U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-KSB

         |X|      Annual  report  under  Section  13 or 15(d) of the  Securities
                  Exchange Act of 1934

         For the fiscal year ended December 31, 2000

         |_|      Transition  report under Section 13 or 15(d) of the Securities
                  Exchange Act of 1934

         For the transition period from _______________ to ________________

Commission file number: 333-36688

                          Indian River Banking Company
                 (Name of Small Business Issuer in its Charter)


              Florida                                   59-2931518
  (State or other jurisdiction              (I.R.S. Employer Identification No.)
of incorporation or organization)


                    958 20th Place, Vero Beach, Florida 32960
               (Address of Principal Executive Offices) (Zip Code)

Issuer's Telephone Number: 561.569.9200

Securities registered under Section 12(b) of the Act: None

Securities registered under Section 12(g) of the Act: None

Check whether the Issuer;  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports);  and (2) has been
subject to such filing requirements for the past 90 days.
Yes |_|  No |X|

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. |X|

The  issuer's  revenues  for the  fiscal  year  ended  December  31,  2000  were
approximately $26,560,741.

The aggregate market value of the outstanding common stock held by nonaffiliates
as of March 15, 2001 was approximately $31,689,548.

As of March 15,  2001,  the number of  outstanding  shares of the common  stock,
$1.00 par value, of Indian River Banking Company was 1,764,500.

Transitional Small Business Disclosure Format (check one):  Yes |_|  No |X|

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None


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                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

GENERAL

         Indian River Banking Company ("Indian  River") was  incorporated  under
the laws of the State of Florida in January  1989 to be the holding  company for
Indian River National Bank ("Indian River Bank"), and acquired all of the shares
of Indian  River Bank in April  1989.  Indian  River  Bank,  a national  banking
association,  is Indian  River's sole  subsidiary.  Indian River Bank  commenced
operations in March 1985, and currently operates out of its main office and five
branch  offices.  Indian  River Bank  seeks to provide a high level of  personal
service and a  sophisticated  menu of products to  individuals  and to small and
medium sized businesses. While Indian River Bank offers a full range of services
to a wide array of depositors and borrowers,  it has chosen the small and medium
sized  businesses,  professionals and individual retail customers as its primary
target market.  Indian River Bank believes that as financial  institutions  grow
and are merged with or acquired by larger  institutions  with  headquarters that
are far away from the local  customer base, the local business and individual is
further removed from the point of decision making. Indian River Bank attempts to
place the customer contact and the ultimate  decision on products and credits as
close together as possible.

         Indian River has elected to become a "financial  holding company" under
the Gramm Leach Bliley Act and the regulations  promulgated under that act. As a
financial  holding  company,  Indian River is to engage in activities which law,
regulation or order determines are financial in nature,  or which are incidental
or complementary to those activities. While we have not commenced any activities
which are financial in nature, we expect that Indian River will explore engaging
in insurance agency and title insurance agency activities.  Currently, there are
no  definitive  plans or  agreements  regarding  Indian  River's  plans in these
activities or other activities which are financial in nature.  We cannot be sure
that we will engage in these insurance activities or other financial activities,
or that we will be successful or profitable in these activities.

LENDING ACTIVITIES

         Indian  River Bank offers a full  spectrum  of lending  services to its
customers,  including commercial loans, lines of credit,  residential mortgages,
home equity loans,  personal loans,  auto loans and financing  arrangements  for
personal equipment and business equipment. Loan terms, including interest rates,
loan to value ratios,  and maturities,  are tailored as much as possible to meet
the needs of the  borrower.  A special  effort is made to keep loan  products as
flexible as possible within the guidelines of prudent banking practices in terms
of interest rate risk and credit risk.

         The primary factors taken into  consideration by Indian River Bank when
considering  loan  requests  are the cash flow and  financial  condition  of the
borrower, the value of the underlying collateral,  if any, and the character and
integrity  of the  borrower.  These  factors are  evaluated  in a number of ways
including an analysis of financial  statements,  credit reviews,  trade reviews,
and visits to the  borrower's  place of  business.  The bank has  implemented  a
comprehensive  loan policy and  procedures  manual to provide its loan  officers
with term, collateral,  loan-to-value and pricing guidelines.  The policy manual
and sound credit analysis,  together with thorough review by the Asset-Liability
Committee,   have  resulted  in  a  profitable  loan  portfolio,   with  minimal
non-performing assets.

         Loan   business  is   generated   primarily   through   referrals   and
direct-calling  efforts.   Referrals  of  loan  business  come  from  directors,
shareholders,  current customers and professionals such as lawyers,  accountants
and financial intermediaries.

         At December 31, 2000,  Indian River Bank's  statutory  lending limit to
any single  borrower was $3.4  million  subject to certain  exceptions  provided
under  applicable  law. As of December  31, 2000,  Indian  River  Bank's  credit
exposure to its largest borrower was $2.8 million.

         Commercial  Loans.  Commercial  loans  are  written  for  any  business
purpose,  including  the  financing  of plant and  equipment,  the  carrying  of
accounts   receivable,   contract   administration,   and  the  acquisition  and
construction of real




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estate projects.  Special attention is paid to the commercial real estate market
which is  particularly  stable and active in the Indian River and Brevard County
area. Indian River Bank's commercial loan portfolio  reflects a diverse group of
borrowers with no concentration in any borrower, or group of borrowers.

         As part of its  internal  loan  review  process,  Indian  River  Bank's
Asset-Liability  Committee,  comprised of loan  officers and staff,  reviews all
loans 30-day  delinquent,  loans on the Watch List, loans rated special mention,
substandard,  or doubtful,  and other loans of concern at least quarterly.  Loan
reviews are reported to the Audit and  Examining  Committee  with any  adversely
rated changes specifically mentioned. All other loans with their respective risk
ratings are reported  monthly to Indian River  Bank's  Board of  Directors.  The
Audit and Examining Committee  coordinates  periodic  documentation and internal
control reviews by outside vendors to complement loan reviews.

         Residential  Mortgage and Home Equity  Loans.  The strong local economy
provides for a large and active real estate market for the construction and sale
of new  residential  property  and sale of existing  housing.  Indian River Bank
provides financing for the construction and acquisition of residential  property
throughout its market area. Indian River Bank has availed itself of the services
of  mortgage  brokers  and  programs  offered by the  Federal  Home Loan Bank of
Atlanta in an effort to offer as many  long-term  and low interest rate mortgage
products as possible. In addition, Indian River Bank has developed a competitive
home equity line of credit  product for the use of its  customers.  This product
offers the customer the ability to use the line of credit  flexibility  features
to manage their own credit needs on an on-going  basis.  Indian River Bank sells
loans which it  originates  for the  secondary  market to private  investors and
government sponsored associations.

         Other  Loans.  Loans are  considered  for any  worthwhile  personal  or
business  purpose on a case-by-case  basis,  such as the financing of equipment,
receivables, contract administration expenses, land acquisition and development,
and automobile financing.

INVESTMENT ACTIVITIES

         The  investment  policy of Indian River Bank is an integral part of its
overall asset/liability management program. The purpose of the investment policy
is to establish a portfolio which will provide liquidity necessary to facilitate
funding  of  loans  and to cover  deposit  fluctuations  while at the same  time
achieving a satisfactory  return on the funds invested.  Indian River Bank seeks
to maximize  earnings from its investment  portfolio  consistent with the safety
and liquidity of those investment assets.

         The  securities  in which  Indian  River Bank may invest are subject to
regulation  and,  for the  most  part,  are  limited  to  securities  which  are
considered  investment  grade  securities.  In  addition,  Indian  River  Bank's
internal  investment policy restricts  investments to the following  categories:
U.S. Treasury securities;  obligations of U.S. government  agencies,  investment
grade  obligations of U.S.  private  corporations,  mortgage-backed  securities,
including  securities  issued by Federal National  Mortgage  Association and the
Federal Home Loan Mortgage  Corporation;  and securities of states and political
subdivisions,  all of which must be considered  investment grade by a recognized
rating service.

BROKERAGE ACTIVITIES

         Indian River Bank offers brokerage  services  through FiServe,  a third
party  vendor.  Services  provided by FiServe  include a full line of investment
products,  including the purchase and sale of mutual funds,  annuities,  stocks,
options, and corporate and government bonds.

         The manager of  brokerage  services for Indian River Bank is a licensed
securities  representative  and is a dual  employee  of both  FiServe and Indian
River Bank.  In such  capacity,  he must comply  with all  applicable  rules and
regulations  of the FDIC,  the SEC and the National  Association  of  Securities
Dealers.  Fees and commissions earned by the brokerage  services  department are
paid monthly by FiServe directly to Indian River Bank.



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         The  customer  base  of  the   brokerage   department  is  made  up  of
approximately  99%  percent  individuals,   with  the  remainder  consisting  of
investment  clubs and other  accounts.  As of  December  31,  2000,  there  were
approximately 530 open brokerage accounts.

SOURCES OF FUNDS

         Deposits.  Deposits  obtained  through bank offices have  traditionally
been the  principal  source of Indian  River Bank's funds for use in lending and
for other general business purposes.  At December 31, 2000 total deposits in the
bank amounted to $284.5 million.  Certificates of deposit and savings  deposits,
representing  over 75.0% of the deposit  base,  are Indian River Bank's  primary
source of deposit funds.

         In order to better serve the needs of its customers,  Indian River Bank
offers  several  types of deposit  accounts in  addition  to  standard  savings,
checking,  and NOW accounts.  Special deposit accounts include low cost Personal
Checking and Small  Business  Checking.  Personal  checking  requires no minimum
balance and may have no monthly fee, per check charge, or activity limit.  Small
Business  Checking  allows a small business to pay a flat monthly service charge
of $15.00,  and a $0.15 per check charge,  offset by an earnings credit of $0.25
per $100.00 collected balance in the account during the period.

         Borrowing.  While Indian River has not traditionally placed significant
reliance on  borrowings  as a source of liquidity,  it has  established  various
borrowing arrangements in order to provide management with additional sources of
liquidity and funding, thereby increasing flexibility.  Management believes that
Indian River  currently has adequate  liquidity  available to respond to current
liquidity demands.

COMMUNITY REINVESTMENT ACT

         Indian  River Bank is  committed  to serving the  banking  needs of the
entire community, including low and moderate income areas, and is a supporter of
the  Community  Reinvestment  Act.  There are several ways in which Indian River
Bank  attempts to fulfill  this  commitment,  including  working  with  economic
development agencies,  undertaking special projects,  and becoming involved with
neighborhood outreach programs.

         Indian River Bank has contacts with state and city agencies that assist
in the financing of affordable housing developments as well as with groups which
promote the economic development of low and moderate income individuals.  Indian
River Bank has computer software to geographically code all types of accounts to
track business  development and performance by census tract and to assess market
penetration in low and moderate income  neighborhoods within the primary service
area. Indian River Bank is a registered Small Business Administration lender.

         Indian River  encourages  its directors and officers to  participate in
community,  civic and  charitable  organizations.  Management and members of the
Board of Directors  periodically  review the various Community  Reinvestment Act
activities of Indian River Bank, including the advertising program and geocoding
of real  estate  loans by census  tract data which  specifically  focuses on low
income  neighborhoods,  its credit  granting  process  with  respect to business
prospects  generated in these areas, and its involvement with community  leaders
on a personal level.

COMPETITION

         In attracting  deposits and making loans,  Indian River Bank encounters
competition  from  other  institutions,   including  larger  commercial  banking
organizations,  savings banks, credit unions,  other financial  institutions and
non-bank  financial  service companies serving Indian River and Brevard counties
and adjoining areas. Financial and non-financial institutions not located in the
market are also able to reach persons and entities  based in the market  through
mass  marketing,  the internet,  telemarketing,  and other means.  The principal
methods of competition include the level of loan interest rates,  interest rates
paid on deposits, efforts to obtain deposits, range of services provided and the
quality of these  services.  Our  competitors  include  several major  financial
companies whose  substantially  greater  resources may afford them a marketplace
advantage by enabling  them to maintain  numerous  banking  locations  and mount
extensive promotional and advertising campaigns. In light of the deregulation of
the financial service industry and the



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absence  of  interest  rate  controls  on  deposits,  we  anticipate  continuing
competition  from all of these  institutions in the future.  Additionally,  as a
result of  legislation  which reduced  restrictions  on  interstate  banking and
widened the array of  companies  that may own banks,  Indian River Bank may face
additional  competition from institutions outside the Florida market and outside
the traditional range of bank holding companies which may take advantage of such
legislation  to acquire or  establish  banks or branches in Indian  River Bank's
market.  There can be no  assurance  that we will be able to  successfully  meet
these competitive challenges.

         In addition to offering  competitive rates for its banking products and
services,  our  strategy  for meeting  competition  has been to  concentrate  on
specific  segments  of the market for  financial  services,  particularly  small
business and individuals, by offering such customers customized and personalized
banking  services.  Although there are other small banks  offering  personalized
banking  services in Indian River Bank's  primary  service area, we believe that
Indian  River  Bank  is  one  of  few  such  banks  offering   flexible   credit
accommodations to small businesses.

         We believe that active  participation in civic and community affairs is
an  important  factor  in  building  our  reputation  and,  thereby,  attracting
customers.

EMPLOYEES

         As of  March  31,  2000,  Indian  River  Bank had 110  full-time  and 3
part-time employees. Indian River has no employees who are not also employees of
Indian  River  Bank.  Such  employees  are  not  represented  by any  collective
bargaining  unit, and we believe our employee  relations are good.  Indian River
Bank  maintains a benefit  program which includes  health and dental  insurance,
life and long-term disability insurance, and a 401(k) plan for substantially all
full-time employees.

SUBSEQUENT EVENT

         On  April  4,  2001,  Indian  River  accepted  the  resignation  of its
President,  Chief Executive Officer and Director, William A. High, and appointed
Paul A.  Beindorf  President  and Chief  Executive  Officer of Indian  River and
Indian and  Indian  River  Bank.  Indian  River  will take a one time  charge of
approximately  $567,000,  or  approximately  $357,000 after taxes, in respect of
payments,  in  satisfaction  of all amounts  which may be owing under Mr. High's
employment agreement and the termination of options held by Mr. High.

                           SUPERVISION AND REGULATION

INDIAN RIVER

         Indian  River  is a bank  holding  company  registered  under  the Bank
Holding  Company  Act of  1956,  as  amended,  (the  "Act")  and is  subject  to
supervision by the Federal  Reserve  Board.  As a bank holding  company,  Indian
River is required to file with the Federal  Reserve  Board an annual  report and
such other  additional  information  as the  Federal  Reserve  Board may require
pursuant to the Act. The Federal  Reserve  Board may also make  examinations  of
Indian River and each of its  subsidiaries.  Indian River has also elected to be
treated as a financial holding company.

         The Act requires approval of the Federal Reserve Board for, among other
things,  the  acquisition by a bank holding company of control of more than five
percent (5%) of the voting shares,  or substantially all the assets, of any bank
or the merger or  consolidation  by a bank  holding  company  with  another bank
holding  company.  The Act also  generally  permits  the  acquisition  by a bank
holding company of control, or substantially all the assets, of any bank located
in a state other than the home state of the bank holding  company,  except where
the bank has not been in existence  for the minimum  period of time  required by
state law,  but if the bank is at least 5 years old, the Federal  Reserve  Board
may approve the acquisition.

         Under  current law,  with certain  limited  exceptions,  a bank holding
company is prohibited from acquiring control of any voting shares of any company
which is not a bank or bank  holding  company  and  from  engaging  directly  or
indirectly in any activity other than banking or managing or  controlling  banks
or furnishing services to or performing service for its authorized subsidiaries.
A bank holding company may, however, engage in or acquire an interest in a


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company  that  engages  in  activities  which  the  Federal  Reserve  Board  has
determined  by order or  regulation  to be so  closely  related  to  banking  or
managing or controlling banks as to be properly incident thereto. In making such
a  determination,  the Federal Reserve Board is required to consider whether the
performance of such activities can reasonably be expected to produce benefits to
the public, such as convenience,  increased  competition or gains in efficiency,
which  outweigh  possible  adverse  effects,  such  as  undue  concentration  of
resources,  decreased  or unfair  competition,  conflicts of interest or unsound
banking practices.  The Federal Reserve Board is also empowered to differentiate
between   activities   commenced  de  novo  and  activities   commenced  by  the
acquisition,  in whole or in part, of a going  concern.  Some of the  activities
that the  Federal  Reserve  Board has  determined  by  regulation  to be closely
related to banking include making or servicing  loans,  performing  certain data
processing  services,  acting as a fiduciary or investment or financial advisor,
and making investments in corporations or projects designed primarily to promote
community welfare.

         The Gramm  Leach  Bliley  Act  allows a bank  holding  company or other
company to certify status as a financial holding company, which allows a company
to engage in  activities  that are financial in nature,  that are  incidental to
such activities, or are complementary to such activities. The Gramm Leach Bliley
Act enumerates certain  activities that are deemed financial in nature,  such as
underwriting  insurance  or acting as an insurance  principal,  agent or broker,
underwriting,  dealing  in or making  markets in  securities,  and  engaging  in
merchant  banking under certain  restrictions.  It also  authorizes  the Federal
Reserve Board to determine by regulation what other  activities are financial in
nature or incidental or complementary thereto.

         Subsidiary  banks of a bank  holding  company  are  subject  to certain
restrictions  imposed by the Federal  Reserve Act on any extensions of credit to
the bank holding  company or any of its  subsidiaries,  or  investments in their
stock or other  securities,  and on the taking of their stock or  securities  as
collateral  for  loans to any  borrower.  Further,  a  holding  company  and any
subsidiary bank are prohibited  from engaging in certain tie-in  arrangements in
connection  with the  extension  of  credit.  A  subsidiary  bank may not extend
credit,  lease or sell  property,  or furnish any  services,  or fix or vary the
consideration for any of the foregoing,  on the condition that: (a) the customer
obtain or provide some additional  credit,  property or services from or to such
bank other than a loan,  discount,  deposit or trust  service;  (b) the customer
obtain or provide  some  additional  credit,  property or service from or to the
company or any other  subsidiary of the company;  or (c) the customer not obtain
some other credit,  property or service from competitors,  except for reasonable
requirements to assure the soundness of credit extended.

         The  Federal  Reserve  has also  adopted  capital  guidelines  for bank
holding companies that are  substantially the same as the requirements  applying
to national banks.

INDIAN RIVER BANK

         Indian  River  Bank is a  national  banking  association.  Its  deposit
accounts  are insured by the Bank  Insurance  Fund of the FDIC up to the maximum
legal  limits  of the FDIC and it is  subject  to  regulation,  supervision  and
regular  examination  by the Office of the  Comptroller  of the Currency and the
FDIC. The  regulations of these various  agencies  govern most aspects of Indian
River Bank's business,  including  required  reserves against  deposits,  loans,
investments,  mergers and acquisitions,  borrowings,  dividends and location and
number of branch offices.  The laws and regulations  governing Indian River Bank
generally have been promulgated to protect  depositors and the deposit insurance
funds, and not for the purpose of protecting stockholders.

         Competition among commercial banks, savings and loan associations,  and
credit unions has increased  following  enactment of  legislation  which greatly
expanded the ability of banks and bank holding companies to engage in interstate
banking or acquisition activities. The Gramm Leach Bliley Act will allow a wider
array of companies to own banks,  which could result in companies with resources
substantially  in excess of Indian River's entering into competition with Indian
River and Indian River Bank.

         Banking is a business which depends on interest rate differentials.  In
general, the differences between the interest paid by a bank on its deposits and
its other  borrowings  and the interest  received by a bank on loans extended to
its customers and  securities  held in its investment  portfolio  constitute the
major portion of Indian River Bank's earnings.  Thus, the earnings and growth of
Indian River Bank will be subject to the influence of economic conditions in


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general, both domestic and foreign, and also to the monetary and fiscal policies
of the United States and its agencies,  particularly  the Federal  Reserve Board
which  regulates the supply of money through various means including open market
dealings  in United  States  government  securities.  The  nature  and timing of
changes  in such  policies  and  their  impact on Indian  River  Bank  cannot be
predicted.

         Branching and  Interstate  Banking.  The federal  banking  agencies are
authorized to approve  interstate  bank merger  transactions  without  regard to
whether such transaction is prohibited by the law of any state,  unless the home
state of one of the banks has opted out of the interstate bank merger provisions
of the Riegle-Neal  Interstate  Banking and Branching  Efficiency Act of 1994 by
adopting a law after the date of enactment of the  Riegle-Neal  Act and prior to
June 1, 1997 which  applies  equally  to all  out-of-state  banks and  expressly
prohibits  merger  transactions   involving   out-of-state   banks.   Interstate
acquisitions of branches are permitted only if the law of the state in which the
branch is located  permits such  acquisitions.  Such interstate bank mergers and
branch  acquisitions  are also subject to the nationwide  and statewide  insured
deposit concentration limitations described in the Riegle-Neal Act.

         The Riegle-Neal Act authorizes the federal banking  agencies to approve
interstate  branching  de novo by  national  and  state  banks in  states  which
specifically  allow for such  branching.  Florida has enacted  laws which permit
interstate acquisitions of banks and bank branches and permit out-of-state banks
to establish de novo branches.

         Capital Adequacy Guidelines. The Federal Reserve Board and the OCC have
adopted risk-based capital adequacy guidelines pursuant to which they assess the
adequacy  of  capital  in  examining  and  supervising  banks  and bank  holding
companies and in analyzing  bank  regulatory  applications.  Risk-based  capital
requirements  determine  the adequacy of capital  based on the risk  inherent in
various classes of assets and off-balance sheet items.

         National banks are expected to meet a minimum ratio of total qualifying
capital,  defined as the sum of core capital (Tier 1) and supplementary  capital
(Tier 2), to risk  weighted  assets of 8%.  At least  half of this  amount  (4%)
should be in the form of core capital.

         Tier 1 Capital  generally  consists of the sum of common  stockholders'
equity  and  perpetual  preferred  stock  (subject  in the case of the latter to
limitations on the kind and amount of such stock which may be included as Tier 1
Capital),  less goodwill,  without adjustment for changes in the market value of
securities classified as "available for sale" in accordance with FAS 115. Tier 2
Capital  consists  of  the  following:  hybrid  capital  instruments;  perpetual
preferred  stock  which  is not  otherwise  eligible  to be  included  as Tier 1
Capital; term subordinated debt, intermediate-term preferred stock; and, subject
to limitations,  general  allowances for loan losses.  Assets are adjusted under
the risk-based  guidelines to take into account different risk  characteristics,
with the categories ranging from 0%, requiring no risk-based capital, for assets
such as cash, to 100% for the bulk of assets which are typically  held by a bank
holding company,  including certain multi-family residential and commercial real
estate loans,  commercial  business loans and consumer loans.  Residential first
mortgage  loans  on one to four  family  residential  real  estate  and  certain
seasoned  multi-family  residential real estate loans,  which are not 90 days or
more  past-due or  non-performing  and which have been made in  accordance  with
prudent  underwriting  standards  are assigned a 50% level in the  risk-weighing
system, as are certain privately-issued  mortgage-backed securities representing
indirect  ownership of such loans.  Off-balance sheet items also are adjusted to
take into account certain risk characteristics.

