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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, 2006

Commission File Number 000-50091



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BANCSHARES OF FLORIDA, INC.

A Florida Corporation

IRS Employer Identification No. 59-3535315



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1185 Immokalee Road

Naples, Florida 34110

(239) 254-2100

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 a large accelerated filer, an accelerated filer, or a non-accelerated
filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act).

Large accelerated
filer ̈Accelerated
filer  x                Non-accelerated filer ̈

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, 2006 was 9,563,703 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 Balance Sheets September 30, 2006 and December 31, 2005                                                    |  | 1   
|           |  |                                                                                                                                  
|           |  | Condensed Consolidated Statements of Operations - Three and nine-months ended September 30, 2006 and 2005                         |  | 2   
|           |  |                                                                                                                                  
|           |  | Condensed Consolidated Statements of Stockholders Equity - Year ended December 31, 2005 and nine-months ended September 30, 2006 |  | 3   
|           |  |                                                                                                                                  
|           |  | Condensed Consolidated Statements of Comprehensive Income - Three and nine-months ended September 30, 2006 and 2005               |  | 3   
|           |  |                                                                                                                                  
|           |  | Condensed Consolidated Statements of Cash Flows - Nine months ended September 30, 2006 and 2005                                   |  | 4   
|           |  |                                                                                                                                  
|           |  | Notes to the Condensed Consolidated Financial Statements                                                                          |  | 6   
|           |  |                                                                                                                                  
|           |  | Selected Quarterly Consolidated Financial Data                                                                                    |  | 18  
|           |  |                                                                                                                                  
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operation                                              |  |     
|           |  |                                                                                                                                  
|           |  | Overview                                                                                                                          |  | 19  
|           |  |                                                                                                                                  
|           |  | Analysis of Financial Condition                                                                                                   |  | 19  
|           |  |                                                                                                                                  
|           |  | Analysis of Results of Operations                                                                                                 |  | 21  
|           |  |                                                                                                                                  
|           |  | Liquidity and Capital Resources                                                                                                   |  | 25  
|           |  |                                                                                                                                  
|Item 3.    |  | Quantitative and Qualitative Disclosures about Market Risk                                                                        |  | 27  
|           |  |                                                                                                                                  
|Item 4.    |  | Controls and Procedures                                                                                                           |  | 27  
|           |  |                                                                                                                                  
|PART II.   |  | Other Information                                                                                                                 |  |     
|           |  |                                                                                                                                  
|Item 1.    |  | Legal Proceedings                                                                                                                 |  | 28  
|           |  |                                                                                                                                  
|Item 6.    |  | Exhibits                                                                                                                          |  | 28  
|           | 
|Signatures |  | 30                                                                                                                               



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2006 and December 31, 2005

(In Thousands, except share and per share data)



|                                                                                                                                                                                      |  |                   |         |   |                  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                                                                                                                      |  | September 30,2006 |         |   | December 31,2005 |  
|                                                                                                                                                                                      |  | (Unaudited)       |         |   |                  |  
|ASSETS                                                                                                                                                                                |  |                   |         |   |                  |   |         |  
|Cash and due from banks                                                                                                                                                               |  | $                 | 31,331  |   |                  | $ | 18,976  |  
|Interest-bearing deposits due from other banks                                                                                                                                        |  |                   | 2,903   |   |                  |   | 2,402   |  
|Federal funds sold                                                                                                                                                                    |  |                   | 14,223  |   |                  |   | 28,739  |  
|                                                                                                                                                                                      |  |                   |         |   |                  |   |         |  
|TOTAL CASH AND CASH EQUIVALENTS                                                                                                                                                       |  |                   | 48,457  |   |                  |   | 50,117  |  
|Securities held to maturity                                                                                                                                                           |  |                   | 25      |   |                  |   | 25      |  
|Securities available for sale                                                                                                                                                         |  |                   | 41,970  |   |                  |   | 18,597  |  
|Loans held for sale                                                                                                                                                                   |  |                   | 2,364   |   |                  |   | 1,323   |  
|Loans held for investment                                                                                                                                                             |  |                   | 726,246 |   |                  |   | 485,399 |  
|Less: Allowance for loan losses                                                                                                                                                       |  |                   | 7,094   |   |                  |   | 4,603   |  
|                                                                                                                                                                                      |  |                   |         |   |                  |   |         |  
|NET LOANS HELD FOR INVESTMENT                                                                                                                                                         |  |                   | 719,152 |   |                  |   | 480,796 |  
|Restricted securities, Federal Home Loan Bank stock, at cost                                                                                                                          |  |                   | 3,117   |   |                  |   | 918     |  
|Premises and equipment                                                                                                                                                                |  |                   | 7,301   |   |                  |   | 6,716   |  
|Accrued interest receivable                                                                                                                                                           |  |                   | 3,916   |   |                  |   | 2,196   |  
|Cash surrender value of life insurance                                                                                                                                                |  |                   | 3,217   |   |                  |   | 3,128   |  
|Deferred tax asset                                                                                                                                                                    |  |                   | 4,454   |   |                  |   | 3,951   |  
|Goodwill                                                                                                                                                                              |  |                   | 10,597  |   |                  |   |        |  
|Intangible assets                                                                                                                                                                     |  |                   | 2,628   |   |                  |   | 925     |  
|Other assets                                                                                                                                                                          |  |                   | 2,898   |   |                  |   | 1,090   |  
|                                                                                                                                                                                      |  |                   |         |   |                  |   |         |  
|TOTAL ASSETS                                                                                                                                                                          |  | $                 | 850,096 |   |                  | $ | 569,782 |  
|                                                                                                                                                                                      |  |                   |         |   |                  |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                  |  |                   |         |   |                  |   |         |  
|Deposits                                                                                                                                                                              |  | $                 | 660,443 |   |                  | $ | 495,080 |  
|Subordinated debt                                                                                                                                                                     |  |                   | 11,000  |   |                  |   | 11,000  |  
|Federal home loan bank advances                                                                                                                                                       |  |                   | 39,500  |   |                  |   | 3,000   |  
|Accrued interest payable                                                                                                                                                              |  |                   | 749     |   |                  |   | 352     |  
|Accrued expenses and other liabilities                                                                                                                                                |  |                   | 3,941   |   |                  |   | 1,289   |  
|                                                                                                                                                                                      |  |                   |         |   |                  |   |         |  
|TOTAL LIABILITIES                                                                                                                                                                     |  |                   | 715,633 |   |                  |   | 510,721 |  
|                                                                                                                                                                                      |  |                   |         |   |                  |   |         |  
|Stockholders Equity:                                                                                                                                                                 |  |                   |         |   |                  |   |         |  
|Undesignated Preferred stock, par value $.01 per share, 1,000,000 shares authorized, no shares issued and outstanding at September 30,
2006 and December 31, 2005, respectively       |  |                   |        |   |                  |   |        |  
|Common stock, par value $.01 per share, 20,000,000 shares authorized, 9,563,703 and 5,943,783 shares issued and outstanding at
September 30, 2006 and December 31, 2005, respectively |  |                   | 96      |   |                  |   | 59      |  
|Additional paid-in capital                                                                                                                                                            |  |                   | 139,713 |   |                  |   | 66,066  |  
|Accumulated deficit                                                                                                                                                                   |  |                   | (5,227  | ) |                  |   | (6,870  | )
|Accumulated other comprehensive loss                                                                                                                                                  |  |                   | (119    | ) |                  |   | (194    | )
|                                                                                                                                                                                      |  |                   |         |   |                  |   |         |  
|TOTAL STOCKHOLDERS EQUITY                                                                                                                                                            |  |                   | 134,463 |   |                  |   | 59,061  |  
|                                                                                                                                                                                      |  |                   |         |   |                  |   |         |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                            |  | $                 | 850,096 |   |                  | $ | 569,782 |  
|                                                                                                                                                                                      |  |                   |         |   |                  |   |         |  

See accompanying notes to condensed consolidated financial statements.



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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, 2006 and 2005

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



|                                                    |  |                                 |           |                                |   |           |  |      |           |  |   |          
|--------------------------------------------------- |  | ------------------------------- | --------- | ------------------------------ | - | --------- |  | ---- | --------- |  | - | ---------
|                                                    |  | Three-months endedSeptember 30, |           | Nine-months endedSeptember 30,
|                                                    |  | 2006                            |           | 2005                           |   | 2006      |  | 2005
|INTEREST INCOME                                     |  |                                 |           |                                |   |           |  |      |           |  |   |          
|Interest and fees on loans                          |  | $                               | 13,151    |                                | $ | 6,967     |  | $    | 33,582    |  | $ | 18,071   
|Interest on securities and other                    |  |                                 | 622       |                                |   | 203       |  |      | 1,147     |  |   | 504      
|Interest on federal funds sold                      |  |                                 | 526       |                                |   | 390       |  |      | 1,374     |  |   | 1,096    
|                                                    |  |                                 |           |                                |   |           |  |      |           |  |   |          
|TOTAL INTEREST INCOME                               |  |                                 | 14,299    |                                |   | 7,560     |  |      | 36,103    |  |   | 19,671   
|                                                    |  |                                 |           |                                |   |           |  |      |           |  |   |          
|INTEREST EXPENSE                                    |  |                                 |           |                                |   |           |  |      |           |  |   |          
|Interest on deposits                                |  |                                 | 5,277     |                                |   | 2,277     |  |      | 12,921    |  |   | 6,143    
|Interest on subordinated debt                       |  |                                 | 213       |                                |   | 60        |  |      | 597       |  |   | 127      
|Interest on Federal Home Loan Bank advances         |  |                                 | 477       |                                |   | 34        |  |      | 698       |  |   | 38       
|                                                    |  |                                 |           |                                |   |           |  |      |           |  |   |          
|TOTAL INTEREST EXPENSE                              |  |                                 | 5,967     |                                |   | 2,371     |  |      | 14,216    |  |   | 6,308    
|                                                    |  |                                 |           |                                |   |           |  |      |           |  |   |          
|NET INTEREST INCOME                                 |  |                                 | 8,332     |                                |   | 5,189     |  |      | 21,887    |  |   | 13,363   
|PROVISION FOR LOAN LOSSES                           |  |                                 | 840       |                                |   | 614       |  |      | 2,102     |  |   | 1,309    
|                                                    |  |                                 |           |                                |   |           |  |      |           |  |   |          
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |  |                                 | 7,492     |                                |   | 4,575     |  |      | 19,785    |  |   | 12,054   
|                                                    |  |                                 |           |                                |   |           |  |      |           |  |   |          
|NONINTEREST INCOME                                  |  |                                 |           |                                |   |           |  |      |           |  |   |          
|Service charges and fees                            |  |                                 | 331       |                                |   | 363       |  |      | 878       |  |   | 1,096    
|Trust fees                                          |  |                                 | 659       |                                |   | 401       |  |      | 1,936     |  |   | 1,089    
|Gain on sale of loans, net                          |  |                                 | 72        |                                |   | 101       |  |      | 354       |  |   | 196      
|                                                    |  |                                 |           |                                |   |           |  |      |           |  |   |          
|TOTAL NONINTEREST INCOME                            |  |                                 | 1,062     |                                |   | 865       |  |      | 3,168     |  |   | 2,381    
|                                                    |  |                                 |           |                                |   |           |  |      |           |  |   |          
|NONINTEREST EXPENSES                                |  |                                 |           |                                |   |           |  |      |           |  |   |          
|Salaries and employee benefits                      |  |                                 | 4,236     |                                |   | 2,660     |  |      | 11,266    |  |   | 7,316    
|Occupancy                                           |  |                                 | 1,032     |                                |   | 729       |  |      | 2,863     |  |   | 2,180    
|Equipment rental, depreciation and maintenance      |  |                                 | 421       |                                |   | 331       |  |      | 1,163     |  |   | 881      
|Data processing                                     |  |                                 | 495       |                                |   | 347       |  |      | 1,408     |  |   | 1,005    
|Stationary, postage and office supplies             |  |                                 | 176       |                                |   | 129       |  |      | 478       |  |   | 389      
|Professional fees                                   |  |                                 | 145       |                                |   | 251       |  |      | 559       |  |   | 846      
|Advertising, marketing and public relations         |  |                                 | 190       |                                |   | 124       |  |      | 592       |  |   | 347      
|Other                                               |  |                                 | 723       |                                |   | 282       |  |      | 1,894     |  |   | 931      
|                                                    |  |                                 |           |                                |   |           |  |      |           |  |   |          
|TOTAL NONINTEREST EXPENSES                          |  |                                 | 7,418     |                                |   | 4,853     |  |      | 20,223    |  |   | 13,895   
|                                                    |  |                                 |           |                                |   |           |  |      |           |  |   |          
|INCOME BEFORE INCOME TAX EXPENSE                    |  |                                 | 1,136     |                                |   | 587       |  |      | 2,730     |  |   | 540      
|Income tax expense                                  |  |                                 | 447       |                                |   |          |  |      | 1,087     |  |   |         
|                                                    |  |                                 |           |                                |   |           |  |      |           |  |   |          
|NET INCOME                                          |  | $                               | 689       |                                | $ | 587       |  | $    | 1,643     |  | $ | 540      
|                                                    |  |                                 |           |                                |   |           |  |      |           |  |   |          
|NET INCOME PER SHARE: BASIC                         |  | $                               | 0.08      |                                | $ | 0.10      |  | $    | 0.22      |  | $ | 0.05     
|                                                    |  |                                 |           |                                |   |           |  |      |           |  |   |          
|NET INCOME PER SHARE: DILUTED                       |  | $                               | 0.07      |                                | $ | 0.10      |  | $    | 0.21      |  | $ | 0.05     
|                                                    |  |                                 |           |                                |   |           |  |      |           |  |   |          
|WEIGHTED AVERAGE SHARES OUTSTANDING: BASIC          |  |                                 | 9,149,185 |                                |   | 5,917,630 |  |      | 7,506,280 |  |   | 5,484,007
|                                                    |  |                                 |           |                                |   |           |  |      |           |  |   |          
|WEIGHTED AVERAGE SHARES OUTSTANDING: DILUTED        |  |                                 | 9,397,872 |                                |   | 6,168,208 |  |      | 7,763,654 |  |   | 5,671,788
|                                                    |  |                                 |           |                                |   |           |  |      |           |  |   |          
|DIVIDENDS PER SHARE                                 |  | $                               |          |                                | $ |          |  | $    |          |  | $ |         
|                                                    |  |                                 |           |                                |   |           |  |      |           |  |   |          

See accompanying notes to condensed consolidated financial statements.



