##### Table of Contents

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities
Exchange Act of 1934



For the Quarterly Period Ended
September 30, 2005



Commission File Number 000-50091



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BANCSHARES OF FLORIDA, INC.



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A Florida Corporation

IRS Employer Identification No. 59-3535315



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1185 Immokalee Road

Naples, Florida 34110

(239) 254-2100



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Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 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 ̈



Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange
Act).    Yes  x    No ̈



Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act).    Yes ̈No  x



The number of shares outstanding of the Registrants common stock, as of
October 31, 2005 was 5,919,385 shares of $.01 par value common stock.



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

Index



|         |  |                       |  |                                                                                                                                                                                                                         |  |     
|-------- |  | --------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|         |  |                       |  |                                                                                                                                                                                                                         |  | Page
|PART I.  |  | Financial Information |  |                                                                                                                                                                                                                        
|         |  |                       | 
|         |  | Item 1.               |  | Financial Statements (Unaudited)                                                                                                                                                                                        |  |     
|         |  |                       | 
|         |  |                       |  | Condensed Consolidated Statements of Financial ConditionSeptember 30, 2005 and December 31, 2004                                                                                                                        |  | 1   
|         |  |                       | 
|         |  |                       |  | Condensed Consolidated Statements of Operations -Three and nine-months ended September 30, 2005 and 2004                                                                                                                |  | 2   
|         |  |                       | 
|         |  |                       |  | Condensed Consolidated Statements of Stockholders Equity -Year ended December 31, 2004 and nine months ended September 30, 2005                                                                                        |  | 3   
|         |  |                       | 
|         |  |                       |  | Condensed Consolidated Statements of Comprehensive Income (Loss) -Three and nine-months ended September 30, 2005 and 2004                                                                                               |  | 3   
|         |  |                       | 
|         |  |                       |  | Condensed Consolidated Statements of Cash Flows -Nine months ended September 30, 2005 and 2004                                                                                                                          |  | 4   
|         |  |                       | 
|         |  |                       |  | Notes to the Condensed Consolidated Financial Statements                                                                                                                                                                |  | 5   
|         |  |                       | 
|         |  |                       |  | Selected Quarterly Consolidated Financial Data                                                                                                                                                                          |  | 16  
|         |  |                       | 
|         |  | Item 2.               |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                                                                                                   |  |     
|         |  |                       | 
|         |  |                       |  | Overview                                                                                                                                                                                                                |  | 17  
|         |  |                       | 
|         |  |                       |  | Critical Accounting Policies                                                                                                                                                                                            |  | 17  
|         |  |                       | 
|         |  |                       |  | Discussion of the Three Months Ended September 30, 2005 Compared to the Three Months EndedSeptember 30, 2004 and June 30, 2005 and Discussion of the Nine Months Ended September 30, 2005compared to September 30, 2004 |  | 18  
|         |  |                       | 
|         |  |                       |  | Liquidity and Capital Resources                                                                                                                                                                                         |  | 30  
|         |  |                       | 
|         |  | Item 3.               |  | Quantitative and Qualitative Disclosures about Market Risk                                                                                                                                                              |  | 33  
|         |  |                       | 
|         |  | Item 4.               |  | Controls and Procedures                                                                                                                                                                                                 |  | 35  
|         |  |                      
|PART II. |  | Other Information     |  |                                                                                                                                                                                                                        
|         |  |                       | 
|         |  | Item 1.               |  | Legal Proceedings                                                                                                                                                                                                       |  | 35  
|         |  |                       | 
|         |  | Item 6.               |  | Exhibits                                                                                                                                                                                                                |  | 35  
|         |  |                      
|         |  | Signatures            |  | 37                                                                                                                                                                                                                     







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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

September 30, 2005 and December 31, 2004

(In Thousands, except share and per share data)



|                                                                                                                                                                                                                                                  |  |                    |         |   |                   |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------- | - | ----------------- | - | ------- | -
|                                                                                                                                                                                                                                                  |  | September 30, 2005 |         |   | December 31, 2004 |  
|                                                                                                                                                                                                                                                  |  | (Unaudited)        |         |   |                   |  
|ASSETS                                                                                                                                                                                                                                            |  |                    |         |   |                   |   |         |  
|Cash and due from banks                                                                                                                                                                                                                           |  | $                  | 14,003  |   |                   | $ | 16,011  |  
|Interest-bearing deposits due from other banks                                                                                                                                                                                                    |  |                    | 1,722   |   |                   |   | 67      |  
|Federal funds sold                                                                                                                                                                                                                                |  |                    | 27,356  |   |                   |   | 41,819  |  
|                                                                                                                                                                                                                                                  |  |                    |         |   |                   |   |         |  
|TOTAL CASH AND CASH EQUIVALENTS                                                                                                                                                                                                                   |  |                    | 43,081  |   |                   |   | 57,897  |  
|                                                                                                                                                                                                                                                  |  |                   
|Securities held to maturity                                                                                                                                                                                                                       |  |                    | 25      |   |                   |   |        |  
|Securities available for sale, at fair value                                                                                                                                                                                                      |  |                    | 19,069  |   |                   |   | 25,945  |  
|                                                                                                                                                                                                                                                  |  |                   
|Loans                                                                                                                                                                                                                                             |  |                    | 445,494 |   |                   |   | 325,981 |  
|Less:                                                                                                                                                                                                                                             |  |                    |         |   |                   |   |         |  
|Allowance for loan losses                                                                                                                                                                                                                         |  |                    | 4,084   |   |                   |   | 2,817   |  
|Unamortized loan fees, net                                                                                                                                                                                                                        |  |                    | 580     |   |                   |   | 202     |  
|                                                                                                                                                                                                                                                  |  |                    |         |   |                   |   |         |  
|NET LOANS                                                                                                                                                                                                                                         |  |                    | 440,830 |   |                   |   | 322,962 |  
|                                                                                                                                                                                                                                                  |  |                   
|Restricted securities, Federal Home Loan Bank and Federal Reserve stock, at cost                                                                                                                                                                  |  |                    | 1,278   |   |                   |   | 1,039   |  
|Premises and equipment                                                                                                                                                                                                                            |  |                    | 6,789   |   |                   |   | 6,828   |  
|Accrued interest receivable                                                                                                                                                                                                                       |  |                    | 2,012   |   |                   |   | 1,119   |  
|Bank-owned life insurance                                                                                                                                                                                                                         |  |                    | 3,097   |   |                   |   | 3,021   |  
|Intangible asset                                                                                                                                                                                                                                  |  |                    | 935     |   |                   |   | 964     |  
|Other assets                                                                                                                                                                                                                                      |  |                    | 967     |   |                   |   | 1,033   |  
|                                                                                                                                                                                                                                                  |  |                    |         |   |                   |   |         |  
|TOTAL ASSETS                                                                                                                                                                                                                                      |  | $                  | 518,083 |   |                   | $ | 420,808 |  
|                                                                                                                                                                                                                                                  |  |                    |         |   |                   |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                                              |  |                    |         |   |                   |   |         |  
|Deposits                                                                                                                                                                                                                                          |  | $                  | 443,308 |   |                   | $ | 376,064 |  
|Borrowings                                                                                                                                                                                                                                        |  |                    | 19,000  |   |                   |   | 2,000   |  
|Accrued interest payable                                                                                                                                                                                                                          |  |                    | 233     |   |                   |   | 187     |  
|Accrued expenses and other liabilities                                                                                                                                                                                                            |  |                    | 1,257   |   |                   |   | 603     |  
|                                                                                                                                                                                                                                                  |  |                    |         |   |                   |   |         |  
|TOTAL LIABILITIES                                                                                                                                                                                                                                 |  |                    | 463,798 |   |                   |   | 378,854 |  
|                                                                                                                                                                                                                                                  |  |                    |         |   |                   |   |         |  
|Commitments                                                                                                                                                                                                                                       |  |                    |         |   |                   |   |         |  
|                                                                                                                                                                                                                                                  |  |                   
|Stockholders Equity:                                                                                                                                                                                                                             |  |                    |         |   |                   |   |         |  
|Series A Preferred stock, par value $.01 per share, aggregate liquidation preference of $3.5 million; 50,000 shares authorized, no shares
issued and outstanding at September 30, 2005; 36,097 shares issued and outstanding at December 31, 2004 |  |                    |        |   |                   |   | 3,610   |  
|Undesignated Preferred stock, par value $.01 per share, 950,000 shares authorized, no shares issued and outstanding at September 30, 2005
and December 31, 2004, respectively                                                                     |  |                    |        |   |                   |   |        |  
|Common stock, par value $.01 per share, 20,000,000 shares authorized, 5,919,385 and 4,835,632 shares issued and outstanding at
September 30, 2005 and December 31, 2004, respectively                                                             |  |                    | 59      |   |                   |   | 48      |  
|Additional paid-in capital                                                                                                                                                                                                                        |  |                    | 65,572  |   |                   |   | 49,817  |  
|Accumulated deficit                                                                                                                                                                                                                               |  |                    | (11,213 | ) |                   |   | (11,479 | )
|Accumulated other comprehensive loss                                                                                                                                                                                                              |  |                    | (133    | ) |                   |   | (42     | )
|                                                                                                                                                                                                                                                  |  |                    |         |   |                   |   |         |  
|TOTAL STOCKHOLDERS EQUITY                                                                                                                                                                                                                        |  |                    | 54,285  |   |                   |   | 41,954  |  
|                                                                                                                                                                                                                                                  |  |                    |         |   |                   |   |         |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                                        |  | $                  | 518,083 |   |                   | $ | 420,808 |  
|                                                                                                                                                                                                                                                  |  |                    |         |   |                   |   |         |  



See accompanying notes
to condensed consolidated financial statements.



1



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three and Nine-Months Ended September 30, 2005 and 2004

(In Thousands, except share and per share data)



|                                                                         |  |                                 |           |      |                                |           |      |  |      |           |  |   |           |  
|------------------------------------------------------------------------ |  | ------------------------------- | --------- | ---- | ------------------------------ | --------- | ---- |  | ---- | --------- |  | - | --------- | -
|                                                                         |  | (unaudited)                     |          
|                                                                         |  | Three-months endedSeptember 30, |           |      | Nine-months endedSeptember 30, |          
|                                                                         |  | 2005                            |           | 2004 |                                |           | 2005 |  | 2004 |          
|INTEREST INCOME                                                          |  |                                 |           |      |                                |           |      |  |      |           |  |   |           |  
|Interest and fees on loans                                               |  | $                               | 6,967     |      | $                              | 3,755     |      |  | $    | 18,071    |  | $ | 9,909     |  
|Interest on securities available for sale                                |  |                                 | 201       |      |                                | 60        |      |  |      | 494       |  |   | 242       |  
|Interest on federal funds sold                                           |  |                                 | 390       |      |                                | 92        |      |  |      | 1,096     |  |   | 89        |  
|Interest on other interest earning assets                                |  |                                 | 2         |      |                                |          |      |  |      | 10        |  |   |          |  
|                                                                         |  |                                 |           |      |                                |           |      |  |      |           |  |   |           |  
|TOTAL INTEREST INCOME                                                    |  |                                 | 7,560     |      |                                | 3,907     |      |  |      | 19,671    |  |   | 10,240    |  
|                                                                         |  |                                 |           |      |                                |           |      |  |      |           |  |   |           |  
|INTEREST EXPENSE                                                         |  |                                 |           |      |                                |           |      |  |      |           |  |   |           |  
|Interest on deposits                                                     |  |                                 | 2,277     |      |                                | 1,288     |      |  |      | 6,143     |  |   | 3,394     |  
|Interest on borrowings                                                   |  |                                 | 94        |      |                                | 29        |      |  |      | 165       |  |   | 40        |  
|                                                                         |  |                                 |           |      |                                |           |      |  |      |           |  |   |           |  
|TOTAL INTEREST EXPENSE                                                   |  |                                 | 2,371     |      |                                | 1,317     |      |  |      | 6,308     |  |   | 3,434     |  
|                                                                         |  |                                 |           |      |                                |           |      |  |      |           |  |   |           |  
|NET INTEREST INCOME                                                      |  |                                 | 5,189     |      |                                | 2,590     |      |  |      | 13,363    |  |   | 6,806     |  
|                                                                         |  |                                 |           |     
|PROVISION FOR LOAN LOSSES                                                |  |                                 | 614       |      |                                | 263       |      |  |      | 1,309     |  |   | 827       |  
|                                                                         |  |                                 |           |      |                                |           |      |  |      |           |  |   |           |  
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                      |  |                                 | 4,575     |      |                                | 2,327     |      |  |      | 12,054    |  |   | 5,979     |  
|                                                                         |  |                                 |           |      |                                |           |      |  |      |           |  |   |           |  
|NONINTEREST INCOME                                                       |  |                                 |           |      |                                |           |      |  |      |           |  |   |           |  
|Mortgage banking                                                         |  |                                 | 101       |      |                                | 117       |      |  |      | 196       |  |   | 208       |  
|Trust fees                                                               |  |                                 | 401       |      |                                | 277       |      |  |      | 1,089     |  |   | 778       |  
|Service charges and fees                                                 |  |                                 | 363       |      |                                | 218       |      |  |      | 1,096     |  |   | 569       |  
|Gains on sales of securities, net                                        |  |                                 |          |      |                                | (1        | )    |  |      |          |  |   | 5         |  
|                                                                         |  |                                 |           |      |                                |           |      |  |      |           |  |   |           |  
|TOTAL NONINTEREST INCOME                                                 |  |                                 | 865       |      |                                | 611       |      |  |      | 2,381     |  |   | 1,560     |  
|                                                                         |  |                                 |           |      |                                |           |      |  |      |           |  |   |           |  
|NONINTEREST EXPENSES                                                     |  |                                 |           |      |                                |           |      |  |      |           |  |   |           |  
|Salaries and employee benefits                                           |  |                                 | 2,660     |      |                                | 1,746     |      |  |      | 7,316     |  |   | 4,516     |  
|Occupancy expenses                                                       |  |                                 | 729       |      |                                | 591       |      |  |      | 2,180     |  |   | 1,523     |  
|Equipment rental, depreciation and maintenance                           |  |                                 | 331       |      |                                | 203       |      |  |      | 881       |  |   | 550       |  
|General operating                                                        |  |                                 | 1,133     |      |                                | 1,254     |      |  |      | 3,518     |  |   | 2,837     |  
|                                                                         |  |                                 |           |      |                                |           |      |  |      |           |  |   |           |  
|TOTAL NONINTEREST EXPENSES                                               |  |                                 | 4,853     |      |                                | 3,794     |      |  |      | 13,895    |  |   | 9,426     |  
|                                                                         |  |                                 |           |      |                                |           |      |  |      |           |  |   |           |  
|INCOME (LOSS) BEFORE INCOME TAXES                                        |  |                                 | 587       |      |                                | (856      | )    |  |      | 540       |  |   | (1,887    | )
|                                                                         |  |                                 |           |     
|INCOME TAXES                                                             |  |                                 |          |      |                                |          |      |  |      |          |  |   |          |  
|                                                                         |  |                                 |           |      |                                |           |      |  |      |           |  |   |           |  
|NET INCOME (LOSS)                                                        |  | $                               | 587       |      | $                              | (856      | )    |  | $    | 540       |  | $ | (1,887    | )
|                                                                         |  |                                 |           |      |                                |           |      |  |      |           |  |   |           |  
|Earnings (loss) per common share - basic                                 |  | $                               | 0.10      |      | $                              | (0.22     | )    |  | $    | 0.05      |  | $ | (0.58     | )
|                                                                         |  |                                 |           |      |                                |           |      |  |      |           |  |   |           |  
|Earnings (loss) per common & common equivalent shares - diluted          |  | $                               | 0.10      |      | $                              | (0.22     | )    |  | $    | 0.05      |  | $ | (0.58     | )
|                                                                         |  |                                 |           |      |                                |           |      |  |      |           |  |   |           |  
|Weighted average common shares outstanding - basic                       |  |                                 | 5,917,630 |      |                                | 4,220,137 |      |  |      | 5,484,007 |  |   | 3,467,324 |  
|                                                                         |  |                                 |           |      |                                |           |      |  |      |           |  |   |           |  
|Weighted average common & common equivalent shares outstanding - diluted |  |                                 | 6,168,208 |      |                                | 4,220,137 |      |  |      | 5,671,788 |  |   | 3,467,324 |  
|                                                                         |  |                                 |           |      |                                |           |      |  |      |           |  |   |           |  
|Dividends                                                                |  |                                 |          |      |                                |          |      |  |      |          |  |   |          |  
|                                                                         |  |                                 |           |      |                                |           |      |  |      |           |  |   |           |  



See accompanying notes
to condensed consolidated financial statements.



2



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

For the Year Ended December 31, 2004 and the Nine-Months Ended September 30, 2005

(In Thousands, except share and per share data; unaudited)



|                                                                                     |  |                 |   |  |              |        |                            |               |                     |        |   |                                     |  |   |        |  |   |         |   |  |   |      |   |  |   |        |  
|------------------------------------------------------------------------------------ |  | --------------- | - |  | ------------ | ------ | -------------------------- | ------------- | ------------------- | ------ | - | ----------------------------------- |  | - | ------ |  | - | ------- | - |  | - | ---- | - |  | - | ------ | -
|                                                                                     |  | Preferred Stock |   |  | Common Stock |        | Additional Paid-In Capital |               | Accumulated Deficit |        |   | AccumulatedOther Comprehensive Loss |  |   | Total  | 
|                                                                                     |  | Shares Issued   |   |  | Amount       |        |                            | Shares Issued |                     | Amount |   |                                     |  |  
|                                                                                     |  |                 |   |  |              |        |                           
|Balance as of December 31, 2003                                                      |  |                |   |  | $            |       |                            |               | 3,079,199           |        | $ | 31                                  |  | $ | 29,634 |  | $ | (8,389  | ) |  | $ | (56  | ) |  | $ | 21,220 |  
|Net loss                                                                             |  |                |   |  |              |       |                            |               |                    |        |   |                                    |  |   |       |  |   | (2,880  | ) |  |   |     |   |  |   | (2,880 | )
|Preferred stock issued                                                               |  | 34,000          |   |  |              | 3,400  |                            |               |                    |        |   |                                    |  |   |       |  |   |        |   |  |   |     |   |  |   | 3,400  |  
|Exercise of stock options and warrants                                               |  |                |   |  |              |       |                            |               | 31,433              |        |   |                                    |  |   | 314    |  |   |        |   |  |   |     |   |  |   | 314    |  
|Adjustments to additional paid-in-capital from stock compensation expense            |  |                |   |  |              |       |                            |               |                    |        |   |                                    |  |   | 119    |  |   |        |   |  |   |     |   |  |   | 119    |  
|Common stock issued, net of offering cost of $1,698                                  |  |                |   |  |              |       |                            |               | 1,725,000           |        |   | 17                                  |  |   | 19,750 |  |   |        |   |  |   |     |   |  |   | 19,767 |  
|Preferred stock dividends paid at a quarterly rate of 0.02 shares of preferred stock |  | 2,097           |   |  |              | 210    |                            |               |                    |        |   |                                    |  |   |       |  |   | (210    | ) |  |   |     |   |  |   |       |  
|Changes in fair value on available for sale securities                               |  |                |   |  |              |       |                            |               |                    |        |   |                                    |  |   |       |  |   |        |   |  |   | 14   |   |  |   | 14     |  
|                                                                                     |  |                 |   |  |              |        |                            |               |                     |        |   |                                     |  |   |        |  |   |         |   |  |   |      |   |  |   |        |  
|Balance as of December 31, 2004                                                      |  | 36,097          |   |  |              | 3,610  |                            |               | 4,835,632           |        |   | 48                                  |  |   | 49,817 |  |   | (11,479 | ) |  |   | (42  | ) |  |   | 41,954 |  
|Net income                                                                           |  |                |   |  |              |       |                            |               |                    |        |   |                                    |  |   |       |  |   | 540     |   |  |   |     |   |  |   | 540    |  
|Exercise of stock options and warrants                                               |  |                |   |  |              |       |                            |               | 3,399               |        |   |                                    |  |   | 36     |  |   |        |   |  |   |     |   |  |   | 36     |  
|Adjustments to additional paid-in-capital from stock compensation expense            |  |                |   |  |              |       |                            |               |                    |        |   |                                    |  |   | 134    |  |   |        |   |  |   |     |   |  |   | 134    |  
|Common stock issued, net of offering cost of $739                                    |  |                |   |  |              |       |                            |               | 915,000             |        |   | 9                                   |  |   | 12,978 |  |   |        |   |  |   |     |   |  |   | 12,987 |  
|Preferred stock dividends paid at a quarterly rate of 0.02 shares of preferred stock |  | 1,251           |   |  |              | 125    |                            |               |                    |        |   |                                    |  |   |       |  |   | (125    | ) |  |   |     |   |  |   |       |  
|Preferred stock converted to common at $15.78 per share                              |  | (25,090         | ) |  |              | (2,509 | )                          |               | 165,354             |        |   | 2                                   |  |   | 2,607  |  |   | (100    | ) |  |   |     |   |  |   |       |  
|Redemption of preferred stock at $104 per share                                      |  | (12,258         | ) |  |              | (1,226 | )                          |               |                    |        |   |                                    |  |   |       |  |   | (49     | ) |  |   |     |   |  |   | (1,275 | )
|Changes in fair value on available for sale securities                               |  |                |   |  |              |       |                            |               |                    |        |   |                                    |  |   |       |  |   |        |   |  |   | (91  | ) |  |   | (91    | )
|                                                                                     |  |                 |   |  |              |        |                            |               |                     |        |   |                                     |  |   |        |  |   |         |   |  |   |      |   |  |   |        |  
|Balance as of September 30, 2005                                                     |  |                |   |  | $            |       |                            |               | 5,919,385           |        | $ | 59                                  |  | $ | 65,572 |  | $ | (11,213 | ) |  | $ | (133 | ) |  | $ | 54,285 |  
|                                                                                     |  |                 |   |  |              |        |                            |               |                     |        |   |                                     |  |   |        |  |   |         |   |  |   |      |   |  |   |        |  





BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(LOSS)

(In Thousands, unaudited)



|                                                                                                |  |                                 |     |   |                                |   |      |      |  |   |      |   |  |   |        |  
|----------------------------------------------------------------------------------------------- |  | ------------------------------- | --- | - | ------------------------------ | - | ---- | ---- |  | - | ---- | - |  | - | ------ | -
|                                                                                                |  | Three-months endedSeptember 30, |     |   | Nine-months endedSeptember 30, |  
|                                                                                                |  | 2005                            |     |   | 2004                           |   |      | 2005 |  |   | 2004 |  
|Net income (loss)                                                                               |  | $                               | 587 |   |                                | $ | (856 | )    |  | $ | 540  |   |  | $ | (1,887 | )
|Other comprehensive income (loss):                                                              |  |                                 |     |   |                                |   |      |      |  |   |      |   |  |   |        |  
|Unrealized gains (losses) on available for sale securities:                                     |  |                                 |     |   |                                |   |      |      |  |   |      |   |  |   |        |  
|Unrealized holding gains (losses) arising during the period, net of taxes                       |  |                                 | (69 | ) |                                |   | 185  |      |  |   | (91  | ) |  |   | 26     |  
|Less reclassification adjustment for gains (losses) realized in net income (loss), net of taxes |  |                                 |    |   |                                |   |     |      |  |   |     |   |  |   | (5     | )
|                                                                                                |  |                                 |     |   |                                |   |      |      |  |   |      |   |  |   |        |  
|Net unrealized gains (losses)                                                                   |  |                                 | (69 | ) |                                |   | 185  |      |  |   | (91  | ) |  |   | 21     |  
|                                                                                                |  |                                 |     |   |                                |   |      |      |  |   |      |   |  |   |        |  
|Comprehensive income (loss)                                                                     |  | $                               | 518 |   |                                | $ | (671 | )    |  | $ | 449  |   |  | $ | (1,866 | )
|                                                                                                |  |                                 |     |   |                                |   |      |      |  |   |      |   |  |   |        |  



See accompanying notes
to condensed consolidated financial statements.



