<PAGE>   1




                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                   FORM 10-K

             ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934


                    For Year Fiscal Ended December 31, 1999

                Commission File Number 33 Act File No. -33-90524


                             VALRICO BANCORP, INC.
                      ------------------------------------
             (Exact name of registrant as specified in its Charter)


                                    Florida
                      ------------------------------------
         (State or other jurisdiction of incorporation or organization)


                                   65-0553757
                      ------------------------------------
                      (I.R.S. employer Identification No.)


                1815 East State Road 60, Valrico, Florida 33594
                      ------------------------------------
             (Address of Principal executive offices and zip code)


                                 (813) 689-1231
                      ------------------------------------
              (Registrant's telephone number, including area code)


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. (1) Yes [X]    (2) No [ ]
                                                  ---           ---

As of December 31, 1999, there were 301,509 shares of common stock outstanding.



                                       1

<PAGE>   2

ITEM 1.  BUSINESS
GENERAL

Valrico Bancorp, Inc. (the "Company") is a one-bank holding company which was a
newly-formed corporation on May 31, 1995 with its principal place of business
in Valrico, Florida. The Company subsequently acquired all of the outstanding
common stock of Valrico State Bank (the "Bank"), a wholly-owned subsidiary. All
shares held by the Bank's shareholders were exchanged on a one-to-one basis for
Valrico Bancorp, Inc. shares. The Company's common stock, no par value,
authorized 1,000,000 shares, had 301,509 issued and outstanding shares as of
December 31, 1999. The Company derives substantially all of its income from
dividends and lease from its subsidiary. The Bank and the Company share the
same board of directors, which is comprised of nine individuals. Those
individuals are LeVaughn Amerson, Jerry L. Ball, C. Dennis Carlton, H. Leroy
English, Gregory L. Henderson, Douglas A. Holmberg, Charles E. Jennings, Jr.,
J.E. McLean, III, Justo Noriega, Jr.

SUBSIDIARY BANK

Valrico State Bank (the "Bank") was incorporated under the laws of the state of
Florida on August 29, 1988. The Bank was chartered as a Florida state bank
effective June 23, 1989 after receiving approval to organize from the Florida
Department of Banking and Finance (the "Florida Department"). The Bank
commenced operations on June 23, 1989. The Bank is supervised, regulated and
regularly examined by the Florida State Banking Department and the Federal
Deposit Insurance Corporation. The Bank is not currently a member of the
Federal Reserve Bank.

DESCRIPTION OF BUSINESS

The Company, through its subsidiary bank, conducts a general commercial banking
business from its main office located at 1815 East State Road 60, Valrico,
Florida 33594-3623 and its four branch facilities located at 102 West Robertson
Street, Brandon, Florida 33511, 305 South Wheeler Street, Plant City, Florida
33566, 2602 Jim Redman Parkway, Plant City, Florida 33566 and 10101
Bloomingdale Ave, Riverview, Florida 33569. The Company's primary telephone
number is (813) 689-1231. Valrico is a community located in the eastern portion
of Hillsborough County, Florida, and is approximately 14 miles east of Tampa,
Florida, which is located on the west coast of the state of Florida. While the
Bank's overall market area extends throughout Hillsborough County, it expects
to draw most of its business from eastern Hillsborough County (the
Brandon/Valrico/Dover/Plant City/Riverview area) and estimates that more than
75% of its business will come from customers whose businesses or residences are
located in an area within a radius of approximately five miles of the Bank's
principle offices (the "Bank's Assessment Area"). The Company, through its
subsidiary bank, intends for the near future, to service (with few exceptions)
only residents and businesses located in Hillsborough County, but may choose to
accept some business from outside of Hillsborough County. The Bank received
approval in January 1994 from the Federal Deposit Insurance Corporation and the
Florida Department of Banking and Finance to open a branch located at 102 West
Robertson Street, Brandon, Florida 33511. Therefore, the Bank successfully
opened its first branch on April 29, 1994, which is located approximately one
and a half miles west of the main office and located in our current community
and assessment area. The location is in the center of Brandon, extremely
convenient to many businesses and professional offices. The Bank, after
receiving regulatory approval, opened its second branch on September 15, 1995,
in Plant City located at 305 South Wheeler Street (corner of Renfro and
Wheeler). The Bank purchased, from Barnett Bank, a former Glendale Federal Bank
branch, a free standing building with approximately 2,400 square feet including
the land and furniture. This positioned the Bank to better service the Plant
City market in which the Bank was already servicing a small customer base. The
Bank, after receiving regulatory approval, opened its third branch on June 23,
1997 as an in-store branch facility in the Wal-Mart Supercenter on Jim Redman
Parkway in Plant City, Florida. The Bank leases the facilities at this site.
The Bank, after receiving regulatory approval, opened its fourth branch on
January 22, 1999, in Riverview located at 10101 Bloomingdale Ave (corner of
Bloomingdale and US 301). The Bank purchased, from Nationsbank, a free standing
building with approximately 6,000 square feet, the purchased included the land
surrounding the building.

The Company, through it subsidiary, conducts substantially the same business
operations as a typical independent commercial bank with special emphasis on
retail banking. The Bank offers a wide range of consumer and commercial banking
services traditionally offered by commercial banks, such as personal and
commercial checking accounts, regular negotiable order of withdrawal ("NOW")
accounts, certificates of deposits, money market accounts, savings accounts,
IRA accounts, foreign currency exchanges, credit cards, debit cards, money
orders, travelers' cheques, notary service, safe deposit boxes and wire
transfers. It also offers discounted brokerage services, profit sharing
programs, 401(k)s and other similar programs. These depository services are
further complemented by direct deposit programs, night depository services, and
bank by mail. The Bank's Main, Brandon and the new North Riverview offices
lobby hours are from 9:00 a.m. to 4:00 p.m., Mondays through Thursdays, 9:00
a.m. to 6:00 p.m. on Fridays, and 9:00 a.m. to 12:00 p.m. on Saturdays. The
Bank also offers drive-up teller facilities which are open from 8:00 a.m. to
6:00 p.m., Mondays through Fridays, and 9:00 a.m. to 12:00 p.m. on Saturdays.
The Wheeler Street branches have the same office hours, except they have no
Saturday lobby hours. The Jim Redman Parkway branch offers extended hours of
service from 10:00 a.m. to 8:00 p.m. Monday through Saturday. The Bank does
currently owns three automatic teller machines



                                       2
<PAGE>   3

(ATM) at the Jim Redman Parkway, Main, and North Riverview offices and may
purchase additional machines in the immediate future. It also offers ATM and
Mastermoney Debit cards to its customers which can be used at ATM machines
which are members of the Southeast Switch, which includes HONOR Network
(Florida and other southeastern states) and CIRRUS (a worldwide network).

The Bank originates a wide range of loans including, but not limited to,
commercial and consumer loans, as well as loans secured by deposit accounts and
other marketable collateral. As of December 31, 1999, commercial and consumer
loans accounted for approximately 57.3%and 15.1%, respectively, of the Bank's
loan portfolio. Loans are also made to enable borrowers to purchase, refinance,
construct or improve residential or other real estate and usually are secured
by mortgages on such real estate. As of December 31, 1999, residential real
estate mortgage loans accounted for approximately 7.4% of the Bank's loan
portfolio. To service the agricultural segment of the Bank's market area, the
Bank employs an agricultural lender. As of December 31, 1999, 20.2% of the
total loan portfolio was comprised of agricultural loans. All loans are made in
compliance with applicable Federal and state regulations.

The Bank uses a computer system to handle all accounting and statement
processing. In addition, the Bank makes extensive use of personal computers in
its teller and lobby locations, which allows for efficient handling and
tracking of new accounts, loans and other paper intensive services, and
provides every employee of the Bank access to complete customer profiles at all
times. We have recently upgraded many of our desktop systems in order to
effectively utilize many of the newer programs available today.

The Bank offers a complete brokerage service through a third party which
permits its customers to buy and sell stocks and bonds and otherwise trade in
securities at a discount with full accountability of their transactions. The
Bank offers, through third parties, standard and self-directed IRA, the new
Roth and Educational IRA, qualified pension plans, SEPs, Keogh and
profit-sharing plans, including 401(k) plans, etc.

Management of the Company believes that the emerging dominance of large
regional holding companies in the banking industry has created a need for more
locally-owned institutions with personalized banking services. The Bank was
organized as a locally-owned, locally-managed community financial institution,
owned and managed by people who are actively involved in the Bank's market area
and committed to its economic growth and development. With local ownership,
management and directors, the Bank believes it can be more responsive to the
community it serves and tailor services to its customers' needs rather than the
standardized services that large holding companies tend to offer. Local
ownership and operation will allow faster, more responsive and flexible
decision-making, which may not be available at the majority of financial
institutions in or near the Bank's Assessment Area which are branch offices of
large regional holding company banks with headquarters located elsewhere in
Florida or in the United States.

The principal business of the Bank is to attract deposits from the general
public, and to invest those funds in various types of loans and other
interest-earning assets. Funds provide for the operations of the Bank through
proceeds from the sale of investments and loans, from amortization and
repayment of outstanding loans, from borrowings, and from working capital.
Earnings of the Bank depend primarily upon the difference between (1) the
interest and fees received by the Bank from loans, the securities held in its
investment portfolio, and other investments, and (2) expenses incurred by the
Bank in connection with obtaining funds for lending (including interest paid on
deposits and other borrowings) and expenses relating to day-to-day operations.

The primary sources of the Bank's funds for lending and for other general
business purposes are the Bank's capital, deposits, loan repayments, borrowings
and funds provided from operations. The Bank expects that loan repayments and
funds provided from operations will be relatively stable sources of funds,
while deposit inflows and outflows will be significantly influenced by
prevailing interest rates, money market and general economic conditions.
Generally, short-term borrowings are used to compensate for reductions in
normal sources of funds while longer-term borrowings are used to support
expanded lending activities. The Bank's customers are primarily individuals,
professionals, small and medium size businesses, and citrus and agricultural
enterprises located predominantly in eastern and southern Hillsborough County,
Florida. The Bank's business is not dominated by a single customer or by a few
customers. The loss of any one or more would not have a materially adverse
effect on the business of the Bank. The Bank attempts to tailor its services to
the needs of its customers since there is a heavy emphasis on retail and
service-oriented businesses in the Company's market area. Moreover, the Bank's
main office location is on a major east-west artery in one of eastern
Hillsborough County's faster growing areas in terms of the number of new
residents. The exposure provided by the site and the population growth of the
area are expected to contribute to the growth of the Company.

The Bank continually seeks to develop new business through an ongoing program
of personal calls on both present and potential customers. As a local
independent bank, the Bank utilizes traditional local advertising media, as
well as direct mailings, telephone contacts, and brochures to promote the Bank
and develop loans and deposits. In addition, the



                                       3
<PAGE>   4

Company's directors all have worked and/or lived in or near eastern
Hillsborough County for a number of years. The Bank believes that this factor,
coupled with the past and continued involvement of the directors in various
local community activities, will further promote its image as a
locally-oriented independent institution, which management believes is an
important factor to its targeted customer base.

The banking business in Florida in general, and in Hillsborough County in
particular, is highly competitive with respect to both loans and deposits. The
Bank competes with other commercial banks in Hillsborough County and the
surrounding area for all services customarily provided by commercial banks. In
addition, the Bank competes with savings and loan associations, finance
companies, insurance companies, money market mutual funds, credit unions, other
financial institutions and various other non-bank competitors. Many of these
competitors are larger and have greater resources, including more personnel and
a larger asset base, than the Bank and provide certain services, such as trust
services, which the Bank does not currently provide.

As of December 31, 1999, there were 16 commercial banks (including the
Company's subsidiary bank) with 26 offices and 1 savings and loan association
with 4 offices; at least 10 credit unions; and various other financial entities
as competitors in the Bank's Assessment Area. The Company expects to receive
substantial competition from most of these financial institutions. The Bank's
main office is located on East State Road 60, a primary east-west artery in the
Bank's Assessment Area, and 800 feet west of Valrico Road, a primary
north-south artery in the Bank's Assessment Area. The Brandon branch facility
is located in the center of Brandon, the Plant City branch facility is located
in the center of Plant City, and the Jim Redman Parkway branch is located in
the eastern section of Plant City. The North Riverview Branch is located at the
intersection of US 301 and Bloomingdale Ave in the Riverview community. The
Bank is one of only four financial institutions which have their headquarters
in eastern Hillsborough County. The other financial institutions, being
Sunshine State Savings and Loan and Hillsboro Bank in Plant City, and Platinum
Bank in Brandon. All others are branches of institutions which have their
headquarters in other parts of Hillsborough County or elsewhere in Florida.
Several actually are owned by banks with headquarters in Georgia, Alabama,
North Carolina, Ohio, and New Jersey. The Bank's second branch was opened in
1995 in the Plant City market and the Bank expanded in this market area with an
in-store branch which opened on June 23, 1997 within a Walmart Supercenter on
Jim Redman Parkway. This location is in a growing area and a very active
shopping center with an estimated 50,000 plus customers per week. This Wal-Mart
is one of their largest supercenters in Florida. The bank expanded its market
area with the opening of its fourth branch on January 22, 1999 in Riverview
area. In order to compete with major financial institutions and others in the
Bank's Assessment Area, the Bank will continue to emphasize specialized
services, local promotional activity and personal contacts by the Bank's
officers, directors and employees. The Bank believes that its local ownership
and community-oriented operating philosophy and personalized banking services
are competitive factors in which it has strength.

As of December 31, 1999, total deposits of the Bank were distributed among
demand deposits (17.8%), savings and time deposits (54.2%) and NOW and money
market deposits (28.5%). The Bank's deposits are attracted primarily from
individuals, professionals, small and medium size businesses and citrus and
agricultural enterprises located predominantly in eastern Hillsborough County,
Florida. As of December 31, 1999, approximately 19.1% of the Bank's total
deposits were from businesses and 80.9% were from individuals. Management of
the Bank has no reason to believe that the loss of any one or a few of its
deposit accounts would have a material adverse effect upon the operations of
the Bank or erode its deposit base.

The Company is regulated under both State and Federal law. The Company is
regulated by the Federal Reserve Bank of Atlanta and is subject to the rules
and regulations of the Securities and Exchange Commission. The Company's
subsidiary bank is not a member of the Federal Reserve System, but is subject
to the rules and regulations of the Federal Deposit Insurance Corporation
("FDIC") which agency also insures the Bank's deposits up to applicable limits.
As a state-chartered bank, the Bank is subject to the regulations of the
Florida Department. The Bank will be subject to periodic examinations by both
the FDIC and the Florida Department focusing on fund reserves, loans and loan
policy, investments, management policy and practices, and various other aspects
of the Bank's operations.

Neither the Company nor its subsidiary hold any patents, registered trademarks,
licenses (other than licenses which have been obtained from appropriate banking
regulatory agencies), franchises or concessions.

Prior to the organization of the Bank, the organizers of the Bank conducted
economic and other surveys to evaluate the banking needs for the community of
Valrico and its immediate environs. The results of those surveys were used to
support the application to the Florida Department for permission to organize
the Bank and the application to the FDIC for insurance of the Bank's accounts.
Since it commenced operations, officers of the Bank have engaged continually in
marketing activities, including the evaluation of development of new services,
to enable the Bank to improve its competitive position in the Bank's Assessment
Area. The cost to the Bank for these marketing activities cannot be



                                       4
<PAGE>   5
calculated with any degree of certainty. In the fourth quarter of 1993, the
Bank gathered and reviewed new economic data for the purpose of supporting an
application to the Florida Department for permission to open a full service
branch facility in Brandon, Florida, and performed similar research in the
summer of 1995 to support an application to the Florida Department for
permission to open a full service branch in Plant City, Florida. The cost of
collecting and evaluating this information likewise cannot be determined with
any degree of certainty, as most of the information was collected from public
sources and other sources already utilized by the Company for its day-to-day
evaluations. In the fourth quarter of 1996, the Bank reviewed data submitted by
International Banking Technologies for the purpose of supporting the
application for the in-store branch in Plant City. In the fourth quarter of
1998, the Bank gathered and reviewed new economic data for the purpose of
supporting an application to the Florida Department for permission to open a
full service branch facility in Riverview, Florida.

As of December 31, 1999, the Bank employed 41 full-time employees, of which two
were executive officers, and 23 part-time employees, of which two are bank
officers. The Bank's employees are not represented by a collective bargaining
group, and the Bank considers its relations with its employees to be excellent.
The Bank also maintains training and educational programs designed to equip
employees for positions of increasing responsibility in both management and
operating positions. The Bank provides employees certain benefits customary in
the banking industry, which includes major medical insurance, group term life
insurance and normal vacation and sick leave. The Bank implemented a K-SOP plan
in 1997.

As of December 31, 1999, the Bank has been in operation for ten and one-half
years. Management believes that there is some seasonality in its deposit base
due primarily to its agricultural relationships. The seasonality in these
deposits, however, has not been substantial to impact the core base of
deposits, therefore, management does not believe its deposit relationship is
affected. In its lending portfolio, the Bank sees a greater affect on this
seasonal business during the period from September to May reflecting larger
outstandings in the agricultural portfolio.

ITEM 2.  PROPERTIES

The Company, through its subsidiary, has a principal office located at 1815
East State Road 60 in Valrico, Florida, in a traditional, southern, Greek
neo-classical two-story building with 9,860 square feet. The Brandon office,
located at 102 West Robertson Street in Brandon, Florida, is in a leased 3,000
square foot end unit in a retail plaza at a major intersection in the center of
Brandon. The Plant City office is located at 305 South Wheeler Street in
facilities purchased in July 1995. The Jim Redman office, located at 2606 Jim
Redman Parkway, is in a leased 507 square foot unit located within the Wal-Mart
Supercenter in Plant City. The North Riverview Office, located at the
intersection of US 301 and Bloomingdale Avenue in Riverview was purchased in
October of 1998.

