##### Table of Contents

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange
Act of 1934



For the Quarterly Period Ended June 30, 2005



Commission File Number 000-50091



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BANCSHARES OF FLORIDA, INC.



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A Florida Corporation

IRS Employer Identification No. 59-3535315



1185 Immokalee Road

Naples, Florida
34110

(239) 254-2100



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Indicate by check mark whether the Registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.    Yes  x    No ̈



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



The number of shares outstanding of the Registrants common stock, as of July 31, 2005 was 5,916,685 shares of $.01 par value common stock.



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

Index



|                              |  |            |  |                                                                                      |  |                                                                                                                                                                                                       |  |     
|----------------------------- |  | ---------- |  | ------------------------------------------------------------------------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|                              |  |            |  |                                                                                      |  |                                                                                                                                                                                                       |  | Page
|PART I. Financial Information |  |           
|                              |  |            | 
|                              |  | Item 1.    |  | Financial Statements (Unaudited)                                                     |  |                                                                                                                                                                                                      
|                              |  |            |  |                                                                                     
|                              |  |            |  |                                                                                      |  | Condensed Consolidated Statements of Financial Condition June 30, 2005 and December 31, 2004                                                                                                          |  | 1   
|                              |  |            |  |                                                                                     
|                              |  |            |  |                                                                                      |  | Condensed Consolidated Statements of Operations - Three and six-months ended June 30, 2005 and 2004                                                                                                   |  | 2   
|                              |  |            |  |                                                                                     
|                              |  |            |  |                                                                                      |  | Condensed Consolidated Statements of Stockholders Equity - Year ended December 31, 2004 and six months ended June 30, 2005                                                                           |  | 3   
|                              |  |            |  |                                                                                     
|                              |  |            |  |                                                                                      |  | Condensed Consolidated Statements of Comprehensive Income (Loss) - Three and six-months ended June 30, 2005 and 2004                                                                                  |  | 3   
|                              |  |            |  |                                                                                     
|                              |  |            |  |                                                                                      |  | Condensed Consolidated Statements of Cash Flows - Six months ended June 30, 2005 and 2004                                                                                                             |  | 4   
|                              |  |            |  |                                                                                     
|                              |  |            |  |                                                                                      |  | Notes to the Condensed Consolidated Financial Statements                                                                                                                                              |  | 5   
|                              |  |            |  |                                                                                     
|                              |  |            |  |                                                                                      |  | Selected Quarterly Consolidated Financial Data                                                                                                                                                        |  | 15  
|                              |  |            | 
|                              |  | Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operation |  |                                                                                                                                                                                                      
|                              |  |            |  |                                                                                     
|                              |  |            |  |                                                                                      |  | Overview                                                                                                                                                                                              |  | 16  
|                              |  |            |  |                                                                                     
|                              |  |            |  |                                                                                      |  | Critical Accounting Policies                                                                                                                                                                          |  | 16  
|                              |  |            |  |                                                                                     
|                              |  |            |  |                                                                                      |  | Discussion of the Three Months Ended June 30, 2005 Compared to the Three Months Ended June 30, 2004 and March 31, 2005 and Discussion of the Six Months Ended June 30, 2005 compared to June 30, 2004 |  | 17  
|                              |  |            |  |                                                                                     
|                              |  |            |  |                                                                                      |  | Liquidity and Capital Resources                                                                                                                                                                       |  | 28  
|                              |  |            | 
|                              |  | Item 3.    |  | Quantitative and Qualitative Disclosures about Market Risk                           |  | 31                                                                                                                                                                                                   
|                              |  |            | 
|                              |  | Item 4.    |  | Controls and Procedures                                                              |  | 33                                                                                                                                                                                                   
|                              | 
|PART II. Other Information    |  |           
|                              |  |            | 
|                              |  | Item 1.    |  | Legal Proceedings                                                                    |  | 33                                                                                                                                                                                                   
|                              |  |            | 
|                              |  | Item 4.    |  | Submission of Matters to a Vote of Security Holders                                  |  | 34                                                                                                                                                                                                   
|                              |  |            | 
|                              |  | Item 6.    |  | Exhibits                                                                             |  | 34                                                                                                                                                                                                   
|                              |  |           
|                              |  | Signatures |  | 36                                                                                  



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

June 30, 2005 and December 31, 2004

(In Thousands, except share and per share data)



|                                                                                                                                                                                                                                             |  |               |         |   |                  |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                                                                                                                                                                             |  | June 30, 2005 |         |   | December 31,2004 |  
|                                                                                                                                                                                                                                             |  | (Unaudited)   |         |   |                  |  
|ASSETS                                                                                                                                                                                                                                       |  |               |         |   |                  |   |         |  
|Cash and due from banks                                                                                                                                                                                                                      |  | $             | 18,234  |   |                  | $ | 16,011  |  
|Interest-bearing deposits due from other banks                                                                                                                                                                                               |  |               | 683     |   |                  |   | 67      |  
|Federal funds sold                                                                                                                                                                                                                           |  |               | 61,441  |   |                  |   | 41,819  |  
|                                                                                                                                                                                                                                             |  |               |         |   |                  |   |         |  
|TOTAL CASH AND CASH EQUIVALENTS                                                                                                                                                                                                              |  |               | 80,358  |   |                  |   | 57,897  |  
|                                                                                                                                                                                                                                             |  |              
|Securities available for sale, at fair value                                                                                                                                                                                                 |  |               | 19,520  |   |                  |   | 25,945  |  
|                                                                                                                                                                                                                                             |  |              
|Loans                                                                                                                                                                                                                                        |  |               | 394,210 |   |                  |   | 325,981 |  
|Less:                                                                                                                                                                                                                                        |  |               |         |   |                  |   |         |  
|Allowance for loan losses                                                                                                                                                                                                                    |  |               | 3,513   |   |                  |   | 2,817   |  
|Unamortized loan (fees) and costs, net                                                                                                                                                                                                       |  |               | 509     |   |                  |   | 202     |  
|                                                                                                                                                                                                                                             |  |               |         |   |                  |   |         |  
|NET LOANS                                                                                                                                                                                                                                    |  |               | 390,188 |   |                  |   | 322,962 |  
|                                                                                                                                                                                                                                             |  |              
|Restricted securities, Federal Home Loan Bank and Federal Reserve stock, at cost                                                                                                                                                             |  |               | 1,008   |   |                  |   | 1,039   |  
|Premises and equipment                                                                                                                                                                                                                       |  |               | 6,888   |   |                  |   | 6,828   |  
|Accrued interest receivable                                                                                                                                                                                                                  |  |               | 1,745   |   |                  |   | 1,119   |  
|Bank-owned life insurance                                                                                                                                                                                                                    |  |               | 3,061   |   |                  |   | 3,021   |  
|Intangible asset                                                                                                                                                                                                                             |  |               | 945     |   |                  |   | 964     |  
|Other assets                                                                                                                                                                                                                                 |  |               | 1,014   |   |                  |   | 1,033   |  
|                                                                                                                                                                                                                                             |  |               |         |   |                  |   |         |  
|TOTAL ASSETS                                                                                                                                                                                                                                 |  | $             | 504,727 |   |                  | $ | 420,808 |  
|                                                                                                                                                                                                                                             |  |               |         |   |                  |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                                         |  |               |         |   |                  |   |         |  
|Deposits                                                                                                                                                                                                                                     |  | $             | 444,762 |   |                  | $ | 376,064 |  
|Borrowings                                                                                                                                                                                                                                   |  |               | 5,000   |   |                  |   | 2,000   |  
|Accrued interest payable                                                                                                                                                                                                                     |  |               | 139     |   |                  |   | 187     |  
|Accrued expenses and other liabilities                                                                                                                                                                                                       |  |               | 1,160   |   |                  |   | 603     |  
|                                                                                                                                                                                                                                             |  |               |         |   |                  |   |         |  
|TOTAL LIABILITIES                                                                                                                                                                                                                            |  |               | 451,061 |   |                  |   | 378,854 |  
|                                                                                                                                                                                                                                             |  |               |         |   |                  |   |         |  
|Commitments                                                                                                                                                                                                                                  |  |               |         |   |                  |   |         |  
|                                                                                                                                                                                                                                             |  |              
|Stockholders Equity:                                                                                                                                                                                                                        |  |               |         |   |                  |   |         |  
|Series A Preferred stock, par value $.01 per share, aggregate liquidation preference of $3.5 million; 50,000 shares authorized, no shares
issued and outstanding at June 30, 2005; 36,097 shares issued and outstanding at December 31, 2004 |  |               |        |   |                  |   | 3,610   |  
|Undesignated Preferred stock, par value $.01 per share, 950,000 shares authorized, no shares issued and outstanding at June 30, 2005 and
December 31, 2004, respectively                                                                     |  |               |        |   |                  |   |        |  
|Common stock, par value $.01 per share, 20,000,000 shares authorized, 5,916,685 and 4,835,632 shares issued and outstanding at June 30, 2005
and December 31, 2004, respectively                                                             |  |               | 59      |   |                  |   | 48      |  
|Additional paid-in capital                                                                                                                                                                                                                   |  |               | 65,471  |   |                  |   | 49,817  |  
|Accumulated deficit                                                                                                                                                                                                                          |  |               | (11,800 | ) |                  |   | (11,479 | )
|Accumulated other comprehensive loss                                                                                                                                                                                                         |  |               | (64     | ) |                  |   | (42     | )
|                                                                                                                                                                                                                                             |  |               |         |   |                  |   |         |  
|TOTAL STOCKHOLDERS EQUITY                                                                                                                                                                                                                   |  |               | 53,666  |   |                  |   | 41,954  |  
|                                                                                                                                                                                                                                             |  |               |         |   |                  |   |         |  
|                                                                                                                                                                                                                                             |  | $             | 504,727 |   |                  | $ | 420,808 |  
|                                                                                                                                                                                                                                             |  |               |         |   |                  |   |         |  



See accompanying notes
to condensed consolidated financial statements.



1



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three and Six-Months Ended June 30, 2005 and 2004

(In Thousands, except share and per share data)



|                                                                         |  |                             |           |      |                           |           |      |  |   |           |   |  |   |           |  
|------------------------------------------------------------------------ |  | --------------------------- | --------- | ---- | ------------------------- | --------- | ---- |  | - | --------- | - |  | - | --------- | -
|                                                                         |  | (unaudited)                 |          
|                                                                         |  | Three-months ended June 30, |           |      | Six-months ended June 30, |          
|                                                                         |  | 2005                        |           | 2004 |                           |           | 2005 |  |   | 2004      |  
|INTEREST INCOME                                                          |  |                             |           |      |                           |           |      |  |   |           |   |  |   |           |  
|                                                                         |  |                             |           |     
|Interest and fees on loans                                               |  | $                           | 6,059     |      | $                         | 3,273     |      |  | $ | 11,105    |   |  | $ | 6,154     |  
|Interest on securities available for sale                                |  |                             | 222       |      |                           | 78        |      |  |   | 292       |   |  |   | 150       |  
|Interest on federal funds sold                                           |  |                             | 384       |      |                           | 17        |      |  |   | 707       |   |  |   | 29        |  
|Interest on other interest earning assets                                |  |                             | 6         |      |                           |          |      |  |   | 7         |   |  |   |          |  
|                                                                         |  |                             |           |      |                           |           |      |  |   |           |   |  |   |           |  
|TOTAL INTEREST INCOME                                                    |  |                             | 6,671     |      |                           | 3,368     |      |  |   | 12,111    |   |  |   | 6,333     |  
|                                                                         |  |                             |           |      |                           |           |      |  |   |           |   |  |   |           |  
|INTEREST EXPENSE                                                         |  |                             |           |      |                           |           |      |  |   |           |   |  |   |           |  
|Interest on deposits                                                     |  |                             | 2,080     |      |                           | 1,118     |      |  |   | 3,867     |   |  |   | 2,106     |  
|Interest on borrowings                                                   |  |                             | 37        |      |                           | 10        |      |  |   | 70        |   |  |   | 11        |  
|                                                                         |  |                             |           |      |                           |           |      |  |   |           |   |  |   |           |  
|TOTAL INTEREST EXPENSE                                                   |  |                             | 2,117     |      |                           | 1,128     |      |  |   | 3,937     |   |  |   | 2,117     |  
|                                                                         |  |                             |           |      |                           |           |      |  |   |           |   |  |   |           |  
|NET INTEREST INCOME                                                      |  |                             | 4,554     |      |                           | 2,240     |      |  |   | 8,174     |   |  |   | 4,216     |  
|                                                                         |  |                             |           |     
|PROVISION FOR LOAN LOSSES                                                |  |                             | 399       |      |                           | 230       |      |  |   | 695       |   |  |   | 564       |  
|                                                                         |  |                             |           |      |                           |           |      |  |   |           |   |  |   |           |  
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                      |  |                             | 4,155     |      |                           | 2,010     |      |  |   | 7,479     |   |  |   | 3,652     |  
|                                                                         |  |                             |           |      |                           |           |      |  |   |           |   |  |   |           |  
|NONINTEREST INCOME                                                       |  |                             |           |      |                           |           |      |  |   |           |   |  |   |           |  
|Mortgage banking                                                         |  |                             | 83        |      |                           | 43        |      |  |   | 95        |   |  |   | 91        |  
|Trust fees                                                               |  |                             | 365       |      |                           | 258       |      |  |   | 688       |   |  |   | 501       |  
|Service charges and fees                                                 |  |                             | 371       |      |                           | 202       |      |  |   | 733       |   |  |   | 351       |  
|Gains on sales of securities, net                                        |  |                             |          |      |                           | 5         |      |  |   |          |   |  |   | 5         |  
|                                                                         |  |                             |           |      |                           |           |      |  |   |           |   |  |   |           |  
|TOTAL NONINTEREST INCOME                                                 |  |                             | 819       |      |                           | 508       |      |  |   | 1,516     |   |  |   | 948       |  
|                                                                         |  |                             |           |      |                           |           |      |  |   |           |   |  |   |           |  
|NONINTEREST EXPENSES                                                     |  |                             |           |      |                           |           |      |  |   |           |   |  |   |           |  
|Salaries and employee benefits                                           |  |                             | 2,417     |      |                           | 1,480     |      |  |   | 4,656     |   |  |   | 2,769     |  
|Occupancy expenses                                                       |  |                             | 713       |      |                           | 536       |      |  |   | 1,451     |   |  |   | 933       |  
|Equipment rental, depreciation and maintenance                           |  |                             | 293       |      |                           | 180       |      |  |   | 550       |   |  |   | 347       |  
|General operating                                                        |  |                             | 1,224     |      |                           | 842       |      |  |   | 2,385     |   |  |   | 1,583     |  
|                                                                         |  |                             |           |      |                           |           |      |  |   |           |   |  |   |           |  
|TOTAL NONINTEREST EXPENSES                                               |  |                             | 4,647     |      |                           | 3,038     |      |  |   | 9,042     |   |  |   | 5,632     |  
|                                                                         |  |                             |           |      |                           |           |      |  |   |           |   |  |   |           |  
|INCOME (LOSS) BEFORE INCOME TAXES                                        |  |                             | 327       |      |                           | (520      | )    |  |   | (47       | ) |  |   | (1,032    | )
|                                                                         |  |                             |           |     
|INCOME TAXES                                                             |  |                             |          |      |                           |          |      |  |   |          |   |  |   |          |  
|                                                                         |  |                             |           |      |                           |           |      |  |   |           |   |  |   |           |  
|NET INCOME (LOSS)                                                        |  | $                           | 327       |      | $                         | (520      | )    |  | $ | (47       | ) |  | $ | (1,032    | )
|                                                                         |  |                             |           |      |                           |           |      |  |   |           |   |  |   |           |  
|Earnings (loss) per common share - basic                                 |  | $                           | 0.02      |      | $                         | (0.19     | )    |  | $ | (0.06     | ) |  | $ | (0.36     | )
|                                                                         |  |                             |           |      |                           |           |      |  |   |           |   |  |   |           |  
|Earnings (loss) per common & common equivalent shares - diluted          |  | $                           | 0.02      |      | $                         | (0.19     | )    |  | $ | (0.06     | ) |  | $ | (0.36     | )
|                                                                         |  |                             |           |      |                           |           |      |  |   |           |   |  |   |           |  
|Weighted average common shares outstanding - basic                       |  |                             | 5,686,208 |      |                           | 3,094,199 |      |  |   | 5,263,602 |   |  |   | 3,086,781 |  
|                                                                         |  |                             |           |      |                           |           |      |  |   |           |   |  |   |           |  
|Weighted average common & common equivalent shares outstanding - diluted |  |                             | 5,836,987 |      |                           | 3,094,199 |      |  |   | 5,263,602 |   |  |   | 3,086,781 |  
|                                                                         |  |                             |           |      |                           |           |      |  |   |           |   |  |   |           |  



See accompanying notes
to condensed consolidated financial statements.