3



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine-Months Ended September 30, 2005 and 2004

(In Thousands)



|                                                                                         |  |                                |          |   |      |   |         |  
|---------------------------------------------------------------------------------------- |  | ------------------------------ | -------- | - | ---- | - | ------- | -
|                                                                                         |  | (unaudited)                    |         
|                                                                                         |  | Nine-Months EndedSeptember 30, |         
|                                                                                         |  | 2005                           |          |   | 2004 |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                                     |  |                                |          |   |      |   |         |  
|Net income (loss)                                                                        |  | $                              | 540      |   |      | $ | (1,887  | )
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                                |          |   |      |   |         |  
|Depreciation and amortization                                                            |  |                                | 905      |   |      |   | 509     |  
|Provision for loan losses                                                                |  |                                | 1,309    |   |      |   | 827     |  
|Amortization of deferred loan fees and costs, net                                        |  |                                | (252     | ) |      |   | 5       |  
|Amortization (accretion) of premiums and discounts on investments, net                   |  |                                | (47      | ) |      |   | 25      |  
|Gains on sales of securities available for sale, net                                     |  |                                |         |   |      |   | (5      | )
|Amortization of intangible assets                                                        |  |                                | 29       |   |      |   |        |  
|Increase in accrued interest receivable                                                  |  |                                | (893     | ) |      |   | (155    | )
|Decrease in other assets                                                                 |  |                                | 66       |   |      |   | 271     |  
|Stock compensation expense                                                               |  |                                | 134      |   |      |   |        |  
|Increase in Bank-owned life insurance                                                    |  |                                | (76      | ) |      |   |        |  
|Increase in accrued interest payable                                                     |  |                                | 46       |   |      |   | 83      |  
|Increase in accrued expenses and other liabilities                                       |  |                                | 654      |   |      |   | 542     |  
|                                                                                         |  |                                |          |   |      |   |         |  
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                                |  |                                | 2,415    |   |      |   | 215     |  
|                                                                                         |  |                                |          |   |      |   |         |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                                     |  |                                |          |   |      |   |         |  
|Net increase in loans                                                                    |  |                                | (118,925 | ) |      |   | (84,086 | )
|Proceeds from maturities and principal repayments on securities available for sale       |  |                                | 332,886  |   |      |   |        |  
|Purchase of securities available for sale                                                |  |                                | (326,079 | ) |      |   | (2,123  | )
|Purchase of restricted securities, net                                                   |  |                                | (239     | ) |      |   | (300    | )
|Purchase of premises and equipment                                                       |  |                                | (866     | ) |      |   | (1,883  | )
|Acquisition cost of business                                                             |  |                                |         |   |      |   | 561     |  
|                                                                                         |  |                                |          |   |      |   |         |  
|NET CASH USED IN INVESTING ACTIVITIES                                                    |  |                                | (113,223 | ) |      |   | (87,831 | )
|                                                                                         |  |                                |          |   |      |   |         |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                                     |  |                                |          |   |      |   |         |  
|Net increase in deposits                                                                 |  |                                | 67,244   |   |      |   | 97,724  |  
|Increase in (Repayment of) FHLB advances                                                 |  |                                | 11,000   |   |      |   | (2,133  | )
|Proceeds from issuance of subordinated debt, net                                         |  |                                | 6,000    |   |      |   | 2,000   |  
|(Redemption) Issuance of Series A preferred stock                                        |  |                                | (1,275   | ) |      |   | 3,400   |  
|Net proceeds from issuance of common stock                                               |  |                                | 13,023   |   |      |   | 20,081  |  
|                                                                                         |  |                                |          |   |      |   |         |  
|NET CASH PROVIDED BY FINANCING ACTIVITIES                                                |  |                                | 95,992   |   |      |   | 121,072 |  
|                                                                                         |  |                                |          |   |      |   |         |  
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                     |  |                                | (14,816  | ) |      |   | 33,456  |  
|CASH AND CASH EQUIVALENTS:                                                               |  |                                |          |   |      |   |         |  
|Beginning of period                                                                      |  |                                | 57,897   |   |      |   | 8,424   |  
|                                                                                         |  |                                |          |   |      |   |         |  
|End of period                                                                            |  | $                              | 43,081   |   |      | $ | 41,880  |  
|                                                                                         |  |                                |          |   |      |   |         |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                                         |  |                                |          |   |      |   |         |  
|Cash paid during the period for:                                                         |  |                                |          |   |      |   |         |  
|Interest                                                                                 |  | $                              | 6,262    |   |      | $ | 3,351   |  
|                                                                                         |  |                                |          |   |      |   |         |  
|Noncash Transactions:                                                                    |  |                                |          |   |      |   |         |  
|(Decrease) increase in fair value on securities available for sale                       |  | $                              | (91      | ) |      | $ | 21      |  
|                                                                                         |  |                                |          |   |      |   |         |  
|Increase in preferred stock for dividends paid                                           |  | $                              | 125      |   |      | $ | 140     |  
|                                                                                         |  |                                |          |   |      |   |         |  
|Preferred stock exchanged for common stock                                               |  | $                              | 2,509    |   |      |   |        |  
|                                                                                         |  |                                |          |   |      |   |         |  



See accompanying notes
to condensed consolidated financial statements.



4



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE 1Organization and Basis of Presentation



Organization:



Bancshares of Florida Inc., (Bancshares), was incorporated in Florida in September 1998 to serve as a holding company for Bank of
FloridaSouthwest, a national banking association then in organization. (Bancshares and its subsidiaries are collectively referred to in this report as the Company).



For approximately the first eleven months following its incorporation, the main activities of Bancshares centered on
applying for a national bank charter, applying to become a bank holding company, hiring and training bank employees, preparing the banking facilities and premises for opening, and conducting an initial public offering of common stock to raise a
minimum of $10 million to fund the startup of Bank of Florida  Southwest. By August 1999, Bancshares had received subscriptions to purchase common stock in an amount in excess of the required minimum, and on August 24, 1999, Bank of
FloridaSouthwest, commenced operations at its office located at 3401 Tamiami Trail North in Naples, Florida. Effective January 1, 2005, Bank of FloridaSouthwest became a Florida state chartered bank.



On April 18, 2000, Bank of Florida Trust Company (the Trust
Company) was incorporated under the laws of the State of Florida as a wholly-owned subsidiary of Bank of Florida  Southwest. Bank of Florida Trust Company applied to the Comptroller of the Currency and was approved to engage in fiduciary
services and estate planning consultation on August 23, 2000. In October 2002, the Trust Company applied to the Florida Department of Financial Services, and upon that applications approval in March 2003, Bancshares acquired the Trust
Company from Bank of Florida  Southwest. On July 16, 2004, the Trust Company received approval from the Florida Department of Financial Services to change its name from Florida Trust Company to Bank of Florida Trust Company as a means to
improve the name recognition of the subsidiary with Bancshares and its affiliates. As a subsidiary of Bancshares, Bank of Florida Trust Company offers non-proprietary, third party investment consulting services and access to an extensive, nationwide
network of independent money managers.



On July 16, 2002,
Bank of Florida, a newly formed state-chartered commercial bank, opened in Ft. Lauderdale, Florida with over $7 million in capital and on November 5, 2004, Bank of Florida  Tampa Bay opened with over $8 million in capital. (Bank of
Florida  Southwest, Bank of Florida and Bank of Florida  Tampa Bay are collectively referred to as the Banks). The Banks offer a complete range of interest bearing and non-interest bearing accounts, including commercial and
retail checking accounts, money market accounts, individual retirement accounts, regular interest bearing statement savings accounts, and certificates of deposit. Lending products include commercial loans, real estate loans, home equity loans and
consumer/installment loans. In addition, they provide such consumer services as U.S. Savings Bonds, traveler checks, cashier checks, safe deposit boxes, bank-by-mail services, direct deposit, on-line banking, and automatic teller services.
Specialized services to commercial customers include cash management, expanded on-line banking, lock box, and Door-to-Door banking.



The holding company structure provides flexibility for expansion of our banking business through possible acquisition of other financial institutions and
provision of additional banking-related services, which the traditional bank may not provide under present laws. For example, banking regulations require that banks maintain a minimum ratio of capital to assets. In the event that the growth of Bank
of Florida  Southwest, Bank of Florida or Bank of Florida  Tampa Bay is such that this minimum ratio is not maintained, we may borrow funds, subject to the capital adequacy guidelines of the Federal Reserve Board, and contribute them to
the capital of the Banks, and otherwise raise capital in a manner that is unavailable to our Bank subsidiaries under existing banking regulations. In addition, the Banks may participate loans with each other such that the excess of an individual
Banks loan limit may be shared with another bank, resulting in greater retention within the holding company of the customer relationship, given acceptable credit risk and industry concentration.



The Trust Company presently operates as a subsidiary of Bancshares, and
exercises its trust powers thereunder. The Trust Company offers and provides to its customers wealth management services, including fiduciary services, as a trustee, executor, administrator, guardian, custodian of funds, asset manager (with and
without discretion) and investment advisor. It serves all of the Banks with these services, generally having a representative situated in the local bank markets that the Company serves with a link to the centralized administrative and support
services in the Trust Company home office location in Naples, Florida.



5



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)



Basis of Presentation:



The unaudited interim condensed consolidated financial
statements reflect all adjustments necessary (consisting of normal recurring adjustments) to present fairly our financial position as of September 30, 2005 and December 31, 2004, and the results of operations for the three and nine-month
periods ended September 30, 2005 and 2004, the cash flows for the nine months ended September 30, 2005 and 2004, and the stockholders equity for the nine and twelve months ended September 30, 2005 and December 31, 2004. The
accounting and reporting policies of the Company are in conformity with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q, Article 10 of Regulation S-X
and prevailing practices within the financial services industry. Accordingly, they do not include all of the footnotes and information required by accounting principles generally accepted in the United States of America.



The preparation of financial statements, in conformity with accounting
principles generally accepted in the United States of America, requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and the reported amounts of income and expense during the reporting period. Such estimates are subject to change in the future as additional information becomes available or previously existing circumstances are
modified. The Companys significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements included in its 2004 Annual Report on Form 10-KSB filed with the Securities and Exchange Commission. For interim
reporting purposes, the Company follows the same basic accounting policies and considers each interim period as an integral part of an annual period.



These unaudited condensed consolidated financial statements included herein should be read in conjunction with the financial statements and related
footnotes included in the Companys 2004 Form 10-KSB. The results of operations for interim periods are not necessarily indicative of the results of operations to be expected for the fiscal year ending December 31, 2005 or any other
interim period.



Reclassifications:



Certain reclassifications have been made to prior period financial
statements to conform to the September 30, 2005 financial statement presentation. These reclassifications only changed the reporting categories but did not affect our results of operations or financial position.



Stock-based Compensation:



The Company applies the intrinsic-value-based method of accounting
prescribed by Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations including Financial Accounting Standards Board (FASB) Interpretation
No. 44, Accounting for Certain Transactions involving Stock Compensation, and Interpretation of APB Opinion No.25, to account for its fixed-plan stock options. Under this method, compensation expense is recorded on the date of
grant only if the current market price of the underlying stock exceeded the exercise price. FASB Statement No. 123, Accounting for Stock-Based Compensation and FASB Statement No. 148, Accounting for Stock-Based Compensation
 Transition and Disclosure, an Amendment of FASB Statement No. 123, established accounting and disclosure requirements using a fair-value-based method of accounting for stock-based compensation plans. As permitted by existing
standards, the Company has elected to continue to apply the intrinsic-value-based method of accounting described above, and has adopted only the disclosure requirements of Statement 123, as amended.



Effective December 15, 2002, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 148, Accounting for Stock-Based CompensationTransition and Disclosure. This statement amends SFAS No. 123, Accounting for Stock-Based Compensation. It provides alternative
methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. It also amends the disclosure provision of SFAS No. 123 to require prominent disclosure about the
effects on reported net income (loss) of an entitys accounting policy decisions with respect to stock-based employee compensation.



6



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)



The
per share weighted average fair value of stock options granted during the three months ended September 30, 2005 and 2004 was $8.86 and $7.88, respectively, and for the nine months ended September 30, 2005 and 2004 was $7.48 and $7.31,
respectively, on the date of grant using the Black Scholes option-pricing model with the following weighted average assumptions:



|                        |  |                                         |   |  |                                        |   |  |         |   |  |          |  
|----------------------- |  | --------------------------------------- | - |  | -------------------------------------- | - |  | ------- | - |  | -------- | -
|                        |  | For the three monthsended September 30, |   |  | For the nine monthsended September 30, |  
|                        |  | 2005                                    |   |  | 2004                                   |   |  | 2005    |   |  | 2004     |  
|Expected dividend yield |  | 0.00                                    | % |  | 0.00                                   | % |  | 0.00    | % |  | 0.00     | %
|Expected volatility     |  | 40.00                                   | % |  | 30.00                                  | % |  | 37.00   | % |  | 25.86    | %
|Risk free interest rate |  | 4.05                                    | % |  | 4.71                                   | % |  | 3.86    | % |  | 3.82     | %
|Expected life           |  | 7 years                                 |   |  | 10 years                               |   |  | 7 years |   |  | 10 years |  



Had compensation cost
for the Companys stock option plan been determined under SFAS No. 123, based on the fair market value at the grant dates, the Companys proforma net income (loss) and net earnings (loss) per share would have been as follows (in
thousands, except per share data):



|                                                                                                                                    |  |                                         |      |   |                                        |   |       |   |  |   |       |   |  |   |        |  
|----------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------- | ---- | - | -------------------------------------- | - | ----- | - |  | - | ----- | - |  | - | ------ | -
|                                                                                                                                    |  | For the three monthsended September 30, |      |   | For the nine monthsended September 30, |  
|                                                                                                                                    |  |                                         | 2005 |   |                                        |   | 2004  |   |  |   | 2005  |   |  |   | 2004   |  
|Net income (loss) as reported                                                                                                       |  | $                                       | 587  |   |                                        | $ | (856  | ) |  | $ | 540   |   |  | $ | (1,887 | )
|Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax
effects |  |                                         | (94  | ) |                                        |   | (33   | ) |  |   | (631  | ) |  |   | (133   | )
|                                                                                                                                    |  |                                         |      |   |                                        |   |       |   |  |   |       |   |  |   |        |  
|Proforma net income (loss)                                                                                                          |  | $                                       | 493  |   |                                        | $ | (889  | ) |  | $ | (91   | ) |  | $ | (2,020 | )
|                                                                                                                                    |  |                                         |      |   |                                        |   |       |   |  |   |       |   |  |   |        |  
|Earnings ( loss) per share as reported:                                                                                             |  |                                         |      |   |                                        |   |       |   |  |   |       |   |  |   |        |  
|Earnings (loss) per share - basic                                                                                                   |  | $                                       | 0.10 |   |                                        | $ | (0.22 | ) |  | $ | 0.05  |   |  | $ | (0.58  | )
|                                                                                                                                    |  |                                         |      |   |                                        |   |       |   |  |   |       |   |  |   |        |  
|Earnings (loss) per common and common equivalent share - diluted                                                                    |  | $                                       | 0.10 |   |                                        | $ | (0.22 | ) |  | $ | 0.05  |   |  | $ | (0.58  | )
|                                                                                                                                    |  |                                         |      |   |                                        |   |       |   |  |   |       |   |  |   |        |  
|Proforma Earnings ( loss) per share:                                                                                                |  |                                         |      |   |                                        |   |       |   |  |   |       |   |  |   |        |  
|Earnings (loss) per share - basic                                                                                                   |  | $                                       | 0.08 |   |                                        | $ | (0.23 | ) |  | $ | (0.07 | ) |  | $ | (0.62  | )
|                                                                                                                                    |  |                                         |      |   |                                        |   |       |   |  |   |       |   |  |   |        |  
|Earnings (loss) per common and common equivalent share - diluted                                                                    |  | $                                       | 0.08 |   |                                        | $ | (0.23 | ) |  | $ | (0.06 | ) |  | $ | (0.62  | )
|                                                                                                                                    |  |                                         |      |   |                                        |   |       |   |  |   |       |   |  |   |        |  



7



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)



Recent Accounting
Pronouncements:



On March 30, 2005, the Financial
Accounting Standards Board (the FASB) issued FASB Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations,(FIN 47). FIN 47 clarifies that the term conditional asset
retirement obligationas used in FASB Statement No. 143, Accounting for Asset Retirement Obligations,refers to a legal obligation to perform an asset retirement activity in which the timing and (or) method of settlement
are conditional on a future event that may or may not be within the control of the entity. FIN 47 also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. FIN 47 is
effective no later than the end of fiscal years ending after December 15, 2005. Retrospective application of interim financial information is permitted but is not required. Early adoption of FIN 47 is encouraged. The Company does not currently
have any asset retirement obligations, and, therefore, FIN 47 is not applicable.



In December 2004, the FASB issued FASB Statement No. No. 153, Exchanges of Nonmonetary Assets  an Amendment to APB opinion No. 29. This Statement addresses the measurement of
exchanges of nonmonetary assets. The Statement is effective for fiscal periods beginning after June 15, 2005. Management believes this Statement will not have a material effect on the Companys consolidated financial statements.



On December 16, 2004, the FASB issued FASB Statement
No. 123 (revised 2004), Share-Based Payment. Statement 123(R) replaces FASB Statement No. 123, Accounting for Stock-Based Compensation, supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends FASB Statement
No. 95, Statement of Cash Flows. Statement 123(R) requires that all share-based payments to employees, including grants of employee stock options, be recognized in the financial statements based on their fair values. The provisions of Statement
123(R) are effective prospectively as of the first interim or annual reporting period that begins after June 15, 2005. On March 30, 2005, the SEC Staff issued Staff Accounting Bulletin No. 107, Application of FASB Statement
123R, Share-Based Payment, which amends the effective date to begin the first annual period beginning after June 15, 2005. The implementation of this statement is expected to result in an additional $486,000 in expense for
fiscal year 2006, based on current options outstanding.



Earnings (Loss) Per
Common Share:



Basic earnings (loss) per share represents
net income (loss) available to common shareholders divided by the weighted-average number of common shares outstanding during the period. Dilutive earnings per share is computed based on the weighted average number of shares outstanding plus
the effect of outstanding stock options computed using the treasury stock method. Common stock equivalents were antidilutive for the three and nine-month periods ended September 30, 2004 due to losses incurred by the Company.



8



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)



Income (Loss) Per
Common Share (contd):



At September 30,
2004, there were 399,899 common stock options and 303,856 warrants, respectively, for the three-month periods that were anti-dilutive and therefore not included in the calculation below. Components used in computing earnings (loss) per share for the
three months ended September 30, 2005 and 2004, are summarized as follows (in thousands, except share data):



|                                                         |  |                                          |     |                                  |           |                  |   |         |  |   |                                  |   |              |           |  |   |       |  
|-------------------------------------------------------- |  | ---------------------------------------- | --- | -------------------------------- | --------- | ---------------- | - | ------- |  | - | -------------------------------- | - | ------------ | --------- |  | - | ----- | -
|                                                         |  | For the three months ended September 30, |    
|                                                         |  | 2005                                     |     | 2004                             |          
|                                                         |  | NetIncome                                |     | WeightedAverageSharesOutstanding |           | EarningsPerShare |   | NetLoss |  |   | WeightedAverageSharesOutstanding |   | LossPerShare |          
|Net income (loss)                                        |  | $                                        | 587 |                                  |           |                  |   |         |  | $ | (856                             | ) |              |           |  |   |       |  
|Less preferred stock dividends                           |  |                                          |    |                                  |           |                  |   |         |  |   | (69                              | ) |              |           |  |   |       |  
|                                                         |  |                                          |     |                                  |           |                  |   |         |  |   |                                  |   |              |           |  |   |       |  
|Income (loss) available to common shareholders - basic   |  |                                          | 587 |                                  | 5,917,630 |                  | $ | 0.10    |  |   | (925                             | ) |              | 4,220,137 |  | $ | (0.22 | )
|Dilutive effect of stock options outstanding             |  |                                          |     |                                  | 168,201   |                  |   |        |  |   |                                  |   |              |          |  |   |       |  
|Dilutive effect of warrants outstanding                  |  |                                          |     |                                  | 82,377    |                  |   |        |  |   |                                  |   |              |          |  |   |       |  
|                                                         |  |                                          |     |                                  |           |                  |   |         |  |   |                                  |   |              |           |  |   |       |  
|Income (loss) available to common shareholders  diluted |  | $                                        | 587 |                                  | 6,168,208 |                  | $ | 0.10    |  | $ | (925                             | ) |              | 4,220,137 |  | $ | (0.22 | )
|                                                         |  |                                          |     |                                  |           |                  |   |         |  |   |                                  |   |              |           |  |   |       |  



At September 30,
2004, there were 399,899 common stock options and 303,856 warrants, respectively, which were anti-dilutive and therefore not included in the calculation below. Components used in computing loss per share for the nine months ended September 30,
2005 and 2004 are summarized as follows (in thousands, except share data):



|                                               |  |                                         |      |      |                                  |           |                  |   |          |  |   |                                  |   |              |           |  |   |       |  
|---------------------------------------------- |  | --------------------------------------- | ---- | ---- | -------------------------------- | --------- | ---------------- | - | -------- |  | - | -------------------------------- | - | ------------ | --------- |  | - | ----- | -
|                                               |  | For the nine months ended September 30, |     
|                                               |  | 2005                                    |      | 2004 |                                 
|                                               |  | NetIncome                               |      |      | WeightedAverageSharesOutstanding |           | EarningsPerShare |   | Net Loss |  |   | WeightedAverageSharesOutstanding |   | LossPerShare |          
|Net income                                     |  | $                                       | 540  |      |                                  |           |                  |   |          |  | $ | (1,887                           | ) |              |           |  |   |       |  
|Less premium paid on preferred stock           |  |                                         | (149 | )    |                                  |           |                  |   |          |  |   |                                  |   |              |           |  |   |       |  
|Less preferred stock dividends                 |  |                                         | (125 | )    |                                  |           |                  |   |          |  |   | (140                             | ) |              |           |  |   |       |  
|                                               |  |                                         |      |      |                                  |           |                  |   |          |  |   |                                  |   |              |           |  |   |       |  
|Income (Loss) available to common shareholders |  |                                         | 266  |      |                                  | 5,484,007 |                  | $ | 0.05     |  |   | (2,027                           | ) |              | 3,467,324 |  | $ | (0.58 | )
|Dilutive effect of stock options outstanding   |  |                                         |      |      |                                  | 122,188   |                  |   |          |  |   |                                  |   |              |          |  |   |       |  
|Dilutive effect of warrants outstanding        |  |                                         |      |      |                                  | 65,593    |                  |   |          |  |   |                                  |   |              |          |  |   |       |  
|                                               |  |                                         |      |      |                                  |           |                  |   |          |  |   |                                  |   |              |           |  |   |       |  
|Income (loss) available to common shareholders |  | $                                       | 266  |      |                                  | 5,671,788 |                  | $ | 0.05     |  | $ | (2,027                           | ) |              | 3,467,324 |  | $ | (0.58 | )
|                                               |  |                                         |      |      |                                  |           |                  |   |          |  |   |                                  |   |              |           |  |   |       |  



9



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)



NOTE 2Segment
Information



The Company has five reportable segments:
Bank of FloridaSouthwest, based in Naples, Florida; Bank of Florida, based in Fort Lauderdale, Florida; Bank of FloridaTampa Bay, based in Tampa, Florida; Bank of Florida Trust Company, based in Naples, Florida; and Bancshares of
Florida, Inc., the parent corporation. The Companys reportable business segments are strategic business units that offer distinctive products and services that are marketed through different channels. These are managed separately because of
their management, marketing and distribution requirements.