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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, 2005 and the Nine-Months Ended September 30, 2006 (Unaudited)

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



|                                                                                     |  |                 |   |  |              |        |   |        |           |        |   |                          |  |                    |         |  |                              |         |   |       |   |      |   |  |   |         |  
|------------------------------------------------------------------------------------ |  | --------------- | - |  | ------------ | ------ | - | ------ | --------- | ------ | - | ------------------------ |  | ------------------ | ------- |  | ---------------------------- | ------- | - | ----- | - | ---- | - |  | - | ------- | -
|                                                                                     |  | Preferred Stock |   |  | Common Stock |        |   |        |           |        |   |                          |  |                    |         | 
|                                                                                     |  | Shares          |   |  | Amount       |        |   | Shares |           | Amount |   | AdditionalPaid-InCapital |  | AccumulatedDeficit |         |  | AccumulatedComprehensiveLoss |         |   | Total |  
|Balance, December 31, 2004                                                           |  | 36,097          |   |  | $            | 3,610  |   |        | 4,835,632 |        | $ | 48                       |  | $                  | 49,817  |  | $                            | (11,479 | ) |       | $ | (42  | ) |  | $ | 41,954  |  
|Net income                                                                           |  |                |   |  |              |       |   |        |          |        |   |                         |  |                    |        |  |                              | 4,883   |   |       |   |     |   |  |   | 4,883   |  
|Exercise of stock options & warrants                                                 |  |                |   |  |              |       |   |        | 27,797    |        |   |                         |  |                    | 277     |  |                              |        |   |       |   |     |   |  |   | 277     |  
|Tax benefit from stock options exercised                                             |  |                |   |  |              |       |   |        |          |        |   |                         |  |                    | 107     |  |                              |        |   |       |   |     |   |  |   | 107     |  
|Adjustments to additional paid-in-capital from stock compensation expense            |  |                |   |  |              |       |   |        |          |        |   |                         |  |                    | 280     |  |                              |        |   |       |   |     |   |  |   | 280     |  
|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 $104.00 per share                                   |  | (12,258         | ) |  |              | (1,226 | ) |        |          |        |   |                         |  |                    |        |  |                              | (49     | ) |       |   |     |   |  |   | (1,275  | )
|Changes in fair value on available-for-sale securities, net of tax                   |  |                |   |  |              |       |   |        |          |        |   |                         |  |                    |        |  |                              |        |   |       |   | (152 | ) |  |   | (152    | )
|                                                                                     |  |                 |   |  |              |        |   |        |           |        |   |                          |  |                    |         |  |                              |         |   |       |   |      |   |  |   |         |  
|Balance as of December 31, 2005                                                      |  |                |   |  |              |       |   |        | 5,943,783 |        |   | 59                       |  |                    | 66,066  |  |                              | (6,870  | ) |       |   | (194 | ) |  |   | 59,061  |  
|Net income                                                                           |  |                |   |  |              |       |   |        |          |        |   |                         |  |                    |        |  |                              | 1,643   |   |       |   |     |   |  |   | 1,643   |  
|Exercise of stock options & warrants                                                 |  |                |   |  |              |       |   |        | 56,702    |        |   | 1                        |  |                    | 634     |  |                              |        |   |       |   |     |   |  |   | 635     |  
|Tax benefit from stock options exercised                                             |  |                |   |  |              |       |   |        |          |        |   |                         |  |                    | 159     |  |                              |        |   |       |   |     |   |  |   | 159     |  
|Adjustments to additional paid-in-capital from stock compensation expense            |  |                |   |  |              |       |   |        |          |        |   |                         |  |                    | 221     |  |                              |        |   |       |   |     |   |  |   | 221     |  
|Common stock issued, net of offering cost of $3,941                                  |  |                |   |  |              |       |   |        | 2,875,000 |        |   | 29                       |  |                    | 57,843  |  |                              |        |   |       |   |     |   |  |   | 57,872  |  
|Common stock issued in acquisition                                                   |  |                |   |  |              |       |   |        | 688,218   |        |   | 7                        |  |                    | 14,790  |  |                              |        |   |       |   |     |   |  |   | 14,797  |  
|Changes in fair value on available for sale securities, net of tax of $45            |  |                |   |  |              |       |   |        |          |        |   |                         |  |                    |        |  |                              |        |   |       |   | 75   |   |  |   | 75      |  
|                                                                                     |  |                 |   |  |              |        |   |        |           |        |   |                          |  |                    |         |  |                              |         |   |       |   |      |   |  |   |         |  
|Balance as of September 30, 2006                                                     |  |                |   |  | $            |       |   |        | 9,563,703 |        | $ | 96                       |  | $                  | 139,713 |  | $                            | (5,227  | ) |       | $ | (119 | ) |  | $ | 134,463 |  
|                                                                                     |  |                 |   |  |              |        |   |        |           |        |   |                          |  |                    |         |  |                              |         |   |       |   |      |   |  |   |         |  

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



|                                                                                                                      |  |                                 |     |      |                                 |     |      |  |      |       |  |   |     |  
|--------------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | --- | ---- | ------------------------------- | --- | ---- |  | ---- | ----- |  | - | --- | -
|(In Thousands, unaudited)                                                                                             |  | Three-months endedSeptember 30, |     |      | Nine months ended September 30, |    
|                                                                                                                      |  | 2006                            |     | 2005 |                                 |     | 2006 |  | 2005 |      
|Net income                                                                                                            |  | $                               | 689 |      | $                               | 587 |      |  | $    | 1,643 |  | $ | 540 |  
|Other comprehensive income :                                                                                          |  |                                 |     |      |                                 |     |      |  |      |       |  |   |     |  
|Unrealized gains (losses) on available-for-sale securities:                                                           |  |                                 |     |      |                                 |     |      |  |      |       |  |   |     |  
|Unrealized holding gains (losses) arising during the period, net of income tax of $104 and $45 in 2006, respectively. |  |                                 | 173 |      |                                 | (69 | )    |  |      | 75    |  |   | (91 | )
|                                                                                                                      |  |                                 |     |      |                                 |     |      |  |      |       |  |   |     |  
|Comprehensive income                                                                                                  |  | $                               | 862 |      | $                               | 518 |      |  | $    | 1,718 |  | $ | 449 |  
|                                                                                                                      |  |                                 |     |      |                                 |     |      |  |      |       |  |   |     |  

See accompanying notes to condensed consolidated financial statements.



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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, 2006 and 2005

(In Thousands)



|                                                                                                 |  |                                |          |   |      |   |          |  
|------------------------------------------------------------------------------------------------ |  | ------------------------------ | -------- | - | ---- | - | -------- | -
|                                                                                                 |  | (Unaudited)                    |         
|                                                                                                 |  | Nine-Months EndedSeptember 30, |         
|                                                                                                 |  | 2006                           |          |   | 2005 |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                                             |  |                                |          |   |      |   |          |  
|Net income                                                                                       |  | $                              | 1,643    |   |      | $ | 540      |  
|Adjustments to reconcile net income to net cash provided by operating activities:                |  |                                |          |   |      |   |          |  
|Depreciation and amortization                                                                    |  |                                | 1,061    |   |      |   | 905      |  
|Provision for loan losses                                                                        |  |                                | 2,102    |   |      |   | 1,309    |  
|Accretion of deferred loan fees and costs, net                                                   |  |                                | (656     | ) |      |   | (252     | )
|Accretion of premiums and discounts on investments, net                                          |  |                                | (13      | ) |      |   | (47      | )
|Gain on sale of loans held for sale, net                                                         |  |                                | (354     | ) |      |   |         |  
|Proceeds from sale of loans held for sale                                                        |  |                                | 70,202   |   |      |   |         |  
|Originations of loans held for sale                                                              |  |                                | (70,889  | ) |      |   |         |  
|Amortization of intangible assets                                                                |  |                                | 29       |   |      |   | 29       |  
|Increase in accrued interest receivable                                                          |  |                                | (970     | ) |      |   | (893     | )
|Deferred income tax expense                                                                      |  |                                | 1,087    |   |      |   |         |  
|Increase in bank-owned life insurance                                                            |  |                                | (89      | ) |      |   | (76      | )
|(Increase) Decrease in other assets                                                              |  |                                | (2,181   | ) |      |   | 66       |  
|Stock compensation expense                                                                       |  |                                | 221      |   |      |   | 134      |  
|Increase in accrued interest payable                                                             |  |                                | 397      |   |      |   | 46       |  
|Increase in accrued expenses and other liabilities                                               |  |                                | 1,903    |   |      |   | 654      |  
|                                                                                                 |  |                                |          |   |      |   |          |  
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                                        |  |                                | 3,493    |   |      |   | 2,415    |  
|                                                                                                 |  |                                |          |   |      |   |          |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                                             |  |                                |          |   |      |   |          |  
|Net increase in loans held for investment                                                        |  |                                | (179,786 | ) |      |   | (118,925 | )
|Excess of assets acquired over liabilities assumed, net of cash acquired in Business acquisition |  |                                | 670      |   |      |   |         |  
|Proceeds from maturing securities and principal payments on available-for-sale securities        |  |                                | 23,442   |   |      |   | 332,886  |  
|Purchase of securities available-for-sale                                                        |  |                                | (23,691  | ) |      |   | (326,079 | )
|Purchase of restricted securities, net                                                           |  |                                | (1,634   | ) |      |   | (239     | )
|Purchase of premises and equipment, net                                                          |  |                                | (1,379   | ) |      |   | (866     | )
|                                                                                                 |  |                                |          |   |      |   |          |  
|NET CASH USED IN INVESTING ACTIVITIES                                                            |  |                                | (182,378 | ) |      |   | (113,223 | )
|                                                                                                 |  |                                |          |   |      |   |          |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                                             |  |                                |          |   |      |   |          |  
|Net increase in deposits                                                                         |  |                                | 90,718   |   |      |   | 67,244   |  
|Takedown of Advances                                                                             |  |                                | 86,000   |   |      |   | 11,000   |  
|Repayment of Advances                                                                            |  |                                | (58,000  | ) |      |   | 6,000    |  
|Redemption of Series A preferred stock                                                           |  |                                |         |   |      |   | (1,275   | )
|Net proceeds from issuance of common stock                                                       |  |                                | 58,507   |   |      |   | 13,023   |  
|                                                                                                 |  |                                |          |   |      |   |          |  
|NET CASH PROVIDED BY FINANCING ACTIVITIES                                                        |  |                                | 177,225  |   |      |   | 95,992   |  
|                                                                                                 |  |                                |          |   |      |   |          |  
|NET DECREASE IN CASH AND CASH EQUIVALENTS                                                        |  |                                | (1,660   | ) |      |   | (14,816  | )
|CASH AND CASH EQUIVALENTS:                                                                       |  |                                |          |   |      |   |          |  
|Beginning of period                                                                              |  |                                | 50,117   |   |      |   | 57,897   |  
|                                                                                                 |  |                                |          |   |      |   |          |  
|End of period                                                                                    |  | $                              | 48,457   |   |      | $ | 43,081   |  
|                                                                                                 |  |                                |          |   |      |   |          |  



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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, 2006 and 2005

(In Thousands)



|                                                         |  |   |        |  |   |       |  
|-------------------------------------------------------- |  | - | ------ |  | - | ----- | -
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION         |  |   |        |  |   |       |  
|Cash paid during the period for:                         |  |   |        |  |   |       |  
|Interest                                                 |  | $ | 13,819 |  | $ | 6,262 |  
|                                                         |  |   |        |  |   |       |  
|Taxes                                                    |  | $ | 100    |  | $ |      |  
|                                                         |  |   |        |  |   |       |  
|Noncash Transactions:                                    |  |   |        |  |   |       |  
|Unrealized holding loss on securities available-for-sale |  | $ | 75     |  | $ | (91   | )
|                                                         |  |   |        |  |   |       |  
|Increase in preferred stock for dividends paid           |  | $ |       |  | $ | 125   |  
|                                                         |  |   |        |  |   |       |  
|Tax benefit from exercise of common stock options        |  | $ | 159    |  | $ |      |  
|                                                         |  |   |        |  |   |       |  
|Preferred stock exchanged for common stock               |  | $ |       |  | $ | 2,509 |  
|                                                         |  |   |        |  |   |       |  
|Acquisition of Financial Institution:                    |  |   |        |  |   |       |  
|Fair value of investment securities acquired             |  |   | 23,556 |  |   |      |  
|                                                         |  |   |        |  |   |       |  
|Fair value of premises and equipment acquired            |  | $ | 267    |  |   |      |  
|                                                         |  |   |        |  |   |       |  
|Fair value of loans acquired                             |  | $ | 60,602 |  |   |      |  
|                                                         |  |   |        |  |   |       |  
|Core deposit intangible                                  |  | $ | 1,732  |  |   |      |  
|                                                         |  |   |        |  |   |       |  
|Goodwill                                                 |  | $ | 10,597 |  |   |      |  
|                                                         |  |   |        |  |   |       |  
|Fair value of other assets acquired                      |  |   | 2,439  |  |   |      |  
|                                                         |  |   |        |  |   |       |  
|Fair value of deposit liabilities assumed                |  | $ | 74,645 |  |   |      |  
|                                                         |  |   |        |  |   |       |  
|Fair value of FHLB advances assumed                      |  | $ | 8,500  |  |   |      |  
|                                                         |  |   |        |  |   |       |  
|Fair value of other liabilities assumed                  |  |   | 749    |  |   |      |  
|                                                         |  |   |        |  |   |       |  

See accompanying notes to condensed consolidated financial statements.



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1General

The consolidated financial statements of Bancshares of Florida, Inc. (the Company) include the accounts of the Company and
its wholly-owned subsidiaries, Bank of Florida  Southwest, Bank of Florida  Southeast, and Bank of Florida  Tampa Bay (collectively, the Banks), and Bank of Florida Trust Company. All significant intercompany balances and
transactions have been eliminated.

Bancshares of Florida, Inc, incorporated in Florida in September 1998, is a multi-bank holding company.
Our subsidiary banks are separately chartered independent community banks with local boards that provide full-service commercial banking in a private banking environment. Our trust company offers investment management, trust administration, estate
planning, and financial planning services largely to the Banks 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, which is primarily
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, including possible acquisitions of other financial institutions, and provision of support and additional banking-related services to its subsidiary banks.

In the opinion of management, the accompanying 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, 2006 and December 31, 2005, and the results of operations for the three and nine-month periods ended September 30, 2006 and
2005, the cash flows for the nine months ended September 30, 2006 and 2005, and the stockholders equity for the nine and twelve months ended September 30, 2006 and December 31, 2005. 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, 2006 or any other interim period.

Reclassifications:

Certain reclassifications have been made to prior period financial statements to conform to the
September 30, 2006 financial statement presentation. These reclassifications only changed the reporting categories but did not affect our results of operations or financial position.