In January, 1997, the premises, previously leased from Roy J. and Ann M.
Winter, were purchased by Valrico Bancorp, Inc. for approximately $1,683,000.
The annual lease payments from the Bank to the Company is $204,000.

The Bank leases its Brandon branch office space pursuant to an agreement dated
March 31, 1994 (the "Lease") with J. "Bill" Noriega, Jr. (the "Lessor"). Mr.
Noriega currently serves as a director of the Bank. This lease expired March
31, 1997 and was renewed with a new expiration date of March 31, 2000 at an
annual rental of $42,000. The Bank has the option to renew the lease for four
additional three-year terms at rentals to be negotiated at the time of the
renewal.

The Company, through its subsidiary, purchased from Barnett Bank, a former
Glendale Federal Bank branch with approximately 2,400 square feet. The purchase
included building and land located at 305 South Wheeler Street (corner of
Renfro and Wheeler). On September 15, 1995, the Bank opened its second branch
at this location.

The Bank leases its Jim Redman Parkway branch office space pursuant to an
agreement dated December 31, 1996 (the "Walmart Lease").

The aggregate lease expense paid by the Bank under these leases, excluding the
Bank building lease, totaled $64,163 for the fiscal year ended December 31,
1999.

The Company, through its subsidiary, owns a parcel of land for future
expansion. The partially improved property, totaling approximately one acre, is
immediately adjacent to the Company's main office property on the west side.
The site is ideally located for the development of an Operations Center when
the growth of the Company will require additional space beyond that which is
available in the existing Company facility.

The Company, through its subsidiary, purchased from Nationsbank, a building
with approximately 6,000 square feet. The purchase included building and land
located at 10101 Bloomingdale Avenue (corner of US 301 and Bloomingdale). On
January 22, 1999 the bank opened its fourth branch at this location.



                                       5
<PAGE>   6

During 1999, the Bank purchased three parcels of land adjacent to the main
office facility.

ITEM 3.  LEGAL PROCEEDINGS

As of the date of this Annual Report, the management of the Company has no
knowledge of any material pending legal proceedings, including proceedings
contemplated by governmental authorities, to which the Company and its
subsidiary or any of its property is subject.


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

There were no matters submitted to votes of the stockholders of the Company
during the last quarter of 1999.

ITEM 5.  MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED SECURITY HOLDER
         MATTERS

There is no trading market at the current time for the Common Stock of the
Company, and it is not expected that a trading market will develop for shares
of the Company's Common Stock in the near future. The Company is aware of 14
sale transactions that occurred during fiscal year 1999 at prices ranging from
$16.00 to $21.00 per share, exclusive of commissions. The Bank is also aware of
17 sale transactions that occurred during fiscal year 1998 at prices ranging
from $14.00 to $16.00 per share, exclusive of commissions. As of March 1, 2000,
there were 504 holders of record of the Common Stock of the Company.

Holders of Common Stock are entitled to share pro rata in the distribution of
dividends when and as declared by the Board of Directors from funds legally
available for such purpose. The Bank cannot pay dividends in any one year in
which its net income from the current year, combined with its retained net
income for the preceding two years, is a loss or which would cause the capital
accounts of the Bank to fall below the minimum amount required by law.
Additionally, under certain circumstances, approval of the FDIC and the Florida
Department may be required prior to the payment of a dividend.

At the discretion of the Board of Directors of the Company and after careful
review of certain factors, such as results of operations, capital requirements,
regulatory restrictions, tax considerations and general economic conditions,
the Board declared its first dividend in September 1993 at ten cents per share
and paid said dividend on October 5, 1993. It likewise paid a similar dividend
in 1994, 1995, 1996 and 1997. In 1998 and 1999, the dividend paid increased to
twelve cents per share. The dividends were based on respective year earnings
and paid on October 1 of each year.

ITEM 6.  SELECTED FINANCIAL DATA

The following table sets forth, in summary form, certain comparative financial
data of the Company for a five year period encompassing the periods ended
December 31, 1995, December 31, 1996, December 31, 1997, December 31, 1998 and
December 31, 1999. This information should be read in conjunction with the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations, and Other Statistical Disclosure" and the audited financial
statements of the Company for the years ended December 31, 1997, 1998 and 1999,
and related notes thereto included elsewhere herein.

<TABLE>
<CAPTION>
                                                  AS OF AND FOR THE YEAR ENDED DECEMBER 31,
                                         -----------------------------------------------------------
                                           1999         1998         1997         1996         1995
                                         -------      -------      -------      -------      -------
                                                     (in Thousands, except Per Share Data)
<S>                                      <C>          <C>          <C>          <C>          <C>

INCOME STATEMENT DATA

Interest income                          $ 6,267      $ 5,543      $ 4,711      $ 4,206      $ 3,767
Interest expense                          (2,353)      (2,060)      (1,887)      (1,544)      (1,413)
                                         -------      -------      -------      -------      -------
Net interest income                        3,419        3,483        2,824        2,662        2,354
Provision for loan losses                   (101)        (210)        (300)        (181)         (97)
                                         -------      -------      -------      -------      -------
Net interest income after
  provision for loan losses                3,813        3,273        2,524        2,481        2,257
Non-interest income                          838          657          516          431          383
Non-interest expense                      (3,688)      (3,051)      (2,616)      (2,408)      (2,156)
                                         -------      -------      -------      -------      -------
Income before income taxes                   963          879          424          504          484
Income taxes                                (324)        (318)        (100)        (156)        (115)
                                         -------      -------      -------      -------      -------
Net income                               $   639      $   561      $   324      $   348      $   369
                                         =======      =======      =======      =======      =======

</TABLE>



                                       6
<PAGE>   7

<TABLE>
<S>                                     <C>           <C>           <C>           <C>           <C>
PER SHARE DATA
Net income                              $   2.09      $   1.88      $   1.09      $   1.17      $   1.22
Cash dividends                              0.12          0.12          0.10          0.10          0.10
Book value                                 17.42         16.00         14.17         13.10         11.91
Number of shares used in net
  income-per-share calculations (1)      305,565       299,221       297,026       297,545       302,071

BALANCE SHEET DATA
Total assets                            $ 84,366      $ 80,685      $ 63,802      $ 54,919      $ 49,592
Total investment securities                9,134         8,832         7,942        10,400         8,025
Total net loans (2)                       62,385        55,694        47,873        37,897        33,191
Total deposits                            73,333        70,505        55,047        48,876        44,774
Shareholders' equity                       5,251         4,924         4,237         3,899         3,595

</TABLE>

(1)  Based on average shares outstanding during the period.

(2)  Net loans means total loans net of allowance for possible future loan
     losses.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

Overview

         The purpose of this discussion is to focus on significant changes in
the financial condition and results of the operations of the Company and it's
subsidiary during the past three years. This discussion and analysis is
intended to supplement and highlight information contained in the accompanying
financial statements and the selected financial data presented elsewhere in
this report, and is based on the fiscal years of 1999, 1998, and 1997. The
company's fiscal year runs from January 1st through December 31st of each
respective year.

Results of Operations

         The company had a net income after taxes of $639,000, $561,000 and
$324,000 during the years 1999, 1998 and 1997. This corresponds to per share
amounts of $2.09, $1.88 and $1.09 during those three years respectively.

         The banks net interest income increased 12.37% in 1999, down from the
increase of 23.34% in 1998 and up from the 6.09% increase during 1997. This net
interest income is a major component of the Bank's earning capacity and is the
difference or spread between interest income and interest expense. These
Earning Assets are primarily loans, federal funds Sold (funds loaned on a
short-term basis to other banks) and investment securities. The spread is
considered positive when interest income exceeds interest expense and negative
when interest expense exceeds interest income. Net interest income is also
affected by changes in interest rates earned and interest rates paid and by
changes in the volume of interest-earning assets and interest-bearing
liabilities. In 1999, the net interest income was $3,914,000 which was an
increase of $431,000 over the 1998 net interest income of $3,483,000. This was
an increase of $659,000 over the 1997 net interest income of $2,824,000. The
continued increase is primarily a result of the Bank's continued growth coupled
with a continuance of a strong ratio of loans to other earning assets. This has
allowed the interest earned on loans to increase from $3,990,000 in 1997 to
$5,284,000 in 1999 or an increase of 32.4%. Also increasing was interest income
derived from investment securities and federal funds sold, which are normally
lower yielding instruments, the interest income from these assets increased
from 2.7% in 1998 from $721,000 to $741,000 and continued to increase 35.2% to
$983,000 in 1999. During the same period of time, the interest expense has also
increased from $1,888,000 in 1997 to $2,191,000 in 1998 to $2,521,000 in 1999.
This represents a cumulative increase from 1997 to 1999 of 24.7%, which is
primarily due to overall growth in the deposit base of the Bank.

         Interest income on loans, which is normally higher than interest
yields on investments and federal funds sold, was favorable to the Bank's
profit. In 1999, loan related interest income was $5,284,000, including loan
fees which are normally an adjustment to loan yield, was earned on an average
net loans of $56,592,000 or an average interest yield of 9.35%, as compared to
9.26% and 9.41% in 1998 and 1997 respectively. The interest income on
investments of $983,000 earned an average yield of 5.36% on $18,325,000 in
earning assets, as compared to 5.79% and 6.22% in 1998 and 1997 respectively.
The cost of funds (interest expense) of $2,521,000 was paid on the Bank's and
Company's average interest-bearing deposits and other borrowings of
approximately $65,083,000 for 1999 was 3.87% compared to 3.99% for the previous
year with interest expense of $2,191,000 and an average interest-bearing
deposits and loans of $54,926,000. While there is a high concentration of
certificates of deposits, the Bank does not anticipate the maturity of such
certificates to affect the Bank's liquidity, as management believes that such
high concentration is primarily due to customer relations and the higher than
market rates typically offered by such certificates. The Bank is not in the
practice of paying above market rates on deposits.



                                       7
<PAGE>   8

         The net interest spread measures the difference between the average
yield on earning assets and the average rate paid on interest-bearing sources
of funds. The net interest spread showed a slight decrease during 1999 moving
from 4.53% in 1998 to 4.44%. This slight decrease is still down compared to the
4.50% in 1997.The net interest yield is calculated by taking the net interest
income and dividing it by the average earning assets. During 1999, the Net
interest yield was 5.00% down from 1998 and 1997 which were 5.08% and 5.14%
respectively. To the extent possible, the Bank follows a strategy intended to
insulate the Bank's interest rate spread from adverse changes in interest rates
by maintaining spreads through the adjustability of its earning assets and
interest-bearing liabilities.

         The Bank's non-interest expenses for the fiscal year 1999 were
$3,688,000 or approximately $307,000 average per month as compared to
$3,051,000 or approximately $254,000 average per month for 1998. Non-interest
expense for 1997 was $2,616,000 or approximately $218,000 average per month.
The amount of $3,688,000 for December 31, 1999 consisted primarily of
$1,843,000 in salaries and benefits, $532,000 of occupancy expense for all its
offices, equipment expenses of $321,000 and $992,000 of other operating
expenses. Other operating expenses primarily consisted of marketing expense,
taxes (intangible and sales), insurance (FDIC, blanket bond and property),
state assessments, professional fees (accounting, audit and legal), office
supplies, postage and delivery, service fees and amortization of capitalized
expenses.

         The Bank's non-interest income for fiscal year 1999 was $838,000. The
sources reflected in non-interest income were from service charges on deposit
accounts of $729,000 and non-deposit income of $109,000. This is an increase of
$181,000 compared to the $657,000 of non-interest income reported for the
twelve month period ended December 31, 1998.

         Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109 (FAS 109), "Accounting for Income Taxes," which
uses the asset and liability method of accounting for income taxes. Provisions
for income taxes are based on amounts reported in the statements of operations,
after exclusion of nontaxable income, such as interest on state and municipal
securities, tax-exempt loans, and includes deferred taxes on temporary
differences in the recognition of income and expense for tax and financial
statement purposes. Deferred taxes are computed on the liability method
pursuant in FAS 109, Accounting for Income Taxes. For 1999, net income before
taxes was $963,000 and after taxes of $324,000, the net income was $639,000.
See Note N of Notes to Consolidated Financial Statements.

         The bank experienced a year of good deposit growth during 1999,
resulting in a net increase for the fiscal year of 4.0%, a large drop from the
previous two years of growth of 28.1% in 1998 and 12.6% in 1997. This drop is
not a dramatic a decrease as it might at first seem, the large 1998 growth can
be, in part, attributed to the Barnett - Nationsbank merger. Also, in part was
the controlling of growth to allow the Bank's capital position and loan to
deposit ratios to rebuild after they dropped due to the rapid growth that
occurred during the aforementioned merger. Being the primary source for the
funding of investment and financing activities, thus the breakdown of deposits
is of vital importance to the Bank and Management. As of the end of 1999, the
Bank's total deposits were $73,333,000, a $2,828,000 increase. Approximately
82.7% of the Bank's deposits are in interest-bearing accounts at the end of the
current fiscal year, which is typical in the Bank's market area. Also note that
included in interest-bearing accounts are the Bank's now accounts, which are
the only type of personal checking account offered by the Bank. Of this
$15,110,000, only a small percentage maintains a sufficient minimum balance to
earn interest. Non-Interest-bearing accounts made up 17.3% and NOW and Money
Market Accounts were 28.5% of total deposits compared to 18.0% and 20.4% in the
previous year respectively. In time deposits, the Bank held 54.2% in time
deposits, which comprise savings accounts and Certificates of Deposits. This
was a slight increase from the approximately 52.8% the year before.

         Effective August 15, 1995, the Federal Housing Finance Board approved
Valrico State Bank's membership to the Federal Home Loan Bank of Atlanta. Being
a member offers alternative funding sources for the Bank.

         At the conclusion of the fiscal year 1999, residential (1-4 family)
real estate loans totaled $4,622,000, an increase from the previous year amount
of $3,757,000, but this is still a decrease from the total residential real
estate loans at the end of the fiscal year 1997, which was $5,227,000. The
$4,622,000 at year end represents approximately 7.4% of the total loans
outstanding, a slight increase from the 6.6% for the year ending 1998, and a
slight decrease from the 10.8% for the year ending 1997. These real estate
loans consist primarily of intermediate term loans secured by real estate and
payable in periodic installments. Consumer loans consist of loans made to
individuals and business for consumer purposes. These loans represented
$9,007,000 or 14.5% of the total loan portfolio. In 1998 and 1997, these loans
represented $8,139,000 and $7,406,185 or 14.3% and 15.3% of the total loan
portfolio respectively.

         The Bank splits its commercial loan into two categories, those loans
that are used for commercial and industrial purposes and those used for
agricultural purposes. The commercial and industrial purpose loans includes
commercial



                                      8
<PAGE>   9

real estate loans that are secured by anything other that farmland or farm
equipment. These latter loans are included in the agricultural loans. At the
end of the fiscal year 1999, the commercial loan portfolio totaled $49,039,000,
this is an increase from the $44,640,000 in 1998 and the $35,858,000 in 1997.
These totals represent in each of the respective years 1999, 1998, and 1997,
77.5%, 80.0%, and 73.9% of the total loan portfolio. The commercial and
industrial loans comprised $36,259,000, $28,764,000, and $24,206,000 for the
three years ending 1999, 1998, and 1997 respectively. The agricultural loans
for the same periods were $12,780,000, $15,876,000 and $11,652,000. At the end
of the fiscal year 1999, the commercial loans consisted of 57.3% of the total
loan portfolio while the agricultural loans comprised 20.2%.

         The allowance for loan losses is established through a provision for
loan losses charged to expense. Loans are charged against the allowance for
loan losses when management of the Bank believes that the collectibility of the
principal on such loans is unlikely. The allowance is an amount that management
of the Bank believes will be adequate to absorb losses inherent in existing
loans and commitments to extend credit, based on evaluations of the
collectibility of outstanding loans and prior loan loss experience relating to
loans and commitments to extend credit. The evaluations take into consideration
such factors as changes in the nature and volume of the loan portfolio, overall
portfolio quality, review of specific problem loans, and current economic
conditions that may affect the borrowers' ability to pay. Subsequent
recoveries, if any, on loans charged against the allowance will be credited to
the allowance.

         The Bank derives its loan loss reserve based on several methods. One
is to review the Bank's historical loss percentages calculated by dividing
year-to-date charge-offs by the amount of reservable loans. Secondly, a review
of classified loans based on a specific reserve allocation method, a percentage
method, and a blended reserve based on specific and percentage methods. The
reserve allocation is based on the overall assessment of all the methods to
determine the appropriate amount to charge to the provision for loan losses.

         Additionally, the Bank's loan portfolio is periodically reviewed by
Federal and State regulators as a normal part of their examination process.
Governmental examination procedures require individual judgments about a
borrower's ability to repay loans, sufficiency of collateral values and the
effects of changing economic circumstances. These procedures are similar to
those employed by the Bank in determining the adequacy of the allowance for
loan losses and in classifying loans.

         As a result of their examinations, regulators may propose adjustments
to the allowance for loan losses or in the loan classifications. As a practical
matter, management and Board of Directors of the Bank promptly consider and
implement those proposed adjustments.