Measurement of
Segment Profit or Loss and Segment Assets:



The following
presents financial information of reportable segments as of and for the three-month periods ended September 30, 2005 and 2004 and June 30, 2005. The Other column includes executive management and finance and accounting expense;
expense for acquisitions, capital-raising, shareholder/investor relations, and various professional services; and entries necessary to reconcile the identified segments to the reported consolidated amounts. When performance of these segments is
reported in the text of Managements Discussion and Analysis of Financial Condition and Results of Operations and in similar texts, figures are stated before the latter eliminating entries (in thousands).



|                                |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|------------------------------- |  | ------------------------- | ------- | ----------------------------- | - | ------------------------ |  | - | -------------------------- | - | ----- | - | ------- | ------------------------- | - | ------- | - |  | - | ------- | -
|For the Three Months Ended:     |  | Bank ofFlorida -Southwest |         | Bank ofFlorida, Ft.Lauderdale |   | Bank ofFlorida -TampaBay |  |   | Bank ofFloridaTrustCompany |   | Other |   |         | Bancsharesof Florida,Inc. |  
|September 30, 2005              |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|Net interest income             |  | $                         | 2,452   |                               | $ | 2,234                    |  | $ | 486                        |   |       | $ | 17      |                           | $ |        |   |  | $ | 5,189   |  
|Provision for loan losses       |  |                           | 279     |                               |   | 227                      |  |   | 108                        |   |       |   |        |                           |   |        |   |  |   | 614     |  
|Noninterest income              |  |                           | 323     |                               |   | 121                      |  |   | 20                         |   |       |   | 401     |                           |   |        |   |  |   | 865     |  
|Noninterest expense             |  |                           | 1,140   |                               |   | 1,316                    |  |   | 484                        |   |       |   | 345     |                           |   | 1,568   |   |  |   | 4,853   |  
|Holding company servicing costs |  |                           | 479     |                               |   | 233                      |  |   | 68                         |   |       |   | 21      |                           |   | (801    | ) |  |   |        |  
|                                |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|Net income (loss)               |  | $                         | 877     |                               | $ | 579                      |  | $ | (154                       | ) |       | $ | 52      |                           | $ | (767    | ) |  | $ | 587     |  
|                                |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|End of period assets            |  | $                         | 268,369 |                               | $ | 195,067                  |  | $ | 63,215                     |   |       | $ | 2,467   |                           | $ | (11,035 | ) |  | $ | 518,083 |  
|                                |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|Assets under advice             |  | $                         |        |                               | $ |                         |  | $ |                           |   |       | $ | 340,753 |                           | $ |        |   |  | $ | 340,753 |  
|                                |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|June 30, 2005                   |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|Net interest income             |  | $                         | 2,259   |                               | $ | 1,882                    |  | $ | 397                        |   |       | $ | 16      |                           | $ |        |   |  | $ | 4,554   |  
|Provision for loan losses       |  |                           | 189     |                               |   | 116                      |  |   | 94                         |   |       |   |        |                           |   |        |   |  |   | 399     |  
|Noninterest income              |  |                           | 347     |                               |   | 93                       |  |   | 14                         |   |       |   | 365     |                           |   |        |   |  |   | 819     |  
|Noninterest expense             |  |                           | 1,154   |                               |   | 1,189                    |  |   | 446                        |   |       |   | 331     |                           |   | 1,527   |   |  |   | 4,647   |  
|Holding company servicing costs |  |                           | 472     |                               |   | 233                      |  |   | 65                         |   |       |   | 21      |                           |   | (791    | ) |  |   |        |  
|                                |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|Net income (loss)               |  | $                         | 791     |                               | $ | 437                      |  | $ | (194                       | ) |       | $ | 29      |                           | $ | (736    | ) |  | $ | 327     |  
|                                |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|End of period assets            |  | $                         | 256,945 |                               | $ | 200,615                  |  | $ | 52,539                     |   |       | $ | 2,370   |                           | $ | (7,742  | ) |  | $ | 504,727 |  
|                                |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|Assets under advice             |  | $                         |        |                               | $ |                         |  | $ |                           |   |       | $ | 306,152 |                           | $ |        |   |  | $ | 306,152 |  
|                                |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|September 30, 2004              |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|Net interest income             |  | $                         | 1,720   |                               | $ | 831                      |  | $ |                           |   |       | $ | 16      |                           | $ | 23      |   |  | $ | 2,590   |  
|Provision for loan losses       |  |                           | 176     |                               |   | 87                       |  |   |                           |   |       |   |        |                           |   |        |   |  |   | 263     |  
|Noninterest income              |  |                           | 255     |                               |   | 79                       |  |   |                           |   |       |   | 277     |                           |   |        |   |  |   | 611     |  
|Noninterest expense             |  |                           | 1,449   |                               |   | 732                      |  |   | 181                        |   |       |   | 285     |                           |   | 1,147   |   |  |   | 3,794   |  
|Holding company servicing costs |  |                           |        |                               |   |                         |  |   |                           |   |       |   |        |                           |   |        |   |  |   |        |  
|                                |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|Net income (loss)               |  | $                         | 350     |                               | $ | 91                       |  | $ | (181                       | ) |       | $ | 8       |                           | $ | (726    | ) |  | $ | (856    | )
|                                |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|End of period assets            |  | $                         | 219,170 |                               | $ | 117,960                  |  | $ | 2,450                      |   |       | $ | 2,320   |                           | $ | 2,744   |   |  | $ | 344,644 |  
|                                |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|Assets under advice             |  | $                         |        |                               | $ |                         |  | $ |                           |   |       | $ | 185,873 |                           | $ |        |   |  | $ | 185,873 |  
|                                |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  



10



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)



Measurement of Segment
Profit or Loss and Segment Assets:



The following presents
financial information of reportable segments as of and for the nine-month periods ended September 30, 2005 and 2004. The Other column includes executive management and finance and accounting expense; expense for acquisitions,
capital-raising, shareholder/investor relations, and various professional services; and entries necessary to reconcile the identified segments to the reported consolidated amounts. When performance of these segments is reported in the text of
Managements Discussion and Analysis of Financial Condition and Results of Operations and in similar texts, figures are stated before the latter eliminating entries (in thousands).



|                                |  |                           |         |                               |   |         |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|------------------------------- |  | ------------------------- | ------- | ----------------------------- | - | ------- | ------------------------ |  | - | -------------------------- | - | ----- | - | ------- | ------------------------- | - | ------- | - |  | - | ------- | -
|For the Nine Months Ended:      |  | Bank ofFlorida -Southwest |         | Bank ofFlorida, Ft.Lauderdale |   |         | Bank ofFlorida -TampaBay |  |   | Bank ofFloridaTrustCompany |   | Other |   |         | Bancsharesof Florida,Inc. |  
|September 30, 2005              |  |                           |         |                               |   |         |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|Net interest income             |  | $                         | 6,638   |                               | $ | 5,553   |                          |  | $ | 1,122                      |   |       | $ | 50      |                           | $ |        |   |  | $ | 13,363  |  
|Provision for loan losses       |  |                           | 612     |                               |   | 344     |                          |  |   | 353                        |   |       |   |        |                           |   |        |   |  |   | 1,309   |  
|Noninterest income              |  |                           | 939     |                               |   | 316     |                          |  |   | 37                         |   |       |   | 1,089   |                           |   |        |   |  |   | 2,381   |  
|Noninterest expense             |  |                           | 3,371   |                               |   | 3,693   |                          |  |   | 1,367                      |   |       |   | 994     |                           |   | 4,470   |   |  |   | 13,895  |  
|Holding company servicing costs |  |                           | 1,421   |                               |   | 690     |                          |  |   | 196                        |   |       |   | 63      |                           |   | (2,370  | ) |  |   |        |  
|                                |  |                           |         |                               |   |         |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|Net income (loss)               |  | $                         | 2,173   |                               | $ | 1,142   |                          |  | $ | (757                       | ) |       | $ | 82      |                           | $ | (2,100  | ) |  | $ | 540     |  
|                                |  |                           |         |                               |   |         |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|End of period assets            |  | $                         | 268,369 |                               | $ | 195,067 |                          |  | $ | 63,215                     |   |       | $ | 2,467   |                           | $ | (11,035 | ) |  | $ | 518,083 |  
|                                |  |                           |         |                               |   |         |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|Assets under advice             |  | $                         |        |                               | $ |        |                          |  | $ |                           |   |       | $ | 340,753 |                           | $ |        |   |  | $ | 340,753 |  
|                                |  |                           |         |                               |   |         |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|September 30, 2004              |  |                           |         |                               |   |         |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|Net interest income             |  | $                         | 4,542   |                               | $ | 2,190   |                          |  | $ |                           |   |       | $ | 51      |                           | $ | 23      |   |  | $ | 6,806   |  
|Provision for loan losses       |  |                           | 500     |                               |   | 327     |                          |  |   |                           |   |       |   |        |                           |   |        |   |  |   | 827     |  
|Noninterest income              |  |                           | 635     |                               |   | 147     |                          |  |   |                           |   |       |   | 778     |                           |   |        |   |  |   | 1,560   |  
|Noninterest expense             |  |                           | 4,076   |                               |   | 2,086   |                          |  |   | 181                        |   |       |   | 784     |                           |   | 2,299   |   |  |   | 9,426   |  
|Holding company servicing costs |  |                           |        |                               |   |        |                          |  |   |                           |   |       |   |        |                           |   |        |   |  |   |        |  
|                                |  |                           |         |                               |   |         |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|Net income (loss)               |  | $                         | 601     |                               | $ | (76     | )                        |  | $ | (181                       | ) |       | $ | 45      |                           | $ | (2,276  | ) |  | $ | (1,887  | )
|                                |  |                           |         |                               |   |         |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|End of period assets            |  | $                         | 219,170 |                               | $ | 117,960 |                          |  | $ | 2,450                      |   |       | $ | 2,320   |                           | $ | 2,744   |   |  | $ | 344,644 |  
|                                |  |                           |         |                               |   |         |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|Assets under advice             |  | $                         |        |                               | $ |        |                          |  | $ |                           |   |       | $ | 185,873 |                           | $ |        |   |  | $ | 185,873 |  
|                                |  |                           |         |                               |   |         |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  



11



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)



NOTE 3Securities



The amortized cost, gross unrealized gains and losses and
estimated fair value of securities shown in the condensed consolidated balance sheets of the Company at September 30, 2005 and December 31, 2004 are as follows (in thousands):



|                                                                                |  |               |        |                  |        |    |                     |   |      |   |  |   |       
|------------------------------------------------------------------------------- |  | ------------- | ------ | ---------------- | ------ | -- | ------------------- | - | ---- | - |  | - | ------
|                                                                                |  | AMORTIZEDCOST |        | GROSS UNREALIZED |        |    | ESTIMATEDFAIR VALUE
|                                                                                |  |               | GAINS  |                  | LOSSES |    |                    
|September 30, 2005                                                              |  |               |        |                  |        |    |                     |   |      |   |  |   |       
|Mortgage-backed securities of U.S. government agencies  Available for Sale     |  | $             | 5,120  |                  | $      |   |                     | $ | (67  | ) |  | $ | 5,053 
|U.S. Treasury securities and other U.S. agency obligations  Available for Sale |  |               | 14,031 |                  |        | 4  |                     |   | (70  | ) |  |   | 13,965
|IBB stock  Available for Sale                                                  |  |               | 51     |                  |        |   |                     |   |     |   |  |   | 51    
|Other securities  Held-to-Maturity                                             |  |               | 25     |                  |        |   |                     |   |     |   |  |   | 25    
|                                                                                |  |               |        |                  |        |    |                     |   |      |   |  |   |       
|Totals                                                                          |  | $             | 19,227 |                  | $      | 4  |                     | $ | (137 | ) |  | $ | 19,094
|                                                                                |  |               |        |                  |        |    |                     |   |      |   |  |   |       
|                                                                                |  |               |       
|                                                                                |  | AMORTIZEDCOST |        | GROSS UNREALIZED |        |    | ESTIMATEDFAIR VALUE
|                                                                                |  |               | GAINS  |                  | LOSSES |    |                    
|December 31, 2004                                                               |  |               |        |                  |        |    |                     |   |      |   |  |   |       
|Mortgage-backed securities of U.S. government agencies  Available for Sale     |  | $             | 3,943  |                  | $      | 10 |                     | $ | (34  | ) |  | $ | 3,919 
|U.S. Treasury securities and other U.S. agency obligations  Available for Sale |  |               | 21,993 |                  |        | 3  |                     |   | (21  | ) |  |   | 21,975
|IBB stock  Available for Sale                                                  |  |               | 51     |                  |        |   |                     |   |     |   |  |   | 51    
|                                                                                |  |               |        |                  |        |    |                     |   |      |   |  |   |       
|Totals                                                                          |  | $             | 25,987 |                  | $      | 13 |                     | $ | (55  | ) |  | $ | 25,945
|                                                                                |  |               |        |                  |        |    |                     |   |      |   |  |   |       



Management evaluates
securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value
has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated
recovery in fair value.



The unrealized losses on investment
securities were caused by interest rate changes. It is expected that the securities would not be settled at a price less than the par value of the investments. Because the decline in fair value is attributable to changes in interest rates
and not credit quality, and because the Banks have the ability and intent to hold these investments until a market price recovery or maturity, these investments are not considered other-than-temporarily impaired.



Information pertaining to securities with gross unrealized losses at
September 30, 2005, aggregated by investment category and length of time that individual securities have been in a continuous loss position, is as follows:



|                                                           |  |                         |     |                    |            |   |                         |  |   |            |   |  |   |      
|---------------------------------------------------------- |  | ----------------------- | --- | ------------------ | ---------- | - | ----------------------- |  | - | ---------- | - |  | - | -----
|                                                           |  | Less Than Twelve Months |     | Over Twelve Months
|                                                           |  | Gross Unrealized Losses |     |                    | Fair Value |   | Gross Unrealized Losses |  |   | Fair Value
|                                                           |  | (In Thousands)         
|Securities :                                               |  |                         |     |                    |            |   |                         |  |   |            |   |  |   |      
|Mortgage-backed securities of U.S. government agencies     |  | $                       | (12 | )                  |            | $ | 2,678                   |  | $ | (54        | ) |  | $ | 2,375
|U.S. Treasury securities and other U.S. agency obligations |  |                         | (37 | )                  |            |   | 12,494                  |  |   | (34        | ) |  |   | 1,442
|                                                           |  |                         |     |                    |            |   |                         |  |   |            |   |  |   |      
|Total securities                                           |  | $                       | (49 | )                  |            | $ | 15,172                  |  | $ | (88        | ) |  | $ | 3,817
|                                                           |  |                         |     |                    |            |   |                         |  |   |            |   |  |   |      



12



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)



NOTE 4Loans



The following table sets forth the composition of the
loan portfolio at September 30, 2005 and December 31, 2004 (in thousands).



|                               |  |                   |         |   |                  |   |         |  
|------------------------------ |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                               |  | September 30,2005 |         |   | December 31,2004 |  
|Real estate:                   |  |                   |         |   |                  |   |         |  
|Commercial real estate         |  | $                 | 162,262 |   |                  | $ | 103,597 |  
|Construction                   |  |                   | 114,276 |   |                  |   | 65,172  |  
|Multi-family                   |  |                   | 22,424  |   |                  |   | 14,627  |  
|One-to-four family residential |  |                   | 70,766  |   |                  |   | 60,124  |  
|                               |  |                   |         |   |                  |   |         |  
|Total real estate loans        |  |                   | 369,728 |   |                  |   | 243,520 |  
|Commercial loans               |  |                   | 37,260  |   |                  |   | 42,721  |  
|Lines of credit                |  |                   | 26,528  |   |                  |   | 23,871  |  
|Consumer loans                 |  |                   | 11,978  |   |                  |   | 15,869  |  
|                               |  |                   |         |   |                  |   |         |  
|Total gross loans              |  |                   | 445,494 |   |                  |   | 325,981 |  
|Allowance for loan losses      |  |                   | (4,084  | ) |                  |   | (2,817  | )
|Unamortized loan fees, net     |  |                   | (580    | ) |                  |   | (202    | )
|                               |  |                   |         |   |                  |   |         |  
|Total loans, net               |  | $                 | 440,830 |   |                  | $ | 322,962 |  
|                               |  |                   |         |   |                  |   |         |  



At September 30,
2005 and December 31, 2004, the Company had non-accrual loans with a balance of $302,000 and $544,000, respectively. At September 30, 2005, there were no loans considered impaired under SFAS No. 114. At June 30, 2005, $798,000 of
loans to one customer were considered impaired under SFAS 114. These loans were repaid during the quarter at no loss to the Company. A loan is considered impaired when, based on current information and events, it is probable that a lender will be
unable to collect all amounts due according to the contractual terms of the loan agreement. Specific impairment on loans in this category is calculated based on the present value of expected future cash flows discounted at the loans effective
interest rate, or for collateral-dependent loans, at the fair value of the collateral. At December 31, 2004, the Company did not hold any loans that were classified as impaired.



The following table represents the activity in the allowance for loan losses during the nine months ended September 30,
2005 and 2004 (in thousands).



|                          |  |               |       |   |      |   |       |  
|------------------------- |  | ------------- | ----- | - | ---- | - | ----- | -
|                          |  | September 30, |      
|                          |  | 2005          |       |   | 2004 |  
|Beginning balance         |  | $             | 2,817 |   |      | $ | 1,568 |  
|Provision for loan losses |  |               | 1,309 |   |      |   | 827   |  
|Charge-offs               |  |               | (45   | ) |      |   | (37   | )
|Recoveries                |  |               | 3     |   |      |   | 10    |  
|                          |  |               |       |   |      |   |       |  
|Ending balance            |  | $             | 4,084 |   |      | $ | 2,368 |  
|                          |  |               |       |   |      |   |       |  



13



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)



NOTE 5Intangible
Assets



On July 27, 2004, the Company acquired 100%
ownership of Bank of Florida  Tampa Bay (In Organization) that had not yet been incorporated or commenced its planned principal operations. The Company does not believe this acquisition was a business combination pursuant to the provisions of
SFAS No. 141, Accounting for Business Combinations, but rather an acquisition of net assets. Accordingly, the excess of fair value of the liabilities assumed over the fair value of the assets acquired of $974,000 was allocated to an
amortizable identifiable intangible. The balance of the intangible asset was $935,000 ($974,000 gross carrying amount less $39,000 accumulated amortization) at September 30, 2005 and is being amortized on a straight-line basis over 25 years.
Following is the estimated amortization expense for each of the five succeeding periods ending December 31st:



|                               |  |   |       
|------------------------------ |  | - | ------
|Remaining three months of 2005 |  | $ | 9,739 
|2006                           |  |   | 38,955
|2007                           |  |   | 38,955
|2008                           |  |   | 38,955
|2009                           |  |   | 38,955
|First nine months of 2010      |  |   | 29,216



NOTE 6Borrowings



On September 30, 2005, Bank of Florida in Ft.
Lauderdale issued $3.0 million in subordinated debt with a maturity of September 30, 2011. Interest is payable quarterly in arrears, commencing January 1, 2006, at a rate of two and one-half percent over the quarterly adjustable
three-month LIBOR rate. The interest rate at September 30, 2005 was 6.52%. Bank of Florida may prepay the debt at its option (and with the approval of its regulators, if necessary), in whole or in part, without penalty, at par after one year.
The subordinated debt issued qualifies as Tier II capital for regulatory risk-based capital guidelines for the Companys Bank of Florida, Ft. Lauderdale subsidiary and for Bancshares of Florida, Inc.



On August 5, 2005, Bank of Florida  Southwest issued $5.0 million
in junior subordinated debt with a maturity of October 7, 2015. Interest is payable quarterly in arrears, commencing October 7, 2005, at a rate of two percent over the quarterly adjustable three-month LIBOR rate. The interest rate at
September 30, 2005 was 5.73%. Upon the occurrence and continuation of a Tax Event (a Special Event), Bank of Florida  Southwest may prepay the debt at its option (and with the approval of its regulators, if necessary) in whole
at a redemption price of 105% of par plus accrued interest during the first five years. The Bank will also have the right to repay this debt security at par, anytime on or after October 7, 2010. The subordinated debt issued qualifies as Tier II
capital for regulatory risk-based capital guidelines for the Companys Bank of FloridaSouthwest subsidiary and for the Company.