NOTE 2Stock-based Compensation

In 2000, the
Company adopted the 1999 Stock Option Plan (the Plan) pursuant to which the Companys Board of Directors may grant stock options to officers and key employees. The Plan, as amended at the 2005 Annual Shareholders meeting, authorized grants
of options to purchase no less than 11.5% of outstanding shares. In no event, however, would the number of reserved shares ever exceed 1,000,000 shares. The 2006 Stock compensation Plan authorized 12% of common shares issued after April 3, 2006
plus 58,154 shares which were available for grant under the 2005 plan and was approved by shareholders on June 8, 2006.

This plan
provides for the grant of the following: options to purchase common stock; restricted shares of common stock (which may be subject to both grant and forfeiture conditions) (Restricted Stock); units (which are a contractual right for a
recipient to receive shares of Restricted Stock at a certain date or upon the occurrence of a certain event); and stock appreciation rights (entitling the grantee to receive the difference in value between the underlying common stock on the date of
exercise and the value of such stock on the date of grant) (SARS), which may be either freestanding or granted in tandem with an option. Options to purchase common stock may be either incentive stock options (ISOs), which are
intended to satisfy the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the Code), or non-qualified stock options (NQOs) which are not intended to satisfy the requirements of
Section 422 of the Code.

The exercise price of the stock options may not be less than the fair market value of common stock on the date the option is
granted. The Plan provides for the grant of options at the discretion of the Board of Directors or a committee designated by the Board of Directors to administer the Plan. Each stock option granted under the Plan has a maximum term of ten years
subject to earlier termination in the event the participant ceases to be an employee. The committee shall determine the period during which stock options vest at the date of grant. The Plan will



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

NOTE 2Stock-based Compensation (contd)



terminate on June 8, 2016. At September 30, 2006, there were 465,955 shares available for grant under the Plan.

Prior to January 1, 2006, the Companys stock option plans were accounted for under the recognition and measurement provisions of APB Opinion
No. 25 (Opinion 25), Accounting for Stock Issued to Employees, and related interpretations, as permitted by FASB Statement No. 123, Accounting for Stock-Based Compensation (as amended by SFAS No. 148, Accounting for
Stock-Based Compensation Transition and Disclosure) (collectively SFAS 123). No stock-based employee compensation cost was recognized in the Companys Statements of Operations through December 31, 2005, as all options granted to
employees under the plans had an exercise price equal to the market value of the underlying common stock on the date of grant. Effective January 1, 2006, the Company adopted the fair value recognition provisions of FASB Statement No. 123R
Share-Based Payment (SFAS 123R), using the modified-prospective-transition method. Under that transition method, compensation cost recognized in 2006 includes: (a) compensation cost for all share-based payments granted prior to, but not
yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS 123, and (b) compensation cost for all share-based payments granted subsequent to December 31, 2005,
based on the grant-date fair value estimated in accordance with the provisions of SFAS 123R. As of December 31, 2005, only 10,551 stock options were not fully vested.

In addition, prior to the adoption of SFAS 123R, the tax benefits of stock option exercises were classified as operating cash flows. Since the adoption
of SFAS 123R, tax benefits resulting from tax deductions in excess of the compensation cost recognized for options are classified as financing cash flows. As the Company adopted the modified prospective transition method, the prior period cash flow
statement was not adjusted to reflect current period presentation.

In 2005, the Companys Board of Directors approved the
acceleration of vesting of virtually all outstanding stock options that existed as of December 14, 2005 (the Acceleration). In accordance with SFAS 123, in 2005 the Company expensed the remaining unrecognized compensation cost
associated with the options with accelerated vesting in the pro forma disclosure. These actions were taken in order to avoid expense recognition in future financial statements upon adoption of SFAS 123R.

As a result of adopting SFAS 123R on January 1, 2006, the total fair value of shares vested and recognized as compensation expense was approximately
$100,500 and $123,900, respectively, for the three and nine-months ended September 30, 2006. There was no associated tax benefit recognized in connection with these incentive stock options. As of September 30, 2006, the Company had 36,050
nonvested options outstanding and there was $380,100 of total unrecognized compensation cost related to these nonvested options. This cost is expected to be recognized monthly on a straight-line basis, over the vesting periods, through June 30,
2011.

As part of the adoption of SFAS 123R, the Company examined its historical pattern of option exercises in an effort to determine if
there were any patterns based on certain employee populations. From this analysis, the Company could not identify any patterns in the exercise of options. As such, the Company used the guidance in Staff Accounting Bulletin No. 107 to determine
the estimated life of options issued subsequent to the adoption of SFAS 123R. Based on this guidance, the estimated term was deemed to be the midpoint of the vesting term and the contractual term ((vesting term and original contractual term)/2).
Expected volatility is based on historical volatility of the Companys stock.



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

NOTE 2Stock-based Compensation (contd)



The fair value of each option granted during the three months ended September 30, 2006 and 2005
was $11.68 and $8.86, respectively, and for the nine months ended September 30, 2006 and 2005 was $11.28 and $7.48, 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, |  
|                        |  | 2006                                    |   |  | 2005                                   |   |  | 2006    |   |  | 2005    |  
|Expected dividend yield |  | 0.00                                    | % |  | 0.00                                   | % |  | 0.00    | % |  | 0.00    | %
|Expected volatility     |  | 47.00                                   | % |  | 40.00                                  | % |  | 47.00   | % |  | 37.00   | %
|Risk-free interest rate |  | 5.06                                    | % |  | 4.05                                   | % |  | 4.80    | % |  | 3.86    | %
|Expected life           |  | 7 years                                 |   |  | 7 years                                |   |  | 7 years |   |  | 7 years |  

The following table illustrates the effect on net earnings and earnings per share if the Company
had applied the fair value recognition provisions of SFAS 123 to options granted under the Companys stock option plan for the three and nine-months ended September 30, 2005. For purposes of this pro forma disclosure, the value of the
options is estimated using the Black-Scholes option-pricing model and is being amortized to expense over the options vesting periods (in thousands, except per share data):



|                                                                                                                                    |  |                                             |      |   |                                            |   |       |  
|----------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------- | ---- | - | ------------------------------------------ | - | ----- | -
|                                                                                                                                    |  | For the three monthsended September 30,2005 |      |   | For the nine monthsended September 30,2005 |  
|Net income as reported                                                                                                              |  | $                                           | 587  |   |                                            | $ | 540   |  
|Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax
effects |  |                                             | (94  | ) |                                            |   | (631  | )
|                                                                                                                                    |  |                                             |      |   |                                            |   |       |  
|Proforma net income (loss)                                                                                                          |  | $                                           | 493  |   |                                            | $ | (91   | )
|                                                                                                                                    |  |                                             |      |   |                                            |   |       |  
|Earnings per share as reported:                                                                                                     |  |                                             |      |   |                                            |   |       |  
|Earnings per share  basic                                                                                                          |  | $                                           | 0.10 |   |                                            | $ | 0.05  |  
|                                                                                                                                    |  |                                             |      |   |                                            |   |       |  
|Earnings per common and common equivalent share  diluted                                                                           |  | $                                           | 0.10 |   |                                            | $ | 0.05  |  
|                                                                                                                                    |  |                                             |      |   |                                            |   |       |  
|Proforma earnings ( loss) per share:                                                                                                |  |                                             |      |   |                                            |   |       |  
|Earnings (loss) per share  basic                                                                                                   |  | $                                           | 0.08 |   |                                            | $ | (0.07 | )
|                                                                                                                                    |  |                                             |      |   |                                            |   |       |  
|Earnings (loss) per common and common equivalent share - diluted share  diluted                                                    |  | $                                           | 0.08 |   |                                            | $ | (0.06 | )
|                                                                                                                                    |  |                                             |      |   |                                            |   |       |  

The Company has also issued warrants to the Board of Directors of the Company and Board members
and Advisory Board members of the Companys subsidiaries. At September 30, 2006 and December 31, 2005 warrants to purchase 241,879 and 288,190 common shares, respectively, at an average exercise price of $11.06 and $11.09,
respectively, were outstanding. Of that amount, 226,679 and 265,390, respectively, were fully vested. If, at any time, the holders of these warrants cease to serve as a director of the Company or a Company subsidiary, or an Advisory Board member,
the warrants shall immediately expire. Compensation expense totaling $97,000 and $133,600 was recognized during the nine months ended September 30, 2006 and 2005, respectively in connection with certain of these warrants and options.



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

NOTE 2Stock-based Compensation (contd)



The total intrinsic value of options exercised during the three and nine months ended
September 30, 2006 was $6,700 and $35,700, respectively. Stock option activity during the period was as follows:



|                                |  |                    |   |  |                                       |       |                          |           |                         |   |      
|------------------------------- |  | ------------------ | - |  | ------------------------------------- | ----- | ------------------------ | --------- | ----------------------- | - | -----
|Stock Option Plan               |  | OPTIONSOUTSTANDING |   |  | WEIGHTED AVERAGE OPTIONPRICEPER SHARE |       | REMAININGCONTRACTUALTERM |           | AGGREGATEINTRINSICVALUE
|Balance December 31, 2005       |  | 655,189            |   |  | $                                     | 14.61 |                          |           |                         |   |      
|Granted                         |  | 26,499             |   |  |                                       | 20.88 |                          |           |                         |   |      
|Exercised                       |  | (10,391            | ) |  |                                       | 11.04 |                          |           |                         |   |      
|Forfeited                       |  | (2,050             | ) |  |                                       | 17.57 |                          |           |                         |   |      
|                                |  |                    |   |  |                                       |       |                          |           |                         |   |      
|Balance, September 30, 2006     |  | 669,247            |   |  | $                                     | 15.12 |                          | 7.3 years |                         | $ | 5,317
|                                |  |                    |   |  |                                       |       |                          |           |                         |   |      
|Exercisable, September 30, 2006 |  | 637,748            |   |  | $                                     | 15.07 |                          | 7.2 years |                         | $ | 5,017
|                                |  |                    |   |  |                                       |       |                          |           |                         |   |      
|Stock Warrants Outstanding      |  |                    |   |  |                                       |       |                          |           |                         |   |      
|Balance December 31, 2005       |  | 288,190            |   |  | $                                     | 11.09 |                          |           |                         |   |      
|Granted                         |  |                   |   |  |                                       |      |                          |           |                         |   |      
|Exercised                       |  | (46,311            | ) |  |                                       | 11.24 |                          |           |                         |   |      
|Forfeited                       |  |                   |   |  |                                       |      |                          |           |                         |   |      
|                                |  |                    |   |  |                                       |       |                          |           |                         |   |      
|Balance September 30, 2006      |  | 241,879            |   |  | $                                     | 11.06 |                          |           |                         |   |      
|                                |  |                    |   |  |                                       |       |                          |           |                         |   |      

NOTE 3Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (the FASB) issued FASB Statement No. 158, Employers Accounting
for Defined Benefit Pension and Other Postretirement Plans (an amendment of FASB Statements No. 87, 88, 106, and 132R,(FAS 158). FAS 158 requires an employer to: (a) recognize in its statement of financial position
an asset for a plans overfunded status or a liability for a plans underfunded status; (b) measure a plans assets and its obligations that determine its funded status as of the end of the employers fiscal year, and;
(c) recognize changes in the funded status of a defined benefit postretirement plan in the year in which the changes occur as a component of comprehensive income. The requirement to recognize the funded status of a benefit plan and the
disclosure requirements are effective for financial statements as of the fiscal year ended December 15, 2006. The requirement to measure plan assets and benefit obligations as of the date of the employers fiscal year-end statement of
financial position is effective for financial statements issued for fiscal years ending after December 15, 2008. Management believes this Statement will not have a material effect on the Companys consolidated financial statements.

In September 2006, the Financial Accounting Standards Board (the FASB) issued FASB Statement No. 157, Fair Value
Measurements,(FAS 157). FAS 157 provides enhanced guidance for using fair value to measure assets and liabilities. The standard also responds to investors request for expanded information about the extent to which
companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurement on earnings and is applicable whenever other standards require (or permit) assets and liabilities to be
measured at fair value. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those years. Early adoption is permitted. Management believes this Statement will
not have a material effect on the Companys consolidated financial statements.

In June 2006, the Financial Accounting Standards Board
(the FASB) issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109,(FIN 48). FIN 48 clarifies the accounting for uncertainty in
income taxes recognized in an enterprises financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. This interpretation prescribes a



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

NOTE 3Recent Accounting Pronouncements (contd)



recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a
tax return. This statement is effective for fiscal years beginning after December 15, 2006. Management believes this Statement will not have a material effect on the Companys consolidated financial statements.

In March 2006, the FASB issued FASB Statement No. 156, Accounting for Servicing of Financial Assets,(FAS 156) which amends FASB
Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. This Statement addresses the recognition and measurement of separately recognized servicing assets and
liabilities, such as those common with mortgage securitization activities, and provides an approach to simplify efforts to obtain hedge-like accounting. It also clarifies when an obligation to service financial assets should be separately recognized
as a servicing asset or servicing liability and requires that those separately recognized assets or liabilities be initially measured at fair value, if practicable. FAS 156 permits an entity to choose either the amortization method or the fair value
method for subsequent measurement and also permits a servicer that uses derivative financial instruments to offset risks on servicing to report both the derivative financial instrument and related servicing asset or liability by using a consistent
measurement attribute  fair value. This Statement shall be effective for all separately recognized servicing assets and liabilities acquired or issued after the beginning of an entitys first fiscal year beginning after September 15,
2006, with early adoption permitted. Management believes this Statement will not have a material effect on the Companys consolidated financial statements.

In February 2006, the FASB issued FASB Statement No. 155, Accounting for Hybrid Financial Instruments  an amendment of FASB Statements No. 133 and 140.This statement amends FASB
Statements No. 133, Accounting for Derivative Instruments and Hedging Activities (FAS 133), and No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities (FAS 140). This Statement allows financial instruments that have embedded derivatives to be accounted for as a whole (eliminating the need to bifurcate the derivative from its host) if the holder elects to account
for the whole instrument on a fair value basis. It also clarifies which interest-only strips and principal-only strips are not subject to the requirements of FAS 133; establishes a requirement to evaluate interests in securitized financial assets to
identify interest that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation; clarifies that concentrations of credit risk in the form of subordination are not embedded
derivatives; and, amends FAS 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. This
Statement shall be effective for all financial instruments acquired or issued after the beginning of an entitys first fiscal year beginning after September 15, 2006. Management believes this Statement will not have a material effect on
the Companys consolidated financial statements.



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)



NOTE 4Income Per Common Share

Basic income per share represents net income available to common shareholders minus preferred stock dividends divided by the weighted-average number of
common shares outstanding during the period. Dilutive income per share is computed based on the weighted-average number of common shares outstanding plus the effect of stock options and warrants outstanding computed using the treasury stock
method.

