UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-K

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

         For the fiscal year ended December 31, 2001

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

         For the transition period from                 to
                                        ---------------    --------------

Commission file number: 000-32643

                          INDIAN RIVER BANKING COMPANY
             (Exact name of registrant as specified 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)

Registrant's telephone number: 772.569.9200

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

Securities registered under Section 12(g) of the Act: Common Stock, $1.00 par
value

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained in this form,
and will not 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-K or any amendment to this Form 10-K.

The issuer's revenues for the fiscal year ended December 31, 2001 were
approximately $30,288,360.

The aggregate market value of the outstanding common stock held by nonaffiliates
as of February 22, 2002 was approximately $ 32,768,215.

As of February 22, 2002, the number of outstanding shares of registrant's common
stock, $1.00 par value, was 1,948,822.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents are hereby incorporated by reference into
this Form 10-K:

         Portions of the registrant's definitive Proxy Statement for the
             Annual Meeting of Shareholders, to be held on April 24,
             2002 are incorporated by reference in part III hereof.


<PAGE>

                                     PART I

ITEM 1. 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 has two subsidiaries, Indian
River Bank, a national banking association, and Indian River Title Company, LLC.
Indian River Bank commenced operations in March 1985, and currently operates out
of its main office and six 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 activities in addition to the title insurance agency
activities currently conducted by Indian River Title Company, particularly those
related to health and life agency activities. Currently, there are no definitive
plans or agreements regarding Indian River's plans to engage in 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.

         Indian River Bank expects to continue its expansion of operations by
opening its seventh branch, its fourth in Brevard County, during 2002. No
location has been selected as of this date, and the cost of construction or
renovation cannot be reliably estimated. Although we expect that the new branch
will open before year end there can be no assurance as to the date on which it
will open, that it will be profitably operated or that it will add to earnings.

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.


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<PAGE>

         At December 31, 2001, Indian River Bank's statutory lending limit to
any single borrower was $4.4 million subject to certain exceptions provided
under applicable law. As of December 31, 2001, Indian River Bank's credit
exposure to its largest borrower was $4.1 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 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
Examining (Audit) 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 Investor
Services, Inc, member NASD & SIPC, a third party vendor. Brokerage services
provided by FiServe include a full line of investment products, including the
purchase and sale of mutual funds, annuities, stocks, bonds, term life
insurance, cash management accounts, IRA's, and many other products and
services.


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<PAGE>

         The manager of brokerage services for Indian River Bank is a licensed
securities representative through the NASD 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, SIPC and the OCC. Fees and commissions earned
by the brokerage services department are paid monthly by FiServe directly to
Indian River Bank.

         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, 2001, there were
approximately 730 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, 2001 total deposits in the
bank amounted to $318.8 million. Certificates of deposit and savings deposits,
representing 71.9% 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 Personal Checking
and Small Business Checking. Personal checking requires no minimum balance and
has no monthly fee, per check charge, or activity limit, and checks are
truncated. Small Business Checking allows a small business to have up to 300
items per month at no cost and then a $0.25 per item charge thereafter during
the period.

         Bills have been introduced in each of the last three Congresses which
would permit banks to pay interest on checking and demand deposit accounts
established by businesses, a practice which is currently prohibited by
regulation. If the legislation effectively permitting the payment of interest on
business demand deposits is enacted, of which there can be no assurance, it is
likely that we may be required to pay interest on some portion of our
noninterest bearing deposits in order to compete against other banks. As a
significant portion of our deposits are non-interest bearing demand deposits
established by businesses, payment of interest on these deposits could have a
significant negative impact on our net income, net interest income, interest
margin, return on assets and equity, and other indices of financial performance.
We expect that other banks would be faced with similar negative impacts. We also
expect that the primary focus of competition would continue to be based on other
factors, such as quality of service.

         Borrowing. Indian River has established various borrowing arrangements
in order to provide management with additional sources of liquidity and funding,
thereby increasing flexibility. Indian River has total borrowings, consisting
primarily of securities sold under agreements to repurchase and FHLB advances,
of $41.6 million at December 31, 2001. In addition, Indian River has available
credit of $9 million under federal funds lines of credit and in excess of $20
million available under its line with the Federal Home Loan Bank of Atlanta.
Management believes that Indian River currently has adequate liquidity available
to respond to anticipated 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.


                                       4
<PAGE>

         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 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 1, 2002, Indian River Bank had 130 full-time equivalent
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.

                           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.

         The Gramm Leach Bliley Act allows a bank holding 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


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<PAGE>

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. A
bank holding company may become a financial holding company if each of its
subsidiary banks is well capitalized under the FDIC Improvement Act prompt
corrective action provisions, is well managed and has at least a satisfactory
rating under the Community Reinvestment Act. Indian River has elected to be 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
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.

         As a financial holding company, no prior regulatory approval will be
required for Indian River to acquire a company, other than a bank or savings
association, engaged in most activities permitted under the Gramm Leach Bliley
Act, as discussed above.

         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


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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
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 and certain U.S. government and agency securities, to 100% for the
bulk of assets which are typically held by a bank or 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-


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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
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.


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<PAGE>

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 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.

         Deposit Insurance Premiums. The FDIA establishes a risk based deposit
insurance assessment system. Under applicable regulations, deposit premium
assessments are determined based upon a matrix formed utilizing capital
categories - well capitalized, adequately capitalized and undercapitalized -
defined in the same manner as those categories are defined for purposes of
Section 38 of the FDIA. Each of these groups is then divided into three
subgroups which reflect varying levels of supervisory concern, from those which
are considered healthy to those which are considered to be of substantial
supervisory concern. The matrix so created results in nine assessment risk
classifications, with rates ranging from 0.04% of insured deposits for well
capitalized institutions having the lowest level of supervisory concern, to
0.31% of insured deposits for undercapitalized institutions having the highest
level of supervisory concern. In general, while the Bank Insurance Fund of the
FDIC ("BIF") maintains a reserve ratio of 1.25% or greater, no deposit insurance
premiums are required. When the BIF reserve ratio falls below that level, all
insured banks would be required to pay premiums at a uniform rate of 0.23% of
insured deposits. Certain studies by the FDIC


                                       9
<PAGE>

and other agencies project that the BIF will fall below the required reserve
ratio in 2002, which would likely result in the imposition of deposit premiums
at the uniform rate in 2003, although there can be no assurance of this.

ITEM 2. PROPERTIES.

         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
six year lease which terminates in February 2007, and has a current annual rent
of $37,835, 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 September
2002, at a current annual rent of $37,005, 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 $72,230, subject to
annual increase based on the CPI, with a 5% maximum annual increase. Indian
River has two 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 $73,075, subject to
annual increase based on the CPI with an 8% maximum annual increase. Indian
River has two five year renewal options. The Rockledge branch, located at 3300
Murrell Road, Rockledge, Brevard County, 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 2011 at a current annual rental of
$88,968, 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 $87,829, 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 feet, expires in November 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.

         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, 2001.


                                       10
<PAGE>

                                     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, 2000,
at prices ranging from approximately $18.41 to $ 30.00 per share, as adjusted
for the 10% stock dividends paid in January 2000, February 2001 and January
2002, and the two for one stock split paid in March 2000. The last trade known
to Indian River was a trade of 444 shares at $30.00 per share on February 15,
2002. 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, approximately 228,610 shares as adjusted), 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, 2001, there were 1,771,817 shares of common stock
outstanding, held of record by approximately 806 shareholders. On January 24,
2002, Indian River paid a 10% stock dividend to shareholders of record on
January 9, 2002, increasing the number of outstanding shares of common stock to
1,948,692, after adjustment for the elimination of fractional shares.

         As of December 31, 2001, there were outstanding options to purchase
120,427 shares of common stock (132,471 as adjusted for the10% stock dividend)
pursuant to Indian River's stock option plans, of which 58,274 (64,101 as
adjusted for the 10% stock dividend) were presently exercisable.

         The following table shows information relating to Indian River's share
price history for the past two fiscal years, and through February 22, 2002.
Prices have been adjusted to reflect the 10% stock dividends paid in January
2000, February 2001 and January 2002 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.