During June of 2004, Bank of Florida  Southwest issued $2 million in subordinated debt to a local community bank. Interest was payable at a rate of
Prime less one percent during the first sixty days, Prime plus zero percent for the next sixty days, and Prime plus one percent thereafter. This debenture was redeemable by us at our option, without penalty. Bank of Florida  Southwest repaid
the subordinated debt plus accrued interest on August 8, 2005.



At September 30, 2005, the Company had $11.0 million in advances from the Federal Home Loan Bank (FHLB). The Company did not have any FHLB advances at December 31, 2004.



NOTE 7Stockholders Equity



On April 26, 2005, the Company completed a private placement offering through
Allen & Company LLC, selling 915,000 shares of common stock at $15.00 a share to accredited investors. The shares of the Companys common stock issued in conjunction with the private placement offering were issued pursuant to
exemptions from the registration requirements of the Securities Act of 1933, as amended (the Securities Act), and are restricted securities. Such shares may not be offered or sold in the United States absent registration with
the Securities and Exchange Commission under the Securities Act or an applicable exception therefrom. The Company agreed to file a registration statement covering the resale of the Companys common stock within 60 days from the date of the
closing, with the registration statement being declared effective no later than 210 days after the closing date. The Company received approximately $13.0 million in net proceeds. The registration was declared effective on September 13, 2005.



14



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)



NOTE
7Stockholders Equity (contd)



On
July 30, 2004, the Company completed a common stock offering, selling 1,500,000 shares of common stock at $12.50 per share. Also during that quarter, the underwriter, Advest, Inc., acquired an additional 225,000 shares at $12.50 per share.
After underwriting discounts and commissions and other offering expenses, the Company received $19.8 million in proceeds.



During 2004, the Company authorized the issuance and sale of up to 50,000 shares of Series A Preferred Stock, par value $0.01, to only accredited
investors. During March 2004, the Company issued 34,000 shares of the Series A Preferred Stock for consideration of $3,400,000 at an offering price of $100 per share. The dividends were payable at a quarterly rate of 0.02 shares of Series A
Preferred Stock.



On May 23, 2005, certain holders of the
preferred stock elected to exchange the redemption value of their shares for common stock. The Company paid a premium on 25,090 shares of Series A Preferred Stock equal to $4 per share or $100,000. The resulting value, after payment of the premium,
was exchanged for 165,354 shares of the Companys common stock at $15.78 per share.



On June 30, 2005, the Company elected to redeem the remaining 12,258 shares of Series A Preferred Stock. The redemption price for the shares of Series A Preferred Stock was based on a declining premium scale. The
redemption price at June 30thwas $104 per share, which included a premium of $49,000.



NOTE 8Retirement Plan



During 2004, the Company implemented a supplemental executive retirement
plan (the Plan) to provide supplemental income for certain key executives after their retirement. The funding of the Plan involved the purchase of bank-owned life insurance (BOLI) policies that are informally linked to the
Plan. The Plan is structured such that each participant is scheduled to receive specified levels of salary continuation income after the retirement age of 65 for a certain number of years. In the event a participant leaves the employment of the
Company before retirement, only the benefits vested through that date would be paid to the employee. The Plan also provides for 100% vesting in the event of a change in Company ownership.



The BOLI is recorded at the amounts to be realized under the insurance contract, which represents the amounts contributed to
the cash surrender value of the policies. The Company recognized revenue from the investment returns from the BOLI of $76,000 and compensation expense of $72,000 for the amounts accrued toward the participants retirement fund, during the first
nine months ended September 30, 2005. The Company has approximately $94,600 accrued at September 30, 2005, which is included in accrued expenses and other liabilities in the accompanying consolidated balance sheets. No income or expense
items were recognized for the nine months ended September 30, 2004.



15



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##### Table of Contents

SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA



|                                                      |  |               |           |   |                                                |   |           |               |  |   |               |    |  |               |           |    |  |   |           |   
|----------------------------------------------------- |  | ------------- | --------- | - | ---------------------------------------------- | - | --------- | ------------- |  | - | ------------- | -- |  | ------------- | --------- | -- |  | - | --------- | --
|                                                      |  | Quarter Ended |          
|                                                      |  | Sept. 30,2005 |           |   | June 30,2005                                   |   |           | March 31,2005 |  |   | Dec. 31, 2004 |    |  | Sept. 30,2004 |          
|                                                      |  |               |           |   | (Dollars in thousands, except per share data.) |  
|Statement of Operations Data:                         |  |               |           |   |                                                |   |           |               |  |   |               |    |  |               |           |    |  |   |           |   
|Total interest income                                 |  | $             | 7,560     |   |                                                | $ | 6,671     |               |  | $ | 5,440         |    |  | $             | 4,526     |    |  | $ | 3,907     |   
|Total interest expense                                |  |               | 2,371     |   |                                                |   | 2,117     |               |  |   | 1,820         |    |  |               | 1,528     |    |  |   | 1,317     |   
|                                                      |  |               |           |   |                                                |   |           |               |  |   |               |    |  |               |           |    |  |   |           |   
|Net interest income before provision for loan losses  |  |               | 5,189     |   |                                                |   | 4,554     |               |  |   | 3,620         |    |  |               | 2,998     |    |  |   | 2,590     |   
|Provision for loan losses                             |  |               | 614       |   |                                                |   | 399       |               |  |   | 296           |    |  |               | 451       |    |  |   | 263       |   
|                                                      |  |               |           |   |                                                |   |           |               |  |   |               |    |  |               |           |    |  |   |           |   
|Net interest income after provision for loan losses   |  |               | 4,575     |   |                                                |   | 4,155     |               |  |   | 3,324         |    |  |               | 2,547     |    |  |   | 2,327     |   
|Noninterest income                                    |  |               | 865       |   |                                                |   | 819       |               |  |   | 698           |    |  |               | 616       |    |  |   | 611       |   
|Loss on sale of investments                           |  |               |          |   |                                                |   |          |               |  |   |              |    |  |               |          |    |  |   | (1        | ) 
|Noninterest expense                                   |  |               | 4,853     |   |                                                |   | 4,647     |               |  |   | 4,397         |    |  |               | 4,156     |    |  |   | 3,794     |   
|Provision for income taxes                            |  |               |          |   |                                                |   |          |               |  |   |              |    |  |               |          |    |  |   |          |   
|                                                      |  |               |           |   |                                                |   |           |               |  |   |               |    |  |               |           |    |  |   |           |   
|Net income (loss)                                     |  |               | 587       |   |                                                |   | 327       |               |  |   | (375          | )  |  |               | (993      | )  |  |   | (856      | ) 
|                                                      |  |               |           |   |                                                |   |           |               |  |   |               |    |  |               |           |    |  |   |           |   
|Share Data:                                           |  |               |           |   |                                                |   |           |               |  |   |               |    |  |               |           |    |  |   |           |   
|Basic earnings (loss) per share                       |  | $             | 0.10      |   |                                                | $ | 0.02      |               |  | $ | (0.09         | )  |  | $             | (0.22     | )  |  | $ | (0.22     | ) 
|Diluted earnings (loss) per share                     |  |               | 0.10      |   |                                                |   | 0.02      |               |  |   | (0.09         | )  |  |               | (0.22     | )  |  |   | (0.22     | ) 
|Weighted average shares outstanding - basic           |  |               | 5,917,630 |   |                                                |   | 5,686,208 |               |  |   | 4,836,300     |    |  |               | 4,835,632 |    |  |   | 4,220,137 |   
|Weighted average shares outstanding - diluted         |  |               | 6,168,208 |   |                                                |   | 5,836,987 |               |  |   | 4,836,300     |    |  |               | 4,835,632 |    |  |   | 4,220,137 |   
|Total shares outstanding                              |  |               | 5,919,385 |   |                                                |   | 5,916,685 |               |  |   | 4,836,331     |    |  |               | 4,835,632 |    |  |   | 4,835,632 |   
|Book value per common share (period end)              |  | $             | 9.17      |   |                                                | $ | 9.07      |               |  | $ | 7.82          |    |  | $             | 7.93      |    |  | $ | 8.13      |   
|Statement of Financial Condition Data:                |  |               |           |   |                                                |   |           |               |  |   |               |    |  |               |           |    |  |   |           |   
|Total assets                                          |  | $             | 518,083   |   |                                                | $ | 504,727   |               |  | $ | 442,053       |    |  | $             | 420,808   |    |  | $ | 344,644   |   
|Total cash and cash equivalents                       |  |               | 43,081    |   |                                                |   | 80,358    |               |  |   | 50,785        |    |  |               | 57,897    |    |  |   | 41,880    |   
|Interest-earning assets                               |  |               | 494,945   |   |                                                |   | 476,863   |               |  |   | 416,322       |    |  |               | 394,851   |    |  |   | 326,387   |   
|Investment securities                                 |  |               | 19,094    |   |                                                |   | 19,520    |               |  |   | 19,170        |    |  |               | 25,945    |    |  |   | 10,196    |   
|Loans held for investment                             |  |               | 445,494   |   |                                                |   | 394,210   |               |  |   | 361,168       |    |  |               | 325,981   |    |  |   | 284,599   |   
|Allowance for loan losses                             |  |               | 4,084     |   |                                                |   | 3,513     |               |  |   | 3,113         |    |  |               | 2,817     |    |  |   | 2,368     |   
|Deposit accounts                                      |  |               | 443,308   |   |                                                |   | 444,762   |               |  |   | 390,374       |    |  |               | 376,064   |    |  |   | 298,878   |   
|Stockholders equity                                  |  |               | 54,285    |   |                                                |   | 53,666    |               |  |   | 41,501        |    |  |               | 41,954    |    |  |   | 42,835    |   
|Performance Ratios:                                   |  |               |           |   |                                                |   |           |               |  |   |               |    |  |               |           |    |  |   |           |   
|Return on average assets                              |  |               | 0.46      | % |                                                |   | 0.27      | %             |  |   | (0.35         | )% |  |               | (1.07     | )% |  |   | (1.05     | )%
|Return on average common stockholders equity         |  |               | 4.27      |   |                                                |   | 2.63      |               |  |   | (3.87         | )  |  |               | (10.39    | )  |  |   | (10.03    | ) 
|Interest-rate spread during the period                |  |               | 3.71      |   |                                                |   | 3.46      |               |  |   | 3.13          |    |  |               | 3.03      |    |  |   | 2.95      |   
|Net interest margin                                   |  |               | 4.31      |   |                                                |   | 3.99      |               |  |   | 3.61          |    |  |               | 3.45      |    |  |   | 3.36      |   
|Efficiency ratio1                                     |  |               | 80.16     |   |                                                |   | 86.49     |               |  |   | 101.83        |    |  |               | 115.00    |    |  |   | 118.53    |   
|Asset Quality Ratios:                                 |  |               |           |   |                                                |   |           |               |  |   |               |    |  |               |           |    |  |   |           |   
|Allowance for loan losses to period end loans         |  |               | 0.92      | % |                                                |   | 0.89      | %             |  |   | 0.86          | %  |  |               | 0.86      | %  |  |   | 0.83      | % 
|Allowance for loan losses to nonperforming loans      |  |               | 1350.37   |   |                                                |   | 748.85    |               |  |   | 644.83        |    |  |               | 480.70    |    |  |   | 540.68    |   
|Net charge-offs to average loans                      |  |               | 0.04      |   |                                                |   | 0.00      |               |  |   | 0.00          |    |  |               | 0.00      |    |  |   | 0.04      |   
|Nonperforming assets to period end total assets       |  |               | 0.06      |   |                                                |   | 0.09      |               |  |   | 0.11          |    |  |               | 0.14      |    |  |   | 0.13      |   
|Capital and Liquidity Ratios:                         |  |               |           |   |                                                |   |           |               |  |   |               |    |  |               |           |    |  |   |           |   
|Average equity to average assets                      |  |               | 10.74     | % |                                                |   | 10.66     | %             |  |   | 9.85          | %  |  |               | 11.28     | %  |  |   | 11.55     | % 
|Leverage (4.00% required minimum)                     |  |               | 10.46     |   |                                                |   | 10.77     |               |  |   | 9.44          |    |  |               | 11.07     |    |  |   | 12.90     |   
|Risk-based capital:                                   |  |               |           |   |                                                |   |           |               |  |   |               |    |  |               |           |    |  |   |           |   
|Tier 1                                                |  |               | 10.88     | % |                                                |   | 12.07     | %             |  |   | 10.63         | %  |  |               | 11.85     | %  |  |   | 14.29     | % 
|Total                                                 |  |               | 13.34     |   |                                                |   | 13.33     |               |  |   | 11.96         |    |  |               | 13.24     |    |  |   | 15.78     |   
|Average loans held for investment to average deposits |  |               | 93.32     |   |                                                |   | 89.16     |               |  |   | 88.44         |    |  |               | 90.37     |    |  |   | 97.03     |   
|Trust Assets Under Advice:                            |  |               |           |   |                                                |   |           |               |  |   |               |    |  |               |           |    |  |   |           |   
|Total assets under advice                             |  | $             | 340,753   |   |                                                | $ | 306,152   |               |  | $ | 200,139       |    |  | $             | 202,138   |    |  | $ | 185,873   |   
|Trust fee income                                      |  |               | 401       |   |                                                |   | 365       |               |  |   | 323           |    |  |               | 285       |    |  |   | 277       |   
|Trust fees as a % of average assets under advice      |  |               | 0.47      | % |                                                |   | 0.48      | %             |  |   | 0.64          | %  |  |               | 0.59      | %  |  |   | 0.64      | % 

---

|1 | Efficiency ratio = Noninterest expense divided by the total of net interest income before provision for loan losses plus noninterest income (excluding net securities
gains and losses).
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations



OVERVIEW



Bancshares of Florida,
Inc. was incorporated in Florida in September 1998 to serve as a holding company for Bank of FloridaSouthwest, which opened as a full service commercial bank in August 1999. In April 2000, Bank of Florida Trust Company was incorporated under
the laws of the State of Florida as a wholly-owned subsidiary of Bank of FloridaSouthwest; it became a subsidiary of the holding company in March 2003. Bank of Florida Trust Company offers investment management, trust administration, estate
planning, and financial planning services largely to its commercial borrowers and other high net worth individuals. The Companys overall focus is to develop a total financial services relationship with its client base. In July 2002, Bank of
Florida, a newly formed state-chartered commercial bank, commenced operations in Ft. Lauderdale, Florida, focusing on the same kind of customer base in its market as the founding bank, and in November 2004, the Bank of FloridaTampa Bay
opened for business. The Companys primary customer base is businesses, professionals, and entrepreneurs with commercial real estate borrowing needs. The Banks also provide technology-based cash management and other depository services. The
holding company structure provides flexibility for expansion of the Companys banking business through possible acquisition of other financial institutions and provision of support and additional banking-related services to its subsidiary
banks.



The primary market areas of the Company are Collier and
Lee Counties on the southwest coast of Florida (served by Bank of Florida - Southwest) and Broward, northern Miami-Dade, and Palm Beach Counties on the southeast coast (served by Bank of Florida). With the opening of a de novo bank in the Tampa Bay
market in November 2004, Hillsborough and Pinellas Counties became another primary market area to be served on the west coast of Florida. The high population growth and income demographics of the counties in which the Company operates support its
plans to grow loans, deposits, and wealth management revenues with limited, highly selective, full-service locations. These counties together constitute nearly 50% of the deposit market share in the state of Florida.



CRITICAL ACCOUNTING POLICIES



The Companys consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. The financial information contained within these statements is, to a
significant extent, based on approximate measures of the financial effects of transactions and events that have already occurred. Critical accounting policies are those that involve the most complex and subjective decisions and assessments, and
have the greatest potential impact on the Companys stated results of operations. In managements opinion, the Companys critical accounting policies deal with the following area: the establishment of the Companys
allowance for loan losses, as explained in detail in the Provision and Allowance for Loan Losses sections of this discussion and analysis.



Our allowance for loan loss methodology incorporates a variety of risk considerations, both quantitative and qualitative, in establishing an allowance for
loan loss that management believes is appropriate at each reporting date. Quantitative factors include our historical loss experience, peer bank loss experience, delinquency and charge-off trends, collateral values, changes in nonperforming
loans, loan concentrations and other factors. Qualitative factors include the general economic conditions in our state. Size and complexity of individual credits in relation to loan structure, existing loan policies and pace of portfolio growth
are other qualitative factors that are considered in the methodology. As we add new products and increase the complexity of our loan portfolio, we shall enhance our methodology accordingly. Management may report a materially different
amount for the provision for loan losses in the statement of operations to change the allowance for loan losses if its assessment of the above factors were different. This discussion and analysis should be read in conjunction with our
consolidated financial statements and the accompanying notes presented elsewhere herein as well as with portions of this Managements Discussion and Analysis section. Although management believes the levels of the allowance as of
September 30, 2005 and December 31, 2004 were adequate to absorb probable losses inherent in the loan portfolio, a decline in local economic conditions, or other factors, could result in increasing losses that cannot be reasonably
predicted at this time.



As of December 31, 2004, the
Company had a consolidated deferred tax asset of $4.2 million, of which $3.3 million is a result of the net operating losses listed above. Currently, the Company has an offsetting valuation allowance against the deferred tax asset equal to the $4.2
million. The accounting rules require that a valuation allowance be recorded against a deferred tax asset if it is more likely than not that some portion or all of the deferred items will not be realized. Although a thorough analysis has
not yet been completed, it is anticipated that based upon current estimates, the Company will report taxable income in 2006 and may recognize all or part of the deferred tax asset in 2006.



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##### Table of Contents

This discussion presents managements analysis (MD&A) of the financial condition and
results of operations of the Company for each of the three and nine-month periods ended September 30, 2005 and 2004 and the three month period ended June 30, 2005 and includes the statistical disclosures required by SEC Guide 3
(Statistical Disclosure by Bank Holding Companies). The discussion should be read in conjunction with the consolidated financial statements of the Company and the notes related thereto which appear elsewhere in this document.



DISCUSSION OF THE THREE MONTHS ENDED SEPTEMBER 30, 2005

COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2004 AND JUNE 30,
2005

AND DISCUSSION OF THE NINE MONTHS ENDED SEPTEMBER 30, 2005 COMPARED TO THE

NINE MONTHS ENDED SEPTEMBER 30, 2004



Management Summary



The Company reported
record third quarter net income of $587,000 or $0.10 per diluted share, a $260,000 (80%) and $0.08 per share (400%) improvement from second quarter 2005. For the first nine months of this year, net income was $540,000, or $0.05 per diluted
share, compared to a net loss of $1.887 million, or $0.58 per diluted share, for the comparable 2004 period.



In a press release dated October 25, 2005, Michael L. McMullan, Bancshares of Floridas President and CEO, stated, This quarters
results demonstrate our ability to balance continued strong earning asset growth with increasing profitability. Loans climbed a record $51 million or 13% during the last 90 days, our net interest margin extended its steady rise since third quarter
2005 by increasing 32 basis points to 4.31%, our efficiency ratio improved nicely to 80%, and asset quality remained excellent at 0.07% nonperforming loans/loans outstanding.



At the affiliate level, McMullan went on to say,



| |  |  | Our Naples bank had record earnings of $877,000, up $86,000 from second quarter 2005, with loans climbing $18 million to $243 million, 23% higher than one year earlier.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Earnings continued to climb at our Fort Lauderdale bank, reaching $579,000 this quarter, up $142,000 from second quarter 2005. Total loans rose $22 million to $154 million, up 79%
in the last 12 months.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our Tampa Bay bank, which opened in November 2004, grew its loans to $48 million at September 30, 2005, up $11 million in the last 90 days, reducing its net loss by 21% from
the prior quarter to $154,000.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Lastly, Bank of Florida Trust Company achieved its seventh consecutive profitable quarter, with assets under advice climbing $35 million during the quarter to $341 million, up $155
million or 83% from a year ago.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Other
primary balance sheet and income statement highlights for the quarter at the consolidated level include:



| |  |  | The Companys record third quarter loan growth of $51 million or 13% compares to an increase of $33 million or 9% during second quarter 2005, and the previous growth high in
fourth quarter 2004 of $41 million. Loan pipelines at all the affiliates remain strong. Loans at quarter end were $445 million, up 57% in the last twelve months.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Commercial loans, largely secured by real estate, accounted for $353 million (79% of total loans) at September 30, 2005, up $47 million in the last 90 days, $33 million of
which was due to construction lending. Multi-family and residential mortgage loans were $53 million (12% of total loans), largely unchanged, followed by consumer lines of credit at $27 million (6%), up $3 million, and installment and other loans,
level at $12 million (3% of total loans outstanding).
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | During the second and third quarters this year, the Company recruited five new commercial lenders for its affiliate banks, increasing the total commercial lending staff by 50% from
year-end 2004 levels.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



18



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##### Table of Contents

| |  |  | Average deposits for September were $450 million, up $24 million or 5.6% compared to June 2005 at $426 million (excluding temporary deposits of a large wealth management client).
Noninterest-bearing checking accounts climbed $10 million or 13% on average during that same period, reaching 18.3% of average total deposits in September, up from 17.1% in June. The latter growth reflects the Companys vigorous strategy to
increase this source of low-cost funds through the sale of cash management products and services. In addition to deposit growth, the $37 million increase in average loans for September versus June was funded by a reduction in short-term investments
and expanded term borrowings.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Top-line revenue, which combines net banking spread income and all fee income, rose 13% over second quarter 2005 to $6.1 million, 88% higher than in third quarter 2004.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Growth was enhanced by a 32 basis point expansion during the quarter in net interest margin to 4.31%, reflective of the Company having positioned its balance sheet to benefit from a
rising rate environment. Since second quarter 2004, after which Federal Reserve tightening began, the net interest margin has risen 95 basis points. Compared to third quarter 2004, net interest income has risen $2.6 million, 23% or $600,000 due to
improved margins with the balance due to higher earning asset volumes.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Noninterest income rose 5.6% over second quarter 2005, led by expanded trust revenues followed by increased fees from selling mortgages into the secondary market. In addition to new
business, trust fees are expected to increase as assets of clients that are presently in a custody arrangement move into being actively managed. The Company continues to benefit from the increasing production of five experienced, full-time mortgage
originators across its affiliate locations.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Noninterest expense increased 4.4% in the quarter compared to second quarter 2005, a rise of $206,000 against a top-line revenue increase of $681,000. As a result, the efficiency
ratio improved by 6 percentage points to 80%, following 15 and 13 percentage point improvements during second and first quarter 2005, respectively. The primary reason for the third quarter increase was increased salaries and benefits due to lending
and operations new hires and higher incentive compensation and stock option expense. A portion of that increase was reflected in unallocated holding company expenses, which amounted to $767,000 in the third quarter, up $33,000 from second quarter
2005.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Asset quality continued to be strong, with nonperforming loans falling both by dollar (down 49%) and as a ratio (down 5 basis points) compared to June 30, 2005 to $794,000 or
0.07% of loans outstanding at September 30, 2005. There were $43,000 in net charge-offs in the quarter and no others this year, resulting in a ratio of net charge-offs to average loans year-to-date of 0.01% versus 0.02% last year at this time.
Coverage of the loan loss allowance over nonperforming loans was 13.5 times. These measures are consistent with the Companys historic norm and compare very favorably to national peer bank levels as of June 30, 2005.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