         The Bank charged to operations $101,000 for provision for loan losses
in 1999 and $210,000 and $300,000, respectively, for 1998 and 1997. The amount
of $101,000 was added to the beginning balance of $776,000 for the period ended
December 31, 1998 for a total accumulated provision less net charge-offs for
the period ended December 31, 1999 of $877,000. The Bank charged off loans
during the fiscal year 1999 in the amount of $102,000 and reflected recoveries
of $3,000 leaving a net balance in the allowance for loan losses for the period
ended December 31, 1999 of $778,000, which was 1.23% of total loans outstanding
of $63,239,000.

         Loans on which the accrual of interest has been discontinued are
designated as nonaccrual loans. Accrual of interest on loans is discontinued
either when reasonable doubt exists as to the full and timely collection of
interest or principal or both, or when a loan becomes contractually past due by
90 days or more with respect to interest or principal. When a loan is placed on
nonaccrual status, all interest previously accrued but not collected is
reversed against current period interest income. Income on such loans is then
recognized only to the extent that cash is received and where the future
collection of principal is probable. Interest accruals are resumed on such
loans only when they are brought fully current with respect to interest and
principal and when, in the judgement of management, the loans are estimated to
be fully collectible as to both principal and interest. At December 31, 1999
and December 31, 1998, the Bank's loans designated as nonaccrual totaled $0 and
$163,000, respectively.

         In May 1993, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 114 ("FASB 114"), Accounting by Creditors
for Impairment of a Loan, which sets the standard for recognition of loan
impairment and the measurement methods for certain impaired loans and loans
whose terms are modified in troubled debt restructurings.

         Under FASB 114, a loan is impaired when it is probable that a creditor
will be unable to collect the full amount of principal and interest due
according to the contractual terms of the loan agreement. When a loan is
impaired, a creditor has a choice of ways to measure the impairment. The
measurement of impairment may be based on (1) the present value of the expected
future cash flows of the impaired loan discounted at the loan's original
effective interest



                                       9
<PAGE>   10

rate, (2) the observable market price of the impaired loan, or (3) the fair
value of the collateral of a collateral-dependent loan. Creditors may select
the measurement method on a loan-by-loan basis, except that
collateral-dependent loans for which foreclosure is probable must be measured
at the fair value of the collateral. A creditor in a troubled debt
restructuring involving a restructured loan should measure impairment by
discounting the total expected future cash flows at the loan's original
effective rate of interest. At December 31, 1999 and December 31, 1998, loans
totaling $270,000 and $189,000, respectively, had been classified as impaired.

         The Bank's investment portfolio at December 31, 1999 of $9,153,000
(based on securities held available for sale marked to approximate fair market
value) comprised approximately 12.7% of the Bank's total earning assets, as
compared to 12.3% at December 31, 1998. The investment securities are primarily
concentrated in U. S. Treasury securities, obligations of other U. S.
Government agencies, municipals and corporations. As of December 31, 1999, the
Bank's investment portfolio had 28.7% adjustable rate securities.

         The FASB 115 rule regarding "Accounting For Certain Investments in
Debt and Equity Securities" was implemented the first quarter of 1994. The new
rule required financial institutions to segregate their investment portfolio
into three categories; 1) securities held-to-maturity (HTM), 2) securities
available for sale (AFS), and 3) trading securities. Securities available for
sale are to be marked to a fair market value. Unrealized holding gains and
losses for AFS securities are excluded from earnings and reported as a net
amount in a separate component of shareholders' equity until realized.
Unrealized holding gains and losses for trading securities are included in
earnings. As of December 31, 1999, the Bank's investment portfolio, based on
Marked to Market, consisted of $7,295,000 in AFS and $1,858,000, in HTM. The
net effect to stockholders' equity as of December 31, 1999 was a net loss in
reserve for securities of $144,000.

         Reclassifying of securities as to available for sale and
held-to-maturity took place at December 1995, based upon a regulatory change
which allowed a window of opportunity to reclassify the investment portfolio.

         FAS 121, which was effective for the first quarter of 1996, did not
have any significant effect on the Company. The Bank does not have any
financial instruments which would be affected by Financial Accounting Standard
Boards Statement No. 119 ("FAS 119"). FAS 119 requires new qualitative
disclosures regarding derivative financial instruments (e.g. futures, forwards,
swaps and options). In June 1997, the Financial Accounting Standards Board
issued Statement No., 130 (?FAS130"), Reporting Comprehensive Income,
establishes standards for reporting comprehensive income in financial
statements. It requires that all items that are required to be recognized under
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. Some of the items included in comprehensive income are
unrealized gains or losses on securities available-for-sale, underfunded
pension obligations and employee stock options. FAS 130 is effective for
periods beginning after December 15, 1997. Reclassification of financial
statements for earlier periods provided for comparative purposes is required.
Implementation of FAS 130 will require additional disclosures in the financial
statements but will not have an impact on the Company's balance sheet or
Statement of Income.

         The market value of securities fluctuates during the investment period
and is determined on the basis of market quotations. The Bank reprices its
securities on a monthly basis. The Bank invests in securities for interest
income and liquidity.

         When calculating total earning assets, the amount of $979,000 as of
December 31, 1999 was added to total earning assets. This amount represents the
cash surrender value of whole life insurance policies purchased primarily to
fund a deferred benefit pension plan implemented in 1993 for officers of the
Bank who qualified for the program.

         Non-interest earning assets accounted for approximately 13.5% of the
Company's total assets at December 31, 1999, a increase from the approximately
12.1% at December 31, 1998. The total non-interest earning assets primarily
consisted of cash and funds placed on deposit in accounts with other banks. Of
the total $12,338,000 of non-interest earning assets, cash and non-interest
bearing deposits totaled $6,787,000. Other significant non-interest earning
assets consisted of fixed assets and interest receivable.

         A good capital position, which is vital to the continued profitability
of the Company, also promotes depositor and shareholder confidence and provides
a solid foundation for the future growth of the Bank. The Bank has provided for
its capital requirements through the retention of earnings. At December 31,
1999, the Bank's Tier 1 capital position was 6.12% ($5,710,000 shareholders'
equity divided by total assets of $83,325,000) and the Bank's Tier 2 capital
was 7.10% determined by adding loan loss reserves of $778,000 to shareholders'
equity of $5,710,000 and dividing by total assets of $83,325,000 Total Tier 1
capital to total risk-weighted assets as of December 31, 1999 was 8.62% and
total capital (Tier 2) to total risk-weighted assets was 9.77% compared to
7.89% and 9.14%, respectively, in 1998.



                                      10
<PAGE>   11

         Interest rate sensitivity is a function of the repricing
characteristics of the Bank's portfolio of assets and liabilities. These
repricing characteristics are the time frames within which the interest-bearing
assets and liabilities are subject to change in interest rates. The change in
interest rates can be either at replacement, repricing or maturity during the
life of the assets or liabilities. Interest rate sensitivity management is to
concentrate on the maturities of assets and liabilities as they reprice during
time periods of changes in market interest rates. Effective management is to
ensure that both assets and liabilities respond to changes in interest rates
within an acceptable time frame while minimizing the effect of interest rate
changes on net interest income.

         The major elements used to manage interest rate risk include the mix
of fixed and variable rate assets and liabilities and the maturity pattern of
assets and liabilities. The Bank performs a monthly review of assets and
liabilities that reprice and the time bands within which the repricing occurs.
Through such analysis, the Bank monitors and manages its interest sensitivity
gap to minimize the effects of changing interest rates.

         The interest rate sensitivity structure within the Bank's balance
sheet at December 31, 1999, indicated a net interest sensitive liability gap of
111.2% when projecting out one year. In the near term, defined as 90 days, the
Bank had a net interest sensitivity asset gap of 201.1%. This information
represents a general indication of repricing characteristics over time;
however, the sensitivity of certain deposit products may vary during extreme
swings in interest rates. Since all interest rates and yields do not adjust at
the same velocity, the interest rate sensitivity gap is only a general
indicator of the potential effects of interest rate changes on net interest
income.

         Liquidity is the ability of the Bank to meet present and future
financial obligations either through the sale or maturity of existing assets or
by the acquisition of funds through asset and liability management. Management
of the Bank continually evaluates its liquidity position and seeks to achieve
its desired liquidity objectives from both assets and liabilities. Asset
liquidity is achieved through the continuous maturing of earning assets and by
investing in short-term marketable assets. Liability liquidity is available
through continued deposit growth, maturity structure and accessibility to
market sources of funds.

         As of December 31, 1999, the Bank's liquidity ratio was 20.19% derived
by dividing net cash, short-term, and marketable assets of $14.9 million by net
deposits of $73.7 million. The Bank's dependency ratio as of December 31, 1999
was 11.53%. This ratio is determined by taking the Bank's volatile liabilities
(primarily Jumbo certificates) of $8.9 million less short-term investments of
$.5 million divided by adjusted total earning assets of $72.2 million. In 1998
and 1997, the Bank had maintained a liquidity ratio on an average of 20% to
35%. As noted in "Funding Sources" above, management of the Bank believes that
the high concentration of time deposits is primarily due to customer
relationships and not the attraction of the higher than market rates typically
offered by certificates of deposits.

FORWARD LOOKING STATEMENTS

         This filing contains forward-looking statements that involve risks and
uncertainties, and there are certain important factors that could cause actual
results to differ materially from those anticipated. These important factors
include, but are not limited to, economic conditions (both generally and more
specifically in the Bank's market), competition for customers from other
providers of financial services, government legislation and regulation which
changes from time to time and over which the Company and the Bank have no
control, changes in interest rates, the impact of the Bank's growth, and other
risks detailed in the Annual Report on Form 10-K and in the Company's other
filings with the Securities and Exchange Commission, all of which are difficult
to predict and many of which are beyond the control of the Company.




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                                      11
<PAGE>   12

TABLES TO ITEM 7.

The following tables attached to this Form 10-K in response to Item 7 are
intended to be supplementary information to be read in conjunction with
management's discussion and analysis of financial condition and result of
operations.

         TABLE I    -  Distribution of Assets, Liabilities, and Stockholder's
                       Equity; Interest Rates and Interest Differentials
         TABLE II   -  Investment Portfolio
         TABLE III  -  Loan Portfolio
         TABLE IV   -  Summary of Loan Loss Experience
         TABLE V    -  Deposits
         TABLE VI   -  Return on Equity and Assets
         TABLE VII  -  Short-Term Borrowings




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                                      12
<PAGE>   13


                                    TABLE I
                   AVERAGE BALANCES, INTEREST, AND YIELD/RATE
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>

                                                      1999                           1998                          1997
                                           AVERAGE   INCOME/   AVERAGE    AVERAGE   INCOME/   AVERAGE   AVERAGE   INCOME/   AVERAGE
                                           BALANCE   EXPENSE     RATE     BALANCE   EXPENSE    RATE     BALANCE   EXPENSE     RATE
                                            ------    -----      ----     ------     -----     ----      ------    -----      ----
<S>                                        <C>       <C>       <C>        <C>       <C>       <C>       <C>       <C>       <C>

ASSETS:
Earning Assets:
Loans, Net of unearned income               56,521    5,284       9.35%   50,349     4,660     9.26%     41,230    3,880      9.41%

  Investment Securities
    Taxable                                  6,267      385       6.14%    6,447       392     6.08%      8,321      550      6.61%
    Tax exempt                               2,521      121       4.80%    1,421        81     5.70%      1,285       65      5.06%
                                            ------    -----       ----    ------     -----     ----      ------    -----      ----
      Total Investments                      8,788      499       5.76%    7,868       473     6.01%      9,606      615      6.40%
  Federal Funds Sold                         9,537      477       5.00%    4,881       265     5.43%      2,011      107      5.32%
                                            ------    -----       ----    ------     -----     ----      ------     ----      ----
    Total Earning Assets                    74,846    6,267       8.37%   63,098     5,398     8.55%     52,847    4,602      8.71%
Allowance for loan losses                     (776)                         (671)                          (541)
Cash and Due From                            4,901                         3,792                          3,994
Other Assets                                 5,237                         4,607                          4,022
                                            ------                        ------                         ------
    Total Assets                            84,208                        70,826                         60,322
                                            ======                        ======                         ======

LIABILITIES AND SHAREHOLDERS EQUITY
Interest Bearing Liabilities
  Deposits
    NOW Accounts                            14,733      259       1.76%   12,497       220     1.76%      9,459      168      1.78%
    Money Market Accounts                    5,390      139       2.58%    4,265       103     2.42%      3,923      108      2.75%
    Savings Accounts                         9,510      228       2.40%    7,568       179     2.37%      6,287      146      2.32%
    Time $100,000 and over                   8,821      472       5.35%    6,397       360     5.63%      5,315      293      5.51%
    Other Time Deposits                     22,299    1,131       5.07%   19,958     1,070     5.36%      7,896      945      5.28%
                                            ------    -----       ----    ------     -----     ----      ------    -----      ----
      Total interest bearing deposits       60,753    2,229       3.67%   50,685     1,932     3.81%     42,880    1,660      3.87%
    Securities sold under agreement
    to repurchase, Federal funds
    purchased and other borrowings           4,330      292       6.74%    4,241       259     6.11%      3,113      228      7.32%
                                            ------    -----       ----    ------     -----     ----      ------    -----      ----
      Total interest bearing liabilities    65,083    2,521       3.87%   54,926     2,191     3.99%     45,993    1,888      4.10%

Demand Deposits (non interest-bearing)      13,295                        10,634                          9,411
Accrued expenses and other liabilities         740                           675                            862
                                            ------                        ------                         ------
Shareholders' equity                         5,090                         4,591                          4,056
                                            ------                        ------                         ------

Total liabilities and shareholders' equity  84,208                        70,826                         60,322
                                            ======                        ======                         ======
Net interest income/net interest spread               3,746       4.45%              3,207     4.53%               2,714      4.50%

Net yield on earning assets                                       5.00%                        5.08%                          5.14%

</TABLE>


The following table sets forth the extent to which changes in volume and rates
of earning assets and interest-bearing liabilities affected the change in
interest income or interest expense in the indicated time periods. For each
major balance sheet category, information is provided relating to 1) changes in
volume (changes in average balance multiplied by the prior year's average
interest rate), 2) changes in rate (changes in average interest rate multiplied
by the prior year's average balance), and 3) the total change in interest
income/expenses. Changes attributable jointly to volume and rate have been
allocated proportionately.



                                      13

<PAGE>   14


                               TABLE I CONTINUED


<TABLE>
<CAPTION>

DECEMBER 31,                                                         1999                                 1998
                                                        VOLUME       RATE       TOTAL      VOLUME         RATE        TOTAL
<S>                                                     <C>          <C>        <C>        <C>            <C>         <C>

Interest Income
              Loans                                       571         53         624         858          (78)         780
              Investment Securities                        55        (22)         33        (111)         (31)        (142)
              Other Earning Assets                        253        (41)        212         153            5          158
                                                          ---        ---         ---        ----         ----         ----
                      Total                               879        (10)        869         900         (104)         796

Interest Expense
              Deposits                                    384        (87)        297         302          (30)         272
              Borrowings                                    5         28          33          83          (52)          31
                                                          ---        ---         ---        ----         ----         ----
                      Total                               389        (59)        330         385          (82)         303
                                                          ---        ---         ---        ----         ----         ----

                      Net Change                          490         49         539         515          (22)         493
                                                          ===        ===         ===        ====         ====         ====

</TABLE>

                           INTEREST RATE SENSITIVITY

                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                   After Three   After One     After Three
                                                       Within      Months but    Year but       Years but      After
                                                       Three       Within One   Within Three   Within Five     Five
                                                       Months         Year         Years        Years but      Years
                                                       -----         ------        ------        -----         ----
<S>                                                    <C>         <C>          <C>            <C>             <C>

December 31, 1999
Assets
  Loans                                                23343           7721         14865        14293         2942
  Short term investments                                 509              0             0            0            0
  Securities                                             656           1076          2260         1922         3392
                                                       -----         ------        ------        -----         ----
     Total interest sensitive assets (ISA)             24508           8797         17125        16215         6334

Liabilities
  Interest bearing deposits                            11517          24851         12384        11900            0
  Federal funds purchased                                  0              0             0            0            0
  Long term borrowings                                  1168              0             0            0         2000
  Short term borrowings                                 1642              0             0            0            0
                                                       -----         ------        ------        -----         ----
     Total interest sensitive liabilities (ISL)        14327          24851         12384        11900         2000

  Net position os ISA minus ISL                        10181         (16054)         4741         4315         4334
  Cumulative net position of ISA minus ISL             10181          (5873)        (1132)        3183         7517
  Cumulative net position as a percent
  of total assets                                      12.07%         (6.96%)       (1.34%)       3.77%        8.91%

</TABLE>


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                                      14

<PAGE>   15


                                    TABLE II
                              INVESTMENT PORTFOLIO

                                (AMORTIZED COST)

<TABLE>
<CAPTION>

DECEMBER 31,                               1999             1998              1997
<S>                                      <C>              <C>              <C>

Securities to be held-to-maturity
   1. U.S. Treasury Securities                   0                0                0
   2. U.S. Government Agencies                   0                0                0
   3. Mortgage-backed securities           554,829          765,417        1,147,657
   4. Other                              1,285,257        1,284,014        1,282,827
                                         ---------        ---------        ---------

     Subtotal                            1,840,087        2,049,431        2,430,484

Securities available-for-sale
   1. U.S. Treasury Securities                   0          502,194          753,063
   2. U.S. Government Agencies             996,855          500,000          924,300
   3. Mortgage-backed securities         3,836,665        3,504,024        3,295,644
   4. Other                              2,630,161        2,247,545          533,641
                                         ---------        ---------        ---------

     Subtotal                            7,463,681        6,753,763        5,506,648
                                         ---------        ---------        ---------

     Total investment securities         9,303,768        8,803,194        7,937,132
                                         =========        =========        =========
</TABLE>