2



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

For the Year Ended December 31, 2004 and the Six-Months Ended June 30, 2005

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



|                                                                                     |  |                 |   |  |              |        |                           |              |                    |        |   |                                        |  |   |        |  |   |         |   |  |   |     |   |  |   |        |  
|------------------------------------------------------------------------------------ |  | --------------- | - |  | ------------ | ------ | ------------------------- | ------------ | ------------------ | ------ | - | -------------------------------------- |  | - | ------ |  | - | ------- | - |  | - | --- | - |  | - | ------ | -
|                                                                                     |  | Preferred Stock |   |  | Common Stock |        | Additional Paid-InCapital |              | AccumulatedDeficit |        |   | Accumulated ComprehensiveIncome (Loss) |  |   | Total  | 
|                                                                                     |  | SharesIssued    |   |  | Amount       |        |                           | SharesIssued |                    | Amount |   |                                        |  |  
|Balance as of December 31, 2003                                                      |  |                |   |  | $            |       |                           |              | 3,079,199          |        | $ | 31                                     |  | $ | 29,634 |  | $ | (8,389  | ) |  | $ | (56 | ) |  | $ | 21,220 |  
|Net loss                                                                             |  |                |   |  |              |       |                           |              |                   |        |   |                                       |  |   |       |  |   | (2,880  | ) |  |   |    |   |  |   | (2,880 | )
|Preferred stock issued                                                               |  | 34,000          |   |  |              | 3,400  |                           |              |                   |        |   |                                       |  |   |       |  |   |        |   |  |   |    |   |  |   | 3,400  |  
|Exercise of stock options and warrants                                               |  |                |   |  |              |       |                           |              | 31,433             |        |   |                                       |  |   | 314    |  |   |        |   |  |   |    |   |  |   | 314    |  
|Adjustments to additional paid-in-capital from stock compensation expense            |  |                |   |  |              |       |                           |              |                   |        |   |                                       |  |   | 119    |  |   |        |   |  |   |    |   |  |   | 119    |  
|Common stock issued, net of offering cost of $1,698                                  |  |                |   |  |              |       |                           |              | 1,725,000          |        |   | 17                                     |  |   | 19,750 |  |   |        |   |  |   |    |   |  |   | 19,767 |  
|Preferred stock dividends paid at a quarterly rate of 0.02 shares of preferred stock |  | 2,097           |   |  |              | 210    |                           |              |                   |        |   |                                       |  |   |       |  |   | (210    | ) |  |   |    |   |  |   |       |  
|Changes in fair value on available for sale securities                               |  |                |   |  |              |       |                           |              |                   |        |   |                                       |  |   |       |  |   |        |   |  |   | 14  |   |  |   | 14     |  
|                                                                                     |  |                 |   |  |              |        |                           |              |                    |        |   |                                        |  |   |        |  |   |         |   |  |   |     |   |  |   |        |  
|Balance as of December 31, 2004                                                      |  | 36,097          |   |  |              | 3,610  |                           |              | 4,835,632          |        |   | 48                                     |  |   | 49,817 |  |   | (11,479 | ) |  |   | (42 | ) |  |   | 41,954 |  
|Net loss                                                                             |  |                |   |  |              |       |                           |              |                   |        |   |                                       |  |   |       |  |   | (47     | ) |  |   |    |   |  |   | (47    | )
|Exercise of stock options and warrants                                               |  |                |   |  |              |       |                           |              | 699                |        |   |                                       |  |   | 8      |  |   |        |   |  |   |    |   |  |   | 8      |  
|Adjustments to additional paid-in-capital from stock compensation expense            |  |                |   |  |              |       |                           |              |                   |        |   |                                       |  |   | 61     |  |   |        |   |  |   |    |   |  |   | 61     |  
|Common stock issued, net of offering cost of $739                                    |  |                |   |  |              |       |                           |              | 915,000            |        |   | 9                                      |  |   | 12,978 |  |   |        |   |  |   |    |   |  |   | 12,987 |  
|Preferred stock dividends paid at a quarterly rate of 0.02 shares of preferred stock |  | 1,251           |   |  |              | 125    |                           |              |                   |        |   |                                       |  |   |       |  |   | (125    | ) |  |   |    |   |  |   |       |  
|Preferred stock converted to common at $15.78 per share                              |  | (25,090         | ) |  |              | (2,509 | )                         |              | 165,354            |        |   | 2                                      |  |   | 2,607  |  |   | (100    | ) |  |   |    |   |  |   |       |  
|Redemption of preferred stock at $104 per share                                      |  | (12,258         | ) |  |              | (1,226 | )                         |              |                   |        |   |                                       |  |   |       |  |   | (49     | ) |  |   |    |   |  |   | (1,275 | )
|Changes in fair value on available for sale securities                               |  |                |   |  |              |       |                           |              |                   |        |   |                                       |  |   |       |  |   |        |   |  |   | (22 | ) |  |   | (103   | )
|                                                                                     |  |                 |   |  |              |        |                           |              |                    |        |   |                                        |  |   |        |  |   |         |   |  |   |     |   |  |   |        |  
|Balance as of June 30, 2005                                                          |  |                |   |  | $            |       |                           |              | 5,916,685          |        | $ | 59                                     |  | $ | 65,471 |  | $ | (11,800 | ) |  | $ | (64 | ) |  | $ | 53,666 |  
|                                                                                     |  |                 |   |  |              |        |                           |              |                    |        |   |                                        |  |   |        |  |   |         |   |  |   |     |   |  |   |        |  



BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(LOSS)

(In Thousands, unaudited)



|                                                                                                |  |                             |     |      |                           |      |      |  |   |      |   |  |   |        |  
|----------------------------------------------------------------------------------------------- |  | --------------------------- | --- | ---- | ------------------------- | ---- | ---- |  | - | ---- | - |  | - | ------ | -
|                                                                                                |  | Three-months ended June 30, |     |      | Six-months ended June 30, |     
|                                                                                                |  | 2005                        |     | 2004 |                           |      | 2005 |  |   | 2004 |  
|Net income (loss)                                                                               |  | $                           | 328 |      | $                         | (520 | )    |  | $ | (47  | ) |  | $ | (1,032 | )
|Other comprehensive income (loss):                                                              |  |                             |     |      |                           |      |      |  |   |      |   |  |   |        |  
|Unrealized gains (losses) on available for sale securities:                                     |  |                             |     |      |                           |      |      |  |   |      |   |  |   |        |  
|Unrealized holding gains (losses) arising during the period, net of taxes                       |  |                             | 81  |      |                           | (230 | )    |  |   | (22  | ) |  |   | (159   | )
|Less reclassification adjustment for gains (losses) realized in net income (loss), net of taxes |  |                             |    |      |                           |     |      |  |   |     |   |  |   | (5     | )
|                                                                                                |  |                             |     |      |                           |      |      |  |   |      |   |  |   |        |  
|Net unrealized gains (losses)                                                                   |  |                             | 81  |      |                           | (230 | )    |  |   | (22  | ) |  |   | (164   | )
|                                                                                                |  |                             |     |      |                           |      |      |  |   |      |   |  |   |        |  
|Comprehensive income (loss)                                                                     |  | $                           | 409 |      | $                         | (750 | )    |  | $ | (69  | ) |  | $ | (1,196 | )
|                                                                                                |  |                             |     |      |                           |      |      |  |   |      |   |  |   |        |  



See accompanying notes
to condensed consolidated financial statements.



3



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six-Months Ended June 30, 2005 and 2004

(In Thousands)



|                                                                                          |  |                           |          |   |      |   |         |  
|----------------------------------------------------------------------------------------- |  | ------------------------- | -------- | - | ---- | - | ------- | -
|                                                                                          |  | (unaudited)               |         
|                                                                                          |  | Six-Months Ended June 30, |         
|                                                                                          |  | 2005                      |          |   | 2004 |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                                      |  |                           |          |   |      |   |         |  
|Net loss                                                                                  |  | $                         | (47      | ) |      | $ | (1,032  | )
|Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |  |                           |          |   |      |   |         |  
|Depreciation and amortization                                                             |  |                           | 598      |   |      |   | 334     |  
|Provision for loan losses                                                                 |  |                           | 695      |   |      |   | 564     |  
|Amortization of deferred loan fees and costs, net                                         |  |                           | (130     | ) |      |   | 21      |  
|Amortization (accretion) of premiums and discounts on investments, net                    |  |                           | (51      | ) |      |   | 18      |  
|Gains on sales of securities available for sale, net                                      |  |                           |         |   |      |   | (5      | )
|Amortization of intangible assets                                                         |  |                           | 19       |   |      |   |        |  
|Increase in accrued interest receivable                                                   |  |                           | (626     | ) |      |   | (36     | )
|Decrease (Increase) in other assets                                                       |  |                           | 19       |   |      |   | (358    | )
|Stock compensation expense                                                                |  |                           | 61       |   |      |   |        |  
|Increase in Bank-owned life insurance                                                     |  |                           | (40      | ) |      |   |        |  
|(Decrease) Increase in accrued interest payable                                           |  |                           | (48      | ) |      |   | 47      |  
|Increase in accrued expenses and other liabilities                                        |  |                           | 557      |   |      |   | 383     |  
|                                                                                          |  |                           |          |   |      |   |         |  
|NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                                       |  |                           | 1,007    |   |      |   | (64     | )
|                                                                                          |  |                           |          |   |      |   |         |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                                      |  |                           |          |   |      |   |         |  
|Net increase in loans                                                                     |  |                           | (67,791  | ) |      |   | (63,247 | )
|Proceeds from maturities and principal repayments on securities available for sale        |  |                           | 332,533  |   |      |   | 1,615   |  
|Purchase of securities available for sale                                                 |  |                           | (326,079 | ) |      |   |        |  
|Redemption (Purchase) of restricted securities, net                                       |  |                           | 31       |   |      |   | (300    | )
|Purchase of premises and equipment                                                        |  |                           | (658     | ) |      |   | (1,488  | )
|Acquisition cost of business                                                              |  |                           |         |   |      |   | (387    | )
|                                                                                          |  |                           |          |   |      |   |         |  
|NET CASH USED IN INVESTING ACTIVITIES                                                     |  |                           | (61,964  | ) |      |   | (63,807 | )
|                                                                                          |  |                           |          |   |      |   |         |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                                      |  |                           |          |   |      |   |         |  
|Net increase in deposits                                                                  |  |                           | 68,698   |   |      |   | 63,948  |  
|Increase in FHLB advances                                                                 |  |                           | 3,000    |   |      |   | 6,000   |  
|Proceeds from issuance of subordinated debt                                               |  |                           |         |   |      |   | 2,000   |  
|Redemption (Issuance) of Series A preferred stock                                         |  |                           | (1,275   | ) |      |   | 3,400   |  
|Net proceeds from issuance of common stock                                                |  |                           | 12,995   |   |      |   | 150     |  
|                                                                                          |  |                           |          |   |      |   |         |  
|NET CASH PROVIDED BY FINANCING ACTIVITIES                                                 |  |                           | 83,418   |   |      |   | 75,498  |  
|                                                                                          |  |                           |          |   |      |   |         |  
|NET INCREASE IN CASH AND CASH EQUIVALENTS                                                 |  |                           | 22,461   |   |      |   | 11,627  |  
|CASH AND CASH EQUIVALENTS:                                                                |  |                           |          |   |      |   |         |  
|Beginning of period                                                                       |  |                           | 57,897   |   |      |   | 8,424   |  
|                                                                                          |  |                           |          |   |      |   |         |  
|End of period                                                                             |  | $                         | 80,358   |   |      | $ | 20,051  |  
|                                                                                          |  |                           |          |   |      |   |         |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                                          |  |                           |          |   |      |   |         |  
|Cash paid during the year for:                                                            |  |                           |          |   |      |   |         |  
|Interest                                                                                  |  | $                         | 3,985    |   |      | $ | 2,070   |  
|                                                                                          |  |                           |          |   |      |   |         |  
|Noncash Transactions:                                                                     |  |                           |          |   |      |   |         |  
|Decrease in fair value on securities available for sale                                   |  | $                         | (22      | ) |      | $ | (164    | )
|                                                                                          |  |                           |          |   |      |   |         |  
|Increase in preferred stock for dividends paid                                            |  | $                         | 72       |   |      | $ |        |  
|                                                                                          |  |                           |          |   |      |   |         |  
|Preferred stock exchanged for common stock                                                |  | $                         | 2,509    |   |      |   |        |  
|                                                                                          |  |                           |          |   |      |   |         |  



See accompanying notes
to condensed consolidated financial statements.



4



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE 1Organization and Basis of Presentation



Organization:



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



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



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



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



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



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



5



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)



Basis of Presentation:



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



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



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



Reclassifications:



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



Stock-based Compensation:



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



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



6



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)



The per
share weighted average fair value of stock options granted during the three months ended June 30, 2005 and 2004 was $7.62 and $7.03, respectively, and for the six months ended June 30, 2005 and 2004 was $7.33 and $7.03, respectively, on the date of
grant using the Black Scholes option-pricing model with the following weighted average assumptions:



|                        |  |                                    |   |  |                                  |   |  |         |   |  |          |  
|----------------------- |  | ---------------------------------- | - |  | -------------------------------- | - |  | ------- | - |  | -------- | -
|                        |  | For the three monthsended June 30, |   |  | For the six monthsended June 30, |  
|                        |  | 2005                               |   |  | 2004                             |   |  | 2005    |   |  | 2004     |  
|Expected dividend yield |  | 0.00                               | % |  | 0.00                             | % |  | 0.00    | % |  | 0.00     | %
|Expected volatility     |  | 38.00                              | % |  | 30.00                            | % |  | 37.00   | % |  | 25.86    | %
|Risk free interest rate |  | 3.98                               | % |  | 4.71                             | % |  | 3.96    | % |  | 3.82     | %
|Expected life           |  | 7 years                            |   |  | 10 years                         |   |  | 7 years |   |  | 10 years |  



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



|                                                                                                                                    |  |                                     |       |   |                                   |   |       |      |  |   |       |   |  |   |        |  
|----------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------- | ----- | - | --------------------------------- | - | ----- | ---- |  | - | ----- | - |  | - | ------ | -
|                                                                                                                                    |  | For the three months ended June 30, |       |   | For the six months ended June 30, |  
|                                                                                                                                    |  | 2005                                |       |   | 2004                              |   |       | 2005 |  |   | 2004  |  
|Net income (loss) as reported                                                                                                       |  | $                                   | 327   |   |                                   | $ | (520  | )    |  | $ | (47   | ) |  | $ | (1,032 | )
|Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax
effects |  |                                     | (163  | ) |                                   |   | (81   | )    |  |   | (536  | ) |  |   | (100   | )
|                                                                                                                                    |  |                                     |       |   |                                   |   |       |      |  |   |       |   |  |   |        |  
|Proforma net income (loss)                                                                                                          |  | $                                   | 164   |   |                                   | $ | (601  | )    |  | $ | (583  | ) |  | $ | (1,132 | )
|                                                                                                                                    |  |                                     |       |   |                                   |   |       |      |  |   |       |   |  |   |        |  
|Earnings ( loss) per share as reported:                                                                                             |  |                                     |       |   |                                   |   |       |      |  |   |       |   |  |   |        |  
|Earnings (loss) per share - basic                                                                                                   |  | $                                   | 0.02  |   |                                   | $ | (0.19 | )    |  | $ | (0.06 | ) |  | $ | (0.36  | )
|                                                                                                                                    |  |                                     |       |   |                                   |   |       |      |  |   |       |   |  |   |        |  
|Earnings (loss) per common and common equivalent share - diluted                                                                    |  | $                                   | 0.02  |   |                                   | $ | (0.19 | )    |  | $ | (0.06 | ) |  | $ | (0.36  | )
|                                                                                                                                    |  |                                     |       |   |                                   |   |       |      |  |   |       |   |  |   |        |  
|Proforma Earnings ( loss) per share:                                                                                                |  |                                     |       |   |                                   |   |       |      |  |   |       |   |  |   |        |  
|Earnings (loss) per share - basic                                                                                                   |  | $                                   | (0.01 | ) |                                   | $ | (0.21 | )    |  | $ | (0.16 | ) |  | $ | (0.40  | )
|                                                                                                                                    |  |                                     |       |   |                                   |   |       |      |  |   |       |   |  |   |        |  
|Earnings (loss) per common and common equivalent share - diluted                                                                    |  | $                                   | (0.01 | ) |                                   | $ | (0.21 | )    |  | $ | (0.16 | ) |  | $ | (0.40  | )
|                                                                                                                                    |  |                                     |       |   |                                   |   |       |      |  |   |       |   |  |   |        |  



Recent Accounting Pronouncements:



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



7



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)



On December
16, 2004, the FASB issued FASB Statement No. 123 (revised 2004), Share-Based Payment. Statement 123(R) replaces FASB Statement No. 123, Accounting for Stock-Based Compensation, supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees
and amends FASB Statement No. 95, Statement of Cash Flows. Statement 123(R) requires that all share-based payments to employees, including grants of employee stock options, be recognized in the financial statements based on their fair values. The
provisions of Statement 123(R) are effective prospectively as of the first interim or annual reporting period that begins after June 15, 2005. On March 30, 2005, the SEC Staff issued Staff Accounting Bulletin No. 107, Application of FASB
Statement 123R, Share-Based Payment which amends the effective date to begin the first annual period beginning after June 15, 2005. The implementation of this statement is expected to result in an additional $482,000 in expense for
fiscal year 2006, based on current options outstanding.



Earnings (Loss) Per
Common Share:



Basic earnings (loss) per share represents
net income (loss) available to common shareholders divided by the weighted-average number of common shares outstanding during the year. Because we reported net losses in 2005 and 2004 on a year-to-date basis, all potentially dilutive securities for
the six month period were anti-dilutive and basic and diluted earnings (loss) per share were the same in those periods.



At June 30, 2005 and 2004, there were 0 and 378,799 common stock options and 0 and 191,856 warrants, respectively, for the three-month period that were
anti-dilutive and therefore not included in the calculation below. Components used in computing earnings (loss) per share for the three months ended June 30, 2005 and 2004, are summarized as follows (in thousands, except share data):



|                                                         |  |                                     |      |      |                                  |           |                         |   |         |  |   |                                  |   |               |           |  |   |       |  
|-------------------------------------------------------- |  | ----------------------------------- | ---- | ---- | -------------------------------- | --------- | ----------------------- | - | ------- |  | - | -------------------------------- | - | ------------- | --------- |  | - | ----- | -
|                                                         |  | For the three months ended June 30, |     
|                                                         |  | 2005                                |      | 2004 |                                 
|                                                         |  | NetIncome                           |      |      | WeightedAverageSharesOutstanding |           | Earnings(Loss)Per Share |   | NetLoss |  |   | WeightedAverageSharesOutstanding |   | LossPer Share |          
|Net income (loss)                                        |  | $                                   | 327  |      |                                  |           |                         |   |         |  | $ | (520                             | ) |               |           |  |   |       |  
|Less premium paid on preferred stock                     |  |                                     | (149 | )    |                                  |           |                         |   |         |  |   |                                  |   |               |           |  |   |       |  
|Less preferred stock dividends                           |  |                                     | (53  | )    |                                  |           |                         |   |         |  |   | (70                              | ) |               |           |  |   |       |  
|                                                         |  |                                     |      |      |                                  |           |                         |   |         |  |   |                                  |   |               |           |  |   |       |  
|Income (loss) available to common shareholders - basic   |  |                                     | 125  |      |                                  | 5,686,208 |                         | $ | 0.02    |  |   | (590                             | ) |               | 3,094,199 |  | $ | (0.19 | )
|Dilutive effect of stock options outstanding             |  |                                     |      |      |                                  | 95,800    |                         |   |        |  |   |                                  |   |               |          |  |   |       |  
|Dilutive effect of warrants outstanding                  |  |                                     |      |      |                                  | 54,979    |                         |   |        |  |   |                                  |   |               |          |  |   |       |  
|                                                         |  |                                     |      |      |                                  |           |                         |   |         |  |   |                                  |   |               |           |  |   |       |  
|Income (loss) available to common shareholders  diluted |  | $                                   | 125  |      |                                  | 5,836,987 |                         | $ | 0.02    |  | $ | (590                             | ) |               | 3,094,199 |  | $ | (0.19 | )
|                                                         |  |                                     |      |      |                                  |           |                         |   |         |  |   |                                  |   |               |           |  |   |       |  



8



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)



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



At June 30, 2005, there were 509,725
common stock options and 290,523 warrants, respectively, which were anti-dilutive and therefore not included in the calculation below. At June 30, 2004, there were 378,799 common stock options and 191,856 warrants, respectively, that were
anti-dilutive and therefore not included in the calculation below. Components used in computing loss per share for the six months ended June 30, 2005 and 2004, are summarized as follows (in thousands, except share data):



|                                             |  |                                   |      |   |                                  |           |              |   |       |          |  |   |                                  |   |              |           |  |   |       |  
|-------------------------------------------- |  | --------------------------------- | ---- | - | -------------------------------- | --------- | ------------ | - | ----- | -------- |  | - | -------------------------------- | - | ------------ | --------- |  | - | ----- | -
|                                             |  | For the Six months ended June 30, |     
|                                             |  | 2005                              |      |   | 2004                             |          
|                                             |  | NetLoss                           |      |   | WeightedAverageSharesOutstanding |           | LossPerShare |   |       | Net Loss |  |   | WeightedAverageSharesOutstanding |   | LossPerShare |          
|Net loss                                     |  | $                                 | (47  | ) |                                  |           |              |   |       |          |  | $ | (1,032                           | ) |              |           |  |   |       |  
|Less premium paid on preferred stock         |  |                                   | (149 | ) |                                  |           |              |   |       |          |  |   |                                  |   |              |           |  |   |       |  
|Less preferred stock dividends               |  |                                   | (125 | ) |                                  |           |              |   |       |          |  |   | (70                              | ) |              |           |  |   |       |  
|                                             |  |                                   |      |   |                                  |           |              |   |       |          |  |   |                                  |   |              |           |  |   |       |  
|Loss available to common shareholders        |  |                                   | (321 | ) |                                  | 5,263,602 |              | $ | (0.06 | )        |  |   | (1,102                           | ) |              | 3,086,781 |  | $ | (0.36 | )
|Dilutive effect of stock options outstanding |  |                                   |      |   |                                  |          |              |   |       |          |  |   |                                  |   |              |          |  |   |       |  
|Dilutive effect of warrants outstanding      |  |                                   |      |   |                                  |          |              |   |       |          |  |   |                                  |   |              |          |  |   |       |  
|                                             |  |                                   |      |   |                                  |           |              |   |       |          |  |   |                                  |   |              |           |  |   |       |  
|Loss available to common shareholders        |  | $                                 | (321 | ) |                                  | 5,263,602 |              | $ | (0.06 | )        |  | $ | (1,102                           | ) |              | 3,086,781 |  | $ | (0.36 | )
|                                             |  |                                   |      |   |                                  |           |              |   |       |          |  |   |                                  |   |              |           |  |   |       |  



NOTE 2Segment Information



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



Measurement of Segment Profit or Loss and
Segment Assets:



The following presents financial
information of reportable segments as of and for the three-month periods ended June 30, 2005 and 2004 and March 31, 2005. The Other column includes executive management and finance and accounting expense; expense for acquisitions,
capital-raising, shareholder/investor relations, and various professional services; and entries necessary to reconcile the identified segments to the reported consolidated amounts. When performance of these segments is reported in the text of
Managements Discussion and Analysis of Financial Condition and Results of Operations and in similar texts, figures are stated before the latter eliminating entries.