19



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##### Table of Contents

Statements of Financial Condition



The following tables summarize the major components of the Statements of Financial Condition and key ratios for the periods
ending September 30, 2005 and 2004, and June 30, 2005, respectively.



|                                                    |  |                                       |           |   |                     |   |           |   |  |   |           |    |  |       |   
|--------------------------------------------------- |  | ------------------------------------- | --------- | - | ------------------- | - | --------- | - |  | - | --------- | -- |  | ----- | --
|                                                    |  | AT                                    |           |   | INCREASE/(DECREASE) |  
|                                                    |  | (IN THOUSANDS, EXCEPT PER SHARE DATA) |          
|                                                    |  | Sept. 30, 2005                        |           |   | Sept. 30,2004       |   |           | $ |  |   | %         |   
|Total assets                                        |  | $                                     | 518,083   |   |                     | $ | 344,644   |   |  | $ | 173,439   |    |  | 50.3  | % 
|Cash and cash equivalents                           |  |                                       | 43,081    |   |                     |   | 41,880    |   |  |   | 1,201     |    |  | 2.9   | % 
|Interest-earning assets                             |  |                                       | 494,945   |   |                     |   | 326,387   |   |  |   | 168,558   |    |  | 51.6  | % 
|Investment securities                               |  |                                       | 19,094    |   |                     |   | 10,196    |   |  |   | 8,898     |    |  | 87.3  | % 
|Loans held for investment                           |  |                                       | 445,494   |   |                     |   | 284,599   |   |  |   | 160,895   |    |  | 56.5  | % 
|Allowance for loan losses                           |  |                                       | 4,084     |   |                     |   | 2,368     |   |  |   | 1,716     |    |  | 72.5  | % 
|Deposit accounts                                    |  |                                       | 443,308   |   |                     |   | 298,878   |   |  |   | 144,430   |    |  | 48.3  | % 
|Borrowings                                          |  |                                       | 19,000    |   |                     |   | 2,000     |   |  |   | 17,000    |    |  | 850.0 | % 
|Stockholders equity                                |  |                                       | 54,285    |   |                     |   | 42,835    |   |  |   | 11,450    |    |  | 26.7  | % 
|                                                    |  |                                       |           |   |                     |   |           |   |  |   |           |    |  |       |   
|Total shares outstanding                            |  |                                       | 5,919,385 |   |                     |   | 4,835,632 |   |  |   | 1,083,753 |    |  | 22.4  | % 
|Book value per common share                         |  |                                       | 9.17      |   |                     |   | 8.13      |   |  |   | 1.04      |    |  | 12.8  | % 
|                                                    |  |                                       |           |   |                     |   |           |   |  |   |           |    |  |       |   
|Allowance for loan losses to total loans            |  |                                       | 0.92      | % |                     |   | 0.83      | % |  |   | 0.08      | %  |  | 10.0  | % 
|Allowance for loan losses to nonperforming loans    |  |                                       | 1350.37   | % |                     |   | 540.68    | % |  |   | 809.69    | %  |  | 149.8 | % 
|Nonperforming loans to total loans                  |  |                                       | 0.07      | % |                     |   | 0.15      | % |  |   | (0.08     | )% |  | (53.3 | )%
|Nonperforming assets to total assets                |  |                                       | 0.06      | % |                     |   | 0.13      | % |  |   | (0.07     | )% |  | (53.8 | )%
|                                                    |  |                                       |           |   |                     |   |           |   |  |   |           |    |  |       |   
|Leverage (Tier 1 to average total assets)           |  |                                       | 10.46     | % |                     |   | 12.90     | % |  |   | (2.44     | )% |  | (18.9 | )%
|Assets under advice  Bank of Florida Trust Company |  | $                                     | 340,753   |   |                     | $ | 185,873   |   |  | $ | 154,880   |    |  | 83.3  | % 



|                                                    |  |                                       |           |   |                     |   |           |   |  |   |         |    |  |       |   
|--------------------------------------------------- |  | ------------------------------------- | --------- | - | ------------------- | - | --------- | - |  | - | ------- | -- |  | ----- | --
|                                                    |  | AT                                    |           |   | INCREASE/(DECREASE) |  
|                                                    |  | (IN THOUSANDS, EXCEPT PER SHARE DATA) |          
|                                                    |  | Sept. 30,2005                         |           |   | June 30,2005        |   |           | $ |  |   | %       |   
|Total assets                                        |  | $                                     | 518,083   |   |                     | $ | 504,727   |   |  | $ | 13,356  |    |  | 2.6   | % 
|Cash and cash equivalents                           |  |                                       | 43,081    |   |                     |   | 80,358    |   |  |   | (37,277 | )  |  | (46.4 | )%
|Interest-earning assets                             |  |                                       | 494,945   |   |                     |   | 476,863   |   |  |   | 18,082  |    |  | 3.8   | % 
|Investment securities                               |  |                                       | 19,094    |   |                     |   | 19,520    |   |  |   | (426    | )  |  | (2.2  | )%
|Loans held for investment                           |  |                                       | 445,494   |   |                     |   | 394,210   |   |  |   | 51,284  |    |  | 13.0  | % 
|Allowance for loan losses                           |  |                                       | 4,084     |   |                     |   | 3,513     |   |  |   | 571     |    |  | 16.3  | % 
|Deposit accounts                                    |  |                                       | 443,308   |   |                     |   | 444,761   |   |  |   | (1,453  | )  |  | (0.3  | )%
|Borrowings                                          |  |                                       | 19,000    |   |                     |   | 5,000     |   |  |   | 14,000  |    |  | 280.0 | % 
|Stockholders equity                                |  |                                       | 54,285    |   |                     |   | 53,666    |   |  |   | 619     |    |  | 1.2   | % 
|                                                    |  |                                       |           |   |                     |   |           |   |  |   |         |    |  |       |   
|Total shares outstanding                            |  |                                       | 5,919,385 |   |                     |   | 5,916,685 |   |  |   | 2,700   |    |  | 0.0   | % 
|Book value per common share                         |  |                                       | 9.17      |   |                     |   | 9.07      |   |  |   | 0.10    |    |  | 1.1   | % 
|                                                    |  |                                       |           |   |                     |   |           |   |  |   |         |    |  |       |   
|Allowance for loan losses to total loans            |  |                                       | 0.92      | % |                     |   | 0.89      | % |  |   | 0.02    | %  |  | 2.7   | % 
|Allowance for loan losses to nonperforming loans    |  |                                       | 1350.37   | % |                     |   | 748.85    | % |  |   | 601.52  | %  |  | 80.3  | % 
|Nonperforming loans to total loans                  |  |                                       | 0.07      | % |                     |   | 0.12      | % |  |   | (0.05   | )% |  | (41.7 | )%
|Nonperforming assets to total assets                |  |                                       | 0.06      | % |                     |   | 0.09      | % |  |   | (0.03   | )% |  | (33.3 | )%
|                                                    |  |                                       |           |   |                     |   |           |   |  |   |         |    |  |       |   
|Leverage (Tier 1 to average total assets)           |  |                                       | 10.46     | % |                     |   | 10.77     | % |  |   | (0.31   | )% |  | (2.9  | )%
|Assets under advice  Bank of Florida Trust Company |  | $                                     | 340,753   |   |                     |   | 306,152   |   |  | $ | 34,601  |    |  | 11.3  | % 



20



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##### Table of Contents

Loans in the Companys combined banks rose by $51 million or 13% over the last three
months to $445 million; since September 30, 2004, loans have risen $161 million or 57%. Commercial loans, largely secured by real estate, accounted for $353 million (79% of total loans) at September 30, 2005, up $47 million in the last 90
days, $33 million of which was due to construction lending. Multi-family and residential mortgage loans (excluding $40 million which serve as collateral for commercial loans) were $53 million (12% of total loans), largely unchanged, followed by
consumer lines of credit at $27 million (6%), up $2 million, and installment and other loans, level at $12 million (3% of total loans outstanding). In the last nine months, loans have grown by $119 million, with commercial loans, which comprised 77%
of outstanding loans at year end, rising $101 million or 40%; growth in construction lending amounted to about half the increase.



Asset qualityremained excellent by peer standards with nonperforming loans and 30-89 day delinquencies at 0.07% and 0.11%, respectively, of
loans outstanding as of September 30, 2005. There have been $42,000 in net charge-offs for the first nine months of this year versus $30,000 for all of 2004. Compared to the most recently available data for national peer banks as of
June 30, 2005 in the $500 million to $1 billion asset size group, the Companys ratios for nonperforming loans, loans 30-89 days past due, and net charge-offs were 0.12%, 0.28%, and zero, respectively, versus 0.51%, 0.57%, and 0.10%,
respectively, for peers.



As of September 30, 2005, the
allowance for loan losses reached $4.1 million, up $571,000 (16%) from second quarter 2005 and up $1.7 million (72%) from September 30, 2004. The ratio of the loan loss allowance to total loans outstanding at 0.92% was up 3 basis
points from June 30, 2005 and up 9 basis points from twelve months earlier. Nonperforming loans declined to $302,000 at quarter end from $469,000 at June 30, 2005 and $438,000 at September 30, 2004. Coverage of the loan loss allowance
over nonperformers was 13.5 times at September 30, 2005, in comparison to coverage of 749% and 541% 90 days and one year earlier, respectively. National peer bank allowance coverage over nonperforming loans at June 30, 2005 was 514%.



Investment securities and overnight investments
were $48 million at September 30, 2005, a decrease of $33 million during the quarter as these funds were reinvested into higher yielding loans. Since September 30, 2004, investment securities and overnight investments have been largely
unchanged, with the increase held to $7 million.



Securities
available for sale totaled $19.1 million, down slightly from June 30, 2005, primarily as a result of normal repayment activity on mortgage backed securities. The Company had $25,000 and zero securities classified as held to maturity at
September 30, 2005 and December 31, 2004, respectively. The Company had no securities classified as trading at September 30, 2005 and December 31, 2004. The average yield on investment securities for the third quarter of 2005 was
3.92%, an increase of 233 basis points compared to the same period one year ago and up 20 basis points from the previous quarter.



Federal Funds sold totaled $27.4 million at September 30, 2005, a decrease of $34 million from June 30, 2005. This category of earning assets
can be subject to large daily fluctuations based on deposit flows and daily funding requirements. The average yield on Federal Funds for the third quarter of 2005 was 3.40%, up 118 basis points compared to the third quarter of 2004 and up 47 basis
points from the previous quarter, reflective of continued interest rate tightening by the Federal Reserve.



Total earning assets reached $495 million at September 30, 2005, up $18 million over the last three months compared to a $51 million
increase in loans. As a result, the mix of loans to earning assets has increased 7 percentage points to 90%. The loan/earning asset ratio was 87% at September 30, 2004.



Deposits as of September 30, 2005 at $443 million remained nearly unchanged from 90 days earlier, but on
average for September were $450 million, up $24 million or 5.6% compared to June 2005 at $426 million (excluding temporary deposits of a large wealth management client). Noninterest-bearing checking accounts climbed $10 million or 13% on average
during that same period, reaching 18.3% of average total deposits in September, up from 17.1% in June. The latter growth reflects the Companys vigorous strategy to increase this source of low-cost funds through the sale of cash management
products and on-line banking services, which also have the potential to generate additional fee income.



For the third quarter as a whole, average checking deposits (both non-interest and interest bearing) rose $8 million or 6.7% compared to second quarter
2005 and $71 million or 114% compared to four quarters earlier. A parallel Company strategy to increasing checking deposits is to reduce reliance on higher costing CDs by expanding money market deposits. Money market deposits rose $10 million on
average in third quarter 2005 compared to the second quarter while CDs decreased by $4 million. Compared to third quarter 2004, money market deposits



21



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##### Table of Contents

increased $73 million while the increase in CDs was held to $13 million. On average for September 2005, money market
deposits were 34% of total deposits (up from 31% in June 2005, rising $21 million over the period, excluding the temporary deposits of a large wealth management client) while CDs were 36% of total deposits (down from 38% in June 2005, decreasing $1
million over the period).



Stockholders
equity at $54.3 million was $11.5 million higher compared to September 30, 2004. This increase resulted from the Companys 915,000 share common stock offering in April 2005, which netted $13.0 million through a private placement
with Allen and Company LLC. Late in the following month, 165,000 common shares were received in exchange for about two-thirds of the preferred stock the Company issued in the first quarter of last year. The balance of the latter offering was
redeemed at June 30, 2005, which decreased total equity by $1.3 million. The Companys combined net loss over the last four quarters, impact of preferred dividend payments/call premium, and change in comprehensive income was approximately
$(171,000).



The Companys Tier 1 leverage ratio decreased
244 basis points in the last 12 months to 10.46% at September 30, 2005, still well above the minimum for well-capitalized bank holding companies of 5.0%. This reflects the impact of $173 million (50%) growth in total assets for the twelve
month period compared to 27% growth in stockholders equity.



Results
of Operations



The following tables summarize the major
components of the Statements of Operations and key ratios for the three- and nine-month periods ending September 30, 2005 and 2004 and the three-month period ending June 30, 2005.



Third Quarter 2005 Compared to Third Quarter 2004



|                                                               |  |                                       |           |   |                     |   |           |    |  |   |           |    |  |       |   
|-------------------------------------------------------------- |  | ------------------------------------- | --------- | - | ------------------- | - | --------- | -- |  | - | --------- | -- |  | ----- | --
|                                                               |  | FOR THE THREE MONTHSENDED             |           |   | INCREASE/(DECREASE) |  
|                                                               |  | (IN THOUSANDS, EXCEPT PER SHARE DATA) |          
|                                                               |  | SEPT. 30, 2005                        |           |   | SEPT. 30,2004       |   |           | $  |  |   | %         |   
|Total interest income                                          |  | $                                     | 7,560     |   |                     | $ | 3,907     |    |  | $ | 3,653     |    |  | 93.5  | % 
|Total interest expense                                         |  |                                       | 2,371     |   |                     |   | 1,317     |    |  |   | 1,054     |    |  | 80.0  | % 
|                                                               |  |                                       |           |   |                     |   |           |    |  |   |           |    |  |       |   
|Net interest income before provision                           |  |                                       | 5,189     |   |                     |   | 2,590     |    |  |   | 2,599     |    |  | 100.3 | % 
|Provision for loan losses                                      |  |                                       | 614       |   |                     |   | 263       |    |  |   | 351       |    |  | 133.5 | % 
|                                                               |  |                                       |           |   |                     |   |           |    |  |   |           |    |  |       |   
|Net interest income after provision                            |  |                                       | 4,575     |   |                     |   | 2,327     |    |  |   | 2,248     |    |  | 96.6  | % 
|Non interest income                                            |  |                                       | 865       |   |                     |   | 612       |    |  |   | 253       |    |  | 41.3  | % 
|Loss on sale of investments                                    |  |                                       |          |   |                     |   | (1        | )  |  |   | 1         |    |  |      |   
|Noninterest expense                                            |  |                                       | 4,853     |   |                     |   | 3,794     |    |  |   | 1,059     |    |  | 27.9  | % 
|Provision for income taxes                                     |  |                                       |          |   |                     |   |          |    |  |   |          |    |  |      |   
|                                                               |  |                                       |           |   |                     |   |           |    |  |   |           |    |  |       |   
|Net income (loss)                                              |  |                                       | 587       |   |                     |   | (856      | )  |  |   | 1,443     |    |  | 168.6 | % 
|                                                               |  |                                       |           |   |                     |   |           |    |  |   |           |    |  |       |   
|Basic earnings (loss) per share                                |  | $                                     | 0.10      |   |                     | $ | (0.22     | )  |  | $ | 0.32      |    |  | 145.5 | % 
|Diluted earnings (loss) per share                              |  |                                       | 0.10      |   |                     |   | (0.22     | )  |  |   | 0.32      |    |  | 145.5 | % 
|Weighted average common shares  basic                         |  |                                       | 5,917,630 |   |                     |   | 4,220,137 |    |  |   | 1,697,493 |    |  | 40.2  | % 
|Weighted average common and common equivalent shares - diluted |  |                                       | 6,168,208 |   |                     |   | 4,220,137 |    |  |   | 1,948,071 |    |  | 46.2  | % 
|                                                               |  |                                       |           |  
|Return on average assets                                       |  |                                       | 0.46      | % |                     |   | (1.05     | )% |  |   | 1.51      | %  |  | 143.6 | % 
|Return on average equity                                       |  |                                       | 4.27      | % |                     |   | (10.03    | )% |  |   | 14.30     | %  |  | 142.5 | % 
|                                                               |  |                                       |           |  
|Top-line revenue                                               |  | $                                     | 6,054     |   |                     | $ | 3,201     |    |  | $ | 2,853     |    |  | 89.1  | % 
|Net interest margin                                            |  |                                       | 4.31      | % |                     |   | 3.36      | %  |  |   | 0.95      | %  |  | 28.3  | % 
|Efficiency ratio                                               |  |                                       | 80.16     | % |                     |   | 118.53    | %  |  |   | (38.33    | )% |  | (32.3 | )%
|Average equity to average assets                               |  |                                       | 10.74     | % |                     |   | 11.55     | %  |  |   | (0.81     | )% |  | (7.0  | )%
|Average loans held for investment to average deposits          |  |                                       | 93.32     | % |                     |   | 97.03     | %  |  |   | (3.71     | )% |  | (3.8  | )%
|Net charge-offs to average loans                               |  |                                       | 0.04      | % |                     |   | 0.04      | %  |  |   | 0.00      | %  |  | 0.0   | % 



The Company recorded
net income of $587,000 in the current quarter, an increase of $1.4 million or 169% compared to third quarter 2004. Top-line revenue climbed $2.9 million on a 52% growth in earning assets and an 83% increase in assets under advice. We define top-line
revenue, which is a non-GAAP term, as the sum of the



22



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##### Table of Contents

Companys lending or spread income (interest income less interest expense) plus fee income (excluding net securities
gains/losses), both of which often pertain to the same customer base and can be matched against the underlying noninterest expense to generate those revenue components. Approximately $2.6 million of the top-line revenue increase reflects growth in
net interest income, of which $582,000 was due to a 95 basis point expansion in net interest margin.



Noninterest income increased $253,000, approximately one-half of which is attributable to the increase in assets under advice. Noninterest expense rose
$1.1 million in the third quarter of 2005, or 37% of the increase in top-line revenue. This net improvement of $1.8 million resulted in an efficiency ratio of 80%, 38% lower (better) than the same period last year. Partially offsetting this
improvement was an increase in loan loss provision expense of $351,000; loans during third quarter 2005 rose $51 million, $32 million greater than in third quarter 2004.



Third Quarter 2005 Compared to Second Quarter 2005



|                                                               |  |                                       |           |   |                     |   |           |   |  |   |         |    |  |       |   
|-------------------------------------------------------------- |  | ------------------------------------- | --------- | - | ------------------- | - | --------- | - |  | - | ------- | -- |  | ----- | --
|                                                               |  | FOR THE THREE MONTHSENDED             |           |   | INCREASE/(DECREASE) |  
|                                                               |  | (IN THOUSANDS, EXCEPT PER SHARE DATA) |          
|                                                               |  | SEPT. 30,2005                         |           |   | JUNE 30,2005        |   |           | $ |  |   | %       |   
|Total interest income                                          |  | $                                     | 7,560     |   |                     | $ | 6,671     |   |  | $ | 889     |    |  | 13.3  | % 
|Total interest expense                                         |  |                                       | 2,371     |   |                     |   | 2,117     |   |  |   | 254     |    |  | 12.0  | % 
|                                                               |  |                                       |           |   |                     |   |           |   |  |   |         |    |  |       |   
|Net interest income before provision                           |  |                                       | 5,189     |   |                     |   | 4,554     |   |  |   | 635     |    |  | 13.9  | % 
|Provision for loan losses                                      |  |                                       | 614       |   |                     |   | 399       |   |  |   | 215     |    |  | 53.9  | % 
|                                                               |  |                                       |           |   |                     |   |           |   |  |   |         |    |  |       |   
|Net interest income after provision                            |  |                                       | 4,575     |   |                     |   | 4,155     |   |  |   | 420     |    |  | 10.1  | % 
|Non interest income                                            |  |                                       | 865       |   |                     |   | 819       |   |  |   | 46      |    |  | 5.6   | % 
|Noninterest expense                                            |  |                                       | 4,853     |   |                     |   | 4,647     |   |  |   | 206     |    |  | 4.4   | % 
|Provision for income taxes                                     |  |                                       |          |   |                     |   |          |   |  |   |        |    |  |      |   
|                                                               |  |                                       |           |   |                     |   |           |   |  |   |         |    |  |       |   
|Net income (loss)                                              |  |                                       | 587       |   |                     |   | 327       |   |  |   | 260     |    |  | 79.5  | % 
|                                                               |  |                                       |           |   |                     |   |           |   |  |   |         |    |  |       |   
|Basic earnings (loss) per share                                |  | $                                     | 0.10      |   |                     | $ | 0.02      |   |  | $ | 0.08    |    |  | 400.0 | % 
|Diluted earnings (loss) per share                              |  |                                       | 0.10      |   |                     |   | 0.02      |   |  |   | 0.08    |    |  | 400.0 | % 
|Weighted average common shares - basic                         |  |                                       | 5,917,630 |   |                     |   | 5,686,208 |   |  |   | 231,422 |    |  | 4.1   | % 
|Weighted average common and common equivalent shares - diluted |  |                                       | 6,168,208 |   |                     |   | 5,836,987 |   |  |   | 331,221 |    |  | 5.7   | % 
|                                                               |  |                                       |           |  
|Return on average assets                                       |  |                                       | 0.46      | % |                     |   | 0.27      | % |  |   | 0.19    | %  |  | 72.2  | % 
|Return on average equity                                       |  |                                       | 4.27      | % |                     |   | 2.63      | % |  |   | 1.63    | %  |  | 62.1  | % 
|                                                               |  |                                       |           |  
|Top-line revenue                                               |  | $                                     | 6,054     |   |                     | $ | 5,373     |   |  | $ | 681     |    |  | 12.7  | % 
|Net interest margin                                            |  |                                       | 4.31      | % |                     |   | 3.99      | % |  |   | 0.32    | %  |  | 8.0   | % 
|Efficiency ratio                                               |  |                                       | 80.16     | % |                     |   | 86.49     | % |  |   | (6.33   | )% |  | (7.3  | )%
|Average equity to average assets                               |  |                                       | 10.74     | % |                     |   | 10.66     | % |  |   | 0.08    | %  |  | 0.8   | % 
|Average loans held for investment to average deposits          |  |                                       | 93.32     | % |                     |   | 89.16     | % |  |   | 4.16    | %  |  | 4.7   | % 
|Net charge-offs to average loans                               |  |                                       | 0.04      | % |                     |   | 0.00      | % |  |   | 0.04    | %  |  | 0.0   | % 



The Companys
third quarter net income increased $260,000 to $587,000 from second quarter net income of $327,000. Top-line revenue climbed $681,000 on 4.4% growth in average earning assets, improved margins, and higher assets under advice. Nearly all of the
increase in top-line revenue this quarter reflects growth in net interest income, of which $249,000 (39%) was due to expansion in the net interest margin from 3.99% to 4.31%. Noninterest income climbed $46,000, led by expanded trust revenue and
increased secondary mortgage market fees.