                    INVESTMENT SECURITIES MATURITY SCHEDULE

                             (DOLLARS IN THOUSANDS)
                               MATURITY SCHEDULE

<TABLE>
<CAPTION>

                                              IN 1999                      IN 1998                     IN 1997
                                        AMOUNT       YIELD           AMOUNT       YIELD           AMOUNT       YIELD
Security Type                                                         WITHIN ONE YEAR

<S>                                     <C>          <C>             <C>           <C>            <C>          <C>
   1. U.S. Treasury Securities               0       0.00%               502       6.23%               248       6.12%
   2. U.S. Government Agencies               0       0.00%                 0       0.00%                 0       0.00%
   3. Mortgage-backed securities             6       4.82%                 0       0.00%                 0       0.00%
   4. Other                                  0       0.00%                 0       0.00%                 0       0.00%
                                        ------                         -----                         -----

     Totals                                  6                           502                           248
                                        ======                         =====                         =====

</TABLE>

<TABLE>
<CAPTION>

                                              IN 1999                      IN 1998                     IN 1997
                                        AMOUNT       YIELD           AMOUNT       YIELD           AMOUNT       YIELD
Security Type                                               AFTER ONE YEAR BUT WITHIN FIVE YEARS
<S>                                     <C>          <C>             <C>           <C>            <C>          <C>

1. U.S. Treasury Securities                  0       0.00%                 0       0.00%               505       6.23%
2. U.S. Government Agencies                500       6.05%                 0       0.00%               250       7.00%
3. Mortgage-backed securities              346       6.31%               817       6.39%               266       6.63%
4. Other                                  1225       5.82%               719       5.44%               275       4.60%
                                        ------                         -----                         -----

  Totals                                 2,071                         1,536                         1,296
                                        ======                         =====                         =====

</TABLE>



                                      15
<PAGE>   16

                               TABLE II CONTINUED

<TABLE>
<CAPTION>

                                              IN 1999                      IN 1998                     IN 1997
                                        AMOUNT       YIELD           AMOUNT       YIELD           AMOUNT       YIELD
Security Type                                               AFTER FIVE YEARS BUT WITHIN TEN YEARS
<S>                                     <C>          <C>             <C>           <C>            <C>          <C>

     1. U.S. Treasury Securities            0        0.00%                 0       0.00%                0        0.00%
     2. U.S. Government Agencies          500        6.05%               500       6.05%              674        6.21%
     3. Mortgage-backed securities       1401        6.57%              1601       4.94%             1221        5.87%
     4. Other                            1521        5.03%              2415       5.04%              266        5.15%
                                        -----                          -----                        -----


               Totals                   3,422                          4,516                        2,161
                                        =====                          =====                        =====

</TABLE>

<TABLE>
<CAPTION>

                                              IN 1999                      IN 1998                     IN 1997
                                        AMOUNT       YIELD           AMOUNT       YIELD           AMOUNT       YIELD
Security Type                                                         AFTER 10 YEARS
<S>                                     <C>          <C>             <C>           <C>            <C>          <C>

     1. U.S. Treasury Securities            0        0.00%                0       0.00%                0       0.00%
     2. U.S. Government Agencies            0        0.00%                0       0.00%                0       0.00%
     3. Mortgage-backed securities       2584        6.21%             1955       6.05%             2656       6.44%
     4. Other                           1,157        5.02%              243       5.50%             1275       6.38%
                                        -----                         -----                        -----

               Totals                   3,741                         2,198                        3,931
                                        =====                         =====                        =====

</TABLE>




               (Remainder of this page intentionally left blank)



                                      16
<PAGE>   17

                                   TABLE III
                                 LOAN PORTFOLIO

                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>

December 31,                                      1999                           1998                         1997
                                                        PERCENT                        PERCENT                      PERCENT
                                            AMOUNT      OF TOTAL          AMOUNT      OF TOTAL          AMOUNT     OF TOTAL
Loan Type
<S>                                         <C>          <C>              <C>          <C>              <C>          <C>

   1. Commercial                            49,039       77.5%            44,640       79.0%            35,858       73.9%
   2. Real Estate (1.4 family)               4,651        7.4%             3,759        6.6%             5,227       10.8%
   3. Installment and other                  9,549       15.1%             8,139       14.4%             7,406       15.3%
                                           -------      -----             ------      -----             ------      -----

     Total Loans                            63,239      100.0%            56,535      100.0%            48,491      100.0%
                                                        =====                         =====                         =====

   Less:  Unearned Income                      (76)                          (65)                          (41)
   Less:  Allowance for loan losses           (778)                         (776)                         (576)
                                           -------                        ------                        ------
     Total loans less allowance
     and unearned income                    62,385                        55,694                        47,874
                                           =======                        ======                        ======
</TABLE>

         SELECTED LOAN MATURITY AND INTEREST RATE SENSITIVITY SCHEDULES

                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>

December 31,                            1999              1998              1997
                                                    WITHIN ONE YEAR
<S>                                    <C>               <C>               <C>

1. Commercial                          16,846            28,488            10,718
2. Real Estate (1.4 family)             1,672             4,779             2,593
3. Installment and other                1,795             4,608             3,565
                                       ------            ------            ------

  Total                                20,313            37,875            16,876
                                       ======            ======            ======

                                           AFTER ONE YEAR BUT WITHIN FIVE YEARS
1. Commercial                          28,614            28,488            10,718
2. Real Estate (1.4 family)             2,510             4,779             2,593
3. Installment and other                6,959             4,608             3,565
                                       ------            ------            ------

  Total                                38,083            37,875            16,876
                                       ======            ======            ======

                                                   AFTER FIVE YEARS
1. Commercial                           3,579             2,221             2,732
2. Real Estate (1.4 family)               469               769               670
3. Installment and other                  795               541               539
                                       ------            ------            ------

  Total                                 4,843             3,531             3,941
                                       ======            ======            ======

</TABLE>



                                      17

<PAGE>   18

                              TABLE III CONTINUED
                RATE STRUCTURE FOR LOANS MATURING OVER ONE YEAR

                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>

                                    WITH PRE-        WITH           WITH PRE-        WITH         WITH PRE-          WITH
                                   DETERMINED       FLOATING       DETERMINED      FLOATING      DETERMINED        FLOATING
                                    INTEREST          OR           INTEREST           OR          INTEREST            OR
                                      RATE         ADJUSTABLE        RATE         ADJUSTABLE        RATE          ADJUSTABLE
                                                     RATE                            RATE                            RATE
                                     AMOUNT         AMOUNT          AMOUNT          AMOUNT         AMOUNT           AMOUNT
<C>                                <C>             <C>             <C>            <C>            <C>              <C>

1. Commercial                        22,376          9,817          29,155          1,554          11,034          2,416
2. Real Estate (1.4 family)           2,979              0           5,548              0           3,263              0
3. Installment and other              7,754              0           5,149              0           4,104              0
                                     ------          -----          ------          -----          ------          -----

        Total                        33,109          9,817          39,852          1,554          18,401          2,416
                                     ======          =====          ======          =====          ======          =====

</TABLE>




               (Remainder of this page intentionally left blank)



                                      18
<PAGE>   19

                                    TABLE IV
                        SUMMARY OF LOAN LOSS EXPERIENCE

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                    1999             1998             1997
<S>                                       <C>              <C>              <C>

Balance at beginning of Period            776,382          576,347          500,504
   Charge-offs:
      Commercial Loans                     56,772                0          213,248
      Commercial Mortgages Loans                0                0                0
      Construction Loans                        0                0                0
      Residential Mortgage Loans           16,341                0              947
      Consumer Loans                       29,138           23,672           48,524
                                          -------          -------          -------
          Total Charge-offs               102,251           23,672          262,719

   Recoveries
      Commercial Loans                      1,826            4,962           27,237
      Commercial Mortgages Loans                0                0                0
      Construction Loans                        0                0                0
      Residential Mortgage Loans              755                0                0
      Consumer Loans                            0            8,745           11,325
                                          -------          -------          -------
          Total Recoveries                  2,581           13,707           38,562
                                          -------          -------          -------
Net Charge-offs less recoveries            99,670            9,965          224,157
Additions charged to operations           101,000          210,000          300,000
                                          -------          -------          -------
Balance at end of period                  777,712          776,382          576,347
                                          =======          =======          =======

</TABLE>

                  ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES


<TABLE>
<CAPTION>
                                                      1999                       1998                        1997
                                                            PERCENT OF                  PERCENT OF                  PERCENT OF
                                                           LOANS IN EACH               LOANS IN EACH               LOANS IN EACH
                                                            CATEGORY TO                 CATEGORY TO                 CATEGORY TO
                                                 AMOUNT     TOTAL LOANS      AMOUNT     TOTAL LOANS      AMOUNT     TOTAL LOANS
<S>                                              <C>       <C>               <C>       <C>              <C>        <C>
Balance at end of period applicable to:
   Commercial and agricultural                   603,081       77.5%         579,415       74.6%        350,354       70.0%
   Real estate                                    57,198        7.4%         100,727       13.0%        100,100       20.0%
   Installment and Others                        117,433       15.1%          96,240       12.4%         50,050       10.0%
                                                 -------     ------          -------       -----        -------      -----

                                                 777,712      100.0%         776,382       100.0%       500,504      100.0%
                                                 =======     ======          =======       =====        =======      =====

</TABLE>



                                      19
<PAGE>   20

                                    TABLE V
                                    DEPOSITS

                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>

Year Ended December 31,                             1999                          1998                           1997
                                           AVERAGE       AVERAGE         AVERAGE        AVERAGE          AVERAGE       AVERAGE
                                           BALANCE        RATE           BALANCE         RATE            BALANCE        RATE
                                           ------         ----            ------         ----             -----         ----
<S>                                        <C>           <C>             <C>            <C>              <C>           <C>
Deposits:
Non-interest demand deposits               13,295         0.00%           10,634         0.00%            9,411         0.00%

Interest Bearing Deposits
  NOW accounts                             14,733         1.76%           12,497         1.76%            9,459         1.78%
  Money market accounts                     5,390         2.58%            4,265         2.43%            3,923         2.75%
  Savings accounts                          9,510         2.40%            7,568         2.36%            6,287         2.32%
  Time, $100,000 and over                   8,821         5.35%            6,397         5.62%            5,315         5.51%
  Other time Deposits                      22,299         5.07%           19,958         5.36%           17,896         5.28%
                                           ------         ----            ------         ----            ------         ----

  Total Interest bearing deposits          60,753         3.67%           50,685         3.81%           42,880         3.87%
                                           ------         ====            ------         ====            ------         ====
        Total Deposits                     74,048                         61,319                         52,291
                                           ======                         ======                         ======

</TABLE>


                   MATURITIES OF TIME DEPOSITS OVER $100,000

                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>

December 31,                                        1999                          1998                          1997
                                                         OTHER                         OTHER                         OTHER
                                       CERTIFICATES       TIME       CERTIFICATES       TIME        CERTIFICATES      TIME
                                       OF DEPOSITS      DEPOSITS     OF DEPOSITS      DEPOSITS      OF DEPOSITS     DEPOSITS
<S>                                    <C>              <C>          <C>              <C>           <C>             <C>
Three months or less                      2,544            0            1,464            0            1,923            0
Over three through six months             1,984            0            1,697            0            1,328            0
Over six through twelve months            2,074            0            2,186            0            1,953            0
Over twelve Months                        2,251            0            2,514            0            1,100            0
                                          -----        -----            -----        -----            -----        -----

        Total                             8,853            0            7,861            0            6,304            0
                                          =====        =====            =====        =====            =====        =====

</TABLE>



                                      20
<PAGE>   21

                                    TABLE VI
                          RETURN ON EQUITY AND ASSETS

<TABLE>
<CAPTION>

December 31,                                        1999            1998            1997
<S>                                                <C>             <C>              <C>

Return on average assets                            0.76%           0.70%           0.54%
Return on average common Equity                    12.55%          11.40%           7.64%
Common dividend payout ratio                        5.82%           6.38%           9.17%
Average equity to average assets ratio              6.04%           6.48%           6.72%

</TABLE>


                          LEVERAGE RATIO CALCULATIONS

<TABLE>
<CAPTION>

December 31,                                        1999            1998            1997
<S>                                                <C>             <C>             <C>

Total average assets                               84,208          70,826          60,322
    Less intangibles                                    0               0               0

   Total tangible average assets                   84,208          70,826          60,322

Total common shareholders' equity                   5,251           4,924           4,237
     Less intangibles                                   0               0               0
     Total tangible period-end common
             shareholders' equity                   5,251           4,924           4,237

Leverage ratio                                       6.24%           6.95%           7.02%

</TABLE>


                            RISK-BASED CAPITAL RATIO
                                  (Bank Only)

<TABLE>
<S>                                                  <C>           <C>               <C>

Tier I capital ratio                                 6.87%         6.12%             8.44%
Total risk-based capital ratio                       9.77%         9.14%             9.60%

</TABLE>

                                   TABLE VII
                             SHORT TERM BORROWINGS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>

Year ended December 31,                             1999                           1998                            1997
                                          SECURITIES                     SECURITIES                      SECURITIES
                                           FEDERAL       SOLD UNDER       FEDERAL       SOLD UNDER        FEDERAL      SOLD UNDER
                                           FUNDS         AGREEMENTS        FUNDS        AGREEMENTS         FUNDS       AGREEMENTS
                                           SOLD        TO REPURCHASE       SOLD        TO REPURCHASE       SOLD       TO REPURCHASE
<S>                                       <C>          <C>               <C>           <C>               <C>          <C>

Maximum outstanding at any month-end       2,970            675            2,400            900            3,562           800
Average Balance                            2,889            401              575            449              770         2,011
Ending balance                             2,970            672              500            646            1,100         1,872
Average interest rate                       6.16%           3.48%           8.60%           4.54%           5.76%         5.88%
Average interest rate at year-end           6.00%           2.08%           9.89%           3.15%           5.75%         5.82%

</TABLE>



                                      21

<PAGE>   22

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statement of the Company and the related notes thereto required
by Subpart F have been included immediately following Item 13 of this Annual
Report.


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

There were no changes in accountants, nor were there any disagreements with
accountants on accounting and financial disclosure.

ITEM 10.  DIRECTORS AND PRINCIPAL OFFICERS OF THE COMPANY

DIRECTORS OF THE COMPANY

The information required by Item 10 pertaining to directors of the Company is
incorporated herein by reference to the sections entitled "Election of
Directors" in the Company's definitive proxy statement for its 2000 Annual
Meeting of Shareholders, which will be filed with the Securities and Exchange
within 120 days of the end of the Company's fiscal year ended December 31,
1999.

PRINCIPAL OFFICERS OF THE COMPANY AND ITS SUBSIDIARY BANK

All principal officers of the Company are elected by the Board of Directors and
serve at the pleasure of the Board. There are no arrangements or understanding
between the Company and any principal officer pursuant to which any such person
was elected as a principal officer of the Company.

J. E. "BOB" MCLEAN, III, 63, is Chairman of the Bank and Company and was
elected President and CEO in May 1997 of the Company. Mr. McLean is the owner
and President of J. E. McLean & Sons, a family business he took over in 1967.
He is a citrus grower who also harvests and ships fruit. Prior to that, Mr.
McLean was a banker at Marine Bank of Tampa and was employed with Tampa
Electric for three and a half years. He is a third generation of Valrico,
attending Brandon High School and the University of Florida for a couple of
years. Mr. McLean served in the Army. He has served as Chairman of the Board of
the Bank since its inception in 1989 and has served as Chairman of the Board
for the Company since May 1995.

JERRY L. BALL, 47, The President and CEO of the Bank is also the Executive Vice
President of the Company. In May 1997, Mr. Ball was promoted to his current
position. In 1995, Mr. Ball was promoted to Executive Vice President. From 1989
to May 1995, Mr. Ball served in the position of Senior Vice President and
Cashier. From 1980 to April 1989, Mr. Ball was an Assistant Vice President and
Branch Manager for First Union National Bank of Florida. Mr. Ball attended King
College and received a B.A. degree in Business and Economics. He is a graduate
of the School of Banking at the University of Florida. Mr. Ball has over 23
years of banking experience.

DONALD WEAVER, 57, joined the Company and Bank in November 1995. He was hired
as Senior Vice President of Commercial Loans of the Bank. In May 1997, he was
promoted to Executive Vice President and Director of Commercial Loans and was
elected to the position of Secretary to the Company. He has over 35 years in
commercial banking, all within the Hillsborough County area. He came to our
Bank from Peoples Bank of Lakeland where he served as Vice President and
Commercial Loan Manager since 1990. He attended Hillsborough Community College
and has attended a number of banking schools. He has been a resident of the
Brandon area for over 25 years.

Set forth below are the names and ages of the other principal officers of the
Company's subsidiary bank, giving their principal occupation and business
experience of each such principal officer during the past six years. All of
such information has been furnished by each such person.



                                      22
<PAGE>   23

GLENN J. CHASTEEN, 48, is currently serving as Senior Vice President-Consumer
Loans. He has been the Bank's installment lender since June 1989. From January
1987 to October 1988, Mr. Chasteen served as Senior Vice President of San
Antonio Citizens Federal Credit Union. From February 1980 to January 1987, Mr.
Chasteen served as Vice President-Consumer Lending with Sun Bank of Tampa Bay
(formerly known as Brandon State Bank).

ROBERT N. MORRIS, 73, has served as Senior Vice President-Agriculture Loans of
the Bank since April 1991. Mr. Morris serves in this position on a part-time
basis. From June 1985 to December 1990, Mr. Morris was employed as Vice
President-Agriculture Loans of Barnett Bank. Mr. Morris has over 30 years of
banking experience.