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BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)



|                                |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|------------------------------- |  | ------------------------- | ------- | ----------------------------- | - | ------------------------ |  | - | -------------------------- | - | ----- | - | ------- | ------------------------- | - | ------- | - |  | - | ------- | -
|For the Three Months Ended:     |  | Bank ofFlorida -Southwest |         | Bank ofFlorida, Ft.Lauderdale |   | Bank ofFlorida -TampaBay |  |   | Bank ofFloridaTrustCompany |   | Other |   |         | Bancsharesof Florida,Inc. |  
|June 30, 2005                   |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|Net interest income             |  | $                         | 2,259   |                               | $ | 1,882                    |  | $ | 397                        |   |       | $ | 16      |                           | $ |        |   |  | $ | 4,554   |  
|Provision for loan losses       |  |                           | 189     |                               |   | 116                      |  |   | 94                         |   |       |   |        |                           |   |        |   |  |   | 399     |  
|Noninterest income              |  |                           | 347     |                               |   | 93                       |  |   | 14                         |   |       |   | 365     |                           |   |        |   |  |   | 819     |  
|Noninterest expense             |  |                           | 1,154   |                               |   | 1,189                    |  |   | 446                        |   |       |   | 331     |                           |   | 1,526   |   |  |   | 4,646   |  
|Holding company servicing costs |  |                           | 472     |                               |   | 233                      |  |   | 65                         |   |       |   | 21      |                           |   | (791    | ) |  |   |        |  
|                                |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|Net income (loss)               |  | $                         | 791     |                               | $ | 437                      |  | $ | (194                       | ) |       | $ | 29      |                           | $ | (735    | ) |  | $ | 328     |  
|                                |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|End of period assets            |  | $                         | 256,945 |                               | $ | 200,615                  |  | $ | 52,539                     |   |       | $ | 2,370   |                           | $ | (7,742  | ) |  | $ | 504,727 |  
|                                |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|Assets under advice             |  | $                         |        |                               | $ |                         |  | $ |                           |   |       | $ | 306,152 |                           | $ |        |   |  | $ | 306,152 |  
|                                |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|March 31, 2005                  |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|Net interest income             |  | $                         | 1,927   |                               | $ | 1,437                    |  | $ | 240                        |   |       | $ | 16      |                           | $ |        |   |  | $ | 3,620   |  
|Provision for loan losses       |  |                           | 145     |                               |   |                         |  |   | 151                        |   |       |   |        |                           |   |        |   |  |   | 296     |  
|Noninterest income              |  |                           | 270     |                               |   | 102                      |  |   | 3                          |   |       |   | 323     |                           |   |        |   |  |   | 698     |  
|Noninterest expense             |  |                           | 1,078   |                               |   | 1,189                    |  |   | 437                        |   |       |   | 317     |                           |   | 1,376   |   |  |   | 4,397   |  
|Holding company servicing costs |  |                           | 469     |                               |   | 225                      |  |   | 63                         |   |       |   | 21      |                           |   | (778    | ) |  |   |        |  
|                                |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|Net income (loss)               |  | $                         | 505     |                               | $ | 125                      |  | $ | (408                       | ) |       | $ | 1       |                           | $ | (598    | ) |  | $ | (375    | )
|                                |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|End of period assets            |  | $                         | 250,073 |                               | $ | 168,157                  |  | $ | 44,291                     |   |       | $ | 2,313   |                           | $ | (22,781 | ) |  | $ | 442,053 |  
|                                |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|Assets under advice             |  | $                         |        |                               | $ |                         |  | $ |                           |   |       | $ | 200,139 |                           | $ |        |   |  | $ | 200,139 |  
|                                |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|June 30, 2004                   |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|Net interest income             |  | $                         | 1,489   |                               | $ | 738                      |  | $ |                           |   |       | $ | 13      |                           | $ |        |   |  | $ | 2,240   |  
|Provision for loan losses       |  |                           | 170     |                               |   | 60                       |  |   |                           |   |       |   |        |                           |   |        |   |  |   | 230     |  
|Noninterest income              |  |                           | 216     |                               |   | 34                       |  |   |                           |   |       |   | 258     |                           |   |        |   |  |   | 508     |  
|Noninterest expense             |  |                           | 1,356   |                               |   | 708                      |  |   |                           |   |       |   | 248     |                           |   | 726     |   |  |   | 3,038   |  
|Holding company servicing costs |  |                           |        |                               |   |                         |  |   |                           |   |       |   |        |                           |   |        |   |  |   |        |  
|                                |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|Net income (loss)               |  | $                         | 179     |                               | $ | 4                        |  | $ |                           |   |       | $ | 23      |                           | $ | (726    | ) |  | $ | (520    | )
|                                |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|End of period assets            |  | $                         | 210,056 |                               | $ | 84,892                   |  | $ |                           |   |       | $ | 1,592   |                           | $ | 803     |   |  | $ | 297,343 |  
|                                |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  
|Assets under advice             |  | $                         |        |                               | $ |                         |  | $ |                           |   |       | $ | 162,185 |                           | $ |        |   |  | $ | 162,185 |  
|                                |  |                           |         |                               |   |                          |  |   |                            |   |       |   |         |                           |   |         |   |  |   |         |  



10



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BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)



Measurement of Segment
Profit or Loss and Segment Assets:



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



|                                |  |                             |         |                                 |   |         |                             |  |   |                               |   |       |   |         |                             |   |        |   |  |   |         |  
|------------------------------- |  | --------------------------- | ------- | ------------------------------- | - | ------- | --------------------------- |  | - | ----------------------------- | - | ----- | - | ------- | --------------------------- | - | ------ | - |  | - | ------- | -
|For the Six Months Ended:       |  | Bank of Florida - Southwest |         | Bank of Florida, Ft. Lauderdale |   |         | Bank of Florida - Tampa Bay |  |   | Bank of Florida Trust Company |   | Other |   |         | Bancshares of Florida, Inc. |  
|June 30, 2005                   |  |                             |         |                                 |   |         |                             |  |   |                               |   |       |   |         |                             |   |        |   |  |   |         |  
|Net interest income             |  | $                           | 4,186   |                                 | $ | 3,319   |                             |  | $ | 637                           |   |       | $ | 32      |                             | $ |       |   |  | $ | 8,174   |  
|Provision for loan losses       |  |                             | 334     |                                 |   | 116     |                             |  |   | 245                           |   |       |   |        |                             |   |       |   |  |   | 695     |  
|Noninterest income              |  |                             | 617     |                                 |   | 194     |                             |  |   | 17                            |   |       |   | 688     |                             |   |       |   |  |   | 1,516   |  
|Noninterest expense             |  |                             | 2,232   |                                 |   | 2,377   |                             |  |   | 883                           |   |       |   | 648     |                             |   | 2,902  |   |  |   | 9,042   |  
|Holding company servicing costs |  |                             | 941     |                                 |   | 458     |                             |  |   | 128                           |   |       |   | 42      |                             |   | (1,569 | ) |  |   |        |  
|                                |  |                             |         |                                 |   |         |                             |  |   |                               |   |       |   |         |                             |   |        |   |  |   |         |  
|Net income (loss)               |  | $                           | 1,296   |                                 | $ | 562     |                             |  | $ | (602                          | ) |       | $ | 30      |                             | $ | (1,333 | ) |  | $ | (47     | )
|                                |  |                             |         |                                 |   |         |                             |  |   |                               |   |       |   |         |                             |   |        |   |  |   |         |  
|End of period assets            |  | $                           | 256,945 |                                 | $ | 200,615 |                             |  | $ | 52,539                        |   |       | $ | 2,370   |                             | $ | (7,742 | ) |  | $ | 504,727 |  
|                                |  |                             |         |                                 |   |         |                             |  |   |                               |   |       |   |         |                             |   |        |   |  |   |         |  
|Assets under advice             |  | $                           |        |                                 | $ |        |                             |  | $ |                              |   |       | $ | 306,152 |                             | $ |       |   |  | $ | 306,152 |  
|                                |  |                             |         |                                 |   |         |                             |  |   |                               |   |       |   |         |                             |   |        |   |  |   |         |  
|June 30, 2004                   |  |                             |         |                                 |   |         |                             |  |   |                               |   |       |   |         |                             |   |        |   |  |   |         |  
|Net interest income             |  | $                           | 2,834   |                                 | $ | 1,350   |                             |  | $ |                              |   |       | $ | 32      |                             | $ |       |   |  | $ | 4,216   |  
|Provision for loan losses       |  |                             | 324     |                                 |   | 240     |                             |  |   |                              |   |       |   |        |                             |   |       |   |  |   | 564     |  
|Noninterest income              |  |                             | 380     |                                 |   | 68      |                             |  |   |                              |   |       |   | 500     |                             |   |       |   |  |   | 948     |  
|Noninterest expense             |  |                             | 2,627   |                                 |   | 1,354   |                             |  |   |                              |   |       |   | 499     |                             |   | 1,152  |   |  |   | 5,632   |  
|Holding company servicing costs |  |                             |        |                                 |   |        |                             |  |   |                              |   |       |   |        |                             |   |       |   |  |   |        |  
|                                |  |                             |         |                                 |   |         |                             |  |   |                               |   |       |   |         |                             |   |        |   |  |   |         |  
|Net income (loss)               |  | $                           | 263     |                                 | $ | (176    | )                           |  | $ |                              |   |       | $ | 33      |                             | $ | (1,152 | ) |  | $ | (1,032  | )
|                                |  |                             |         |                                 |   |         |                             |  |   |                               |   |       |   |         |                             |   |        |   |  |   |         |  
|End of period assets            |  | $                           | 210,056 |                                 | $ | 84,892  |                             |  | $ |                              |   |       | $ | 1,592   |                             | $ | 803    |   |  | $ | 297,343 |  
|                                |  |                             |         |                                 |   |         |                             |  |   |                               |   |       |   |         |                             |   |        |   |  |   |         |  
|Assets under advice             |  | $                           |        |                                 | $ |        |                             |  | $ |                              |   |       | $ | 162,185 |                             | $ |       |   |  | $ | 162,185 |  
|                                |  |                             |         |                                 |   |         |                             |  |   |                               |   |       |   |         |                             |   |        |   |  |   |         |  



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BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)



NOTE 3Securities



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



|                                                           |  |                |        |                  |        |    |                      |   |     |   |  |   |       
|---------------------------------------------------------- |  | -------------- | ------ | ---------------- | ------ | -- | -------------------- | - | --- | - |  | - | ------
|                                                           |  | AMORTIZED COST |        | GROSS UNREALIZED |        |    | ESTIMATED FAIR VALUE
|                                                           |  |                | GAINS  |                  | LOSSES |    |                     
|March 31, 2005                                             |  |                |        |                  |        |    |                      |   |     |   |  |   |       
|Mortgage-backed securities of U.S. government agencies     |  | $              | 5,476  |                  | $      | 4  |                      | $ | (47 | ) |  | $ | 5,433 
|U.S. Treasury securities and other U.S. agency obligations |  |                | 14,032 |                  |        | 27 |                      |   | (48 | ) |  |   | 14,011
|IBB stock and other securities                             |  |                | 76     |                  |        |   |                      |   |    |   |  |   | 76    
|                                                           |  |                |        |                  |        |    |                      |   |     |   |  |   |       
|Totals                                                     |  | $              | 19,584 |                  | $      | 31 |                      | $ | (95 | ) |  | $ | 19,520
|                                                           |  |                |        |                  |        |    |                      |   |     |   |  |   |       
|                                                           |  |                |       
|                                                           |  | AMORTIZED COST |        | GROSS UNREALIZED |        |    | ESTIMATED FAIR VALUE
|                                                           |  |                | GAINS  |                  | LOSSES |    |                     
|December 31, 2004                                          |  |                |        |                  |        |    |                      |   |     |   |  |   |       
|Mortgage-backed securities of U.S. government agencies     |  | $              | 3,943  |                  | $      | 10 |                      | $ | (34 | ) |  | $ | 3,919 
|U.S. Treasury securities and other U.S. agency obligations |  |                | 21,993 |                  |        | 3  |                      |   | (21 | ) |  |   | 21,975
|IBB stock and other securities                             |  |                | 51     |                  |        |   |                      |   |    |   |  |   | 51    
|                                                           |  |                |        |                  |        |    |                      |   |     |   |  |   |       
|Totals                                                     |  | $              | 25,987 |                  | $      | 13 |                      | $ | (55 | ) |  | $ | 25,945
|                                                           |  |                |        |                  |        |    |                      |   |     |   |  |   |       



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



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



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



|                                                           |  |                         |     |                    |            |   |                         |  |   |            |   |  |   |      
|---------------------------------------------------------- |  | ----------------------- | --- | ------------------ | ---------- | - | ----------------------- |  | - | ---------- | - |  | - | -----
|                                                           |  | Less Than Twelve Months |     | Over Twelve Months
|                                                           |  | Gross Unrealized Losses |     |                    | Fair Value |   | Gross Unrealized Losses |  |   | Fair Value
|                                                           |  | (In Thousands)         
|Securities available for sale:                             |  |                         |     |                    |            |   |                         |  |   |            |   |  |   |      
|Mortgage-backed securities of U.S. government agencies     |  | $                       | (1  | )                  |            | $ | 2,015                   |  | $ | (46        | ) |  | $ | 2,595
|U.S. Treasury securities and other U.S. agency obligations |  |                         | (18 | )                  |            |   | 3,040                   |  |   | (30        | ) |  |   | 1,444
|                                                           |  |                         |     |                    |            |   |                         |  |   |            |   |  |   |      
|Total securities available for sale                        |  | $                       | (19 | )                  |            | $ | 5,055                   |  | $ | (76        | ) |  | $ | 4,039
|                                                           |  |                         |     |                    |            |   |                         |  |   |            |   |  |   |      



12



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BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)



NOTE 4Loans



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



|                                   |  |               |         |   |                   |   |         |  
|---------------------------------- |  | ------------- | ------- | - | ----------------- | - | ------- | -
|                                   |  | June 30, 2005 |         |   | December 31, 2004 |  
|Real estate:                       |  |               |         |   |                   |   |         |  
|Commercial real estate             |  | $             | 140,809 |   |                   | $ | 103,597 |  
|Construction                       |  |               | 80,899  |   |                   |   | 65,172  |  
|Multi-family                       |  |               | 21,120  |   |                   |   | 14,627  |  
|One-to-four family residential     |  |               | 70,367  |   |                   |   | 60,124  |  
|                                   |  |               |         |   |                   |   |         |  
|Total real estate loans            |  |               | 313,195 |   |                   |   | 243,520 |  
|Commercial loans                   |  |               | 43,509  |   |                   |   | 42,721  |  
|Lines of credit                    |  |               | 25,035  |   |                   |   | 23,871  |  
|Consumer loans                     |  |               | 12,471  |   |                   |   | 15,869  |  
|                                   |  |               |         |   |                   |   |         |  
|Total gross loans                  |  |               | 394,210 |   |                   |   | 325,981 |  
|Allowance for loan losses          |  |               | (3,513  | ) |                   |   | (2,817  | )
|Unamortized loan (fees) costs, net |  |               | (509    | ) |                   |   | (202    | )
|                                   |  |               |         |   |                   |   |         |  
|Total loans, net                   |  | $             | 390,188 |   |                   | $ | 322,962 |  
|                                   |  |               |         |   |                   |   |         |  



At June 30, 2005 and
December 31, 2004, the Company had non-accrual loans with a balance of $469,000 and $544,000, respectively. At June 30, 2005, $798,000 of loans to one client were considered impaired under SFAS No. 114. A loan is considered impaired when, based on
current information and events, it is probable that a lender will be unable to collect all amounts due according to the contractual terms of the loan agreement. Specific impairment on loans in this category is calculated based on the present value
of expected future cash flows discounted at the loans effective interest rate, or for collateral-dependent loans, at the fair value of the collateral. A specific valuation allowance was not required on loans considered impaired as no loss is
expected. At December 31, 2004, the Company did not hold any loans that were classified as impaired.