Noninterest expense
rose $206,000 in the third quarter, or only 30% of the increase in top-line revenue, reflecting positive operating leverage. The resulting net improvement of $475,000 was partially offset by a $215,000 increase in loan loss provision expense largely
due to record loan growth, which exceeded second quarter 2005 growth by $18 million or 55%.



23



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##### Table of Contents

Nine months ended September 30, 2005 Compared to Nine months ended September 30, 2004



|                                                               |  |                                       |           |   |                     |   |           |    |  |   |           |    |  |        |   
|-------------------------------------------------------------- |  | ------------------------------------- | --------- | - | ------------------- | - | --------- | -- |  | - | --------- | -- |  | ------ | --
|                                                               |  | FOR THE NINE MONTHSENDED              |           |   | INCREASE/(DECREASE) |  
|                                                               |  | (IN THOUSANDS, EXCEPT PER SHARE DATA) |          
|                                                               |  | SEPT. 30,2005                         |           |   | SEPT. 30,2004       |   |           | $  |  |   | %         |   
|Total interest income                                          |  | $                                     | 19,671    |   |                     | $ | 10,240    |    |  | $ | 9,431     |    |  | 92.1   | % 
|Total interest expense                                         |  |                                       | 6,308     |   |                     |   | 3,434     |    |  |   | 2,874     |    |  | 83.7   | % 
|                                                               |  |                                       |           |   |                     |   |           |    |  |   |           |    |  |        |   
|Net interest income before provision                           |  |                                       | 13,363    |   |                     |   | 6,806     |    |  |   | 6,557     |    |  | 96.3   | % 
|Provision for loan losses                                      |  |                                       | 1,309     |   |                     |   | 827       |    |  |   | 482       |    |  | 58.3   | % 
|                                                               |  |                                       |           |   |                     |   |           |    |  |   |           |    |  |        |   
|Net interest income after provision                            |  |                                       | 12,054    |   |                     |   | 5,979     |    |  |   | 6,075     |    |  | 101.6  | % 
|Non interest income                                            |  |                                       | 2,381     |   |                     |   | 1,555     |    |  |   | 826       |    |  | 53.1   | % 
|Gain on sale of investments                                    |  |                                       |          |   |                     |   | 5         |    |  |   | (5        | )  |  | (100.0 | )%
|Noninterest expense                                            |  |                                       | 13,895    |   |                     |   | 9,426     |    |  |   | 4,469     |    |  | 47.4   | % 
|Provision for income taxes                                     |  |                                       |          |   |                     |   |          |    |  |   |          |    |  |       |   
|                                                               |  |                                       |           |   |                     |   |           |    |  |   |           |    |  |        |   
|Net income (loss)                                              |  |                                       | 540       |   |                     |   | (1,887    | )  |  |   | 2,427     |    |  | 128.6  | % 
|                                                               |  |                                       |           |   |                     |   |           |    |  |   |           |    |  |        |   
|Basic earnings (loss) per share                                |  | $                                     | 0.05      |   |                     | $ | (0.58     | )  |  | $ | 0.61      |    |  | 108.9  | % 
|Diluted earnings (loss) per share                              |  |                                       | 0.05      |   |                     |   | (0.58     | )  |  |   | 0.60      |    |  | 108.9  | % 
|Weighted average common shares - basic                         |  |                                       | 5,484,007 |   |                     |   | 3,467,324 |    |  |   | 2,016,683 |    |  | 58.2   | % 
|Weighted average common and common equivalent shares - diluted |  |                                       | 6,038,945 |   |                     |   | 3,467,324 |    |  |   | 2,571,621 |    |  | 74.2   | % 
|                                                               |  |                                       |           |  
|Return on average assets                                       |  |                                       | 0.45      | % |                     |   | (2.60     | )% |  |   | 3.05 ,    | %  |  | 117.4  | % 
|Return on average equity                                       |  |                                       | 4.46      | % |                     |   | (29.05    | )% |  |   | 33.51 ,   | %  |  | 115.4  | % 
|                                                               |  |                                       |           |  
|Top-line revenue                                               |  | $                                     | 15,744    |   |                     | $ | 8,361     |    |  | $ | 7,383     |    |  | 88.3   | % 
|Net interest margin                                            |  |                                       | 3.99      | % |                     |   | 3.38      | %  |  |   | 0.61 ,    | %  |  | 18.0   | % 
|Efficiency ratio                                               |  |                                       | 88.26     | % |                     |   | 112.74    | %  |  |   | (24.48    | )% |  | (21.7  | )%
|Average equity to average assets                               |  |                                       | 10.55     | % |                     |   | 9.88      | %  |  |   | 0.67      | %  |  | 6.8    | % 
|Average loans held for investment to average deposits          |  |                                       | 90.53     | % |                     |   | 96.20     | %  |  |   | (5.67     | )% |  | (5.9   | )%
|Net charge-offs to average loans                               |  |                                       | 0.01      | % |                     |   | 0.02      | %  |  |   | (0.01     | )% |  | (50.0  | )%



The Companys net
income for the first nine months of 2005 was $540,000, a $2.4 million positive swing from the $1.9 million net loss in the same period last year. Top-line revenue climbed $7.4 million (88%) on 52% growth in earning assets and an 83% increase in
assets under advice. Approximately $6.6 million of the increase in top-line revenue reflects growth in net interest income, of which $1.3 million (20%) was due to a 61 basis point expansion in the net interest margin. Noninterest income
(excluding securities transactions) climbed $826,000 (53%) year-to-date versus the first nine months of last year; the primary drivers were service charge income followed by trust fees.



Noninterest expense rose $4.5 million (47%) year-to-date versus the same
2004 period, of which approximately $1.9 million reflects the incremental cost of the new Boca Raton and Tampa Bay locations less the third quarter 2004 Horizon Financial Corp. acquisition write-off. The $2.9 million margin of increased top-line
revenue over increased noninterest expense was reduced by $482,000 in additional loan loss provision expense reflective of $161 million (57%) growth in loans.



Discussion of Changes by Income Statement Line Item for the Above Quarterly and Year-to-Date Periods



Company-wide top-line revenue climbed 89% compared to third
quarter 2004 versus a 28% rise in overhead expense. Compared to second quarter 2005, top-line revenue rose 13% versus a 4.4% rise in overhead. For the first nine months of 2005, top-line revenue increased 88% over that for the same period last year,
while overhead expense rose by 47%. Operating leverage (growth in top-line revenue versus growth in noninterest expense) was positive in all comparative periods.



Of the two components of top-line revenue, third quarter net interest income rose $2.6 million or 100% versus
the same quarter last year, while noninterest income climbed $253,000 or 41%. The largest portion of the latter increase was due to greater service charges and fees (up $145,000 or 67%, due to continued growth in customer accounts and
overdraft fees), followed closely by higher trust fees (up $124,000 or 45%, due to 83% more



24



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##### Table of Contents

assets under advice). Compared to second quarter 2005, net interest income rose $635,000 or 14% while noninterest income
climbed $46,000 or 6%, largely due to an 11% increase in trust fees. For the first nine months of 2005, net interest income increased $6.6 million (96%) and noninterest income (excluding securities losses) rose by $826,000 (53%). Approximately
two-thirds of the latter increase was related to greater service charges and fees resulting from a $144 million climb in deposit accounts over the past twelve months.



The most significant reason for third quarter net interest income growth over the same period a year ago was a
57% increase in average earning assets and a reduction in the proportion of underlying interest bearing liabilities; the resulting increase in net interest income was $2.0 million (volume variance) or 78% of the total increase in net interest
income. The balance of the rise in net interest income was caused by an improvement in the net interest margin, which increased 95 basis points to 4.31% over the same period last year (rate variance of $582,000). Compared to second
quarter 2005, $390,000 of the $635,000 increase in net interest income was due to higher earning asset volumes (which rose by 4%), with the balance reflecting an improved net interest margin (which increased 32 basis points). For the first nine
months of 2005, average earning assets climbed 67% from the same period last year, which contributed $5.3 million (80%) to the increase in net interest income.



The margin improvement reflects the interest sensitivity of the balance sheet, which includes the sensitivity
of loan yields to changes in the prime rate (approximately 49% of loans immediately adjust to prime rate changes); the portion of deposits held in CDs (only the new or renewing maturities reprice with changes in interest rates; CDs constitute
36% of total average third quarter 2005 deposits); the ability to lag rate increases in other interest-bearing liabilities; and the mix of noninterest-bearing deposits (demand deposits were 18% of average third quarter 2005 deposits). The prime rate
averaged 6.42% for third quarter 2005 (including two 1/4 point rate increases, ending at 6.75%), up 48 basis points from the second quarter 2005 average prime (5.92%, also reflecting two 1/4 point rate increases) and 144 basis points from the third
quarter 2004 average of 4.42%. For third quarter 2005, the average yield on loans was 6.71%, up 33 and 128 basis points from second quarter 2005 and third quarter 2004, respectively, and for the first nine months of 2005, the average yield on loans
was 6.38%, up 104 basis points from the same period last year.



Total noninterest expense in the third quarter increased $1.1 million or 28% over third quarter 2004, which included $312,000 related to the Horizon Financial Corp. acquisition write-off. The primary source of the increase
($1.168 million or 85%, excluding the Horizon write-off) related to expenses leading to the establishment in fourth quarter 2004 of the Palm Beach County banking center and Tampa Bay bank and expansion of back office functions to support the rapid
growth of the Company. Beginning with first quarter 2005, certain activities pertaining to operations, finance, and other support services previously housed in the individual banks were consolidated into the holding company, which can now provide
these services in a more cost-effective and consistent manner as the Companys subsidiaries expand into multiple geographic markets.



The above same factors explain $4.3 million or 90% of the $4.8 million increase in noninterest expense, excluding the Horizon write-off, for the nine
months of the current year compared to the same period last year. Included in that increase is $134,000 in compensation expense related to options and warrants issued in connection with the openings of the Tampa Bay bank and the Palm Beach County
location versus none for the comparable 2004 period.



Noninterest expense increased $206,000 (4.4%) in comparison to the second quarter of 2005. Personnel expense accounted for $243,000 of the increase (up 10.0%), reflecting overall merit increases and selected additions to staff, largely
in lending-related areas, and additional compensation expense of $29,000 related to the Tampa Bay bank and the Palm Beach County options and warrants. General operating expense was reduced by $90,000, largely due to timing issues related to certain
professional fees.



Despite the increase in overhead of an
expanding company, the third quarter 2005 efficiency ratio decreased to a more favorable 80% compared to 119% for the same period last year and 86% for the immediately preceding quarter. The efficiency ratio for the first nine months of 2005 is 88%,
a 250 basis point improvement from a ratio of 113% for the same period last year. The improvements reflect the greater relative growth in top-line revenue compared to noninterest expense.



25



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##### Table of Contents

Average Balances, Income and Expenses, and Rates



The following tables represent, for the three and nine-month periods indicated, certain information related to our average
balance sheet and its annualized average yields on assets and annualized average costs of liabilities. Discussion of these tables is included above in the net interest income sections of the Results of Operations(dollars in
thousands).



|                                                                        |  |                                          |         |                       |      |       |                   |  |      |                 |  |                       |         |  |                   |       |   |  |      |  
|----------------------------------------------------------------------- |  | ---------------------------------------- | ------- | --------------------- | ---- | ----- | ----------------- |  | ---- | --------------- |  | --------------------- | ------- |  | ----------------- | ----- | - |  | ---- | -
|                                                                        |  | For the Three-Months Ended September 30, |        
|                                                                        |  | 2005                                     |         |                       | 2004 |      
|                                                                        |  | Average Balance                          |         | Interest andDividends |      |       | AverageYield/Rate |  |      | Average Balance |  | Interest andDividends |         |  | AverageYield/Rate |      
|Assets:                                                                 |  |                                          |         |                       |      |       |                   |  |      |                 |  |                       |         |  |                   |       |   |  |      |  
|Earning assets:                                                         |  |                                          |         |                       |      |       |                   |  |      |                 |  |                       |         |  |                   |       |   |  |      |  
|Interest earning deposits                                               |  | $                                        | 410     |                       | $    | 2     |                   |  | 1.94 | %               |  | $                     |        |  | $                 |      |   |  | 0.00 | %
|Securities1                                                             |  |                                          | 20,347  |                       |      | 201   |                   |  | 3.92 | %               |  |                       | 14,956  |  |                   | 60    |   |  | 1.59 | %
|Federal funds sold                                                      |  |                                          | 45,458  |                       |      | 390   |                   |  | 3.40 | %               |  |                       | 16,411  |  |                   | 92    |   |  | 2.22 | %
|Loans2                                                                  |  |                                          | 411,961 |                       |      | 6,967 |                   |  | 6.71 | %               |  |                       | 274,185 |  |                   | 3,755 |   |  | 5.43 | %
|                                                                        |  |                                          |         |                       |      |       |                   |  |      |                 |  |                       |         |  |                   |       |   |  |      |  
|Total interest-earning assets                                           |  |                                          | 478,176 |                       |      | 7,560 |                   |  | 6.27 | %               |  |                       | 305,552 |  |                   | 3,907 |   |  | 5.07 | %
|                                                                        |  |                                          |         |                       |      |       |                   |  |      |                 |  |                       |         |  |                   |       |   |  |      |  
|Non interest-earning assets                                             |  |                                          | 34,075  |                       |      |       |                   |  |      |                 |  |                       | 20,181  |  |                   |       |   |  |      |  
|                                                                        |  |                                          |         |                       |      |       |                   |  |      |                 |  |                       |         |  |                   |       |   |  |      |  
|Total Assets                                                            |  | $                                        | 512,251 |                       |      |       |                   |  |      |                 |  | $                     | 325,733 |  |                   |       |   |  |      |  
|                                                                        |  |                                          |         |                       |      |       |                   |  |      |                 |  |                       |         |  |                   |       |   |  |      |  
|Liabilities:                                                            |  |                                          |         |                       |      |       |                   |  |      |                 |  |                       |         |  |                   |       |   |  |      |  
|Interest-bearing liabilities:                                           |  |                                          |         |                       |      |       |                   |  |      |                 |  |                       |         |  |                   |       |   |  |      |  
|Interest bearing checking                                               |  | $                                        | 53,119  |                       |      | 50    |                   |  | 0.37 | %               |  | $                     | 22,248  |  |                   | 20    |   |  | 0.36 | %
|Money market accounts                                                   |  |                                          | 144,166 |                       |      | 856   |                   |  | 2.36 | %               |  |                       | 70,792  |  |                   | 260   |   |  | 1.46 | %
|Savings                                                                 |  |                                          | 5,222   |                       |      | 17    |                   |  | 1.29 | %               |  |                       | 3,669   |  |                   | 15    |   |  | 1.62 | %
|Time deposit                                                            |  |                                          | 158,526 |                       |      | 1,354 |                   |  | 3.39 | %               |  |                       | 145,825 |  |                   | 993   |   |  | 2.70 | %
|Other borrowings                                                        |  |                                          | 7,085   |                       |      | 94    |                   |  | 5.26 | %               |  |                       | 4,294   |  |                   | 29    |   |  | 2.68 | %
|                                                                        |  |                                          |         |                       |      |       |                   |  |      |                 |  |                       |         |  |                   |       |   |  |      |  
|Total interest-bearing liabilities                                      |  | $                                        | 368,118 |                       |      | 2,371 |                   |  | 2.56 | %               |  | $                     | 246,828 |  |                   | 1,317 |   |  | 2.12 | %
|Non-interest bearing deposits                                           |  |                                          | 80,405  |                       |      |       |                   |  |      |                 |  |                       | 40,051  |  |                   |       |   |  |      |  
|Other liabilities                                                       |  |                                          | 8,691   |                       |      |       |                   |  |      |                 |  |                       | 1,226   |  |                   |       |   |  |      |  
|Stockholders equity                                                    |  |                                          | 55,037  |                       |      |       |                   |  |      |                 |  |                       | 37,628  |  |                   |       |   |  |      |  
|                                                                        |  |                                          |         |                       |      |       |                   |  |      |                 |  |                       |         |  |                   |       |   |  |      |  
|Total Liabilities & Stockholders Equity                                |  | $                                        | 512,251 |                       |      |       |                   |  |      |                 |  | $                     | 325,733 |  |                   |       |   |  |      |  
|                                                                        |  |                                          |         |                       |      |       |                   |  |      |                 |  |                       |         |  |                   |       |   |  |      |  
|Net interest income                                                     |  |                                          |         |                       | $    | 5,189 |                   |  |      |                 |  |                       |         |  | $                 | 2,590 |   |  |      |  
|                                                                        |  |                                          |         |                       |      |       |                   |  |      |                 |  |                       |         |  |                   |       |   |  |      |  
|Interest-rate spread                                                    |  |                                          |         |                       |      |       |                   |  | 3.71 | %               |  |                       |         |  |                   |       |   |  | 2.95 | %
|Net interest margin                                                     |  |                                          |         |                       |      |       |                   |  | 4.31 | %               |  |                       |         |  |                   |       |   |  | 3.36 | %
|Ratio of average interest-bearing liabilities to average earning assets |  |                                          |         |                       |      | 77.0  | %                 |  |      |                 |  |                       |         |  |                   | 80.8  | % |  |      |  



INCREASE (DECREASE) DUE TO
CHANGE IN (IN THOUSANDS):



|                                         |  |        |       |      |   |       |        |  |   |      
|---------------------------------------- |  | ------ | ----- | ---- | - | ----- | ------ |  | - | -----
|                                         |  | VOLUME |       | RATE |   |       | CHANGE
|Increase (decrease) in interest income:  |  |        |       |      |   |       |        |  |   |      
|Federal funds sold                       |  | $      | 249   |      | $ | 49    |        |  | $ | 2987 
|Other investments1                       |  |        | 55    |      |   | 88    |        |  |   | 143  
|Loans2                                   |  |        | 2,330 |      |   | 882   |        |  |   | 3,212
|                                         |  |        |       |      |   |       |        |  |   |      
|Total interest income                    |  |        | 2,634 |      |   | 1,019 |        |  |   | 3,653
|                                         |  |        |       |      |   |       |        |  |   |      
|Increase (decrease) in interest expense: |  |        |       |      |   |       |        |  |   |      
|NOW and Money market deposits            |  |        | 465   |      |   | 161   |        |  |   | 626  
|Savings deposits                         |  |        | 5     |      |   | (3    | )      |  |   | 2    
|Time deposits                            |  |        | 108   |      |   | 253   |        |  |   | 361  
|Other borrowings                         |  |        | 39    |      |   | 26    |        |  |   | 65   
|                                         |  |        |       |      |   |       |        |  |   |      
|Total interest expense                   |  |        | 617   |      |   | 437   |        |  |   | 1,054
|                                         |  |        |       |      |   |       |        |  |   |      
|Total change in net interest income      |  | $      | 2,017 |      | $ | 582   |        |  | $ | 2,599
|                                         |  |        |       |      |   |       |        |  |   |      

---

|1 | Tax-exempt income, to the extent included in the amounts above, is not reflected on a tax equivalent basis.
|- | -----------------------------------------------------------------------------------------------------------

|2 | For purpose of this analysis, non-accruing loans, if any, are included in the average
balances.
|- | -----------------------------------------------------------------------------------------------