Components used in computing income per share for the three and nine-months ended September 30, 2006 and 2005, are summarized
as follows (in thousands, except share data):



|                                                  |  |                                          |     |                                   |           |                |   |           |  |                                   |     |                |           |  |   |     
|------------------------------------------------- |  | ---------------------------------------- | --- | --------------------------------- | --------- | -------------- | - | --------- |  | --------------------------------- | --- | -------------- | --------- |  | - | ----
|                                                  |  | For the three months ended September 30,
|                                                  |  | 2006                                     |     | 2005                             
|                                                  |  | NetIncome                                |     | Weighted-AverageSharesOutstanding |           | IncomePerShare |   | NetIncome |  | Weighted-AverageSharesOutstanding |     | IncomePerShare
|Net income                                        |  | $                                        | 689 |                                   | 9,149,185 |                | $ | 0.08      |  | $                                 | 587 |                | 5,917,630 |  | $ | 0.10
|Dilutive effect of stock options outstanding      |  |                                          |     |                                   | 175,955   |                |   |           |  |                                   |     |                | 168,201   |  |   |     
|Dilutive effect of warrants outstanding           |  |                                          |     |                                   | 72,732    |                |   |           |  |                                   |     |                | 82,377    |  |   |     
|                                                  |  |                                          |     |                                   |           |                |   |           |  |                                   |     |                |           |  |   |     
|Income available to common shareholders  diluted |  | $                                        | 689 |                                   | 9,397,872 |                | $ | 0.07      |  | $                                 | 587 |                | 6,168,208 |  | $ | 0.10
|                                                  |  |                                          |     |                                   |           |                |   |           |  |                                   |     |                |           |  |   |     



|                                                  |  |                                         |       |                                   |           |                |   |           |  |   |                                   |   |                |           |  |   |     
|------------------------------------------------- |  | --------------------------------------- | ----- | --------------------------------- | --------- | -------------- | - | --------- |  | - | --------------------------------- | - | -------------- | --------- |  | - | ----
|                                                  |  | For the nine months ended September 30,
|                                                  |  | 2006                                    |       | 2005                             
|                                                  |  | NetIncome                               |       | Weighted-AverageSharesOutstanding |           | IncomePerShare |   | NetIncome |  |   | Weighted-AverageSharesOutstanding |   | IncomePerShare
|Net income                                        |  | $                                       | 1,643 |                                   |           |                |   |           |  | $ | 540                               |   |                |           |  |   |     
|Less premium paid on preferred stock              |  |                                         |      |                                   |           |                |   |           |  |   | (149                              | ) |                |           |  |   |     
|Less preferred stock dividends                    |  |                                         |      |                                   |           |                |   |           |  |   | (125                              | ) |                |           |  |   |     
|                                                  |  |                                         |       |                                   |           |                |   |           |  |   |                                   |   |                |           |  |   |     
|Income available to common shareholders  basic   |  |                                         | 1,643 |                                   | 7,506,280 |                | $ | 0.22      |  |   | 266                               |   |                | 5,484,007 |  | $ | 0.05
|Dilutive effect of stock options outstanding      |  |                                         |       |                                   | 184,394   |                |   |           |  |   |                                   |   |                | 122,188   |  |   |     
|Dilutive effect of warrants outstanding           |  |                                         |       |                                   | 72,980    |                |   |           |  |   |                                   |   |                | 65,593    |  |   |     
|                                                  |  |                                         |       |                                   |           |                |   |           |  |   |                                   |   |                |           |  |   |     
|Income available to common shareholders  diluted |  | $                                       | 1,643 |                                   | 7,763,654 |                | $ | 0.21      |  | $ | 266                               |   |                | 5,671,788 |  | $ | 0.05
|                                                  |  |                                         |       |                                   |           |                |   |           |  |   |                                   |   |                |           |  |   |     



11



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)



NOTE 5Business Combination

On August 25, 2006, the Company completed the acquisition of Bristol Bank (Bristol) in Coral Gables, Florida, by merging Bristol into the Companys wholly-owned subsidiary, Bank of Florida 
Southeast. The acquisition of Bristol Bank provides the Company entry into the dynamic Coral Gables market. The Coral Gables/Miami-Dade County demographics are a perfect fit for the Companys premium private-banking brand and
entrepreneurial business model. The Company issued a total of 688,218 shares of common stock and cash consideration of approximately $6.2 million representing total consideration of $21.0 million.

The Company recorded $12.3 million in intangible assets, of which $1.7 million was allocated to the core deposit intangible. The principal factors
considered when valuing the core deposit intangible consist of the following: (1) the rate and maturity structure of the interest bearing liabilities, (2) estimated retention rates for each deposit liability category, (3) the current
interest rate environment and (4) estimated noninterest income potential of the acquired relationship. The core deposit intangible created is being amortized on a double declining balance basis over ten years. The remaining intangible created
of $10.6 million, was allocated to goodwill.

The following table summarizes the fair values of the assets acquired and liabilities assumed
at the date of acquisition (in thousands):



|                                |  |              |        
|------------------------------- |  | ------------ | -------
|                                |  | Bristol Bank
|Cash and due from banks         |  | $            | 2,329  
|Securities                      |  |              | 23,556 
|Federal funds sold              |  |              | 4,522  
|Net loans                       |  |              | 60,016 
|Other assets                    |  |              | 2,439  
|Goodwill                        |  |              | 10,597 
|Core deposit intangible         |  |              | 1,732  
|                                |  |              |        
|Total assets acquired           |  | $            | 105,191
|                                |  |              |        
|Deposits                        |  |              | 74,645 
|Federal Home Loan Bank advances |  |              | 8,500  
|Other liabilities               |  |              | 749    
|                                |  |              |        
|Total liabilities assumed       |  |              | 83,894 
|                                |  |              |        
|Net assets acquired             |  | $            | 21,297 
|                                |  |              |        

The Companys results of operations includes the operations of the acquired banks since the
acquisition date. The following table presents unaudited proforma results for the three and nine-months ended September 30, 2006 and 2005. Since no consideration is given to operational efficiencies and expanded products and services, the
proforma summary information does not necessarily reflect the results of operations as they would have been, if the acquisitions had occurred on January 1, for the periods presented (in thousands, except per share amount).



|                         |  |                                 |        |                                |   |       |  |      |        |  |   |       
|------------------------ |  | ------------------------------- | ------ | ------------------------------ | - | ----- |  | ---- | ------ |  | - | ------
|                         |  | Three months endedSeptember 30, |        | Nine months endedSeptember 30,
|                         |  | 2006                            |        | 2005                           |   | 2006  |  | 2005
|Total revenue            |  | $                               | 16,279 |                                | $ | 9,808 |  | $    | 43,204 |  | $ | 25,928
|Net income               |  | $                               | 120    |                                | $ | 591   |  | $    | 745    |  | $ | 405   
|Basic income per share   |  | $                               | 0.01   |                                | $ | 0.09  |  | $    | 0.09   |  | $ | 0.02  
|Diluted income per share |  | $                               | 0.01   |                                | $ | 0.09  |  | $    | 0.09   |  | $ | 0.02  



12



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)



NOTE 6Segment Information

The Company has five reportable segments: Bank of FloridaSouthwest, based in Naples, Florida; Bank of FloridaSoutheast, 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 following presents financial information of reportable segments as of and for the three-month periods ended
September 30, 2006 and 2005 and June 30, 2006. The Other column includes bank holding company financial results and inter-company elimination entries. 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 -Southeast |   | Bank ofFlorida -TampaBay |  |   | Bank ofFloridaTrustCompany |   | Other |   |         | Bancsharesof Florida,Inc.-Consolidated
|September 30, 2006                  |  |                           |         |                           |   |                          |  |   |                            |   |       |   |         |                                        |   |         |   |  |   |        
|Net interest income                 |  | $                         | 3,576   |                           | $ | 3,353                    |  | $ | 1,094                      |   |       | $ | 21      |                                        | $ | 288     |   |  | $ | 8,332  
|Provision for loan losses           |  |                           | 380     |                           |   | 201                      |  |   | 259                        |   |       |   |        |                                        |   |        |   |  |   | 840    
|Noninterest income                  |  |                           | 197     |                           |   | 178                      |  |   | 29                         |   |       |   | 658     |                                        |   |        |   |  |   | 1,062  
|Noninterest expense                 |  |                           | 1,479   |                           |   | 2,088                    |  |   | 916                        |   |       |   | 527     |                                        |   | 2,408   |   |  |   | 7,418  
|Holding company servicing costs     |  |                           | 649     |                           |   | 468                      |  |   | 177                        |   |       |   | 26      |                                        |   | (1,320  | ) |  |   |       
|                                    |  |                           |         |                           |   |                          |  |   |                            |   |       |   |         |                                        |   |         |   |  |   |        
|Net income (loss) before income tax |  |                           | 1,265   |                           |   | 774                      |  |   | (229                       | ) |       |   | 126     |                                        |   | (800    | ) |  |   | 1,136  
|Income tax expense (benefit)        |  |                           | 512     |                           |   | 78                       |  |   | 28                         |   |       |   | 112     |                                        |   | (283    | ) |  |   | 447    
|                                    |  |                           |         |                           |   |                          |  |   |                            |   |       |   |         |                                        |   |         |   |  |   |        
|Net income (loss)                   |  | $                         | 753     |                           | $ | 696                      |  | $ | (257                       | ) |       | $ | 14      |                                        | $ | (517    | ) |  | $ | 689    
|                                    |  |                           |         |                           |   |                          |  |   |                            |   |       |   |         |                                        |   |         |   |  |   |        
|End of period assets                |  | $                         | 367,417 |                           | $ | 405,457                  |  | $ | 114,477                    |   |       | $ | 3,020   |                                        | $ | 40,275  |   |  | $ | 850,096
|                                    |  |                           |         |                           |   |                          |  |   |                            |   |       |   |         |                                        |   |         |   |  |   |        
|Assets under advice                 |  | $                         |        |                           | $ |                         |  | $ |                           |   |       | $ | 381,371 |                                        | $ |        |   |  | $ | 381,371
|                                    |  |                           |         |                           |   |                          |  |   |                            |   |       |   |         |                                        |   |         |   |  |   |        
|June 30, 2006                       |  |                           |         |                           |   |                          |  |   |                            |   |       |   |         |                                        |   |         |   |  |   |        
|Net interest income                 |  | $                         | 3,328   |                           | $ | 3,001                    |  | $ | 806                        |   |       | $ | 20      |                                        | $ | 182     |   |  | $ | 7,337  
|Provision for loan losses           |  |                           | 330     |                           |   | 249                      |  |   | 77                         |   |       |   |        |                                        |   |        |   |  |   | 656    
|Noninterest income                  |  |                           | 172     |                           |   | 142                      |  |   | 26                         |   |       |   | 666     |                                        |   |        |   |  |   | 1,006  
|Noninterest expense                 |  |                           | 1,486   |                           |   | 1,849                    |  |   | 733                        |   |       |   | 515     |                                        |   | 2,181   |   |  |   | 6,764  
|Holding company servicing costs     |  |                           | 617     |                           |   | 436                      |  |   | 164                        |   |       |   | 25      |                                        |   | (1,242  | ) |  |   |       
|                                    |  |                           |         |                           |   |                          |  |   |                            |   |       |   |         |                                        |   |         |   |  |   |        
|Net income (loss) before income tax |  |                           | 1,067   |                           |   | 609                      |  |   | (142                       | ) |       |   | 146     |                                        |   | (757    | ) |  |   | 923    
|Income tax expense (benefit)        |  |                           | 401     |                           |   | 229                      |  |   | (48                        | ) |       |   | 58      |                                        |   | (270    | ) |  |   | 370    
|                                    |  |                           |         |                           |   |                          |  |   |                            |   |       |   |         |                                        |   |         |   |  |   |        
|Net income (loss)                   |  | $                         | 666     |                           | $ | 380                      |  | $ | (94                        | ) |       | $ | 88      |                                        | $ | (487    | ) |  | $ | 553    
|                                    |  |                           |         |                           |   |                          |  |   |                            |   |       |   |         |                                        |   |         |   |  |   |        
|End of period assets                |  | $                         | 390,062 |                           | $ | 284,511                  |  | $ | 92,149                     |   |       | $ | 2,882   |                                        | $ | (13,337 | ) |  | $ | 756,267
|                                    |  |                           |         |                           |   |                          |  |   |                            |   |       |   |         |                                        |   |         |   |  |   |        
|Assets under advice                 |  | $                         |        |                           | $ |                         |  | $ |                           |   |       | $ | 384,154 |                                        | $ |        |   |  | $ | 384,154
|                                    |  |                           |         |                           |   |                          |  |   |                            |   |       |   |         |                                        |   |         |   |  |   |        
|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) before income tax |  |                           | 877     |                           |   | 579                      |  |   | (154                       | ) |       |   | 52      |                                        |   | (767    | ) |  |   | 587    
|Income tax expense (benefit)        |  |                           |        |                           |   |                         |  |   |                           |   |       |   |        |                                        |   |        |   |  |   |       
|                                    |  |                           |         |                           |   |                          |  |   |                            |   |       |   |         |                                        |   |         |   |  |   |        
|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
|                                    |  |                           |         |                           |   |                          |  |   |                            |   |       |   |         |                                        |   |         |   |  |   |        



13



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

NOTE 6Segment Information (contd)