The following table represents the activity in the allowance for loan losses during the six months ended June 30, 2005 and 2004.



|                          |  |          |       |      |   |      
|------------------------- |  | -------- | ----- | ---- | - | -----
|                          |  | June 30,
|                          |  | 2005     |       | 2004
|Beginning balance         |  | $        | 2,817 |      | $ | 1,568
|Provision for loan losses |  |          | 695   |      |   | 564  
|Charge-offs               |  |          |      |      |   |     
|Recoveries                |  |          | 1     |      |   |     
|                          |  |          |       |      |   |      
|Ending balance            |  | $        | 3,513 |      | $ | 2,132
|                          |  |          |       |      |   |      



NOTE 5Intangible Assets



On July 27, 2004, the Company acquired 100% ownership of
Bank of Florida  Tampa Bay (In Organization) that had not yet been incorporated or commenced its planned principal operations. The Company does not believe this acquisition was a business combination pursuant to the provisions of SFAS No. 141,
Accounting for Business Combinations, but rather an acquisition of net assets. Accordingly, the excess of fair value of the liabilities assumed over the fair value of the assets acquired of $974,000 was allocated to an amortizable
identifiable intangible. The balance of the intangible asset was $945,000 ($974,000 gross carrying amount less $29,000 accumulated amortization) at June 30, 2005 and is being amortized on a straight-line basis over 25 years. Following is the
estimated amortization expense for each of the five succeeding periods ending December 31st:



|                             |  |   |       
|---------------------------- |  | - | ------
|Remaining six months of 2005 |  | $ | 19,477
|2006                         |  |   | 38,955
|2007                         |  |   | 38,955
|2008                         |  |   | 38,955
|2009                         |  |   | 38,955
|First six months of 2010     |  |   | 19,478



13



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##### Table of Contents

BANCSHARES OF FLORIDA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)



NOTE 6Borrowings



During June of 2004, Bank of Florida  Southwest
issued $2 million in subordinated debt to a local community bank. Interest is payable at a rate of Prime less one percent during the first sixty days, Prime plus zero percent for the next sixty days, and Prime plus one percent thereafter. The
interest rate at June 30, 2005 was 7.00%. This debt matures and is payable in full in June of 2010. Bank of Florida  Southwest may prepay the debt at its option (and with the approval of its regulators, if necessary) without penalty plus
accrued interest. The subordinated debt issued qualifies as Tier II capital for regulatory risk-based capital guidelines for the Companys Bank of Florida - Southwest subsidiary and for Bancshares of Florida, Inc.



At June 30, 2005, the Company had $3.0 million in advances from the Federal
Home Loan Bank (FHLB). The Company did not have any FHLB advances at December 31, 2004.



NOTE 7Stockholders Equity



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



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



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



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



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



NOTE 8Retirement Plan



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



The BOLI is recorded at the amounts to be realized under the insurance contract, which represents the amounts contributed to the cash surrender value of
the policies. The Company recognized revenue from the investment returns from the BOLI of $40,000 and compensation expense of $48,000 for the amounts accrued toward the participants retirement fund, during the first six months ended June 30,
2005. The Company has approximately $70,700 accrued at June 30, 2005, which is included in other liabilities in the accompanying consolidated balance sheets. No income or expense items were recognized for the six months ended June 30, 2004.



14



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##### Table of Contents

SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA



|                                                      |  |                                                |           |   |                |   |           |               |  |   |                |    |  |               |           |    |  |   |           |   
|----------------------------------------------------- |  | ---------------------------------------------- | --------- | - | -------------- | - | --------- | ------------- |  | - | -------------- | -- |  | ------------- | --------- | -- |  | - | --------- | --
|                                                      |  | Quarter Ended                                  |          
|                                                      |  | June 30, 2005                                  |           |   | March 31, 2005 |   |           | Dec. 31, 2004 |  |   | Sept. 30, 2004 |    |  | June 30, 2004 |          
|                                                      |  | (Dollars in thousands, except per share data.) |          
|Statement of Operations Data:                         |  |                                                |           |   |                |   |           |               |  |   |                |    |  |               |           |    |  |   |           |   
|Total interest income                                 |  | $                                              | 6,671     |   |                | $ | 5,440     |               |  | $ | 4,526          |    |  | $             | 3,907     |    |  | $ | 3,368     |   
|Total interest expense                                |  |                                                | 2,117     |   |                |   | 1,820     |               |  |   | 1,528          |    |  |               | 1,317     |    |  |   | 1,128     |   
|                                                      |  |                                                |           |   |                |   |           |               |  |   |                |    |  |               |           |    |  |   |           |   
|Net interest income before provision for loan losses  |  |                                                | 4,554     |   |                |   | 3,620     |               |  |   | 2,998          |    |  |               | 2,590     |    |  |   | 2,240     |   
|Provision for loan losses                             |  |                                                | 399       |   |                |   | 296       |               |  |   | 451            |    |  |               | 263       |    |  |   | 230       |   
|                                                      |  |                                                |           |   |                |   |           |               |  |   |                |    |  |               |           |    |  |   |           |   
|Net interest income after provision for loan losses   |  |                                                | 4,155     |   |                |   | 3,324     |               |  |   | 2,547          |    |  |               | 2,327     |    |  |   | 2,010     |   
|Noninterest income                                    |  |                                                | 819       |   |                |   | 698       |               |  |   | 616            |    |  |               | 611       |    |  |   | 503       |   
|Gain (loss) on sale of investments                    |  |                                                |          |   |                |   |          |               |  |   |               |    |  |               | (1        | )  |  |   | 5         |   
|Noninterest expense                                   |  |                                                | 4,647     |   |                |   | 4,397     |               |  |   | 4,156          |    |  |               | 3,794     |    |  |   | 3,038     |   
|Provision for income taxes                            |  |                                                |          |   |                |   |          |               |  |   |               |    |  |               |          |    |  |   |          |   
|                                                      |  |                                                |           |   |                |   |           |               |  |   |                |    |  |               |           |    |  |   |           |   
|Net income (loss)                                     |  |                                                | 327       |   |                |   | (375      | )             |  |   | (993           | )  |  |               | (856      | )  |  |   | (520      | ) 
|                                                      |  |                                                |           |   |                |   |           |               |  |   |                |    |  |               |           |    |  |   |           |   
|Share Data:                                           |  |                                                |           |   |                |   |           |               |  |   |                |    |  |               |           |    |  |   |           |   
|Basic earnings (loss) per share                       |  | $                                              | 0.02      |   |                | $ | (0.09     | )             |  | $ | (0.22          | )  |  | $             | (0.22     | )  |  | $ | (0.19     | ) 
|Diluted earnings (loss) per share                     |  |                                                | 0.02      |   |                |   | (0.09     | )             |  |   | (0.22          | )  |  |               | (0.22     | )  |  |   | (0.19     | ) 
|Weighted average shares outstanding - basic           |  |                                                | 5,686,208 |   |                |   | 4,836,300 |               |  |   | 4,835,632      |    |  |               | 4,220,137 |    |  |   | 3,094,199 |   
|Weighted average shares outstanding - diluted         |  |                                                | 5,836,987 |   |                |   | 4,836,300 |               |  |   | 4,835,632      |    |  |               | 4,220,137 |    |  |   | 3,094,199 |   
|Total shares outstanding                              |  |                                                | 5,916,685 |   |                |   | 4,836,331 |               |  |   | 4,835,632      |    |  |               | 4,835,632 |    |  |   | 3,094,199 |   
|Book value per common share (period end)              |  | $                                              | 9.07      |   |                | $ | 7.82      |               |  | $ | 7.93           |    |  | $             | 8.13      |    |  | $ | 6.50      |   
|                                                      |  |                                                |           |   |               
|Statement of Financial Condition Data:                |  |                                                |           |   |                |   |           |               |  |   |                |    |  |               |           |    |  |   |           |   
|Total assets                                          |  | $                                              | 504,727   |   |                | $ | 442,053   |               |  | $ | 420,808        |    |  | $             | 344,644   |    |  | $ | 297,343   |   
|Total cash and cash equivalents                       |  |                                                | 80,358    |   |                |   | 50,785    |               |  |   | 57,897         |    |  |               | 41,880    |    |  |   | 20,051    |   
|Interest-earning assets                               |  |                                                | 476,863   |   |                |   | 416,322   |               |  |   | 394,851        |    |  |               | 326,387   |    |  |   | 276,979   |   
|Investment securities                                 |  |                                                | 19,520    |   |                |   | 19,170    |               |  |   | 25,945         |    |  |               | 10,196    |    |  |   | 6,281     |   
|Loans held for investment                             |  |                                                | 394,210   |   |                |   | 361,168   |               |  |   | 325,981        |    |  |               | 284,599   |    |  |   | 263,746   |   
|Allowance for loan losses                             |  |                                                | 3,513     |   |                |   | 3,113     |               |  |   | 2,817          |    |  |               | 2,368     |    |  |   | 2,132     |   
|Deposit accounts                                      |  |                                                | 444,762   |   |                |   | 390,374   |               |  |   | 376,064        |    |  |               | 298,878   |    |  |   | 265,102   |   
|Stockholders equity                                  |  |                                                | 53,666    |   |                |   | 41,501    |               |  |   | 41,954         |    |  |               | 42,835    |    |  |   | 23,575    |   
|                                                      |  |                                                |           |   |               
|Performance Ratios:                                   |  |                                                |           |   |                |   |           |               |  |   |                |    |  |               |           |    |  |   |           |   
|Return on average assets                              |  |                                                | 0.27      | % |                |   | (0.35     | )%            |  |   | (1.07          | )% |  |               | (1.05     | )% |  |   | (0.72     | )%
|Return on average common stockholders equity         |  |                                                | 2.63      |   |                |   | (3.87     | )             |  |   | (10.39         | )  |  |               | (10.03    | )  |  |   | (10.13    | ) 
|Interest-rate spread during the period                |  |                                                | 3.46      |   |                |   | 3.13      |               |  |   | 3.03           |    |  |               | 2.95      |    |  |   | 3.05      |   
|Net interest margin                                   |  |                                                | 3.99      |   |                |   | 3.61      |               |  |   | 3.45           |    |  |               | 3.36      |    |  |   | 3.36      |   
|Efficiency ratio1                                     |  |                                                | 86.49     |   |                |   | 101.83    |               |  |   | 115.00         |    |  |               | 118.53    |    |  |   | 110.75    |   
|                                                      |  |                                                |           |   |               
|Asset Quality Ratios:                                 |  |                                                |           |   |                |   |           |               |  |   |                |    |  |               |           |    |  |   |           |   
|Allowance for loan losses to period end loans         |  |                                                | 0.89      | % |                |   | 0.86      | %             |  |   | 0.86           | %  |  |               | 0.83      | %  |  |   | 0.81      | % 
|Allowance for loan losses to nonperforming loans      |  |                                                | 748.85    |   |                |   | 644.83    |               |  |   | 480.70         |    |  |               | 540.68    |    |  |   | 168.67    |   
|Net charge-offs to average loans                      |  |                                                | 0.00      |   |                |   | 0.00      |               |  |   | 0.00           |    |  |               | 0.04      |    |  |   | 0.00      |   
|Nonperforming assets to period end total assets       |  |                                                | 0.09      |   |                |   | 0.11      |               |  |   | 0.14           |    |  |               | 0.13      |    |  |   | 0.43      |   
|                                                      |  |                                                |           |   |               
|Capital and Liquidity Ratios:                         |  |                                                |           |   |                |   |           |               |  |   |                |    |  |               |           |    |  |   |           |   
|Average equity to average assets                      |  |                                                | 10.66     | % |                |   | 9.85      | %             |  |   | 11.28          | %  |  |               | 11.55     | %  |  |   | 8.26      | % 
|Leverage (4.00% required minimum)                     |  |                                                | 10.77     |   |                |   | 9.44      |               |  |   | 11.07          |    |  |               | 12.90     |    |  |   | 8.19      |   
|                                                      |  |                                                |           |   |               
|Risk-based capital:                                   |  |                                                |           |   |                |   |           |               |  |   |                |    |  |               |           |    |  |   |           |   
|Tier 1                                                |  |                                                | 12.07     | % |                |   | 10.63     | %             |  |   | 11.85          | %  |  |               | 14.29     | %  |  |   | 9.57      | % 
|Total                                                 |  |                                                | 13.33     |   |                |   | 11.96     |               |  |   | 13.24          |    |  |               | 15.78     |    |  |   | 11.24     |   
|Average loans held for investment to average deposits |  |                                                | 89.16     |   |                |   | 88.44     |               |  |   | 90.37          |    |  |               | 97.03     |    |  |   | 95.95     |   
|                                                      |  |                                                |           |   |               
|Trust Assets Under Advice:                            |  |                                                |           |   |                |   |           |               |  |   |                |    |  |               |           |    |  |   |           |   
|Total assets under advice                             |  | $                                              | 306,152   |   |                | $ | 200,139   |               |  | $ | 202,138        |    |  | $             | 185,873   |    |  | $ | 162,185   |   
|Trust fee income                                      |  |                                                | 365       |   |                |   | 323       |               |  |   | 285            |    |  |               | 277       |    |  |   | 258       |   
|Trust fees as a % of average assets under advice      |  |                                                | 0.48      | % |                |   | 0.64      | %             |  |   | 0.59           | %  |  |               | 0.64      | %  |  |   | 0.66      | % 

---

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



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##### Table of Contents

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



OVERVIEW



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



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



CRITICAL ACCOUNTING POLICIES



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



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



This discussion presents managements analysis (MD&A) of
the financial condition and results of operations of the Company for each of the three and six-month periods ended June 30, 2005 and 2004 and the three month period ended March 31, 2005 and includes the statistical disclosures required by SEC Guide
3 (Statistical Disclosure by Bank Holding Companies). The discussion should be read in conjunction with the consolidated financial statements of the Company and the notes related thereto which appear elsewhere in this document.



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##### Table of Contents

DISCUSSION OF THE THREE MONTHS ENDED JUNE 30, 2005

COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2004 AND MARCH 31, 2005

AND DISCUSSION OF THE SIX MONTHS ENDED JUNE 30, 2005 COMPARED TO THE SIX MONTHS

ENDED JUNE 30, 2004



Management
Summary



The Company reported second quarter net income of
$327,000, a $702,000 improvement in operating performance from first quarter 2005, marking the first profitable quarter in the Companys history. For the first six months of this year, the Company reduced its net loss to $47,000 compared to a
net loss of $1.032 million for the comparable 2004 period. Earnings (loss) per share-diluted for the second quarter were $0.02, narrowing the year-to-date loss per share to $0.06.



In a press release dated July 26, 2005, Michael L. McMullan, Bancshares of Floridas President and CEO, stated,
This was truly a break-through quarter for us, reaching profitability ahead of our guidance and exceeding the $500 million threshold in total assets. Our net interest margin rose nicely to nearly 4%, our efficiency ratio improved sharply to
86%, and asset quality remained strong at 0.12% nonperforming loans/loans outstanding. We are confident that we have crossed into the arena of profitable operations while continuing to focus on significant and sustainable quality earning asset and
deposit growth.



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



| |  |  | Our Fort Lauderdale bank earned $437,000, nearly 21/2times the first quarter 2005 level, marking the second consecutive quarter of profitability after the opening of its new Boca Raton banking center last October. Total assets increased 19% during the last 90 days to $201 million,
with the new Boca Raton location contributing $16 million in deposits at quarter end.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our Tampa Bay bank, which opened in November 2004, reached $53 million in total assets at June 30, 2005, and reduced its net loss by 52% from the prior quarter to $195,000.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our Naples bank, which has been profitable since third quarter 2003, had a record quarter with net income of $791,000, which compares to $178,000 in second quarter 2004. Total
assets exceeded $257 million, 22% greater than one year earlier.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | And Bank of Florida Trust Company achieved its sixth consecutive profitable quarter. Assets under advice climbed $106 million or 53% during the quarter to $306 million due to a
substantial expansion in its family office business.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



McMullan continued, Especially significant to our plan of continued rapid growth in earning assets, which have increased 72% in the last twelve months, is approximately $13.0 million in net proceeds from common equity we raised during
the quarter just ended along with $2.6 million of preferred stock exchanged for common shares.



| |  |  | The primary issuance was 915,000 shares of common stock through a private placement with Allen and Company LLC in April, followed by 165,000 common shares issued in late May in
exchange for about two-thirds of the preferred stock we raised in the first quarter of last year. The balance of the latter offering was redeemed at June 30, 2005, resulting in a call premium paid during the quarter on the converted and redeemed
preferred shares of $149,000, which reduced earnings per share (diluted) by approximately $0.02. Reported net income was not affected.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The combination of second quarter 2005 earnings and the above issuances increased book value per common share to $9.07 at quarter end, up $1.25 or 16% in the last 90 days.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | The Company grew total loans $33 million or 9% during the last 90 days, slightly ahead of the $32 million average quarterly pace in 2004. Loan pipelines at all the affiliates remain
strong. Loans at quarter end were $394 million, up 49% in the last twelve months. Commercial loans, largely secured by real estate, accounted for $327 million (83% of total loans) at June 30, 2005, followed by residential mortgage loans at
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

$30 million (8%), consumer lines of credit at $25 million (6%), and installment and other loans at $12
million (3%). Based on prospects for continued robust loan demand across its markets, the company recruited six new commercial lenders during the quarter for its affiliate banks, all of whom are or will be in place by mid-August, increasing the
companys commercial lending staff by 60% from year-end 2004 levels.



| |  |  | Deposits rose $54 million or 14% during the second quarter to $445 million, an increase of $48 million (13%) on average. Noninterest-bearing checking accounts climbed $14 million or
23% on average, reaching 17% of average total deposits for the second quarter, up from 15.6% in the first quarter. The latter growth reflects the companys concerted strategy to increase this source of low-cost funds through the sale of cash
management products and services.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Top-line revenue, which combines net banking spread income and all fee income, rose 24% over first quarter 2005 to $5.4 million, 96% higher than in second quarter 2004.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Growth was enhanced by a 38 basis point expansion during the quarter in net interest margin to 3.99%, reflective of the Company having positioned its balance sheet to benefit from a
rising rate environment. Since third quarter 2004, the net interest margin has risen 63 basis points.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Noninterest income rose 17% over first quarter 2005, led by increased secondary mortgage market fees and expanded trust revenue. As it enters the third quarter, the Company will
have five experienced, full-time mortgage originators across its affiliate locations as opposed to two originators one year ago.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Noninterest expense increased 5.7% in the quarter compared to first quarter 2005, or a rise of $250,000 against a top-line revenue increase of $1.055 million. As a result, the
efficiency ratio improved by 15 percentage points to 86%, falling below 100% for the first time, following a 13 percentage point improvement during first quarter 2005.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | And asset quality continued to be strong, with nonperforming loans falling slightly by dollar and as a ratio compared to March 31, 2005 to $469,000 or 0.12% of loans outstanding at
June 30, 2005. There have been no net charge-offs in the first half of 2005, and there were none in the comparable 2004 period. Coverage of the loan loss allowance over nonperforming loans was 7.5 times. These measures are consistent with the
Companys historic norm and very favorable to national peer bank levels as of March 31, 2005.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



McMullan concluded, We are especially proud of our second quarter earnings performance in light of the ability of our established Naples and Fort
Lauderdale franchises to absorb approximately $550,000 in net expenses associated with our Palm Beach County and Tampa Bay initiatives, which opened two very promising markets for us in the last quarter of 2004. Our fourth quarter 2004 earnings
press release stated that we had budgeted to achieve overall profitability during the last half of 2005; we have achieved that goal sooner and exceeded it by a wide margin. Based on our strong second quarter performance and now having additional
equity capital in hand, we are confident that we have built a solid financial services business model in four great Florida markets, supported by investment in holding company infrastructure, capable of sustained, growing profitability.