         In  addition  to the  risk-based  capital  requirements,  the  OCC  has
established  a minimum  3.0%  Leverage  Capital  Ratio  (Tier 1 Capital to total
adjusted assets) requirement for the most highly-rated banks, with an additional
cushion  of at  least  100 to 200  basis  points  for  all  other  banks,  which
effectively increases the minimum Leverage Capital Ratio for such other banks to
4.0% - 5.0% or more. The highest-rated banks are those that are not anticipating
or experiencing  significant growth and have well diversified risk, including no
undue interest rate risk exposure, excellent asset quality, high liquidity, good
earnings  and,  in  general,   those  which  are  considered  a  strong  banking
organization.  A bank  having  less  than the  minimum  Leverage  Capital  Ratio
requirement  shall,  within  60 days of the date as of which it fails to  comply
with such requirement,  submit a reasonable plan describing the means and timing
by which a bank shall achieve its minimum Leverage Capital Ratio requirement.  A
bank which  fails to file such plan is deemed to be  operating  in an unsafe and
unsound manner,  and could subject that bank to a  cease-and-desist  order.  Any
insured  depository  institution with a Leverage Capital Ratio that is less than
2.0% is deemed to be  operating  in an unsafe or unsound  condition  pursuant to
Section 8(a) of the Federal Deposit Insurance Act (the "FDIA") and is subject to


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potential  termination of deposit insurance.  However,  such an institution will
not be subject to an  enforcement  proceeding  solely on account of its  capital
ratios,  if it has entered into and is in compliance with a written agreement to
increase  its  Leverage  Capital  Ratio and to take such other  action as may be
necessary for the  institution  to be operated in a safe and sound  manner.  The
capital  regulations  also provide,  among other  things,  for the issuance of a
capital  directive,  which  is a final  order  issued  to a bank  that  fails to
maintain  minimum  capital or to restore  its  capital  to the  minimum  capital
requirement  within a specified time period. A capital  directive is enforceable
in the same manner as a final cease-and-desist order.

         Prompt  Corrective  Action.  Under Section 38 of the FDIA, each federal
banking agency is required to implement a system of prompt corrective action for
institutions  which it regulates.  The federal banking agencies have promulgated
substantially  similar  regulations to implement the system of prompt corrective
action  established  by Section 38 of the FDIA.  Under the  regulations,  a bank
shall be  deemed to be:  (i) "well  capitalized"  if it has a Total  Risk  Based
Capital  Ratio of 10.0% or more,  a Tier 1 Risk Based  Capital  Ratio of 6.0% or
more, a Leverage Capital Ratio of 5.0% or more and is not subject to any written
capital order or directive; (ii) "adequately capitalized" if it has a Total Risk
Based  Capital  Ratio of 8.0% or more, a Tier 1 Risk Based Capital Ratio of 4.0%
or more and a Tier 1 Leverage  Capital Ratio of 4.0% or more (3.0% under certain
circumstances)  and does not meet the  definition of "well  capitalized;"  (iii)
"undercapitalized"  if it has a Total Risk Based Capital Ratio that is less than
8.0%,  a Tier 1 Risk  based  Capital  Ratio that is less than 4.0% or a Leverage
Capital  Ratio that is less than 4.0% (3.0% under certain  circumstances);  (iv)
"significantly undercapitalized" if it has a Total Risk Based Capital Ratio that
is less than 6.0%, a Tier 1 Risk Based Capital Ratio that is less than 3.0% or a
Leverage   Capital   Ratio  that  is  less  than  3.0%;   and  (v)   "critically
undercapitalized"  if it has a ratio of tangible  equity to total assets that is
equal to or less than 2.0%.

         An institution  generally must file a written capital  restoration plan
which meets specified  requirements  with an appropriate  federal banking agency
within 45 days of the date the institution  receives notice or is deemed to have
notice that it is undercapitalized, significantly undercapitalized or critically
undercapitalized.  A federal  banking agency must provide the  institution  with
written  notice of  approval  or  disapproval  within 60 days after  receiving a
capital restoration plan, subject to extensions by the applicable agency.

         An institution  which is required to submit a capital  restoration plan
must  concurrently  submit a performance  guaranty by each company that controls
the  institution.  A guaranty is limited to the lesser of (i) an amount equal to
5.0% of the institution's  total assets at the time the institution was notified
or  deemed  to have  notice  that it was  undercapitalized  or (ii)  the  amount
necessary  at  such  time  to  restore  the  relevant  capital  measures  of the
institution  to the levels  required for the  institution  to be  classified  as
adequately  capitalized.  A guaranty  expires after the federal  banking  agency
notifies the institution that it has remained adequately capitalized for each of
four  consecutive  calendar  quarters.  An  institution  which fails to submit a
written  capital  restoration  plan within the requisite  period,  including any
required performance  guaranty,  or fails in any material respect to implement a
capital  restoration plan, shall be subject to the restrictions in Section 38 of
the FDIA which are applicable to significantly undercapitalized institutions.

         A  "critically  undercapitalized   institution"  is  to  be  placed  in
conservatorship  or  receivership  within  90  days  unless  the  FDIC  formally
determines  that  forbearance  from such action would better protect the deposit
insurance fund. Unless the FDIC or other appropriate  federal banking regulatory
agency makes specific  further  findings and certifies  that the  institution is
viable and is not  expected to fail,  an  institution  that  remains  critically
undercapitalized on average during the fourth calendar quarter after the date it
becomes critically undercapitalized must be placed in receivership.  The general
rule is that the FDIC will be appointed as receiver  within 90 days after a bank
becomes critically  undercapitalized unless extremely good cause is shown and an
extension  is agreed to by the federal  regulators.  In  general,  good cause is
defined  as  capital  which has been  raised  and is  imminently  available  for
infusion into a bank except for certain technical  requirements  which may delay
the infusion for a period of time beyond the 90 day time period.

         Immediately upon becoming undercapitalized, an institution shall become
subject to the provisions of Section 38 of the FDIA,  which (i) restrict payment
of capital  distributions and management fees; (ii) require that the appropriate
federal  banking agency monitor the condition of the institution and its efforts
to restore its capital;  (iii) require submission of a capital restoration plan;
(iv)  restrict the growth of the  institution's  assets;  and (v) require  prior
approval of certain expansion proposals.  The appropriate federal banking agency
for an undercapitalized institution



                                       8
<PAGE>

also may take any  number of  discretionary  supervisory  actions  if the agency
determines that any of these actions is necessary to resolve the problems of the
institution at the least possible  long-term cost to the deposit insurance fund,
subject  in  certain  cases  to  specified   procedures.   These   discretionary
supervisory  actions  include:  requiring the  institution  to raise  additional
capital; restricting transactions with affiliates;  requiring divestiture of the
institution or the sale of the institution to a willing purchaser; and any other
supervisory  action  that the agency  deems  appropriate.  These and  additional
mandatory  and  permissive  supervisory  actions  may be taken  with  respect to
significantly undercapitalized and critically undercapitalized institutions.

         Additionally,  under  Section  11(c)(5) of the FDIA, a  conservator  or
receiver  may  be  appointed  for an  institution  where:  (i) an  institution's
obligations  exceed its assets;  (ii) there is  substantial  dissipation  of the
institution's  assets or  earnings  as a result of any  violation  of law or any
unsafe or unsound  practice;  (iii) the  institution  is in an unsafe or unsound
condition;  (iv) there is a willful violation of a  cease-and-desist  order; (v)
the  institution  is unable to pay its  obligations  in the  ordinary  course of
business;  (vi) losses or threatened  losses deplete all or substantially all of
an  institution's  capital,  and there is no  reasonable  prospect  of  becoming
"adequately capitalized" without assistance; (vii) there is any violation of law
or unsafe or unsound practice or condition that is likely to cause insolvency or
substantial  dissipation  of  assets  or  earnings,   weaken  the  institution's
condition,  or otherwise  seriously prejudice the interests of depositors or the
insurance fund; (viii) an institution ceases to be insured; (ix) the institution
is  undercapitalized  and  has  no  reasonable  prospect  that  it  will  become
adequately capitalized,  fails to become adequately capitalized when required to
do so, or fails to submit or materially implement a capital restoration plan; or
(x)  the   institution   is   critically   undercapitalized   or  otherwise  has
substantially insufficient capital.

         Regulatory   Enforcement   Authority.   Federal   banking   law  grants
substantial  enforcement powers to federal banking regulators.  This enforcement
authority  includes,  among  other  things,  the  ability to assess  civil money
penalties,   to  issue  cease-and-desist  or  removal  orders  and  to  initiate
injunctive  actions against  banking  organizations  and  institution-affiliated
parties.  In general,  these enforcement actions may be initiated for violations
of laws and  regulations  and  unsafe or  unsound  practices.  Other  actions or
inactions may provide the basis for enforcement action,  including misleading or
untimely reports filed with regulatory authorities.

ITEM 2.  DESCRIPTION OF PROPERTY.

         The  executive  offices of Indian River and Indian River Bank,  and the
main  office of Indian  River Bank are  located at 958 20th  Place,  Vero Beach,
Florida, in a 12,000 square foot, two-story masonry building.  Indian River owns
the building.  Indian River owns the  buildings  which house Indian River Bank's
Loan Center and the South  Sebastian  Branch.  The Loan Center is located at 929
21st  Street,  Vero Beach in a 10,000  square foot  masonry  building.  The Loan
Center site also houses a six lane drive  through  banking  facility.  The South
Sebastian branch is located at 816 US 1, Sebastian,  Florida,  in a 4,000 square
foot brick building, and has one drive through lane.

         Indian River leases the properties  housing its remaining  branches and
the  Operations  Center.  The Roseland  Branch,  located at 13600 US 1, Unit 14,
Sebastian,  Florida,  in a 2,600 square foot masonry  building is leased under a
two year lease which  terminates in February 2001, and has a current annual rent
of $35,387,  subject to annual  increase  based on the consumer price index (the
"CPI"). The Plantation branch, located at 6600 20th Street, Vero Beach, Florida,
consists of 2,875  square  feet in a masonry  building  and three drive  through
lanes. The property is occupied under a ten year lease,  terminating in 2002, at
a current annual rent of $36,078,  subject to annual  increase based on the CPI,
with a maximum increase of 5% annually. Indian River has four three year renewal
options.  The Palm Bay branch,  located at 5240  Babcock  Street,  NE, Palm Bay,
Florida,  consists of 5,000  square feet in a masonry  building  and three drive
through lanes. The property is occupied under a three year lease, terminating in
October 2003, at a current  annual rent of $68,237,  subject to annual  increase
based on the CPI,  with a 5% maximum  annual  increase.  Indian  River has three
three year renewal options.  The Gateway Office,  located at 1421 Gateway Drive,
Melbourne,  Florida,  is a 2,500 square foot stand alone  masonry  building with
three drive  through  lanes.  The  property is occupied  under a ten year lease,
terminating  in 2009,  at a current  annual rent of  $69,626,  subject to annual
increase based on the CPI with an 8% maximum annual  increase.  Indian River has
two five year  renewal  options.  The  Operations  Center,  located at 3895 39th
Square,  is  occupied  under two  leases.  The  Operations  Center  consists  of
approximately  10,300 square feet in a frame  building.  The  aggregate  current
annual rental is $82,862, subject to annual increase based on the CPI, with a 2%
minimum  annual  increase  and a 5% maximum  annual  increase.  The first lease,
covering approximately 8,300 square



                                       9
<PAGE>

feet,  expires  in 2002 and is  subject to two five year  renewal  options.  The
second lease,  covering 2,000 square feet is leased under a one year lease, with
a one year renewal option.

         During 2000,  construction began on the Bank's seventh branch,  located
at 3300 Murell Road, Rockledge,  Brevard County, Florida, will be a 2,500 square
foot stand alone masonry  building with three drive through lanes.  The property
will be occupied under a ten year lease with two five year renewal options.

         Management  believes  the existing  facilities  are adequate for Indian
River's business as presently conducted.

ITEM 3.  LEGAL PROCEEDINGS.

         Indian River and Indian  River Bank are  involved  from time to time in
routine legal proceedings  occurring in the ordinary course of business.  In the
opinion of  management,  the final  disposition of these matters will not have a
material  adverse  effect on Indian  River's  financial  condition or results of
operations.

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

         No matters  were  submitted  to a vote of security  holders  during the
fourth quarter of the year ended December 31, 2000.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         There does not currently  exist an organized  public trading market for
shares of Indian  River  common  stock.  Trading  in the  common  stock has been
sporadic and consists mainly of private trades conducted without brokers. We are
aware of a limited  number of trades of the common stock since  January 1, 1999,
at prices ranging from approximately $17.27 to $27.27 per share, as adjusted for
the 10% stock  dividends paid in January 1999 and 2000 and February 2001 and the
two for one stock split paid in March 2000. The last trade known to Indian River
was a trade of 1,711  shares at $27.27 per share (as  adjusted for the 10% stock
dividend on December 29,  2000).  In October  2000,  Indian  River  competed its
offering  of shares of its common  stock,  having sold an  aggregate  of 207,828
shares of common stock,  at a price of $25.00 per share (before  adjustment  for
the February 2001 stock dividend),  for gross proceeds of $5,195,700.  There may
be other trades of which we are either not aware,  or for which we are not aware
of the price.  These  trades and  transactions  do not  necessarily  reflect the
intrinsic or market values of the common stock.  As of December 31, 2000,  there
were 1,764,500 shares of common stock outstanding, as adjusted for the 10% stock
dividend paid in February  2001 and for the  elimination  of  fractional  shares
resulting  from  the  stock  dividend,  held  of  record  by  approximately  750
shareholders.

         As of December 31,  2000,  there were  outstanding  options to purchase
152,809 shares of common stock pursuant to Indian River's stock option plans, of
which 64,464 were presently exercisable.

         The following table shows information  relating to Indian River's share
price  history  for the past two fiscal  years.  Prices  have been  adjusted  to
reflect the 10% stock dividends paid in January 1999 and 2000 and February 2001,
and a two for one stock split in the form of a dividend paid in March 2000. High
and  low  sales  prices  reflect  trades  known  to  Indian  River,  and  do not
necessarily  reflect all trades  which  occurred.  Indian River has not paid any
cash dividends during the past two fiscal years,  electing to retain earnings to
fund the growth of Indian River Bank.


<TABLE>
<CAPTION>
                      2001                    2000                   1999
               --------------------    -------------------     -----------------
Period Ended     High        Low        High        Low         High      Low
               ---------   --------    --------   --------     -------  --------
<S>             <C>        <C>         <C>        <C>          <C>      <C>
March 31        $27.50     $26.00      $22.72     $20.45       $17.35   $16.53
June 30                                $27.27     $22.72       $20.65   $17.35
September 30                           $22.72     $22.72         --       --
December 31                            $27.27     $22.72       $20.65   $19.62
</TABLE>


                                       10
<PAGE>

         Dividends.  Holders  of  the  common  stock  are  entitled  to  receive
dividends as and when declared by the Board of Directors.  Indian River has paid
stock  dividends  for each of the last  eleven  years and  currently  intends to
continue the payment of such dividends. Indian River has not paid cash dividends
during such  period,  electing  to retain  earnings  to support  growth.  Future
dividends  will depend  primarily upon Indian River Bank's  earnings,  financial
condition,  and need for funds, as well as governmental policies and regulations
applicable  to Indian  River and Indian River Bank.  There can be no  assurance,
however,  that Indian River and Indian River Bank will continue to have earnings
at a level  sufficient to support the payment of dividends or that either entity
will in the future elect to pay  dividends.  As Indian River Bank is the primary
source of funds for payment of  dividends  by Indian  River,  the  inability  of
Indian River Bank to pay dividends could adversely  affect the ability of Indian
River to pay dividends.

         Regulations of the OCC place a limit on the amount of dividends  Indian
River Bank may pay without prior approval. Prior approval of the OCC is required
to pay  dividends  which exceed  Indian River Bank's net profits for the current
year plus its retained net profits for the  preceding two calendar  years,  less
required  transfers to surplus.  At December 31, 2000, the amount  available for
the payment of dividends without prior approval was approximately  $6.6 million.
The  Federal  Reserve  and the OCC also have  authority  to prohibit a bank from
paying  dividends if the Federal  Reserve or the OCC deems such payment to be an
unsafe or unsound practice.

         The Federal  Reserve has  established  guidelines  with  respect to the
maintenance  of  appropriate  levels  of  capital  by  registered  bank  holding
companies.  Compliance with such standards,  as presently in effect,  or as they
may be amended from time to time,  could  possibly limit the amount of dividends
that Indian River may pay in the future.  In 1985, the Federal  Reserve issued a
policy statement on the payment of cash dividends by bank holding companies.  In
the statement,  the Federal  Reserve  expressed its view that a holding  company
experiencing earnings weaknesses should not pay cash dividends exceeding its net
income,  or which  could  only be  funded  in ways  that  weakened  the  holding
company's financial health, such as by borrowing.

         As a depository  institution,  the deposits of which are insured by the
FDIC,  Indian River Bank may not pay dividends or distribute  any of its capital
assets while it remains in default on any assessment due the FDIC.  Indian River
Bank is not currently in default under any of its obligations to the FDIC.

         Recent Sales of Unregistered Shares.  None.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS.

         Indian River is a one-bank holding company for Indian River Bank and is
headquartered in Vero Beach,  Florida.  Indian River Bank is a growing community
bank serving individuals and small to medium sized businesses with special focus
on real estate related lending and the professional community. Indian River Bank
operates  four  branches  in Indian  River  County and two  branches  in Brevard
County.  Indian River Bank offers deposit  accounts and  associated  services to
businesses and individuals and makes loans and invests in qualified  securities.
In addition,  Indian River Bank's income  includes fees on deposit  accounts and
loans.

         Forward-looking  statements -This management's  discussion and analysis
and other portions of this report, contain forward-looking statements within the
meaning of the Securities Exchange Act of 1934, as amended, including statements
of goals,  intentions,  and expectations as to future trends,  plans,  events or
results of Company  operations  and  policies  and  regarding  general  economic
conditions.  In some cases,  forward looking statements can be identified by use
of words such as "may," "will,"  "anticipates,"  believes,"  "expects," "plans,"
"estimates,"  "potential,  "continue,"  "should"  and similar  words or phrases.
These  statements are based upon current and  anticipated  economic  conditions,
nationally and in the Company's market, interest rates and interest rate policy,
competitive  factors,  and  other  conditions  which  by their  nature,  are not
susceptible to accurate  forecast,  and are subject to significant  uncertainty.
Because of these  uncertainties and the assumptions on which this discussion and
the  forward-looking  statements are based, actual future operations and results
in the future may differ  materially  from those indicated  herein.  Readers are
cautioned against placing undue reliance on any such forward-looking statements.
The Company  does not  undertake  to update any  forward-looking  statements  to
reflect occurrences or events which may not have been anticipated as of the date
of such statements.



                                       11
<PAGE>

RESULTS OF OPERATIONS

         NET INCOME. Indian River had income before income taxes of $4.1 million
for the year ended December 31, 2000 compared to $3.1 million for the year ended
December 31, 1999.  Net income  totaled $2.6 million the year ended December 31,
2000,  an  increase  of $0.6  million or 31.37%  compared to net income in 1999.
Earnings  per  share  basic  were  $1.66 in 2000  compared  to $1.31 in 1999 (as
adjusted for the 10% stock dividends and two for one stock split). Net income in
1999 was adversely impacted by one time expenses aggregating  approximately $0.4
million  related to the  retirement of the former  President and hiring of a new
President,  and the  writedown  of a  parcel  of land  previously  held for bank
premises.  Return on average  equity was 16.6% for the year ended  December  31,
2000,  as  compared to 14.3% for the year ended  December  31,  1999.  Return on
average assets for 2000 was 0.85% as compared to 0.84% for 1999.

         NET INTEREST  INCOME.  Net interest  income is the  difference  between
interest  income on earning  assets and  interest  expense on deposits and other
borrowed funds. Net interest income for the year ended December 31, 2000 totaled
$11.5 million  compared to $9.9 million in 1999,  reflecting an increase of $1.6
million or 15.76%.  Total interest income totaled $24.0 million in 2000 compared
to $17.9 million in 1999. This increase was primarily the result of increases of
$2.7  million in  interest  and fees on loans,  and $3.5  million in interest on
investment securities.  The increase in earnings on loans was due to an increase
in average  outstanding  loan  balances  from  $153.3  million in 1999 to $180.7
million in 2000  coupled with an increase in the  interest  rate  earned,  which
increased  to 8.84% in 2000 from 8.69% in 1999.  The  increase  in  interest  on
investments  was  due  to  an  increase  in  average  outstanding   balances  of
approximately $45.4 million as well as an increase in the average yield of 7.10%
in 2000 from 6.65% in 1999.  Interest expense for 2000 increased by $4.5 million
from 1999.  The  increase in interest  expense was due to an increase in average
interest-bearing  deposits  and  other  borrowed  funds of  approximately  $63.6
million as well as an increase  of the  average  rate paid to 4.93% in 2000 from
4.21% in 1999.

         The average  yield on earning  assets for the year ended  December  31,
2000,  was 8.17%  compared to 8.03% in 1999.  The average  rate paid on interest
bearing  liabilities  in 2000 was 4.93%  compared to 4.21% in 1999.  The average
interest rate paid on other  borrowed  funds in 2000 was 6.50% compared to 5.90%
in 1999.  Net  interest  margin is the ratio of net  interest  income to average
earning assets.  For the year ended 2000, net interest margin was 3.91% compared
to 4.44% for the year ended December 31, 1999. The table below  illustrates  the
analysis of Indian River's average balances,  yields and changes in net interest
income for the fiscal years indicated.

         PROVISION FOR LOAN LOSSES.  The  provisions  for loan losses added $0.7
million to the  allowance  for loan losses in 2000  compared to $0.6  million in
1999.  This  increase was  primarily  attributed to the increase in total loans.
Total charge-offs net of recoveries were approximately $111 thousand in 2000 and
$196 thousand in 1999.

         NON-INTEREST  INCOME.  Non-interest  income for the year ended December
31, 2000 was $2.6 million  compared to $2.5 million in 1999, an increase of $0.1
million or approximately 4.0%. The change was primarily due to increased deposit
fee  income  offset  by a  decline  in the  gains on loan  sales and the sale of
securities.

         NON-INTEREST  EXPENSE.  Total  non-interest  expense for the year ended
December 31, 2000 of $9.3 million  reflected an increase of  approximately  $0.7
million or 7.83%  primarily as a result of increase in personnel costs and other
operating  expenses.  Salaries and benefits expense increased by $0.4 million or
8.54% in 2000, to $4.6 million  compared to $4.2 million in 1999.  Occupancy and
equipment  expense of $1.5 million  increased by $0.2 million or 16.94% in 2000.
The increase in salary and benefits expense and occupancy and equipment  expense
were both in part a result of the  establishment  and staffing of the  Melbourne
branch, Indian River Bank's sixth, during 2000. Other operating expenses of $3.2
million increased by $0.1 million or 3.11% in 2000.

         TAXES ON INCOME.  Income tax  expense  totaled  $1.4  million  for 2000
compared to income tax expense of $1.1 million in 1999.



                                       12
<PAGE>

COMPARISON OF AVERAGE BALANCES, INTEREST AND YIELDS

         The following  table provides  certain  information  relating to Indian
River's average consolidated  statements of financial condition and reflects the
interest   income  on   interest-earning   assets   and   interest   expense  of
interest-bearing  liabilities  for the periods  indicated and the average yields
earned  and rates paid for the  periods  indicated.  These  yields and costs are
derived  by  dividing  income or  expense by the  average  daily  balance of the
related assets or liabilities for the periods presented.  Non-accrual loans have
been included in the average balances of loans receivable.