ROY SCHRETT, 62, has served as Senior Vice President-Commercial Loans since his
employment April 1997. Mr. Schrett was with South Hillsborough Community Bank,
a local independent bank, serving in the capacity of Senior Vice President and
Senior Lending Officer. Prior employment has been with Southtrust Bank of West
Florida, Nazareth National Bank, and Marine Midland Bank, N.A. Mr. Schrett has
over 39 years of banking experience. Mr. Schrett graduated Summa Cum Laude,
B.A. degree from Allentown College of St. Frances de Sales, University of
Buffalo, A.A.S. degree, Graduate Lending School, University of Oklahoma and has
taken several banking courses.

CAROL TODD JOHNSON, 68, has served as Vice President and Business Development
Officer of the Bank since June 1991. Mrs. Johnson serves in this position on a
part-time basis and was promoted in 1995 to Vice President-Business
Development. From 1972 to May 1991, Mrs. Johnson was Vice President of Business
and Community Development Officer at the Brandon office of Barnett Bank.

ROBERT M. (MYKE) MORRIS, ARA, 46, is currently serving as a Vice President -
Commercial Loans. He has been serving in that position since September 1, 1999.
He is an Accredited Rural Appraiser and State Certified General Appraiser.
Before joining the bank, he was an agricultural investment portfolio manager.

SUSAN L. RADFORD, 42, is currently serving as a Vice President -
Cashier/Compliance Officer. She was promoted to this position in July 1999. Ms.
Radford has 24 years of banking experience, 15 years in bank operations.

GLENDA C. PEACOCK, 60, is currently serving as a Vice President - Branch
Manager of the Bank's Main office. She has been serving in this capacity since
August 1, 1999. Prior to this, she served as a branch manager of our Brandon
location since March 1994. Mrs. Peacock was hired by the Bank in August 1993
where she served as an AVP - Loan Officer.

MELISSA B. OVERTON, 42, is currently serving as a branch manager of our Brandon
location as a Vice President - Branch Manager/Commercial Loan Officer. She has
been serving in this capacity since August 1999. Mrs. Overton was hired by the
bank as a commercial lender in March 1999. Prior to being hired by us, Mrs.
Overton has worked for Suntrust and Barnett Banks as a commercial lender and
also for a small community bank in southern Florida as a commercial
lender/Branch manager. Also during 1997-1998, Mrs. Overton worked as a Human
Resource Coordinator for a restaurant chain in southern Florida.

ITEM 11.  MANAGEMENT COMPENSATION AND TRANSACTIONS

The information required by Item 11 pertaining to management compensation and
transactions with management of the Company is incorporated herein by reference
to the sections entitled "Executive Compensation and Other Information" and
"Certain Transactions" in the Company's definitive proxy statement for its 2000
Annual Meeting of Shareholders, which will be filed with the Federal Deposit
Insurance Corporation within 120 days of the end of the Company's fiscal year
ended December 31, 1999.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS



                                      23
<PAGE>   24

The only class of voting securities of the Company is its Common Stock, 301,509
shares of which were outstanding as of December 31, 2000. To the best knowledge
of the Company, other than Messrs. Carlton, Holmberg and Amerson (whose
shareholdings are listed in "Security Ownership of Management" below), there
are no other persons who own beneficially more than five percent (5%) of the
Company's Common Stock.

SECURITY OWNERSHIP OF MANAGEMENT

The information set forth below as to the beneficial ownership of shares of
Common Stock of the Company by each director of the Company, and by all
directors and principal officers of the Company as a group, as of December 31,
1999 has been furnished by the respective persons.



                                      24
<PAGE>   25

<TABLE>
<CAPTION>

                                       AMOUNT AND NATURE
NAME OF BENEFICIAL                       OF BENEFICIAL
     OWNER                                 OWNERSHIP          PERCENT OF CLASS
------------------------               ------------------     ----------------
<S>                                    <C>                    <C>

LeVaughn Amerson                             29,000(1)             9.61
Jerry L. Ball                                   450(1)              .15
C. Dennis Carlton                            26,075(2)             8.65
H. Leroy English                              4,122(1)             1.37
Gregory L. Henderson                         10,500(3)             3.48
Douglas A. Holmberg                          29,107(4)             9.65
Charles E. Jennings, Jr.                      7,766(5)             2.57
J. E. "Bob" McLean, III                       6,270(6)             2.08
J. "Bill" Noriega, Jr.                        7,526(7)             2.50
Donald M. Weaver                                300(8)              .10
                                            -------               -----
All directors and principal                 121,116               40.17
officers as a group (10 persons)

</TABLE>


(1)  All of these shares are owned as joint tenant with this individual's
     spouse.

(2)  Includes 25,925 shares which Mr. Carlton owns individually and 50 shares
     each owned by Mr. Carlton's trust for his three children (a total of 150
     shares) of which Mr. Carlton is sole trustee.

(3)  Includes 10,000 shares which Dr. Henderson owns as joint tenant with his
     wife and 125 shares each owned by a trust set up for Dr. Henderson's four
     children (a total of 500 shares).

(4)  Includes 29,007 shares which Mr. Holmberg owns individually. Also includes
     100 shares which is owned by Mr. Holberg's wife, as to which shares Mr.
     Holmberg disclaims beneficial ownership.

(5)  Includes 5,000 shares held in C. E. Jennings, Jr. Harbor Trust IRA, of
     which Mr. Jennings is sole beneficiary; 2,466 shares which Mr. Jennings
     owns individually and 200 shares which Mr. Jennings owns as joint tenant
     with his wife. Also includes 100 shares which Mr. Jennings' wife owns, as
     to which shares Mr. Jennings disclaims beneficial ownership.

(6)  Includes 4,000 shares which Mr. McLean owns as joint tenant with his wife
     and daughter and 1,170 shares owned by Mr. McLean in trust for his
     grandchildren for which Mr. McLean is sole trustee. Also includes 1,100
     shares owned by Mr. McLean's daughter, son-in-law and wife as to which
     these 1,100 shares Mr. McLean disclaims beneficial ownership.

(7)  Includes 7,226 shares which Mr. Noriega owns individually and 100 shares
     each owned joint with three of Mr. Noriega's children (a total of 300
     shares).

(8)  Includes 100 shares which Mr. Weaver owns individually and 200 shares
     owned in joint with Mr. Weavers spouse.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Certain officers, directors, security holders with more than five percent
ownership, and corporations and individuals related to such persons have
indebtedness in the form of loans. These loans to such persons are made in the
ordinary course of business. The loans are made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons, and do not involve more than
the normal risk of collectibility, nor do they present other unfavorable
features.



                                      25
<PAGE>   26

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

<TABLE>
<S>      <C>                                                                                                    <C>

(a)(1)   FINANCIAL STATEMENTS:

(1)      Independent Auditors' ....................................................................................26

(2)      Consolidated Balance Sheets as of December 31, 1999 and 1998..............................................27

(3)      Consolidated Statements of Income for Each of the Three Years
         in the Period Ended December 31, 1999.....................................................................28

(4)      Consolidated Statements of Changes in Stockholders' Equity for Each
         of the Three Years in the Period Ended December 31, 1999..................................................29

(5)      Consolidated Statements of Cash Flows for Each of the Three Years
         in the Period Ended December 31, 1999.....................................................................30

(6)      Notes to Consolidated Financial Statements.............................................................31-44

</TABLE>

(2)      FINANCIAL STATEMENT SCHEDULES:

The following financial statement schedules have been omitted since the
required information is not applicable or has been included in the Notes to
Consolidated Financial Statements:

Schedule I - U. S. Treasury Securities, Obligations of Other U. S. Government
Agencies and Corporations, Obligations of States and Political Subdivisions,
and Other Bonds, Notes and Debentures

Schedule IV - Company Premises and Equipment

Schedule V - Investment In, Income From Dividends, And Equity In Earnings Or
Losses Of Subsidiaries And Associated Companies

Schedule VI - Allowance For Possible Loan Losses

The following financial statement schedules are attached to this 10-K in
response to Item 14:

Report of Independent Auditors on Supplementary Schedules

Schedule II - Loans to Officers, Directors, Principal Security Holders, and any
Associates of the Foregoing Persons

Schedule III - Loans and Lease Financing Receivables


               (Remainder of this page intentionally left blank)



                                      26
<PAGE>   27


                          INDEPENDENT AUDITORS' REPORT


To The Board of Directors and Stockholders
Valrico Bancorp, Inc. and Subsidiary
Valrico, Florida


We have audited the accompanying consolidated balance sheets of Valrico
Bancorp, Inc. and Subsidiary as of December 31, 1999 and December 31, 1998, and
the related consolidated statements of income, changes in stockholders' equity
and cash flows for each of the three years in the period ended December 31,
1999. These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Valrico Bancorp,
Inc. and Subsidiary at December 31, 1999 and December 31, 1998, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity with generally
accepted accounting principles.




                          Certified Public Accountants

Tampa, Florida
January 21, 2000




                                      27
<PAGE>   28

                      VALRICO BANCORP, INC. AND SUBSIDIARY
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                    DECEMBER 31,
                                                                           ----------------------------
                                                                             1999                 1998
                                                                           --------             -------
                                                                                  (in thousands)
<S>                                                                        <C>                  <C>

                             ASSETS
Cash and non-interest bearing deposits                                     $  6,787             $ 4,454
Federal funds sold                                                              509               6,356
Securities available-for-sale                                                 7,295               6,783
Securities to be held-to-maturity (approximate fair value of
  $1,858,000 for 1999; $2,140,000 for 1998)                                   1,839               2,049
Loans                                                                        62,385              55,694
Facilities, net                                                               3,504               3,405
Other real estate                                                                 1                 102
Accrued interest receivable                                                     580                 479
Other assets                                                                  1,466               1,363
                                                                           --------             -------
         Total assets                                                      $ 84,366             $80,685
                                                                           ========             =======

                           LIABILITIES
Deposits:
      Demand deposits                                                      $ 13,080             $12,704
      NOW accounts                                                           15,110              14,354
      Money market accounts                                                   5,780               6,207
      Savings accounts                                                        9,894               8,128
      Time, $100,000 and over                                                 8,850               6,991
      Other time deposits                                                    21,019              22,121
                                                                           --------             -------
         Total deposits                                                      73,733              70,505


Securities sold under agreements to repurchase                                  672                 647
Accounts payable and accrued liabilities                                        572                 887
Advances under line-of-credit                                                   970                 500
Notes payable                                                                 3,168               3,222
                                                                           --------             -------
                            Total liabilities                                79,115              75,761
                                                                           --------             -------
Commitments and contingencies (Notes O and P)

                       STOCKHOLDERS' EQUITY
Common stock, no par value, authorized 1,000,000
  shares, issued and outstanding 301,509 shares for 1999;
  307,790 for 1998                                                              302                 308
Capital surplus                                                               2,450               2,566
Retained earnings                                                             2,643               2,041
Accumulated other comprehensive income                                         (144)                  9
                                                                           --------             -------
         Total stockholders' equity                                           5,251               4,924
                                                                           --------             -------
         Total liabilities and stockholders' equity                        $ 84,366             $80,685
                                                                           ========             =======

</TABLE>

See Accompanying Notes to Consolidated Financial Statements




                                      28
<PAGE>   29

                      VALRICO BANCORP, INC. AND SUBSIDIARY
                       CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>

                                                                                YEAR ENDED DECEMBER 31,
                                                                       ---------------------------------------
                                                                         1999             1998           1997
                                                                       --------         -------         ------
                                                                        (in thousands, except per share data)
<S>                                                                    <C>             <C>            <C>
INTEREST INCOME
      Interest and fees on loans                                       $  5,284        $  4,802       $  3,990
      Interest on investment securities:
              U. S. Treasury                                                 19              46             73
              U. S. Government agencies and corporations                    348             314            452
              Other                                                         139             116             89
      Income on Federal funds sold                                          477             265            107
                                                                       --------        --------       --------
                            Total interest income                         6,267           5,543          4,711
                                                                       --------        --------       --------

INTEREST EXPENSE
      Interest on deposits                                                2,229           1,940          1,659
      Interest on short-term borrowings                                      14              36            127
      Interest on long-term debt                                            110              84            101
                                                                       --------        --------       --------
                            Total interest expense                        2,353           2,060          1,887
                                                                       --------        --------       --------
                            Net interest income                           3,914           3,483          2,824

PROVISION FOR LOAN LOSSES                                                   101             210            300
                                                                       --------        --------       --------
                            Net interest income after provision
                             for loan losses                              3,813           3,273          2,524
                                                                       --------        --------       --------

OTHER INCOME
      Service charges on deposit accounts                                   729             563            429
      Miscellaneous income                                                  109              94             87
                                                                       --------        --------       --------
                            Total other income                              838             657            516
                                                                       --------        --------       --------

OTHER EXPENSES
      Salaries and employee benefits                                      1,843           1,487          1,304
      Occupancy expense                                                     532             421            244
      Equipment expense                                                     321             298            270
      Stationery, printing and supplies                                     139             103             95
      Miscellaneous expenses                                                853             742            703
                                                                       --------        --------       --------
                            Total other expenses                          3,688           3,051          2,616
                                                                       --------        --------       --------
INCOME BEFORE INCOME TAXES                                                  963             879            424

INCOME TAXES                                                                324             318            100
                                                                       --------        --------       --------

NET INCOME                                                                  639             561

OTHER COMPREHENSIVE INCOME                                                 (153)             18             12
      Unrealized gains (losses) on securities
                                                                       --------        --------       --------

COMPREHENSIVE INCOME                                                   $    486        $    579       $    336
                                                                       ========        ========       ========

PER SHARE DATA                                                          305,565         299,221        297,026
                                                                       --------        --------       --------
      Average shares outstanding
      Basic EPS                                                        $   2.09        $   1.88       $   1.09
                                                                       ========        ========       ========

</TABLE>

See Accompanying Notes to Consolidated Financial Statements



                                      29
<PAGE>   30


                      VALRICO BANCORP, INC. AND SUBSIDIARY
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                                                                    ACCUMULATED
                                                                                                       OTHER             TOTAL
                                                      COMMON         CAPITAL        RETAINED       COMPREHENSIVE     STOCKHOLDERS
                                                      STOCK          SURPLUS        EARNINGS          INCOME            EQUITY
                                                     -------         -------        --------       -------------     ------------
                                                                                  (in thousands)
<S>                                                  <C>             <C>            <C>            <C>               <C>

Balance, December 31, 1996                           $   297         $ 2,354         $ 1,269         $   (21)        $ 3,899

Net income for 1997                                       --              --             324              --             324
      Other comprehensive
              Net change in net
               unrealized holding
               losses on securities                       --              --              --              12              12
    Stock issuance                                         2              31              --              --              33
      Stock redemption                                    --              --             (30)             --             (30)
      Cash dividends                                      --              (1)             --              --              (1)
      Transfer                                            --              47             (47)             --              --
                                                     -------         -------         -------         -------         -------
Balance, December 31, 1997                               299           2,431           1,516              (9)          4,237


Net income for 1998                                       --              --             561              --             561
      Other comprehensive income, net of tax:
              Net change in net
               unrealized holding
               losses on securities                       --              --              --              18              18
    Stock issuance                                        15             213              --              --             228
      Cash dividends                                      --              --             (36)             --             (36)
      Stock redemption                                    (6)            (78)             --              --             (84)
                                                     -------         -------         -------         -------         -------
Balance, December 31, 1998                               308           2,566           2,041               9           4,924

                                                          --              --             639              --             639
Net income for 1999
      Other comprehensive income, net of tax:
              Net change in net
               unrealized holding
               losses on securities                       --              --              --            (153)           (153)
    Stock issuance                                         4              74              --              --              78
      Cash dividends                                      --              --             (37)             --             (37)
      Stock redemption                                   (10)           (190)             --              --            (200)
                                                     -------         -------         -------         -------         -------

Balance, December 31, 1999                           $   302         $ 2,450         $ 2,643         $  (144)        $ 5,251
                                                     =======         =======         =======         =======         =======

</TABLE>

See Accompanying Notes to Consolidated Financial Statements


                                      30
<PAGE>   31


                      VALRICO BANCORP, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                   YEAR ENDED DECEMBER 31,
                                                                             ---------------------------------
                                                                              1999         1998         1997
                                                                             -------     --------     --------
                                                                                       (in thousands)
<S>                                                                          <C>         <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
      Net income                                                             $   639     $    561     $    324
      Adjustments to reconcile net income to net
       cash provided by operating
       activities:
              Provision for loan losses                                          101          210          300
              Depreciation and amortization                                      284          287          248
              Net amortization (accretion) of investment
               security premiums and discounts                                     1          (11)         (13)
              Deferred income taxes                                              (44)        (128)           2
              (Increase) in assets:
                     Accrued interest receivable                                (101)         (10)         (52)
                     Other assets                                                (69)        (107)          (7)
              Increase (decrease) in liabilities:
                     Accounts payable and accrued liabilities                   (315)         412          (82)
                                                                             -------     --------     --------
                            Net cash provided by operating activities            496        1,214          720
                                                                             -------     --------     --------
CASH FLOWS FROM INVESTING ACTIVITIES
      Securities available-for-sale:
              Purchase of securities                                          (1,956)      (3,635)        (501)
              Proceeds from maturities of securities                           1,290        2,400          912
              Proceeds from sale of securities                                    --           --        1,253
      Securities to be held to maturity:                                          --           --           --
              Proceeds from maturities of securities                             215          385          820
      Decrease (increase) in Federal funds sold                                5,847       (6,356)         358
      Net increase in loans                                                   (6,797)      (8,133)     (10,276)
      Purchase of facilities                                                    (373)        (829)      (2,075)
      Proceeds from sale of other real estate                                    101           --           --
                                                                             -------     --------     --------
                            Net cash used in investing activities             (1,673)     (16,168)      (9,509)
                                                                             -------     --------     --------
CASH FLOWS FROM FINANCING ACTIVITIES                                           3,228       15,459        6,171
      Net increase in deposits
      Increase (decrease) in Federal funds purchased                              --       (1,872)         772
      Net increase in securities sold under
         agreements to repurchase                                                 26          147           12
      Proceeds from issuance of long-term debt                                    --        2,000        1,713
      Principal payments on long-term debt                                       (55)         (50)         (41)
      Proceeds from issuance of common stock                                      78          228           33
      Cash dividends paid                                                        (37)         (36)         (30)
      Redemption of common stock                                                (200)         (84)          (2)
      Net borrowings on line-of-credit                                           470          100           --
                                                                             -------     --------     --------
                            Net cash provided by financing activities          3,510       15,892        8,628
                                                                             -------     --------     --------
NET INCREASE (DECREASE) IN CASH                                                2,333          938         (161)

CASH, BEGINNING OF YEAR                                                        4,454        3,516        3,677
                                                                             -------     --------     --------

CASH, END OF YEAR                                                            $ 6,787     $  4,454     $  3,516
                                                                             =======     ========     ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
              Cash paid during the year for interest                         $ 2,033     $  2,132     $  1,857
              Cash paid during the year for income taxes                     $   307     $    101     $    174
              Loans transferred to foreclosed real estate during the year    $    --     $    102     $     --
</TABLE>

See Accompanying Notes to Consolidated Financial Statements




                                       31
<PAGE>   32

                      VALRICO BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES

GENERAL:
   The consolidated financial statements include the accounts and transactions
   of Valrico Bancorp, Inc. (Company) and its wholly-owned subsidiary, Valrico
   State Bank (Bank). All significant intercompany accounts and transactions
   have been eliminated in consolidation.