18



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##### Table of Contents

Statements of Financial Condition



The following tables summarize the major components of the Statements of
Financial Condition and key ratios for the periods ending June 30, 2005 and 2004, and March 31, 2005, respectively.



|                                                    |  |                                       |           |   |                     |   |           |   |  |   |           |    |  |       |   
|--------------------------------------------------- |  | ------------------------------------- | --------- | - | ------------------- | - | --------- | - |  | - | --------- | -- |  | ----- | --
|                                                    |  | AT                                    |           |   | INCREASE/(DECREASE) |  
|                                                    |  | (IN THOUSANDS, EXCEPT PER SHARE DATA) |          
|                                                    |  | June 30, 2005                         |           |   | June 30, 2004       |   |           | $ |  |   | %         |   
|Total assets                                        |  | $                                     | 504,727   |   |                     | $ | 297,343   |   |  | $ | 207,384   |    |  | 69.7  | % 
|Cash and cash equivalents                           |  |                                       | 80,358    |   |                     |   | 20,051    |   |  |   | 60,307    |    |  | 300.8 | % 
|Interest-earning assets                             |  |                                       | 476,863   |   |                     |   | 276,979   |   |  |   | 199,884   |    |  | 72.2  | % 
|Investment securities                               |  |                                       | 19,520    |   |                     |   | 6,281     |   |  |   | 13,239    |    |  | 210.8 | % 
|Loans held for investment                           |  |                                       | 394,210   |   |                     |   | 263,746   |   |  |   | 130,464   |    |  | 49.5  | % 
|Allowance for loan losses                           |  |                                       | 3,513     |   |                     |   | 2,132     |   |  |   | 1,381     |    |  | 64.8  | % 
|Deposit accounts                                    |  |                                       | 444,761   |   |                     |   | 265,102   |   |  |   | 179,659   |    |  | 67.8  | % 
|Stockholders equity                                |  |                                       | 53,666    |   |                     |   | 23,575    |   |  |   | 30,091    |    |  | 127.6 | % 
|                                                    |  |                                       |           |  
|Total shares outstanding                            |  |                                       | 5,916,685 |   |                     |   | 3,094,199 |   |  |   | 2,822,486 |    |  | 91.2  | % 
|Book value per common share                         |  |                                       | 9.07      |   |                     |   | 6.50      |   |  |   | 2.57      |    |  | 39.5  | % 
|                                                    |  |                                       |           |  
|Allowance for loan losses to total loans            |  |                                       | 0.89      | % |                     |   | 0.81      | % |  |   | 0.08      | %  |  | 9.9   | % 
|Allowance for loan losses to nonperforming loans    |  |                                       | 748.85    | % |                     |   | 168.67    | % |  |   | 580.18    | %  |  | 344.0 | % 
|Nonperforming loans to total loans                  |  |                                       | 0.12      | % |                     |   | 0.48      | % |  |   | (0.36     | )% |  | (75.0 | )%
|Nonperforming assets to total assets                |  |                                       | 0.09      | % |                     |   | 0.43      | % |  |   | (0.34     | )% |  | (79.1 | )%
|                                                    |  |                                       |           |  
|Leverage (Tier 1 to average total assets)           |  |                                       | 10.77     | % |                     |   | 8.19      | % |  |   | 2.58      | %  |  | 31.5  | % 
|Assets under advice  Bank of Florida Trust Company |  | $                                     | 306,152   |   |                     | $ | 162,185   |   |  | $ | 143,967   |    |  | 88.8  | % 
|                                                    |  |                                      
|                                                    |  | AT                                    |           |   | INCREASE/(DECREASE) |  
|                                                    |  | (IN THOUSANDS, EXCEPT PER SHARE DATA) |          
|                                                    |  | June 30, 2005                         |           |   | March 31,2005       |   |           | $ |  |   | %         |   
|Total assets                                        |  | $                                     | 504,727   |   |                     | $ | 442,053   |   |  | $ | 62,674    |    |  | 14.2  | % 
|Cash and cash equivalents                           |  |                                       | 80,358    |   |                     |   | 50,785    |   |  |   | 29,573    |    |  | 58.2  | % 
|Interest-earning assets                             |  |                                       | 476,863   |   |                     |   | 416,322   |   |  |   | 60,541    |    |  | 14.5  | % 
|Investment securities                               |  |                                       | 19,520    |   |                     |   | 19,170    |   |  |   | 350       |    |  | 1.8   | % 
|Loans held for investment                           |  |                                       | 394,210   |   |                     |   | 361,168   |   |  |   | 33,042    |    |  | 9.1   | % 
|Allowance for loan losses                           |  |                                       | 3,513     |   |                     |   | 3,113     |   |  |   | 400       |    |  | 12.8  | % 
|Deposit accounts                                    |  |                                       | 444,761   |   |                     |   | 390,374   |   |  |   | 54,387    |    |  | 13.9  | % 
|Stockholders equity                                |  |                                       | 53,666    |   |                     |   | 41,501    |   |  |   | 12,165    |    |  | 29.3  | % 
|                                                    |  |                                       |           |  
|Total shares outstanding                            |  |                                       | 5,916,685 |   |                     |   | 4,836,331 |   |  |   | 1,080354  |    |  | 22.3  | % 
|Book value per common share                         |  |                                       | 9.07      |   |                     |   | 7.82      |   |  |   | 1.25      |    |  | 16.0  | % 
|                                                    |  |                                       |           |  
|Allowance for loan losses to total loans            |  |                                       | 0.89      | % |                     |   | 0.86      | % |  |   | 0.03      | %  |  | 3.4   | % 
|Allowance for loan losses to nonperforming loans    |  |                                       | 748.85    | % |                     |   | 644.83    | % |  |   | 104.02    | %  |  | 16.1  | % 
|Nonperforming loans to total loans                  |  |                                       | 0.12      | % |                     |   | 0.13      | % |  |   | (0.01     | )% |  | (7.7  | )%
|Nonperforming assets to total assets                |  |                                       | 0.09      | % |                     |   | 0.11      | % |  |   | (0.02     | )% |  | (18.2 | )%
|                                                    |  |                                       |           |  
|Leverage (Tier 1 to average total assets)           |  |                                       | 10.77     | % |                     |   | 9.44      | % |  |   | 1.33      | %  |  | 14.1  | % 
|Assets under advice  Bank of Florida Trust Company |  | $                                     | 306,152   |   |                     | $ | 200,139   |   |  | $ | 106,013   |    |  | 53.0  | % 



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##### Table of Contents

Loans in the Companys combined banks rose by $33 million or 9% over the last three
months to $394 million; since June 30, 2004, loans have risen $130 million or 50%. Commercial real estate loans have increased $70 million (62%) over the past twelve months to $141 million, while construction loans have increased $53 million (189%)
to $81 million. Combined multi-family and one-to-four family residential loans ($40 million of which serve as collateral for commercial loans) decreased $9 million during the past year to $91 million. In total, loans secured by real estate comprise
$313 million or 79% of loans outstanding at June 30, 2005. The remaining loans at quarter end consisted of $44 million in largely commercial and industrial loans (11% of total loans), $25 million in home equity and other consumer lines of credit (6%
of total loans), and $12 million in consumer installment and other loans (3% of total loans).



Asset quality remained excellent by peer standards with nonperforming loans and 30-89 day delinquencies at 0.12% and 0.28%, respectively, of loans outstanding as of June 30, 2005. There were no net
charge-offs for the quarter versus $30,000 for all of 2004. Compared to the most recently available data for national peer banks as of March 31, 2005 in the $300 to $500 million asset size group, the Companys ratios for nonperforming loans,
loans 30-89 days past due, and net charge-offs as a percent of average loans were 0.13%, 0.53%, and zero, respectively, versus 0.54%, 0.80%, and 0.07%, respectively, for peers.



As of June 30, 2005, the allowance for loan losses reached $3.513 million, up $400,000 (13%) from first quarter 2005 and up
$1.381 million (65%) from June 30, 2004. The ratio of the loan loss allowance to total loans outstanding at 0.89% was up 3 basis points from March 31, 2005 and up 8 basis points from twelve months earlier. Nonperforming loans declined to $469,000 at
quarter end from $483,000 at March 31, 2005 and a high of $1.3 million at June 30, 2004. Coverage of the loan loss allowance over nonperformers was 749% at June 30, 2005, in comparison to coverage of 645% and 169% 90 days and one year earlier,
respectively. National peer bank allowance coverage over nonperforming loans at March 31, 2005 was 490%.



Investment securities and overnight investments were $81 million at June 30, 2005, an increase of $28 million during the quarter. Since June
30, 2004, investment securities and overnight investments have increased nearly $69 million reflective of deposit growth and additional liquidity.



Securities available for sale totaled $19.5 million, a slight increase from $19.2 million at March 31, 2005. The average yield on investment securities
for the second quarter of 2005 was 3.72%, an increase of 9 basis points compared to the same period one year ago and up 84 basis points from the previous quarter; the latter occurred due to investment in short-term Treasuries of a large, temporary
increase in deposits caused by a single customer in June. The Company does not have any securities classified as held to maturity or trading at June 30, 2005 or December 31, 2004.



Federal Funds sold totaled $61.4 million at June 30, 2005, an increase of $28 million from March 31, 2005. This category of
earning assets can be subject to large daily fluctuations based on deposit flows and daily funding requirements. The average yield on federal funds for the second quarter of 2005 was 2.93%, up 201 basis points compared to the second quarter of 2004
and up 47 basis points from the previous quarter reflective of continued interest rate tightening by the Federal Reserve.



Total earning assets reached $476.9 million at June 30, 2005, up $61 million over the last three months compared to a $33 million increase
in loans. As a result, the mix of loans to earning assets declined to 83% from 87%. The loan/earning asset ratio was 95% at June 30, 2004, reflective of less relative liquidity at that date compared to the present time.



Deposits rose $54 million or 14% during second quarter 2005 to
$445 million; compared to one year ago, the increase was $180 million or 68%. Average deposits rose $43 million or 11% compared to the first quarter of the current year, with growth in checking (both non-interest and interest bearing) and money
market accounts comprising $63 million of this increase. The Company is committed to expanding its deposit base with less reliance on higher-cost CDs, which presently constitute 38% of average deposits versus 17% for noninterest-bearing checking
accounts. This latter source of funds is targeted to increase based on a vigorous program to market the Companys state-of-the-art cash management products and on-line banking capabilities, which also have the potential to generate additional
fee income.



Stockholders equity at $53.7
million was $30.1 million higher compared to June 30, 2004. This increase resulted from the Companys 1.725 million-share common stock offering during third quarter 2004, which netted proceeds of $19.8 million, and the Companys 915,000
share common stock offering in April 2005 which netted $13.0 million. These increases were partially reduced by the redemption of 12,258 shares of preferred stock at June 30, 2005, which decreased equity by $1.3 million.



20



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##### Table of Contents

The Companys Tier 1 leverage ratio increased 258 basis points in the last 12 months to 10.77% at
June 30, 2005, well above the minimum for well-capitalized bank holding companies of 5.0%. This reflects the impact of nearly $13 million in net proceeds from common equity raised in April 2005.



Results of Operations



The following tables summarize the major components of the Statements of Operations and key ratios for the three- and
six-month periods ending June 30, 2005 and 2004 and the three-month period ending March 31, 2005.



Second Quarter 2005 Compared to Second Quarter 2004



|                                                               |  |                                       |           |   |                     |   |           |    |  |   |           |    |  |        |   
|-------------------------------------------------------------- |  | ------------------------------------- | --------- | - | ------------------- | - | --------- | -- |  | - | --------- | -- |  | ------ | --
|                                                               |  | FOR THE THREE MONTHS ENDED            |           |   | INCREASE/(DECREASE) |  
|                                                               |  | (IN THOUSANDS, EXCEPT PER SHARE DATA) |          
|                                                               |  | JUNE 30, 2005                         |           |   | JUNE 30, 2004       |   |           | $  |  |   | %         |   
|Total interest income                                          |  | $                                     | 6,671     |   |                     | $ | 3,368     |    |  | $ | 3,303     |    |  | 98.1   | % 
|Total interest expense                                         |  |                                       | 2,117     |   |                     |   | 1,128     |    |  |   | 989       |    |  | 87.7   | % 
|                                                               |  |                                       |           |   |                     |   |           |    |  |   |           |    |  |        |   
|Net interest income before provision                           |  |                                       | 4,554     |   |                     |   | 2,240     |    |  |   | 2,314     |    |  | 103.3  | % 
|Provision for loan losses                                      |  |                                       | 399       |   |                     |   | 230       |    |  |   | 169       |    |  | 73.5   | % 
|                                                               |  |                                       |           |   |                     |   |           |    |  |   |           |    |  |        |   
|Net interest income after provision                            |  |                                       | 4,155     |   |                     |   | 2,010     |    |  |   | 2,145     |    |  | 106.7  | % 
|Non interest income                                            |  |                                       | 819       |   |                     |   | 503       |    |  |   | 316       |    |  | 62.8   | % 
|Gain on sale of investments                                    |  |                                       |          |   |                     |   | 5         |    |  |   | (5        | )  |  | (100.0 | )%
|Noninterest expense                                            |  |                                       | 4,646     |   |                     |   | 3,038     |    |  |   | 1,608     |    |  | 53.0   | % 
|Provision for income taxes                                     |  |                                       |          |   |                     |   |          |    |  |   |          |    |  |       |   
|                                                               |  |                                       |           |   |                     |   |           |    |  |   |           |    |  |        |   
|Net income (loss)                                              |  |                                       | 328       |   |                     |   | (520      | )  |  |   | 848       |    |  | 162.9  | % 
|                                                               |  |                                       |           |   |                     |   |           |    |  |   |           |    |  |        |   
|Basic earnings (loss) per share                                |  | $                                     | 0.02      |   |                     | $ | (0.19     | )  |  | $ | 0.21      |    |  | 110.5  | % 
|Diluted earnings (loss) per share                              |  |                                       | 0.02      |   |                     |   | (0.19     | )  |  |   | 0.21      |    |  | 110.5  | % 
|Weighted average common shares  basic                         |  |                                       | 5,686,208 |   |                     |   | 3,094,199 |    |  |   | 2,592,009 |    |  | 83.8   | % 
|Weighted average common and common equivalent shares - diluted |  |                                       | 5,836,987 |   |                     |   | 3,094,199 |    |  |   | 2,742,788 |    |  | 88.6   | % 
|                                                               |  |                                       |           |  
|Return on average assets                                       |  |                                       | 0.27      | % |                     |   | (0.72     | )% |  |   | 0.98      | %  |  | 137.2  | % 
|Return on average equity                                       |  |                                       | 2.63      | % |                     |   | (0.72     | )% |  |   | 12.76     | %  |  | 126.0  | % 
|                                                               |  |                                       |           |  
|Top-line revenue                                               |  | $                                     | 5,373     |   |                     | $ | 2,748     |    |  | $ | 2,625     |    |  | 95.5   | % 
|Net interest margin                                            |  |                                       | 3.99      | % |                     |   | 3.36      | %  |  |   | 0.63      | %  |  | 18.8   | % 
|Efficiency ratio                                               |  |                                       | 86.49     | % |                     |   | 110.75    | %  |  |   | (24.26    | )% |  | (21.9  | )%
|Average equity to average assets                               |  |                                       | 10.66     | % |                     |   | 8.26      | %  |  |   | 2.40      | %  |  | 29.1   | % 
|Average loans held for investment to average deposits          |  |                                       | 89.16     | % |                     |   | 95.95     | %  |  |   | (6.79     | )% |  | (7.1   | )%
|Net charge-offs to average loans                               |  |                                       | 0.00      | % |                     |   | 0.00      | %  |  |   | 0.00      | %  |  | 0.0    | % 



The Company recorded
net income of $328,000 in the current quarter, an increase of $848,000 or 163% compared to second quarter 2004. Top-line revenue climbed $2.6 million on a 72% growth in earning assets and an 89% increase in assets under advice. We define top-line
revenue, which is a non-GAAP term, as the sum of the Companys lending or spread income (interest income less interest expense) plus fee income (excluding net securities gains/losses), both of which often pertain to the same customer base and
can be matched against the underlying noninterest expense to generate those revenue components. Approximately $2.3 million of the top-line revenue increase reflects growth in net interest income, of which $454,000 was due to a 63 basis point
expansion in net interest margin.



Noninterest income increased
$316,000, one-third of which is attributable to the increase in assets under advice. Noninterest expense rose $1.6 million in the second quarter, or 61% of the increase in top-line revenue. This net improvement of $1.017 million resulted in an
efficiency ratio of 86%, 24% lower (better) than the same period last year. Partially offsetting this improvement was an increase in loan loss provision expense of $169,000; loans during second quarter 2005 rose $33 million, $8 million greater than
in second quarter 2004.