                      2002                    2001                   2000
               --------------------    -------------------     -----------------
Period Ended     High        Low        High        Low         High      Low
               ---------   --------    --------   --------     -------  --------
March 31       $30.00      $26.00      $24.75     $23.40       $20.45   $18.41
June 30                                $24.30     $23.40       $24.55   $20.45
September 30                           $24.30     $22.50       $20.45   $20.45
December 31                            $24.30     $23.85       $24.55   $20.45

         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, and currently
expects that it will continue 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


                                       11
<PAGE>

December 31, 2001, the amount available for the payment of dividends without
prior approval was approximately $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. During 2001, Indian River issued
315 shares of common stock which were not registered under the Securities Act of
1933 to 36 non-officer employees of Indian River as awards under to stock grant
program. The stock grant program awards one share of common stock for each year
of service to non-office employees upon their anniversary date, commencing with
their fifth anniversary. No cash consideration or other property was received
for the awards, which if considered sales, are exempt under Section 4(2) of the
Securities Act.


                                       12
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA

         The following table shows selected historical consolidated financial
data for Indian River. You should read it in connection with the Company's
audited consolidated financial statements for the years ended December 31, 2001,
2000 and 1999. The information in this table was derived from audited financial
statements, including financial statements for the years ended December 31, 1998
and 1997, which were audited by a firm other than Indian River's current
auditors.

<TABLE>
<CAPTION>

                                                                        Year Ended December 31,
                                                  --------------------------------------------------------------------
                                                     2001        2000         1999         1998            1997
                                                  -----------  ----------  -----------  ------------    --------------
                                                                            (Dollars in Thousands)
<S>                                             <C>          <C>         <C>          <C>             <C>
RESULTS OF OPERATIONS:
Total interest income                             $   26,041  $   24,008   $   17,946    $   15,341     $   13,515
Total interest expense                                12,716      12,523        8,025         7,135          6,307
Net interest income                                   13,325      11,485        9,921         8,206          7,208
Provision for loan losses                                600         660          590           375            385
Net interest income after provision for loan
  losses                                              12,725      10,825        9,331         7,831          6,823
Other income                                           4,247       2,552        2,455         2,217          1,299
Other expenses                                        11,179       9,318        8,641         6,740          4,952
Income before income taxes                             5,793       4,059        3,145         3,308          3,170
Income tax expense                                     2,111       1,428        1,143         1,209          1,172
Net income                                             3,682       2,631        2,003         2,099          1,998

EARNINGS PER SHARE:
Basic earnings per common share(1)                $     1.89  $     1.51   $     1.19    $     1.25     $     1.18
Diluted earnings per common share(1)                    1.86        1.48         1.18          1.24           1.18

PERIOD-ENDING BALANCES:
Total loans, including loans held for sale        $  216,662  $  200,052   $  168,550    $  144,364     $  117,641
Total assets                                         389,145     337,075      271,236       223,116        191,468
Total deposits                                       318,806     284,545      238,846       200,397        172,812
Stockholders' equity                                  27,703      23,200       13,591        13,784         11,597
Stockholders' equity per share(1)                      14.24       13.33         8.06          8.18           6.88
Average weighted shares outstanding at period
  end:
     Basic(1)                                      1,943,064   1,740,754    1,686,621     1,686,270      1,686,837
     Diluted(1)                                    1,980,349   1,780,308    1,696,154     1,691,002      1,688,047

ASSET QUALITY RATIOS:
Allowance for loan losses to loans                      1.30%       1.24%        1.13%         1.05%          1.12%
Nonperforming loans to loans                            0.13%       0.07%        0.06%         0.28%          0.08%
Allowance for loan losses to nonperforming
  loans                                               972.26%    1916.56%     1796.23%       594.60%       1760.91%
Nonperforming assets to loans and other real
  estate                                                0.14%       0.07%        0.06%         0.28%          0.11%
Net loan charge-offs to average loans                   0.11%       0.06%        0.13%         0.15%          0.24%

CAPITAL RATIOS:
Tier I risk-based capital ratio                         9.60%      10.60%        8.40%         9.40%          9.71%
Total risk-based capital ratio                         10.70%      11.70%        9.50%        10.50%         10.87%
Leverage ratio                                          7.00%       7.10%        5.90%         6.20%          6.05%

SELECTED RATIOS:(2)
Return on average total assets                          1.02%       0.85%        0.84%         1.05%          1.16%
Yield on average earning assets                         7.40%       8.20%        8.03%         8.31%          8.36%
Return on average stockholders' equity(2)              14.57%      16.02%       14.34%        16.42%         19.26%
Average stockholders' equity to average total
  assets                                                6.96%       5.32%        5.89%         6.41%          6.00%
</TABLE>

(1)      Per share data and average weighted shares have been adjusted to
         reflect 10% stock dividends paid in each year through 2002, and to
         reflect the two for one stock split in the form of a dividend paid in
         March 2000.
(2)      Represents the return on average stockholders' equity including
         unrealized gains and losses on securities available for sale of $1.0
         million, ($1.6 million), ($319 thousand), $582 thousand and $225
         thousand in 2001, 2000, 1999, 1998 and 1997. If the return on average
         stockholders' equity were calculated without including these unrealized
         gains and losses, then it would be 15.18%, 14.61%, 13.98%, 17.20% and
         19.68% for the years ended December 31, 2001, 2000, 1999, 1998 and
         1997.


                                       13
<PAGE>

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

         Indian River is a financial 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 three
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.

RESULTS OF OPERATIONS

2001 COMPARED TO 2000

         NET INCOME. Indian River had income before income taxes of $5.8 million
for the year ended December 31, 2001 compared to $4.1 million for the year ended
December 31, 2000. Net income totaled $3.7 million the year ended December 31,
2001, an increase of $1.1 million or 39.9% compared to net income in 2000.
Earnings per share basic were $1.89 in 2001 compared to $1.51 in 2000 (as
adjusted for 10% stock dividends in January 2002 and February 2001). Return on
average equity was 14.6% for the year ended December 31, 2001, as compared to
16.0% for the year ended December 31, 2000. The decline in return on equity
during 2001 as compared to 2000 in part reflects the sale in the fourth quarter
of 2000 of 207,828 shares of common stock, for gross proceeds of approximately
$5.1 million. Return on average assets for 2001 was 1.02% as compared to 0.85%
for 2000.

         NET INTEREST INCOME. Net interest income is the difference between
interest income on earning assets and interest expense on deposits and other
borrowed funds. During 2001 net interest income, rates earned on loans and
investments and rates paid on deposits and other borrowings were impacted by the
activities of the Federal Reserve in lowering market interest rate benchmarks on
eleven occasions, by an aggregate of 475 basis points. Net interest income for
the year ended December 31, 2001 totaled $13.3 million compared to $11.5 million
in 2000, reflecting an increase of $1.8 million or 16.02%. Total interest income
totaled $26.0 million in 2001 compared to $24.0 million in 2000. This increase
was primarily the result of increases of $1.6 million in interest and fees on
loans. The increase in earnings on loans was due to an increase in average
outstanding loan balances from $180.7 million in 2000 to $210.5 million in 2001,
offsetting a decrease in the average loan rates earned, which decreased to 8.37%
in 2001 from 8.84% in 2000. Interest expense for 2001 increased by $193 thousand
from 2000. The increase in interest expense was due to an increase in average
interest-bearing deposits and other borrowed funds of approximately $39.4
million, offsetting a decrease in the average rate paid to 4.33% in 2001 from
4.93% in 2000.

         The average yield on earning assets for the year ended December 31,
2001, was 7.53% compared to 8.17% in 2000. The average rate paid on interest
bearing liabilities in 2001 was 4.33% compared to 4.93% in 2000. The average
interest rate paid on other borrowed funds in 2001 was 4.53% compared to 6.50%
in 2000. Yields on savings accounts and certificates of deposits have not
dropped as dramatically as market deposit rates in general due to certificate of
deposit specials which were offered in 2000 and 2001 before the decline in
market rates and also, a savings account


                                       14
<PAGE>

special offered in connection with the opening of the Rockledge branch in April
2001, with a rate of 4.89% guaranteed until April 2002. Net interest margin is
the ratio of net interest income to average earning assets. For the year ended
2001, net interest margin was 3.85% compared to 3.91% for the year ended
December 31, 2000. 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 $0.6
million to the allowance for loan losses in 2001 compared to $0.7 million in
2000. Total charge-offs, net of recoveries, were approximately $234 thousand in
2001 and $111 thousand in 2000.