<TABLE>
<CAPTION>
Consolidated                                                        Year Ended December 31,
                                  -------------------------------------------------------------------------------------------
                                                      2000                                             1999
                                  -----------------------------------------    ----------------------------------------------
                                     Average                     Average           Average                        Average
                                     Balance        Interest     Yield/Rate        Balance           Interest     Yield/Rate
                                  --------------  ------------  ------------    ---------------   --------------- ------------
<S>                                <C>            <C>                  <C>       <C>               <C>                    <C>
Assets:
Interest-earning assets:
    Investments (1)                $113,002,509   $  8,019,988         7.10%     $   67,588,351    $    4,495,681         6.65%
    Federal funds sold                  247,803         15,573         6.28%          2,549,521           129,487         5.08%
    Loans receivable (2)            180,742,955     15,972,769         8.84%        153,267,176        13,321,103         8.69%
                                   -------------  -------------  ------------    ---------------   ---------------  ------------
         Total interest
    earning assets                  293,993,267     24,008,330         8.17%        223,405,048        17,946,271         8.03%
                                                  -------------  ------------                      ---------------  ------------
Noninterest-earning assets           14,444,823                                      14,325,769
                                   -------------                                 ---------------
         Total                     $308,438,090                                  $  237,730,817
                                   =============                                 ===============

Liabilities and Stockholders'
Equity:
Interest-bearing liabilities:
   NOW and money market accounts   $ 29,205,768        352,638         1.21%     $   26,199,766           350,773         1.34%
   Savings accounts                  68,860,058      2,654,017         3.85%         77,325,111         3,099,527         4.01%
   Certificates of deposit          127,986,759      7,684,996         6.00%         75,647,738         3,901,802         5.16%
   Other                             28,171,890      1,831,797         6.50%         11,408,966           672,892         5.90%
                                   -------------  -------------  ------------    ---------------   ---------------  ------------
         Total interest-bearing
            liabilities             254,224,475     12,523,448         4.93%        190,581,581         8,024,994         4.21%
                                                  -------------  ------------                      ---------------  ------------
Noninterest-bearing
liabilities                          38,326,239                                      33,145,360
Stockholders' equity                 15,887,376                                      14,003,876
                                   -------------                                 ---------------
         Total                     $308,438,090                                  $  237,730,817
                                   =============                                 ===============

Net interest income and net yield
    On interest-earning assets                    $ 11,484,882         3.91%                       $   9,921,277          4.44%
                                                  =============  ============                      ===============  ============
<FN>
(1)      Includes investment securities and Federal Reserve Bank, Fed Home Loan Bank, and IBB stock.
(2)      Includes loans for which the accrual of interest has been suspended.
</FN>
</TABLE>




                                       13
<PAGE>

<TABLE>
<CAPTION>
                                           Year Ended December 31,
                                --------------------------------------------
                                                    1998
                                --------------------------------------------
                                     Average                       Average
                                     Balance         Interest     Yield/Rate
                                ----------------  -------------- -----------
<S>                             <C>               <C>                 <C>
Assets
Interest-earning assets"
    Investments (1)             $    55,390,843   $   3,766,518       6.80%
    Federal funds sold                1,752,685          92,242       5.26%
    Loans receivable (2)            127,407,802      11,482,346       9.01%
                                ----------------  -------------- -----------
        Total interest earning
    assets                          184,551,330      15,341,106       8.31%
                                                  -------------- -----------
Noninterest-earning assets           14,411,112
                                ----------------
        Total                   $   198,962,442
                                ================

Liabilities and Stockholders'
   Equity:
Interest-bearing liabilities:
    NOW and money market
       accounts                      22,803,504         335,294       1.47%
    Savings accounts                 54,945,860       2,347,241       4.27%
    Certificates of deposit          70,513,670       3,823,823       5.42%
    Other                             9,984,968         628,329       6.29%
                                ----------------  --------------  ----------
        Total interest-bearing
           liabilities              158,248,002       7,134,687       4.51%
                                                  -------------- -----------
Noninterest-bearing liabilities      28,532,992
Stockholders' equity                 12,784,119
                                ----------------
        Total                   $   199,565,113
                                ================

Net interest income and net
   yield On interest-earning
   assets                                        $   8,206,419       4.45%
                                                  ============== ===========
<FN>
(1) Includes investment securities and Federal Reserve Bank, Fed Home Loan Bank, and IBB stock.
(2) Includes loans for which the accrual of interest has been suspended.
</FN>
</TABLE>



                                       14
<PAGE>

RATE/VOLUME ANALYSIS OF NET INCOME

         The following table sets forth certain information regarding changes in
interest income and interest expense of Indian River for the periods  indicated.
For each category of  interest-earning  assets and  interest-bearing  liability,
information  is  provided  on changes  attributable  to:  (i)  changes in volume
(changes in volume multiplied by the prior period's rate); (ii) changes in rates
(change in rate  multiplied by the prior  period's  volume) and (iii) changes in
rate-volume (change in rate multiplied by the changes in volume).

<TABLE>
<CAPTION>
                                                                     Year Ended December 31,
                               --------------------------------------------------------------------------------------------------
                                                 2000 vs. 1999                                        1999 Vs. 1998
                                      Increase (Decrease) Attributable to                  Increase (Decrease) Attributable to
                               -----------------------------------------------     ----------------------------------------------
                                 Volume       Rate     Rate/Volume    Change         Volume      Rate     Rate/Volume    Change
                               ----------   ---------  -----------  ----------     ----------  ---------  -----------  ----------
<S>                            <C>          <C>         <C>         <C>            <C>         <C>         <C>         <C>
Interest income on:
      Investments              $3,021,445   $ 300,724   $ 202,138   $3,524,307     $  829,417  $ (82,162)  $ (18,092)  $  729,163
      Federal funds sold         (116,900)     30,722     (27,736)    (113,914)        41,937     (3,225)     (1,467)      37,245
      Loans receivable          2,387,781     223,770      40,115    2,651,666      2,330,519   (408,791)    (82,971)   1,838,757
                               ----------   ---------   ---------   ----------     ----------  ---------   ---------   ----------
Total interest income on
interest-earning assets         5,292,326     555,216     214,517    6,062,059      3,201,873   (494,178)   (102,530)   2,605,165
                               ----------   ---------   ---------   ----------     ----------  ---------   ---------   ----------

Interest expense on:
      NOW and money market
         accounts                  40,241     (34,426)     (3,950)      (1,865)        49,937    (29,992)     (4,466)      15,479
      Savings accounts           (339,328)   (119,235)     13,053     (445,510)       956,023   (144,772)    (58,965)     752,286
      Certificates of deposit   2,699,658     640,434     443,102    3,783,194        278,411   (186,829)    (13,603)      77,979
      Other                       988,663      68,944     101,298    1,158,905         89,609    (39,423)     (5,623)      44,563
                               ----------   ---------   ---------   ----------     ----------  ---------   ---------   ----------
Total interest expense on
interest-bearing liabilities    3,389,234     555,717     553,503    4,498,454      1,373,980   (401,016)    (82,657)     890,307
                               ----------   ---------   ---------   ----------     ----------  ---------   ---------   ----------

Increase (decrease) in net
      interest income          $1,903,092   $    (501)  $(338,986)  $1,563,605     $1,827,893  $ (93,162)  $ (19,873)  $1,714,858
                               ==========   =========   =========   ==========     ==========  =========   =========   ==========
</TABLE>

FINANCIAL CONDITION

         Total  assets were  $337.1  million at  December  31, 2000  compared to
$271.2 million as of December 31, 1999. This  represented an increase of 24.27%.
Average earning assets for 2000 were $294.0 million,  an increase of 31.60% from
the 1999 average of $223.4 million.

         Total  net loans  increased  by $31.0  million,  or  18.61%,  to $197.6
million at December  31, 2000  compared to $166.6  million at December 31, 1999.
Total deposits increased by 19.13% to $284.5 million.  Investment securities and
federal funds sold increased to $121.0 million, a 35.54% increase from the $89.3
million as of December 31, 1999.

         INVESTMENT ACTIVITY.  During 2000, Indian River's investment securities
portfolio increased by $31.2 million, or 34.99%. This increase in the securities
portfolio  reflects  management's  commitment to increasing the level of earning
assets,  enhances  our  liquidity  level,  and is a function  of deposit  growth
exceeding loan growth.  The before tax unrealized  gain on securities  available
for sale at  December  31, 2000 was $421  thousand as compared to an  unrealized
loss of $2.5  million at December  31, 1999,  an increase of $2.9  million.  The
increase in value is primarily a result of the decline in interest rates and the
related increase of the market value of fixed rate bonds.

         The following table provides  information  regarding the composition of
Indian River's  investment  portfolio at the dates indicated.  See Note 3 to the
Consolidated  Financial  Statements  for  additional  information  regarding the
securities portfolio.



                                       15
<PAGE>

<TABLE>
<CAPTION>
                                                                                        December 31,
                                                             --------------------------------------------------------------------
                                                                    2000                    1999                    1998
                                                             --------------------    --------------------    --------------------
                                                                         Percent                 Percent                 Percent
                                                             Balance     of Total    Balance     of Total    Balance     of Total
                                                             -------     --------    -------     --------    -------     --------
                                                                                      (Dollars in thousands)
<S>                                                          <C>           <C>       <C>           <C>       <C>           <C>
Available for Sale (at Estimated Market Value):
U.S. Treasury                                                $      0       0.0%     $      0       0.0%     $  7,205      12.7%
U.S. Government Agency obligations                             77,881      64.6%       64,852      72.6%       42,050      75.8%
Mortgage-backed securities                                      7,490       6.2%        6,471       7.3%        5,783      10.2%
Corporate debt securities                                      21,844      18.1%       10,093      11.3%            0       0.0%
                                                             --------      ----      --------      ----      --------      ----
                                                             $107,215      88.9%     $ 81,416      91.2%     $ 56,038      98.7%
                                                             ========      ====      ========      ====      ========      ====

Held to Maturity (at Amortized Cost):
Securities issued by state/political
subdivisions                                                 $  2,025       1.7%     $  2,025       2.3%     $      0       0.0%
Mortgage-backed securities                                      9,585       8.0%        5,047       5.6%            0       0.0%
                                                             --------      ----      --------      ----      --------      ----
                                                             $ 11,610       9.7%     $  7,072       7.9%     $      0       0.0%
                                                             ========      ====      ========      ====      ========      ====
</TABLE>


         The following  table  provides  information  regarding the  contractual
maturity and weighted  average yield of Indian River's  investment  portfolio at
December 31, 2000.

<TABLE>
<CAPTION>
                                                          After One Year    After Five Years
                                    One Year or Less    Through Five Years  Through Ten Years   After Ten Years          Total
                                   ------------------   ------------------ ------------------  ------------------  -----------------
                                            Weighted             Weighted           Weighted            Weighted            Weighted
                                   Carrying  Average    Carrying  Average  Carrying  Average   Carrying  Average   Carrying  Average
                                    Value     Yield      Value     Yield    Value     Yield     Value     Yield     Value     Yield
                                   --------  --------   --------  -------  --------  -------   --------  -------   --------  -------
                                                                           (Dollars in thousands)
<S>                                <C>         <C>     <C>         <C>     <C>         <C>     <C>         <C>     <C>         <C>
Available for Sale:
U.S. Government Agency
   obligations                     $ 21,725    6.3%    $ 10,581    6.9%    $ 29,290    7.1%    $ 16,285    8.0%    $ 77,881    7.0%
Mortgage-backed securities                3    8.1%       1,326    6.9%       4,042    7.3%       2,119    7.0%       7,490    7.2%
Corporate debt securities             3,999    6.3%      13,827    6.8%       1,997    7.0%       2,021    7.9%      21,844    6.8%
                                   --------    ---     --------    ---     --------    ---     --------    ---     --------    ---
Total                              $ 25,727    6.3%    $ 25,734    6.8%    $ 35,329    7.1%    $ 20,425    7.9%    $107,215    7.0%
                                   ========    ===     ========    ===     ========    ===     ========    ===     ========    ===

Held To Maturity
Securities issued by
   state/political subdivisions    $    100    6.3%    $      0    0.0%    $    237    8.0%    $  1,688    8.0%    $  2,025    7.9%
Mortgage-backed securities                0    0.0%       4,542    7.6%           0    0.0%       5,043    8.1%       9,585    7.9%
                                   --------    ---     --------    ---     --------    ---     --------    ---     --------    ---
Total                              $    100    6.3%    $  4,542    7.6%    $    237    8.0%    $  6,731    8.0%    $ 11,610    7.9%
                                   ========    ===     ========    ===     ========    ===     ========    ===     ========    ===
</TABLE>

Yields on  securities  issued by  state/political  subdivisions  are stated on a
tax-equivalent basis.



                                       16
<PAGE>

         LOAN  PORTFOLIO.  The following  table shows the  composition of Indian
River's loan portfolio by type of loan at the dates indicated.

<TABLE>
<CAPTION>
                                                                              December 31,
                                       ---------------------------------------------------------------------------------------------
                                              2000               1999               1998               1997              1996
                                              ----               ----               ----               ----              ----
                                                 Percent            Percent            Percent            Percent           Percent
                                                 of Total           of Total           of Total           of Total          of Total
                                        Balance   Loans    Balance   Loans    Balance   Loans    Balance   Loans   Balance   Loans
                                        -------   -----    -------   -----    -------   -----    -------   -----   -------   -----
                                                            (Dollars in Thousands)
<S>                                    <C>        <C>     <C>        <C>     <C>        <C>     <C>        <C>     <C>        <C>
Real Estate:
   Construction and land development   $  8,883    4.4%   $  8,626    5.1%   $  2,382    1.7%   $  1,892    1.6%   $    588    0.6%
   Farmland                               2,690    1.3%      3,146    1.9%      2,984    2.1%      1,916    1.6%      2,207    2.1%
   One to four family residential        89,890   44.9%     68,431   40.6%     60,956   42.2%     49,873   42.4%     41,193   39.8%
   Multifamily residential                1,117    0.6%      1,766    1.0%      1,762    1.2%      2,014    1.7%      2,327    2.2%
   Nonfamily, nonresidential             62,772   31.4%     55,104   32.7%     45,452   31.5%     32,080   27.3%     26,323   25.4%
Agriculture                               3,236    1.6%      1,707    1.0%      1,552    1.1%      1,752    1.5%      2,461    2.4%
Commercial and industrial                13,048    6.6%     12,308    7.3%     11,038    7.6%      9,865    8.4%      8,338    8.1%
Consumer                                 15,244    7.6%     15,092    9.0%     15,562   10.8%     15,868   13.5%     17,760   17.2%
Other                                     3,172    1.6%      2,370    1.4%      2,676    1.8%      2,381    2.0%      2,242    2.2%
                                       --------           --------           --------           --------           --------
   Total Loans                          200,052            168,550            144,364            117,641            103,439
                                       --------           --------           --------           --------           --------

   Less: allowance for loan loss          2,453              1,904              1,510              1,322              1,204
   Less: unearned discounts
         and loan fees                        6                 --                  1                  8                 63
                                       --------           --------           --------           --------           --------
   Loans, net                          $197,593           $166,645           $142,853           $116,311           $102,172
                                       ========           ========           ========           ========           ========
</TABLE>


                                       17
<PAGE>


         LOAN MATURITY.  The following  table sets forth the term to contractual
maturity of Indian River Bank's loan portfolio at December 31, 2000. Loans which
have adjustable rates and fixed rates are all shown in the period of contractual
maturity.  Demand loans, loans having no contractual maturity and overdrafts are
reported as due in one year or less.


<TABLE>
<CAPTION>
                                                                                          Due In
                                                                 -----------------------------------------------------------
                                                 Total           One Year or Less      One to Five Years     Over Five Years
                                                --------         ----------------      -----------------     ---------------
                                                                          (Dollars in Thousands)
<S>                                             <C>                   <C>                   <C>                   <C>
Commercial, Agricultural                        $ 16,284              $  4,565              $  9,992              $  1,726
Real estate construction                           8,883                 1,981                   764                 6,138
Real estate mortgage                             156,469                 7,803                21,541               127,126
Consumer, other                                   18,416                 5,450                12,347                   619
                                                --------              --------              --------              --------
Total loans                                     $200,052              $ 19,799              $ 44,644              $135,609
                                                ========              ========              ========              ========

Loans with:
Predetermined fixed interest rate               $ 76,840              $ 10,950              $ 36,124              $ 29,766
Floating interest rate                           123,212                 8,849                 8,520               105,843
                                                --------              --------              --------              --------
Total loans                                     $200,052              $ 19,799              $ 44,644              $135,609
                                                ========              ========              ========              ========
</TABLE>


         Fixed rate loans due after one year total approximately $66 million and
adjustable rate loans due after one year total approximately $114 million.

         ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses is a valuation
reserve  established by management in an amount it deems adequate to provide for
losses in the loan portfolio.  Management assesses the adequacy of the allowance
for loan  losses  based  upon a  number  of  factors  including,  among  others:
analytical  reviews of loan loss experience in relationship to outstanding loans
and commitments; unfunded loan commitments; problem and non-performing loans and
other  loans  presenting  credit  concerns;  trends  in loan  growth,  portfolio
composition and quality; appraisals of the value of collateral; and management's
judgment  with respect to current and  expected  economic  conditions  and their
impact on the existing loan portfolio.

         The  allowance  for loan losses is  increased  by  provisions  for loan
losses charged to expense.  Charge-offs of loan amounts determined by management
to be  uncollectible  or impaired  decrease the  allowance,  and  recoveries  of
previous charge-offs are added to the allowance.

         At December  31,  2000.  the  allowance  for losses was $2.4 million or
1.23%  of  loans  outstanding  compared  to  $1.9  million  or  1.13%  of  loans
outstanding as of December 31, 1999, an increase of $549 thousand. This increase
is attributable primarily to an increase in total loans outstanding. At December
31,  2000,  non-accrual  loans  increased  by $66  thousand  or  120.73% to $120
thousand  compared to $54 thousand at December 31, 1999.  The allowance for loan
losses coverage of non-accrual  loans was 2049.15% at December 31, 2000 compared
to a coverage of 3511.22% at December 31, 1999.



                                       18
<PAGE>

         The  following  table sets forth  activity  in the  allowance  for loan
losses for the periods indicated.

<TABLE>
<CAPTION>
                                                                                    Year Ended December 31,
                                                               -------------------------------------------------------------------
                                                                2000           1999           1998           1997           1996
                                                               -------        -------        -------        -------        -------
                                                                                    (Dollars in Thousands)
<S>                                                            <C>            <C>            <C>            <C>            <C>
Balance at beginning of year                                   $ 1,904        $ 1,510        $ 1,322        $ 1,204        $ 1,066
                                                               -------        -------        -------        -------        -------
Charge-offs:
  Commercial, Agricultural                                         (15)           (17)           (12)           (18)           (17)
  Real estate construction                                           0              0              0              0              0
  Real estate mortgage                                             (27)             0              0             (6)            (7)
  Installment loans to individuals                                (111)          (232)          (233)          (317)          (307)
                                                               -------        -------        -------        -------        -------

Total                                                             (153)          (249)          (245)          (341)          (331)
                                                               -------        -------        -------        -------        -------
Recoveries
  Commercial, Agricultural                                           1             10              6              6              6
  Real estate construction                                           0              0              0              0              0
  Real estate mortgage                                               0              0              0              7              0
  Installment loans to individuals                                  41             43             52             61             48
                                                               -------        -------        -------        -------        -------

Total                                                               42             53             58             74             54
                                                               -------        -------        -------        -------        -------

Net charge-offs                                                   (111)          (196)          (187)          (267)          (277)
Additions charged to operations                                    660            590            375            385            415
                                                               -------        -------        -------        -------        -------
Balance at end of period                                       $ 2,453        $ 1,904        $ 1,510        $ 1,322        $ 1,204
                                                               =======        =======        =======        =======        =======

Ratio of net charge-offs during the period to
to average loans outstanding during the period                    0.06%          0.13%          0.15%          0.24%          0.28%
</TABLE>

         The  following  table  allocates  the allowance for loan losses by loan
category.  The  allocation of the allowance to each category is not  necessarily
indicative  of future  losses and does not restrict the use of the  allowance to
absorb losses in any category.

<TABLE>
<CAPTION>
                                                                        December 31,
                            ------------------   ------------------   ------------------   ------------------   -----------------
                                   2000                 1999                 1998                 1997                 1996
                            ------------------   ------------------   ------------------   ------------------   -----------------
                                                                         (Dollars in Thousands)

                            Amount  Percent(1)   Amount  Percent(1)   Amount  Percent(1)   Amount  Percent(1)   Amount  Percent(1)
                            ------  ----------   ------  ----------   ------  ----------   ------  ----------   ------  ----------
<S>                         <C>       <C>        <C>       <C>        <C>       <C>        <C>       <C>        <C>       <C>
Commercial, Agricultural    $  390      8.1%     $   66      8.3%     $   41      8.7%     $   47      9.9%     $   42     10.4%
Real estate construction        76      4.4%         39      5.2%         15      1.7%         10      1.6%         36      0.6%
Real estate mortgage         1,639     78.2%      1,400     76.1%      1,105     77.0%        860     73.0%        627     69.7%
Consumer, other                348      9.2%        399     10.4%        349     12.6%        405     15.5%        499     19.3%
                            ------    -----      ------    -----      ------    -----      ------    -----      ------    -----
  Total allowance for
     loan losses            $2,453    100.0%     $1,904    100.0%     $1,510    100.0%     $1,322    100.0%     $1,204    100.0%
                            ======    =====      ======    =====      ======    =====      ======    =====      ======    =====
<FN>
1) Represents the percent of loans in category to the gross loans.
</FN>
</TABLE>

         NON-PERFORMING ASSETS. Indian River Bank's non-performing assets, which
are comprised of loans delinquent 90 days or more,  non-accrual loans, and other
real estate owned ("OREO"),  totaled $128 thousand at December 31, 2000 compared
to $106 thousand at December 31, 1999. The percentage of  non-performing  assets
to total assets was 0.04% at December 31, 2000 and December 31, 1999.



                                       19
<PAGE>

         Non-performing  loans constituted all of the  non-performing  assets at
December 31, 2000 and December  31, 1999.  Non-performing  loans at December 31,
2000 consist of loans in  non-accrual  status in the amount of $120 thousand and
loans past due over ninety days of $8 thousand  compared to non-accrual loans of
$54 thousand and loans past due over ninety days of $52 thousand at December 31,
1999.

         Indian River Bank owned no other real estate  owned at either  December
31, 2000 and 1999.  Generally,  Indian  River Bank would  evaluate the fair OREO
value of each property  annually.  These  evaluations may be appraisals or other
market  studies.  Credit card loans are placed on non accrual  when they are 180
days  delinquent.  All  other  consumer  and  commercial  loans  are  placed  on
nonaccrual at 90 days or when determined to be uncollectible by management.

         The following table shows the amounts of  non-performing  assets at the
dates indicated.

<TABLE>
<CAPTION>
                                                                               December 31,
                                                        ------------------------------------------------------------
                                                        2000          1999          1998          1997          1996
                                                        ----          ----          ----          ----          ----
                                                                     (Dollars in Thousands)
<S>                                                     <C>           <C>           <C>           <C>           <C>
Nonaccrual Loans
      Real estate                                       $120          $ 49          $254          $  0          $186
      Installment                                          0             5             0            30             5

Accrual loans - Past due 90 days or more
      Real estate                                          0            20           132            30           311
      Installment                                         10            32            11            40            96

Restructured loans                                         0             0             0             0             0

Real estate owned                                          0             0             0            33            96

                                                        ----          ----          ----          ----          ----
            Total nonperforming assets                  $130          $106          $397          $133          $695
                                                        ====          ====          ====          ====          ====
</TABLE>


         At  December  31,  2000,  there  were no  performing  loans  considered
potential  problem  loans,  defined as loans which are not  included in the past
due,  nonaccrual or  restructured  categories,  but for which known  information
about  possible  credit  problems  causes  management  to be uncertain as to the
ability of the borrowers to comply with the present loan repayment terms.