21



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##### Table of Contents

Second Quarter 2005 Compared to First Quarter 2005



|                                                               |  |                                       |           |   |                     |   |           |    |  |   |           |    |  |       |   
|-------------------------------------------------------------- |  | ------------------------------------- | --------- | - | ------------------- | - | --------- | -- |  | - | --------- | -- |  | ----- | --
|                                                               |  | FOR THE THREE MONTHS ENDED            |           |   | INCREASE/(DECREASE) |  
|                                                               |  | (IN THOUSANDS, EXCEPT PER SHARE DATA) |          
|                                                               |  | JUNE 30, 2005                         |           |   | MARCH 31, 2005      |   |           | $  |  |   | %         |   
|Total interest income                                          |  | $                                     | 6,671     |   |                     | $ | 5,440     |    |  | $ | 1,231     |    |  | 22.6  | % 
|Total interest expense                                         |  |                                       | 2,117     |   |                     |   | 1,820     |    |  |   | 297       |    |  | 16.3  | % 
|                                                               |  |                                       |           |   |                     |   |           |    |  |   |           |    |  |       |   
|Net interest income before provision                           |  |                                       | 4,554     |   |                     |   | 3,620     |    |  |   | 934       |    |  | 25.8  | % 
|Provision for loan losses                                      |  |                                       | 399       |   |                     |   | 296       |    |  |   | 103       |    |  | 34.8  | % 
|                                                               |  |                                       |           |   |                     |   |           |    |  |   |           |    |  |       |   
|Net interest income after provision                            |  |                                       | 4,155     |   |                     |   | 3,324     |    |  |   | 831       |    |  | 25.0  | % 
|Non interest income                                            |  |                                       | 819       |   |                     |   | 698       |    |  |   | 121       |    |  | 17.3  | % 
|Noninterest expense                                            |  |                                       | 4,647     |   |                     |   | 4,397     |    |  |   | 250       |    |  | 5.7   | % 
|Provision for income taxes                                     |  |                                       |          |   |                     |   |          |    |  |   |          |    |  |      |   
|                                                               |  |                                       |           |   |                     |   |           |    |  |   |           |    |  |       |   
|Net income (loss)                                              |  |                                       | 327       |   |                     |   | (375      | )  |  |   | 702       |    |  | 187.2 | % 
|                                                               |  |                                       |           |   |                     |   |           |    |  |   |           |    |  |       |   
|Basic earnings (loss) per share                                |  | $                                     | 0.02      |   |                     | $ | (0.09     | )  |  | $ | 0.11      |    |  | 122.2 | % 
|Diluted earnings (loss) per share                              |  |                                       | 0.02      |   |                     |   | (0.09     | )  |  |   | 0.11      |    |  | 122.2 | % 
|Weighted average common shares - basic                         |  |                                       | 5,686,208 |   |                     |   | 4,836,300 |    |  |   | 849,918   |    |  | 17.6  | % 
|Weighted average common and common equivalent shares - diluted |  |                                       | 5,836,987 |   |                     |   | 4,836,300 |    |  |   | 1,000,687 |    |  | 20.7  | % 
|                                                               |  |                                       |           |  
|Return on average assets                                       |  |                                       | 0.27      | % |                     |   | (0.35     | )% |  |   | 0.62      | %  |  | 176.3 | % 
|Return on average equity                                       |  |                                       | 2.63      | % |                     |   | (3.87     | )% |  |   | 6.50      | %  |  | 168.0 | % 
|                                                               |  |                                       |           |  
|Top-line revenue                                               |  | $                                     | 5,373     |   |                     | $ | 4,318     |    |  | $ | 1,055     |    |  | 24.4  | % 
|Net interest margin                                            |  |                                       | 3.99      | % |                     |   | 3.61      | %  |  |   | 0.38      | %  |  | 10.5  | % 
|Efficiency ratio                                               |  |                                       | 86.49     | % |                     |   | 101.83    | %  |  |   | (15.34    | )% |  | (15.1 | )%
|Average equity to average assets                               |  |                                       | 10.66     | % |                     |   | 9.85      | %  |  |   | 0.81      | %  |  | 8.2   | % 
|Average loans held for investment to average deposits          |  |                                       | 89.16     | % |                     |   | 88.44     | %  |  |   | 0.72      | %  |  | 0.8   | % 
|Net charge-offs to average loans                               |  |                                       | 0.00      | % |                     |   | 0.00      | %  |  |   | 0.00      | %  |  | 0.0   | % 



The Companys
second quarter net income increased $702,000 from a first quarter 2005 net loss of $375,000 to a positive $327,000. Top-line revenue climbed $1.055 million on 15% growth in earning assets and a 53% increase in assets under advice. Approximately
$934,000 of the increase in top-line revenue reflects growth in net interest income, of which $246,000 (26%) was due to expansion in the net interest margin from 3.61% to 3.99%. Noninterest income climbed $121,000 during the quarter, led by
increased secondary mortgage market fees and expanded trust revenue.



Noninterest expense rose $250,000 in the second quarter, or less than 1/4 of the increase in top-line revenue. The resulting net improvement of $805,000 was partially offset by a $103,000 increase in the loan loss provision from first
quarter 2005 largely due to accelerated loan growth in the Ft. Lauderdale bank.



22



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##### Table of Contents

Six months ended June 30, 2005 Compared to Six months ended June 30, 2004



|                                                               |  |                                       |           |    |                     |   |           |    |  |   |           |    |  |        |   
|-------------------------------------------------------------- |  | ------------------------------------- | --------- | -- | ------------------- | - | --------- | -- |  | - | --------- | -- |  | ------ | --
|                                                               |  | FOR THE SIX MONTHS ENDED              |           |    | INCREASE/(DECREASE) |  
|                                                               |  | (IN THOUSANDS, EXCEPT PER SHARE DATA) |          
|                                                               |  | JUNE 30, 2005                         |           |    | JUNE 30, 2004       |   |           | $  |  |   | %         |   
|Total interest income                                          |  | $                                     | 12,111    |    |                     | $ | 6,333     |    |  | $ | 5,778     |    |  | 91.2   | % 
|Total interest expense                                         |  |                                       | 3,937     |    |                     |   | 2,117     |    |  |   | 1,820     |    |  | 86.0   | % 
|                                                               |  |                                       |           |    |                     |   |           |    |  |   |           |    |  |        |   
|Net interest income before provision                           |  |                                       | 8,174     |    |                     |   | 4,216     |    |  |   | 3,958     |    |  | 93.9   | % 
|Provision for loan losses                                      |  |                                       | 695       |    |                     |   | 564       |    |  |   | 131       |    |  | 23.2   | % 
|                                                               |  |                                       |           |    |                     |   |           |    |  |   |           |    |  |        |   
|Net interest income after provision                            |  |                                       | 7,479     |    |                     |   | 3,652     |    |  |   | 3,827     |    |  | 104.8  | % 
|Non interest income                                            |  |                                       | 1,516     |    |                     |   | 943       |    |  |   | 573       |    |  | 60.8   | % 
|Gain on sale of investments                                    |  |                                       |          |    |                     |   | 5         |    |  |   | (5        | )  |  | (100.0 | )%
|Noninterest expense                                            |  |                                       | 9,042     |    |                     |   | 5,632     |    |  |   | 3,411     |    |  | 60.6   | % 
|Provision for income taxes                                     |  |                                       |          |    |                     |   |          |    |  |   |          |    |  |       |   
|                                                               |  |                                       |           |    |                     |   |           |    |  |   |           |    |  |        |   
|Net loss                                                       |  |                                       | (47       | )  |                     |   | (1,032    | )  |  |   | 985       |    |  | 95.4   | % 
|                                                               |  |                                       |           |    |                     |   |           |    |  |   |           |    |  |        |   
|Basic loss per share                                           |  | $                                     | (0.06     | )  |                     | $ | (0.36     | )  |  | $ | 0.30      |    |  | 83.3   | % 
|Diluted loss per share                                         |  |                                       | (0.06     | )  |                     |   | (0.36     | )  |  |   | 0.30      |    |  | 83.3   | % 
|Weighted average common shares - basic                         |  |                                       | 5,263,602 |    |                     |   | 3,086,781 |    |  |   | 2,176,821 |    |  | 70.5   | % 
|Weighted average common and common equivalent shares - diluted |  |                                       | 5,263,602 |    |                     |   | 3,086,781 |    |  |   | 2,176,821 |    |  | 70.5   | % 
|                                                               |  |                                       |           |   
|Return on average assets                                       |  |                                       | (0.04     | )% |                     |   | (1.51     | )% |  |   | 1.47      | %  |  | 97.3   | % 
|Return on average equity                                       |  |                                       | (0.36     | )% |                     |   | (18.36    | )% |  |   | 18.00     | %  |  | 98.1   | % 
|                                                               |  |                                       |           |   
|Top-line revenue                                               |  | $                                     | 9,690     |    |                     | $ | 5,159     |    |  | $ | 4,531     |    |  | 87.8   | % 
|Net interest margin                                            |  |                                       | 3.819     | %  |                     |   | 3.39      | %  |  |   | 0.42      | %  |  | 12.4   | % 
|Efficiency ratio                                               |  |                                       | 93.31     | %  |                     |   | 109.15    | %  |  |   | (15.84    | )% |  | (14.5  | )%
|Average equity to average assets                               |  |                                       | 12.10     | %  |                     |   | 8.87      | %  |  |   | 3.23      | %  |  | 36.4   | % 
|Average loans held for investment to average deposits          |  |                                       | 107.20    | %  |                     |   | 111.50    | %  |  |   | (4.30     | )% |  | (3.9   | )%
|Net charge-offs to average loans                               |  |                                       | 0.00      | %  |                     |   | 0.00      | %  |  |   | 0.00      | %  |  | 0.0    | % 



The Companys net
loss for the first half of 2005 was $47,000, a $985,000 decrease compared to the same period last year. Top-line revenue climbed $4.5 million (88%) on 72% growth in earning assets and an 89% increase in assets under advice. Approximately $3.96
million of the increase in top-line revenue reflects growth in net interest income, of which $734,000 (19%) was due to a 42 basis point expansion in the net interest margin. Noninterest income (excluding securities transactions) climbed $573,000
(61%) year-to-date versus year-to-date 2004; the primary drivers were service charge income followed by trust fees.



Noninterest expense rose $3.4 million (61%) year-to-date versus the same 2004 period, of which approximately $1.65 million reflects the additional cost of
the new Boca Raton and Tampa Bay locations. The $1.12 million margin of increased top-line revenue (less the absence of a $5,000 investment gain) over increased noninterest expense was reduced by $131,000 in additional loan loss provision expense;
loans during the first half of 2005 rose $68 million, $5 million greater than in the first half of 2004.



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



Company-wide top-line revenue climbed 96% compared to second quarter 2004 versus a 53% rise in overhead expense. Compared to first quarter
2005, top-line revenue rose 24% versus a 6% rise in overhead. For the first six months of 2005, top-line revenue increased 88% over that for the same period last year, while overhead expense rose by 61%.



Of the two components of top-line revenue, second quarter
net interest income rose $2.3 million or 103% versus the same quarter last year, while noninterest income climbed $316,000 or 63%. The largest portion of the latter increase was due to greater service
charges and fees (up $169,000 or 84%, due to continued growth in customer accounts and overdraft fees), followed closely by higher trust fees (up $107,000 or 42%, due to 89% more



23



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##### Table of Contents

assets under advice). Compared to first quarter 2005, net interest income rose $934,000 or 26% while noninterest income
climbed $121,000 or 17%, largely for the same reasons. For the first half of 2005, net interest income increased $4.0 million (94%) and noninterest income (excluding securities losses) rose by $573,000 (61%). Approximately two-thirds of the latter
increase was related to greater service charges and fees resulting from a $179.7 million climb in deposit accounts over the past twelve months.



The most significant reason for second quarter net interest income growth over the same period a year ago was a 71% increase in average
earning assets and a reduction in the proportion of underlying interest bearing liabilities; the resulting increase in net interest income was $1.9 million (volume variance) or 80% of the total increase in net interest income. The balance of the
rise in net interest income was caused by an improvement in the net interest margin, which increased 63 basis points to 3.99% over the same period last year (rate variance of $454,000). Compared to first quarter 2005, $688,000 of the
$934,000 increase in net interest income was due to higher earning asset volumes (which rose by 13%), with the balance reflecting an improved net interest margin (which increased 38 basis points). For the first six months of 2005 average earning
assets climbed 73% from the same period last year, which contributed $3.2 million (81%) to the increase in net interest income.



The margin improvement reflects the interest sensitivity of the balance sheet, which includes the sensitivity of loan yields to changes in
the prime rate (approximately 50% of loans immediately adjust to prime rate changes); the portion of deposits held in CDs (only the new or renewing maturities of which are eligible to reprice with changes in interest rates; CDs constitute 46%
of total average second quarter 2005 deposits); the ability to lag rate increases in other interest-bearing liabilities; and the mix of noninterest-bearing deposits (demand deposits were 17% of average second quarter 2005 deposits). The prime rate
averaged 5.92% for second quarter 2005 (including two 1⁄4 point rate increases, ending at 6.25%), up 48 basis points from the first quarter 2005 average prime (5.44%, also reflecting two 1⁄4 point rate increases) and 144 basis points from the
second quarter 2004 average of 4.0%. For second quarter 2005, the average yield on loans was 6.38%, up 40 and 116 basis points from first quarter 2005 and second quarter 2004, respectively, and for the first half of 2005, the average yield on loans
was 6.19%, up 93 basis points from the same period last year.



Total noninterest expense in the second quarter increased $1.6 million or 53% over second quarter 2004. The primary source of the increase ($937,000 or 63%) related to increased staffing levels caused by the establishment in
fourth quarter 2004 of the Palm Beach County banking center and Tampa Bay bank and expansion of back office functions to support the rapid growth of the Company. Beginning with first quarter 2005, certain activities related to operations, finance,
and other support services previously housed in the individual banks were consolidated into the holding company, which can now provide these services in a more cost-effective and consistent manner as the Companys subsidiaries expand into
multiple geographic markets. Noninterest expense for the current quarter also included an additional $234,000 and $277,000 (excluding increases in salaries and benefits included above) over the same period last year for expansion into the Palm Beach
County and Tampa Bay markets, respectively. These same factors explain the $3.4 million or 61% increase in noninterest expense for the first half of the current year compared to the same period last year. Of that amount, 55% was related to an
increase in salaries and employee benefits to support the growth of the Company.



Noninterest expense increased $249,000 (5.7%) in comparison to the first quarter of 2005. Personnel expense accounted for $178,000 of the increase (up 8.0%), reflecting overall merit increases and selected additions
to staff, largely in lending-related areas, and compensation expense related to warrants issued in connection with the openings of the Tampa Bay bank and the Palm Beach County location of $28,000. Higher data processing costs in connection with
compliance requirements accounted for $80,000 of the increase (up 27.5%).



Despite the increase in overhead of an expanding company, the second quarter 2005 efficiency ratio decreased to a more favorable 86% compared to 111% for the same period last year and 102% for the immediately
preceding quarter. The efficiency ratio for the first six months of 2005 is 93%, a 16 basis point improvement from a ratio of 109% for the first half of 2004. The improvements reflect the greater relative growth in top-line revenue compared to
noninterest expense.



24



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##### Table of Contents

Average Balances, Income and Expenses, and Rates



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



|                                                                        |  |                                     |         |                        |      |       |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|----------------------------------------------------------------------- |  | ----------------------------------- | ------- | ---------------------- | ---- | ----- | ------------------ |  | ---- | --------------- |  | ---------------------- | ------- |  | ------------------ | ----- | - |  | ---- | -
|                                                                        |  | For the Three-Months Ended June 30, |        
|                                                                        |  | 2005                                |         |                        | 2004 |      
|                                                                        |  | Average Balance                     |         | Interest and Dividends |      |       | Average Yield/Rate |  |      | Average Balance |  | Interest and Dividends |         |  | Average Yield/Rate |      
|Assets:                                                                 |  |                                     |         |                        |      |       |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Earning assets:                                                         |  |                                     |         |                        |      |       |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Interest earning deposits                                               |  | $                                   | 429     |                        | $    | 6     |                    |  | 5.61 | %               |  | $                      | 47      |  | $                  |      |   |  | 0.43 | %
|Securities1                                                             |  |                                     | 23,956  |                        |      | 222   |                    |  | 3.72 | %               |  |                        | 8,609   |  |                    | 78    |   |  | 3.63 | %
|Federal funds sold                                                      |  |                                     | 52,608  |                        |      | 384   |                    |  | 2.93 | %               |  |                        | 7,434   |  |                    | 17    |   |  | 0.92 | %
|Loans2                                                                  |  |                                     | 381,085 |                        |      | 6,059 |                    |  | 6.38 | %               |  |                        | 251,302 |  |                    | 3,273 |   |  | 5.22 | %
|                                                                        |  |                                     |         |                        |      |       |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Total interest-earning assets                                           |  |                                     | 458,078 |                        |      | 6,671 |                    |  | 5.84 | %               |  |                        | 267,392 |  |                    | 3,368 |   |  | 5.05 | %
|                                                                        |  |                                     |         |                        |      |       |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Non interest-earning assets                                             |  |                                     | 33,173  |                        |      |       |                    |  |      |                 |  |                        | 23,040  |  |                    |       |   |  |      |  
|                                                                        |  |                                     |         |                        |      |       |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Total Assets                                                            |  | $                                   | 491,251 |                        |      |       |                    |  |      |                 |  | $                      | 290,432 |  |                    |       |   |  |      |  
|                                                                        |  |                                     |         |                        |      |       |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Liabilities:                                                            |  |                                     |         |                        |      |       |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Interest-bearing liabilities:                                           |  |                                     |         |                        |      |       |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Interest bearing checking                                               |  | $                                   | 52,310  |                        |      | 46    |                    |  | 0.35 | %               |  | $                      | 25,237  |  |                    | 21    |   |  | 0.33 | %
|Money market accounts                                                   |  |                                     | 134,278 |                        |      | 736   |                    |  | 2.20 | %               |  |                        | 70,081  |  |                    | 245   |   |  | 1.40 | %
|Savings                                                                 |  |                                     | 5,572   |                        |      | 20    |                    |  | 1.44 | %               |  |                        | 1,713   |  |                    | 4     |   |  | 0.94 | %
|Time deposit                                                            |  |                                     | 162,420 |                        |      | 1,278 |                    |  | 3.16 | %               |  |                        | 126,099 |  |                    | 848   |   |  | 2.70 | %
|Other borrowings                                                        |  |                                     | 2,341   |                        |      | 37    |                    |  | 6.34 | %               |  |                        | 2,839   |  |                    | 10    |   |  | 1.41 | %
|                                                                        |  |                                     |         |                        |      |       |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Total interest-bearing liabilities                                      |  | $                                   | 356,921 |                        |      | 2,117 |                    |  | 2.38 | %               |  | $                      | 225,969 |  |                    | 1,128 |   |  | 2.00 | %
|Non-interest bearing deposits                                           |  |                                     | 72,832  |                        |      |       |                    |  |      |                 |  |                        | 38,792  |  |                    |       |   |  |      |  
|Other liabilities                                                       |  |                                     | 9,147   |                        |      |       |                    |  |      |                 |  |                        | 1,694   |  |                    |       |   |  |      |  
|Stockholders equity                                                    |  |                                     | 52,351  |                        |      |       |                    |  |      |                 |  |                        | 23,977  |  |                    |       |   |  |      |  
|                                                                        |  |                                     |         |                        |      |       |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Total Liabilities & Stockholders Equity                                |  | $                                   | 491,251 |                        |      |       |                    |  |      |                 |  | $                      | 290,432 |  |                    |       |   |  |      |  
|                                                                        |  |                                     |         |                        |      |       |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Net interest income                                                     |  |                                     |         |                        | $    | 4,554 |                    |  |      |                 |  |                        |         |  | $                  | 2,240 |   |  |      |  
|                                                                        |  |                                     |         |                        |      |       |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Interest-rate spread                                                    |  |                                     |         |                        |      |       |                    |  | 3.46 | %               |  |                        |         |  |                    |       |   |  | 3.05 | %
|Net interest margin                                                     |  |                                     |         |                        |      |       |                    |  | 3.99 | %               |  |                        |         |  |                    |       |   |  | 3.36 | %
|Ratio of average interest-bearing liabilities to average earning assets |  |                                     |         |                        |      | 77.9  | %                  |  |      |                 |  |                        |         |  |                    | 84.5  | % |  |      |  