The following presents financial information of reportable segments as of and for the nine-month
periods ended September 30, 2006 and 2005. The Other column includes bank holding company financial results and inter-company elimination entries. 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 -Southeast |   | Bank ofFlorida -TampaBay |  |   | Bank ofFloridaTrustCompany |   | Other |   |         | Bancsharesof Florida,Inc.-Consolidated
|September 30, 2006                  |  |                           |         |                           |   |                          |  |   |                            |   |       |   |         |                                        |   |         |   |  |   |        
|Net interest income                 |  | $                         | 9,770   |                           | $ | 9,025                    |  | $ | 2,544                      |   |       | $ | 60      |                                        | $ | 488     |   |  | $ | 21,887 
|Provision for loan losses           |  |                           | 945     |                           |   | 710                      |  |   | 447                        |   |       |   |        |                                        |   |        |   |  |   | 2,102  
|Noninterest income                  |  |                           | 667     |                           |   | 484                      |  |   | 81                         |   |       |   | 1,936   |                                        |   |        |   |  |   | 3,168  
|Noninterest expense                 |  |                           | 4,382   |                           |   | 5,625                    |  |   | 2,226                      |   |       |   | 1,543   |                                        |   | 6,447   |   |  |   | 20,223 
|Holding company servicing costs     |  |                           | 1,873   |                           |   | 1,328                    |  |   | 487                        |   |       |   | 77      |                                        |   | (3,765  | ) |  |   |       
|                                    |  |                           |         |                           |   |                          |  |   |                            |   |       |   |         |                                        |   |         |   |  |   |        
|Net income (loss) before income tax |  |                           | 3,237   |                           |   | 1,846                    |  |   | (535                       | ) |       |   | 376     |                                        |   | (2,194  | ) |  |   | 2,730  
|Income tax expense (benefit)        |  |                           | 1,256   |                           |   | 484                      |  |   | (79                        | ) |       |   | 211     |                                        |   | (785    | ) |  |   | 1,087  
|                                    |  |                           |         |                           |   |                          |  |   |                            |   |       |   |         |                                        |   |         |   |  |   |        
|Net income (loss)                   |  | $                         | 1,981   |                           | $ | 1,362                    |  | $ | (456                       | ) |       | $ | 165     |                                        | $ | (1,409  | ) |  | $ | 1,643  
|                                    |  |                           |         |                           |   |                          |  |   |                            |   |       |   |         |                                        |   |         |   |  |   |        
|End of period assets                |  | $                         | 367,417 |                           | $ | 405,457                  |  | $ | 114,477                    |   |       | $ | 3,020   |                                        | $ | 40,275  |   |  | $ | 850,096
|                                    |  |                           |         |                           |   |                          |  |   |                            |   |       |   |         |                                        |   |         |   |  |   |        
|Assets under advice                 |  | $                         |        |                           | $ |                         |  | $ |                           |   |       | $ | 381,371 |                                        | $ |        |   |  | $ | 381,371
|                                    |  |                           |         |                           |   |                          |  |   |                            |   |       |   |         |                                        |   |         |   |  |   |        
|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) before income tax |  |                           | 2,173   |                           |   | 1,142                    |  |   | (757                       | ) |       |   | 82      |                                        |   | (2,100  | ) |  |   | 540    
|Income tax expense (benefit)        |  |                           |        |                           |   |                         |  |   |                           |   |       |   |        |                                        |   |        |   |  |   |       
|                                    |  |                           |         |                           |   |                          |  |   |                            |   |       |   |         |                                        |   |         |   |  |   |        
|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
|                                    |  |                           |         |                           |   |                          |  |   |                            |   |       |   |         |                                        |   |         |   |  |   |        



14



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)



NOTE 7Loans

The following table sets forth the composition of the loan portfolio at September 30, 2006 and December 31, 2005 (in thousands).



|                                                     |  |                   |         |   |                  |   |         |  
|---------------------------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                                                     |  | September 30,2006 |         |   | December 31,2005 |  
|Real estate:                                         |  |                   |         |   |                  |   |         |  
|Commercial real estate                               |  | $                 | 235,988 |   |                  | $ | 180,039 |  
|Real estate - construction                           |  |                   | 258,363 |   |                  |   | 141,534 |  
|One-to-four family residential                       |  |                   | 102,613 |   |                  |   | 64,805  |  
|Multi-family                                         |  |                   | 21,254  |   |                  |   | 25,255  |  
|                                                     |  |                   |         |   |                  |   |         |  
|Total Real Estate Loans                              |  |                   | 618,218 |   |                  |   | 411,633 |  
|Commercial Loans                                     |  |                   | 59,196  |   |                  |   | 36,834  |  
|Lines of credit                                      |  |                   | 35,893  |   |                  |   | 26,393  |  
|Consumer loans                                       |  |                   | 14,151  |   |                  |   | 11,391  |  
|                                                     |  |                   |         |   |                  |   |         |  
|Total Gross loans held for investment                |  |                   | 727,458 |   |                  |   | 486,251 |  
|Less: allowance for loan losses                      |  |                   | (7,094  | ) |                  |   | (4,603  | )
|Less: unamortized loan fees, net                     |  |                   | (1,212  | ) |                  |   | (852    | )
|                                                     |  |                   |         |   |                  |   |         |  
|Total loans held for investment, net                 |  | $                 | 719,152 |   |                  | $ | 480,796 |  
|                                                     |  |                   |         |   |                  |   |         |  
|Residential one-to-four family  loans held for sale |  | $                 | 2,364   |   |                  | $ | 1,323   |  
|                                                     |  |                   |         |   |                  |   |         |  

At September 30, 2006, the Company had two loans totaling $3.8 million which were classified
as impaired under SFAS 114. A loan is considered impaired when, based on current information and events; it is probable that the Company 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. A specific
allowance was not required on these loan as the value of the underlying collateral exceeds the current book value. At December 31, 2005, the Company had one loan totaling $500,000 which was classified as impaired under SFAS No. 114. The
average recorded investment in impaired loans during the nine-months ended September 30, 2006 and 2005, was $732,000 and $266,000, respectively. The amount of the interest recognized on impaired loans during the nine-month periods was not
significant.

At September 30, 2006 and December 31, 2005, the Company had nonaccrual loans with a balance of $743,000 and
$321,000, respectively. There were no loans past due 90 days or more and still accruing interest at September 30, 2006 and December 31, 2005, respectively. The following table represents the activity in the allowance for loan losses during
the nine months ended September 30, 2006 and 2005 (in thousands).



|                                |  |               |       |   |      |   |       |  
|------------------------------- |  | ------------- | ----- | - | ---- | - | ----- | -
|                                |  | September 30, |      
|                                |  | 2006          |       |   | 2005 |  
|Beginning balance               |  | $             | 4,603 |   |      | $ | 2,817 |  
|Reserves related to acquisition |  |               | 586   |   |      |   |      |  
|Provision for loan losses       |  |               | 2,102 |   |      |   | 1,309 |  
|Charge-offs                     |  |               | (200  | ) |      |   | (45   | )
|Recoveries                      |  |               | 3     |   |      |   | 3     |  
|                                |  |               |       |   |      |   |       |  
|Ending balance                  |  | $             | 7,094 |   |      | $ | 4,084 |  
|                                |  |               |       |   |      |   |       |  



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)



NOTE 8Goodwill and Other Intangible Assets

The Company has intangible assets totaling $13.2 million. Of that amount, $12.3 million was acquired through the purchase of Bristol Bank in August 2006
as discussed in Note 2  Business Combinations. The remaining $896,000 resulted from the purchase of Bank of Florida  Tampa Bay.

In connection with the acquisition of Bristol Bank, the Company recorded $10.6 million in goodwill and $1.7 million of core deposit intangible. The core deposit intangible created is being amortized on a double declining balance basis over
ten years. The estimated amortization expense for each of the five succeeding years ending December 31stis
$113,000, $296,000, $242,000, $198,000 and $162,000, respectively.

On July 27, 2004, the Company acquired 100% ownership of Bank of
Florida  Tampa Bay 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 $896,000 ($974,000 gross carrying amount less $78,000 accumulated amortization) and $925,000 ($974,000 gross carrying amount less $49,000 accumulated amortization) at September 30, 2006 and
December 31, 2005, respectively. This intangible is being amortized on a straight-line basis over 25 years. The estimated amortization expense for each of the five succeeding years ending December 31stis $38,955 per year.

NOTE 9Federal Home Loan
Bank Advances

At September 30, 2006, the Company had $39.5 million in advances from the Federal Home Loan Bank (FHLB), at an
average rate of 5.33%, with varying maturities. The Company had $3.0 million in FHLB advances at December 31, 2005 at a rate of 4.26%, maturing on June 24, 2008. At September 30, 2006 and December 31, 2005, the Company had an
unused credit line with the FHLB of $21.4 million and $32.1 million, respectively. Borrowings from the FHLB may be either on a fixed or variable rate basis. These borrowings are collateralized by the Companys FHLB stock and a blanket lien on
one-to-four family residential loans and certain loans secured by multifamily dwellings totaling $60.7 million as of September 30, 2006. The following table provides the amount, interest rate and maturity of outstanding FHLB advances at
September 30, 2006 and December 31, 2005, respectively (in thousands):



|                                 |  |                      |        |      |                     |   |        |   |       |  |      |  
|-------------------------------- |  | -------------------- | ------ | ---- | ------------------- | - | ------ | - | ----- |  | ---- | -
|                                 |  | At September 30,2006 |        |      | At December 31,2005 |  
|                                 |  | Amount               |        | Rate |                     |   | Amount |   | Rate  | 
|Fixed Rate; Matures 6/24/2008    |  | $                    | 3,000  |      | 4.26                | % |        | $ | 3,000 |  | 4.26 | %
|Fixed Rate; Matures 6/24/ 2008   |  |                      | 3,000  |      | 4.26                |   |        |   |      |  |     |  
|Variable Rate; Matures 6/13/2011 |  |                      | 15,000 |      | 5.90                |   |        |   |      |  |     |  
|Variable Rate; Matures 6/13/2011 |  |                      | 10,000 |      | 5.90                |   |        |   |      |  |     |  
|Variable Rate; Matures 7/21/2012 |  |                      | 3,500  |      | 4.83                |   |        |   |       |  |      |  
|Variable Rate; Matures 7/21/2015 |  |                      | 5,000  |      | 4.13                |   |        |   |      |  |     |  
|                                 |  |                      |        |      |                     |   |        |   |       |  |      |  
|Total FHLB Advances              |  | $                    | 39,500 |      | 5.33                | % |        | $ | 3,000 |  | 4.26 |  
|                                 |  |                      |        |      |                     |   |        |   |       |  |      |  



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)



NOTE 10Proposed Merger and Acquisition

On August 29, 2006 the Company announced the execution of a definitive agreement with Old Florida Bankshares, Inc., a $326 million-asset bank holding
company based in Fort Myers, Florida (Old Florida), by which Bancshares of Florida, Inc. will acquire Old Florida by merging it into Bancshares of Florida, Inc. and Old Floridas subsidiary, Old Florida Bank, will be combined with
those of Bancshares wholly-owned subsidiary Bank of FloridaSouthwest. Under the terms of the definitive agreement, Old Floridas shareholders may elect to receive either 1.7915 shares of the Companys common stock, $38.50 per
share in cash, or a combination of stock and cash. The value of the merger consideration will be approximately $82.6 million, consisting of approximately 3.1 million shares of the Companys common stock and $16.5 million in cash,
reflecting a mix of consideration of 80% common stock and 20% in cash. The merger is subject to customary closing conditions, including approval from the shareholders of the Company and Old Florida and the banking regulators.