   The Bank provides a wide range of banking services to individual and
   corporate customers primarily in Hillsborough County, Florida.

   The Company and the Bank are subject to regulations issued by certain
   regulatory agencies and undergo periodic examinations by those agencies.

BASIS OF FINANCIAL STATEMENT PRESENTATION:
   The accounting and reporting policies of the Company conform with generally
   accepted accounting principles and with general practices within the banking
   industry. In preparing the consolidated financial statements, management is
   required to make estimates and assumptions that affect the reported amounts
   of assets and liabilities as of the date of the balance sheet and revenues
   and expenses for the period. Actual results could differ significantly from
   those estimates.

   Material estimates that are particularly susceptible to significant change
   relate to the determination of the allowance for loan losses and the
   valuation of foreclosed assets. Additionally, management has made extensive
   estimates in determining fair values of financial instruments.

   Management believes that the allowance for losses on loans is adequate. While
   management uses available information to recognize losses on loans, including
   independent appraisals for significant properties, future additions to the
   allowance may be necessary based on changes in economic conditions. In
   addition, various regulatory agencies, as an integral part of their
   examination process, periodically review the allowance for losses on loans.
   Such agencies may require the Company to recognize additions to the allowance
   based on their judgments about information available to them at the time of
   their examination.

INVESTMENTS:
   Statement of Financial Accounting Standards No. 115 ("FAS 115"), Accounting
   for Certain Investments in Debt and Equity Securities, sets the standard for
   classification of and accounting for investments in equity securities that
   have readily determinable fair values, and all investments in debt securities
   which are to be classified as held-to-maturity securities, available-for-sale
   securities, or trading securities.

   Debt securities that an enterprise has the positive intent and ability to
   hold to maturity are classified as held-to-maturity securities and reported
   at amortized cost. Debt and equity securities that are bought and held
   principally for the purpose of selling them in the near term are classified
   as trading securities and reported at fair value, with unrealized gains and
   losses included in net income. Debt and equity securities not classified as
   either held-to-maturity securities or trading securities are classified as
   available-for-sale securities and reported at fair value, with unrealized
   gains and losses included as accumulated other comprehensive income in a
   separate component of stockholders' equity.

   The Bank classifies its investments at the purchase date in accordance with
   the above-described guidelines. Premiums or discounts on securities at the
   date of purchase are being amortized or accreted, respectively, over the
   estimated life of the security using a method which approximates the level
   yield method. Gains and losses realized on the disposition of securities are
   based on the specific identification method and are reflected in other
   income.




                                       32
<PAGE>   33

                      VALRICO BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (CONTINUED)

LOANS:
   Loans receivable are stated at unpaid principal balance, less the allowance
   for loan losses and net deferred loan origination fees and costs.

   Interest on loans is accounted for on the accrual basis. Generally, the
   Company's policy is to discontinue the accrual of interest on loans
   delinquent over ninety days unless fully secured and in the process of
   collection. The accrued and unpaid interest is reversed from current income
   and thereafter interest is recognized only to the extent payments are
   received. A non-accrual loan may be restored to accrual basis when interest
   and principal payments are current and prospects for future recovery are no
   longer in doubt.

   Statement of Financial Accounting Standards No. 114 ("FAS 114"), Accounting
   by Creditors for Impairment of a Loan, sets the standard for recognition of
   loan impairment and the measurement methods for certain impaired loans and
   loans whose terms are modified in troubled debt restructurings.

   Under FAS 114, a loan is impaired when it is probable that a creditor will be
   unable to collect the full amount of principal and interest due according to
   the contractual terms of the loan agreement. When a loan is impaired, a
   creditor has a choice of ways to measure the impairment. The measurement of
   impairment may be based on (1) the present value of the expected future cash
   flows of the impaired loan discounted at the loan's original effective
   interest rate, (2) the observable market price of the impaired loan, or (3)
   the fair value of the collateral of a collateral-dependent loan. Creditors
   may select the measurement method on a loan-by-loan basis, except that
   collateral-dependent loans for which foreclosure is probable must be measured
   at the fair value of the collateral. A creditor in a troubled debt
   restructuring involving a restructured loan should measure impairment by
   discounting the total expected future cash flows at the loan's original
   effective rate of interest.

FACILITIES:
   Facilities are stated at cost, less accumulated depreciation and
   amortization. Charges to income for depreciation and amortization are
   computed on the straight-line method over the assets' estimated useful lives.

   When properties are sold or otherwise disposed of, the gain or loss resulting
   from the disposition is credited or charged to income. Expenditures for
   maintenance and repairs are charged against income and renewals and
   betterments are capitalized.

ALLOWANCE FOR LOAN LOSSES:
   The allowance for loan losses is established through a provision for loan
   losses charged to expense. Loans are charged-off against the allowance when
   management believes that the collectibility of principal is unlikely.
   Recoveries of amounts previously charged-off are credited to the allowance.
   The allowance for loan losses is based on management's evaluation of various
   factors including prevailing and anticipated economic conditions,
   diversification and size of the loan portfolio, current financial status and
   credit standing of the borrower, the status and level of nonperforming
   assets, past and expected loan loss experience, adequacy of collateral,
   specific impaired loans and economic conditions. Allowances for impaired
   loans are generally determined based on collateral values or the present
   value of estimated cash flows.

OFF BALANCE SHEET FINANCIAL INSTRUMENTS:
   In the ordinary course of business the Bank has entered into off balance
   sheet financial instruments consisting of commitments to extend credit and
   standby letters of credit. Such financial instruments are recorded in the
   financial statements when they become payable.

INCOME TAXES:
   The Bank accounts for income taxes under the asset and liability method as
   prescribed in FAS No. 109, Accounting for Income Taxes. Deferred tax assets
   and liabilities are recognized for the future tax consequences attributable
   to differences between the financial statement carrying amounts of existing
   assets and liabilities and their respective tax bases and operating loss and
   tax credit carryforwards. Deferred tax assets and liabilities are measured
   using enacted tax rates expected to apply to taxable income in the year in
   which those temporary differences are expected to be recovered or settled.
   The effect on deferred tax assets and liabilities of a change in tax rates is
   recognized in income in the period that includes the enactment date.





                                       33
<PAGE>   34

                      VALRICO BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (CONTINUED)

COMPREHENSIVE INCOME:
   In June 1997, the Financial Accounting Standards Board issued FAS 130,
   Reporting Comprehensive Income. The statement establishes standards for
   reporting and display of comprehensive income and its components in a full
   set of general purpose financial statements. It requires an enterprise to
   classify items of other comprehensive income by their nature and to display
   the accumulated balance of other comprehensive income separately in the
   equity section of a statement of financial position.

   This statement is effective for fiscal years beginning after December 15,
   1997. Reclassification of financial statements for earlier periods provided
   for comparative purposes is required.

   The effect of FAS 130 is not significant to the Company's financial
   statements.

EARNINGS:
   Basic EPS is computed by dividing net income by the weighted average shares
   of common stock outstanding during the year.

STATEMENT OF CASH FLOWS:
   For purposes of reporting cash flows, cash includes cash on hand and amounts
   on deposit in non-interest bearing accounts with other commercial banks.

RECLASSIFICATION OF ACCOUNTS:
   Certain items in the consolidated financial statements for prior years have
   been reclassified to conform to classifications used in the current year.


NOTE B - INVESTMENT SECURITIES

The amortized cost and estimated fair value of investments in securities at
December 31, 1999, are as follows:

<TABLE>
<CAPTION>

                                                                    GROSS           GROSS
                                                   AMORTIZED     UNREALIZED       UNREALIZED        FAIR
                                                      COST          GAINS           LOSSES         VALUE
                                                   ---------     ----------       ----------       ------
                                                                       (in thousands)
  <S>                                              <C>           <C>              <C>              <C>
  Securities available-for-sale:
       U. S. Government agencies                     $  997          $ --          $   23          $  974
       State and municipal                            1,260            --              --           1,260
       Mortgage-backed securities                     3,837            --              52           3,785
       Other                                          1,370            --              94           1,276
                                                     ------          ----          ------          ------

                                                     $7,464          $ --          $  169          $7,295
                                                     ======          ====          ======          ======
  Securities to be held-to-maturity:                 $  554          $ 14          $   --          $  568
       Mortgage-backed securities
         State and municipal                          1,285             5              --           1,290
                                                     ------          ----          ------          ------

                                                     $1,839          $ 19          $   --          $1,858
                                                     ======          ====          ======          ======
</TABLE>




                                       34
<PAGE>   35

                      VALRICO BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

NOTE B - INVESTMENT SECURITIES (CONTINUED)

The amortized cost and estimated fair value of investments in securities at
December 31, 1998, are as follows:

<TABLE>
<CAPTION>

                                                               GROSS         GROSS
                                               AMORTIZED     UNREALIZED     UNREALIZED        FAIR
                                                  COST          GAINS         LOSSES          VALUE
                                               ---------     ----------     ----------       ------
                                                                (in thousands)
    <S>                                        <C>           <C>            <C>              <C>
    Securities available-for-sale:
        U. S. Treasury                          $  502          $ 5          $   --          $  507
        U. S. Government agencies                  500            5              --             505
        Mortgage-backed securities               3,504           14              17           3,501
        Other                                    2,248           22              --           2,270
                                                ------          ---          ------          ------

                                                $6,754          $46          $   17          $6,783
                                                ======          ===          ======          ======
    Securities to be held-to-maturity:          $  765          $ 9          $   --          $  774
        Mortgage-backed securities
        Other                                    1,284           81              --           1,365
                                                ------          ---          ------          ------

                                                $2,049          $90          $   --          $2,139
                                                ======          ===          ======          ======
</TABLE>

The fair value of securities fluctuates during the investment period. No
provision for loss has been made in connection with the decline of fair value
below book value, because the securities are purchased for investment purposes
and the decline is not deemed to be other than temporary. The estimated fair
value of securities is determined on the basis of market quotations. Securities
with amortized cost of approximately $818,000 and $907,000 and market values of
approximately $804,000 and $918,000 were pledged to secure repurchase agreements
and deposit accounts at December 31, 1999 and December 31, 1998, respectively.

There were no security sales during 1999 or 1998.

At December 31, 1995, securities with an amortized cost of approximately
$1,646,000 were transferred to held-to-maturity from available-for-sale due to a
one-time opportunity to reassess security classifications in accordance with
guidelines issued by the FASB. These securities had a net unrealized loss of
$10,000 at December 31, 1999.

The cost and estimated fair value of debt securities at December 31, 1999, by
contractual maturities, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>

                                            SECURITIES                     SECURITIES TO BE
                                        AVAILABLE-FOR-SALE                 HELD-TO-MATURITY
                                      ------------------------         -----------------------
                                      AMORTIZED          FAIR          AMORTIZED         FAIR
                                         COST            VALUE           COST            VALUE
                                      ---------         ------         ---------        ------
                                                            (in thousands)
    <S>                               <C>               <C>            <C>              <C>
    Due in one year or less             $   22          $   22          $   --          $   --
    Due from one to five years           1,742           1,707             359             361
    Due from five to ten years           2,666           2,608             517             522
    Due after ten years                  3,034           2,958             963             975
                                        ------          ------          ------          ------

                                        $7,464          $7,295          $1,839          $1,858
                                        ======          ======          ======          ======
</TABLE>




                                       35
<PAGE>   36

                      VALRICO BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

NOTE C - LOANS

The loan portfolio is classified as follows:

<TABLE>
<CAPTION>

                                                         DECEMBER 31,
                                                 ---------------------------
                                                   1999                1998
                                                 --------           --------
                                                        (in thousands)
    <S>                                          <C>                <C>
    Commercial and agricultural                  $ 49,039           $ 44,640
    Real estate                                     4,651              3,757
    Installment and other loans                     9,549              8,139
                                                 --------           --------
    Total loans                                    63,239             56,536
        Less, unearned income                         (76)               (66)
        Less, allowance for loan losses              (778)              (776)
                                                 --------           --------

                                                 $ 62,385           $ 55,694
                                                 ========           ========
</TABLE>

The following is a summary of the transactions in the allowance for loan losses:

<TABLE>
<CAPTION>

                                                             YEAR ENDED DECEMBER 31,
                                                     -------------------------------------
                                                      1999            1998            1997
                                                     -----           -----           -----
                                                                  (in thousands)
    <S>                                              <C>             <C>             <C>
    Balance, beginning of year                       $ 776           $ 576           $ 500
    Provision charged to operating expenses            101             210             300
    Loans charged-off                                 (102)            (24)           (263)
    Recoveries                                           3              14              39
                                                     -----           -----           -----

                                                     $ 778           $ 776           $ 576
                                                     =====           =====           =====
</TABLE>

Loans on which interest was not being accrued totaled $163,000 at December 31,
1998. Had interest been accrued on these non-accrual loans at originally
contracted rates, interest income (before income taxes) would have been
increased by approximately $9,000 for 1998. During 1999 there were no loans on
which interest was not being accrued.

A loan is considered impaired when it is probable that the Bank will be unable
to collect all amounts due according to the contractual terms of the agreement.
At December 31, 1999 and December 31, 1998, the Bank has classified loans in the
amounts of $270,000 and $189,000 as impaired loans, respectively. The allowance
for loan losses includes amounts applicable to impaired loans. These allowances
are not significant to the Bank's financial statements.

NOTE D - FACILITIES

Facilities are summarized as follows:

<TABLE>
<CAPTION>

                                                                    ACCUMULATED                        ESTIMATED
                                                                   DEPRECIATION &      NET BOOK         USEFUL
                                                    COST            AMORTIZATION         VALUE           LIVES
                                                  --------         --------------      --------      ------------
    <S>                                           <C>              <C>                 <C>           <C>
    DECEMBER 31, 1999                                              (in thousands)
    Land                                          $  1,060             $   --           $ 1,060           N/A
    Building                                         1,828                144             1,684      39 1/2 years
    Leasehold improvements                             602                284               318      3 - 15 years
    Furniture, fixtures and equipment                1,721              1,279               442      2 - 15 years
                                                  --------             ------           -------

                                                  $  5,211             $1,707           $ 3,504
                                                  ========             ======           =======
</TABLE>




                                       36
<PAGE>   37

                      VALRICO BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

NOTE D - FACILITIES (CONTINUED)

<TABLE>
<CAPTION>

                                                                    ACCUMULATED                        ESTIMATED
                                                                   DEPRECIATION &      NET BOOK         USEFUL
                                                    COST            AMORTIZATION         VALUE           LIVES
                                                  --------         --------------      --------      ------------
   <S>                                            <C>              <C>                 <C>           <C>
   DECEMBER 31, 1999                                              (in thousands)
   Land                                           $  1,060             $   --           $ 1,060           N/A
   Building                                          1,714                 87             1,627      39 1/2 years
   Leasehold improvements                              603                252               351      3 - 15 years
   Furniture, fixtures and equipment                 1,526              1,159               367      2 - 15 years
                                                  --------             ------           -------
                                                  $  4,903             $1,498           $ 3,405
                                                  ========             ======           =======
</TABLE>

Other expenses for the years ended December 31, 1999, 1998 and 1997, included
depreciation and amortization of facilities of $274,000, $277,000, and $238,000,
respectively.

NOTE E - TIME DEPOSITS

Time deposits at December 31, 1999 totaled $29,869,000. Maturities (in
thousands) of such deposits are as follows:

<TABLE>
<CAPTION>

            Year Ending December 31
            <S>                                      <C>
                      2000                           $ 23,986
                      2001                              2,643
                      2002                              1,397
                      2003                              1,458
                      2004                                383
</TABLE>

NOTE F - LINE-OF-CREDIT

The Company entered into an open end loan agreement with Independent Banker's
Bank of Florida which provides for maximum borrowings of $1,000,000 at the prime
interest rate. The security for the loan agreement consists of the Bank's common
stock and a security interest in other Company assets.