26



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##### Table of Contents

|                                                                        |  |                             |         |                       |               |       |                   |  |      |                |  |                       |         |  |                   |       |   |  |      |  
|----------------------------------------------------------------------- |  | --------------------------- | ------- | --------------------- | ------------- | ----- | ----------------- |  | ---- | -------------- |  | --------------------- | ------- |  | ----------------- | ----- | - |  | ---- | -
|                                                                        |  | For the Three-Months Ended: |        
|                                                                        |  | September 30, 2005          |         |                       | June 30, 2005 |      
|                                                                        |  | AverageBalance              |         | Interest andDividends |               |       | AverageYield/Rate |  |      | AverageBalance |  | Interest andDividends |         |  | AverageYield/Rate |      
|Assets:                                                                 |  |                             |         |                       |               |       |                   |  |      |                |  |                       |         |  |                   |       |   |  |      |  
|Earning assets:                                                         |  |                             |         |                       |               |       |                   |  |      |                |  |                       |         |  |                   |       |   |  |      |  
|Interest earning deposits                                               |  | $                           | 410     |                       | $             | 2     |                   |  | 1.94 | %              |  | $                     | 429     |  | $                 | 6     |   |  | 5.61 | %
|Securities1                                                             |  |                             | 20,347  |                       |               | 201   |                   |  | 3.92 | %              |  |                       | 23,956  |  |                   | 222   |   |  | 3.72 | %
|Federal funds sold                                                      |  |                             | 45,458  |                       |               | 390   |                   |  | 3.40 | %              |  |                       | 52,608  |  |                   | 384   |   |  | 2.93 | %
|Loans2                                                                  |  |                             | 411,961 |                       |               | 6,967 |                   |  | 6.71 | %              |  |                       | 381,085 |  |                   | 6,059 |   |  | 6.38 | %
|                                                                        |  |                             |         |                       |               |       |                   |  |      |                |  |                       |         |  |                   |       |   |  |      |  
|Total interest-earning assets                                           |  |                             | 478,176 |                       |               | 7,560 |                   |  | 6.27 | %              |  |                       | 458,078 |  |                   | 6,671 |   |  | 5.84 | %
|                                                                        |  |                             |         |                       |               |       |                   |  |      |                |  |                       |         |  |                   |       |   |  |      |  
|Non interest-earning assets                                             |  |                             | 34,075  |                       |               |       |                   |  |      |                |  |                       | 33,173  |  |                   |       |   |  |      |  
|                                                                        |  |                             |         |                       |               |       |                   |  |      |                |  |                       |         |  |                   |       |   |  |      |  
|Total Assets                                                            |  | $                           | 512,251 |                       |               |       |                   |  |      |                |  | $                     | 591,251 |  |                   |       |   |  |      |  
|                                                                        |  |                             |         |                       |               |       |                   |  |      |                |  |                       |         |  |                   |       |   |  |      |  
|Liabilities:                                                            |  |                             |         |                       |               |       |                   |  |      |                |  |                       |         |  |                   |       |   |  |      |  
|Interest-bearing liabilities:                                           |  |                             |         |                       |               |       |                   |  |      |                |  |                       |         |  |                   |       |   |  |      |  
|Interest bearing checking                                               |  | $                           | 53,119  |                       |               | 50    |                   |  | 0.37 | %              |  | $                     | 52,310  |  |                   | 46    |   |  | 0.35 | %
|Money market accounts                                                   |  |                             | 144,166 |                       |               | 856   |                   |  | 2.36 | %              |  |                       | 134,278 |  |                   | 736   |   |  | 2.20 | %
|Savings                                                                 |  |                             | 5,222   |                       |               | 17    |                   |  | 1.29 | %              |  |                       | 5,572   |  |                   | 20    |   |  | 1.44 | %
|Time deposit                                                            |  |                             | 158,526 |                       |               | 1,354 |                   |  | 3.39 | %              |  |                       | 162,420 |  |                   | 1,278 |   |  | 3.16 | %
|Other borrowings                                                        |  |                             | 7,085   |                       |               | 94    |                   |  | 5.26 | %              |  |                       | 2,341   |  |                   | 37    |   |  | 6.34 | %
|                                                                        |  |                             |         |                       |               |       |                   |  |      |                |  |                       |         |  |                   |       |   |  |      |  
|Total interest-bearing liabilities                                      |  | $                           | 368,118 |                       |               | 2,371 |                   |  | 2.56 | %              |  | $                     | 356,921 |  |                   | 2,117 |   |  | 2.38 | %
|Non-interest bearing deposits                                           |  |                             | 80,405  |                       |               |       |                   |  |      |                |  |                       | 72,832  |  |                   |       |   |  |      |  
|Other liabilities                                                       |  |                             | 8,691   |                       |               |       |                   |  |      |                |  |                       | 9,147   |  |                   |       |   |  |      |  
|Stockholders equity                                                    |  |                             | 55,037  |                       |               |       |                   |  |      |                |  |                       | 52,351  |  |                   |       |   |  |      |  
|                                                                        |  |                             |         |                       |               |       |                   |  |      |                |  |                       |         |  |                   |       |   |  |      |  
|Total Liabilities & Stockholders Equity                                |  | $                           | 512,251 |                       |               |       |                   |  |      |                |  | $                     | 491,251 |  |                   |       |   |  |      |  
|                                                                        |  |                             |         |                       |               |       |                   |  |      |                |  |                       |         |  |                   |       |   |  |      |  
|Net interest income                                                     |  |                             |         |                       | $             | 5,189 |                   |  |      |                |  |                       |         |  | $                 | 4,554 |   |  |      |  
|                                                                        |  |                             |         |                       |               |       |                   |  |      |                |  |                       |         |  |                   |       |   |  |      |  
|Interest-rate spread                                                    |  |                             |         |                       |               |       |                   |  | 3.71 | %              |  |                       |         |  |                   |       |   |  | 3.46 | %
|Net interest margin                                                     |  |                             |         |                       |               |       |                   |  | 4.31 | %              |  |                       |         |  |                   |       |   |  | 3.99 | %
|Ratio of average interest-bearing liabilities to average earning assets |  |                             |         |                       |               | 77.0  | %                 |  |      |                |  |                       |         |  |                   | 77.9  | % |  |      |  



INCREASE (DECREASE) DUE TO
CHANGE IN (IN THOUSANDS):



|                                         |  |        |     |   |      |   |     |        |  |   |     |  
|---------------------------------------- |  | ------ | --- | - | ---- | - | --- | ------ |  | - | --- | -
|                                         |  | VOLUME |     |   | RATE |   |     | CHANGE | 
|Increase (decrease) in interest income:  |  |        |     |   |      |   |     |        |  |   |     |  
|Federal funds sold                       |  | $      | (57 | ) |      | $ | 63  |        |  | $ | 6   |  
|Other investments1                       |  |        | (34 | ) |      |   | 9   |        |  |   | (25 | )
|Loans2                                   |  |        | 589 |   |      |   | 319 |        |  |   | 908 |  
|                                         |  |        |     |   |      |   |     |        |  |   |     |  
|Total interest income                    |  |        | 498 |   |      |   | 391 |        |  |   | 889 |  
|                                         |  |        |     |   |      |   |     |        |  |   |     |  
|Increase (decrease) in interest expense: |  |        |     |   |      |   |     |        |  |   |     |  
|NOW and Money market deposits            |  |        | 68  |   |      |   | 56  |        |  |   | 124 |  
|Savings deposits                         |  |        | (1  | ) |      |   | (2  | )      |  |   | (3  | )
|Time deposits                            |  |        | (19 | ) |      |   | 95  |        |  |   | 76  |  
|Other borrowings                         |  |        | 60  |   |      |   | (3  | )      |  |   | 57  |  
|                                         |  |        |     |   |      |   |     |        |  |   |     |  
|Total interest expense                   |  |        | 108 |   |      |   | 146 |        |  |   | 254 |  
|                                         |  |        |     |   |      |   |     |        |  |   |     |  
|Total change in net interest income      |  | $      | 390 |   |      | $ | 245 |        |  | $ | 635 |  
|                                         |  |        |     |   |      |   |     |        |  |   |     |  

---

|1 | Tax-exempt income, to the extent included in the amounts above, is not reflected on a tax equivalent basis.
|- | -----------------------------------------------------------------------------------------------------------

|2 | For purpose of this analysis, non-accruing loans, if any, are included in the average
balances.
|- | -----------------------------------------------------------------------------------------------



27



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|                                                                        |  |                                         |         |                       |      |        |                   |  |      |                |  |                       |         |  |                   |        |   |  |      |  
|----------------------------------------------------------------------- |  | --------------------------------------- | ------- | --------------------- | ---- | ------ | ----------------- |  | ---- | -------------- |  | --------------------- | ------- |  | ----------------- | ------ | - |  | ---- | -
|                                                                        |  | For the Nine-Months Ended September 30, |        
|                                                                        |  | 2005                                    |         |                       | 2004 |       
|                                                                        |  | AverageBalance                          |         | Interest andDividends |      |        | AverageYield/Rate |  |      | AverageBalance |  | Interest andDividends |         |  | AverageYield/Rate |       
|Assets:                                                                 |  |                                         |         |                       |      |        |                   |  |      |                |  |                       |         |  |                   |        |   |  |      |  
|Earning assets:                                                         |  |                                         |         |                       |      |        |                   |  |      |                |  |                       |         |  |                   |        |   |  |      |  
|Interest earning deposits                                               |  | $                                       | 379     |                       | $    | 10     |                   |  | 3.53 | %              |  | $                     | 31      |  | $                 |       |   |  | 0.19 | %
|Securities1                                                             |  |                                         | 18,136  |                       |      | 494    |                   |  | 3.64 | %              |  |                       | 10,443  |  |                   | 242    |   |  | 3.09 | %
|Federal funds sold                                                      |  |                                         | 50,441  |                       |      | 1,096  |                   |  | 2.91 | %              |  |                       | 9,850   |  |                   | 89     |   |  | 1.20 | %
|Loans2                                                                  |  |                                         | 378,663 |                       |      | 18,071 |                   |  | 6.38 | %              |  |                       | 248,022 |  |                   | 9,909  |   |  | 5.34 | %
|                                                                        |  |                                         |         |                       |      |        |                   |  |      |                |  |                       |         |  |                   |        |   |  |      |  
|Total interest-earning assets                                           |  |                                         | 447,619 |                       |      | 19,671 |                   |  | 5.88 | %              |  |                       | 268,346 |  |                   | 10,240 |   |  | 5.08 | %
|                                                                        |  |                                         |         |                       |      |        |                   |  |      |                |  |                       |         |  |                   |        |   |  |      |  
|Non interest-earning assets                                             |  |                                         | 31,076  |                       |      |        |                   |  |      |                |  |                       | 22,049  |  |                   |        |   |  |      |  
|                                                                        |  |                                         |         |                       |      |        |                   |  |      |                |  |                       |         |  |                   |        |   |  |      |  
|Total Assets                                                            |  | $                                       | 478,695 |                       |      |        |                   |  |      |                |  | $                     | 290,395 |  |                   |        |   |  |      |  
|                                                                        |  |                                         |         |                       |      |        |                   |  |      |                |  |                       |         |  |                   |        |   |  |      |  
|Liabilities:                                                            |  |                                         |         |                       |      |        |                   |  |      |                |  |                       |         |  |                   |        |   |  |      |  
|Interest-bearing liabilities:                                           |  |                                         |         |                       |      |        |                   |  |      |                |  |                       |         |  |                   |        |   |  |      |  
|Interest bearing checking                                               |  | $                                       | 46,838  |                       |      | 121    |                   |  | 0.35 | %              |  | $                     | 23,449  |  |                   | 61     |   |  | 0.35 | %
|Money market accounts                                                   |  |                                         | 129,286 |                       |      | 2,090  |                   |  | 2.16 | %              |  |                       | 70,346  |  |                   | 761    |   |  | 1.45 | %
|Savings                                                                 |  |                                         | 5,403   |                       |      | 57     |                   |  | 1.41 | %              |  |                       | 2,139   |  |                   | 20     |   |  | 1.25 | %
|Time deposit                                                            |  |                                         | 163,860 |                       |      | 3,875  |                   |  | 3.16 | %              |  |                       | 124,305 |  |                   | 2,552  |   |  | 2.74 | %
|Other borrowings                                                        |  |                                         | 3,860   |                       |      | 165    |                   |  | 6.36 | %              |  |                       | 2,510   |  |                   | 40     |   |  | 2.13 | %
|                                                                        |  |                                         |         |                       |      |        |                   |  |      |                |  |                       |         |  |                   |        |   |  |      |  
|Total interest-bearing liabilities                                      |  | $                                       | 349,247 |                       |      | 6,308  |                   |  | 2.41 | %              |  | $                     | 222,749 |  |                   | 3,434  |   |  | 2.05 | %
|Non-interest bearing deposits                                           |  |                                         | 72,906  |                       |      |        |                   |  |      |                |  |                       | 37,567  |  |                   |        |   |  |      |  
|Other liabilities                                                       |  |                                         | 6,031   |                       |      |        |                   |  |      |                |  |                       | 1,397   |  |                   |        |   |  |      |  
|Stockholders equity                                                    |  |                                         | 50,511  |                       |      |        |                   |  |      |                |  |                       | 28,682  |  |                   |        |   |  |      |  
|                                                                        |  |                                         |         |                       |      |        |                   |  |      |                |  |                       |         |  |                   |        |   |  |      |  
|Total Liabilities & Stockholders Equity                                |  | $                                       | 478,695 |                       |      |        |                   |  |      |                |  | $                     | 290,395 |  |                   |        |   |  |      |  
|                                                                        |  |                                         |         |                       |      |        |                   |  |      |                |  |                       |         |  |                   |        |   |  |      |  
|Net interest income                                                     |  |                                         |         |                       | $    | 13,363 |                   |  |      |                |  |                       |         |  | $                 | 6,806  |   |  |      |  
|                                                                        |  |                                         |         |                       |      |        |                   |  |      |                |  |                       |         |  |                   |        |   |  |      |  
|Interest-rate spread                                                    |  |                                         |         |                       |      |        |                   |  | 3.47 | %              |  |                       |         |  |                   |        |   |  | 3.03 | %
|Net interest margin                                                     |  |                                         |         |                       |      |        |                   |  | 3.99 | %              |  |                       |         |  |                   |        |   |  | 3.38 | %
|Ratio of average interest-bearing liabilities to average earning assets |  |                                         |         |                       |      | 78.0   | %                 |  |      |                |  |                       |         |  |                   | 83.0   | % |  |      |  



INCREASE (DECREASE) DUE TO
CHANGE IN (IN THOUSANDS):



|                                         |  |        |       |      |   |        |  |   |      
|---------------------------------------- |  | ------ | ----- | ---- | - | ------ |  | - | -----
|                                         |  | VOLUME |       | RATE |   | CHANGE
|Increase (decrease) in interest income:  |  |        |       |      |   |        |  |   |      
|Federal funds sold                       |  | $      | 881   |      | $ | 126    |  | $ | 1,007
|Other investments1                       |  |        | 219   |      |   | 43     |  |   | 262  
|Loans2                                   |  |        | 6,234 |      |   | 1,928  |  |   | 8,162
|                                         |  |        |       |      |   |        |  |   |      
|Total interest income                    |  |        | 7,334 |      |   | 2,097  |  |   | 9,431
|                                         |  |        |       |      |   |        |  |   |      
|Increase (decrease) in interest expense: |  |        |       |      |   |        |  |   |      
|NOW and Money market deposits            |  |        | 1,013 |      |   | 376    |  |   | 1,389
|Savings deposits                         |  |        | 34    |      |   | 3      |  |   | 37   
|Time deposits                            |  |        | 935   |      |   | 388    |  |   | 1,323
|Other borrowings                         |  |        | 75    |      |   | 50     |  |   | 125  
|                                         |  |        |       |      |   |        |  |   |      
|Total interest expense                   |  |        | 2,057 |      |   | 817    |  |   | 2,874
|                                         |  |        |       |      |   |        |  |   |      
|Total change in net interest income      |  | $      | 5,277 |      | $ | 1,280  |  | $ | 6,557
|                                         |  |        |       |      |   |        |  |   |      

---

|1 | Tax-exempt income, to the extent included in the amounts above, is not reflected on a tax equivalent basis.
|- | -----------------------------------------------------------------------------------------------------------

|2 | For purpose of this analysis, non-accruing loans, if any, are included in the average balances.
|- | -----------------------------------------------------------------------------------------------



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##### Table of Contents

Provision and Allowance for Loan Losses



The allowance for loan losses is an estimated amount that management believes will be adequate to absorb losses inherent in
the loan portfolio based on evaluations of its collectibility. The evaluations take into consideration such factors as changes in the nature and volume of the portfolio, overall portfolio quality, specific problem loans and commitments, and current
anticipated economic conditions that may affect the borrowers ability to pay. Management also considers the results of independent internal and external credit reviews.



The allowance for loan losses is established through a provision for loan losses charged against operations. Loans are
charged against the allowance when management believes that the collectibility of the principal is unlikely. While management uses the best information available to estimate probable losses on loans, future additions to the allowance may be
necessary based on changes in economic conditions.



An analysis
of the change in the Companys allowance for possible loan losses and loan loss experience (charge-offs) is furnished in the following table for the three-month periods ended September 30, 2005, June 30, 2005 and
September 30, 2004. (See Note 4-Loans for a comparison of the nine-months ended September 30, 2005 and 2004, respectively.)



|                                           |  |                |       |   |              |   |                |  |   |       |  
|------------------------------------------ |  | -------------- | ----- | - | ------------ | - | -------------- |  | - | ----- | -
|(in thousands)                             |  | Sept. 30, 2005 |       |   | June 30,2005 |   | Sept. 30, 2004 | 
|Balance at beginning of period             |  | $              | 3,513 |   |              | $ | 3,113          |  | $ | 2,132 |  
|Provision for losses charged to operations |  |                | 614   |   |              |   | 399            |  |   | 263   |  
|Loan charge-offs                           |  |                | (45   | ) |              |   |               |  |   | (37   | )
|Recoveries                                 |  |                | 2     |   |              |   | 1              |  |   | 10    |  
|                                           |  |                |       |   |              |   |                |  |   |       |  
|Balance at end of period                   |  | $              | 4,084 |   |              | $ | 3,513          |  | $ | 2,368 |  
|                                           |  |                |       |   |              |   |                |  |   |       |  



Discussion of the
above table, including nonperforming loans, charge-off experience, and change in loan loss provision expense, is contained above in the asset quality section of Statements of Financial Conditionand in the loan loss
provision expense sections of Results of Operations.



The allocation of the allowance for loan losses by type of loan has corresponded to the increases in loan balances by type (dollars in thousands):



|                               |  |                    |       |                         |               |   |        |                    |                         |  |       |        |  |                         |       |  |       |  
|------------------------------ |  | ------------------ | ----- | ----------------------- | ------------- | - | ------ | ------------------ | ----------------------- |  | ----- | ------ |  | ----------------------- | ----- |  | ----- | -
|                               |  | September 30, 2005 |       |                         | June 30, 2005 |   |        | September 30, 2004 |                        
|                               |  | AMOUNT             |       | % LOANS IN EACHCATEGORY |               |   | AMOUNT |                    | % LOANS IN EACHCATEGORY |  |       | AMOUNT |  | % LOANS IN EACHCATEGORY |      
|Commercial real estate         |  | $                  | 1,348 |                         | 36.4          | % |        | $                  | 1,147                   |  | 35.7  | %      |  | $                       | 630   |  | 29.4  | %
|Construction                   |  |                    | 1,338 |                         | 25.6          | % |        |                    | 934                     |  | 20.5  | %      |  |                         | 649   |  | 20.9  | %
|Multifamily                    |  |                    | 218   |                         | 5.0           | % |        |                    | 202                     |  | 5.4   | %      |  |                         | 105   |  | 4.1   | %
|One-to-four family residential |  |                    | 297   |                         | 15.9          | % |        |                    | 285                     |  | 17.8  | %      |  |                         | 204   |  | 20.9  | %
|Commercial                     |  |                    | 481   |                         | 8.4           | % |        |                    | 555                     |  | 11.0  | %      |  |                         | 435   |  | 12.6  | %
|Lines of credit                |  |                    | 239   |                         | 6.0           | % |        |                    | 221                     |  | 6.4   | %      |  |                         | 184   |  | 7.8   | %
|Consumer                       |  |                    | 163   |                         | 2.7           | % |        |                    | 169                     |  | 3.2   | %      |  |                         | 161   |  | 4.3   | %
|                               |  |                    |       |                         |               |   |        |                    |                         |  |       |        |  |                         |       |  |       |  
|Total                          |  | $                  | 4,084 |                         | 100.0         | % |        | $                  | 3,513                   |  | 100.0 | %      |  | $                       | 2,368 |  | 100.0 | %
|                               |  |                    |       |                         |               |   |        |                    |                         |  |       |        |  |                         |       |  |       |  



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Liquidity and Capital Resources



Liquidity Management Liquidity management involves monitoring sources and uses of funds in order to meet day-to-day cash flow requirements while maximizing profits. Liquidity represents the ability of a company to convert
assets into cash or cash equivalents without significant loss and to raise additional funds by increasing liabilities.



Liquidity management is made more complicated because different balance sheet components are subject to scheduled maturities and varying degrees of
management control. For example, the timing of maturities of certain holdings in the investment portfolio is very predictable and subject to a high degree of control at the time of purchase; other investment holdings, such as mortgage-backed
securities, are much less predictable due to sensitivity to financial market rates. Net deposit inflows and outflows, whether related to time deposits or nonmaturity instruments such as money market accounts or demand deposits, are also difficult to
predict, as they are greatly influenced by general interest rates, economic conditions and competition.



Asset liquidity is provided by cash and assets which are readily marketable, which can be pledged, or which will mature in the near future. Liability
liquidity is provided by access to core funding sources, principally the ability to generate customer deposits in our primary markets. In addition, liability liquidity is provided through the ability to borrow against approved lines of credit,
including Federal Funds purchased from correspondent banks and the Federal Home Loan Bank (FHLB). Such borrowings have historically been relatively small, averaging $3.1 million for third quarter 2005, $341,000 for second quarter 2005, and $2.3
million for third quarter 2004. At September 30, 2005, FHLB borrowings were $11.0 million versus $3.0 million at June 30, 2005 and zero at September 30, 2004.



Management regularly reviews the Banks liquidity position and has implemented internal policies that establish
guidelines for sources of asset-based liquidity and limit the total amount of purchased funds used to support the balance sheet and funding from non-core sources.



Short-Term Investments and Securities Available for Sale Short-term investments, which consist of federal
funds sold and interest-bearing deposits, are a component source of the Companys liquidity and are generally invested on an overnight basis. The subsidiary Banks enter into Federal Funds transactions with their principal correspondent banks,
and primarily act as net sellers of such funds. The sale of Federal Funds amounts to a short-term loan from the Banks to other banks.



Federal Funds sold and interest-bearing deposits averaged $45.9 million for third quarter 2005, about 2.8 times higher than the $16.4 million average for
second quarter 2004 and slightly lower than the $53.0 million average in second quarter 2005. This level represents the liquidity management policy of the Company commensurate with increased deposit levels and was additionally higher due to an
increase in deposit activity (see below) until those funds were redeployed into higher yielding loans. At September 30, 2005, Federal Funds sold and interest-bearing deposits totaled $29.1 million versus $62.1 million at June 30, 2005 and
$30.7 million at September 30, 2004.



The Company invests
primarily in obligations of the United States, or obligations guaranteed as to principal and interest by the United States, and in other taxable securities (no nontaxable securities are held at this time). Management determines the appropriate
classification of investment securities at the time of purchase. If management has the intent and the Company has the ability (or is required for regulatory reasons) to hold these securities until maturity or on a long-term basis, they are
classified as held-to-maturity investments. Securities to be held for indefinite periods of time and not intended to be held to maturity or on a long-term basis are classified as available-for-sale. The volume of sales of available-for-sale
securities is based on several factors, including, but not limited to, changes in interest rates, resultant prepayment risk, liquidity needs at the Banks and other factors related to interest rate and resultant prepayment risk.



Virtually all of the Companys securities ($19.1 million) are presently
classified as available-for-sale. Investment securities totaled $19.1 million at September 30, 2005, down slightly from $19.5 million June 30, 2005, and up 87% from $10.2 million one year earlier.



Deposits - Deposits from the Companys primary markets provide a
relatively stable funding source for its loan portfolio and other earning assets. Total deposits were $443 million at September 30, 2005, remaining relatively level from 90 days earlier, but on average for September were $450 million, up $24
million or 5.6% compared to June 2005 at $426 million (excluding temporary deposits of a large wealth management client).



30



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##### Table of Contents

Compared to September 30, 2004, deposits are up $144 million or 48%. The proceeds of these deposits have been
invested in Federal Funds sold until redeployment into longer term assets, primarily commercial real estate secured loans. The funding requirements for loans have continued to grow over the last twelve months, with loans outstanding increasing by
$161 million or 57% over the last twelve months to $445 million at September 30, 2005. During third quarter 2005, loans rose $51 million or 13%.