         NON-INTEREST INCOME. Non-interest income for the year ended December
31, 2001 was $4.3 million compared to $2.6 million in 2000, an increase of $1.7
million or approximately 66.39%. The increase in deposit fee income of $319
thousand, or 23.82% over 2000 levels, resulted primarily from the increased
volume of accounts and Indian River Bank's branches opened in 2000 and 2001. The
increase in gains on loans held for sale of $989 thousand or 142% over 2000
levels reflected the high level of mortgage lending activity resulting from the
significant decline in interest rates during 2001. Declines in mortgage lending
and refinancing activity, which may result from a period of stable or increasing
interest rates, may have an adverse affect on the volume of loans sold and gains
therefrom in future periods. Also, positively affecting non interest income in
2001 was the $221,000 in gains on the sale of securities, an increase of
$209,000, or 1,674%, from 2000. See investment activity section below.

         NON-INTEREST EXPENSE. Total non-interest expense for the year ended
December 31, 2001 of $11.2 million reflected an increase of approximately $1.9
million, or 19.97%, primarily as a result of increase in personnel costs and
other operating expenses. Salaries and benefits expense increased by $1.0
million, or 23.12%, in 2001, to $5.6 million compared to $4.6 million in 2000.
Occupancy and equipment expense of $1.5 million stayed the same for 2001 as
compared to 2000. The increase in salary and benefits expense was in part a
result of the establishment and staffing of the Rockledge branch, Indian River
Bank's seventh, during 2001 and payments in connection with the resignation of a
former officer. Other operating expenses of $4.1 million increased by $0.9
million or 27.57% in 2001. This was due in part to a $327 thousand increase in
service bureau cost. The higher costs reflect an increase in number of accounts
and additional services, such as internet banking, bill pay, and ATM online
transactions.

         TAXES ON INCOME. Income tax expense totaled $2.1 million for 2001
compared to income tax expense of $1.4 million in 2000.

2000 COMPARED TO 1999

         NET INCOME. 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 $1.51 in 2000 compared to $1.19 in 1999 (as
adjusted for the 10% stock dividends paid in 2000, 2001 and 2002 and the two for
one stock split). Net income in 1999 was adversely impacted by one time expenses
aggregating approximately $0.4 million related to the resignation of the former
President, and the write-down of a parcel of land previously held for bank
premises. Return on average equity was 16.0% 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 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.


                                       15
<PAGE>

         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.


                                       16
<PAGE>

COMPARISON OF AVERAGE BALANCES, INTEREST AND YIELDS

         The following tables 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>
                                                                Year Ended December 31,
                                  --------------------------------------------------------------------------------------
                                                   2001                                            2000
                                  --------------------------------------       -----------------------------------------
                                   Average                     Average          Average                         Average
                                   Balance       Interest     Yield/Rate        Balance          Interest     Yield/Rate
                                  ---------      --------     ----------       ---------         --------     ----------
                                                                    (Dollars in Thousands)
<S>                               <C>            <C>           <C>            <C>               <C>             <C>
Assets:
Interest-earning assets:
    Investments (1)               $ 126,825      $  8,170        6.4%          $ 113,002         $  8,020         7.1%
    Federal funds sold                8,345           248        3.0%                248               15         6.3%
    Loans receivable (2)            210,538        17,623        8.4%            180,743           15,973         8.8%
                                  ---------      --------        ---           ---------         -------- ------------
         Total interest
         earning assets             345,808        26,041        7.5%            293,993           24,008         8.2%
                                                 --------        ---                             -------- ------------
Noninterest-earning assets           17,312                                       14,445
                                  ---------                                    ---------
         Total                    $ 363,120                                    $ 308,438
                                  =========                                    =========

Liabilities and Stockholders'
Equity:
Interest-bearing liabilities:
    NOW and money market
    accounts                      $  31,517           367        1.2%          $  29,206              352        1.2%
    Savings accounts                 82,013         2,777        3.4%             68,860            2,654        3.8%
    Certificates of deposit         137,208         7,630        5.6%            127,987            7,685        6.0%
    Other                            42,843         1,942        4.5%             28,172            1,832        6.5%
                                  ---------      --------        ---           ---------         --------        ---
         Total interest-bearing
         liabilities                293,582        12,716        4.3%            254,225           12,523        4.9%
                                                 -------------   ---                             --------        ---
Noninterest-bearing liabilities      44,262                                       37,800
Stockholders' equity                 25,276                                       16,413
                                  ---------                                    ---------
         Total                    $ 363,120                                    $ 308,438
                                  =========                                    =========

Net interest income and net
yield on interest-earning assets                 $ 13,325        3.9%                            $ 11,485        3.9%
                                                 ========        ===                             ========        ===
</TABLE>

(1)  Includes investment securities and Federal Reserve Bank, Fed Home Loan
     Bank, and IBB stock. Yields on securities available for sale have been
     calculated on the basis of historical cost and do not give effect to
     changes in fair value of such securities, which are reflected as a
     component of stockholder's equity.
(2)  Includes loans for which the accrual of interest has been suspended.


                                       17
<PAGE>

                                            Year Ended December 31,
                                   -----------------------------------------
                                                      1999
                                   -----------------------------------------
                                    Average                        Average
                                    Balance         Interest      Yield/Rate
                                   ---------        --------      ----------
                                           (Dollars in Thousands)
Assets
Interest-earning assets
    Investments (1)                $  67,588        $  4,496         6.7%
    Federal funds sold                 2,550             129         5.1%
    Loans receivable (2)             153,267          13,321         8.7%
                                   ---------        --------         ---
        Total interest earning
          assets                     223,405          17,946         8.0%
                                                    --------         ---
Noninterest-earning assets            14,326
                                   ---------
        Total                      $ 237,731
                                   =========

Liabilities and Stockholders'
Equity:
Interest-bearing liabilities:
    NOW and money market
      accounts                        26,200             351         1.3%
    Savings accounts                  77,325           3,099         4.0%
    Certificates of deposit           75,648           3,902         5.2%
    Other                             11,409             673         5.9%
                                   ---------        --------         ---
        Total interest-bearing
          liabilities                190,582           8,025         4.2%
                                                    --------         ---
Noninterest-bearing liabilities       33,145
Stockholders' equity                  14,004
                                   ---------
        Total                      $ 237,731
                                   =========

Net interest income and net yield
        On interest-earning assets                  $  9,921         4.4%
                                                    ========         ===

(1) Includes investment securities and Federal Reserve Bank, Fed Home Loan Bank,
    and IBB stock. Yields on securities available for sale have been calculated
    on the basis of historical cost and do not give effect to changes in fair
    value of such securities, which are reflected as a component of
    stockholder's equity.
(2) Includes loans for which the accrual of interest has been suspended.


                                       18
<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,
                                     -------------------------------------------------------------------------------------------
                                                   2001 vs. 2000                                    2000 vs. 1999
                                     -------------------------------------------      ------------------------------------------
                                         Increase (Decrease) Attributable to
                                     -------------------------------------------      ------------------------------------------
                                      Volume     Rate     Rate/Volume    Change       Volume      Rate    Rate/Volume    Change
                                     --------  -------    -----------    -------      -------    -------  -----------    -------
                                                                        (Dollars in Thousands)
<S>                                   <C>       <C>         <C>          <C>          <C>        <C>        <C>          <C>
Interest income on:
     Investments                     $   981   $  (740)     $   (91)     $   150      $ 3,022    $   301    $   202      $ 3,525
     Federal funds sold                  509        (8)        (268)         233         (117)        31        (28)        (114)
     Loans receivable                  2,642      (851)        (141)       1,650        2,388        224         40        2,652
                                     -------   -------      -------      -------      -------    -------    -------      -------
 Total interest income on
   interest-earning assets             4,132    (1,599)        (500)       2,033        5,293        556        214        6,063
                                     -------   -------      -------      -------      -------    -------    -------      -------

 Interest expense on:
     NOW and money market accounts        28       (12)          (1)          15           40        (34)        (4)           2
     Savings accounts                    507      (322)         (62)         123         (339)      (119)        13         (445)
     Certificates of deposit             554      (568)         (41)         (55)       2,700        640        443        3,783
     Other                               954      (555)        (289)         110          989         69        101        1,159
                                     -------   -------      -------      -------      -------    -------    -------      -------
 Total interest expense on
   interest-bearing liabilities        2,043    (1,457)        (393)         193        3,390        556        553        4,499
                                     -------   -------      -------      -------      -------    -------    -------      -------
 Increase (decrease) in net
   interest income                   $ 2,089   $  (142)     $  (107)     $ 1,840      $ 1,903    $    -     $  (339)     $ 1,564
                                     =======   =======      =======      =======      =======    =======    =======      =======
</TABLE>


FINANCIAL CONDITION

         Total assets were $389.1 million at December 31, 2001 compared to
$337.1 million as of December 31, 2000. This represented an increase of 15.45%.
Average earning assets for 2001 were $345.8 million, an increase of 17.62% from
the 2000 average of $294.0 million.