         DEPOSITS  AND OTHER  BORROWINGS.  The  principal  sources  of funds for
Indian River Bank are core deposits (demand deposits, NOW accounts, money market
accounts,  savings accounts and certificates of deposit less than $100,000) from
the local market areas  surrounding the bank's offices.  The bank's deposit base
includes  transaction  accounts,  time and savings  accounts and accounts  which
customers  use for cash  management  and which provide the bank with a source of
fee income and  cross-marketing  opportunities  as well as a low-cost  source of
funds. Time and savings accounts,  including money market deposit accounts, also
provide a relatively stable and low-cost source of funding.

         The following  table reflects  Indian River Bank's deposits by category
for the periods indicated.



                                       20
<PAGE>

<TABLE>
<CAPTION>
                                                                            Year Ended December 31,
                                                      ---------------------------------------------------------------------
                                                             2000                     1999                     1998
                                                             ----                     ----                     ----
                                                      Average     Average      Average     Average      Average     Average
                                                      Balance      Rate        Balance      Rate        Balance       Rate
                                                      -------     -------      -------     -------      -------     -------
                                                                              (Dollars in Thousands)
<S>                                                  <C>           <C>        <C>           <C>        <C>           <C>
DEPOSIT CATEGORY
Noninterest-bearing demand                           $ 36,916      0.00%      $ 32,497      0.00%      $ 27,125      0.00%
Interest-bearing demand                                25,583      1.10%        22,797      1.20%        19,412      1.40%
Money Market                                            3,623      1.98%         3,403      2.00%         3,392      2.20%
Savings                                                68,860      3.86%        77,325      4.00%        54,946      4.30%
Certificates of deposit of $100,000 or more            22,506      5.98%        14,148      5.20%        13,256      5.50%
Other Time                                            105,481      6.01%        61,500      5.10%        57,257      5.40%
                                                     --------                 --------                 --------
Total                                                $262,969                 $211,670                 $175,388
                                                     ========                 ========                 ========
</TABLE>


         The following table indicates the amount of the Bank's  certificates of
deposit of $100,000 or more by time remaining  until maturity as of December 31,
2000.

<TABLE>
<CAPTION>
                                                          December 31, 2000
                                                          -----------------
                                                        (Dollars in Thousands)
<S>                                                           <C>
Due In
         3 months or less                                     $ 9,949
         Over 3 through 6 months                               11,076
         Over 6 through 12 months                              14,069
         Over 12 months                                         3,434
                                                              -------
         Total                                                $38,528
                                                              =======
</TABLE>

         The following table provides information  regarding Indian River Bank's
short-term borrowings for the periods indicated.  See Note 9 to the Consolidated
Financial  Statements for additional  information  regarding Indian River Bank's
borrowings.   At  December  31,  2000,  Indian  River  had  no  holding  company
borrowings,  having repaid all amounts outstanding during 2000 from the proceeds
of the Company's offering of common stock completed in October 2000.


<TABLE>
<CAPTION>
                                               Maximum Amount
                                             Outstanding At Any      Average                           Ending        Average Rate at
Year Ended December 31,                          Month End           Balance       Average Rate        Balance          Period End
------------------------------               ------------------    ------------    -------------     -----------     ---------------
<S>                                              <C>               <C>                 <C>           <C>                  <C>
Federal Funds Sold & Repurchase Agreements
                         2000                    $23,821,817       $13,828,154         6.51%         $15,243,931          6.20%
                         1999                     13,075,000         3,225,151         5.36%           7,800,000          4.83%
                         1998                      7,425,000         1,713,283         6.17%                   0          0.00%
Other Short Term Borrowings
                         2000                    $10,000,000       $ 9,108,509         6.31%         $10,000,000          5.90%
                         1999                      5,000,000           638,889         5.87%           5,000,000          6.50%
                         1998                              0                 0                                 0          0.00%
</TABLE>

         ASSET/LIABILITY MANAGEMENT. Indian River's profitability,  like that of
most  financial  institutions,  is  dependent  to a large  extent  upon  its net
interest  income,  which  is the  difference  between  its  interest  income  on
interest-earning assets, such as loans and investments, and its interest expense
on interest-bearing liabilities, such as deposits. Interest rate risk arises due
to fluctuations in the general level of interest rates and such fluctuations can
significantly impact our level of profitability.  Managing interest rate risk is
fundamental to banking. The inherent maturing and re-pricing  characteristics of
our   day-to-day   lending   and   deposit   activities   create   a   naturally
asset-sensitivity structure. Indian River seeks to manage its interest rate risk
through its Asset/Liability Management



                                       21
<PAGE>

Committee  (ALCO)  established  by the Board of Directors and  consisting of the
Chief Executive Officer, Chief Financial Officer, Chief Lending Officer, Lending
Officers, and Loan Operations Officers.

         The Chief Financial Officer monitors the day-to-day exposure to changes
in interest rates in response to loan and deposit flows.  The methodology we use
for  measuring  exposure  to  interest  rate risk is  intended to ensure that we
include  a  sufficiently  broad  range of rate  scenarios  and  pattern  of rate
movements that we believe to be reasonably  possible.  The methodology  measures
the  impact  that 100,  200,  and 300 basis  point  rate  changes  would have on
earnings  over the  subsequent  twelve  months.  Our earnings  simulation  model
reflects a number of  variables  that we identify as being  affected by interest
rates.  The ALCO also  establishes and monitors the volume and mix of assets and
funding sources to produce  results that are consistent with liquidity,  capital
adequacy, growth, risk, and profitability goals.

         Liquidity  management  enables us to maintain  sufficient  cash flow to
fund  operations and to meet financial  obligations to depositors and borrowers.
Indian River  Bank's  liquidity is enhanced by its ability to attract and retain
deposits and by principal and interest payments on loans and maturing securities
in the investment  portfolio.  Indian River Bank's core deposit base, consisting
of demand deposits,  money market,  and savings  accounts  supplemented by other
deposits  of  varying  maturities  and  rates,  contributes  to  liquidity.  Our
liquidity  position,  those assets invested in federal funds,  mortgaged  backed
securities,  and obligations of the U.S. Government,  its agencies and sponsored
entities available for sale, of $85.9 million at December 31, 2000, reflected an
increase of $14.5  million from December 31, 1999,  or 16.93%.  Funds  available
through  short-term  borrowings and asset maturities are considered  adequate to
meet all current needs. At December 31, 2000,  Indian River had available credit
of $13.1  million  under  lines of credit  with  correspondent  banks.  Although
management  believes that the  liquidity  position is adequate,  increased  loan
demand  could have an adverse  impact on  liquidity.  Indian River Bank also has
available credit of $22.7 million under its line with the Federal Home Loan Bank
of  Atlanta.  This line may be  utilized  as a  supplementary  source of funding
growth for the Bank. In addition, the ALCO has established minimum standards and
key ratios of asset quality and performance.  These standards and ratios provide
the framework for guidance and measurement. Management evaluates these standards
and ratios on an ongoing basis.

         The loan to deposit  ratio at  December  31,  2000 was 69.44% down from
69.77% at December 31, 1999. The loan to total assets ratio at December 31, 2000
was 58.62% compared to 61.44% at December 31, 1999.




                                       22
<PAGE>

         The amounts of interest-earning assets and interest-bearing liabilities
outstanding  at  December  31,  2000  which are  anticipated,  based on  certain
assumptions,  to re-price or mature in future time periods, are set forth in the
sensitivity  analysis  below.  The table reflects the shorter of the maturity or
repricing date as of December 31, 2000.

<TABLE>
<CAPTION>
                                                                 More than 3
                                                                  Months but        1 Year
                                                 3 Months or      Less than 1      through 5     More than 5
                                                     Less            Year            Years           Years          Total
                                                   ---------       ---------       ---------       ---------      ---------
                                                                          (Dollars in Thousands)
<S>                                                <C>             <C>             <C>             <C>            <C>
ASSETS
Securities available for sale                      $  20,722       $   5,005       $  25,734       $  55,754      $ 107,215
Securities held to maturity                                0             100           4,542           6,967         11,609
Other investments                                         42               0               0           1,702          1,744
Federal funds sold                                       493               0               0               0            493
Loans                                                 44,983          67,941          79,779           7,349        200,052
                                                   ---------       ---------       ---------       ---------      ---------
Total earning assets                               $  66,240       $  73,046       $ 110,055       $  71,772      $ 321,113
                                                   ---------       ---------       ---------       ---------      ---------

LIABILITIES
Certificates of deposit                            $  52,815       $  77,275       $  18,937       $      29      $ 149,056
Money market accounts                                      0           1,446           1,445               0          2,891
Transactions accounts                                      0               0          21,462           5,365         26,827
Savings accounts                                           0               0          51,467          12,868         64,335
Federal funds purchased                               10,100               0               0               0         10,100
FHLB advances                                         10,143             143             857           2,000         13,143
Other borrowed funds                                   5,144               0               0               0          5,144
                                                   ---------       ---------       ---------       ---------      ---------
Total interest-bearing liabilities                 $  78,202       $  78,864       $  94,168       $  20,262      $ 271,496
                                                   ---------       ---------       ---------       ---------      ---------

Interest sensitivity gap:
Amount                                             ($ 11,962)      ($  5,818)      $  15,887       $  51,510      $  49,617
Cumulative Gap                                     ($ 11,962)      ($ 17,780)      ($  1,893)      $  49,617      $  49,617
Gap as % of Total Assets                               (3.55%)         (1.73%)          4.71%          15.28%         14.72%
Cumulative Gap as % of Total Assets                    (3.55%)         (5.28%)          (.56%)         14.72%         14.72%

Ratio of rate sensitive assets to rate
   sensitive liabilities                                0.85%           0.93%           1.17%           3.54%          1.18%

Cumulative ratio of rate sensitive assets
   to rate sensitive liabilities                        0.85%           1.02%           0.99%           1.18%          1.18%
</TABLE>

         The amount of assets and  liabilities  shown  which  re-price or mature
during a particular  period were  determined in  accordance  with the earlier of
term to re-pricing or the  contractual  terms of the asset or liability.  Indian
River Bank has assumed that its  savings,  interest  checking,  and money market
accounts  re-price  daily.  At December 31, 2000, the bank's  one-year  interest
sensitivity gap (the difference  between the amount of  interest-earning  assets
and interest  bearing  liabilities,  anticipated  by the bank,  based on certain
assumptions,  to mature or re-price  within one year) as a  percentage  to total
assets was (5.28)%.  This negative gap position means the bank had $17.8 million
more  liabilities  than  assets  re-pricing  within  one  year.  This  generally
indicates that in a period of declining  interest rates, the bank's net interest
income  may be  positively  affected.  Conversely,  in a  rising  interest  rate
environment, the bank's net interest income may decrease. However, this approach
assumes that all re-pricing  assets and liabilities  will re-price the same way.
Historical  data indicates  that certain  deposit  liabilities  such as interest
checking,  savings,  and money  market  deposits do not re-price the same way as
other  products and interest gap analysis tend to be more accurate when adjusted
to reflect such behavior.  No adjustments  are included in the table  presented.
Indian  River also  monitors  its  exposure to changes in  interest  rates using
models  which  measure  the  impact of  assumed  changes.  See  "Asset/Liability
Management" above.

         CAPITAL  ADEQUACY.  Total  stockholders'  equity  was $23.2  million at
December 31, 2000  compared to $13.6  million at December  31, 1999.  The change
represents an increase of $9.6 million or 70.7%.  This change is a result of the
issuance of 207,828 shares of common stock at $25 per share, for net proceeds of
approximately $5.1 million, earnings of $2.6 million, and net unrealized holding
gains on investment securities of $1.9 million in 2000.



                                       23
<PAGE>

         At December  31,  2000,  Indian River Bank's ratio of Tier 1 capital to
total average assets equaled 6.9%,  which exceeded the minimum  leverage capital
ratio of 4.00% by 2.9% and the  minimum  leverage  ratio for "well  capitalized"
banks of 5.00% by 1.9%.

         The ratio of Indian  River's  average  equity to average assets for the
years  ended  December  31,  2000,  1999 and 1998 was  5.15%,  5.89% and  6.43%,
respectively.

IMPACT OF INFLATION AND CHANGING PRICES

         The  Consolidated  Financial  Statements  and Notes  thereto  have been
prepared in accordance  with Generally  Accepted  Accounting  Principles,  which
require the measurement of financial  position and operating results in terms of
historical  dollars without  considering the changes in the relative  purchasing
power of money over time due to inflation.  The impact of inflation is reflected
in the increased cost of operations.  Unlike most industrial  companies,  nearly
all of our assets and liabilities are monetary in nature. As a result,  interest
rates have a greater  impact on our  performance  than do the effects of general
levels  of  inflation.  Interest  rates  do not  necessarily  move  in the  same
direction or to the same extent as the price of goods or services.

IMPACT OF NEW ACCOUNTING STANDARDS

         The FASB has issued SFAS No. 133, Accounting for Derivative Instruments
and Hedging  Activities,  which we had not been required to adopt as of December
31, 2000.  This  Statement,  which is effective for fiscal years beginning after
June 15, 2000,  establishes  accounting  and reporting  standards for derivative
instruments,  including  derivatives embedded in other contracts,  (collectively
referred to as  derivatives)  and for hedging  activities.  It requires  that an
entity  recognizes  all  derivatives  as  either  assets or  liabilities  in the
statement of financial  position and measure those instruments at fair value. If
certain conditions are met, a derivative may be specifically designated as (a) a
hedge of the  exposure  to changes in the fair  value of a  recognized  asset or
liability or an  unrecognized  firm  commitment,  (b) a hedge of the exposure to
variable cash flows of a forecasted  transaction,  or (c) a hedge of the foreign
currency  exposure of a net investment in a foreign  operation,  an unrecognized
firm     commitment,      an      available-for-sale      security,     or     a
foreign-currency-denominated  forecasted  transaction.  This  statement  is  not
expected to have a significant impact on Indian River.



                                       24
<PAGE>

ITEM 7. FINANCIAL STATEMENTS.



                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
Indian River Banking Company
Vero Beach, Florida

We have audited the  accompanying  consolidated  balance  sheets of Indian River
Banking  Company and  subsidiary  (the "Bank") as of December 31, 2000 and 1999,
and the related  consolidated  statements of income,  stockholder's  equity, and
cash flows for the years then ended. These consolidated financial statements are
the responsibility of the Bank's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We have  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  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  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 our audits  provide a reasonable
basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated financial position of Indian
River Banking  Company and  subsidiary as of December 31, 2000 and 1999, and the
results of their  operations  and their cash flows for the years then ended,  in
conformity with generally accepted accounting principles.

         /s/ McGladrey & Pullen, LLP

Fort Lauderdale, Florida
February 2, 2001, except for Note 23  as to
    which the date is February 14, 2001





                                       25
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                                     Consolidated Balance Sheets

<TABLE>
<CAPTION>
DECEMBER 31,                                                                                      2000                   1999
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                           <C>                    <C>
ASSETS

Cash and Cash Equivalents:
      Cash and due from banks (Notes 2 and 18)                                                $ 10,336,581           $  6,714,850
      Federal funds sold (Note 18)                                                                 493,000                     --

-----------------------------------------------------------------------------------------------------------------------------------
                                Total Cash and Cash Equivalents                                 10,829,581              6,714,850

Investment Securities:
      Securities available-for-sale (Notes 3 and 9)                                            107,215,355             81,416,332
      Securities held to maturity (Note 3)                                                      11,609,513              7,071,969
      Other securities (Notes 3 and 9)                                                           1,702,050                798,350

-----------------------------------------------------------------------------------------------------------------------------------
                                    Total Investment Securities                                120,526,918             89,286,651

Loans, net (Notes 4, 5, 9, 12, 17 and 18)                                                      197,593,373            166,644,658

Bank premises and equipment, net (Note 6)                                                        3,816,994              4,315,942

Accrued interest receivable                                                                      2,990,440              2,260,455

Deferred tax asset (Note 8)                                                                        667,369              1,533,364

Other assets                                                                                       650,496                479,692

-----------------------------------------------------------------------------------------------------------------------------------


                                                   Total Assets                               $337,075,171           $271,235,612
                                                                                              ===================================
</TABLE>





See Notes to Consolidated Financial Statements



                                       26
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                                     Consolidated Balance Sheets

<TABLE>
<CAPTION>
Years Ended December 31,                                                                        2000                   1999
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                        <C>                    <C>
Liabilities and Stockholders' Equity

Liabilities
Noninterest bearing demand deposits                                                        $  41,435,265          $  32,142,461
Interest bearing deposits
     NOW                                                                                      26,827,308             24,320,260
     Money Market                                                                              2,890,737              4,316,022
     Savings                                                                                  64,335,447             73,065,351
     Time deposits, $100,000 and over (Note 7)                                                38,527,794             21,841,680
     Other time deposits (Note 7)                                                            110,528,113             83,160,177

-----------------------------------------------------------------------------------------------------------------------------------
                                                    Total Deposits                           284,544,664            238,845,951

Federal funds purchased and securities sold under
     repurchase agreements (Note 9)                                                           15,243,931              7,800,000
Other borrowings (Note 9)                                                                     13,142,857             10,273,953
Other liabilities                                                                                943,258                724,533

-----------------------------------------------------------------------------------------------------------------------------------
                                                 Total Liabilities                           313,874,710            257,644,437

Commitments and Contingencies (Notes 9,13 and 17)

-----------------------------------------------------------------------------------------------------------------------------------
Stockholders' Equity (Notes 10, 11,16 and 23)
      Common stock, $1 par value; 10,000,000
          shares authorized; issued and outstanding
          2000 - 1,764,715 shares, 1999 - 633,666 shares                                       1,764,715                633,666
      Capital surplus                                                                         16,353,972              8,685,986
      Retained earnings                                                                        4,816,781              5,875,727
      Accumulated other comprehensive income (loss)                                              264,993             (1,604,204)

-----------------------------------------------------------------------------------------------------------------------------------
                                        Total Stockholders' Equity                            23,200,461             13,591,175
-----------------------------------------------------------------------------------------------------------------------------------

Total Liabilities and Stockholders' Equity                                                 $ 337,075,171          $ 271,235,612
                                                                                         ========================================
</TABLE>



                                       27
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                               Consolidated Statements of Income

<TABLE>
<CAPTION>
Years Ended December 31,                                                                  2000             1999
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                                    <C>              <C>
Interest Income:
      Loans and fees on loans                                                          $15,972,769      $13,321,103
      Investment securities and due from banks                                           8,019,988        4,495,681
      Federal funds sold                                                                    15,573          129,487
-----------------------------------------------------------------------------------------------------------------------
                                                  Total Interest Income                 24,008,330       17,946,271
-----------------------------------------------------------------------------------------------------------------------

Interest Expense:
      Deposits                                                                          10,691,651        7,352,102
      Other                                                                              1,831,797          672,892
-----------------------------------------------------------------------------------------------------------------------
                                                 Total Interest Expense                 12,523,448        8,024,994
-----------------------------------------------------------------------------------------------------------------------
                                                    Net Interest Income                 11,484,882        9,921,277
Provision for Loan Losses (Note 5)                                                         660,000          590,000
-----------------------------------------------------------------------------------------------------------------------
                    Net Interest Income After Provision for Loan Losses                 10,824,882        9,331,277
-----------------------------------------------------------------------------------------------------------------------

Other Income:
      Service charges and fees                                                           1,338,239        1,097,848
      Gain on sales of securities (Note 3)                                                  12,500           76,340
      Gain on sale of loans                                                                695,911          816,986
      Other                                                                                505,761          464,164
-----------------------------------------------------------------------------------------------------------------------
                                                     Total Other Income                  2,552,411        2,455,338
-----------------------------------------------------------------------------------------------------------------------

Other Expense:
      Salaries                                                                           3,902,663        3,613,205
      Employee benefits                                                                    694,659          622,500
      Occupancy                                                                            688,552          563,344
      Furniture and equipment                                                              819,870          726,584
      Other operating expenses (Note 14)                                                 3,212,512        3,115,615
-----------------------------------------------------------------------------------------------------------------------
                                                    Total Other Expense                  9,318,256        8,641,248
-----------------------------------------------------------------------------------------------------------------------
                                             Income before income taxes                  4,059,037        3,145,367
Provision for Income taxes (Note 8)                                                      1,428,209        1,142,767
-----------------------------------------------------------------------------------------------------------------------
                                                             Net Income                $ 2,630,828      $ 2,002,600
-----------------------------------------------------------------------------------------------------------------------
Basic earnings per share (Note 11)                                                     $      1.66      $      1.31
                                                                                       ================================
Diluted earnings per share (Note 11)                                                   $      1.63      $      1.30
                                                                                       ================================
</TABLE>

See Notes to Consolidated Financial Statements




                                       28
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                      Consolidated Statements of Changes in Stockholders' Equity

<TABLE>
<CAPTION>
Years Ended December 31, 2000 and 1999
------------------------------------------------------------------------------------------------------------------------------------
                                                                                          Accumulated
                                                                                             Other          Total
                                           Common Stock           Capital      Retained   Comprehensive  Stockholders' Comprehensive
                                         Shares      Amount       Surplus      Earnings   Income (Loss)     Equity         Income
------------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>         <C>          <C>           <C>           <C>           <C>           <C>
Balance, Dec. 31, 1998                   576,124   $  576,124   $ 7,365,731   $ 5,251,216   $   590,642   $13,783,713
   10% stock dividend                     57,428       57,428     1,316,250    (1,373,678)           --            --
   Fractional Shares                          --           --            --        (4,411)           --        (4,411)
   Stock options exercised                   114          114         4,005            --            --         4,119
   Comprehensive income (loss):
     Net income                               --           --            --     2,002,600            --     2,002,600   $ 2,002,600
     Other comprehensive loss,
     unrealized loss on securities,
     net of tax (Note 3)                      --           --            --            --    (2,194,846)   (2,194,846)   (2,194,846)
                                                                                                                        -----------
   Comprehensive income (loss)                                                                                          $  (192,246)
                                                                                                                        ===========

                                      --------------------------------------------------------------------------------
Balance, December 31, 1999               633,666      633,666     8,685,986     5,875,727    (1,604,204)   13,591,175
   10% stock dividend                     63,199       63,199     1,303,163    (1,366,362)           --            --
   Fractional shares                          --           --            --        (3,623)           --        (3,623)
   2 for 1 stock split                   696,865      696,865      (696,865)           --            --            --
   Stock options exercised                 2,729        2,729        36,194            --            --        38,923
   Issuance of common stock (Note 21)    207,828      207,828     4,866,133            --            --     5,073,961
   Comprehensive income (loss):
     Net income                               --           --            --     2,630,828            --     2,630,828     2,630,828
     Other comprehensive income,
     unrealized gain on securities,
     net of tax (Note 3)                      --           --            --            --     1,869,197     1,869,197     1,869,797
                                                                                                                        -----------
   Comprehensive income (loss)                                                                                          $ 4,500,025
                                                                                                                        ===========
                                      --------------------------------------------------------------------------------
Balance, December 31, 2000             1,604,287   $1,604,287   $14,194,611   $ 7,136,570   $   264,993   $23,200,461
                                      ================================================================================
</TABLE>

See Notes to Consolidated Financial Statements



                                       29
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                           Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
Years Ended December 31,                                                                                  2000              1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                  <C>               <C>
Cash Flows From Operating Activities
      Net Income                                                                                     $  2,630,828      $  2,002,600
      Adjustments to reconcile net income to net cash provided by operating activities:
         Depreciation and amortization                                                                    712,747           562,825
         Provision for loan losses                                                                        660,000           590,000
         Other real estate owned losses                                                                    15,202           108,369
         Deferred income taxes                                                                           (192,000)         (125,000)
         Proceeds from loans originated for resale                                                     10,476,508        32,476,233
         Origination of loans for resale                                                              (12,857,051)      (29,958,997)
         Gain on sale of loans                                                                           (695,911)         (816,986)
         Amortization of premiums and discounts, net                                                       93,726           185,775
         Gain on sale of securities                                                                       (12,500)          (76,340)
         Increase in accrued interest receivable                                                         (729,985)         (584,178)
         Increase in other assets                                                                        (170,804)         (222,609)
         Decrease in other liabilities                                                                    218,725           267,360
------------------------------------------------------------------------------------------------------------------------------------
             Net cash provided by operating activities                                                    149,485         4,409,052
------------------------------------------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities
         Cash flows from securities (Note 19)                                                         (28,394,301)      (36,078,219)
         Loan origination and principal collections on loans                                          (28,632,330)      (29,559,639)
         Proceeds from sale of loans                                                                           --         3,436,079
         Proceeds from sale of other real estate owned                                                     84,867            36,417
         Proceeds from the sale of land                                                                   230,000                --
         Purchases of premises and equipment                                                             (443,799)         (702,075)
             Net cash used in investing activities                                                    (57,155,563)      (62,867,437)
Cash Flows From Financing Activities
         Net increase in deposits                                                                      45,698,713        38,449,186
         Net increase in fed funds purchased & repurchase agreements                                    7,443,931                --
         Proceeds from other borrowings                                                                10,600,000        12,881,062
         Principal payments on borrowings                                                              (7,731,096)       (3,285,715)
         Proceeds from issuance of stock (Note 21)                                                      5,073,961                --
         Proceeds from exercise of stock options                                                           38,923             4,119
         Cash paid for fractional shares                                                                   (3,623)           (4,411)
             Net cash provided by financing activities                                                 61,120,809        48,044,241
Net increase (decrease) in cash and cash equivalents                                                    4,114,731       (10,414,144)
Cash and cash equivalents
         Beginning                                                                                      6,714,850        17,128,994
                                                                                                    --------------------------------
         Ending                                                                                      $ 10,829,581      $  6,714,850
                                                                                                    ================================
</TABLE>

See Notes to Consolidated Financial Statements
(Additional Cash Flow information - Note 19)



                                       30
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                      Notes to Consolidated Financial Statements

NOTE 1.  Summary of Significant Accounting Policies

--------------------------------------------------------------------------------

Description of business:  Indian River Banking Company is a bank holding company
incorporated in the State of Florida. Its wholly-owned subsidiary,  Indian River
National  Bank,  provides a full range of banking  services  to  individual  and
corporate  customers  through its various  locations in Indian River and Brevard
Counties in  Florida.  Segment  information  is not  presented  since all of the
Company's  revenue is attributed  to a single  reportable  segment.  The Bank is
subject  to  competition  from other  financial  institutions  and  nonfinancial
institutions providing financial products.