Total deposits averaged $441 million in third quarter 2005, up 56% or $159 million from the same period last year and up 3% or $14 million from second
quarter 2005. Non-interest bearing deposits represented 18% of average total deposits during third quarter 2005, rising $40 million or 101% over the same quarter last year, when they averaged 14% of total deposits. Management continues to make a
concerted effort to attract deposits from commercial relationships, including the offering of attractive cash management and other technology-based products that aid a company in the control of its deposits.



The Company anticipates that a stable base of deposits will be the primary
source of funding to meet both its short-term and long-term liquidity needs in the future. However, as a result of the short-term nature of a substantial portion of the Companys deposit base, its cost of funds is sensitive to fluctuations in
rates of interest.



NOW and money market deposits, a large
portion of which can be sensitive to short-term interest rate movements, averaged $197 million in third quarter 2005, an increase of $104 million (up 112%) from third quarter 2004 and up $10 million (5%) from second quarter 2005. The Company
will need to maintain these deposits, or find alternative sources of liquidity, in order to support its asset levels. Although management believes a substantial amount of the existing time deposits will renew, or substitute deposits will be
originated, the need to retain this funding source may impact the Companys ability to react to changes in market rates of interest. At an average of $159 million, time deposits were 36% of total average deposits in third quarter 2005, a
decrease from 52% in the comparable quarter last year and 46% in second quarter 2005.



Other Sources of Funds - In addition to deposits within its geographic market place, the sources of funds available to the Banks for lending and other business purposes include loan repayments, sales of loans
and securities, borrowings from the Federal Home Loan Bank (FHLB), national market funding sources, and contributions from the parent company. Loan repayments are a relatively stable source of funds, while deposit inflows and outflows and loan
prepayments are influenced significantly by competition, general interest rates and money market conditions. Borrowings may be used on a short-term basis to compensate for reductions in other sources, such as deposits at less than projected levels,
and may also be used to fund the origination of mortgage loans designated to be sold in the secondary market.



Certificates of deposits raised from national market funding sources (included in the CD discussion above) averaged $35 million in third quarter 2005, or
8% of total average deposits. This level compares to an average of $57 million or 20% of total deposits four quarters earlier and $44 million or 10% of total deposits in second quarter 2005.



At September 30, 2005, the Company had $11 million in outstanding
borrowings from the FHLB (of which $3 million was intermediate term and the balance overnight) of its present $22.3 million line, and there was $20.3 million in other available lines from correspondents. Additional collateral for potential FHLB
borrowing is in the process of being specifically identified on an automated basis, with the expectation that the approved borrowing line from the FHLB could be as high as $73 million based on a maximum of 20% of the Bank of Florida -
Southwests assets and 10% of the Ft. Lauderdale banks assets as of September 30, 2005.



Capital - The Federal Reserve Board and other bank regulatory agencies require bank holding companies and financial institutions to maintain
capital at adequate levels based on a percentage of assets and off-balance sheet exposures, adjusted for risk weights ranging from 0% to 100%. Under the risk-based standard, capital is classified into two tiers. Tier 1 capital consists of common
stockholders equity, excluding the unrealized gain (loss) on available-for-sale securities, minus certain intangible assets. Tier 2 capital consists of subordinated debt and the general allowance for loan losses subject to certain limitations.
An institutions qualifying capital base for purposes of its risk-based capital ratio consists of the sum of its Tier 1 and Tier 2 capital. Bank holding companies and banks are also required to maintain capital at a minimum level based on total
assets as defined by a leverage ratio.



The regulators define
five classifications for measuring capital levels, including well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall
financial condition. If adequately capitalized, a bank requires regulatory approval to



31



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##### Table of Contents

accept brokered (national market) deposits. If undercapitalized, capital distributions are limited, as is asset growth
and expansion, and plans for capital restoration are required. The regulatory minimum requirements (adequately capitalized) are 4% for Tier 1, 8% for total risk-based capital, and 4% for the Tier 1 leverage ratio. The minimum requirements for the
first three classifications are:



|                       |  |                                 |   |  |                                 |   |  |   |  
|---------------------- |  | ------------------------------- | - |  | ------------------------------- | - |  | - | -
|                       |  | Capital to risk-weighted assets |   |  | Tier 1 capitalto average assets |  
|                       |  | Total                           |   |  | Tier 1                          |   | 
|Well capitalized       |  | 10                              | % |  | 6                               | % |  | 5 | %
|Adequately capitalized |  | 8                               | % |  | 4                               | % |  | 4 | %
|Undercapitalized       |  | 6                               | % |  | 3                               | % |  | 3 | %



The Company was
considered well capitalized as of September 30, 2005. The following table reflects the actual capital levels and minimum required levels at September 30, 2005 (dollars in thousands):



|                                         |  |        |        |       |                                                |   |        |                                                                                   |        |  |      |        |  |       |        |  |       |  
|---------------------------------------- |  | ------ | ------ | ----- | ---------------------------------------------- | - | ------ | --------------------------------------------------------------------------------- | ------ |  | ---- | ------ |  | ----- | ------ |  | ----- | -
|                                         |  | Actual |        |       | Minimum Required For Capital Adequacy Purposes |   |        | Minimum Required To Be Well Capitalized UnderPrompt Corrective Action Regulations |       
|                                         |  | Amount |        | Ratio |                                                |   | Amount |                                                                                   | Ratio  |  |      | Amount |  | Ratio |       
|Total capital (to risk weighted assets)  |  |        |        |       |                                                |   |        |                                                                                   |        |  |      |        |  |       |        |  |       |  
|Consolidated                             |  | $      | 65,567 |       | 13.32                                          | % |        | $                                                                                 | 39,366 |  | 8.00 | %      |  | $     | 49,208 |  | 10.00 | %
|Bank of Florida  Southwest              |  | $      | 30,774 |       | 11.19                                          | % |        | $                                                                                 | 22,000 |  | 8.00 | %      |  | $     | 27,501 |  | 10.00 | %
|Bank of Florida                          |  | $      | 19,867 |       | 12.30                                          | % |        | $                                                                                 | 12,921 |  | 8.00 | %      |  | $     | 16,151 |  | 10.00 | %
|Bank of Florida  Tampa Bay              |  | $      | 7,456  |       | 13.08                                          | % |        | $                                                                                 | 4,559  |  | 8.00 | %      |  | $     | 5,699  |  | 10.00 | %
|Tier 1 capital (to risk weighted assets) |  |        |        |       |                                                |   |        |                                                                                   |        |  |      |        |  |       |        |  |       |  
|Consolidated                             |  | $      | 53,483 |       | 10.87                                          | % |        | $                                                                                 | 19,683 |  | 4.00 | %      |  | $     | 29,525 |  | 6.00  | %
|Bank of Florida  Southwest              |  | $      | 22,534 |       | 8.19                                           | % |        | $                                                                                 | 11,000 |  | 4.00 | %      |  | $     | 16,500 |  | 6.00  | %
|Bank of Florida                          |  | $      | 15,502 |       | 9.60                                           | % |        | $                                                                                 | 6,461  |  | 4.00 | %      |  | $     | 9,691  |  | 6.00  | %
|Bank of Florida  Tampa Bay              |  | $      | 6,977  |       | 12.24                                          | % |        | $                                                                                 | 2,280  |  | 4.00 | %      |  | $     | 3,420  |  | 6.00  | %
|Tier 1 capital (to average assets)       |  |        |        |       |                                                |   |        |                                                                                   |        |  |      |        |  |       |        |  |       |  
|Consolidated                             |  | $      | 53,483 |       | 10.46                                          | % |        | $                                                                                 | 20,453 |  | 4.00 | %      |  | $     | 25,566 |  | 5.00  | %
|Bank of Florida  Southwest              |  | $      | 22,534 |       | 8.69                                           | % |        | $                                                                                 | 10,375 |  | 4.00 | %      |  | $     | 12,969 |  | 5.00  | %
|Bank of Florida                          |  | $      | 15,502 |       | 7.95                                           | % |        | $                                                                                 | 7,800  |  | 4.00 | %      |  | $     | 9,750  |  | 5.00  | %
|Bank of Florida  Tampa Bay              |  | $      | 6,977  |       | 11.87                                          | % |        | $                                                                                 | 2,351  |  | 4.00 | %      |  | $     | 2,939  |  | 5.00  | %



The Company raised
nearly $13.0 million in net proceeds from common equity via the sale of 915,000 shares of common stock at $15.00 per share through a private placement with Allen and Company LLC during second quarter 2005. This includes 700,000 shares sold as of
April 11, 2005 and 215,000 more shares sold on April 26, 2005. In addition, approximately $2.6 million in additional common equity resulted from the conversion on May 23, 2005 of approximately 25,000 shares of the Companys
Series A Preferred stock into 165,000 common shares at $15.78 per share. The balance of the latter offering was redeemed at June 30, 2005, which decreased total equity by $1.3 million. Effective April 15, 2005, $3.5 million in additional
capital was contributed to the Bank of Florida and $3.0 million to the Bank of Florida  Southwest.



The Naples and Fort Lauderdale banks each issued LIBOR-based subordinated debt (Tier 2 capital) during the third quarter at $5 million and $3 million,
respectively. Two million dollars of the Naples issuance was used to pay down prime-rate priced subordinated debt raised in second quarter 2004. In addition, another $3 million in subordinated debt closed in the first week in October at the Fort
Lauderdale bank.



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



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



Undisbursed lines of credit are agreements to
lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are
expected to expire without being drawn upon, the total committed amounts do not necessarily represent future cash requirements. The Company evaluates each customers creditworthiness on a case-by-case basis. The amount of collateral obtained,
if it is deemed necessary by the Company upon extension of credit, is based on managements credit evaluation of the counter party. Standby letters of credit are conditional lending commitments issued by the Company to guarantee the performance
of a customer to a third party. Management believes that the Company has adequate resources to fund all of its commitments and that substantially all its existing commitments will be funded in the next twelve months.



A summary of the amounts of the Companys financial instruments, with
off-balance sheet risk at September 30, 2005, follows (dollars in thousands):



|                            |  |                 |        
|--------------------------- |  | --------------- | -------
|                            |  | Contract Amount
|Standby letters of credit   |  | $               | 1,273  
|                            |  |                 |        
|Undisbursed lines of credit |  | $               | 137,049
|                            |  |                 |        



Item 3. Quantitative and Qualitative Disclosures about Market Risk



Interest Sensitivity



The objective of interest sensitivity management is to minimize the risk associated with the effect of interest rate changes on the net interest margin while maintaining net interest income at acceptable levels. Managing this risk involves
monthly monitoring of the interest sensitive assets relative to interest sensitive liabilities over specific time intervals. All assets and liabilities are evaluated as maturing at the earlier of re-pricing date or contractual maturity date. While
liabilities without specific terms such as money market, NOW and savings accounts are generally considered core deposits for liquidity purposes, they are deemed to re-price for purposes of interest rate sensitivity analysis. Management subjectively
sets rates on all accounts.



At September 30, 2005, the
Company had $296 million in interest sensitive assets compared to $328 million in interest sensitive liabilities that will mature or reprice within a year, resulting in a negative gap position of $31.6 million or 9.6%. Within the first 90 days
of a rate change, the Company is positively gapped by $29 million, reflecting, among other factors, that approximately 49% of the loan portfolio immediately reprices with a prime rate change. Beyond that time period, the cumulative impact of
maturing CDs, net of maturing loans, creates a negatively gapped position.



A negative gap position is indicative of a bank that has a greater amount of interest sensitive liabilities re-pricing (or maturing) than it does interest sensitive assets, in a given time interval. In this instance,
the impact on net interest income would be positive in a declining rate environment and negative if rates were rising. Conversely, a positive gap position represents a greater amount of interest sensitive assets re-pricing (or maturing). Thus, an
increase in rates would positively impact net interest income, as the yield on interest-earning assets would increase prior to the increase in the cost of interest bearing liabilities.



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The following is a consolidated maturity and repricing analysis of rate sensitive assets and liabilities
as of September 30, 2005 (dollars in thousands).



|                                                                                                |  |                        |         |   |            |   |         |             |  |   |            |   |  |       |         |   |  |   |        
|----------------------------------------------------------------------------------------------- |  | ---------------------- | ------- | - | ---------- | - | ------- | ----------- |  | - | ---------- | - |  | ----- | ------- | - |  | - | -------
|                                                                                                |  | 0-90DAYS               |         |   | 91-180DAYS |   |         | 181-365DAYS |  |   | OVER 1YEAR |   |  | TOTAL
|                                                                                                |  | (Dollars in Thousands)
|Interest-earning assets:                                                                        |  |                        |         |   |            |   |         |             |  |   |            |   |  |       |         |   |  |   |        
|Federal funds sold                                                                              |  | $                      | 27,356  |   |            | $ |        |             |  | $ |           |   |  | $     |        |   |  | $ | 27,356 
|Due from banks and investment securities (including required investments in FHLB and FRB stock) |  |                        | 1,722   |   |            |   |        |             |  |   | 1,543      |   |  |       | 18,830  |   |  |   | 22,095 
|Loans                                                                                           |  |                        | 235,275 |   |            |   | 14,908  |             |  |   | 15,599     |   |  |       | 179,712 |   |  |   | 445,494
|                                                                                                |  |                        |         |   |            |   |         |             |  |   |            |   |  |       |         |   |  |   |        
|Total interest-earning assets                                                                   |  |                        | 264,353 |   |            |   | 14,908  |             |  |   | 17,142     |   |  |       | 198,542 |   |  |   | 494,945
|                                                                                                |  |                        |         |   |            |   |         |             |  |   |            |   |  |       |         |   |  |   |        
|Interest-bearing deposits (Non-CDs)                                                             |  |                        | 192,886 |   |            |   |        |             |  |   |           |   |  |       |        |   |  |   | 192,886
|Certificates of deposit                                                                         |  |                        | 34,486  |   |            |   | 45,804  |             |  |   | 43,783     |   |  |       | 42,755  |   |  |   | 166,828
|Other borrowings                                                                                |  |                        | 8,000   |   |            |   |        |             |  |   | 3,000      |   |  |       | 8,000   |   |  |   | 19,000 
|                                                                                                |  |                        |         |   |            |   |         |             |  |   |            |   |  |       |         |   |  |   |        
|Total interest-bearing liabilities                                                              |  | $                      | 235,372 |   |            |   | 45,804  |             |  |   | 46,783     |   |  |       | 50,755  |   |  |   | 378,714
|                                                                                                |  |                        |         |   |            |   |         |             |  |   |            |   |  |       |         |   |  |   |        
|Interest Sensitivity Gap:                                                                       |  |                        |         |   |            |   |         |             |  |   |            |   |  |       |         |   |  |   |        
|Rate sensitive assets less rate sensitive liabilities                                           |  | $                      | 28,981  |   |            | $ | (30,896 | )           |  | $ | (29,641    | ) |  | $     | 147,787 |   |  | $ | 116,231
|                                                                                                |  |                        |         |   |           
|Cumulative interest sensitivity gap                                                             |  |                        | 28,981  |   |            |   | (1,915  | )           |  |   | (31,556    | ) |  |       | 116,231 |   |  |   |        
|                                                                                                |  |                        |         |   |           
|Interest sensitivity gap ratio                                                                  |  |                        | 112.3   | % |            |   | 32.5    | %           |  |   | 36.6       | % |  |       | 391.2   | % |  |   |        
|                                                                                                |  |                        |         |   |           
|Cumulative interest sensitivity gap ratio                                                       |  |                        | 112.3   | % |            |   | 99.3    | %           |  |   | 90.4       | % |  |       | 130.7   | % |  |   |        



The impact on net
interest income described above is general, as other factors would additionally maximize or minimize the effect. For example, a change in the prime interest rate could effect an immediate change in rates on prime-related assets, whereas a liability
which reprices according to changes in Treasury rates might (1) lag in the timing of the change and (2) change rates in an amount less than the change in the prime interest rate. In addition, in the case of an expanding balance sheet with
the Companys characteristics, the 180 day period at which the gap turns negative could be continuously pushed further out in a rising rate environment.



Management believes that the current balance sheet structure of interest sensitive assets and liabilities does not represent a material risk to earnings
or liquidity in the event of a change in market rates.



SAFE HARBOR
STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995



Certain statements in this quarterly Report on Form 10-Q may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which statements generally can be
identified by the use of forward-looking terminology, such as may, will, expect, estimate, anticipate, believe, target, plan, project, or
continue or the negatives thereof or other variations thereon or similar terminology, and are made on the basis of managements plans and current analyses of Bancshares of Florida, Inc., its business and the industry as a whole.
These forward-looking statements are subject to risks and uncertainties, including, but not limited to, economic conditions, competition, interest rate sensitivity and exposure to regulatory and legislative changes. The above factors, in some cases,
have affected, and in the future could affect Bancshares of Florida, Inc.s financial performance and could cause actual results for fiscal 2005 and beyond to differ materially from those expressed or implied in such forward-looking statements.
Bancshares of Florida, Inc. does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.



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Item 4. CONTROLS AND PROCEDURES



|(a) | Evaluation of Disclosure Controls and Procedures
|--- | ------------------------------------------------



Bancshares of Florida, Inc. maintains controls and procedures designed to ensure that information required to be disclosed in the reports that Bancshares
of Florida, Inc. 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
managements evaluation of those controls and procedures performed within the 90 days preceding the filing of this Report, the Chief Executive Officer and Chief Financial Officer of Bancshares of Florida, Inc. concluded that, subject to the
limitations noted below, Bancshares of Florida, Inc.s disclosure controls and procedures were adequate for the above described purpose.



|(b) | Changes in Internal Controls
|--- | ----------------------------



Bancshares of Florida, Inc. has 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 Officer and Chief Financial Officer of Bancshares of Florida, Inc.



|(c) | Limitations on the Effectiveness of Controls
|--- | --------------------------------------------



Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and internal controls will
prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must
reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, within Bancshares of Florida, Inc. have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of
simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.



The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies
or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.



PART II.  OTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS



From
time-to-time, the Company may be involved in various legal proceedings arising in the ordinary course of business. Management believes that the ultimate aggregate liabilities arising from these proceedings, if any, will not have a material adverse
effect on our financial condition or results of operations.



ITEM 6. EXHIBITS



The following
exhibits are filed with the Securities and Exchange Commission and are incorporated by reference into this Form 10-Q. The exhibits which are denominated by an (a.) were previously filed as a part of a Registration Statement on Form SB-2 for
Bancshares of Florida with the SEC on March 24, 1999, File No. 333-74997. The exhibits which are denominated by a (b.) were previously filed as a part of Amendment No. 1 to Form SB-2, filed with the SEC on May 7, 1999. The
exhibits which are denominated by a (c.) were previously filed as a part of Form 10-KSB filed with the SEC on March 30, 2000. The exhibits which are denominated by a (d.) were previously filed as a part of an exhibit to Form 10-QSB/A-1 filed on
December 3, 2001. The exhibits which are denominated by an (e.) were previously filed as a part of a Registration Statement on Form SB-2 for Bancshares of Florida with the SEC on December 28, 2001, File No. 333-76094. The exhibits
which are denominated by an (f.) were previously filed as part of a Form 10-QSB/A filed on September 10, 2002. The exhibit numbers correspond to the exhibit numbers in the referenced document (g.) were previously filed as a part of Form 10-KSB
filed with the SEC on March 30, 2003. The exhibits which are denominated by an (h.) were previously filed as part of a Form 10-QSB/A



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filed on August 12, 2003. The exhibits which are denominated by an (i.) were previously filed as part of a
Registration Statement on Form SB-2 filed with the SEC on June 24, 2004, File No. 333-116833. The exhibits which are denominated by an (j.) were previously filed as part of a Form 10-KSB filed with the SEC on March 30, 2005. The
exhibits which are denominated by a (k.) were previously filed as part of Form 10-Q filed with the SEC on August 4, 2005.



|               |  |                                                                                                                 
|-------------- |  | ----------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description of Exhibit                                                                                          
|k.3.1          |  | Amended and Restated Articles of Incorporation.                                                                 
|               | 
|a.3.2          |  | Bylaws.                                                                                                         
|               | 
|b.4.1          |  | Specimen Common Stock Certificate.                                                                              
|               | 
|b.4.3          |  | Form of Stock Purchase Warrant1999 Offering.                                                                   
|               | 
|e.4.4          |  | Form of Stock Purchase Warrant2002 Offering.                                                                   
|               | 
|i.4.5          |  | Form of Stock Purchase Warrant A 2004 Offering.                                                                
|               | 
|i.4.6          |  | Form of Stock Purchase Warrant B 2004 Offering.                                                                
|               | 
|10.1           |  | Amended and Restated Employment Agreement of Michael L. McMullan dated February 1, 2005.                        
|               | 
|10.2           |  | Amended and Restated Employment Agreement of Martin P Mayhan dated February 1, 2005.                            
|               | 
|c.10.4         |  | 1999 Stock Option Plan.                                                                                         
|               | 
|c.10.5         |  | Form of Incentive Stock Option Agreement.                                                                       
|               | 
|d.10.6         |  | Employment Agreement of Craig D. Sherman, dated as of May 3, 1999.                                              
|               | 
|f.10.6.1       |  | Amendment to Employment Agreement of Craig Sherman, dated as of July 30, 2001.                                  
|               | 
|f.10.8         |  | Employment Agreement of John B. James, dated as of October 1, 2001.                                             
|               | 
|f.10.9         |  | Lease between Citizens Reserve, LLC and Citizens National Bank of Southwest Florida.                            
|               | 
|h.10.13        |  | Employee Severance Agreement of John S. Chaperon, dated as of March 1, 2003.                                    
|               | 
|j.10.14        |  | Employment Agreement of Julie W. Husler, dated as of May 1, 2002.                                               
|               | 
|10.15          |  | Form of Registration Rights Agreement filed as an exhibit to Form 8-K on April 11, 2005.                        
|               | 
|j.14.1         |  | Code of Ethical Conduct.                                                                                        
|               | 
|21.1           |  | Subsidiaries of the Registrant.                                                                                 
|               | 
|31.1           |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - President and Chief Executive Officer.
|               | 
|31.2           |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Chief Financial Officer.              
|               | 
|32.1           |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  President and Chief Executive Officer.
|               | 
|32.2           |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  Chief Financial Officer.              



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SIGNATURES



In accordance with
the requirements of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                        |  |                             |  |                                                                                      
|----------------------- |  | --------------------------- |  | -------------------------------------------------------------------------------------
|                        |  | BANCSHARES OF FLORIDA, INC.
|                        |  |                            
|Dated: November 1, 2005 |  | By:                         |  | /s/ MICHAEL L. MCMULLAN                                                              
|                        |  |                             |  | Michael L. McMullan Chief Executive Officer (Principal Executive Officer)            
|                        |  |                            
|Dated: November 1, 2005 |  | By:                         |  | /s/ DAVID G. WALLACE                                                                 
|                        |  |                             |  | David G. Wallace Chief Financial Officer (Principal Financial and Accounting Officer)



37