17



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##### Table of Contents

SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA



|                                                              |  |                                                |           |   |              |   |           |               |  |   |               |   |  |               |           |   |  |   |           |  
|------------------------------------------------------------- |  | ---------------------------------------------- | --------- | - | ------------ | - | --------- | ------------- |  | - | ------------- | - |  | ------------- | --------- | - |  | - | --------- | -
|                                                              |  | Quarter Ended                                  |          
|                                                              |  | Sept. 30,2006                                  |           |   | June 30,2006 |   |           | March 31,2006 |  |   | Dec. 31, 2005 |   |  | Sept. 30,2005 |          
|                                                              |  | (Dollars In Thousands, except per share data.) |          
|Statement of Operations Data:                                 |  |                                                |           |   |              |   |           |               |  |   |               |   |  |               |           |   |  |   |           |  
|Total interest income                                         |  | $                                              | 14,299    |   |              | $ | 11,858    |               |  | $ | 9,945         |   |  | $             | 8,820     |   |  | $ | 7,560     |  
|Total interest expense                                        |  |                                                | 5,967     |   |              |   | 4,521     |               |  |   | 3,727         |   |  |               | 3,040     |   |  |   | 2,371     |  
|                                                              |  |                                                |           |   |              |   |           |               |  |   |               |   |  |               |           |   |  |   |           |  
|Net interest income before provision for loan losses          |  |                                                | 8,332     |   |              |   | 7,337     |               |  |   | 6,218         |   |  |               | 5,780     |   |  |   | 5,189     |  
|Provision for loan losses                                     |  |                                                | 840       |   |              |   | 656       |               |  |   | 606           |   |  |               | 594       |   |  |   | 614       |  
|                                                              |  |                                                |           |   |              |   |           |               |  |   |               |   |  |               |           |   |  |   |           |  
|Net interest income after provision for loan losses           |  |                                                | 7,492     |   |              |   | 6,681     |               |  |   | 5,612         |   |  |               | 5,186     |   |  |   | 4,575     |  
|Noninterest income                                            |  |                                                | 1,062     |   |              |   | 1,006     |               |  |   | 1,099         |   |  |               | 878       |   |  |   | 865       |  
|Noninterest expense                                           |  |                                                | 7,418     |   |              |   | 6,764     |               |  |   | 6,041         |   |  |               | 5,448     |   |  |   | 4,853     |  
|                                                              |  |                                                |           |   |              |   |           |               |  |   |               |   |  |               |           |   |  |   |           |  
|Net income before tax                                         |  |                                                | 1,136     |   |              |   | 923       |               |  |   | 670           |   |  |               | 616       |   |  |   | 587       |  
|Income tax expense (benefit)                                  |  |                                                | 447       |   |              |   | 370       |               |  |   | 270           |   |  |               | (3,728    | ) |  |   |          |  
|                                                              |  |                                                |           |   |              |   |           |               |  |   |               |   |  |               |           |   |  |   |           |  
|Net income                                                    |  | $                                              | 689       |   |              |   | 553       |               |  |   | 400           |   |  |               | 4,344     |   |  |   | 587       |  
|                                                              |  |                                                |           |   |              |   |           |               |  |   |               |   |  |               |           |   |  |   |           |  
|Share Data:                                                   |  |                                                |           |   |              |   |           |               |  |   |               |   |  |               |           |   |  |   |           |  
|Basic income per share                                        |  | $                                              | 0.08      |   |              | $ | 0.07      |               |  | $ | 0.07          |   |  | $             | 0.73      |   |  | $ | 0.10      |  
|Diluted income per share                                      |  |                                                | 0.07      |   |              |   | 0.07      |               |  |   | 0.06          |   |  |               | 0.70      |   |  |   | 0.10      |  
|Book value per common share (period end)                      |  |                                                | 14.06     |   |              |   | 13.35     |               |  |   | 10.01         |   |  |               | 9.94      |   |  |   | 9.17      |  
|Weighted-average shares outstanding basic                    |  |                                                | 9,149,185 |   |              |   | 7,390,499 |               |  |   | 5,943,933     |   |  |               | 5,923,862 |   |  |   | 5,917,630 |  
|Weighted-average shares outstanding diluted                  |  |                                                | 9,397,872 |   |              |   | 7,648,394 |               |  |   | 6,213,178     |   |  |               | 6,224,724 |   |  |   | 6,168,208 |  
|Total shares outstanding                                      |  |                                                | 9,563,703 |   |              |   | 8,871,444 |               |  |   | 5,944,533     |   |  |               | 5,943,783 |   |  |   | 5,919,385 |  
|Balance Sheet Data:                                           |  |                                                |           |   |              |   |           |               |  |   |               |   |  |               |           |   |  |   |           |  
|Total assets                                                  |  | $                                              | 850,096   |   |              |   | 756,267   |               |  | $ | 620,136       |   |  | $             | 569,782   |   |  | $ | 518,083   |  
|Total cash and cash equivalents                               |  |                                                | 48,457    |   |              |   | 91,040    |               |  |   | 36,320        |   |  |               | 50,117    |   |  |   | 43,081    |  
|Interest-earning assets                                       |  |                                                | 789,695   |   |              |   | 728,062   |               |  |   | 588,641       |   |  |               | 538,255   |   |  |   | 494,945   |  
|Investment securities                                         |  |                                                | 41,995    |   |              |   | 42,316    |               |  |   | 18,319        |   |  |               | 18,622    |   |  |   | 19,094    |  
|Loans                                                         |  |                                                | 728,610   |   |              |   | 607,612   |               |  |   | 551,078       |   |  |               | 487,574   |   |  |   | 445,494   |  
|Allowance for loan losses                                     |  |                                                | 7,094     |   |              |   | 5,666     |               |  |   | 5,055         |   |  |               | 4,603     |   |  |   | 4,084     |  
|Deposit accounts                                              |  |                                                | 660,443   |   |              |   | 593,561   |               |  |   | 535,192       |   |  |               | 495,080   |   |  |   | 443,308   |  
|Other borrowings                                              |  |                                                | 50,500    |   |              |   | 42,000    |               |  |   | 24,000        |   |  |               | 14,000    |   |  |   | 19,000    |  
|Stockholders equity                                          |  |                                                | 134,463   |   |              |   | 118,444   |               |  |   | 59,485        |   |  |               | 59,061    |   |  |   | 54,285    |  
|Performance Ratios:                                           |  |                                                |           |   |              |   |           |               |  |   |               |   |  |               |           |   |  |   |           |  
|Return on average assets                                      |  |                                                | 0.35      |   |              |   | 0.32      | %             |  |   | 0.26          | % |  |               | 3.14      | % |  |   | 0.46      | %
|Return on average common stockholders equity                 |  |                                                | 2.20      |   |              |   | 2.48      |               |  |   | 2.77          |   |  |               | 31.50     |   |  |   | 4.27      |  
|Interest-rate spread during the period                        |  |                                                | 3.47      |   |              |   | 3.85      |               |  |   | 3.77          |   |  |               | 3.77      |   |  |   | 3.71      |  
|Net interest margin                                           |  |                                                | 4.46      |   |              |   | 4.60      |               |  |   | 4.43          |   |  |               | 4.42      |   |  |   | 4.31      |  
|Efficiency ratio1                                             |  |                                                | 78.97     |   |              |   | 81.08     |               |  |   | 82.57         |   |  |               | 81.83     |   |  |   | 80.16     |  
|Asset Quality Ratios:                                         |  |                                                |           |   |              |   |           |               |  |   |               |   |  |               |           |   |  |   |           |  
|Allowance for loan losses to period end loans                 |  |                                                | 0.97      | % |              |   | 0.93      | %             |  |   | 0.92          | % |  |               | 0.94      | % |  |   | 0.92      | %
|Allowance for loan losses to nonperforming loans              |  |                                                | 954.12    |   |              |   |          |               |  |   | 11121.59      |   |  |               | 1435.40   |   |  |   | 1350.37   |  
|Net charge-offs to average loans                              |  |                                                | 0.00      |   |              |   | 0.03      |               |  |   | 0.12          |   |  |               | 0.06      |   |  |   | 0.04      |  
|Nonperforming assets to period end total assets               |  |                                                | 0.09      |   |              |   |          |               |  |   | 0.01          |   |  |               | 0.06      |   |  |   | 0.06      |  
|Capital and Liquidity Ratios:                                 |  |                                                |           |   |              |   |           |               |  |   |               |   |  |               |           |   |  |   |           |  
|Average equity to average assets                              |  |                                                | 16.05     | % |              |   | 12.96     | %             |  |   | 9.53          | % |  |               | 9.97      | % |  |   | 10.74     | %
|Leverage (4.00% required minimum)                             |  |                                                | 15.58     |   |              |   | 17.01     |               |  |   | 9.46          |   |  |               | 10.28     |   |  |   | 10.46     |  
|Risk-based capital:                                           |  |                                                |           |   |              |   |           |               |  |   |               |   |  |               |           |   |  |   |           |  
|Tier 1                                                        |  |                                                | 15.09     | % |              |   | 16.87     | %             |  |   | 9.35          | % |  |               | 10.48     | % |  |   | 10.88     | %
|Total                                                         |  |                                                | 17.38     |   |              |   | 19.29     |               |  |   | 11.97         |   |  |               | 13.37     |   |  |   | 13.34     |  
|Average loans held for investment to average deposits         |  |                                                | 108.00    |   |              |   | 100.35    |               |  |   | 97.65         |   |  |               | 97.44     |   |  |   | 93.32     |  
|Trust Assets Under Advice:                                    |  |                                                |           |   |              |   |           |               |  |   |               |   |  |               |           |   |  |   |           |  
|Total assets under advice                                     |  | $                                              | 381,371   |   |              |   | 384,154   |               |  | $ | 409,092       |   |  | $             | 390,002   |   |  | $ | 340,753   |  
|Trust fee income                                              |  |                                                | 659       |   |              |   | 666       |               |  |   | 612           |   |  |               | 457       |   |  |   | 401       |  
|Trust fees as a % of average assets under advice (annualized) |  |                                                | 0.69      | % |              |   | 0.69      | %             |  |   | 0.60          | % |  |               | 0.47      | % |  |   | 0.47      | %

---

|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, incorporated in Florida in September 1998, is an $850.1 million
financial services company. Our subsidiary banks are separately chartered independent community banks with local boards that provide full-service commercial banking in a private banking environment. Our Trust Company offers investment management,
trust administration, estate planning, and financial planning services largely to the Banks 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, which is primarily 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, including possible acquisitions of other financial institutions, and provision of support and additional banking-related services to its subsidiary banks.

Our corporate vision is to be recognized as a premier financial services company in our markets, while maintaining a well-controlled environment. Our
primary strategy to achieve this vision is to focus on core deposit growth with state-of-the-art products and services and to focus lending on commercial real estate properties in the $1 million to $10 million size range.

The primary market areas of the Company are among the fastest growing markets in Florida. Those markets include Collier and Lee Counties on the southwest
coast of Florida (served by Bank of FloridaSouthwest) and Broward, Miami-Dade, and Palm Beach Counties on the southeast coast (served by Bank of FloridaSoutheast). 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.

Total Assets grew to $850.1 million at September 30, 2006, up $280.3 million or 49% from December 31, 2005. During the most recent quarter, the
Company completed the acquisition of Bristol Bank which contributed $105.2 million of asset growth, including goodwill and the core deposit intangible, and firmly positioned us in the Miami-Dade county, while during the second quarter 2006, the
Company completed its fifth and largest common stock offering, issuing 2.875 million shares at $21.50 per share, with net proceeds totaling $57.7 million. Book value per share at September 30, 2006 rose to $14.06, up 41% from the end of
last year. Loans climbed $241.9 million or 50% during the last 9 months, of which $60.6 million was attributable to the Bristol Bank acquisition.

The Company realized third quarter net income of $689,000, or $0.07 per diluted share. On a pretax basis, earnings were $1.1 million, nearly twice the $587,000 level in third quarter 2005, when the Company was not in a taxable position.
Top-line revenue, which the Company defines as net interest income plus noninterest income (excluding net securities gains/losses), increased over $3.3 million or 55%. This improvement was primarily driven by $3.1 million greater net interest
income, a result of $263 million or 55% growth in average earning assets and a 14 basis point climb in net interest margin to 4.46%. Noninterest income increased 23% due to growth in trust fees. Noninterest expense rose $2.6 million or 53%, $775,000
less than the increase in top-line revenue, indicating positive operating leverage and driving the Companys efficiency ratio down to 79%. The bulk of this expense increase reflects addition to personnel in the Companys areas of strategic
focus, including residential mortgage origination and sales, deposit growth/cash management services, and lending and credit administration. For the first nine months of this year, net income was $1.6 million; a $2.2 million pretax improvement from
the comparable 2005 period, and earnings per diluted share was $0.21 versus $0.05 one year earlier.

ANALYSIS OF FINANCIAL CONDITION

Investment securities and overnight investments

Total investment securities and overnight investments were $56.2 million at September 30, 2006, an increase of $8.9 million or 19% over the levels at
December 31, 2005. Securities available for sale totaled $42.0 million, an increase of $23.4 million compared to those held at December 31, 2005. The purchase of additional securities during the quarter was part of an asset and liability
strategy to position the balance sheet for volatility in interest rates. The Company holds one bond for $25,000 that was classified as held to maturity at September 30, 2006 and December 31, 2005. The Company does not currently engage in
trading activities and, therefore, did not hold any securities classified as trading at September 30, 2006 or December 31, 2005.



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##### Table of Contents

Federal Funds sold totaled $14.2 million at September 30, 2006, a decrease of $14.5 million from
December 31, 2005. This category of earning assets is normally used as a temporary investment vehicle to support the Companys daily funding requirements and, as a result, fluctuates with loan demand. The average yield on federal funds for
the first nine months of 2006 was 5.02%, up 211 basis points compared to the first nine months of 2005 and averaged 5.52% during most recent quarter.

Loans

Total gross loans, including loans held for sale, totaled $728.6 million at September 30, up $122.2
million or 20% during the last 90 days for a total of $241.9 million or 50% since the beginning of the year. This increase includes $60.6 million from the acquisition of Bristol Bank with the remaining $181.3 million from strong loan demand in our
markets.

Construction loans, largely secured by commercial real estate, totaled $258.4 million (36% of total loans) at September 30,
2006, up $116.8 million since the end of last year. Commercial real estate loans, including multi-family dwellings but excluding those in construction, increased by $51.9 million and also total 35% of total loans outstanding, while commercial and
industrial loans climbed $22.4 million to approximately 8% of total loans outstanding. One-to-four family residential loans, including loans held for sale, were $105.0 million (14% of total loans), up $38.8 million from year-end, while consumer
lines of credit and installment and other loans increased to $35.9 million (5% of total loans) and $14.2 million (2% of total loans), respectively.

Asset quality

The Companys asset quality continues to be strong, with nonperforming loans (nonaccruals and
90+ days past due) totaling $743,000 at September 30, 2006. Of that amount, $647,000 were attributable to two loans acquired in the Bristol Bank transaction. Consequently, nonperformers as a percent of loans outstanding increased from
0.07% at December 31, 2005, to 0.10% as of September 30, 2006. Thirty-to-ninety day delinquent loans were $1.1 million or 0.15% of loans outstanding at September 30, 2006. There were $1,280 in net recoveries during the third quarter
for a total of $197,000 in net charge-offs for the first nine months of 2006, resulting in net charge-offs to average loans of 0.07%. These levels compare to 0.02% in net charge-offs for the first nine months of 2005.

Deposits

Total deposits rose $66.9 million during the third quarter for a total increase since the beginning of the year of $165.4 million or 33%. Included in the $165.4 million is an increase of $97.5 million in money market accounts which
represents a 60% increase over the first nine months of the year for that deposit category. Average deposits for the first nine months of 2006 totaled $564.7 million, up $146.4 million or 35% compared to the same period last year. Average
noninterest-bearing checking (DDA) accounts comprised 15% of total average deposits for the first nine months of 2006, slightly below 17% for the same period last year.

The annualized average rate paid on total interest bearing deposits during the first nine months of 2006 was 3.62%, an increase of 124 basis points compared to the same period last year. For the third quarter of 2006,
the annualized average rate paid on total interest bearing deposits was 4.02%, an increase of 152 basis points compared to the third quarter of 2005. These increases resulted primarily from the higher interest rate environment under which we
currently operate and in competition in the pricing of deposit products.

Borrowings

While client deposits remain our primary source of funding for asset growth, management uses other borrowings as a funding source for loan growth,
regulatory capital needs, and as a tool to manage the Companys interest rate risk. At September 30, 2006, borrowings totaled $50.5 million, an increase of $36.5 million compared to December 31, 2005. Total borrowings at
September 30, 2006, consisted of $11.0 million in subordinated debt and $39.5 million in Federal Home Loan Bank (FHLB) Advances compared to $11.0 million and $3.0 million, respectively, at the end of 2005. During the third quarter
of 2006, the Company took down $25.0 million in floating rate FHLB advances with an interest rate floor contract and purchased mortgage-backed securities, as a partial hedge against the potential future impact of falling interest rates.
Additionally, there were $8.5 million in FHLB Advances obtained through the Bristol Bank acquisition. All of the Companys borrowings are long-term with maturities ranging from June 2008 through July 2015.



20



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##### Table of Contents

Stockholders equity

Total stockholders equity was $134.5 million at September 30, 2006, a $75.4 million increase since December 31, 2005. This increase was primarily the result of $14.8 million in common stock issued in
connection with the Bristol Bank acquisition and the Companys 2,875,000 share common stock offering in May 2006, which netted proceeds of $57.7 million. The Company intends to use the proceeds from the secondary offering to capitalize our Palm
Beach County banking location, making it the fourth bank in our multi-bank structure, expected in 2007; and support our continued rapid earning asset growth throughout South Florida and Tampa Bay, which has exceeded our initial growth projections.
In addition $6.2 million was used to finance the cash portion of our purchase of Bristol Bank in August, 2006.

As a result of the common
stock offering and stock issued in the Bristol Bank acquisition, coupled with record earnings growth, the Companys Tier 1 leverage ratio increased to 15.58% at September 30, 2006, up from 10.28% at December 31, 2005.

ANALYSIS OF RESULTS OF OPERATIONS

Third Quarter 2006 Compared to Third Quarter 2005

Consolidated net income for the third quarter of 2006 totaled $689,000. Income before income tax was $1.1 million, an increase of $549,000 or 94% compared
to third quarter 2005. Top-line revenue climbed $3.3 million or 55%, primarily driven by $3.1 million greater net interest income, resulting from $263 million or 55% growth in earning assets and a 15 basis point increase in the net interest margin
to 4.46%.

The strong $3.1 million increase in top-line revenue against a $2.6 million or 53% increase in noninterest expense produced
continued favorable operating leverage resulting in an efficiency ratio for the quarter of 79%. The bulk of the expense increase relates to personnel costs. Since year-end 2005, there have been 29 additions to staff across the Companys areas
of strategic focus, including residential mortgage origination and sales; deposit growth/cash management services; lending and credit administration; and selected branch expansion. The provision for loan losses rose $226,000, consistent with 64%
growth in loans and continued strong asset quality.