         Total net loans, excluding loans held for sale, increased by $13.4
million, or 6.89%, to $208.0 million at December 31, 2001 compared to $194.6
million at December 31, 2000. Loans held for sale increased $2.8 million, or
95%, reflecting increased mortgage activity and refinancing during the declining
rate environment. Investment securities and federal funds sold increased to
$154.3 million, a 27.46% increase from the $121.0 million as of December 31,
2000. Total deposits increased by 12.04% to $318.8 million.

         INVESTMENT ACTIVITY. The securities portfolio represented approximately
37.07% and 35.76% of the Bank's assets as of December 31, 2001 and 2000,
respectively. During 2001, Indian River's investment securities portfolio
increased by $23.7 million, or 19.66%. 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 and additional
borrowings in excess of the loan funding and operational requirements of the
Bank. The before tax unrealized gain on securities available for sale at
December 31, 2001 was $1.6 million as compared to $421 thousand at December 31,
2000, an increase of $1.2 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 significant increase in corporate bonds is a due to the
Bank's 2001 investment strategy that placed an increased reliance on investment
grade corporate bonds to increase yield and keep the maturities in the three to
five year range. Since December 2001, the Bank has subsequently elected to
decrease the percentage of corporate bonds outstanding to about 10% of the total
investment portfolio, electing to purchase mortgage back securities and CMO's.
As a result of the sale of the corporate bonds, the Bank has recognized gains in
the first quarter of 2002.


                                       19
<PAGE>

         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.

<TABLE>
<CAPTION>
                                                                             December 31,
                                             -----------------------------------------------------------------------------
                                                       2001                      2000                      1999
                                             -----------------------    -----------------------    -----------------------
                                                            Percent                    Percent                   Percent
                                                              of                         of                        of
                                              Balance      Portfolio     Balance      Portfolio    Balance      Portfolio
                                             ---------     ---------    ---------     ---------    --------    -----------
                                                                         (Dollars in thousands)
<S>                                          <C>             <C>        <C>            <C>         <C>           <C>
Available for Sale (at Estimated Market Value):

U.S. Government Agency obligations           $  59,720       41.4%      $  77,881       64.6%      $ 64,852       72.6%

Mortgage-backed securities                      11,559        8.0%          7,490        6.2%         6,471        7.3%

Corporate debt securities                       57,479       39.9%         21,844       18.1%        10,093       11.3%
                                             ---------       ----       ---------       ----       --------       ----
                                             $ 128,758       89.3%      $ 107,215       88.9%      $ 81,416       91.2%
                                             =========       ====       =========       ====       ========       ====

Held to Maturity (at Amortized Cost):

U.S. Government Agency obligations           $   3,232        2.2%      $       -        0.0%      $      -        0.0%

Securities issued by state/political
  subdivisions                                   5,293        3.7%          2,025        1.7%         2,025        2.3%

Mortgage-backed securities                       5,037        3.5%          9,585        8.0%         5,047        5.6%
                                             ---------        ---       ---------       ----       --------       ----
                                             $  13,562        9.4%      $  11,610        9.7%      $  7,072        7.9%
                                             =========       ====       =========       ====       ========       ====
</TABLE>

         The following table sets forth the contractual maturities of the
components of the Bank's securities portfolio as of December 31, 2001, and the
weighted average yields on a non-tax-equivalent basis. The table assumes
estimated fair values for available-for-sale securities and amortized cost for
held to maturity securities:

<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                  $      -         -   $ 13,124    4.5%     $ 40,601     6.2%    $  5,995    6.2%    $ 59,720     5.8%
Mortgage-backed securities           -         -      1,818    6.8%        1,021     6.1%       8,720    6.0%      11,559     6.1%
Corporate debt securities            -         -     56,408    5.4%        1,071     6.7%           -    0.0%      57,479     5.4%
                              --------  --------   --------    ---      --------     ---     --------    ---     --------     ---
Total                         $      -         -   $ 71,350    5.3%     $ 42,693     6.2%    $ 14,715    6.1%    $128,758     5.7%
                              ========  ========   ========    ===      ========     ===     ========    ===     ========     ===

Held To Maturity
U.S. Government Agency
 obligations                  $     -           -  $      -      -      $      -          -  $  3,232    7.5%    $  3,232     7.5%
Securities issued by
 state/political subdivisions       -           -         -      -             -          -     5,293    5.1%       5,293     5.1%
Mortgage-backed securities          -           -         -      -             -          -     5,037    3.7%       5,037     3.7%
                              -------   ---------  --------   ----      --------  ---------  --------    ---     --------     ---
Total                         $     -           -  $      -      -      $      -          -  $ 13,562    5.2%    $ 13,562     5.2%
                              =======   =========  ========    ===      ========  =========  ========    ===     ========     ===
</TABLE>


                                       20
<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,
                             ------------------------------------------------------------------------------------------------------
                                    2001                   2000                1999                  1998               1997
                             ------------------   ------------------   ------------------   ------------------   ------------------
                                       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   $  32,778   15.5%    $   8,883    4.5%    $   8,626    5.1%    $   2,382    1.7%    $   1,892    1.6%
   Farmland                      2,943    1.4%        2,690    1.4%        3,146    1.9%        2,984    2.1%        1,916    1.6%
   One to four family
     residential                74,918   35.5%       86,937   44.1%       68,431   40.6%       60,956   42.2%       49,873   42.4%
   Multifamily residential       3,521    1.7%        1,117    0.6%        1,766    1.0%        1,762    1.2%        2,014    1.7%
   Nonfamily,
     nonresidential             62,660   29.7%       62,772   31.8%       55,104   32.7%       45,452   31.5%       32,080   27.3%
Agriculture                      2,454    1.2%        3,236    1.7%        1,707    1.0%        1,552    1.1%        1,752    1.5%
Commercial and Industrial       14,948    7.1%       13,048    6.6%       12,308    7.3%       11,038    7.6%        9,865    8.4%
Consumer                        14,421    6.8%       15,244    7.7%       15,092    9.0%       15,562   10.8%       15,868   13.5%
Other                            2,225    1.1%        3,172    1.6%        2,370    1.4%        2,676    1.8%        2,381    2.0%
                             ---------            ---------             ---------           ---------            ----------
   Total Loans                 210,868              197,099               168,550             144,364               117,641
                             ---------            ---------             ---------           ---------            ----------

   Less: unearned
   discounts and loan fees           5                    6                     -                   1                      8
                             ---------            ---------             ---------           ---------             ----------
   Loans, net                $ 210,863            $ 197,093             $ 168,550             144,363                117,633
                             =========            =========             =========           =========             ==========
</TABLE>

         LOAN MATURITY. The following table sets forth the term to contractual
maturity of Indian River Bank's loan portfolio at December 31, 2001. 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                 $  17,402             $   7,446             $   9,459             $     497
Real estate construction                    32,778                 8,337                 9,128                15,313
Real estate mortgage                       144,042                 6,107                12,946               124,989
Consumer, other                             16,646                 2,092                12,834                 1,720
                                         ---------             ---------             ---------             ---------
Total loans                              $ 210,868             $  23,982             $  44,367             $ 142,519
                                         =========             =========             =========             =========

Loans with:
Predetermined fixed interest rate        $  70,321             $  13,886             $  34,883             $  21,552
Floating interest rate                     140,547                10,096                 9,484               120,967
                                         ---------             ---------             ---------             ---------
Total loans                              $ 210,868             $  23,982             $  44,367             $ 142,519
                                         =========             =========             =========             =========
</TABLE>

         Fixed rate loans due after one year total approximately $62 million and
adjustable rate loans due after one year total approximately $130 million. See
note 4 to the consolidated financial statements for additional information
regarding the composition of the loan portfolio.