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



|                                         |  |        |       |   |      |   |        |  |   |      
|---------------------------------------- |  | ------ | ----- | - | ---- | - | ------ |  | - | -----
|                                         |  | VOLUME |       |   | RATE |   | CHANGE
|Increase (decrease) in interest income:  |  |        |       |   |      |   |        |  |   |      
|Federal funds sold                       |  | $      | 330   |   |      | $ | 37     |  | $ | 367  
|Other investments1                       |  |        | 147   |   |      |   | 3      |  |   | 150  
|Loans2                                   |  |        | 2,053 |   |      |   | 733    |  |   | 2,786
|                                         |  |        |       |   |      |   |        |  |   |      
|Total interest income                    |  |        | 2,530 |   |      |   | 773    |  |   | 3,303
|                                         |  |        |       |   |      |   |        |  |   |      
|Increase (decrease) in interest expense: |  |        |       |   |      |   |        |  |   |      
|NOW and Money market deposits            |  |        | 375   |   |      |   | 141    |  |   | 516  
|Savings deposits                         |  |        | 14    |   |      |   | 2      |  |   | 16   
|Time deposits                            |  |        | 286   |   |      |   | 144    |  |   | 430  
|Other borrowings                         |  |        | (5    | ) |      |   | 32     |  |   | 27   
|                                         |  |        |       |   |      |   |        |  |   |      
|Total interest expense                   |  |        | 670   |   |      |   | 319    |  |   | 989  
|                                         |  |        |       |   |      |   |        |  |   |      
|Total change in net interest income      |  | $      | 1,860 |   |      | $ | 454    |  | $ | 2,314
|                                         |  |        |       |   |      |   |        |  |   |      

---

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



25



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##### Table of Contents

|                                                                        |  |                            |         |                        |                |       |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|----------------------------------------------------------------------- |  | -------------------------- | ------- | ---------------------- | -------------- | ----- | ------------------ |  | ---- | --------------- |  | ---------------------- | ------- |  | ------------------ | ----- | - |  | ---- | -
|                                                                        |  | For the Three-Months Ended |        
|                                                                        |  | June 30, 2005              |         |                        | March 31, 2005 |      
|                                                                        |  | Average Balance            |         | Interest and Dividends |                |       | Average Yield/Rate |  |      | Average Balance |  | Interest and Dividends |         |  | Average Yield/Rate |      
|Assets:                                                                 |  |                            |         |                        |                |       |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Earning assets:                                                         |  |                            |         |                        |                |       |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Interest earning deposits                                               |  | $                          | 429     |                        | $              | 6     |                    |  | 5.61 | %               |  | $                      | 1,258   |  | $                  | 1     |   |  | 0.32 | %
|Securities1                                                             |  |                            | 23,956  |                        |                | 222   |                    |  | 3.72 | %               |  |                        | 9,993   |  |                    | 71    |   |  | 2.88 | %
|Federal funds sold                                                      |  |                            | 52,608  |                        |                | 384   |                    |  | 2.93 | %               |  |                        | 53,343  |  |                    | 323   |   |  | 2.46 | %
|Loans2                                                                  |  |                            | 381,085 |                        |                | 6,059 |                    |  | 6.38 | %               |  |                        | 342,176 |  |                    | 5,045 |   |  | 5.98 | %
|                                                                        |  |                            |         |                        |                |       |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Total interest-earning assets                                           |  |                            | 458,078 |                        |                | 6,671 |                    |  | 5.84 | %               |  |                        | 406,770 |  |                    | 5,440 |   |  | 5.42 | %
|                                                                        |  |                            |         |                        |                |       |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Non interest-earning assets                                             |  |                            | 33,173  |                        |                |       |                    |  |      |                 |  |                        | 25,207  |  |                    |       |   |  |      |  
|                                                                        |  |                            |         |                        |                |       |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Total Assets                                                            |  | $                          | 491,251 |                        |                |       |                    |  |      |                 |  | $                      | 431,977 |  |                    |       |   |  |      |  
|                                                                        |  |                            |         |                        |                |       |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Liabilities:                                                            |  |                            |         |                        |                |       |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Interest-bearing liabilities:                                           |  |                            |         |                        |                |       |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Interest bearing checking                                               |  | $                          | 52,310  |                        |                | 46    |                    |  | 0.35 | %               |  | $                      | 35,068  |  |                    | 25    |   |  | 0.33 | %
|Money market accounts                                                   |  |                            | 134,278 |                        |                | 736   |                    |  | 2.20 | %               |  |                        | 109,028 |  |                    | 498   |   |  | 1.85 | %
|Savings                                                                 |  |                            | 5,572   |                        |                | 20    |                    |  | 1.44 | %               |  |                        | 5,416   |  |                    | 20    |   |  | 1.50 | %
|Time deposit                                                            |  |                            | 162,420 |                        |                | 1,278 |                    |  | 3.16 | %               |  |                        | 170,766 |  |                    | 1,244 |   |  | 2.95 | %
|Other borrowings                                                        |  |                            | 2,341   |                        |                | 37    |                    |  | 6.34 | %               |  |                        | 2,100   |  |                    | 33    |   |  | 6.37 | %
|                                                                        |  |                            |         |                        |                |       |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Total interest-bearing liabilities                                      |  | $                          | 356,921 |                        |                | 2,117 |                    |  | 2.38 | %               |  | $                      | 322,378 |  |                    | 1,820 |   |  | 2.29 | %
|Non-interest bearing deposits                                           |  |                            | 72,832  |                        |                |       |                    |  |      |                 |  |                        | 59,165  |  |                    |       |   |  |      |  
|Other liabilities                                                       |  |                            | 9,147   |                        |                |       |                    |  |      |                 |  |                        | 8,289   |  |                    |       |   |  |      |  
|Stockholders equity                                                    |  |                            | 52,351  |                        |                |       |                    |  |      |                 |  |                        | 42,145  |  |                    |       |   |  |      |  
|                                                                        |  |                            |         |                        |                |       |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Total Liabilities & Stockholders Equity                                |  | $                          | 491,251 |                        |                |       |                    |  |      |                 |  | $                      | 431,977 |  |                    |       |   |  |      |  
|                                                                        |  |                            |         |                        |                |       |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Net interest income                                                     |  |                            |         |                        | $              | 4,554 |                    |  |      |                 |  |                        |         |  | $                  | 3,620 |   |  |      |  
|                                                                        |  |                            |         |                        |                |       |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Interest-rate spread                                                    |  |                            |         |                        |                |       |                    |  | 3.46 | %               |  |                        |         |  |                    |       |   |  | 3.13 | %
|Net interest margin                                                     |  |                            |         |                        |                |       |                    |  | 3.99 | %               |  |                        |         |  |                    |       |   |  | 3.61 | %
|Ratio of average interest-bearing liabilities to average earning assets |  |                            |         |                        |                | 77.9  | %                  |  |      |                 |  |                        |         |  |                    | 79.3  | % |  |      |  



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



|                                         |  |        |     |   |      |   |     |        |  |   |      
|---------------------------------------- |  | ------ | --- | - | ---- | - | --- | ------ |  | - | -----
|                                         |  | VOLUME |     |   | RATE |   |     | CHANGE
|Increase (decrease) in interest income:  |  |        |     |   |      |   |     |        |  |   |      
|Federal funds sold                       |  | $      | (2  | ) |      | $ | 63  |        |  | $ | 61   
|Other investments1                       |  |        | 118 |   |      |   | 38  |        |  |   | 156  
|Loans2                                   |  |        | 683 |   |      |   | 331 |        |  |   | 1,014
|                                         |  |        |     |   |      |   |     |        |  |   |      
|Total interest income                    |  |        | 799 |   |      |   | 432 |        |  |   | 1,231
|                                         |  |        |     |   |      |   |     |        |  |   |      
|Increase (decrease) in interest expense: |  |        |     |   |      |   |     |        |  |   |      
|NOW and Money market deposits            |  |        | 161 |   |      |   | 98  |        |  |   | 259  
|Savings deposits                         |  |        | 1   |   |      |   | (1  | )      |  |   |     
|Time deposits                            |  |        | (53 | ) |      |   | 87  |        |  |   | 34   
|Other borrowings                         |  |        | 2   |   |      |   | 2   |        |  |   | 4    
|                                         |  |        |     |   |      |   |     |        |  |   |      
|Total interest expense                   |  |        | 111 |   |      |   | 186 |        |  |   | 297  
|                                         |  |        |     |   |      |   |     |        |  |   |      
|Total change in net interest income      |  | $      | 688 |   |      | $ | 246 |        |  | $ | 934  
|                                         |  |        |     |   |      |   |     |        |  |   |      

---

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

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



26



---

##### Table of Contents

|                                                                        |  |                                   |         |                        |      |        |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|----------------------------------------------------------------------- |  | --------------------------------- | ------- | ---------------------- | ---- | ------ | ------------------ |  | ---- | --------------- |  | ---------------------- | ------- |  | ------------------ | ----- | - |  | ---- | -
|                                                                        |  | For the Six-Months Ended June 30, |        
|                                                                        |  | 2005                              |         |                        | 2004 |       
|                                                                        |  | Average Balance                   |         | Interest and Dividends |      |        | Average Yield/Rate |  |      | Average Balance |  | Interest and Dividends |         |  | Average Yield/Rate |      
|Assets:                                                                 |  |                                   |         |                        |      |        |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Earning assets:                                                         |  |                                   |         |                        |      |        |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Interest earning deposits                                               |  | $                                 | 363     |                        | $    | 7      |                    |  | 3.89 | %               |  | $                      | 47      |  | $                  | 1     |   |  | 0.76 | %
|Securities1                                                             |  |                                   | 17,013  |                        |      | 292    |                    |  | 3.46 | %               |  |                        | 8,161   |  |                    | 149   |   |  | 3.68 | %
|Federal funds sold                                                      |  |                                   | 52,974  |                        |      | 707    |                    |  | 2.69 | %               |  |                        | 6,533   |  |                    | 29    |   |  | 0.88 | %
|Loans2                                                                  |  |                                   | 361,738 |                        |      | 11,105 |                    |  | 6.19 | %               |  |                        | 234,797 |  |                    | 6,154 |   |  | 5.26 | %
|                                                                        |  |                                   |         |                        |      |        |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Total interest-earning assets                                           |  |                                   | 432,088 |                        |      | 12,111 |                    |  | 5.65 | %               |  |                        | 249,538 |  |                    | 6,333 |   |  | 5.09 | %
|                                                                        |  |                                   |         |                        |      |        |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Non interest-earning assets                                             |  |                                   | 29,551  |                        |      |        |                    |  |      |                 |  |                        | 22,994  |  |                    |       |   |  |      |  
|                                                                        |  |                                   |         |                        |      |        |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Total Assets                                                            |  | $                                 | 461,639 |                        |      |        |                    |  |      |                 |  | $                      | 272,532 |  |                    |       |   |  |      |  
|                                                                        |  |                                   |         |                        |      |        |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Liabilities:                                                            |  |                                   |         |                        |      |        |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Interest-bearing liabilities:                                           |  |                                   |         |                        |      |        |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Interest bearing checking                                               |  | $                                 | 43,646  |                        |      | 71     |                    |  | 0.33 | %               |  | $                      | 24,935  |  |                    | 41    |   |  | 0.33 | %
|Money market accounts                                                   |  |                                   | 121,723 |                        |      | 1,234  |                    |  | 2.04 | %               |  |                        | 69,242  |  |                    | 501   |   |  | 1.46 | %
|Savings                                                                 |  |                                   | 5,494   |                        |      | 40     |                    |  | 1.47 | %               |  |                        | 1,366   |  |                    | 5     |   |  | 0.74 | %
|Time deposit                                                            |  |                                   | 166,571 |                        |      | 2,522  |                    |  | 3.05 | %               |  |                        | 113,427 |  |                    | 1,559 |   |  | 2.77 | %
|Other borrowings                                                        |  |                                   | 2,221   |                        |      | 70     |                    |  | 6.36 | %               |  |                        | 1,608   |  |                    | 11    |   |  | 1.38 | %
|                                                                        |  |                                   |         |                        |      |        |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Total interest-bearing liabilities                                      |  | $                                 | 339,655 |                        |      | 3,937  |                    |  | 2.34 | %               |  | $                      | 210,578 |  |                    | 2,117 |   |  | 2.02 | %
|Non-interest bearing deposits                                           |  |                                   | 66,036  |                        |      |        |                    |  |      |                 |  |                        | 36,311  |  |                    |       |   |  |      |  
|Other liabilities                                                       |  |                                   | 126     |                        |      |        |                    |  |      |                 |  |                        | 1,483   |  |                    |       |   |  |      |  
|Stockholders equity                                                    |  |                                   | 55,822  |                        |      |        |                    |  |      |                 |  |                        | 24,160  |  |                    |       |   |  |      |  
|                                                                        |  |                                   |         |                        |      |        |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Total Liabilities & Stockholders Equity                                |  | $                                 | 461,639 |                        |      |        |                    |  |      |                 |  | $                      | 272,532 |  |                    |       |   |  |      |  
|                                                                        |  |                                   |         |                        |      |        |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Net interest income                                                     |  |                                   |         |                        | $    | 8,174  |                    |  |      |                 |  |                        |         |  | $                  | 4,216 |   |  |      |  
|                                                                        |  |                                   |         |                        |      |        |                    |  |      |                 |  |                        |         |  |                    |       |   |  |      |  
|Interest-rate spread                                                    |  |                                   |         |                        |      |        |                    |  | 3.31 | %               |  |                        |         |  |                    |       |   |  | 3.07 | %
|Net interest margin                                                     |  |                                   |         |                        |      |        |                    |  | 3.81 | %               |  |                        |         |  |                    |       |   |  | 3.39 | %
|Ratio of average interest-bearing liabilities to average earning assets |  |                                   |         |                        |      | 78.6   | %                  |  |      |                 |  |                        |         |  |                    | 84.4  | % |  |      |  



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



|                                         |  |        |       |      |   |       |        |  |   |      
|---------------------------------------- |  | ------ | ----- | ---- | - | ----- | ------ |  | - | -----
|                                         |  | VOLUME |       | RATE |   |       | CHANGE
|Increase (decrease) in interest income:  |  |        |       |      |   |       |        |  |   |      
|Federal funds sold                       |  | $      | 619   |      | $ | 59    |        |  | $ | 678  
|Other investments1                       |  |        | 157   |      |   | (8    | )      |  |   | 149  
|Loans2                                   |  |        | 3,862 |      |   | 1,089 |        |  |   | 4,951
|                                         |  |        |       |      |   |       |        |  |   |      
|Total interest income                    |  |        | 4,638 |      |   | 1,140 |        |  |   | 5,778
|                                         |  |        |       |      |   |       |        |  |   |      
|Increase (decrease) in interest expense: |  |        |       |      |   |       |        |  |   |      
|NOW and Money market deposits            |  |        | 562   |      |   | 201   |        |  |   | 763  
|Savings deposits                         |  |        | 30    |      |   | 5     |        |  |   | 35   
|Time deposits                            |  |        | 805   |      |   | 158   |        |  |   | 963  
|Other borrowings                         |  |        | 17    |      |   | 42    |        |  |   | 59   
|                                         |  |        |       |      |   |       |        |  |   |      
|Total interest expense                   |  |        | 1,414 |      |   | 406   |        |  |   | 1,820
|                                         |  |        |       |      |   |       |        |  |   |      
|Total change in net interest income      |  | $      | 3,224 |      | $ | 734   |        |  | $ | 3,958
|                                         |  |        |       |      |   |       |        |  |   |      

---

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

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



27



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##### Table of Contents

Provision and Allowance for Loan Losses



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



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



An analysis of the change
in the Companys allowance for possible loan losses and loan loss experience (charge-offs) is furnished in the following table for the three-month periods ended June 30, 2005, March 31, 2005 and June 30, 2004. (See Note 4-Loans for a comparison
of the six-months ended June 30, 2005 and 2004, respectively.)



|                                           |  |               |       |                |   |               |  |   |      
|------------------------------------------ |  | ------------- | ----- | -------------- | - | ------------- |  | - | -----
|                                           |  | June 30, 2005 |       | March 31, 2005 |   | June 30, 2004
|Balance at beginning of period             |  | $             | 3,113 |                | $ | 2,817         |  | $ | 1,902
|Provision for losses charged to operations |  |               | 399   |                |   | 296           |  |   | 230  
|Loan charge-offs                           |  |               |      |                |   |              |  |   |     
|Recoveries                                 |  |               | 1     |                |   |              |  |   |     
|                                           |  |               |       |                |   |               |  |   |      
|Balance at end of period                   |  | $             | 3,513 |                | $ | 3,113         |  | $ | 2,132
|                                           |  |               |       |                |   |               |  |   |      



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



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



|                               |  |               |       |                          |                |   |        |               |                          |  |       |        |  |                          |       |  |       |  
|------------------------------ |  | ------------- | ----- | ------------------------ | -------------- | - | ------ | ------------- | ------------------------ |  | ----- | ------ |  | ------------------------ | ----- |  | ----- | -
|                               |  | June 30, 2005 |       |                          | March 31, 2005 |   |        | June 30, 2004 |                         
|                               |  | AMOUNT        |       | % LOANS IN EACH CATEGORY |                |   | AMOUNT |               | % LOANS IN EACH CATEGORY |  |       | AMOUNT |  | % LOANS IN EACH CATEGORY |      
|Commercial real estate         |  | $             | 1,147 |                          | 35.7           | % |        | $             | 953                      |  | 33.2  | %      |  | $                        | 615   |  | 29.3  | %
|Construction                   |  |               | 934   |                          | 20.5           | % |        |               | 835                      |  | 20.4  | %      |  |                          | 317   |  | 10.6  | %
|Multifamily                    |  |               | 202   |                          | 5.4            | % |        |               | 162                      |  | 4.8   | %      |  |                          | 113   |  | 4.6   | %
|One-to-four family residential |  |               | 285   |                          | 17.8           | % |        |               | 287                      |  | 20.6  | %      |  |                          | 304   |  | 30.1  | %
|Commercial                     |  |               | 555   |                          | 11.0           | % |        |               | 484                      |  | 10.7  | %      |  |                          | 462   |  | 14.0  | %
|Lines of credit                |  |               | 221   |                          | 6.4            | % |        |               | 199                      |  | 6.3   | %      |  |                          | 148   |  | 6.5   | %
|Consumer                       |  |               | 169   |                          | 3.2            | % |        |               | 193                      |  | 4.0   | %      |  |                          | 173   |  | 4.9   | %
|                               |  |               |       |                          |                |   |        |               |                          |  |       |        |  |                          |       |  |       |  
|Total                          |  | $             | 3,513 |                          | 100.0          | % |        | $             | 3,113                    |  | 100.0 | %      |  | $                        | 2,132 |  | 100.0 | %
|                               |  |               |       |                          |                |   |        |               |                          |  |       |        |  |                          |       |  |       |  



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.



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##### Table of Contents

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



Asset liquidity is provided by cash and assets which are readily marketable, which can be pledged, or which will mature in the near future. Liability
liquidity is provided by access to core funding sources, principally the ability to generate customer deposits in our primary markets. In addition, liability liquidity is provided through the ability to borrow against approved lines of credit,
including Federal Funds purchased from correspondent banks and the Federal Home Loan Bank (FHLB). Such borrowings have historically been relatively small, averaging $341,000 for second quarter 2005, $100,000 for first quarter 2005, and $839,000 for
second quarter 2004. At June 30, 2005, FHLB borrowings were $3.0 million versus $7.0 million at March 31, 2005 and $6.0 million at June 30, 2004.