Net interest income

Net interest income in the third quarter totaled $8.3 million, up $3.1 million or 61% greater than the third quarter of 2005. Approximately $420,000 of
the increase in net interest income was due to an improved net interest margin, which rose to 4.46%. The spread between the yield on earning assets and cost of interest-bearing liabilities also narrowed when comparing third quarter 2006 versus third
quarter 2005. However, the greater portion of equity supporting earning assets reflecting the full quarters impact of the May secondary offering more than offset the 24 basis point spread compression, resulting in a 15 basis point expansion in
net interest margin. The remaining $2.7 million increase in third quarter net interest income was due to higher earning asset volumes, up $263 million (55%) compared to the same period last year. The tables on the following page represent, for
the three-month periods indicated, certain information related to our average interest earning assets and interest bearing liabilities and the annualized average yields on assets and annualized average costs of liabilities.

Noninterest income

Noninterest income was
$1.1 million in the third quarter, a $197,000 or 23% increase over the same quarter last year. This increase was primarily the result of a steady improvement in trust revenues. Third quarter 2006 trust fees were $659,000. Over the past twelve
months, assets under advice have grown $41 million or 12% to $381 million, which generated a $258,000 or 64% increase in fee income based on a more profitable mix of business. Three individuals with private banking experience have joined the
Companys banking affiliates in the past six months with a focus of driving additional business to Bank of Florida Trust Company. This improvement more than offset the $29,000 reduction in gain on sale of loans in the secondary market and a
$32,000 reduction in service charges and fees on deposit accounts, primarily in NSF fees.



21



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##### Table of Contents

Average Balance Sheet and Rate and Volume Variance Analysis



|                                                                        |  |                                          |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|----------------------------------------------------------------------- |  | ---------------------------------------- | ------- | -------------------- | ---- | ------ | ----------------- |  | ---- | -------------- |  | -------------------- | ------- |  | ----------------- | ----- | - |  | ---- | -
|                                                                        |  | For the Three-Months Ended September 30, |        
|                                                                        |  | 2006                                     |         |                      | 2005 |       
|(dollars in thousands)                                                  |  | AverageBalance                           |         | InterestandDividends |      |        | AverageYield/Rate |  |      | AverageBalance |  | InterestandDividends |         |  | AverageYield/Rate |      
|Assets:                                                                 |  |                                          |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|Earning assets:                                                         |  |                                          |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|Loans                                                                   |  | $                                        | 655,091 |                      | $    | 13,151 |                   |  | 7.96 | %              |  | $                    | 411,961 |  | $                 | 6,967 |   |  | 6.71 | %
|Securities1                                                             |  |                                          | 47,272  |                      |      | 601    |                   |  | 5.04 | %              |  |                      | 20,347  |  |                   | 201   |   |  | 3.92 | %
|Federal funds sold                                                      |  |                                          | 37,814  |                      |      | 526    |                   |  | 5.52 | %              |  |                      | 45,458  |  |                   | 390   |   |  | 3.40 | %
|Interest-bearing deposits2                                              |  |                                          | 905     |                      |      | 21     |                   |  | 9.21 | %              |  |                      | 410     |  |                   | 2     |   |  | 1.94 | %
|                                                                        |  |                                          |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|Total interest-earning assets                                           |  |                                          | 741,082 |                      |      | 14,299 |                   |  | 7.65 | %              |  |                      | 478,176 |  |                   | 7,560 |   |  | 6.27 | %
|                                                                        |  |                                          |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|Noninterest-earning assets                                              |  |                                          | 39,238  |                      |      |        |                   |  |      |                |  |                      | 34,075  |  |                   |       |   |  |      |  
|                                                                        |  |                                          |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|Total Assets                                                            |  | $                                        | 780,320 |                      |      |        |                   |  |      |                |  | $                    | 512,251 |  |                   |       |   |  |      |  
|                                                                        |  |                                          |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|Liabilities:                                                            |  |                                          |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|Interest-bearing liabilities:                                           |  |                                          |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|Interest bearing checking                                               |  | $                                        | 43,490  |                      |      | 71     |                   |  | 0.65 | %              |  | $                    | 53,119  |  |                   | 50    |   |  | 0.37 | %
|Money market accounts                                                   |  |                                          | 252,295 |                      |      | 2,623  |                   |  | 4.12 | %              |  |                      | 144,166 |  |                   | 856   |   |  | 2.36 | %
|Savings                                                                 |  |                                          | 3,683   |                      |      | 10     |                   |  | 1.08 | %              |  |                      | 5,222   |  |                   | 17    |   |  | 1.29 | %
|Time deposit                                                            |  |                                          | 221,188 |                      |      | 2,573  |                   |  | 4.62 | %              |  |                      | 158,526 |  |                   | 1,354 |   |  | 3.39 | %
|                                                                        |  |                                          |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|Total Deposits                                                          |  |                                          | 520,656 |                      |      | 5,277  |                   |  | 4.02 | %              |  |                      | 361,033 |  |                   | 2,277 |   |  | 2.50 | %
|Subordinated debt                                                       |  |                                          | 11,000  |                      |      | 213    |                   |  | 7.68 | %              |  |                      | 3,957   |  |                   | 60    |   |  | 6.02 | %
|FHLB Advances                                                           |  |                                          | 34,418  |                      |      | 477    |                   |  | 5.50 | %              |  |                      | 3,128   |  |                   | 34    |   |  | 4.31 | %
|                                                                        |  |                                          |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|Total interest-bearing liabilities                                      |  | $                                        | 566,074 |                      |      | 5,967  |                   |  | 4.18 | %              |  | $                    | 368,118 |  |                   | 2,371 |   |  | 2.56 | %
|                                                                        |  |                                          |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|Noninterest-bearing deposits                                            |  |                                          | 85,930  |                      |      |        |                   |  |      |                |  |                      | 80,405  |  |                   |       |   |  |      |  
|Other liabilities                                                       |  |                                          | 3,054   |                      |      |        |                   |  |      |                |  |                      | 8,691   |  |                   |       |   |  |      |  
|Stockholders equity                                                    |  |                                          | 125,262 |                      |      |        |                   |  |      |                |  |                      | 55,037  |  |                   |       |   |  |      |  
|                                                                        |  |                                          |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|Total Liabilities & Stockholders Equity                                |  | $                                        | 780,320 |                      |      |        |                   |  |      |                |  | $                    | 512,251 |  |                   |       |   |  |      |  
|                                                                        |  |                                          |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|Net interest income                                                     |  |                                          |         |                      | $    | 8,332  |                   |  |      |                |  |                      |         |  | $                 | 5,189 |   |  |      |  
|                                                                        |  |                                          |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|Interest-rate spread                                                    |  |                                          |         |                      |      |        |                   |  | 3.47 | %              |  |                      |         |  |                   |       |   |  | 3.71 | %
|Net interest margin                                                     |  |                                          |         |                      |      |        |                   |  | 4.46 | %              |  |                      |         |  |                   |       |   |  | 4.31 | %
|Ratio of average interest-bearing liabilities to average earning assets |  |                                          |         |                      |      | 76.4   | %                 |  |      |                |  |                      |         |  |                   | 77.0  | % |  |      |  

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



|                                         |  |        |       |   |      |   |       |        |  |   |       |  
|---------------------------------------- |  | ------ | ----- | - | ---- | - | ----- | ------ |  | - | ----- | -
|                                         |  | VOLUME |       |   | RATE |   |       | CHANGE | 
|Increase (decrease) in interest income:  |  |        |       |   |      |   |       |        |  |   |       |  
|Loans2                                   |  | $      | 4,881 |   |      | $ | 1,303 |        |  | $ | 6,184 |  
|Securities1                              |  |        | 342   |   |      |   | 58    |        |  |   | 400   |  
|Federal funds sold                       |  |        | (106  | ) |      |   | 242   |        |  |   | 136   |  
|Interest-bearing deposits                |  |        | 9     |   |      |   | 10    |        |  |   | 19    |  
|                                         |  |        |       |   |      |   |       |        |  |   |       |  
|Total interest income                    |  |        | 5,126 |   |      |   | 1,613 |        |  |   | 6,739 |  
|                                         |  |        |       |   |      |   |       |        |  |   |       |  
|Increase (decrease) in interest expense: |  |        |       |   |      |   |       |        |  |   |       |  
|Interest bearing checking                |  |        | (16   | ) |      |   | 37    |        |  |   | 21    |  
|Money market accounts                    |  |        | 1,124 |   |      |   | 643   |        |  |   | 1,767 |  
|Savings deposits                         |  |        | (4    | ) |      |   | (3    | )      |  |   | (7    | )
|Time deposits                            |  |        | 729   |   |      |   | 490   |        |  |   | 1,219 |  
|Subordinated debt                        |  |        | 136   |   |      |   | 17    |        |  |   | 153   |  
|FHLB Advances                            |  |        | 434   |   |      |   | 9     |        |  |   | 443   |  
|                                         |  |        |       |   |      |   |       |        |  |   |       |  
|Total interest expense                   |  |        | 2,403 |   |      |   | 1,193 |        |  |   | 3,596 |  
|                                         |  |        |       |   |      |   |       |        |  |   |       |  
|Total change in net interest income      |  | $      | 2,723 |   |      | $ | 420   |        |  | $ | 3,143 |  
|                                         |  |        |       |   |      |   |       |        |  |   |       |  

---

|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.
|- | -----------------------------------------------------------------------------------------------



22



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##### Table of Contents

Noninterest expense

Noninterest expense totaled $7.4 million for the third quarter of 2006. Although this increase reflected a 53% or $2.6 million increase compared to third quarter 2005, the Companys efficiency ratio has improved
a substantial 119 basis points to 79%, reflecting significant positive operating leverage.

Slightly more than half or $1.6 million of the
increase over the same period last year occurred in personnel expense, caused by additions to staff in support of the Companys rapid growth. Approximately $393,000 of the increase is explained by higher occupancy and equipment-related expense.
Building lease and utilities costs rose due to additional space required for business expansion, and equipment rental, maintenance, and depreciation expense increased accordingly. Other increases, which are attributable to the fast growth of the
Company, occurred in the areas of data processing expense ($148,000), stationary, postage and office supplies ($47,000), seminars, travel and entertainment ($94,000), directors fees ($90,000) and advertising, marketing and public relations
($66,000), while professional fees for legal, accounting and consulting fees have declined by $106,000.

Provision and Allowance for Loan Losses

The third quarter provision for loan losses was $840,000, up $226,000 (37%) from third quarter 2005. The increase reflects
loan growth as well as continuing assessment of losses inherent in the portfolio based on a variety of client-specific factors, including the Companys historic, as well as peer bank experience, and industry and economic trends. At
September 30, 2006, the loan loss allowance was 0.97% of total loans and 9.5 times the level of nonperforming loans. There was $1,280 in net recoveries during the third quarter. All the above asset quality measures are consistent with the
Companys historic experience and compare very favorably to national peer bank levels.

Nine-months Ended September 30, 2006 Compared to
Nine-months Ended September 30, 2005

Consolidated net income for the first nine months of 2006 totaled $1.6 million.
Income before income tax was $2.7 million, a 406% improvement compared to the same period of 2005. Top-line revenue climbed $9.3 million or 59%, primarily driven by $8.5 million greater net interest income, a result of $203 million or 45% growth in
earning assets and a 51 basis point increase in the net interest margin to 4.50%.

The strong $6.0 million increase in top-line revenue
against a $6.3 million or 46% increase in noninterest expense resulted in an efficiency ratio for the nine month period of 80.71%, an improvement of 755 basis points over the first nine months of 2005. The bulk of the expense increase relates to
personnel costs. The provision for loan losses rose $793,000, consistent with 64% growth in loans over the twelve month period.

Net interest income

Net interest income for the first nine months of 2006 totaled $21.9 million, up $8.5 million or 64% greater than the same period in
the prior year. Approximately $1.7 million of the increase in net interest income was due to an improved net interest margin, with $6.8 million a result of $46.8 million growth in net interest earning assets. The yield on interest earning assets for
the first nine months of 2006 was 7.42%, a 154 basis point increase over the same period last year, while the cost of funds increased 135 basis points to 3.76%. This resulted in a 21 basis point increase in the interest-rate spread primarily due to
a 150 basis point increase in the prime rate since September 2005.

In addition, total average interest earning assets increased $203.0
million to $650.7 million over the first nine months of 2006 and total average interest bearing liabilities increased $156.3 million to $505.5 million. This positive growth in net earning assets of $46.8 million was reflective of the Companys
campaign to grow average noninterest bearing deposits which averaged $87.5 million for the first nine months of 2006, an increase of $14.5 million compared to the same period last year.

The tables on the following page represent, for the nine-month periods indicated, certain information related to our average interest earning assets and
interest bearing liabilities and the annualized average yields on assets and annualized average costs of liabilities.