Principles of consolidation:  The accompanying consolidated financial statements
include  the  accounts of Indian  River  Banking  Company  and its  wholly-owned
subsidiary,  Indian  River  National  Bank,  a  federally-chartered  independent
community  bank,  collectively  referred  to  as  the  "Bank".  All  significant
intercompany accounts and transactions have been eliminated in consolidation.

Basis of accounting: The consolidated financial statements have been prepared in
conformity with generally  accepted  accounting  principles and general practice
within the banking industry. In preparing the consolidated financial statements,
the Bank's  management  is  required to make  estimates  and  assumptions  which
significantly  affect  the  reported  amounts  of  assets  and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period.  Significant estimates,  which are particularly susceptible to
change in a short period of time, include the determination of the allowance for
loan losses and the fair value of  securities.  Actual results could differ from
those estimates.

Cash and cash flows: Cash and cash equivalents include cash on hand, amounts due
from banks  (including  cash items in process of  clearing),  and federal  funds
sold. For purposes of reporting cash flows, loans and deposits are reported net.
The  Bank  maintains  amounts  due  from  banks  which,  at  times,  may  exceed
federally-insured  limits.  The  Bank has not  experienced  any  losses  in such
accounts.

Investment in debt and marketable equity securities:  Management  determines the
appropriate   classification  of  securities  as  each  individual  security  is
acquired. In addition,  the appropriateness of such classification is reassessed
at each balance sheet date.  The Bank's  classifications  of debt and marketable
equity securities and related accounting policies are as follows:

o    Securities  held  to  maturity:  Held  to  maturity  securities  are  those
     securities  which  the  Bank  has the  ability  and  intent  to hold  until
     maturity.  All  other  securities  not  included  in held to  maturity  are
     classified as available-for-sale.  Held to maturity securities are reported
     at amortized  cost.  Realized  gains and losses from the sale of securities
     are included in earnings and are computed using the specific-identification
     method.

o    Available-for-sale securities:  Securities classified as available-for-sale
     are those debt  securities  that the Bank intends to hold for an indefinite
     period of time but not  necessarily  to  maturity.  Any  decision to sell a
     security  classified  as  available-for-sale  would  be  based  on  various
     factors,  including significant movements in interest rates, changes in the
     maturity  mix  of the  Bank's  assets  and  liabilities,  liquidity  needs,
     regulatory capital considerations, and other similar factors.



                                       31
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                      Notes to Consolidated Financial Statements

NOTE 1.  Summary of Significant Accounting Policies (Continued)

--------------------------------------------------------------------------------


     Securities  available-for-sale are carried at fair value.  Unrealized gains
     or losses,  net of the  related  deferred  tax  effect,  are  reported as a
     separate component of other comprehensive income. Realized gains or losses,
     determined  on the  basis  of the cost of  specific  securities  sold,  are
     included in  earnings.  The  amortization  of  premiums  and  accretion  of
     discounts,  computed by the interest method over their  contractual  lives,
     are recognized in interest income.

Loans and  allowance  for loan losses:  Loans are stated at the amount of unpaid
principal,  reduced by unearned  discounts  and fees and an  allowance  for loan
losses.

Loan origination and commitment fees and certain direct loan  origination  costs
are being deferred and amortized, using the interest method, as an adjustment of
the  related  loan's  yield.  The  Bank is  amortizing  these  amounts  over the
contractual lives of the loans, adjusted for prepayments.  Commitment fees which
are based  upon a  percentage  of a  customer's  unused  line of credit and fees
related to standby letters of credit are recognized over the commitment period.

Interest on loans is  recognized  over the terms of the loans and is  calculated
using the simple-interest method on principal amounts outstanding.  For impaired
loans,  accrual of interest is generally  discontinued  when,  in the opinion of
management,  there is an  indication  that the  borrower  may be  unable to make
payments  as they become due.  Interest on these loans is  recognized  only when
actually paid by the borrower if collection of the principal is likely to occur.
Accrual of interest is  generally  resumed  when the  customer is current on all
principal and interest payments.

Loans held for sale are carried at the lower of cost or market value.

The allowance  for loan losses is maintained to provide for estimated  losses in
the loan  portfolio  that have been  incurred as of the balance  sheet date.  In
establishing  the  allowance,  management  (1) makes  specific  allocations  for
certain  non-performing  loans based on  management's  estimates  of  collateral
shortfall,  (2) applies loss factor  percentages  to the balances of  identified
loans in each  category  of problem  and past due loans,  and (3)  applies  loss
factor  percentages  to balances of performing  loans in each category of loans.
Loss  factor  percentages  are  determined  taking into  consideration  the risk
characteristics  of the loan portfolio,  past charge-off  experience of the Bank
and its peer group, general economic conditions,  and other factors that warrant
current  recognition.  While management uses the best  information  available to
make its evaluation,  the allowance could change materially within the next year
if there are significant changes in economic conditions.

As  adjustments  to the  allowance for loan losses  become  necessary,  they are
reflected as a provision for loan losses in current-period earnings. Actual loan
charge-offs  are  deducted  from  and  subsequent  recoveries  are  added to the
allowance.

A loan is  considered  to be impaired  when it is probable that the Bank will be
unable  to  collect  all  principal  and  interest  amounts   according  to  the
contractual  terms of the loan  agreement.  Under  this  definition,  management
considers  loans that have been placed on  nonaccrual  status or which have been
renegotiated in a troubled debt restructuring to be impaired.



                                       32
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                      Notes to Consolidated Financial Statements

NOTE 1.  Summary of Significant Accounting Policies (Continued)

--------------------------------------------------------------------------------

The allowance for loan losses  related to loans  identified as impaired is based
on discounted  expected  future cash flows (using the loan's  initial  effective
interest rate),  the observable  market value of the loan, or the estimated fair
value of the collateral for certain collateral dependent loans.

Transfers of financial  assets:  Transfers of financial assets are accounted for
as sales  when  control  over the  assets  has been  surrendered.  Control  over
transferred  assets is deemed to be  surrendered  when (1) the assets  have been
isolated from the  Corporation,  (2) the  transferee  obtains the right (free of
conditions  that constrain it from taking  advantage of that right) to pledge or
exchange  the  transferred  assets,  and (3) the  Corporation  does not maintain
effective control over the transferred assets through an agreement to repurchase
them before their maturity.

Bank premises and equipment: Bank premises and equipment are stated at cost less
accumulated  depreciation.   Depreciation  is  computed  using  accelerated  and
straight-line methods over the following estimated useful lives:

<TABLE>
<CAPTION>
                                                                                 Years
                                                                   ---------------------------------
<S>                                                                              <C>
                    Land and improvements                                        3 - 20
                    Buildings and improvements                                   5 - 39
                    Leasehold improvements                                       5 - 15
                    Furniture, fixtures and equipment                            3 - 10
</TABLE>

Income taxes: The holding company and the Bank file consolidated  federal income
tax  returns.  Deferred  taxes are  provided  on an asset and  liability  method
whereby deferred tax assets are recognized for deductible temporary differences,
and operating loss or tax credit  carryforwards and deferred tax liabilities are
recognized for taxable  temporary  differences.  Temporary  differences  are the
differences  between the amounts of assets and  liabilities  recorded for income
tax and  financial  reporting  purposes.  Deferred  tax assets are  reduced by a
valuation  allowance when management  determines that it is more likely than not
that some  portion  or all of the  deferred  tax  assets  will not be  realized.
Deferred tax assets and  liabilities  are adjusted for the effects of changes in
tax laws and rates on the date of enactment.

Stock-based  compensation:  SFAS 123,  Accounting for Stock-Based  Compensation,
allows a company to either  adopt the fair value method of valuation or continue
using the intrinsic valuation method presented under Accounting Principles Board
("APB")  Opinion 25 to account for stock based  compensation.  Accordingly,  the
Bank has  elected  to  continue  using the  intrinsic  valuation  method and has
disclosed  in the  footnotes  pro  forma  net  income  and  earnings  per  share
information as if the fair value method had been applied.

Earnings per share:  Basic earnings  per-share  amounts are computed by dividing
net income  (the  numerator)  by the  weighted-average  number of common  shares
outstanding  adjusted for stock  dividends  and splits  occurring  subsequent to
year-end  (the  denominator).  Diluted  earnings  per-share  amounts  assume the
conversion,  exercise or  issuance of all  potential  common  stock  instruments
unless the effect is to reduce the loss or increase  the income per common share
from continuing operations.



                                       33
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                      Notes to Consolidated Financial Statements

NOTE 1.  Summary of Significant Accounting Policies (Continued)

--------------------------------------------------------------------------------

Fair value of financial instruments:  SFAS No. 107, Disclosures about Fair Value
of Financial  Instruments,  requires  disclosure of fair value information about
financial  instruments,  whether or not recognized in the statement of financial
condition,  for which it is practicable  to estimate that value.  In cases where
quoted market prices are not available, fair values are based on estimates using
present value or other valuation techniques.  Those techniques are significantly
affected by the assumptions  used,  including the discount rate and estimates of
future cash flows. In that regard,  the derived fair value  estimates  cannot be
substantiated by comparison to independent markets and, in many cases, could not
be realized in immediate  settlement  of the  instrument.  SFAS No. 107 excludes
certain financial  instruments and all nonfinancial  assets and liabilities from
its  disclosure  requirements.  Accordingly,  the  aggregate  fair value amounts
presented do not represent the underlying value of the Bank.

The fair value estimates presented are based on pertinent  information available
to management as of December 31, 2000 and 1999. Although management is not aware
of any factors that would significantly  affect the estimated fair value amount,
such  amounts  have not been  comprehensively  revalued  for  purposes  of these
financial statements since these dates and therefore,  current estimates of fair
value may differ  significantly  from the amounts  presented in these  financial
statements.

Emerging accounting standards:  In June 1999, the Financial Accounting Standards
Board issued  Statement  No. 133,  Accounting  for  Derivative  Instruments  and
Hedging  Activities,  which is required to be adopted in years  beginning  after
June 15, 2000.  The Statement  permits early adoption as of the beginning of any
fiscal  quarter after its issuance.  The Bank expects to adopt the new Statement
effective  January 1, 2001. The Statement will require the Bank to recognize all
derivatives on the balance sheet at fair value.  Derivatives that are not hedges
must be adjusted to fair value  through  income.  If the  derivative is a hedge,
depending on the nature of the hedge,  changes in the fair value of  derivatives
will  either be offset  against  the change in fair value of the hedged  assets,
liabilities,  or firm  commitments  through  earnings  or  recognized  in  other
comprehensive  income  until the hedged  item is  recognized  in  earnings.  The
ineffective  portion of a derivative's  change in fair value will be immediately
recognized in earnings.

Because  the Bank has not used  derivatives  in the  past,  management  does not
anticipate that the adoption of the new Statement will have a significant effect
on the Bank's earnings or financial position.


NOTE 2.  Cash and Due From Banks
--------------------------------------------------------------------------------

The Bank is required to  maintain  reserve  balances in cash or with the Federal
Reserve Bank,  based on a percentage  of certain  deposits.  The total  required
reserve balances as of December 31, 2000 and 1999 were approximately  $2,386,000
and $1,997,000, respectively.




                                       34
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                      Notes to Consolidated Financial Statements

NOTE 3.  Investment Securities

--------------------------------------------------------------------------------

Securities  held to maturity:  The amortized  cost and fair values of securities
held to maturity as of December 31, 2000 and 1999 are summarized as follows.

<TABLE>
<CAPTION>
                                                                                       December 31, 2000
                                                             -----------------------------------------------------------------------
                                                                                 Estimated           Estimated           Estimated
                                                               Amortized         Unrealized          Unrealized            Market
                                                                  Cost             Gains               Losses              Value
                                                             -----------------------------------------------------------------------
<S>                                                          <C>                <C>                 <C>                 <C>
Mortgage-backed securities                                   $  9,584,644       $      6,745        $    (93,828)       $  9,497,561
State, county & municipal securities                            2,024,869             74,782                  --           2,099,651
                                                             -----------------------------------------------------------------------
                                                             $ 11,609,513       $     81,527        $    (93,828)       $ 11,597,212
                                                             =======================================================================
</TABLE>
<TABLE>
<CAPTION>
                                                                                        December 31, 1999
                                                             -----------------------------------------------------------------------
                                                                                 Estimated            Estimated           Estimated
                                                               Amortized         Unrealized           Unrealized            Market
                                                                  Cost              Gains               Losses              Value
                                                             -----------------------------------------------------------------------
<S>                                                           <C>                <C>                 <C>                 <C>
Mortgage-backed securities                                    $ 5,046,626        $   174,338         $        --         $ 5,220,964
State, county & municipal securities                            2,025,343              7,074             (14,385)          2,018,032
                                                             -----------------------------------------------------------------------
                                                              $ 7,071,969        $   181,412         $   (14,385)        $ 7,238,996
                                                             =======================================================================
</TABLE>

The amortized  cost and fair values of  securities  held to maturity at December
31, 2000, by contractual maturity, are shown below.  Mortgage-backed  securities
are excluded from the maturity  categories  because they are not due at a single
due date. In addition,  mortgage-backed securities may mature earlier than their
contractual maturities because of prepayments.



<TABLE>
<CAPTION>
                                                                                    Amortized                Estimated Market
                                                                                       Cost                        Value
                                                                                -----------------------------------------------
<S>                                                                                <C>                         <C>
Due in one year or less                                                            $   100,196                 $   100,243
Due after five years through ten years                                                 236,585                     241,063
Due after ten years                                                                  1,688,088                   1,758,345
Mortgage-backed securities                                                           9,584,644                   9,497,561
                                                                                -----------------------------------------------
                                                                                   $11,609,513                 $11,597,212
                                                                                ===============================================
</TABLE>



                                       35
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                      Notes to Consolidated Financial Statements

NOTE 3.  Investment Securities (Continued)

--------------------------------------------------------------------------------

Securities available-for-sale:  The amortized cost and fair values of securities
available-for-sale as of December 31, 2000 and 1999 are summarized as follows:

<TABLE>
<CAPTION>
                                                                                    December 31, 2000
                                                        ----------------------------------------------------------------------------
                                                                                Estimated            Estimated          Estimated
                                                           Amortized            Unrealized          Unrealized            Market
                                                              Cost                Gains               Losses              Value
                                                        ----------------------------------------------------------------------------
<S>                                                      <C>                 <C>                  <C>                  <C>
U.S. Gov't. Corporations and Agencies                    $  77,742,018       $     474,924        $    (336,395)       $  77,880,547
Corporate securities                                        21,631,219             214,481               (1,397)          21,844,303
Mortgage-backed securities                                   7,421,494              78,364               (9,353)           7,490,505
                                                        ----------------------------------------------------------------------------
                                                         $ 106,794,731       $     767,769        $    (347,145)       $ 107,215,355
                                                        ============================================================================
</TABLE>
<TABLE>
<CAPTION>
                                                                                    December 31, 1999
                                                        ----------------------------------------------------------------------------
                                                                                Estimated            Estimated           Estimated
                                                               Amortized        Unrealized           Unrealized            Market
                                                                  Cost             Gains               Losses              Value
                                                        ----------------------------------------------------------------------------
<S>                                                          <C>                <C>                 <C>                 <C>
U.S. Gov't. Corporations and Agencies                        $ 67,210,033       $         --        $ (2,357,623)       $ 64,852,409
Corporate securities                                           10,221,581                 --            (128,534)         10,093,047
Mortgage-backed securities                                      6,491,286             11,975             (32,386)          6,470,876
                                                        ----------------------------------------------------------------------------
                                                             $ 83,922,900       $     11,975        $ (2,518,543)       $ 81,416,332
                                                        ============================================================================
</TABLE>

The amortized cost and fair values of securities  available for sale at December
31, 2000, by contractual maturity, are shown below.  Mortgage-backed  securities
are excluded from the maturity  categories  because they are not due at a single
due date. In addition,  mortgage-backed securities may mature earlier than their
contractual maturities because of prepayments.


<TABLE>
<CAPTION>
                                                                                       Amortized                Estimated Market
                                                                                          Cost                        Value
                                                                                    ----------------------------------------------
<S>                                                                                   <C>                          <C>
Due in one year or less                                                               $ 25,926,222                 $ 25,724,374
Due after one through five years                                                        24,210,109                   24,407,794
Due after five years through ten years                                                  31,125,954                   31,286,855
Due after ten years                                                                     18,110,952                   18,305,827
Mortgage-backed securities                                                               7,421,494                    7,490,505
                                                                                    ----------------------------------------------
                                                                                      $106,794,731                 $107,215,355
                                                                                    ==============================================
</TABLE>

                                       36
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                      Notes to Consolidated Financial Statements

NOTE 3.  Investment Securities (Continued)

--------------------------------------------------------------------------------

Securities  available  for  sale  with a  carrying  amount  of  $36,012,503  and
$16,415,731  at  December  31,  2000 and 1999,  respectively,  were  pledged  as
collateral on public deposits,  various lines of credit (see Note 9), repurchase
agreements, and for other purposes as required or permitted by law.

Gross gains of $12,500 and $76,340  were  realized  from the sale of  securities
available for sale in the years ended December 31, 2000 and 1999, respectively.

Unrealized  gains (losses) on securities  available for sale for the years ended
December 31, 2000 and 1999 are as follows:


<TABLE>
<CAPTION>
                                                                                                     2000                   1999
                                                                                                 -----------------------------------
<S>                                                                                              <C>                    <C>
Unrealized holding gains (losses) arising during the period                                      $ 2,927,192            $(3,353,106)
Less reclassification adjustment for gains realized in net income                                     12,500                 76,340
                                                                                                 -----------------------------------
Net unrealized gains (losses), before tax (expense) benefit                                        2,914,692             (3,429,446)
Tax (expense) benefit                                                                             (1,045,495)             1,234,600
                                                                                                 -----------------------------------
Other comprehensive income (loss)                                                                $ 1,869,197            $(2,194,846)
                                                                                                 ===================================
</TABLE>



Other securities consist primarily of nonmarketable equity securities as follows
at December 31, 2000 and 1999:


<TABLE>
<CAPTION>
                                                                                                2000                         1999
                                                                                            ----------------------------------------
<S>                                                                                         <C>                           <C>
Federal Reserve Bank stock                                                                  $  127,750                    $   97,750
Federal Home Loan Bank stock                                                                 1,564,300                       690,600
Other securities                                                                                10,000                        10,000
                                                                                            ----------------------------------------
                                                                                            $1,702,050                    $  798,350
                                                                                            ========================================
</TABLE>


The Bank, as a member of the Federal Home Loan Bank ("FHLB") system, is required
to maintain an investment in capital stock of the FHLB in an amount equal to the
greater of 1% of its outstanding  home loans or 5% of advances from the FHLB. No
ready market exists for the FHLB stock, and it has no quoted market value.




                                       37
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                      Notes to Consolidated Financial Statements

NOTE 4. Loans

--------------------------------------------------------------------------------

The composition of net loans is as follows at December 31, 2000 and 1999:


<TABLE>
<CAPTION>
                                                                                               2000                          1999
                                                                                           -----------------------------------------
<S>                                                                                        <C>                          <C>
Real Estate:
      Construction and land development                                                    $  8,882,746                 $  8,626,234
      Farmland                                                                                2,690,061                    3,145,918
      One to four family residential                                                         89,890,410                   68,430,840
      Multifamily residential                                                                 1,116,957                    1,766,216
      Non-family, nonresidential                                                             62,772,176                   55,104,420
Agriculture                                                                                   3,236,348                    1,706,865
Commercial and industrial                                                                    13,048,200                   12,307,814
Consumer                                                                                     15,243,558                   15,091,479
Other                                                                                         3,171,631                    2,370,221
                                                                                           -----------------------------------------
                                                                                            200,052,087                  168,550,007
Deduct:
      Allowance for loan losses                                                               2,453,198                    1,904,417
      Unearned discount and loan fees                                                             5,516                          932

                                                                                           -----------------------------------------
                  Loans, net                                                               $197,593,373                 $166,644,658
                                                                                           =========================================
</TABLE>


The Bank's recorded  investment in impaired loans for which a specific allowance
was  recognized  was  $119,718  and  $54,238  at  December  31,  2000 and  1999,
respectively.  The specific SFAS No. 114 allowance  associated  with these loans
was $119,718 and $5,077 at December 31, 2000 and 1999, respectively. The average
recorded  investment  in impaired  loans  during 2000 and 1999 was  $153,180 and
$250,000, respectively. Interest income recognized on impaired loans, recognized
for cash payments received in 2000 and 1999, was not significant.

Included in net loans at  December  31, 2000 and 1999 are loans held for sale of
approximately $2,953,100 and $546,600, respectively.