At December 31, 1999, the outstanding balance was $970,000. Interest expense for
the year ended December 31, 1999 was $68,000.

NOTE G - LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                                                             DECEMBER 31,
                                                                                       -----------------------
                                                                                         1999            1998
                                                                                       -------         -------
                                                                                            (in thousands)
   <S>                                                                                 <C>             <C>
   Note payable to Independent Banker's Bank of Florida, principal and
     interest of $13,000, payable monthly at 8.5% for the first year and
     adjustable each year based on the U. S. Treasury Note three-year
     index; due on January 14, 2012. Secured by real estate.                           $ 1,168         $ 1,222
   Note payable to the Federal Home Loan Bank of Atlanta, interest payable
     quarterly at 5.51%, principal due March 26, 2008. The loan is callable
     as of March 26, 2003 and may be prepaid. Collateralized by mortgage
     loans and Federal Home Loan Bank stock.                                             2,000           2,000
                                                                                       -------         -------
                                                                                         3,168           3,222
       Less: current portion                                                               (58)            (53)
                                                                                       -------         -------
       Long-term debt
                                                                                       $ 3,110         $ 3,169
                                                                                       =======         =======
</TABLE>




                                       37
<PAGE>   38

                      VALRICO BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

NOTE G - LONG-TERM DEBT (CONTINUED)

Estimated maturities (in thousands) on long-term debt are as follows:

<TABLE>

                   <S>                           <C>
                   2001                          $     85
                   2002                                79
                   2003                                72
                   2004                                67
                   Thereafter                       2,807
                                                 --------
                                                 $  3,110
                                                 ========
</TABLE>

Interest expense was $210,721 and $189,608 for the years ended December 31, 1999
and December 31, 1998.

NOTE H - STOCK OPTION PLAN

The Company adopted the 1998 Stock Option Plan on December 15, 1998, replacing
its previous stock option plan. All options under the old plan have been
terminated. Under the new plan 65,000 shares of the Company's common stock have
been reserved to grant to officers, directors and other key personnel of the
Bank. Option prices per share are set by a committee of the Board of Directors
at the time of the grant, but the price cannot be less than the fair market
value of the stock at the date of the grant. The options are generally
nontransferable and expire following termination of employment with the Bank,
except in the event of death or disability.

At December 31, 1998, options for 59,910 shares had been granted with an
exercise price of $16 per share. All such options expire December 14, 2008. At
December 31, 1999, options on 5,090 shares remain available for grant.

The Company accounts for these options based upon APB Opinion No. 25.
Accordingly, no compensation cost has been recognized for its stock options. Had
the compensation cost been determined based upon FAS Opinion No. 123, the
Company's net income would have been reduced approximately $38,000 for 1999 and
$152,000 for 1998.

NOTE I - EMPLOYEE BENEFIT PLANS

The Bank has an Employee Stock Ownership Plan containing Internal Revenue Code
Section 401(k) provisions. The Plan became effective January 1, 1998 and is for
the benefit of employees who have completed six months of service and attained
age 18. The Plan provides for three types of Company contributions:

     (1)  Basic contributions - discretionary contribution made for all
          non-highly compensated participants in order to satisfy the
          nondiscrimination requirements of the Internal Revenue Code.

     (2)  Matching contribution - the Bank matches 25% of salary reduction
          contributions up to 6% of compensation.

     (3)  Optional contributions - additional discretionary contribution made by
          the Bank allocated to the accounts of participants on the basis of
          total relative compensation.

The Bank contributed to the Plan, $11,551 in 1999 and $7,980 in 1998.




                                       38
<PAGE>   39

                      VALRICO BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

NOTE J - REGULATORY CAPITAL MATTERS

The Federal Reserve Board and other bank regulatory agencies have adopted
risk-based capital guidelines for banks and bank holding companies. The main
objectives of the risk-based capital framework are to provide a more consistent
system for comparing capital positions of banking organizations and to take into
account the different risks among banking organizations' assets, liabilities and
off-balance sheet items. Bank regulatory agencies have supplemented the
risk-based capital standard with a leverage ratio for Tier I capital to total
reported assets.

Failure to meet the capital adequacy guidelines and the framework for prompt
corrective actions could initiate actions by the regulatory agencies which could
have a material effect on the financial statements.

As of December 31, 1999, the most recent notification from the FDIC, the Bank
was categorized as well capitalized under the regulatory framework for prompt
corrective action. To remain categorized as well capitalized, it will have to
maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios
as disclosed in the table below. There are no conditions or events since the
most recent notification that management believes have changed the prompt
corrective action category.

<TABLE>
<CAPTION>

                                                                                          TO BE WELL CAPITALIZED
                                                                                               UNDER PROMPT
                                                                     FOR CAPITAL            CORRECTIVE ACTION
                                             ACTUAL              ADEQUACY PURPOSES               PROVISIONS
                                     AMOUNT         RATIO       >AMOUNT       >RATIO        >AMOUNT      >RATIO
                                                                -             -             -            -
                                     ------         -----       -------       ------        -------      ------
                                                               (dollars in thousands)
<S>                                  <C>            <C>         <C>           <C>           <C>          <C>
As of December 31, 1999:
 Total risk-based capital
    (To risk-weighted assets)        $6,608         9.77%        $5,426        8.00%         $6,783      10.00%
  Tier I capital
    (To risk-weighted assets)        $5,830         8.62%        $2,713        4.00%         $4,070       6.00%
  Tier I capital
    (To adjusted total assets)       $5,830         6.82%        $3,418        4.00%         $4,272       5.00%

As of December 31, 1998:
 Total risk-based capital
    (To risk-weighted assets)        $5,615         9.14%        $4,915        8.00%         $6,144      10.00%
  Tier I capital
    (To risk-weighted assets)        $4,847         7.89%        $2,458        4.00%         $3,686       6.00%
  Tier I capital
    (To adjusted total assets)       $4,847         6.60%        $2,939        4.00%         $3,674       5.00%
</TABLE>

NOTE K - OPERATING LEASES

The Bank leases two branch locations. One branch is leased from a director of
the Bank. This lease expires March 31, 2000, and provided for annual rentals of
$42,000. The Bank has the option to renew the lease for three additional
three-year terms at rentals to be negotiated at the time of the renewal. The
second branch is located in Wal-Mart. This lease provides for a monthly rental
of $2,083 for five years. The Bank has the option to renew the lease for two
additional five year terms with annual rentals of $31,250 and $39,062
respectively. Rental expense under said leases was $66,998, $66,996, and $64,163
for each of the years ended December 31, 1999, 1998 and 1997, respectively.




                                       39
<PAGE>   40

                      VALRICO BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

NOTE K - OPERATING LEASES (CONTINUED)

These leases are accounted for as operating leases.

The future minimum rental commitment for said leases are as follows:

<TABLE>
<S>                                                         <C>

2000                                                        $  36,000
2001                                                        $  25,000
2002                                                        $  15,000

</TABLE>

NOTE L - DEFERRED COMPENSATION AGREEMENTS

The Bank entered into deferred compensation agreements with certain executive
officers. The agreements provide for a flat annual retirement benefit at the
time the employee participates in the agreement. The benefit may be increased by
a cost of living adjustment annually and is to be paid for 15 years. Provisions
under these agreements for 1999, 1998, and 1997 were $28,819, $4,741, and
$7,326, respectively.

NOTE M - NON-INTEREST OPERATING EXPENSES

Other expenses for 1999, 1998 and 1997, were as follows:

<TABLE>
<CAPTION>


                                                                 YEAR ENDED DECEMBER 31,
                                                              ----------------------------
                                                               1999        1998       1997
                                                              ------      ------     -----
                                                                     (in thousands)
   <S>                                                        <C>         <C>        <C>

   Advertising and public relations                           $   99      $  104     $  97
   Professional fees                                              77          73        94
   Postage                                                        75          64        53
   Taxes                                                         108          87       104
   Insurance                                                      93          74        63
   Telephone                                                      62          36        38
   Other miscellaneous expenses                                  339         304       254
                                                              ------      ------     -----
                                                              $  853      $  742     $ 703
                                                              ======      ======     =====

</TABLE>

NOTE N - INCOME TAXES

The provision for income taxes is summarized as follows:

<TABLE>
<CAPTION>

                                                        YEAR ENDED DECEMBER 31,
                                                 ------------------------------------
                                                  1999            1998           1997
                                                 -----           -----           ----
                                                             (in thousands)
    <S>                                          <C>             <C>             <C>

    Current income taxes:
        Federal                                  $ 331           $ 381           $ 86
        State                                       37              65             12
                                                 -----           -----           ----
             Total current income taxes            368             446             98
    Deferred income taxes (credit)                 (44)           (128)             2
                                                 -----           -----           ----

             Income tax provision                $ 324           $ 318           $100
                                                 =====           =====           ====

</TABLE>




                                       40
<PAGE>   41

                      VALRICO BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

NOTE N - INCOME TAXES (CONTINUED)

A reconciliation of the income tax computed at the Federal statutory rate of 34%
and the income tax provision shown on the statement of income follows:

<TABLE>
<CAPTION>

                                                                    YEAR ENDED DECEMBER 31,
                                                              -------------------------------------
                                                               1999           1998            1997
                                                              -----           -----           -----
                                                                         (in thousands)
    <S>                                                       <C>             <C>             <C>
    Tax computed at statutory rate                            $ 327           $ 299           $ 144
    Increase (decrease) resulting from:                         (32)            (15)            (30)
        Tax exempt income
        State income tax, net of Federal tax benefit             32              30              11
        Other                                                    (3)              4             (25)
                                                              -----           -----           -----

             Income tax provision                             $ 324           $ 318           $ 100
                                                              =====           =====           =====
</TABLE>

The components of the deferred income tax asset included in other assets are as
follows:

<TABLE>
<CAPTION>

                                                  DECEMBER 31,
                                             ---------------------
                                              1999            1998
                                             -----           -----
                                                 (in thousands)
    <S>                                      <C>             <C>
    Deferred tax liability:
        Federal                              $ (72)          $ (66)
        State                                  (13)            (11)
                                             -----           -----
                                               (85)            (77)
                                             -----           -----
    Deferred tax asset:
        Federal                                288             266
        State                                   50              46
                                             -----           -----
                                               338             312
                                             -----           -----

             Net deferred tax asset          $ 253           $ 235
                                             =====           =====
</TABLE>

The tax effects of each type of significant item that gave rise to deferred
taxes are:

<TABLE>
<CAPTION>

                                                         DECEMBER 31,
                                                    ---------------------
                                                     1999           1998
                                                    -----           -----
                                                        (n thousands)
    <S>                                             <C>             <C>
    Accumulated other comprehensive income          $ (31)          $  (6)
    Accretion income                                  (23)            (23)
    Depreciation                                       (5)            (11)
    Cash to accrual adjustment                        (21)            (32)
    Deferred loan fees                                 28              24
    Allowance for loan losses                         234             222
    Deferred compensation                              19               9
    Other item                                         52              52
                                                    -----           -----

             Net deferred tax asset                 $ 253           $ 235
                                                    =====           =====
</TABLE>




                                       41
<PAGE>   42

                      VALRICO BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

NOTE O - COMMITMENTS AND CONTINGENCIES

The financial statements do not reflect various commitments and contingent
liabilities which arise in the normal course of business and which involve
elements of credit risk, interest rate risk and liquidity risk. These
commitments and contingent liabilities are commitments to extend credit and
standby letters of credit. A summary of these commitments and contingent
liabilities follows:

<TABLE>
<CAPTION>

                                                      DECEMBER 31,
                                                ----------------------
                                                 1999            1998
                                                ------          ------
                                                    (in thousands)
    <S>                                         <C>             <C>

    Commitments to extend credit                $9,901          $5,188
    Standby letters of credit                   $  551          $  292
</TABLE>

The Bank uses the same credit policies in making commitments to extend credit
and in issuing standby letters of credit as it does for extensions of credit
shown on the balance sheets.

The Bank is party to litigation, outstanding commitments and other contingent
liabilities arising in the normal course of business. In the opinion of
management, the resolution of such matters will not have a material effect on
the financial statements.

The Bank has a $5,000,000 unused line-of-credit with Federal Home Loan Bank and
a $1,000,000 unused line-of-credit with Independent Banker's Bank of Florida for
the purchase of Federal funds.

NOTE P - CONCENTRATIONS OF CREDIT

Substantially all of the Bank's loans, commitments and standby letters of credit
have been granted to customers in Hillsborough County, Florida. The
concentrations of credit by type of loan are set forth in Note C. The
distribution of commitments to extend credit approximates the distribution of
loans outstanding. Standby letters of credit were granted primarily to
commercial borrowers.

At December 31, 1999, the Bank had $1,425,000 in excess of FDIC deposit
insurance in non-interest bearing accounts with other financial institutions.

NOTE Q - RELATED PARTIES

Certain officers, directors, employees of the Bank, and certain corporations and
individuals related to such persons have deposits and indebtedness, in the form
of loans, as customers. The total of such deposits at December 31, 1999, was
$3,448,000. Total loans to such persons and their affiliates amounted to
$3,464,000 and $3,629,000 at December 31, 1999 and 1998, respectively. During
1999, originations of related party loans totaled $4,330,000 and payments on
related party loans totaled $4,495,000.

NOTE R - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:

   CASH AND SHORT-TERM INVESTMENTS:
       For those short-term instruments, the carrying amount is a reasonable
       estimate of fair value.




                                       42
<PAGE>   43

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      VALRICO BANCORP, INC. AND SUBSIDIARY
                                DECEMBER 31, 1999

NOTE R - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

   INVESTMENT SECURITIES:
       For securities held as investments, fair value equals quoted market
       price, if available. If a quoted market price is not available, fair
       value is estimated using quoted market prices for similar securities.

   LOANS RECEIVABLE:
       For loans subject to repricing and loans intended for sale within six
       months, fair value is estimated at the carrying amount plus accrued
       interest.

       The fair value of other types of loans is estimated by discounting the
       future cash flows using the current rates at which similar loans would be
       made to borrowers with similar credit ratings and for the same remaining
       maturities.

   DEPOSIT LIABILITIES:
       The fair value of demand deposits, savings accounts, and certain money
       market deposits is the amount payable on demand at the reporting date.
       The fair value of long-term fixed maturity certificates of deposit is
       estimated using the rates currently offered for deposits of similar
       remaining maturities.

   SHORT-TERM DEBT:
       For short-term debt, including accounts and demand notes payable, the
       carrying amount is a reasonable estimate of fair value.

   LONG-TERM DEBT:
       The fair value of long-term debt is estimated by discounting the future
       cash flows using the current rates for similar debt.

The estimated fair values of the Bank's financial instruments at December 31,
1999, are as follows:

<TABLE>
<CAPTION>

                                                         CARRYING              FAIR
                                                          AMOUNT               VALUE
                                                        ----------          ----------
                                                                (in thousands)
    <S>                                                 <C>                 <C>
    FINANCIAL ASSETS                                    $    7,296          $    7,296
        Cash and short-term investments
        Investment securities                                9,134               9,153
        Loans                                               62,385              62,650
                                                        ----------          ----------

             Total assets valued                        $   78,815          $   79,099
                                                        ==========          ==========
    FINANCIAL LIABILITIES                               $   73,733          $   73,675
        Deposits
        Short-term borrowings                                1,642               1,642
        Long-term debt                                       3,168               3,006
                                                        ----------          ----------

                                                        $   78,543          $   78,323
                                                        ==========          ==========
</TABLE>




                                       43
<PAGE>   44

                      VALRICO BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

NOTE S - PARENT COMPANY FINANCIAL INFORMATION

Presented below are condensed financial statements for Valrico Bancorp, Inc.
(parent only):

<TABLE>
<CAPTION>

                                                                        1999            1998
                                                                       ------          ------
                                                                           (in thousands)
   <S>                                                                 <C>             <C>
   CONDENSED BALANCE SHEETS AS OF DECEMBER 31:

   ASSETS
        Cash                                                           $   38          $  110
        Investment in subsidiary bank, net                              5,687           4,859
        Facilities, net                                                 1,620           1,649
        Other assets                                                       43              30
                                                                       ------          ------

                   Total assets                                        $7,388          $6,648
                                                                       ======          ======
    LIABILITIES AND STOCKHOLDERS' EQUITY
        Liabilities:
         Accrued liabilities                                           $   --          $    2
         Line-of-credit                                                   970             500
         Note payable                                                   1,167           1,222
                                                                       ------          ------
                   Total liabilities                                    2,137           1,724
        Stockholders' equity                                            5,251           4,924
                                                                       ------          ------

                   Total liabilities and stockholders' equity          $7,388          $6,648
                                                                       ======          ======
</TABLE>

<TABLE>
<CAPTION>

                                                                       1999                  1998
                                                                    ----------           ----------
                                                                           (in thousands)
    <S>                                                             <C>                  <C>
    CONDENSED STATEMENTS OF OPERATIONS AND STOCKHOLDERS' EQUITY
    YEAR ENDED DECEMBER 31:

        Equity in net income of subsidiary bank:
          Undistributed                                             $      682           $      579
        Rent income                                                        204                  204
        Other income                                                        26                   11
        Interest expense                                                  (168)                (139)
        Other expenses                                                    (105)                 (94)
                                                                    ----------           ----------
                   Net income                                              639                  561

    STOCKHOLDERS' EQUITY
        Beginning of year                                                4,924                4,237
        Dividends paid                                                     (37)                 (36)
        Stock issuance                                                      78                  228
        Stock redemption                                                  (200)                 (84)
        Net change in unrealized holding losses
         on securities in subsidiary bank                                 (153)                  18
                                                                    ----------           ----------