23



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##### Table of Contents

Average Balance Sheet and Rate and Volume Variance Analysis



|                                                                        |  |                                         |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |        |   |  |      |  
|----------------------------------------------------------------------- |  | --------------------------------------- | ------- | -------------------- | ---- | ------ | ----------------- |  | ---- | -------------- |  | -------------------- | ------- |  | ----------------- | ------ | - |  | ---- | -
|                                                                        |  | For the Nine-Months Ended September 30, |        
|                                                                        |  | 2006                                    |         |                      | 2005 |       
|(dollars in thousands)                                                  |  | AverageBalance                          |         | InterestandDividends |      |        | AverageYield/Rate |  |      | AverageBalance |  | InterestandDividends |         |  | AverageYield/Rate |       
|Assets:                                                                 |  |                                         |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |        |   |  |      |  
|Earning assets:                                                         |  |                                         |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |        |   |  |      |  
|Loans                                                                   |  | $                                       | 582,385 |                      | $    | 33,582 |                   |  | 7.71 | %              |  | $                    | 378,663 |  | $                 | 18,071 |   |  | 6.38 | %
|Securities1                                                             |  |                                         | 30,470  |                      |      | 1,095  |                   |  | 4.80 | %              |  |                      | 18,136  |  |                   | 494    |   |  | 3.64 | %
|Federal funds sold                                                      |  |                                         | 36,573  |                      |      | 1,374  |                   |  | 5.02 | %              |  |                      | 50,441  |  |                   | 1,096  |   |  | 2.91 | %
|Interest-bearing deposits2                                              |  |                                         | 1,222   |                      |      | 52     |                   |  | 5.69 | %              |  |                      | 379     |  |                   | 10     |   |  | 3.53 | %
|                                                                        |  |                                         |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |        |   |  |      |  
|Total interest-earning assets                                           |  |                                         | 650,650 |                      |      | 36,103 |                   |  | 7.42 | %              |  |                      | 447,619 |  |                   | 19,671 |   |  | 5.88 | %
|                                                                        |  |                                         |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |        |   |  |      |  
|Noninterest-earning assets                                              |  |                                         | 36,454  |                      |      |        |                   |  |      |                |  |                      | 31,076  |  |                   |        |   |  |      |  
|                                                                        |  |                                         |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |        |   |  |      |  
|Total Assets                                                            |  | $                                       | 687,104 |                      |      |        |                   |  |      |                |  | $                    | 478,695 |  |                   |        |   |  |      |  
|                                                                        |  |                                         |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |        |   |  |      |  
|Liabilities:                                                            |  |                                         |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |        |   |  |      |  
|Interest-bearing liabilities:                                           |  |                                         |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |        |   |  |      |  
|Interest bearing checking                                               |  | $                                       | 49,208  |                      |      | 235    |                   |  | 0.64 | %              |  | $                    | 46,838  |  |                   | 121    |   |  | 0.35 | %
|Money market accounts                                                   |  |                                         | 206,536 |                      |      | 5,534  |                   |  | 3.58 | %              |  |                      | 129,286 |  |                   | 2,090  |   |  | 2.16 | %
|Savings                                                                 |  |                                         | 3,943   |                      |      | 33     |                   |  | 1.12 | %              |  |                      | 5,403   |  |                   | 57     |   |  | 1.41 | %
|Time deposit                                                            |  |                                         | 217,542 |                      |      | 7,119  |                   |  | 4.38 | %              |  |                      | 163,860 |  |                   | 3,875  |   |  | 3.16 | %
|                                                                        |  |                                         |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |        |   |  |      |  
|Total Deposits                                                          |  |                                         | 477,229 |                      |      | 12,921 |                   |  | 3.62 | %              |  |                      | 345,387 |  |                   | 6,143  |   |  | 2.38 | %
|Subordinated debt                                                       |  |                                         | 11,000  |                      |      | 597    |                   |  | 7.26 | %              |  |                      | 2,659   |  |                   | 127    |   |  | 6.39 | %
|FHLB Advances                                                           |  |                                         | 17,277  |                      |      | 698    |                   |  | 5.40 | %              |  |                      | 1,201   |  |                   | 38     |   |  | 4.23 | %
|                                                                        |  |                                         |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |        |   |  |      |  
|Total interest-bearing liabilities                                      |  | $                                       | 505,506 |                      |      | 14,216 |                   |  | 3.76 | %              |  | $                    | 349,247 |  |                   | 6,308  |   |  | 2.41 | %
|                                                                        |  |                                         |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |        |   |  |      |  
|Noninterest-bearing deposits                                            |  |                                         | 87,454  |                      |      |        |                   |  |      |                |  |                      | 72,906  |  |                   |        |   |  |      |  
|Other liabilities                                                       |  |                                         | 2,423   |                      |      |        |                   |  |      |                |  |                      | 6,031   |  |                   |        |   |  |      |  
|Stockholders equity                                                    |  |                                         | 91,721  |                      |      |        |                   |  |      |                |  |                      | 50,511  |  |                   |        |   |  |      |  
|                                                                        |  |                                         |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |        |   |  |      |  
|Total Liabilities & Stockholders Equity                                |  | $                                       | 687,104 |                      |      |        |                   |  |      |                |  | $                    | 478,695 |  |                   |        |   |  |      |  
|                                                                        |  |                                         |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |        |   |  |      |  
|Net interest income                                                     |  |                                         |         |                      | $    | 21,887 |                   |  |      |                |  |                      |         |  | $                 | 13,363 |   |  |      |  
|                                                                        |  |                                         |         |                      |      |        |                   |  |      |                |  |                      |         |  |                   |        |   |  |      |  
|Interest-rate spread                                                    |  |                                         |         |                      |      |        |                   |  | 3.66 | %              |  |                      |         |  |                   |        |   |  | 3.47 | %
|Net interest margin                                                     |  |                                         |         |                      |      |        |                   |  | 4.50 | %              |  |                      |         |  |                   |        |   |  | 3.99 | %
|Ratio of average interest-bearing liabilities to average earning assets |  |                                         |         |                      |      | 77.7   | %                 |  |      |                |  |                      |         |  |                   | 78.0   | % |  |      |  

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



|                                         |  |        |        |   |      |   |       |        |  |   |        |  
|---------------------------------------- |  | ------ | ------ | - | ---- | - | ----- | ------ |  | - | ------ | -
|                                         |  | VOLUME |        |   | RATE |   |       | CHANGE | 
|Increase (decrease) in interest income:  |  |        |        |   |      |   |       |        |  |   |        |  
|Loans2                                   |  | $      | 11,747 |   |      | $ | 3,764 |        |  | $ | 15,511 |  
|Securities1                              |  |        | 443    |   |      |   | 158   |        |  |   | 601    |  
|Federal funds sold                       |  |        | (521   | ) |      |   | 799   |        |  |   | 278    |  
|Interest-bearing deposits                |  |        | 36     |   |      |   | 6     |        |  |   | 42     |  
|                                         |  |        |        |   |      |   |       |        |  |   |        |  
|Total interest income                    |  |        | 11,705 |   |      |   | 4,727 |        |  |   | 16,432 |  
|                                         |  |        |        |   |      |   |       |        |  |   |        |  
|Increase (decrease) in interest expense: |  |        |        |   |      |   |       |        |  |   |        |  
|Interest bearing checking                |  |        | 11     |   |      |   | 103   |        |  |   | 114    |  
|Money market accounts                    |  |        | 2,070  |   |      |   | 1,374 |        |  |   | 3,444  |  
|Savings deposits                         |  |        | (12    | ) |      |   | (12   | )      |  |   | (24    | )
|Time deposits                            |  |        | 1,757  |   |      |   | 1,487 |        |  |   | 3,244  |  
|Subordinated debt                        |  |        | 453    |   |      |   | 17    |        |  |   | 470    |  
|FHLB Advances                            |  |        | 649    |   |      |   | 11    |        |  |   | 660    |  
|                                         |  |        |        |   |      |   |       |        |  |   |        |  
|Total interest expense                   |  |        | 4,928  |   |      |   | 2,980 |        |  |   | 7,908  |  
|                                         |  |        |        |   |      |   |       |        |  |   |        |  
|Total change in net interest income      |  | $      | 6,777  |   |      | $ | 1,747 |        |  | $ | 8,524  |  
|                                         |  |        |        |   |      |   |       |        |  |   |        |  

---

|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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Noninterest income

Noninterest income was $3.2 million in the first nine months of 2006, a $787,000 or 33% increase over the comparable period of 2005. This increase was primarily the result of a steady improvement in trust revenues and
increased fees from selling mortgages into the secondary market. For the first nine months of 2006 trust fees climbed $847,000 or 78% over the first nine months of 2005 to $1.9 million, while the gain on sale of mortgage loans into the secondary
market rose to $354,000 in the first nine months of 2006, up $158,000 or 81% from the comparable period of 2005. These improvements more than offset the $357,000 reduction in NSF fees between the two periods.

Noninterest expense

Noninterest expense
totaled $20.2 million for the nine months of 2006, reflecting a 46% or $6.3 million increase compared to the same period of 2005. A total of $4.0 million of the increase in noninterest expense between the two periods occurred in personnel expense,
caused by additions to staff to support the Companys growth. During the first nine months of 2006 there were 42 additions to staff, bringing total full-time equivalent employees to 195 (including commissioned mortgage loan originators). Nearly
half of these hires reflect market expansion activities through the Bristol acquisition, new branches in Miami-Dade and South Lee counties, and a loan production office in Pinellas county as a precursor to a full-service branch expected to open
there in late first quarter 2007.

Approximately $965,000 of the increase is explained by higher occupancy and equipment-related expense.
As discussed earlier, occupancy costs rose due to additional space required for business expansion. Other increases that are attributable to the fast growth of the Company occurred in the areas of data processing expense ($403,000), seminars, travel
and entertainment ($255,000), directors fees ($256,000) and advertising, marketing and public relations ($245,000).

Provision and Allowance
for Loan Losses

The provision for loan losses for the first nine months of 2006 was $2.1 million, up $793,000 (61%) from the
same period last year. The increase reflects loan growth as well as continuing assessment of losses inherent in the portfolio based on a variety of client-specific factors. There were $197,000 in net charge-offs during the first nine months of 2006,
resulting in a ratio of net charge-offs to average loans of 0.07% compared to $42,000 net charge-offs for the first nine months of 2005. Nonperforming loans at September 30, 2006 totaled $743,000 of which $647,000 were acquired through the
Bristol transaction, compared to $302,000 at September 30, 2005. The ratio of loan loss allowance to total loans was 0.97% at September 30, 2006 compared to 0.92% one year ago.

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. Asset liquidity is provided by cash and assets which are readily marketable, which
can be pledged, or which will mature in the near future.

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 holding 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 be used to fund the origination of mortgage loans designated to be sold in the secondary market.

At September 30, 2006, the Company had $39.5 million in outstanding borrowings from the FHLB of its present $60.9 million line, and there was $29.8
million in other available lines from correspondents. To the extent that additional collateral becomes available beyond the present amount identified for the FHLB line, total borrowings from the FHLB could be as high as $110.2 million based on a
maximum of 20% of the Bank of



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Florida -Southwest banks assets, 10% of the Ft. Lauderdale banks assets and 10% of Bank of Florida  Tampa Bay banks assets as of
September 30, 2006.

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. At September 30, 2006, the Banks exceeded their regulatory liquidity
requirements.

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 the general allowance for credit 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 average 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, regulatory approval is required to 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 Company and subsidiary Banks were all considered well capitalized as of
September 30, 2006. The Companys Tier 1 leverage ratio, Tier 1 risk-based capital ratio and Tier 2 risk-based capital ratio was 15.58%, 15.09% and 17.38%, respectively as of September 30, 2006.

Off-Balance Sheet Financial Instruments

The
Company is 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.

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.

A summary of the amounts of the Companys financial
instruments, with off-balance sheet risk at September 30, 2006, follows (in thousands):



|                             |  |                |        
|---------------------------- |  | -------------- | -------
|                             |  | ContractAmount
|Standby letters of credit    |  | $              | 5,262  
|Undisbursed lines of credit  |  | $              | 168,669
|Commitments to extend credit |  | $              | 109,020



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##### Table of Contents

|Item 3. | Quantitative and Qualitative Disclosures about Market Risk
|------- | ----------------------------------------------------------

Market risk is the risk of loss from adverse changes in market prices and interest rates. The Company has not engaged in, and accordingly has no risk related to, trading accounts, commodities, foreign exchange, hedging activities, interest
rate derivatives or interest rate swaps. Our market risk arises primarily from interest rate risk inherent in its lending and deposit-taking and borrowing activities. The measurement of market risk associated with financial instruments is meaningful
only when all related and offsetting on-and off-balance sheet transactions are aggregated, and the resulting net positions are identified. Disclosures about the fair value of financial instruments as of December 31, 2005, which reflect changes
in market prices and rates, can be found in note 16 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2005. We believe there have been no significant changes in our market
risk exposure since December 31, 2005.

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 2006 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.



|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
(as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934) are effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commissions rules and forms. Our disclosure controls and procedures are designed to provide us with a reasonable assurance that
the information required to be disclosed in reports filed with the SEC is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms. The
disclosure controls and procedures are also designed to provide reasonable assurance that such information is accumulated and communicated to our
management as appropriate to allow such persons to make timely decisions regarding required disclosures.



|(b) | Managements Report on Internal Control Over Financial Reporting
|--- | ----------------------------------------------------------------

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Such internal controls over financial
reporting were designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Under the
supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting



27



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based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based upon our evaluation under the framework in Internal Control-Integrated Framework, our management concluded that our internal
control over financial reporting was effective as of June 30, 2006. Our managements assessment of the effectiveness of our internal control over financial reporting as of December 31, 2005 has been audited by Hacker,
Johnson & Smith PA, an independent registered public accounting firm, as stated in their report included in our Form 10-K for the year ended December 31, 2005.



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

Bancshares of
Florida, Inc. has made no significant changes in its internal controls over financial reporting during the six months ended June 30, 2006 that have materially affected or are reasonably likely to materially affect our internal control over
financial reporting.



|(d) | 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 form 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 Form S-4 filed with the SEC on October 3, 2006. 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. 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 that are
denominated by an (l.) were previously filed as part of Form 10-Q filed with the SEC on November 3, 2005. The exhibits that are denominated by a (m.) were previously filed as part of Form 8-K filed with the SEC on August 29, 2006. The
exhibits that are denominated by a (n.) were previously filed as part of Schedule DEF 14A filed with the SEC on April 21, 2006. The exhibits that are denominated by a (o.) were previously filed as part of Form 10-Q filed with the SEC on
May 4, 2006. The exhibits that are denominated by a (p.) were previously



28



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filed as part of Form 10-Q filed with the SEC on August 7, 2006. The exhibit numbers correspond to the exhibit numbers in the referenced document.



|              |  |                                                                                                                
|------------- |  | ---------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Exhibit                                                                                         
|              | 
|m.2.1         |  | Agreement and Plan of Merger to acquire Old Florida Bank dated August 28, 2006                                 
|              | 
|k.3.1         |  | Amended and Restated Articles of Incorporation                                                                 
|              | 
|a.3.2         |  | Bylaws                                                                                                         
|              | 
|b.4.1         |  | Specimen Common Stock Certificate                                                                              
|              | 
|n.4.2         |  | 2006 Stock Compensation Plan                                                                                   
|              | 
|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                                                                
|              | 
|l.10.1        |  | Amended and Restated Employment Agreement of Michael L. McMullan, dated February 1, 2005                       
|              | 
|10.2          |  | Change in Control Agreement of Roy N. Hellwege dated September 19, 2006                                        
|              | 
|10.3          |  | Change in Control Agreement of Charles K. Cross dated September 19, 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.10.9        |  | Lease between Citizens Reserve, LLC and Citizens National Bank of Southwest Florida                            
|              | 
|j.10.14       |  | Employment Agreement of Julie W. Husler, dated as of May 1, 2002                                               
|              | 
|d.10.15       |  | Change in Control Agreement of Jim Goehler, dated November 30, 2005                                            
|              | 
|o.10.17       |  | Change in Control Agreement of Sharon I. Hill, dated March 21, 2006                                            
|              | 
|p.10.18       |  | Change in Control Agreement of Tracy L. Keegan, dated July 24, 2006                                            
|              | 
|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: October 31, 2006 |  |  |  | By:                         |  | /s/    MICHAEL L.
MCMULLAN
|                        |  |  |  |                             |  |                            |  | Michael L. McMullan Chief Executive Officer (Principal Executive Officer)           
|                        |  |  | 
|Dated: October 31, 2006 |  |  |  | By:                         |  | /s/    Tracy L. Keegan    
|                        |  |  |  |                             |  |                            |  | Tracy L. Keegan Chief Financial Officer (Principal Financial and Accounting Officer)



30