                                       38
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                      Notes to Consolidated Financial Statements

NOTE 5.  Allowance for Loan Losses
--------------------------------------------------------------------------------

Changes in the allowance  for loan losses for the years ended  December 31, 2000
and 1999 are as follows:

<TABLE>
<CAPTION>
                                                                                              2000                           1999
                                                                                          ------------------------------------------
<S>                                                                                       <C>                           <C>
Balance, beginning                                                                        $ 1,904,417                   $ 1,510,272
Provision for loan losses                                                                     660,000                       590,000
Loans charged off                                                                            (153,180)                     (249,068)
Recoveries of amounts charged off                                                              41,961                        53,213
                                                                                          ------------------------------------------
Balance, ending                                                                           $ 2,453,198                   $ 1,904,417
                                                                                          ==========================================
</TABLE>


Note 6.  Bank Premises and Equipment
--------------------------------------------------------------------------------

The major  classes of bank  premises  and  equipment  and the total  accumulated
depreciation are as follows:

<TABLE>
<CAPTION>
                                                                                                            December 31,
                                                                                                ------------------------------------
                                                                                                   2000                     1999
                                                                                                ------------------------------------
<S>                                                                                             <C>                       <C>
Land and improvements                                                                           $1,331,901                $1,561,900
Buildings and improvements                                                                       1,430,398                 1,343,817
Leasehold improvements                                                                             596,738                   550,113
Furniture, fixtures and equipment                                                                3,929,860                 3,624,653
                                                                                                ------------------------------------
                                                                                                 7,288,897                 7,080,483
Less accumulated depreciation and amortization                                                   3,471,903                 2,764,541
                                                                                                ------------------------------------
                                                                                                $3,816,994                $4,315,942
                                                                                                ====================================
</TABLE>


Note 7.  Time Deposits
--------------------------------------------------------------------------------

At December 31, 2000, the scheduled maturities of time deposits are as follows:

<TABLE>
<CAPTION>
Year Ending December 31,                                               Amount
<S>                                                                 <C>
2001                                                                $ 26,621,895
2002                                                                 102,696,941
2003                                                                  16,939,700
2004                                                                   2,226,950
2005                                                                     408,344
Thereafter                                                               162,077
                                                                    ------------
                                                                    $149,055,907
                                                                    ============
</TABLE>



                                       39
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                      Notes to Consolidated Financial Statements

NOTE 8. Income Taxes
--------------------------------------------------------------------------------


The net deferred tax effects of the primary  temporary  differences are included
as shown in the following table:

<TABLE>
<CAPTION>
                                                                                                           December 31,
                                                                                               -------------------------------------
                                                                                                   2000                     1999
                                                                                               -------------------------------------
<S>                                                                                            <C>                      <C>
Deferred tax assets:
    Loan loss allowances                                                                       $   807,000              $   593,000
    Unrealized loss on available-for-sale securities                                                    --                  902,364
    Other                                                                                           44,000                   48,000
                                                                                               -------------------------------------
            Total deferred tax assets                                                              851,000                1,543,364
                                                                                               -------------------------------------

Deferred tax liabilities:
    Unrealized gain on available-for-sale securities                                              (155,631)                      --
    Other                                                                                          (28,000)                 (10,000)
                                                                                               -------------------------------------
            Total deferred tax liabilities                                                        (183,631)                 (10,000)
                                                                                               -------------------------------------
            Net deferred tax assets                                                            $   667,369              $ 1,533,364
                                                                                               ====================================
</TABLE>


The  provision  for income  taxes  charged  to  operations  for the years  ended
December 31, 2000 and 1999 consists of the following:

<TABLE>
<CAPTION>
                                                   2000                 1999
                                               ---------------------------------
<S>                                            <C>                  <C>
Current tax expense                            $ 1,620,209          $ 1,267,767
Deferred tax expense                              (192,000)            (125,000)
                                               --------------------------------
                                               $ 1,428,209          $ 1,142,767
                                               ================================
</TABLE>


The provision for income taxes differs from the amount of income tax  determined
by applying the U.S. federal income tax rate to pretax income as follows:

<TABLE>
<CAPTION>
                                                                           2000                                1999
                                                                  Amount           Percent             Amount         Percent
                                                                -------------------------------------------------------------
<S>                                                             <C>                 <C>              <C>                <C>
Computed "expected" federal tax expense                         $ 1,380,073         34.0%            $ 1,069,425        34.0%
Increase in income taxes resulting from:
   state income taxes, net of federal tax benefit                   137,458          3.4                  45,168         1.4
  Other                                                             (89,322)        (2.2)                 28,174         0.9
                                                                -------------------------------------------------------------
         Provision for income taxes                             $ 1,428,209         35.2%            $ 1,142,767        36.3%
                                                                ============================================================
</TABLE>



                                       40
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                      Notes to Consolidated Financial Statements

NOTE 9.  Other Borrowings, Lines of Credit and Pledged Assets
--------------------------------------------------------------------------------

Other borrowings consist of the following at December 31, 2000 and 1999:


<TABLE>
<CAPTION>
                                                                                                        2000               1999
                                                                                                    --------------------------------
<S>                                                                                                 <C>                  <C>
Advances under Indian River Banking Company
    line of credit with correspondent bank (a)                                                      $        --          $ 1,845,381
Federal Hone Loan Bank advances (b)
    Advance due May 2001, interest payable monthly at an
    adjustable rate, 6.70% at December 31, 2000                                                       5,000,000                   --
Advance, interest payable monthly at a fixed rate of 6.44%, with
    equal semiannual principal payments of $142,857 through
    September 2004                                                                                    1,142,857            1,428,572
Convertible advance due March 2008, interest payable quarterly at
    a fixed rate of 5.51%.  In March 2003 the advance can be called
    at the option of the lender, at which time it can be converted into
    various other advance terms by the Bank                                                           2,000,000            2,000,000
Advance due May 2001, interest payable monthly at an
    adjustable rate, 6.72% at December 31, 2000                                                       5,000,000            5,000,000
                                                                                                    --------------------------------
                                                                                                    $13,142,857          $10,273,953
                                                                                                    ================================
<FN>
(a)  The Company has a $4,000,000 revolving line-of-credit with a correspondent bank. Borrowings under the line are due in quarterly
     installments of interest only at 30-day LIBOR plus 135 basis points (7.35% at December 31, 2000) through September 29, 2001, at
     which time the  outstanding  principal  balance will be converted to a term loan. The term loan will be due in equal  quarterly
     installments  of  principal  plus  interest,  based upon a five-year  amortization  through  September  29,  2006.  The line is
     collateralized  by the common  stock of the Bank.  The Company has agreed to various  conditions,  which  require,  among other
     things, compliance with specified financial covenants.

(b)  The Bank has a secured  line of credit with the Federal  Home Loan Bank under which the Bank can borrow up to thirteen  percent
     (13%) of total assets or  approximately  $43,800,000  at December  31,  2000.  Advances  under the line are  collateralized  by
     residential  first mortgage loans with a balance of approximately  $85,700,000 at December 31, 2000 and the Bank's stock in the
     Federal Home Loan Bank in the amount of $1,564,300 at December 31, 2000.
</FN>
</TABLE>

The aggregate amounts of other borrowings maturing in future years (based on the
outstanding  balance as of December 31, 2000) are as follows:  2001 $10,285,714;
2002 $285,714; 2003 $285,714; 2004 $285,715; 2005 none; thereafter $2,000,000.




                                       41
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                      Notes to Consolidated Financial Statements

NOTE 9.  Other Borrowings, Lines of Credit and Pledged Assets (Continued)
--------------------------------------------------------------------------------

The Bank had overnight  advances  under the line of credit with the Federal Home
Loan Bank in the amount of  $7,900,000  and  $4,500,000 at December 31, 2000 and
1999, respectively, in addition to the advances discussed above. These overnight
advances are included in federal  funds  purchased in the  accompanying  balance
sheet.

The Bank also has unsecured lines of credit of $9,000,000  available for federal
funds  purchases  with  other  correspondent  banks.  There was  $2,200,000  and
$3,300,000  outstanding  under  these  lines at  December  31,  2000  and  1999,
respectively.

The  Bank  has  pledged  securities  with a  carrying  amount  of  approximately
$22,600,000 as collateral for repurchase  agreements at December 31, 2000,  with
borrowings of $5,143,931 at December 31, 2000 and none at December 31, 1999.

NOTE 10.  Stock Options
--------------------------------------------------------------------------------

The  Company  adopted a new stock  option  plan in 1999.  Under the terms of its
stock option  plan,  options to purchase up to 275,000  shares of the  Company's
common stock may be granted to directors and key  officers/employees  at a price
that is not less  than the fair  market  value of such  stock at the date of the
grant. The grants are exercisable in varying amounts over five to ten years from
the date of the grant.  In accordance  with the plan,  the  aggregate  number of
shares for which options may be granted,  the number of shares  covered for each
outstanding  option, and the exercise price per share for each such option shall
be  proportionately  adjusted  for the  payment  of stock  dividends  or similar
adjustments to the number of shares of common stock effected without the receipt
of consideration by the Company.

In December 1999,  the Board of Directors  adopted the Director Fee Stock Option
Plan,  under which each  director  is  entitled  to receive  options to purchase
shares of common  stock (660 shares for 2000) in lieu of cash  compensation  for
attendance at committee  meetings.  Options  granted will have an exercise price
equal  to the fair  value of the  common  stock  at the date of  grant,  will be
immediately exercisable and of limited transferability.

A summary of the  options  outstanding  as of December  31,  2000 and 1999,  and
changes during the years then ended is presented below (after  adjusting for 10%
stock dividends in 2000 and 1999, a 2 for 1 stock split effective March 31, 2000
and a 10% stock  dividend  declared  in February  2001).  The fair value of each
option grant is estimated  on the date of grant using the  Black-Scholes  option
pricing model with the following weighted-average assumptions used for grants in
2000 and 1999: no dividends;  expected  volatility of zero percent because there
is no market for the Company's  stock;  risk-free  interest rates of 6.4 percent
and 6.5  percent,  respectively  and  expected  lives  of 7 years  and 8  years,
respectively.




                                       42
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                      Notes to Consolidated Financial Statements

NOTE 10 Stock Options (Continued)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                           2000                              1999
                                                              ---------------------------------------------------------------
                                                                    Weighted-Average                    Weighted-Average
                                                               Shares            Exercise           Shares            Exercise
                                                                                   Price                                Price
                                                              ---------------------------------------------------------------
<S>                                                            <C>                <C>                <C>               <C>
Outstanding at beginning of year                               118,110            $16.00             35,685            $12.58
Granted                                                         48,884             19.80             89,819             17.06
Exercised                                                      (13,504)            14.95               (275)            13.66
Forfeited                                                         (682)            14.13             (7,119)            13.46
                                                               -------                              -------
         Outstanding at end of year                            152,809             17.33            118,110             16.00
                                                               =======                              =======
         Options exercisable at year-end                        64,464             16.59             43,285             15.74
                                                               =======                              =======

Weighted average fair value of options granted during year                        $ 6.99                               $ 6.92
                                                                               =========                            =========
Weighted average remaining contractual life                                    7.0 years                            7.1 years
</TABLE>


The Bank applies APB Opinion 25 and related  Interpretations  in accounting  for
its plans.  Accordingly,  no compensation cost has been recognized for the stock
options discussed above. Had compensation cost for the Bank's stock options been
determined  based on the fair value at the grant  dates for awards  under  those
plans, the Bank's net income and earnings per share and common  equivalent share
would have been reduced to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                                                               2000                      1999
   -----------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                    <C>                      <C>
   Net Income                                                      As reported            $   2,630,828            $   2,002,600
                                                                   Pro forma                  2,456,628                1,837,600

   Basic earnings per share                                        As reported                     1.66                     1.31
                                                                   Pro forma                       1.55                     1.20

   Diluted earnings per share                                      As reported                     1.63                     1.30
                                                                   Pro forma                       1.52                     1.19
</TABLE>





                                       43
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                      Notes to Consolidated Financial Statements

NOTE 11.  Earnings Per Share
--------------------------------------------------------------------------------

Following is  information  about the  computation of the earnings per share data
for the years ended  December 31, 2000 and 1999 (after  adjusting  for 10% stock
dividends in 2000 and 1999, a 2 for 1 stock split effective March 31, 2000 and a
10% stock dividend declared in February 2001):

<TABLE>
<CAPTION>
                                                                                        Year Ended December 31, 2000
                                                                                ----------------------------------------------
                                                                                 Numerator        Denominator   Per Share Amt
                                                                                ----------------------------------------------
<S>                                                                             <C>                <C>                <C>
Basic earnings per share, income available to common stockholders               $2,630,828         1,582,504          $1.66
      Effect of dilutive securities, options                                            --            35,958       ===========
                                                                                ----------------------------
Diluted earnings per share, income available to common shareholders
      plus assumed exercise of options                                          $2,630,828         1,618,462          $1.63
                                                                                ==============================================
</TABLE>
<TABLE>
<CAPTION>
                                                                                       Year Ended December 31, 1999
                                                                                ----------------------------------------------
                                                                                 Numerator        Denominator   Per Share Amt
                                                                                ----------------------------------------------
<S>                                                                             <C>                <C>                <C>
Basic earnings per share, income available to common stockholders               $2,002,600         1,533,292          $1.31
      Effect of dilutive securities, options                                            --             8,666       ===========
                                                                                ----------------------------
Diluted earnings per share, income available to common shareholders
      plus assumed exercise of options                                          $2,002,600         1,541,958          $1.30
                                                                                ==============================================
</TABLE>


NOTE 12.  Related Party Transactions
--------------------------------------------------------------------------------

Some of the directors of the Bank are also owners or executive officers in other
business organizations. The Bank has made loans to these individuals and related
companies,  as  well  as to  officers  of the  Bank  which,  in the  opinion  of
management,  are on the  same  terms as  comparable  transactions  with  others.
Aggregate loans to these related parties  totaled  approximately  $4,022,000 and
$3,567,000 at December 31, 2000 and 1999,  respectively.  Commitments  to extend
additional credit to these related parties totaled  approximately  $2,300,000 at
December 31, 2000.



                                       44
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                      Notes to Consolidated Financial Statements

NOTE 13.  Leases
--------------------------------------------------------------------------------

The Bank utilizes  certain office spaces under operating leases expiring through
2002.  Several of these  leases have one or more options to renew for periods of
three to five years each. The leases provide for increases in rent in accordance
with changes in the Consumer Price Index.

Future minimum rental payments  required under the operating  leases at December
31, 2000 were as follows:


<TABLE>
<CAPTION>
         Year Ending December 31,                   Amount
<S>                                              <C>
                   2001                          $  293,907
                   2002                             277,135
                   2003                             165,187
                   2004                             105,086
                   2005                             105,574
                Thereafter                          324,124
                                                 -----------
                                                 $1,271,013
                                                 ===========
</TABLE>

Total rent expense (including basic operating expenses) recorded by the Bank for
the  years  ended  December  31,  2000 and  1999,  was  $311,028  and  $238,172,
respectively.


NOTE 14.  Other Operating Expenses
--------------------------------------------------------------------------------

A summary of other operating expenses is as follows for the years ended December
31, 2000 and 1999:

<TABLE>
<CAPTION>
                                                          2000          1999
                                                      ------------------------
<S>                                                   <C>           <C>
       Data Processing                                $  874,955    $  331,636
       Advertising and business development              312,977       427,930
       Professional fees                                 137,645       250,123
       Supplies and postage                              414,095       368,120
       Directors' fees                                   166,450       265,556
       Miscellaneous                                   1,306,390     1,472,250

                                                      ------------------------
                                                      $3,212,512    $3,115,615
                                                      ========================
</TABLE>




                                       45
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                      Notes to Consolidated Financial Statements

NOTE 15.  Salary Savings 401(k) Plan
--------------------------------------------------------------------------------

The Bank sponsors a Salary Savings 401(k) Plan,  which requires the Bank to make
contributions  pursuant to applicable  salary  savings  elections and additional
discretionary  contributions as may be determined by the Board of Directors. The
Bank  contributed  $81,816 and $59,814 for the years ended December 31, 2000 and
1999, respectively.


NOTE 16. - Restrictions on Retained Earnings and Regulatory Matters
--------------------------------------------------------------------------------

The Bank is subject to the dividend  restrictions set forth by the Office of the
Comptroller of the Currency ("OCC"). Under such restrictions,  the Bank may not,
without the prior approval of the OCC, declare dividends in excess of the sum of
the current year's earnings (as defined) plus the retained earnings (as defined)
from the prior two years. The dividends,  as of December 31, 2000, that the Bank
could  declare,  without  the  approval of the OCC,  amounted  to  approximately
$6,600,000.

Banks and bank  holding  companies  are  subject to various  regulatory  capital
requirements  administered  by  the  federal  banking  agencies.  Under  capital
adequacy  guidelines and the regulatory  framework for prompt corrective action,
banks and bank holding  companies  must meet specific  capital  guidelines  that
involve quantitative measures of each entity's assets, liabilities,  and certain
off-balance-sheet items as calculated under regulatory accounting practices.

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require banks and bank holding  companies to maintain minimum amounts and ratios
(set  forth in the table  below) of total  and Tier I capital  to  risk-weighted
assets,  and of  Tier I  capital  to  average  assets  (all  as  defined  in the
regulations).

Banks'  capital  amounts  and  classification  are also  subject to  qualitative
judgments  by the  regulators  about  components,  risk  weightings,  and  other
factors.  Failure to meet minimum  capital  requirements  can  initiate  certain
mandatory - and possibly additional  discretionary - actions by regulators that,
if  undertaken,  could have a direct  material  effect on a company's  financial
statements.  The Company and the Bank meet all capital adequacy  requirements to
which they are subject as of December 31, 2000.

As of December 31, 2000, the most recent  notification  from the OCC categorized
the  Bank  as  well  capitalized  under  the  regulatory  framework  for  prompt
corrective  action. To be categorized as well capitalized the Bank must maintain
minimum total risk-based,  Tier I risk-based,  and Tier I leverage ratios as set
forth  in the  table  below.  There  are no  conditions  or  events  since  that
notification that management believes have changed the Bank's category.



                                       46
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                      Notes to Consolidated Financial Statements

NOTE 16.  Restrictions on Retained Earnings and Regulatory Matters (Continued)
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                                                        To Be Well Capitalized Under
                                                                               For Capital Adequacy        Prompt Corrective Action
                                                        Actual                       Purposes                      Provisions
                                               -------------------------------------------------------------------------------------
As of December 31, 2000                           Amount       Ratio            Amount        Ratio            Amount        Ratio
                                               -------------------------------------------------------------------------------------
<S>                                             <C>             <C>           <C>              <C>           <C>             <C>
Total Capital (to Risk-Weighted Assets):
   Consolidated                                 $25,388,666     11.7%         $17,354,560      8.0%          $21,693,200     10.0%
   Indian River National Bank                    24,965,100     11.5           17,350,160      8.0            21,687,700     10.0
Tier I Capital (to Risk-Weighted Assets):
   Consolidated                                  22,935,468     10.6            8,677,280      4.0            13,015,920      6.0
   Indian River National Bank                    22,511,902     10.4            8,675,080      4.0            13,012,620      6.0
Tier I Capital (to Average Assets):
   Consolidated                                  22,935,468      7.1           13,003,120      4.0            16,253,900      5.0
   Indian River National Bank                    22,511,902      6.9           13,000,920      4.0            16,251,150      5.0
As of December 31, 1999
Total Capital (to Risk-Weighted Assets):
   Consolidated                                  17,099,796      9.5           14,397,680      8.0            17,997,100     10.0
   Indian River National Bank                    18,799,574     10.4           14,396,880      8.0            17,996,100     10.0
Tier I Capital (to Risk-Weighted Assets):
   Consolidated                                  15,195,379      8.4            7,198,840      4.0            10,798,260      6.0
   Indian River National Bank                    16,895,157      9.4            7,198,440      4.0            10,797,660      6.0
Tier I Capital (to Average Assets):
   Consolidated                                  15,195,379      5.9           10,395,520      4.0            12,994,400      5.0
   Indian River National Bank                    16,895,157      6.5           10,395,120      4.0            12,993,900      5.0
</TABLE>



                                       47
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                      Notes to Consolidated Financial Statements

NOTE 17.  Financial Instruments With Off-Balance-Sheet Risk
--------------------------------------------------------------------------------

The Bank, in the normal course of business,  is a party to financial instruments
with off-balance-sheet risk to meet the financing needs of its customers.  These
financial  instruments  include commitments to extend credit and standby letters
of credit. These instruments involve, to varying degrees, elements of credit and
interest rate risk in excess of the amounts recognized on the balance sheet. The
contractual  amounts of these  instruments  reflect  the Bank's  involvement  in
particular classes of financial instruments.

The  Bank's  exposure  to  credit  loss in the  event of  nonperformance  by the
counterparty  to the financial  instruments for commitments to extend credit and
standby  letters of credit is  represented by the  contractual  amounts of those
instruments.  The Bank uses the same credit  policies in making  commitments and
conditional obligations as it does for on-balance-sheet instruments.

These commitments were as follows at December 31, 2000 and 1999:


<TABLE>
<CAPTION>
                                                      2000              1999
                                                  ------------------------------
<S>                                               <C>                <C>
Commitments to extend credit                      $27,500,000        $21,914,000
Credit card arrangements                            5,192,000          4,534,000
Standby letters of credit                           1,314,000          1,102,000
                                                  ------------------------------
                                                  $34,006,000        $27,550,000
                                                  ==============================
</TABLE>


Commitments  to extend credit:  Commitments to extend credit are  commitments to
lend to a customer as long as there is no violation of any condition established
in the contract.  Commitments  generally  have fixed  expiration  dates or other
termination  clauses  and  may  require  payment  of a fee.  Since  many  of the
commitments  are  expected  to  expire  without  being  drawn  upon,  the  total
commitment amounts do not necessarily  represent future cash  requirements.  The
Bank evaluates each customer's  creditworthiness  on a case-by-case  basis.  The
amount  of  collateral  obtained,  if  any,  is  based  on  management's  credit
evaluation of the  counterparty.  Collateral held varies,  but may include cash,
accounts receivable,  inventory,  property, plant and equipment, and residential
and commercial real estate.

Standby letters of credit: Standby letters of credit are conditional commitments
issued by the Bank to guarantee the  performance of a customer to a third party.
The credit risk involved in issuing letters of credit is essentially the same as
that involved in extending loans to customers.



                                       48
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                      Notes to Consolidated Financial Statements

NOTE 18.  Concentrations of Risk
--------------------------------------------------------------------------------

Most of the  Bank's  business  activity  is with  customers  located  within its
primary market area, which generally  includes Central Florida.  Included in the
Bank's loan portfolio (see Note 4) is a  concentration  of loans related to real
estate,  a significant  portion of which relates to  commercial  real estate.  A
substantial  portion of its  debtors'  abilities  to honor  their  contracts  is
dependent upon the local economy.  The economy of the Bank's primary market area
is not heavily dependent on any individual economic sector.

Concentration by institution:  The Bank also has a substantial  concentration of
funds with two banks at December  31,  2000.  Such  concentration  consisted  of
federal  funds sold and a deposit  account  balance and totaled  $6,414,232  and
$3,212,018,  at  December  31,  2000 and  1999,  respectively.  The Bank has not
experienced any losses on such accounts.