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



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



Federal funds sold and interest-bearing deposits averaged $52.6 million for second quarter 2005, about 608% higher than the $7.4 million average for
second quarter 2004 and slightly lower than the $53.3 million average in first quarter 2005. This level represents the liquidity management policy of the Company commensurate with increased deposit levels and was additionally higher due to an
increase in deposit activity (see below) as those funds await redeployment into higher yielding loans. At June 30, 2005, federal funds sold and interest-bearing deposits totaled $62.1 million versus $34.9 million at March 31, 2005 and $5.9 million
at June 30, 2004.



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



All the Companys securities are presently classified as available-for-sale. Investment securities totaled $19.5
million at June 30, 2005, up slightly from $19.2 million March 31, 2005, and up 211% from $6.3 million one year earlier.



Deposits- Deposits from the Companys primary markets provide a relatively stable funding source for its loan portfolio and other earning
assets. Total deposits were $445 million at June 30, 2005, up $180 million or 68% from one year earlier and up $55 million or 14% over the last three months. The proceeds of these deposits have been invested in federal funds sold as they await
redeployment into longer term assets, primarily commercial real estate secured loans. The funding requirements for loans have continued to grow over the last twelve months, with loans outstanding increasing by $130 million or 50% over the last
twelve months to $394 million at June 30, 2005. During second quarter 2005, loans rose $33 million or 9%.



Total deposits averaged $427 million in second quarter 2005, up 63% or $165 million from the same period last year and up 11% or $43 million from first
quarter 2005. Non-interest bearing deposits represented 17% of average total deposits during second quarter 2005, rising $34 million or 88% over the same quarter last year, when they averaged 15% of total deposits. Management continues to make a
concerted effort to attract deposits from commercial relationships, including the offering of attractive cash management and other technology-based products that aid a company in the control of its deposits.



29



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##### Table of Contents

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



NOW and money market deposits, a large portion of which can be sensitive
to short-term interest rate movements, averaged $187 million in second quarter 2005, an increase of $91 million (up 96%) from second quarter 2004 and up $42 million (29%) from first quarter 2005. The Company will need to maintain these deposits, or
find alternative sources of liquidity, in order to support its asset levels. Although management believes a substantial amount of the existing time deposits will renew, or substitute deposits will be originated, the need to retain this funding
source may impact the Companys ability to react to changes in market rates of interest. At an average of $162 million, time deposits were 46% of total average deposits in second quarter 2005, a decrease from 57% in the comparable quarter last
year and 53% in first quarter 2005.



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



Certificates of
deposits raised from national market funding sources (included in the CD discussion above) totaled $38 million in second quarter 2005, or 9% of total deposits. This level compares to $44 million or 17% of total deposits four quarters earlier and $47
million or 12% of total deposits at March 31, 2005.



At June
30, 2005, the Company had $3 million in outstanding short-term (30-day) borrowings from the FHLB of its present $30.3 million line, and there was $23.3 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 $70 million based on a maximum of 20% of the Bank of Florida - Southwest banks assets and 10% of the Ft. Lauderdale
banks assets as of June 30, 2005.



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



The regulators define five classifications for measuring capital levels, including well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, a bank requires regulatory approval to accept brokered
(national market) deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and plans for capital restoration are required. The regulatory minimum requirements (adequately capitalized) are 4% for Tier 1, 8%
for total risk-based capital, and 4% for the Tier 1 leverage ratio. The minimum requirements for the first three classifications are:



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



30



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##### Table of Contents

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



|                                         |  |        |        |       |                                                |   |        |                                                                                   |        |  |      |        |  |       |        |  |       |  
|---------------------------------------- |  | ------ | ------ | ----- | ---------------------------------------------- | - | ------ | --------------------------------------------------------------------------------- | ------ |  | ---- | ------ |  | ----- | ------ |  | ----- | -
|                                         |  | Actual |        |       | Minimum Required For Capital Adequacy Purposes |   |        | MinimumRequired To Be Well Capitalized Under Prompt Corrective Action Regulations |       
|                                         |  | Amount |        | Ratio |                                                |   | Amount |                                                                                   | Ratio  |  |      | Amount |  | Ratio |       
|Total capital (to risk weighted assets)  |  |        |        |       |                                                |   |        |                                                                                   |        |  |      |        |  |       |        |  |       |  
|Consolidated                             |  | $      | 58,298 |       | 13.33                                          | % |        | $                                                                                 | 34,999 |  | 8.00 | %      |  | $     | 43,748 |  | 10.00 | %
|Bank of Florida - Southwest              |  | $      | 26,661 |       | 10.66                                          | % |        | $                                                                                 | 20,009 |  | 8.00 | %      |  | $     | 25,012 |  | 10.00 | %
|Bank of Florida                          |  | $      | 16,060 |       | 10.87                                          | % |        | $                                                                                 | 11,815 |  | 8.00 | %      |  | $     | 14,769 |  | 10.00 | %
|Bank of Florida  Tampa Bay              |  | $      | 7,502  |       | 17.26                                          | % |        | $                                                                                 | 3,477  |  | 8.00 | %      |  | $     | 4,347  |  | 10.00 | %
|Tier 1 capital (to risk weighted assets) |  |        |        |       |                                                |   |        |                                                                                   |        |  |      |        |  |       |        |  |       |  
|Consolidated                             |  | $      | 52,786 |       | 12.07                                          | % |        | $                                                                                 | 17,499 |  | 4.00 | %      |  | $     | 26,249 |  | 6.00  | %
|Bank of Florida - Southwest              |  | $      | 22,657 |       | 9.06                                           | % |        | $                                                                                 | 10,005 |  | 4.00 | %      |  | $     | 15,007 |  | 6.00  | %
|Bank of Florida                          |  | $      | 14,923 |       | 10.10                                          | % |        | $                                                                                 | 5,908  |  | 4.00 | %      |  | $     | 8,861  |  | 6.00  | %
|Bank of Florida  Tampa Bay              |  | $      | 7,131  |       | 16.41                                          | % |        | $                                                                                 | 1,739  |  | 4.00 | %      |  | $     | 2,608  |  | 6.00  | %
|Tier 1 capital (to average assets)       |  |        |        |       |                                                |   |        |                                                                                   |        |  |      |        |  |       |        |  |       |  
|Consolidated                             |  | $      | 52,786 |       | 10.77                                          | % |        | $                                                                                 | 19,612 |  | 4.00 | %      |  | $     | 24,515 |  | 5.00  | %
|Bank of Florida - Southwest              |  | $      | 22,657 |       | 8.39                                           | % |        | $                                                                                 | 10,800 |  | 4.00 | %      |  | $     | 13,500 |  | 5.00  | %
|Bank of Florida                          |  | $      | 14,923 |       | 8.44                                           | % |        | $                                                                                 | 7,072  |  | 4.00 | %      |  | $     | 8,841  |  | 5.00  | %
|Bank of Florida  Tampa Bay              |  | $      | 7,131  |       | 15.11                                          | % |        | $                                                                                 | 1,888  |  | 4.00 | %      |  | $     | 2,359  |  | 5.00  | %



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



Item 3. Quantitative and Qualitative Disclosures about Market Risk



Interest Sensitivity



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



At June 30, 2005, the Company had
$305 million in interest sensitive assets compared to $317 million in interest sensitive liabilities that will mature or reprice within a year, resulting in a negative gap position of $11.4 million or 3.6%. Within the first 90 days of a rate change,
the Company is positively gapped by $38 million, reflecting, among other factors, that 50% of the loan portfolio immediately reprices with a prime rate change. Beyond that time period, the cumulative impact of maturing CDs, net of maturing loans,
creates a negatively gapped position.



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



31



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##### Table of Contents

The following is a consolidated maturity and repricing analysis of rate sensitive assets and liabilities
as of June 30, 2005.



|                                                                                                |  |                        |         |   |            |   |         |             |  |   |            |   |  |       |         |   |  |   |        
|----------------------------------------------------------------------------------------------- |  | ---------------------- | ------- | - | ---------- | - | ------- | ----------- |  | - | ---------- | - |  | ----- | ------- | - |  | - | -------
|                                                                                                |  | 0-90DAYS               |         |   | 91-180DAYS |   |         | 181-365DAYS |  |   | OVER 1YEAR |   |  | TOTAL
|                                                                                                |  | (Dollars in Thousands)
|Interest-earning assets:                                                                        |  |                        |         |   |            |   |         |             |  |   |            |   |  |       |         |   |  |   |        
|Federal funds sold                                                                              |  | $                      | 61,441  |   |            | $ |        |             |  | $ |           |   |  | $     |        |   |  | $ | 61,441 
|Due from banks and investment securities (including required investments in FHLB and FRB stock) |  |                        | 683     |   |            |   |        |             |  |   | 1,547      |   |  |       | 18,982  |   |  |   | 21,212 
|Loans                                                                                           |  |                        | 216,069 |   |            |   | 12,581  |             |  |   | 12,925     |   |  |       | 148,613 |   |  |   | 390,188
|                                                                                                |  |                        |         |   |            |   |         |             |  |   |            |   |  |       |         |   |  |   |        
|Total interest-earning assets                                                                   |  |                        | 278,193 |   |            |   | 12,581  |             |  |   | 14,473     |   |  |       | 167,595 |   |  |   | 472,842
|                                                                                                |  |                        |         |   |            |   |         |             |  |   |            |   |  |       |         |   |  |   |        
|Interest-bearing deposits (Non-CDs)                                                             |  |                        | 207,825 |   |            |   |        |             |  |   |           |   |  |       |        |   |  |   | 207,825
|Certificates of deposit                                                                         |  |                        | 31,990  |   |            |   | 35,859  |             |  |   | 37,991     |   |  |       | 52,967  |   |  |   | 158,807
|Other borrowings                                                                                |  |                        |        |   |            |   |        |             |  |   | 3,000      |   |  |       | 2,000   |   |  |   | 5,000  
|                                                                                                |  |                        |         |   |            |   |         |             |  |   |            |   |  |       |         |   |  |   |        
|Total interest-bearing liabilities                                                              |  | $                      | 239,815 |   |            |   | 35,859  |             |  |   | 40,991     |   |  |       | 54,967  |   |  |   | 371,632
|                                                                                                |  |                        |         |   |            |   |         |             |  |   |            |   |  |       |         |   |  |   |        
|Interest Sensitivity Gap:                                                                       |  |                        |         |   |            |   |         |             |  |   |            |   |  |       |         |   |  |   |        
|Rate sensitive assets less rate sensitive liabilities                                           |  | $                      | 38,378  |   |            | $ | (23,278 | )           |  | $ | (26,518    | ) |  | $     | 112,628 |   |  | $ | 101,210
|                                                                                                |  |                        |         |   |           
|Cumulative interest sensitivity gap                                                             |  |                        | 38,378  |   |            |   | 15,100  |             |  |   | (11,418    | ) |  |       | 101,210 |   |  |   |        
|                                                                                                |  |                        |         |   |           
|Interest sensitivity gap ratio                                                                  |  |                        | 116.0   | % |            |   | 35.1    | %           |  |   | 35.3       | % |  |       | 304.9   | % |  |   |        
|                                                                                                |  |                        |         |   |           
|Cumulative interest sensitivity gap ratio                                                       |  |                        | 116.0   | % |            |   | 105.5   | %           |  |   | 96.4       | % |  |       | 127.2   | % |  |   |        



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



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



SAFE HARBOR
STATEMENT UNDER THE PRIVATE SECURITIES

LITIGATION REFORM ACT OF 1995



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



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Item 4. CONTROLS AND PROCEDURES



(a)
Evaluation of Disclosure Controls and Procedures



Bancshares of Florida, Inc. maintains controls and procedures designed to ensure that information required to be disclosed in the reports that Bancshares of Florida, Inc. files or submits under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Based upon managements evaluation of those controls and procedures performed within the 90 days
preceding the filing of this Report, the Chief Executive Officer and Chief Financial Officer of Bancshares of Florida, Inc. concluded that, subject to the limitations noted below, Bancshares of Florida, Inc.s disclosure controls and procedures
were adequate for the above described purpose.



(b) Changes in Internal
Controls



Bancshares of Florida, Inc. has made no
significant changes in its internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation of those controls by the Chief Executive Officer and Chief Financial Officer of Bancshares of
Florida, Inc.



(c) Limitations on the Effectiveness of Controls



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



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



PART II.  OTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS



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



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##### Table of Contents

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



On May 24, 2005, the Company held its Annual Meeting of shareholders at which the following proposals were considered and acted upon:



PROPOSAL I  To elect fourteen directors as follows:



|                       |  |            |  |                
|---------------------- |  | ---------- |  | ---------------
|Director               |  | Votes For: |  | Votes Withheld:
|Donald R. Barber       |  | 4,266,443  |  | 289,460        
|Joe B. Cox             |  | 4,243,943  |  | 311,960        
|Earl L. Frye           |  | 4,266,343  |  | 289,560        
|H. Wayne Huizenga, Jr. |  | 4,245,243  |  | 310,660        
|John B. James          |  | 4,271,943  |  | 283,960        
|LaVonne Johnson        |  | 4,266,343  |  | 289,560        
|Edward Kaloust         |  | 4,245,443  |  | 310,460        
|Martin P. Mahan        |  | 4,271,943  |  | 283,960        
|Michael L. McMullan    |  | 4,271,943  |  | 283,960        
|Harry K. Moon, M.D.    |  | 4,548,703  |  | 7,200          
|Michael T. Putziger    |  | 4,548,903  |  | 7,000          
|Richard Rochon         |  | 4,220,743  |  | 335,160        
|Ramon A. Rodriguez     |  | 4,242,243  |  | 313,660        
|Terry W. Stiles        |  | 4,220,543  |  | 335,360        



PROPOSAL II
 To amend the Companys 1999 Stock Option Plan to increase the number of shares available for issuance under the Plan with a cap at any given time of the lesser of 11.5% of then outstanding shares or 1,000,000 shares;



|          |  |         |  |        
|--------- |  | ------- |  | -------
|For       |  | Against |  | Abstain
|2,295,473 |  | 554,041 |  | 32,500 



ITEM 6. EXHIBITS



The following
exhibits are filed with the Securities and Exchange Commission and are incorporated by reference into this Form 10-Q. The exhibits which are denominated by an (a.) were previously filed as a part of a Registration Statement on Form SB-2 for
Bancshares of Florida with the SEC on March 24, 1999, File No. 333-74997. The exhibits which are denominated by a (b.) were previously filed as a part of Amendment No. 1 to Form SB-2, filed with the SEC on May 7, 1999. The exhibits which are
denominated by a (c.) were previously filed as a part of Form 10-KSB filed with the SEC on March 30, 2000. The exhibits which are denominated by a (d.) were previously filed as a part of an exhibit to Form 10-QSB/A-1 filed on December 3, 2001. The
exhibits which are denominated by an (e.) were previously filed as a part of a Registration Statement on Form SB-2 for Bancshares of Florida with the SEC on December 28, 2001, File No. 333-76094. The exhibits which are denominated by an (f.) were
previously filed as part of a Form 10-QSB/A filed on September 10, 2002. The exhibit numbers correspond to the exhibit numbers in the referenced document. (g.) were previously filed as a part of Form 10-KSB filed with the SEC on March 30, 2003. The
exhibits which are denominated by an (h.) were previously filed as part of a Form 10-QSB/A filed on August 12, 2003. The exhibits which are denominated by an (i.) were previously filed as part of a Registration Statement on Form SB-2 filed with the
SEC on June 24, 2004, File No. 333-116833. The exhibits which are denominated by an (j.) were previously filed as part of a Form 10-KSB filed with the SEC on March 30, 2005.



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|              |  |                                                                                                                
|------------- |  | ---------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Exhibit                                                                                         
|3.1           |  | Amended and Restated Articles of Incorporation.                                                                
|              | 
|a.3.2         |  | Bylaws.                                                                                                        
|              | 
|b.4.1         |  | Specimen Common Stock Certificate.                                                                             
|              | 
|b.4.3         |  | Form of Stock Purchase Warrant1999 Offering.                                                                  
|              | 
|e.4.4         |  | Form of Stock Purchase Warrant2002 Offering.                                                                  
|              | 
|i.4.5         |  | Form of Stock Purchase Warrant A 2004 Offering.                                                               
|              | 
|i.4.6         |  | Form of Stock Purchase Warrant B 2004 Offering.                                                               
|              | 
|b.10.1        |  | Employment Agreement of Michael L. McMullan, dated as of April 28, 1999.                                       
|              | 
|c.10.1.1      |  | Amendment to Employment Agreement of Michael L. McMullan dated August 24, 1999.                                
|              | 
|f.10.1.2      |  | Amendment to Employment Agreement of Michael L. McMullan dated July 30, 2001.                                  
|              | 
|f.10.1.3      |  | Amendment to Employment Agreement of Michael L. McMullan dated August 30, 2002.                                
|              | 
|c.10.4        |  | 1999 Stock Option Plan.                                                                                        
|              | 
|c.10.5        |  | Form of Incentive Stock Option Agreement.                                                                      
|              | 
|d.10.6        |  | Employment Agreement of Craig D. Sherman, dated as of May 3, 1999.                                             
|              | 
|f.10.6.1      |  | Amendment to Employment Agreement of Craig Sherman, dated as of July 30, 2001.                                 
|              | 
|f.10.8        |  | Employment Agreement of John B. James, dated as of October 1, 2001.                                            
|              | 
|f.10.9        |  | Lease between Citizens Reserve, LLC and Citizens National Bank of Southwest Florida.                           
|              | 
|g.10.11       |  | Employment Agreement of Martin P. Mahan, dated as of September 16, 2002.                                       
|              | 
|h.10.13       |  | Employee Severance Agreement of John S. Chaperon, dated as of March 1, 2003.                                   
|              | 
|j.10.14       |  | Employment Agreement of Julie W. Husler, dated as of May 1, 2002.                                              
|              | 
|10.15         |  | Form of Registration Rights Agreement filed as an exhibit to Form 8-K on April 11, 2005.                       
|              | 
|j.14.1        |  | Code of Ethical Conduct                                                                                        
|              | 
|21.1          |  | Subsidiaries of the Registrant.                                                                                
|              | 
|31.1          |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - President and Chief Executive Officer
|              | 
|31.2          |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Chief Financial Officer              
|              | 
|32.1          |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  President and Chief Executive Officer
|              | 
|32.2          |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  Chief Financial Officer              



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##### Table of Contents

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: August 3, 2005 |  | By:                         |  | /s/ MICHAEL L. MCMULLAN                                             
|                      |  |                             |  | Michael L. McMullan                                                 
|                      |  |                             |  | Chief Executive Officer (Principal Executive Officer)               
|                      |  |                            
|Dated: August 3, 2005 |  | By:                         |  | /s/ DAVID G. WALLACE                                                
|                      |  |                             |  | David G. Wallace                                                    
|                      |  |                             |  | Chief Financial Officer (Principal Financial and Accounting Officer)



36