                                       21
<PAGE>

         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.

         Calculating the allowance for loan losses is divided into three primary
allocation groups: (1) specific allocation loans, (2) past due / problem loans
and (3) all other passing grade loans. For specific allocation loans, the bank
has determined a reserve amount to set aside which it believes is sufficient to
cover a collateral shortfall. Problem loans are identified by the Loan Officer,
Loan Review, Asset Liability Committee or by the Examiners. Those loans
identified as problem loans are assigned a risk grade. Loans graded special
mention are multiplied by an inherent loss factor of 5% to determine the amount
to be reserved. Loans graded substandard are multiplied by a loss factor of 10%,
loans graded doubtful are multiplied by a loss factor of 50% and loans graded
loss are multiplied by a loss factor of 100%. Inherent losses in past due loans
are graded based on the number of days which the loan is past due, and are
multiplied by the same loss factors as problem loans. Loans past due 30-59 are
multiplied by a loss factor of 5%, loans past due 60-89 days are multiplied by
10% and loans past due 90 days are multiplied by a loss factor of 50%. All other
loans are graded pass and are categorized into loan groups and multiplied by an
historical experience factor to determine the appropriate level of the allowance
for loan losses. Loss factor percentages are determined taking into
consideration the risk characteristics of the loan portfolio, past charge-off
experience of the Indian River and its peer group, general economic conditions,
and other factors that warrant current recognition.

         At December 31, 2001, the allowance for losses was $2.8 million or
1.34% of loans outstanding compared to $2.5 million or 1.24% of loans
outstanding as of December 31, 2000, an increase of $366 thousand. This increase
is attributable primarily to an increase in total loans outstanding. At December
31, 2001, non-accrual loans increased by $13 thousand, or 10.84%, to $133
thousand compared to $120 thousand at December 31, 2000. The allowance for loan
losses coverage of non-accrual loans was 2120% at December 31, 2001 compared to
coverage of 2049% at December 31, 2000. See Note 1 to the consolidated financial
statements for additional information regarding the allowance for loan losses.


                                       22
<PAGE>

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

<TABLE>
<CAPTION>
                                                                        Year Ended December 31,
                                                      ----------------------------------------------------------
                                                        2001         2000         1999         1998         1997
                                                      -------      -------      -------      -------      ------
                                                                      (Dollars in Thousands)
<S>                                                   <C>          <C>          <C>          <C>          <C>
           Balance at beginning of year               $ 2,453      $ 1,904      $ 1,510      $ 1,322      $ 1,204
                                                      -------      -------      -------      -------      -------
           Charge-offs:
             Commercial, Agricultural                     (62)         (15)         (17)         (12)         (18)
             Real estate construction                      (4)           -            -            -            0
             Real estate mortgage                           -          (27)           -            -           (6)
             Installment loans to individuals            (201)        (111)        (232)        (233)        (317)
                                                      -------      -------      -------      -------      -------
           Total                                         (267)        (153)        (249)        (245)        (341)
                                                      -------      -------      -------      -------      -------
           Recoveries
             Commercial, Agricultural                       -            1           10            6            6
             Real estate construction                       -            -            -            -            -
             Real estate mortgage                           -            -            -            -            7
             Installment loans to individuals              34           41           43           52           61
                                                      -------      -------      -------      -------      -------
           Total                                           34           42           53           58           74
                                                      -------      -------      -------      -------      -------
           Net charge-offs                               (233)        (111)        (196)        (187)        (267)
           Additions charged to operations                600          660          590          375          385
                                                      -------      -------      -------      -------      -------
           Balance at end of period                   $ 2,820      $ 2,453      $ 1,904      $ 1,510      $ 1,322
                                                      =======      =======      =======      =======      =======

           Ratio of net charge-offs during the
             period to average loans outstanding
             during the period                           0.11%        0.06%        0.13%        0.15%        0.24%
</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,
                 -----------------------------------------------------------------------------------------------------------
                        2001                  2000                  1999                  1998                  1997
                 -------------------   -------------------   -------------------   -------------------   -------------------
                                                             (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   $   524      8%       $   390      8%       $    66      8%       $    41      9%       $    47       10%
Real estate
  construction       154     15%            76      5%            39      5%            15      2%            10        2%
Real estate
  mortgage         1,776     69%         1,639     78%         1,400     76%         1,105     77%           860       73%
Consumer, other      366      8%           348      9%           399     11%           349     12%           405       15%
                 -------    ---        -------    ---        -------    ---        -------    ---        -------    -----
Total allowance
  for loan
  losses         $ 2,820    100%       $ 2,453    100%       $ 1,904    100%       $ 1,510    100%       $ 1,322    100.0%
                 =======    ===        =======    ===        =======    ===        =======    ===        =======    =====
</TABLE>

(1) Represents the percent of loans in category to the gross loans.


                                       23
<PAGE>

         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 $290 thousand at December 31, 2001 compared
to $128 thousand at December 31, 2000. The percentage of non-performing assets
to total assets was 0.08% at December 31, 2001 compared to 0.04% December 31,
2000.

         Non-performing loans constituted all of the non-performing assets at
December 31, 2001 and December 31, 2000. Non-performing loans at December 31,
2001 consist of loans in non-accrual status in the amount of $133 thousand and
loans past due over ninety days of $157 thousand compared to non-accrual loans
of $120 thousand and loans past due over ninety days of $8 thousand at December
31, 2000.

         Indian River Bank owned no other real estate owned at either December
31, 2001 or 2000. 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,
                                                    ----------------------------------------------------------
                                                     2001         2000        1999          1998          1997
                                                    -----        -----       -----         -----         -----
                                                                     (Dollars in Thousands)
<S>                                              <C>             <C>         <C>           <C>           <C>
Nonaccrual Loans
      Real estate                                   $ 120        $ 120       $  49         $ 254         $   -
      Installment                                      13            -           5             -            30

Accrual loans - Past due 90 days or more
      Real estate                                     125            -          20           132            30
      Installment                                      32            8          32            11            40

Restructured loans                                      -            -           -             -             -

Real estate owned                                       -            -           -             -            33
                                                    -----        -----       -----         -----         -----
            Total nonperforming assets              $ 290        $ 128       $ 106         $ 397         $ 133
                                                    =====        =====       =====         =====         =====
</TABLE>

         At December 31, 2001, 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. For
the year ended December 31, 2001, $10 thousand in gross interest income would
have been recorded if the $133 thousand of nonaccrual loans had been accruing
interest throughout the period.

         RELATED PARTY TRANSACTIONS. For the year ended December 31, 2001 the
aggregate loans to director of the Bank and their related interest and executive
officers totaled approximately $3,821,000. During the year $634 thousand in new
loans and advances was extended and $834 thousand was paid on these loans to
related parties.

         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.


                                       24
<PAGE>


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

<TABLE>
<CAPTION>

                                                                            Year Ended December 31,
                                                  ----------------------------------------------------------------------------
                                                           2001                       2000                         1999
                                                           ----                       ----                         ----
                                                                             (Dollars in Thousands)
                                                   Average     Average        Average      Average         Average     Average
                                                   Balance      Rate          Balance       Rate           Balance      Rate
                                                   -------     -------       ---------     -------         -------     -------
<S>                                              <C>            <C>         <C>             <C>           <C>           <C>
Deposit Category
  Noninterest-bearing demand                      $  43,157     0.0%         $  36,916      0.0%          $  32,497     0.0%
  Interest-bearing demand                            28,719     1.1%            25,583      1.1%             22,797     1.2%
  Money market                                        2,798     1.5%             3,623      2.0%              3,403     2.0%
  Savings                                            82,013     3.4%            68,860      3.9%             77,325     4.0%
  Certificates of deposit of $100,000 or more        31,984     5.6%            22,506      6.0%             14,148     5.2%
  Other time                                        105,224     5.5%           105,481      6.0%             61,500     5.1%
                                                  ---------                  ---------                    ---------
  Total                                           $ 293,895                  $ 262,969                    $ 211,670
                                                  =========                  =========                    =========
</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,
2001. See Note 7 to the consolidated financial statements for additional
information regarding Indian River's time deposits.