NOTE 19.  Additional Cash Flow Information
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                                      Year Ended December 31,
                                                                                                 ----------------------------------
                                                                                                     2000                  1999
                                                                                                 ----------------------------------
<S>                                                                                              <C>                   <C>
Cash flows from securities:
    Securities available for sale
      Proceeds from sales                                                                        $  3,012,500          $  8,074,063
      Maturities, calls and paydowns                                                               26,324,182            10,969,617
      Purchases                                                                                   (52,271,979)          (47,961,799)
    Securities held to maturity
      Purchases                                                                                    (5,031,250)           (7,072,200)
      Maturities, calls and paydowns                                                                  475,946                    --
      Purchase of Federal Home Loan Bank stock                                                       (903,700)              (87,900)
                                                                                                 ----------------------------------
                                                                                                 $(28,394,301)         $(36,078,219)
                                                                                                 ==================================
Supplemental disclosures of cash flow information:
      Cash payments for interest                                                                 $ 12,374,074          $  7,322,830
                                                                                                 ==================================
      Cash payments for income taxes                                                             $  1,717,000          $  1,382,000
                                                                                                 ==================================
Supplemental schedule of non-cash investing and financing activities:
      10% stock dividend                                                                         $  1,366,362          $  1,373,678
      2 for 1 stock split                                                                             696,865                    --
</TABLE>



                                       49
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                      Notes to Consolidated Financial Statements

NOTE 20.  Fair Value of Financial Instruments
--------------------------------------------------------------------------------


The following  methods and  assumptions  were used by the Bank in estimating the
fair value of its financial instruments:

     Cash  and  cash   equivalents:   The  carrying   amounts  reported  in  the
     consolidated   balance   sheets   for  cash  and   short-term   instruments
     approximated their fair values.

     Investment securities (including mortgage-backed  securities):  Fair values
     for  investment  securities  are  based  on  quoted  market  prices,  where
     available. If quoted market prices are not available, fair values are based
     on quoted market prices of comparable instruments.

     Loans receivable:  For variable-rate loans that reprice frequently and with
     no significant  change in credit risk, values are based on carrying values.
     Fair values for other loans are estimated  based on discounted  cash flows,
     using interest rates  currently  being offered for loans with similar terms
     to borrowers  with similar  credit  quality.  Management  believes that the
     allowance for loan losses is an  appropriate  indication of the  applicable
     credit  risk  associated  with  determining  the  fair  value  of its  loan
     portfolio  and the allowance has been deducted from the estimate fair value
     of loans.

     Accrued  interest  receivable:  The  carrying  amount of  accrued  interest
     receivable approximates its fair value.

     Off-balance-sheet instruments: Fair values for the Bank's off-balance-sheet
     instruments,  primarily  lending  commitments,  are based on fees currently
     charged to enter into similar agreements, taking into account the remaining
     terms of the agreements. The fair value for such commitments are nominal.

     Deposit  liabilities:  The fair  values of  demand  deposits  and  passbook
     savings equal their carrying amounts which represents the amount payable on
     demand.  The carrying  amounts for  variable-rate,  fixed-term money market
     accounts and  certificates of deposit  approximate  their fair value at the
     reporting  date.  Fair values for  fixed-rate  certificates  of deposit are
     estimated using a discounted cash flow  calculation  that applies  interest
     rates  currently  being offered on certificates to a schedule of aggregated
     expected monthly maturities on time deposits.

     Other borrowings: The fair value of other borrowings with variable interest
     rates  approximate their recorded book value due to interest rates that are
     near market  rates.  Fair values for  fixed-rate  borrowings  are estimated
     using a  discounted  cash flow  calculation  that  applies  interest  rates
     currently  available  on similar  borrowings  to a schedule  of  aggregated
     expected monthly payments due on those borrowings.

     Other  liabilities:  The carrying amount of other liabilities  approximates
     their fair value.

     Commitments  to  extend  credit  and  other   off-balance-sheet   financial
     instruments  -  Consideration  of the fair value of  commitments  to extend
     credit and letters of credit is based on fees charged to enter into similar
     agreements. Since the fees charged by the Bank are nominal, the estimate of
     fair value is negligible.



                                       50
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                      Notes to Consolidated Financial Statements

NOTE 20.  Fair Value of Financial Instruments (Continued)
--------------------------------------------------------------------------------

Following is a summary of the carrying  amounts and  approximate  fair values of
the Bank's financial instruments at December 31, 2000 and 1999:


<TABLE>
<CAPTION>
                                                            ------------------------------------------------------------------------
                                                                          2000                                   1999
                                                            ------------------------------------------------------------------------
                                                              Carrying             Fair               Carrying              Fair
                                                               Amount              Value               Amount               Value
                                                            ------------------------------------------------------------------------
<S>                                                         <C>                 <C>                 <C>                 <C>
Cash and cash equivalents                                   $ 10,336,581        $ 10,336,581        $  6,714,850        $  6,714,850
Investment securities (including
   Federal Reserve Bank and Federal
   Home Loan Bank stock)                                     120,526,918         120,514,616          89,286,651          89,453,678
Loans receivable                                             197,593,373         197,041,975         166,644,658         166,851,393
Accrued interest receivable                                    2,990,440           2,990,440           2,260,455           2,260,455
Deposits                                                     284,544,664         283,664,790         238,845,951         239,428,367
Other borrowings                                              28,386,788          27,258,851          18,073,953          17,826,345
Other liabilities                                                943,258             943,258             724,533             724,533
Commitments to extend credit                                          --                  --                  --                  --
</TABLE>


NOTE 21.  Stock Issuance
--------------------------------------------------------------------------------


The Company offered to sell up to 300,000 newly issued shares of common stock at
a price of $25 per share during 2000.  Proceeds of  $5,195,700  from the sale of
207,808  shares,   less  issuance  costs  of  $121,739,   are  included  in  the
accompanying financial statements.




                                       51
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                      Notes to Consolidated Financial Statements

NOTE 22.  Parent Company Only Financial Statements
--------------------------------------------------------------------------------


Condensed  financial  statements  for  Indian  River  Banking  Company  only are
presented below:

INDIAN RIVER BANKING COMPANY
PARENT COMPANY ONLY BALANCE SHEETS
December 31, 2000 and 1999

<TABLE>
<CAPTION>
                                                                                                  2000                      1999
                                                                                              --------------------------------------
<S>                                                                                           <C>                        <C>
                        ASSETS
     Cash                                                                                     $    61,286                $     9,056
     Investment in wholly-owned subsidiaries                                                   22,772,082                 15,290,950
     Other Assets                                                                                 367,093                    137,664
                                                                                              --------------------------------------
                                                                                              $23,200,461                $15,437,670
                                                                                              ======================================

LIABILITIES AND STOCKHOLDERS' EQUITY

  Liabilities
      Notes Payable                                                                           $        --                $ 1,845,381
      Other Liabilities                                                                                --                      1,114
                                                                                              --------------------------------------
           Total Liabilities                                                                           --                  1,846,495

  Stockholders' Equity                                                                         23,200,461                 13,591,175
                                                                                              --------------------------------------
                                                                                              $23,200,461                $15,437,670
                                                                                              ======================================
</TABLE>

INDIAN RIVER BANKING COMPANY
PARENT COMPANY ONLY STATEMENTS OF OPERATIONS
Years Ended December 31, 2000 and 1999

<TABLE>
<CAPTION>
                                                                                                   2000                    1999
                                                                                               ------------------------------------
<S>                                                                                            <C>                      <C>
Equity in net income of wholly-owned subsidiaries, net                                         $ 2,811,932              $ 2,103,876
Interest income                                                                                     22,115                       --
                                                                                               ------------------------------------
                                                                                                 2,834,047                2,103,876
                                                                                               ------------------------------------
Expenses
     Interest expense                                                                              169,939                  123,742
     Other expense                                                                                 142,406                   32,486
                                                                                               ------------------------------------
                                                                                                   312,345                  156,228
                                                                                               ------------------------------------
Income before income taxes                                                                       2,521,702                1,947,648
Provision for income taxes (benefit)                                                              (109,126)                 (54,952)
                                                                                               ------------------------------------
Net Income                                                                                     $ 2,630,828              $ 2,002,600
                                                                                               ====================================
</TABLE>



                                       52
<PAGE>

                                                    INDIAN RIVER BANKING COMPANY
                                                                  and Subsidiary

                                      Notes to Consolidated Financial Statements

NOTE 22.  Parent Company Only Financial Statements (Continued)
--------------------------------------------------------------------------------


Condensed  financial  statements  for  Indian  River  Banking  Company  only are
presented below:

INDIAN RIVER BANKING COMPANY

<TABLE>
<CAPTION>
                                                                                                        2000                1999
                                                                                                     ------------------------------
<S>                                                                                                  <C>                <C>
Cash flow from operating activities:
     Net Income                                                                                      $ 2,630,828        $ 2,002,600
     Adjustments to reconcile net loss to net cash used in operating activities:
Equity in net income of wholly-owned subsidiaries, net                                                (2,811,932)        (2,103,876)
Other                                                                                                   (230,546)           (54,814)
                                                                                                     ------------------------------
         Net cash used in operating activities                                                          (411,650)          (156,090)
                                                                                                     ------------------------------

Cash flow from investing activities:
     Investment in Indian River National Bank                                                         (2,800,000)
     Investment in other assets                                                                               --            (10,000)
                                                                                                     ------------------------------
         Net cash used in investing activities                                                        (2,800,000)           (10,000)
                                                                                                     ------------------------------

Cash flow from financing activities:
     Increase (decrease) in notes payable, net                                                        (1,845,381)            81,061
     Proceeds from issuance of stock                                                                   5,073,961                 --
     Proceeds from exercise of stock options                                                              38,923              4,119
     Cash paid for fractional shares                                                                      (3,623)            (4,411)
                                                                                                     ------------------------------
         Net cash provided by financing activities                                                     3,263,880             80,769
                                                                                                     ------------------------------
Increase (decrease) in cash and cash equivalents                                                          52,230            (85,321)
Cash and cash equivalents:
         Beginning                                                                                         9,056             94,377
                                                                                                     ------------------------------
         Ending                                                                                      $    61,286        $     9,056
                                                                                                     ==============================
</TABLE>

NOTE 23.  Subsequent Stock Dividend
--------------------------------------------------------------------------------


The number of shares outstanding and the related  stockholders'  equity accounts
have  been  retroactively  adjusted  in the  accompanying  balance  sheet  as of
December 31, 2000 to reflect a 10% stock dividend declared February 14, 2001.

In addition, earnings per share amounts and information concerning stock options
have been adjusted to reflect this stock dividend.




                                       53
<PAGE>

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.

         None

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

         The  following  table sets forth the name,  age at March 30, 2000,  and
principal position with Indian River and Indian River Bank of each person who is
a director or executive  officer of Indian  River as of the date hereof.  Indian
River's Board of Directors currently consists of ten (10) members,  divided into
three  classes.  Members of one class are elected at each  annual  meeting for a
three year term.  The year in which each director  will stand for  reelection is
also provided below.  Each director of Indian River is also a director of Indian
River Bank.

<TABLE>
<CAPTION>
         Name                 Age                        Position                         Term Ends
-----------------------    -----------    ----------------------------------------    ------------------
<S>                            <C>        <C>                                               <C>
DIRECTORS

Paul A. Beindorf               44         Vice President Indian River, Executive            2002
                                          Vice President Indian River Bank, Director

William C. Graves, IV          45         Director                                          2003

Griffin A. Greene              42         Director                                          2001

Robert A. Grice                59         Director                                          2002

William B. Marine              45         Director                                          2001

John L. Minton                 49         Chairman of the Board of Directors                2002
                                          Indian River and Indian River Bank

Keith H. Morgan, Jr.           61         Director                                          2001

Daniel R. Richey               42         Director                                          2003

Mary M. Rogers                 59         Vice Chairman of the Board of Directors           2001

John David Smith               52         Director                                          2002


EXECUTIVE OFFICERS

Charles A. Bradley             39         Senior Vice President, Chief Financial
                                          Officer  Indian River Bank; Treasurer
                                          - Indian River

Kevin D. Evans                 35         Vice President - Marketing, Indian River Bank

Daniel C. Fourmont             49         Senior Vice President,  - Consumer
                                          Lending, Indian River Bank

Jeffrey L. Morton              53         Senior Vice President - Residential
                                          Lending, Indian River Bank

Kitty L. Ruehman               53         Senior Vice President - Human
                                          Resources, Indian River Bank,
                                          Secretary, Indian River

J. Ken Smith                   59         Vide President - Senior Credit
                                          Officer, Indian River Bank

Harry J. Traczyk               56         Senior Vice President - President,
                                          Brevard County operations, Indian
                                          River Bank

Diana L. Walker                48         Vice President - Compliance, Indian
                                          River Bank
</TABLE>

         Set  forth  below is  certain  additional  information  regarding  each
director and executive  officer of Indian River and Indian River Bank. Except as
otherwise  stated,  the  principal  occupation  indicated  has been the person's
principal occupation for at least the last five years.


                                       54
<PAGE>

Directors

         Paul A. Beindorf.  Mr.  Beindorf has been President and chief Executive
Officer of Indian  River and Indian  River  bank since  April 5, 2001.  Prior to
being appointed to that position,  he was Executive Vice  President-Lending,  of
Indian River Bank and Vice  President of Indian River since 1996.  Prior to that
time Mr. Beindorf served in various positions at Indian River Bank since joining
Indian  River  Bank in 1985.  Mr.  Beindorf  has been a member  of the  Board of
Directors since 1996.

         William C. Graves,  IV. Mr.  Graves,  a director  since 1990,  has been
involved  in all aspects of the citrus  industry  since  1977.  Mr.  Graves is a
grower,  individually  and as President and co-owner of Tetley Groves,  Inc. and
Graves and Son, Inc. He is involved in the real estate industry as President and
co-owner of Citrus Investment  Realty,  Inc. and in the fruit marketing and farm
equipment businesses.

         Griffin A. Greene. Mr. Greene, a director since 1999, has been involved
in the citrus  industry  since 1982,  as President and co-owner of Greene Citrus
Management,  Inc.  and as  officer  of its  affiliated  growing,  marketing  and
distribution companies.  Mr. Greene is a member of the Board of Directors of the
Indian River Citrus  League,  and from 1997 to 1999 served on the St. John Water
Management  Board.  Mr. Greene is the son of Barnette E. Greene,  Jr.,  director
emeritus.

         Robert A. Grice.  Mr. Grice, a director of Indian River Bank since 1985
and Indian River since its  organization,  is  president of Bob Grice  Insurance
Agency, Inc., a general lines insurance agency in Vero Beach, Florida. Mr. Grice
is also a citrus grower.

         William B. Marine. Mr. Marine, a director since 1990, has been co-owner
of Citrus Source,  Inc., a licensed citrus fruit dealer,  since 1992. Mr. Marine
also owned The Davis House Inn from 1992 to 1998,  and Island  Hopper  Boats,  a
charter and pleasure  boat  manufacturer  from 1996 to 1999.  Mr. Marine is also
active in real estate development in the Indian River County area.

         John L. Minton.  Mr. Minton,  Chairman of the Board of Directors  since
1996,  has been a director of Indian  River Bank since 1985 and of Indian  River
since its  organization.  Mr.  Minton  has been  President  and Chief  Executive
Officer of Triple M Investment Company since 1996, and has been employed by that
company since 1979.  Triple M is a family  investment  company that controls and
operates  a number of  companies  involved  in the  citrus  growing,  marketing,
packing and real estate businesses.

         Keith H.  Morgan,  Jr. Mr.  Morgan has been a director of Indian  River
since 1997, and  previously  served as a director of Indian River Bank from 1985
to 1987.  Mr. Morgan has been a partner of Morgan,  Jacoby,  Thurn & Associates,
P.A., a certified  public  accounting  firm in Vero Beach,  Florida,  since July
1997.  From 1984 to July 1997, Mr. Morgan was a partner of KPMG Peat Marwick,  a
national certified public accounting firm.

         Daniel L. Richey.  Mr.  Richey,  a director of Indian River since 1996,
has been  involved in the citrus  industry  since 1981.  He currently  serves as
President of Riverfront  Groves,  Riverfront  Gift Fruit Shippers and Gulfstream
Harvesting, Inc. Mr. Richey has served as an officer and director of the Florida
Citrus Packers  Association at various times since 1985, and of the Indian River
Citrus League since 1992. He has served as a member of the advisory board of the
citrus division of Ocean Spray since 1989.

         Mary M. Rogers.  Mrs.  Rogers,  Vice Chairman of the Board of Directors
since  1996,  has been a director  of Indian  River Bank and Indian  River since
their  organization.  Mrs. Rogers has been involved in the citrus industry,  and
has served as Vice Chairman and Secretary of The Packers of Indian River,  Inc.,
since 1989.

         John David Smith. Mr. Smith, a director of Indian River since 1996, has
been a partner of Smith,  Todd,  McEntee &  Company,  LLP,  a  certified  public
accounting firm in Vero Beach, Florida, since 1988.




                                       55
<PAGE>

Executive Officers Who Are Not Directors

         Charles A. Bradley.  Mr. Bradley has been Senior Vice President - Chief
Financial  Officer of Indian  River  National  Bank  since  June 1999.  Prior to
joining  Indian River Bank, Mr.  Bradley  served as Chief  Financial  Officer of
First  Federal  Savings Bank of Dover,  a $110 million  federal  savings bank in
Dover, Ohio, from 1997, as Chief Financial Officer of Bank One Dover, N.A., from
1995 to 1997,  and as Vice  President  - Finance  of Bank One Dover from 1991 to
1995.  Prior to that time he served in various  capacities  with Bank One Akron,
N.A. from 1984.

         Kevin D. Evans. Mr. Evans has been Vice President - Marketing of Indian
River Bank since 1996, and has been with Indian River Bank in various capacities
since 1992.

         Daniel C.  Fourmont.  Mr.  Fourmont,  Senior Vice  President - Consumer
Lending of Indian  River Bank since  1995 and Retail  Branch  Coordinator  since
1997,  has been a loan  officer  with  Indian  River Bank since  1985.  Prior to
joining Indian River Bank, Mr. Fourmont served in various  capacities at Florida
National Bank, Vero Beach, Florida from 1979 to 1985.

         Jeffrey  R.  Morton.   Mr.  Morton  became  Senior  Vice   President  -
Residential  Lending  in  October  1999,  having  served  as  Vice  President  -
Residential  Lending  since May 1997.  Prior to joining  Indian River Bank,  Mr.
Morton was Vice President - Residential  Lending at Port St. Lucie National Bank
from  1995 to 1997,  and at  various  times  from  1990 to 1994  served  as Vice
President - Residential  Lending at various  financial  institutions,  including
SunTrust Bank.

         Kitty L. Ruehman. Mrs. Ruehman, Senior Vice President - Human Resources
of Indian River Bank,  has been with Indian  River since 1986.  Prior to joining
Indian River Bank,  Ms.  Ruehman  served in various  capacities at First Florida
Bank from 1984 to 1986,  Flagship  Bank of Indian River County from 1981 to 1983
and Flagship Bank of Brevard County from 1976 to 1981.

         J. Ken Smith.  Mr. Smith,  Vice  President - Senior  Credit  Officer of
Indian River Bank, has been with Indian River in various capacities since 1991.

         Harry J. Traczyk.  Mr.  Traczyk,  Senior Vice President of Indian River
Bank and President of Brevard County operations, has been with Indian River Bank
since August 2000.  Prior to coming out of retirement to join Indian River Bank,
Mr.  Traczyk was Senior Vice President - Corporate  Banking of Huntington  Banks
from 1998 to 1999, and from 1974 to 1998 served with First Florida Bank, through
its subsequent  acquisitions by Barnett Bank,  NationsBank and  BankAmerica,  in
various capacities, including as Senior Vice President - Senior Loan Officer.

         Diana L.  Walker.  Mrs.  Walker has been Vice  President -  Compliance,
Audit and  Security  of Indian  River Bank since 1994.  Prior to joining  Indian
River  Bank,  Ms.  Walker  served as Senior Vice  President - Internal  Control,
Security and  Compliance  with Sun Bank of the Treasure Coast from 1984 to 1994,
and from 1974 to 1984 was a Compliance Specialist Bank Examiner for the FDIC.

Compliance with Section 16(a) of the Exchange Act

         Not Applicable.

         ITEM 10.  EXECUTIVE COMPENSATION.

         The  following  table  sets  forth  a  comprehensive  overview  of  the
compensation  during the 2000, 1999 and 1998 fiscal years for Indian River's and
Indian  River  Bank's  Chief  Executive  Officer,  and the four other  executive
officers  who  received  total  salary and bonus of  $100,000 or more during the
fiscal year ended December 31, 2000.



                                       56
<PAGE>
                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                                                                      Long-term
                                                                                     Compensation
                                             Annual Compensation                        Awards
                                                                                  -------------------
                                                                                      Securities
                                                                                      Underlying             All Other
Name and Principal Position          Year          Salary           Bonus             Options(2)          Compensation($)
-----------------------------     -----------    ------------    -------------    -------------------    ------------------
<S>                                  <C>          <C>              <C>                  <C>                 <C>
Paul A. Beindorf,                    2000         $101,500         $34,700              14,520              $19,864(3)
      President and Chief            1999          $97,500          $9,506              2,420               $17,733(4)
      Executive Officer,             1998          $86,100         $14,902                0                 $22,279(5)
      Indian River and Indian
      River Bank(1)
Charles A. Bradley, Senior           2000          $83,500         $27,400                0                 $1,673(8)
     Vice President - Chief          1999          $47,833         $ 3,213             13,310(7)            $    0(9)
     Financial Officer,
     Indian River Bank(6)

Daniel C. Fourmont, Senior           2000          $83,000         $26,400               968                 $2,490(9)
     Vice President- Retail          1999          $81,000          $7,897                0                  $2,430(9)
     Banking, Indian River           1998          $74,025         $12,513                0                  $2,220(9)
     Bank

Jeffrey R. Morton, Senior            2000          $85,800         $26,200              9,680                $2,625(9)
     Vice President -                1999          $67,500          $2,406              2,420               $35,370(10)
     Residential Lending,            1998          $56,650            $0                1,730               $43,172(10)
     Indian River Bank

William A. High,                     2000         $162,000         $70,600                0                 $7,400(13)
     Director, President and         1999          $87,500          $6,750          57,041(7)(12)           $14,400(14)
     Chief Executive Officer,
     Indian River and Indian
     River Bank(11)
<FN>
(1)      Mr. Beindorf became  President and Chief Executive  Officer on April 4, 2001.  Prior to that time, he was Vice President of
         Indian River and Executive Vice President - Lending of Indian River Bank.
(2)      Except as otherwise indicated,  options vest in equal installments over a three year period. All options have been adjusted
         to reflect 10% stock dividends in 1999, 2000 and 2001 and a two for one stock split in March 2000.
(3)      Represents directors fees of $12,000, 401(k) contribution of $3,000 and club membership fees.
(4)      Represents directors fees of $12,350 and club membership fees.
(5)      Represents directors fees of $18,900 and club membership fees.
(6)      Mr. Bradley joined Indian River in June 1999.
(7)      Mr. Bradley's options vest over a period of seven years with  approximately 40% vesting in year one and 10% vesting in each
         subsequent year.
(8)      Does not include $21,299 of relocation expense reimbursement.
(9)      Represents 401(k) contribution.
(10)     Represents commissions and 401(k) contributions of $1,700 in 1998 and $2,250 in 1999.
(11)     Mr. High joined Indian River in June 1999 and resigned in April 2001
(12)     Mr.  High's  options vest over a period of seven years with  approximately  40% vesting in year one and 10% vesting in each
         subsequent year. All options were terminated in connection with Mr. High's resignation.
(13)     Represents club membership fees.
(14)     Represents directors fees of $7,000 and club membership fees. Does not include $43,343 of relocation expense reimbursement.
</FN>
</TABLE>
                        OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
                                                       Percent of Total
                          Number of Securities        Options Granted to          Exercise
                           Underlying Options         Employees in Fiscal         Price Per
        Name                     Granted                     Year                   Share          Expiration Date
---------------------    ------------------------    ----------------------     --------------     -----------------
<S>                             <C>                         <C>                    <C>                <C>
Paul A. Beindorf                14,520(1)                   35.09%                 $20.24             12/31/2009

Charles A. Bradley                  0                         N/A                    N/A                 N/A

Daniel C. Fourmont               968(1)                      2.34%                 $20.24             12/31/2009

Jeffrey R. Morton               9,680(1)                    23.39%                 $20.24             12/31/2009

William A. High                     0                         N/A                    N/A                 N/A
<FN>
(1)      As adjusted to reflect the 10% stock  dividends paid in January 2000 and February 2001 and the two for one stock split paid
         in March 2000.
</FN>
</TABLE>

                                       57
<PAGE>
               AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
                          FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
                                                                   Number of Securities             Value of Unexercised
                              Shares                              Underlying Unexercised          In-The-Money Options at
                            Acquired on            Value        Options at December 31, 2000         December 31, 2000
        Name                 Exercise            Realized       Exercisable/Unexercisable(1)      Exercisable/Unexercisable
---------------------     ----------------     --------------   ----------------------------    ----------------------------
<S>                              <C>               <C>                 <C>                          <C>
Paul A. Beindorf                 0                  N/A                6,306/12,100                  $54,306/$24,894

Charles A. Bradley               0                  N/A                 6,665/6,665                  $41,923/$41,923

Daniel C. Fourmont               0                 N/.A                  1,574/565                   $11,518/$3,459

Jeffrey R. Morton                0                  N/A                 9,841/5,013                  $45,380/$26,587

William A. High                  0                  N/A                25,927/25,928                $130,467/$163,087
<FN>
(1) As adjusted for the 10% stock dividend  paid in February 2001.  Value based on a of $23.64 per share.
</FN>
</TABLE>
EMPLOYEE BENEFIT PLANS

         Indian River Bank  provides all officers and full-time  employees  with
group life and medical and dental insurance coverage.