        End of year                                                 $    5,251           $    4,924
                                                                    ==========           ==========
</TABLE>




                                       44
<PAGE>   45

                      VALRICO BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

NOTE S - PARENT COMPANY FINANCIAL INFORMATION (CONTINUED)

<TABLE>
<CAPTION>

                                                                                       1999            1998
                                                                                      -----           -----
                                                                                         (in thousands)
    <S>                                                                               <C>             <C>
    CONDENSED STATEMENTS OF CASH FLOWS
    YEAR ENDED DECEMBER 31:

    CASH FLOWS FROM OPERATING ACTIVITIES
        Net income                                                                    $ 639           $ 561
        Adjustment to reconcile net income to net
        cash provided by operating activities:
             Equity in undistributed earnings of subsidiary                            (682)           (579)
             Depreciation                                                                29              29
             Amortization                                                                10              10
        Increase in other assets                                                        (15)            (11)
        Increase (decrease) in accounts payable and accrued liabilities                 (10)              1
                                                                                      -----           -----

                  Net cash provided (used) by operating activities                      (29)             11
                                                                                      -----           -----
    CASH FLOWS FROM INVESTING ACTIVITIES
        Additional investment in subsidiary                                            (299)           (100)
                                                                                      -----           -----

                  Net cash used in investing activities                                (299)           (100)
                                                                                      -----           -----
    CASH FLOWS FROM FINANCING ACTIVITIES
        Issuance of common stock                                                         78             228
        Redemption of common stock                                                     (200)            (84)
        Cash dividend on common stock                                                   (37)            (36)
        Principal payments on long-term debt                                            (55)            (50)
        Net increase in short-term borrowings                                           470             100
                                                                                      -----           -----

                  Net cash provided by financing activities                             256             158
                                                                                      -----           -----

    NET INCREASE (DECREASE) IN CASH                                                     (72)             69

    CASH AT BEGINNING OF YEAR                                                           110              41
                                                                                      -----           -----

    CASH AT END OF YEAR                                                               $  38           $ 110
                                                                                      =====           =====
</TABLE>




                                       45
<PAGE>   46

                                   SCHEDULE II
                LOANS TO OFFICERS, DIRECTORS, PRINCIPAL SECURITY
              HOLDERS, AND ANY ASSOCIATES OF THE FOREGOING PERSONS

Year ended December 31, 1998

<TABLE>
<CAPTION>
                                       BALANCE                                                                       BALANCE
                                      BEGINNING                                      REDUCTIONS                      END OF
        NAME OF                       OF PERIOD                              AMOUNTS             AMOUNTS             PERIOD
       BORROWER                        1-01-99           ADDITIONS          COLLECTED          CHARGED OFF          12-31-99
----------------------              ------------       ------------       -------------        -------------     -------------
<S>                                 <C>                <C>                <C>                  <C>               <C>
LeVaughn Amerson                    $     77,882       $     90,882       $     168,764        $           0     $           0
C. Dennis Carlton                         83,786                  0              83,786                    0                 0
Carlton & Carlton                            482                  0                 482                    0                 0
C. Dennis Carlton (1)                          0            125,000              25,000                    0           100,000
C. Dennis Carlton (2)                     30,831                  0               2,510                    0            28,321
C. Dennis Carlton (3)                          0            240,000                   0                    0           240,000
Carlton, Sr. (4)                          96,089              3,695              47,390                    0            52,394
Carlton & Carlton (5)                     17,496                  0               4,855                    0            12,641
C. Dennis Carlton (6)                          0             13,104               1,576                    0            11,528
C. Dennis Carlton (7)                     20,275                  0                 696                    0            19,579
C. Dennis Carlton (8)                    254,263                  0              76,178                    0           178,085
C. Dennis Carlton (9)                     80,000                  0              34,000                    0            46,000
C. Dennis Carlton (10)                    48,648                  0              24,324                    0            24,324
Douglas Holmberg (11)                    316,126          1,300,000           1,216,126                    0           400,000
Douglas Holmberg (12)                     76,131                  0               1,488                    0            74,643
Douglas Holmberg (13)                    250,000            700,000             700,000                    0           250,000
C. Dennis Carlton (14)                         0             20,129               1,389                    0            18,740
C. Dennis Carlton (15)                         0             13,104               1,576                    0         3,452,834

5 Directors & Officers                 2,277,810          1,824,142           2,105,372                    0         1,996,581

                                    $  3,629,817       $  4,330,056       $   4,495,511       $            0      $   3,464,362
                                    ============       ============       =============       ==============      =============
</TABLE>

NOTES

<TABLE>
<CAPTION>

(1) C. DENNIS CARLTON                                            (2) C. DENNIS CARLTON
---------------------                                            ---------------------
         <S>              <C>                                    <C>                       <C>
         Original date:   February 18, 1999                              Original date:    June 28, 1995
         Maturity:        February 19, 2001                              Maturity:         June 18, 1999
         Rate:            Prime + 1                                      Rate:             9.5%
         Terms:           Interest Monthly                               Terms:            Principal & Interest
                                                                                           Monthly.

         Collateral:      Unsecured                                      Collateral:       First Mortgage

(3) CARLTON & CARLTON                                            (4) C. DENNIS CARLTON
---------------------                                            ---------------------
         Original date:   September 13, 1999                             Original date:    October 4, 1991
         Maturity:        April 3, 2000                                  Maturity:         October 4, 2001
         Rate:            Prime + 1                                      Rate:             Prime plus 1
         Terms:           Interest Monthly                               Terms:            Principal & Interest
                                                                                           semi-annually

         Collateral:      Real Estate                                    Collateral:       First Mortgage

(5) CARLTON & CARLTON                                            (6) C. DENNIS CARLTON
---------------------                                            ---------------------
         Original date:   July 25, 1997                                  Original date:    June 28, 1999
         Maturity:        August 5, 2002                                 Maturity:         December 28, 2002
         Rate:            8.9%                                           Rate:             9.5%
         Terms:           Principal & Interest                           Terms:            Principle & Interest
                          monthly                                                          Monthly

         Collateral:      Automobile                                     Collateral:       Automobile

(7) C. DENNIS CARLTON                                            (8) C. DENNIS CARLTON
---------------------                                            ---------------------
         Original date:   June 24, 1998                                  Original date:    September 10, 1998
         Maturity:        June 24, 2001                                  Maturity:         September 10, 2001
         Rate:            8.25%                                          Rate:             Prime plus 1
         Terms:           Principal & Interest                           Terms:            Principal & Interest
                          monthly                                                          monthly

         Collateral:      Automobile                                     Collateral:       Accounts Receivable / Inventory
</TABLE>




                                       46
<PAGE>   47

<TABLE>
<CAPTION>

(9) C. DENNIS CARLTON                                            (10) C. DENNIS CARLTON
---------------------                                            ----------------------
         <S>              <C>                                    <C>                       <C>
         Original date:   February 20, 1998                              Original date:    February 19, 1997
         Maturity:        February 18, 2000                              Maturity:         February 19, 2000
         Rate:            Prime plus 1                                   Rate:             Prime plus 1
         Terms:           Principal annually                             Terms:            Principal annually
                          Interest quarterly                                               Interest quarterly

         Collateral:      Real Estate                                    Collateral:       Accounts Receivable / Inventory

(11) HOLMBERG FARMS                                              (12) HOLMBERG FARMS
-------------------                                              -------------------
         Original date:   December 30, 1997                              Original date:    September 10, 1998
         Maturity:        December 29, 1998                              Maturity:         September 10, 1999
         Rate:            Prime plus 1                                   Rate:             Prime plus 1
         Terms:           Interest monthly                               Terms:            Principal annually
                                                                                           Interest monthly

         Collateral:      Agriculture equipment                          Collateral:       Unsecured

(13) HOLMBERG FARMS                                              (14) C. DENNIS CARLTON
-------------------                                              ----------------------
         Original date:   May 20, 1998                                   Original date:    September 27, 1999
         Maturity:        May 19, 2003                                   Maturity:         October 5, 2002
         Rate:            8.9%                                           Rate:             9.75%
         Terms:           Principle & Interest monthly                   Terms:            Principle & Interest
                                                                                           Monthly

         Collateral:      Automobile                                     Collateral:       Automobile

(15) C. DENNIS CARLTON
         Original date:   October 1, 1999
         Maturity:        October 1, 2000
         Rate:            Prime +0.75%
         Terms:           Interest Monthly

         Collateral:      Unsecured

</TABLE>

                (Remainder of this page intentionally left blank)





















                                       47
<PAGE>   48

                                   SCHEDULE II
                LOANS TO OFFICERS, DIRECTORS, PRINCIPAL SECURITY
              HOLDERS, AND ANY ASSOCIATES OF THE FOREGOING PERSONS

Year ended December 31, 1998

<TABLE>
<CAPTION>

                              BALANCE                               REDUCTIONS                BALANCE
                             BEGINNING                      ---------------------------       END OF
NAME OF                      OF PERIOD                        AMOUNTS         AMOUNTS         PERIOD
BORROWER                      1-01-98        ADDITIONS       COLLECTED      CHARGED OFF      12-31-98
--------                    ----------      ----------      ----------      -----------     ----------
<S>                         <C>             <C>             <C>             <C>             <C>
LeVaughn Amerson            $   60,882      $  122,000      $  105,000      $        0      $   77,882
C. Dennis Carlton               33,521               0           2,690               0          30,831
Carlton & Carlton                6,770               0           6,289               0             482
Carlton, Sr.                   103,481               0           7,392               0          96,089
Carlton & Carlton               18,930               0          18,930               0               0
Carlton & Carlton               21,802               0           4,305               0          17,496
C. Dennis Carlton                    0         108,750          24,964               0          83,786
C. Dennis Carlton                    0          23,850           3,576               0          20,275
C. Dennis Carlton                    0         278,000          23,737               0         254,263
C. Dennis Carlton                    0          80,000               0               0          80,000
C. Dennis Carlton                    0          72,972          24,324               0          48,648
Holmberg Farms                 200,000               0         200,000               0               0
Holmberg Farms                   1,698         654,906         340,478               0         316,126
Holmberg Farms                       0          84,161           8,030               0          76,131
Holmberg Farms                       0         250,000               0               0         250,000

5 Directors & Officers       1,943,899       2,224,162       1,890,674               0       2,277,386
                            ----------      ----------      ----------      ----------      ----------

Totals                      $2,390,983      $3,898,801      $2,660,389      $        0      $3,629,395
                            ==========      ==========      ==========      ==========      ==========
</TABLE>

                                   SCHEDULE II
                LOANS TO OFFICERS, DIRECTORS, PRINCIPAL SECURITY
              HOLDERS, AND ANY ASSOCIATES OF THE FOREGOING PERSONS

Year ended December 31, 1997

<TABLE>
<CAPTION>

                              BALANCE                               REDUCTIONS                BALANCE
                             BEGINNING                      ---------------------------       END OF
NAME OF                      OF PERIOD                        AMOUNTS         AMOUNTS         PERIOD
BORROWER                      1-01-97        ADDITIONS       COLLECTED      CHARGED OFF      12-31-97
--------                    ----------      ----------      ----------      -----------     ----------
<S>                         <C>             <C>             <C>             <C>             <C>
LeVaughn Amerson            $        0      $  220,118      $  159,236      $        0      $   60,882
C. Dennis Carlton              154,000               0         154,000               0               0
C. Dennis Carlton               35,990               0           2,469               0          33,521
C. Dennis Carlton               50,000               0          50,000               0               0
Carlton & Carlton               11,332               0           4,562               0           6,770
Carlton, Sr.                   110,871               0           7,390               0         103,481
Carlton & Carlton                    0          24,565           5,635               0          18,930
Carlton & Carlton                    0          22,976           1,174               0          21,802
Holmberg Farms                       0         200,000               0               0         200,000
Holmberg Farms                       0           1,698               0               0           1,698

5 Directors & Officers       2,463,721       1,030,932       1,550,754               0       1,943,899
                            ----------      ----------      ----------      ----------      ----------

Totals                      $2,825,914      $1,500,289      $1,935,220      $        0      $2,390,983
                            ==========      ==========      ==========      ==========      ==========
</TABLE>




                                       48
<PAGE>   49

SCHEDULE III

                      LOANS AND LEASE FINANCING RECEIVABLES
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                    YEAR ENDED DECEMBER 31,                                        1999               1998                  1997
                                                                                 --------          ---------             ---------
<S>                                                                              <C>               <C>                   <C>
1.  Loans secured by real estate:

    a.   Construction and land development                                       $  6,761          $   6,470             $  4,352
    b.   Secured by farmland (including farm residential and other
         improvements)                                                              4,582              2,780                3,505
    c.   Secured by 1 - 4 family residential properties:
         (1)  Revolving, open-end loans secured by 1 - 4 family residential
              properties and extended under lines of credit                             0                  0                    0
         (2) All other loans secured by 1-4 family residential properties:
              (a) Secured by first liens                                            7,733              6,724                7,119
              (b) Secured by junior liens                                             369                550                  699
    d.   Secured by multifamily (5 or more) residential properties                    381                346                  851
    e.   Secured by non-farm nonresidential properties                             20,222             15,226               13,507

2.  Loans to depository institutions                                                    0                  0                    0

3.  Loans to finance agricultural production and other loans to farmers             8,198              9,406                7,300

4.  Commercial and industrial loans                                                 7,373              8,768                6,136

5.  Acceptance of other banks                                                           0                  0                    0

6.  Loans to individuals for household, family, and other personal
    expenditures (i.e., consumer loans) (includes purchase paper):
    a.   Credit cards and related plans (includes check credit and other
         revolving credit plans)                                                      543                402                  375
    b.   Other (includes single payment, installment, and all student loans)        6,710              5,535                4,485

7.  Obligations (other than securities and leases) of states and political
    subdivisions in the U. S. (includes non-rated industrial development
    obligations:
    a.   Taxable obligations                                                            0                  0                    0
    b.   Tax-exempt obligations                                                         0                  0                    0

8.  All other loans (exclude consumer loans)                                          368                327                  161

9.  Lease financing receivables (net of unearned income)                                0                  0                    0

10. LESS: Any unearned income on loans reflected in items 1 - 8 above                 (77)               (65)                 (41)
                                                                                 --------          ---------             --------

11. Total loans and leases, net of unearned income (sum of items 1 through 9
    minus item 10)                                                               $ 63,163          $  56,469             $ 48,449
                                                                                 ========          =========             ========
</TABLE>


                                   SCHEDULE IV
                           BANK PREMISES AND EQUIPMENT

PLEASE REFERENCE NOTES TO FINANCIAL STATEMENTS

                               NOTE D - FACILITIES


                                   SCHEDULE V
               INVESTMENT IN, INCOME FROM DIVIDENDS, AND EQUITY IN
          EARNINGS OR LOSSES, OF SUBSIDIARIES AND ASSOCIATED COMPANIES

NOT APPLICABLE


                                   SCHEDULE VI

                       ALLOWANCE FOR POSSIBLE LOAN LOSSES


PLEASE REFERENCE NOTES TO FINANCIAL STATEMENTS

NOTE C - LOANS




                                       49
<PAGE>   50

REPORTS ON FORM 8-K

No reports on Form 8-K were filed during the quarter ended December 31, 1999.

<TABLE>
<CAPTION>

EXHIBITS
--------
    <S>           <C>
     (3)(i)       Articles of Incorporation of the Company  (a)

     (3)(ii)      Bylaws of the Company  (a)

    (10)(a)       Lease - Valrico State Bank - Jim Redman Parkway Office (c)

        (b)       Lease - Valrico State Bank - Brandon Office  (b) (c)

        (c)       Valrico State Bank Stock Option Plan  (b) (c)

        (d)       Valrico Bancorp Inc, Stock Option Plan (d)

        (e)       Lease - Valrico State Bank - Main Office

    (21)          Valrico State Bank  (b)

    (27)          Financial Data Schedule (for SEC use only)
</TABLE>

        (a)  Incorporated by reference to the Company's Registration Statement
             #33-90524 on Form S-4 for the registrant.

        (b)  Incorporated by reference to the Company's December 31, 1995 Form
             10-K.

        (c)  Incorporated by reference to the Company's December 31, 1997
             Form 10-K

        (d)  Incorporated by reference to the Company's December 31, 1998
             Form 10-K











                                       50
<PAGE>   51

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized on March 24, 2000.

By: /s/ Bob McLean                          By: /s/ Jerry L.  Ball
    ---------------------------                 ----------------------------
    Bob McLean, President & CEO                 Jerry L. Ball, Executive
                                                Vice President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant on
March 24, 2000.

<TABLE>
<CAPTION>

Signatures                                Titles
----------                                ------
<S>                                       <C>

/s/ J. E. "Bob" McLean, III               President and Chief Executive Officer
------------------------------------
    J. E. "Bob" McLean, III

/s/ Jerry L. Ball                         Executive Vice President and Director
------------------------------------
    Jerry L. Ball

/s/ C. Dennis Carlton                     Director
------------------------------------
    C. Dennis Carlton

/s/ H. Leroy English                      Director
------------------------------------
    H. Leroy English

/s/ Gregory L. Henderson                  Director
------------------------------------
    Gregory L. Henderson

/s/ Douglas A. Holmberg                   Director
------------------------------------
    Douglas A. Holmberg

/s/ Charles E. Jennings, Jr.              Director
------------------------------------
    Charles E. Jennings, Jr.

/s/ J. "Bill" Noriega, Jr.                Director
------------------------------------
    J. "Bill" Noriega, Jr.

/s/ LeVaughn Amerson                      Director
------------------------------------
    LeVaughn Amerson

</TABLE>




                                       51