                                                         December 31, 2001
                                                         -----------------
                                                      (Dollars in Thousands)
Due In
         3 months or less                                   $  8,737
         Over 3 through 6 months                              12,864
         Over 6 through 12 months                             11,644
         Over 12 months                                        1,061
                                                            --------
         Total                                              $ 34,306
                                                            ========

         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.

<TABLE>
<CAPTION>

                                                       Maximum Amount
                                                       Outstanding At      Average       Average      Ending     Average Rate at
Year Ended December 31,                                 Any Month End      Balance        Rate        Balance      Period End
------------------------------------------           --------------     --------      --------     --------    ---------------
<S>                                         <C>           <C>             <C>            <C>         <C>
Federal Funds Sold & Repurchase Agreements
                                             2001         $ 20,853        $ 15,625        4.4%       $ 13,156          2.0%
                                             2000           23,822          13,828        6.5%         15,244          6.2%
                                             1999           13,075           3,225        5.4%          7,800          4.8%
Other Short Term Borrowings
                                             2001         $      -        $      -        0.0%       $      -          0.0%
                                             2000           10,000           9,109        6.3%         10,000          5.9%
                                             1999            5,000             639        5.9%          5,000          6.5%
</TABLE>

         ASSET/LIABILITY MANAGEMENT AND QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK. 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 can be defined as the amount
of forecasted net interest income that may be gained or lost due to favorable or
unfavorable changes in market interest rates. Interest rate risk, or
sensitivity, arises due to fluctuations in the general level of interest rates
and such fluctuations can significantly impact our level of profitability.
Interest rate risk, or sensitivity, also relates to the maturity or repricing
characteristics of assets differing from the maturity or repricing
characteristics of liabilities. Net interest income is also affected by changes
in the portion of interest-earning assets that are funded by interest-bearing
liabilities rather than by other sources of funds, such as non-interest-bearing
deposits and shareholders'


                                       25
<PAGE>

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

         The Chief Executive Officer, in conjunction with the ALCO Committee
members, 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. At December 31, 2001, the model
projected net interest income would decrease by 1.09% if interest rates would
immediately fall by 200 basis points. It projects a decrease in net interest
income by 4.68% if interest rates would immediately rise by 200 basis points.
The model projected that for December 31, 2001, net income would decrease by
2.35% if interest rates fell by 200 basis points, and net income would decrease
by 10.06% if interest rates rose by 200 basis points. The simulation model used
by Indian River uses numerous assumptions regarding the effect of changes in
interest rates on the timing and extent of repricing characteristics, future
cash flows and customer behavior. These assumptions are inherently uncertain
and, as a result, the model cannot precisely estimate future changes on net
interest income or net income. Actual results will differ from simulated results
due to timing, magnitude and frequency of interest rate changes, and changes in
market conditions and management strategies, among other factors.

         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. Notwithstanding Indian River's
interest rate risk management activities, the potential for changing market
interest rates is an uncertainty that can have an adverse effect on net income
and on the value of fixed rate assets and variable rate assets which may not
reprice as rapidly as interest rates change, or which may not fully reflect such
changes.

         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 $81.3 million at December 31, 2001, reflected a
decrease of $4.6 million from December 31, 2000, or 5.36%. Funds available
through short-term borrowings and asset maturities are considered adequate to
meet all current needs. At December 31, 2001, Indian River had available credit
of $9.0 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 $22.8 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, 2001 was 67.08% down from
69.44% at December 31, 2000. The loan to total assets ratio at December 31, 2001
was 54.95% compared to 58.62% at December 31, 2000.

         "Gap analysis" is a measure of interest rate sensitivity traditionally
used in the banking industry. Gap analysis measures the cumulative differences
between the amounts of assets and liabilities maturing or repricing within
various time periods. The amortized cost of interest-earning assets and
interest-bearing liabilities outstanding at December 31, 2001 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, 2001.


                                       26
<PAGE>

<TABLE>
<CAPTION>
                                                             More than 3
                                                              Months but         1 Year
                                               3 Months       Less than          through        More than
                                               or Less          1 Year           5 Years         5 Years          Total
                                               ---------     -----------         -------        ---------       ---------
                                                                          (Dollars in Thousands)
<S>                                            <C>            <C>               <C>             <C>             <C>
ASSETS
Securities available for sale                  $   5,420      $  10,738         $  75,574       $  35,442       $ 127,174
Securities held to maturity                        5,037              -                 -           8,525          13,562
Other investments                                  1,899              -                 -               -           1,899
Federal funds sold                                10,033              -                 -               -          10,033
Loans                                             49,006         57,464           105,644           4,548         216,662
                                               ---------      ---------         ---------       ---------       ---------
Total earning assets                           $  71,395      $  68,202         $ 181,218       $  48,515       $ 369,330
                                               ---------      ---------         ---------       ---------       ---------

LIABILITIES
Certificates of deposit                        $  24,584      $  88,534         $   7,541       $      67       $ 120,726
Money market accounts                                  -          1,585             1,585               -           3,170
Transactions accounts                                  -              -            29,778           7,443          37,221
Savings accounts                                       -              -            86,902          21,726         108,628
Federal funds purchased                                -              -                 -               -               -
FHLB advances                                        143            143               571          27,000          27,857
Other borrowed funds                              13,156              -                 -               -          13,156
                                               ---------      ---------         ---------       ---------       ---------
Total interest-bearing liabilities             $  37,883      $  90,262         $ 126,377       $  56,236       $ 310,758
                                               ---------      ---------         ---------       ---------       ---------
Interest sensitivity gap:

Amount                                            33,512        (22,060)           54,841          (7,721)         58,572
Cumulative Gap                                    33,512         11,452            66,293          58,572          58,572

Gap as % of Total Assets                             8.6%          (5.7%)            14.1%           (2.0%)          15.0%
Cumulative Gap as % of Total Assets                  8.6%           2.9%             17.0%           15.0%           15.0%

Ratio of rate sensitive assets to rate
  sensitive liabilities                              1.9%           0.8%              1.4%            0.9%            1.2%

Cumulative ratio of rate sensitive assets
  to rate sensitive liabilities                      1.9%           1.1%              1.2%            1.2%            1.2%
</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, 2001, 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 2.9%.
This positive gap position means the bank had $11.4 million more assets than
liabilities re-pricing within one year. This generally indicates that in a
period of increasing interest rates, the bank's net interest income may be
positively affected. Conversely, in a declining 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.

         CAPITAL ADEQUACY. Total stockholders' equity was $27.7 million at
December 31, 2001 compared to $23.2 million at December 31, 2000. The change
represents an increase of $4.5 million or 19.40%. This change is a result of
earnings of $3.7 million, and net unrealized holding gains on investment
securities of $0.8 million in 2001.


                                       27
<PAGE>

         At December 31, 2000, Indian River Bank's ratio of Tier 1 capital to
total average assets equaled 7.0%, which exceeded the minimum leverage capital
ratio of 4.00% by 3.0% and the minimum leverage ratio for "well capitalized"
banks of 5.00% by 2.0%.

         The ratio of Indian River's average equity to average assets for the
years ended December 31, 2001, 2000 and 1999 was 6.96%, 5.15% and 5.89%,
respectively.

         Indian River monitors its capital levels and those of Indian River Bank
in light of regulatory guidelines and requirements, and the anticipated nature
and level of growth in assets. The ability of Indian River to continue growth is
dependent on its ability to increase its regulatory capital levels, through
retained earnings, holding company borrowing, or the issuance of additional
equity or debt securities, or otherwise. In the event that Indian River is
unable to obtain additional capital on a timely basis, the growth of Indian
River and Indian River Bank may be curtailed, and they could be required to
reduce their level of assets in order to maintain compliance with regulatory
capital requirements. Under those circumstances net income and the rate of
growth of net income may be adversely affected. Indian River does not currently
anticipate the inability to maintain compliance with regulatory capital
requirements.