         401(k)  Plan.  Indian  River  Bank has a  defined  contribution  401(k)
retirement  plan which  covers  employees  that meet  certain  age and length of
service  requirements.  Under this plan,  the Bank will  annually  contribute  a
discretionary amount as approved by the Board of Directors.  For the years ended
December 31, 2000 and 1999, Indian River Bank's contribution amounted to $81,816
and $59,814, respectively.

         Stock Option Plans.  Under Indian River's 1995  Incentive  Stock Option
Plan approved by  stockholders  in 1995 ("1995 Option Plan"),  112,735 shares of
common stock (as adjusted)  were  available for issuance  under options  granted
between  1995 and 1998.  The 1995 Option Plan was designed to enable the Bank to
attract and retain qualified  personnel and to reward  outstanding  performance.
Eligible employees ("Participants") are those employees, including officers, who
at the time options are granted,  serve in managerial positions or are deemed to
be  "key  employees"  by  the  Board  of  Directors.   The  Board  of  Directors
administered  the 1995 Option Plan. No further grants may be made under the 1995
Option Plan. Options outstanding under the 1995 Option Plan will expire no later
than 2003.

         At the 2000 Annual Meeting, the shareholders approved a new option plan
(the "1999 Option Plan")  pursuant to which  302,500  shares of common stock are
available for issuance under options  granted  between  October 1999 and October
2009.  Options under the 1999 Option Plan may be either  incentive stock options
("ISOs")  as defined in Section 422 of the  Internal  Revenue  Code of 1986,  as
amended (the "Code"), or options that are not ISOs ("Non-ISOs").  The purpose of
the 1999 Option Plan is to advance the  interests of the Bank through  providing
selected key  employees of the Bank with the  opportunity  to acquire  shares of
common stock. By encouraging  such stock  ownership,  the Bank seeks to attract,
retain and motivate the best  available  personnel for positions of  substantial
responsibility  and  to  provide  additional  incentive  to  key  employees  and
directors of the Bank to promote the success of the business, as measured by the
value of its shares,  and to increase the  commonality  of  interests  among key
employees and other  stockholders.  The 1999 Option Plan is  administered by the
Board of Directors.

         A  participant  may,  under the 1999 Option  Plan,  receive  additional
options  notwithstanding  the earlier  grant of options and  regardless of their
having been exercised,  expired,  or surrendered.  Participants owning more than
10% of the voting power of all classes of the Bank's voting  securities,  and of
its parent or subsidiary  companies,  if any, may not receive additional options
unless the option  exercise  price is at least 110% of the fair market  value of
the common stock and unless the option  expires on the fifth  anniversary of the
date of its grant.  All other  options  granted  under the 1999 Option Plan must
have an exercise  price at least  equal to the fair  market  value of the common
stock  as of the  time  of  grant,  and may  expire  no  later  than  the  tenth
anniversary of the date of their grant.

         Option  exercise  prices  are  determined  by the Board on the date the
subject  options  are  granted.  In  the  event  of any  merger,  consolidation,
recapitalization, reorganization, reclassification, stock dividend, stock split,
combination or  subdivision  of shares,  or similar event in which the number or
kind of shares is changed  without  receipt or payment of  consideration  by the
Bank,  the Board will  adjust  both the number and kind of shares of stock as to
which  Options may be awarded  under the 1999 Option Plan,  the affected  terms,
including exercise price of all outstanding Options and the

                                       58
<PAGE>

aggregate  number of shares of Common Stock remaining  available for grant under
the 1999 Option  Plan.  Options may be exercised in whole or in part and are not
transferable  except upon the death of the participant.  Any unexercised options
then  existing  may be  exercised  by the  transferee  under  the  terms of such
options.

         In the  absence  of Board  action  to the  contrary:  (A) an  otherwise
unexpired  ISO,  or a  Non-ISO  granted  to  an  employee,  shall  cease  to  be
exercisable  upon (1) an employee's  termination of employment for "just cause",
as defined in the 1999 Option Plan,  (2) the date three months after an employee
terminates service for a reason other than just cause, death, or disability,  or
(3) the date one year after an employee terminates service due to disability, or
two years after  termination of such service due to his death;  (B) an unexpired
Non-ISO granted to a non-employee director shall be exercisable at any time, but
not  later  than  the  date  on  which  the  Non-ISO  would  otherwise   expire.
Notwithstanding  the provisions of any Option which provides for its exercise in
installments  as designated by the Board,  such Option shall become  immediately
exercisable  upon  the  optionee's  death or  permanent  and  total  disability.
Notwithstanding  the  provisions  of any award which provide for its exercise or
vesting in  installments,  on the date of such  change in  control,  all Options
issued  under the 1999 Option Plan shall be  immediately  exercisable  and fully
vested.

         For purposes of the 1999 Option Plan, "change in control" means any one
of the following  events:  (1) the acquisition of ownership of, holding or power
to vote more than 51% of Indian River's voting stock; (2) the acquisition of the
power to control the election of a majority of Indian River's directors; (3) the
exercise of a controlling  influence  over the  management or policies of Indian
River by any  person or by  persons  acting as a group  within  the  meaning  of
Section 13(d) of the Exchange  Act; or (4) the failure  during any period of two
consecutive years, of individuals who at the beginning of such period constitute
the Board of  Directors  of Indian River (the  "Continuing  Directors")  for any
reason to constitute at least two-thirds  thereof,  provided that any individual
whose  election or nomination for election as a member of the Board was approved
by a vote of at least  two-thirds  of the  Continuing  Directors  then in office
shall be considered a Continuing  Director.  For purposes of defining "change in
control,"  the  term  "person"   refers  to  an  individual  or  a  corporation,
partnership,   trust,   association,   joint  venture,  pool,  syndicate,   sole
proprietorship,  unincorporated  organization  or any other  form of entity  not
specifically listed. The decision of the Board as to whether a change in control
has occurred shall be conclusive and binding.

         As of December 31,  2000,  Indian River had options for the purchase of
152,809  shares of common stock issued and  outstanding  under the 1995 and 1999
Option Plans,  as adjusted for the 10% stock  dividend paid in February 2001. As
of the December 31,  149,691  options to acquire shares of common stock remained
available for issuance under the 1999 Option Plan.

         Employment Agreements.  In December 1999, Indian River and Indian River
Bank entered into an employment agreement with Mr. Bradley pursuant to which Mr.
Bradley serves as Chief Financial  Officer of each  institution.  Mr.  Bradley's
agreement  has an initial  term of three  years,  and is  subject  to  automatic
one-year  extensions of such term each  December,  provided that neither  Indian
River nor Mr.  Bradley has given  written  notice of  intention  not to renew at
least 60 days prior to the renewal date. The agreement  provides for the payment
of cash and other benefits to Mr.  Bradley,  including a fixed salary,  reviewed
annually and subject to increase but not decrease,  provided that in the absence
of any action  with  respect to his salary  rate,  Mr.  Bradley is  entitled  to
receive an automatic annual salary increase based upon the consumer price index,
up to a maximum of 5% per year.  Mr.  Bradley's  current  salary is $85,300  per
year.  Mr.  Bradley is  entitled  to  participate  in bonus and fringe  benefit,
incentive compensation,  life insurance,  medical, profit sharing and retirement
plans, and is entitled to reimbursement of reasonable  business  expenses.  With
minor exceptions, the agreement terminates, and there are no additional payments
due under it, upon termination based upon death,  retirement,  or just cause (as
defined) by Indian River,  or upon voluntary  termination by Mr. Bradley without
good reason (as defined).  If Indian River  terminates Mr. Bradley  without just
cause, or if Mr. Bradley  terminates the agreement with good reason, Mr. Bradley
is  entitled  to salary and bonuses  for the  remaining  term of the  agreement,
payable in a lump sum based upon prior year compensation  levels.  The agreement
prohibits  conflicts of interest,  and requires  that Mr.  Bradley  maintain the
confidentiality  of  nonpublic   information  regarding  Indian  River  and  its
customers.

         In the event of a change-in-control  of Indian River, Mr. Bradley would
be entitled to payment of certain  benefits.  If within six months  prior to, or
two years after, a  change-in-control,  Indian River  terminates  Mr.  Bradley's
employment without good cause, or Mr. Bradley voluntarily  terminates employment
for good reason,  then Indian  River,  or its  successor,  is required to make a
lump-sum  cash  payment  equal to two times the sum of his annual  salary at the
highest rate in effect  during the  preceding  twelve months and bonuses for the
preceding  calendar  year.  Mr.  Bradley  would also be  entitled  to  continued
participation  in certain Indian River health and welfare plans.  These payments
and benefits, are limited,  however, so as not to exceed the amount allowable as
a deduction under Section 280G of the



                                       59
<PAGE>

Internal  Revenue Code. If the lump-sum  payment were required to be made to Mr.
Bradley as of December 31, 2000,  he would be entitled to receive  approximately
$221,400 under his contract.

         In October  1999,  Indian  River and Indian  River Bank  entered into a
substantially  identical  employment  agreement with Mr. High, pursuant to which
Mr. High served as President and Chief  Executive  Officer of each  institution.
Mr. High's  agreement  was  terminated  in April 2001 upon his  resignation.  In
connection with his  resignation,  Indian River made a payments of approximately
$567,000  in  satisfaction  of all amounts  which may be owing under Mr.  High's
employment agreement and the termination of options held by Mr. High.

DIRECTORS' COMPENSATION

         The Board of Directors  has adopted the Director Fee Stock Option Plan,
pursuant to which each director who is not an employee of Indian River or Indian
River Bank is entitled to elect to receive  options to purchase shares of common
stock,  in lieu of cash  compensation  for  attendance  at  committee  meetings.
Electing  directors were entitled to receive  options to purchase 242 shares for
service on each committee on which they served in 2000, except that the Chairman
received an aggregate of 770 shares for committee service,  each as adjusted for
the 10% stock dividend paid in February 2001.  Electing  directors are currently
entitled to receive  options to purchase 770 shares (as adjusted) for service on
each  committee for a three year period,  subject to adjustment for future stock
dividends,  splits and similar events, except for the Chairman,  who is entitled
to receive  options to purchase  1,650 shares (as adjusted) for each  committee.
Such options vest over a three year period.  Each of the  nonemployee  directors
has elected to receive  options in lieu of committee  fees.  The options have an
exercise price equal to the fair market value of the common stock at the time of
grant,   are   immediately   exercisable   upon   vesting  and  are  of  limited
transferability.  The payment of cash compensation to nonemployee  directors for
attendance at Board meetings was terminated in 2000.



                                       60
<PAGE>

         ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT.

         The following  table sets forth certain  information as of February 15,
2001  concerning  the number and  percentage of shares of Indian  River's common
stock  beneficially owned by its directors and executive officers as of April 5,
2001, and by all such directors and all executive  officers as a group,  as well
as  information  regarding  each other  person  known by Indian  River to own in
excess of 5% of the outstanding common stock. Except as otherwise indicated, all
shares are owned directly,  and the named person  possesses sole voting and sole
investment  power with  respect to all such  shares.  Except as set forth below,
Indian River knows of no other person or persons who  beneficially own in excess
of 5% of the common stock. Further, Indian River is not aware of any arrangement
which at a subsequent date may result in a change of control of Indian River.

<TABLE>
<CAPTION>
                                                                  PERCENT OF
                NAME                 NUMBER OF SHARES (1)          CLASS(1)
---------------------------------   -----------------------    -----------------
<S>                                       <C>                       <C>
Directors
Paul A. Beindorf                          38,178(2)                  2.2%
William C. Graves, IV                     29,764(3)                  1.7%
Griffin A. Greene                         48,852(4)                  2.8%
Robert A. Grice                           88,769(5)                  5.0%
William B. Marine                         16,714(6)                  1.0%
John L. Minton                            50,741(7)                  2.9%
Keith H. Morgan, Jr.                      27,940(8)                  1.6%
Daniel R. Richey                          12,427(9)                  0.7%
Mary M. Rogers                            88,184(10)                 5.0%
John David Smith                          29,186(11)                 1.7%

Executive Officers
Charles A. Bradley                         6,655(12)                 0.4%
Kevin D. Evans                             3,892(13)                 0.2%
Daniel C. Fourmont                        23,946(14)                 1.4%
Jeffrey R. Morton                         11,207(15)                 0.6%
Kitty L. Ruehman                          14,311(16)                 0.8%
J. Ken Smith                               3,104(17)                 0.2%
Harry J. Traczyk                             440                     0.0%
Diana L. Walker                            4,124(18)                 0.2%
All directors and executive
officers as a group (18 persons)         498,434(19)                27.4%

Other 5% Shareholders
Barnette E. Greene, Jr.                  154,116(20)                 8.7%
2075 38th Avenue
Vero Beach, Florida  32960
<FN>

(1) For purposes  hereof,  a person is deemed to be the beneficial owner of securities with respect to which he has or shares voting
or investment power. Except as otherwise indicated,  the named beneficial owner has sole voting and investment power with respect to
all shares beneficially owned by such person. The percentage of shares owned is based on 1,764,500 shares outstanding as of February
15, 2001, except with respect to individuals  holding options to acquire common stock exercisable  within sixty days of February 15,
2001, in which event represents  percentage of shares issued and outstanding as of February 15, 2001 plus the number of such options
held by such person, and all directors and officers as a group, which represents percentage of shares outstanding as of February 15,
2001 plus the number of such options held by all such persons as a group.

(2) Includes 3,770 shares held jointly with Mr. Beindorf's wife, 8,295 shares held by Mr. Beindorf's wife and presently  exercisable
options to purchase 12,349 shares of common stock.

(3) Includes 21,324 shares held jointly with Mr. Graves' wife and presently  exercisable  options to purchase 1,496 shares of common
stock.  Does not include 7,680 shares of common stock owned by Mr. Graves' wife  individually,  as to which he disclaims  beneficial
ownership.

(4) Includes 11,811 shares held jointly with Mr. Greene's wife, 289 shares of common stock owned by Mr. Greene's wife  individually,
4,549 shares held by a limited liability  partnership owned by Mr. Greene's children,  over which he has voting power, and presently
exercisable  options to purchase 1,496 shares of common stock. Also includes 25,542 shares of common stock owned by a partnership of
which Mr.  Greene is a minority  owner,  of which Mr.  Greene's  parents are each  principal  owners.  Mr. Greene also serves as the
President and is a 35% shareholder of the



                                                                 61
<PAGE>

corporation which is managing partner and 10% owner of the partnership. Mr. Greene is the son of Barnette E. Greene, Jr., a director
emeritus. Mr. Green was appointed to the Board to replace his father upon his retirement from active service on the Board.

(5) Includes presently exercisable options to purchase 1,496 shares of common stock and 85,907 owned jointly with Mr. Grice's wife.

(6) Includes 462 shares held jointly with Mr.  Marine's  wife,  1,201 shares held by Mr.  Marine's wife  individually  and presently
exercisable options to purchase 1,496 shares of common stock.

(7) Includes  15,917  shares held jointly with Mr.  Minton's  wife and an aggregate of 17,341  shares held by Mr.  Minton's wife and
children individually, and presently exercisable options to purchase 3,344 shares of common stock.

(8) Includes 24,244 shares held jointly with Mr. Morgan's wife and presently  exercisable options to purchase 1,496 shares of common
stock.

(9) Includes 7,928 shares held jointly with Mr.  Richey's wife,  3,003 shares held by a corporation of which Mr. Richey is president
and presently exercisable options to purchase 1,496 shares of common stock.

(10) Includes 51,044 shares held jointly with Mrs. Rogers'  husband,  3,689 shares held by Mrs.  Rogers' husband  individually,  939
shares held by Mrs.  Rogers' husband as trustee,  11763 shares held by Mrs. Rogers as trustee,  8,682 shares as to which Mrs. Rogers
has or shares voting power, and presently exercisable options to purchase 1,496 shares of common stock and.

(11) Includes  1,245 shares held jointly with Mr.  Smith's  sister,  774 shares held as trustee for his minor children and presently
exercisable options to purchase 1,496 shares of common stock. Does not include 387 shares held by Mr. Smith's son individually.

(12) Represents presently exercisable options to purchase common stock.

(13) Includes 1,392 shares held by Mr. Evan's wife, and presently exercisable options to purchase 2,212 shares of common stock.

(14) Includes 7,713 shares held jointly with Mr. Fourmont's wife and 4,127 shares owned by Mrs.  Fourmont and presently  exercisable
options to purchase 1,574 shares of common stock.

(15) Includes 1,366 shares owned jointly with Mr. Morton's wife and presently exercisable options to purchase 9,841 shares of common
stock.

(16) Includes  12,577 shares held jointly with Mrs.  Ruehman's  husband and daughter and presently  exercisable  options to purchase
1,734 shares of common stock.

(17) Includes shares jointly owned with Mr. Smith's wife and presently exercisable options to purchase 2,783 shares of common stock.

(18) Includes 74 shares owned jointly with Mrs.  Walker's  husband,  and presently  exercisable  options to purchase 3,500 shares of
common stock

(19) Includes presently exercisable options to purchase an aggregate of 55,960 shares of common stock.

(20) Includes  128,574 shares held by Mr. Greene and his wife as co-trustees and 25,542 shares of common stock held by a partnership
of which Mr. Greene and his wife are each 40.5% owners,  and the managing partner of which is a corporation of which Mr. Greene is a
30.5% owner, Vice President and director.  Mr. Greene is a director emeritus,  and is the father of Griffin A. Greene, a director of
Indian River. As a director emeritus, Mr. Green is entitled to attend Board meetings.
</FN>
</TABLE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         Some of the directors of Indian River and its subsidiary,  or companies
with which they are  associated,  and some of the  executive  officers of Indian
River and Indian River Bank,  were  customers  of, and had banking  transactions
with,  Indian River Bank during the fiscal year ended  December  31,  2000,  and
Indian River expects that it will have similar  transactions in the future.  All
loans and  commitments  to make loans to such  persons by Indian River Bank were
made in the normal course of business on substantially the same terms, including
interest rates and  collateral,  as those  prevailing at the time for comparable
transactions with unrelated persons;  and in the opinion of management,  did not
and do not involve more than a normal risk of  collectibility  or present  other
unfavorable features.

         The maximum aggregate amount of loans to officers,  directors and their
affiliates during 2000 amounted to $5.7 million  representing  approximately 25%
of Indian  River's  total  shareholders'  equity at December  31,  2000.  In the
opinion  of the  Board  of  Directors,  the  terms of  these  loans  are no less
favorable to Indian River Bank than terms of the loans from Indian River Bank to
unaffiliated  parties.  On  December  31,  2000,  $5.7  million  of  loans  were
outstanding to individuals who, during 2000, were officers,  directors of Indian
River  and  their  affiliates.  None of  these  loans  has ever  been  adversely
classified,  and all of such loans are current as to the payment of interest and
principal.



                                       62
<PAGE>

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(A) EXHIBITS

<TABLE>
<CAPTION>
Exhibit No.       Description of Exhibits
<S>                        <C>
         3(a)              Articles of Incorporation of Indian River, as amended (1)
         3(b)              Bylaws of Indian River (1)
         10(a)             Employment contract between Indian River and William A. High (1)
         10(b)             Employment contract between Indian River and Charles A. Bradley (1)
         10(c)             Indian River 1995 Stock Option Plan (1)
         10(d)             Indian River 1999 Stock Option Plan (1)
         11                Statement of Computation of Per Share Earnings
         21                Subsidiaries of the Registrant
<FN>
--------------------------
(1)   Incorporated by reference to exhibit of same number to Indian River's registration statement on Form SB-2 (No. 333-36688)
</FN>
</TABLE>

(B)  REPORTS ON FORM 8-K

         On October 24,  2000,  Indian  River filed a report on Form 8-K,  under
Item 5,  disclosing  the issuance of a press  release  announcing  completion of
Indian River's offering and the proceeds thereof, and third quarter earnings.



                                       63
<PAGE>

                                   SIGNATURES

         In accordance  with Section 13 of the Securities  Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                           INDIAN RIVER BANKING COMPANY


Dated April 11, 2001                       By:    /s/ Paul A. Beindorf
                                                --------------------------------
                                                 Paul A. Beindorf, President
                                                     and Chief Executive Officer

         In accordance  with the Exchange Act, this report has been signed below
by the following  persons on behalf of the  registrant and in the capacities and
on the dates indicated.

<TABLE>
<CAPTION>
       SIGNATURE                                            TITLE                                   DATE
<S>                                                <C>                                           <C>
 /s/ Paul A. Beindorf                              President, Chief Executive Officer            April 11, 2001
---------------------------------------------      and Director (Principal Executive Officer)
Paul A. Beindorf


/s/ William C. Graves, IV                          Director                                      April 11, 2001
---------------------------------------------
William C. Graves, IV


/s/ Robert A. Grice                                Director                                      April 11, 2001
---------------------------------------------
Robert A. Grice


/s/ Griffin A. Greene                              Director                                      April 11, 2001
---------------------------------------------
Griffin A. Greene



                                                   Director                                      April __, 2001
---------------------------------------------
William B. Marine


 /s/ John L. Minton                                Chairman of the Board                         April 11, 2001
---------------------------------------------
John L. Minton


/s/ Keith H. Morgan, Jr.                           Director                                      April 11, 2001
---------------------------------------------
Keith H. Morgan, Jr.


/s/ Daniel R. Richey                               Director                                      April 11, 2001
---------------------------------------------
Daniel R. Richey


/s/ Mary M. Rogers                                 Director                                      April 11, 2001
---------------------------------------------
Mary M. Rogers


</TABLE>

                                                                 64
<PAGE>

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

/s/ John David Smith                               Director                                      April 11, 2001
---------------------------------------------
John David Smith


/s/ Charles A. Bradley                             Vice President, Treasurer and                 April 11, 2001
---------------------------------------------      Chief Financial Officer (Principal
Charles A. Bradley                                 Accounting and Financial Officer)

</TABLE>



                                       65