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

         In July 2001, the Financial Accounting Standards Board issued Statement
141, "Business Combinations" and Statement 142, "Goodwill and Other Intangible
Assets". Statement 141 eliminates the pooling method for accounting for business
combinations; requires that intangible assets that meet certain criteria be
reported separately from goodwill; and requires negative goodwill arising from a
business combination to be recorded as an extraordinary gain. Statement 142
eliminates the amortization of goodwill and other intangibles that are
determined to have an indefinite life; and requires, at a minimum, annual
impairment tests for goodwill and other intangible assets that are determined to
have an indefinite life. For the Company, the provisions of the Statements are
effective January 1, 2002. Implementation of the Statements will have no
material impact on the Company's financial statements.

         The Financial Accounting Standards Board has issued Statement 143,
"Accounting for Asset Retirement Obligations" and Statement 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets". Statement 143 requires that
the fair value of a liability for an asset retirement obligation be recognized
in the period in which it is incurred if a reasonable estimate of fair value can
be made. Statement 144 supersedes FASB Statement 121 and the accounting and
reporting provisions of APB Opinion No. 30. Statement 144 establishes a single
accounting model for long-lived assets to be disposed of by sale which includes
measuring a long-lived asset classified as held for sale at the lower of its
carrying amount or its fair value less costs to sell and to cease
depreciation/amortization. For the Company, the provisions of Statement 143 and
144 are effective January 1, 2003, and January 1, 2002, respectively.
Implementation of the Statements is not expected to have a material impact on
the Company's financial statements.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

          Please refer to Item 7 of this report, "Management's Discussion and
Analysis", under the caption "Asset/Liability Management and Quantitative and
Qualitative Disclosures about Market Risk."


                                       28
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.


                          INDEPENDENT AUDITOR'S 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 subsidiaries (the "Bank") as of December 31, 2001 and 2000,
and the related consolidated statements of income, stockholders' equity, and
cash flows for the each of the three years in the period ended December 31,
2001. 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 audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 that our
audit provides 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 subsidiaries as of December 31, 2001 and 2000, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States of America.

                                                     /s/ McGladrey & Pullen, LLP

Fort Lauderdale, Florida
February 1, 2002

                                       29
<PAGE>

INDIAN RIVER BANKING COMPANY AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2001 AND 2000

<TABLE>
<CAPTION>

ASSETS                                                                                2001                 2000
--------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>                 <C>
Cash and Cash Equivalents
  Cash and due from banks (Notes 2 and 18)                                        $  13,334,594       $  10,336,581
  Federal funds sold (Note 18)                                                       10,032,718             493,000
                                                                                  ---------------------------------
          TOTAL CASH AND CASH EQUIVALENTS                                            23,367,312          10,829,581
                                                                                  ---------------------------------
Investment Securities
  Securities available-for-sale (Note 3)                                            128,757,944         107,215,355
  Securities held to maturity (market value 2001 $13,505,244;
    2000 $11,597,212) (Note 3)                                                       13,561,919          11,609,513
  Other securities, at cost (Notes 3 and 9)                                           1,898,950           1,702,050
                                                                                  ---------------------------------
          TOTAL INVESTMENT SECURITIES                                               144,218,813         120,526,918
                                                                                  ---------------------------------

Loans Held for Sale                                                                   5,794,500           2,953,100


Loans (Notes  4,  9, 12, 17 and 18)                                                 210,862,661         197,093,471
  Less allowance for loan losses (Note 5)                                            (2,819,544)         (2,543,198)
                                                                                  ---------------------------------
          LOANS, NET                                                                208,043,117         194,640,273

Bank Premises and Equipment, net (Note 6)                                             4,051,930           3,816,994

Accrued Interest Receivable                                                           2,783,081           2,990,440

Deferred Tax Asset (Note 8)                                                             345,959             667,369

Other Assets                                                                            540,208             650,496
                                                                                  ---------------------------------
          TOTAL ASSETS                                                            $ 389,144,920       $ 337,075,171
                                                                                  =================================
</TABLE>

See Notes to Consolidated Financial Statements.


                                       30
<PAGE>


<TABLE>
<CAPTION>

LIABILITIES AND STOCKHOLDERS' EQUITY                                                  2001               2000
------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>                  <C>
Liabilities
  Noninterest-bearing demand deposits                                            $  49,062,067       $  41,435,265
  Interest-bearing deposits:
    NOW                                                                             37,220,632           6,827,308
    Money market                                                                     3,169,647           2,890,737
    Savings                                                                        108,628,195          64,335,447
    Time deposits, $100,000 and over (Note 7)                                       34,306,131          38,527,794
    Other time deposits (Note 7)                                                    86,419,524         110,528,113
                                                                                 ---------------------------------
          TOTAL DEPOSITS                                                           318,806,196         284,544,664

Federal funds purchased and securities sold under
  repurchase agreements (Note 9)                                                    13,156,163          15,243,931
Other borrowings (Note 9)                                                           28,427,143          13,142,857
Other liabilities                                                                    1,052,231             943,258
                                                                                 ---------------------------------
          TOTAL LIABILITIES                                                        361,441,733         313,874,710

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 2001 1,948,692 shares;
    2000 1,764,715 shares,                                                           1,948,692           1,764,715
  Capital surplus                                                                   20,877,882          16,353,972
  Retained earnings                                                                  3,878,759           4,816,781
  Accumulated other comprehensive income                                               997,854             264,993
                                                                                 ---------------------------------
          TOTAL STOCKHOLDERS' EQUITY                                                27,703,187          23,200,461
                                                                                 ---------------------------------
          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                             $ 389,144,920       $ 337,075,171
                                                                                 =================================
</TABLE>

                                       31
<PAGE>

INDIAN RIVER BANKING COMPANY AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2001 AND 2000

<TABLE>
<CAPTION>

                                                                            2001              2000             1999
----------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>               <C>              <C>
Interest income:
  Loans and fees on loans                                              $ 17,622,750      $ 15,972,769     $ 13,321,103
  Investment securities and due from banks                                8,170,175         8,019,988        4,495,681
  Federal funds sold                                                        248,554            15,573          129,487
                                                                       -----------------------------------------------
                                                                         26,041,479        24,008,330       17,946,271
                                                                       -----------------------------------------------
Interest expense:
  Deposits                                                               10,773,837        10,691,651        7,352,102
  Other                                                                   1,942,365         1,831,797          672,892
                                                                       -----------------------------------------------
                                                                         12,716,202        12,523,448        8,024,994
                                                                       -----------------------------------------------
      NET INTEREST INCOME                                                13,325,277        11,484,882        9,921,277
Provision for loan losses (Note 5)                                          600,000           660,000          590,000
                                                                       -----------------------------------------------
      NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                12,725,277        10,824,882        9,331,277
                                                                       -----------------------------------------------
Other income:
  Service charges and fees                                                1,657,062         1,338,239        1,097,848
  Gain on sales of securities (Note 3)                                      221,709            12,500           76,340
  Gain on sale of loans                                                   1,684,920           695,911          816,986
  Other                                                                     683,190           505,761          464,164
                                                                       -----------------------------------------------
                                                                          4,246,881         2,552,411        2,455,338
                                                                       -----------------------------------------------
Other expense:
  Salaries                                                                4,804,813         3,902,663        3,613,205
  Employee benefits                                                         764,415           694,659          622,500
  Occupancy                                                                 823,662           688,552          563,344
  Furniture and equipment                                                   687,983           819,870          726,584
  Other operating expenses (Note 14)                                      4,098,074         3,212,512        3,115,615
                                                                       -----------------------------------------------
                                                                         11,178,947         9,318,256        8,641,248
                                                                       -----------------------------------------------
      INCOME BEFORE INCOME TAXES                                          5,793,211         4,059,037        3,145,367
Provision for income taxes (Note 8)                                       2,111,610         1,428,209        1,142,767
                                                                       -----------------------------------------------
      NET INCOME                                                       $  3,681,601      $  2,630,828     $  2,002,600
                                                                       ===============================================
Basic earnings per share (Note 11)                                     $       1.89      $       1.51     $       1.19
                                                                       ===============================================
Diluted earnings per share (Note 11)                                   $       1.86      $       1.48     $       1.18
                                                                       ===============================================
</TABLE>

See Notes to Consolidated Financial Statements

                                       32
<PAGE>

INDIAN RIVER BANKING COMPANY AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2001 AND 2000


<TABLE>
<CAPTION>
                                                                      Common Stock
                                                                   -----------------------------          Capital
                                                                    Shares              Amount            Surplus
---------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>              <C>                <C>
Balance, December 31, 1998                                           576,124         $   576,124        $  7,365,731
  10% stock dividend                                                  57,428              57,428           1,316,250
  Fractional shares                                                        -                   -                   -
  Stock options exercised                                                114                 114               4,005
  Comprehensive income (loss):
    Net income                                                             -                   -                   -
    Other comprehensive loss, unrealized
      loss on securities, net of tax (Note 3)                              -                   -                   -
                                                                   -------------------------------------------------
  COMPREHENSIVE INCOME (LOSS)
                                                                   =================================================
Balance, December 31, 1999                                           633,666             633,666           8,685,986
  10% stock dividend                                                  63,199              63,199           1,303,163
  Fractional shares                                                        -                   -                   -
  2 for 1 stock split                                                696,865             696,865            (696,865)
  Stock options exercised                                              2,729               2,729              36,194
  Issuance of common stock (Note 21)                                 207,828             207,828           4,866,133
  Comprehensive income:
    Net income                                                             -                   -                   -
    Other comprehensive income, unrealized
      gain on securities, net of tax (Note 3)                              -                   -                   -
                                                                   -------------------------------------------------
  COMPREHENSIVE INCOME
                                                                   =================================================
Balance, December 31, 2000                                         1,604,287           1,604,287          14,194,611
  10% stock dividend                                                 160,192             160,192           2,177,009
  Fractional shares                                                        -                   -                   -
  Stock options exercised                                              7,023               7,023              76,512
  Issuance of common stock                                               315                 315               7,875
  Comprehensive income:
    Net income                                                             -                   -                   -
    Other comprehensive income, unrealized
      gain on securities, net of tax (Note 3)                              -                   -                   -
                                                                   -------------------------------------------------
  COMPREHENSIVE INCOME
                                                                   =================================================
Balance, December 31, 2001                                         1,771,817           1,771,817          16,456,007
  Retroactive effect of stock dividend (Note 23)                     176,875             176,875           4,421,875
                                                                   -------------------------------------------------
Balance, December 31, 2001, as adjusted                            1,948,692         $ 1,948,692        $ 20,877,882
                                                                   =================================================
</TABLE>

See Notes to Consolidated Financial Statements.


                                       33
<PAGE>
<TABLE>
<CAPTION>
                                                                        Accumulated
                                                                           Other             Total
                                                     Retained          Comprehensive     Stockholders'      Comprehensive
                                                     Earnings          Income (Loss)        Equity          Income (Loss)
                                                   ----------------------------------------------------------------------
<S>                                                 <C>                 <C>               <C>
Balance, December 31, 1998                         $   5,251,216        $   590,642      $ 13,783,713
  10% stock dividend                                 (1,373,678)                  -                 -
  Fractional shares                                      (4,411)                  -            (4,411)
  Stock options exercised                                      -                  -             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                             5,875,727         (1,604,204)       13,591,175
  10% stock dividend                                  (1,366,362)                 -                 -
  Fractional shares                                       (3,623)                 -            (3,623)
  2 for 1 stock split                                          -                  -                 -
  Stock options exercised                                      -                  -            38,923
  Issuance of common stock (Note 21)                           -                  -         5,073,961
  Comprehensive income:
    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           1,869,197
                                                   ----------------------------------------------------------------------
  COMPREHENSIVE INCOME                                                                                       $  4,500,025
                                                   ======================================================================
Balance, December 31, 2000                             7,136,570            264,993        23,200,461
  10% stock dividend                                 (2,337,201)                                    -
  Fractional shares                                      (3,461)                  -            (3,461)
  Stock options exercised                                      -                  -            83,535
  Issuance of common stock                                     -                  -             8,190
  Comprehensive income:
    Net income                                         3,681,601                  -         3,681,601        $  3,681,601
    Other comprehensive income, unrealized
      gain on securities, net of tax (Note 3)                  -            732,861           732,861             732,861
                                                   ----------------------------------------------------------------------
  COMPREHENSIVE INCOME                                                                                       $  4,414,462
                                                   ======================================================================
Balance, December 31, 2001                         $   8,477,509        $   997,854      $ 27,703,187
  Retroactive effect of stock dividend (Note 23)      (4,598,750)                 -                 -
                                                   ----------------------------------------------------------------------
Balance, December 31, 2001, as adjusted            $   3,878,759        $   997,854      $ 27,703,187
                                                   ======================================================================
</TABLE>

                                       34
<PAGE>

INDIAN RIVER BANKING COMPANY AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2001 AND 2000

<TABLE>
<CAPTION>
                                                                               2001              2000             1999
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>                <C>              <C>
Cash Flows From Operating Activities
  Net income                                                              $ 3,681,601        $ 2,630,828      $ 2,002,600
  Adjustments to reconcile net income to net cash
    provided by operating activities:
    Depreciation and amortization                                             638,029            712,747          562,825
    Provision for loan losses                                                 600,000            660,000          590,000
    Other real estate owned losses                                                  -             15,202          108,369
    Deferred income taxes                                                    (109,000)          (192,000)        (125,000)
    Proceeds from sale of loans originated for resale                      65,861,738         10,476,508       32,476,233
    Origination of loans for resale                                       (67,100,150)       (12,857,051)     (29,958,997)
    Gain on sale of loans                                                  (1,684,920)          (695,911)        (816,986)
    Amortization of premiums and discounts, net                                39,846             93,726          185,775
    Gain on sale of securities                                               (221,709)           (12,500)         (76,340)
    (Increase) decrease in accrued interest receivable                        207,359           (729,985)        (584,178)
    (Increase) decrease in other assets                                       110,288           (170,804)        (222,609)
    Increase in other liabilities                                             108,973            218,725          267,360
                                                                     -----------------------------------------------------
      NET CASH PROVIDED BY OPERATING ACTIVITIES                             2,132,055            149,485        4,409,052
                                                                     -----------------------------------------------------
Cash Flows From Investing Activities
  Cash flows from securities (Note 19)                                    (22,346,761)       (28,394,301)     (36,078,219)
  Loan originations and principal collections on loans                    (19,014,723)       (28,632,330)     (29,559,639)
  Proceeds from sale of loans                                               5,093,811                  -        3,436,079
  Proceeds from the sale of other real estate owned                                 -             84,867           36,417
  Proceeds from the sale of land                                                    -            230,000                -
  Purchases of premises and equipment                                        (872,965)          (443,799)        (702,075)
                                                                     -----------------------------------------------------
      NET CASH USED IN INVESTING ACTIVITIES                               (37,140,638)       (57,155,563)     (62,867,437)
                                                                     -----------------------------------------------------
Cash Flows From Financing Activities
  Net increase in deposits                                                 34,261,532         45,698,713       38,449,186
  Net increase (decrease) in fed funds purchased
   and repurchase agreements                                               (2,087,768)         7,443,931                -
  Proceeds from other borrowings                                           25,600,000         10,600,000       12,881,062
  Principal payments on borrowings                                        (10,315,714)        (7,731,096)      (3,285,715)
  Proceeds from issuance of stock (Note 21)                                     8,190          5,073,961                -
  Proceeds from exercise of stock options                                      83,535             38,923            4,119
  Cash paid for fractional shares                                              (3,461)            (3,623)          (4,411)
                                                                     -----------------------------------------------------
      NET CASH PROVIDED BY FINANCING ACTIVITIES                            47,546,314         61,120,809       48,044,241
                                                                     -----------------------------------------------------
          NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS             12,537,731          4,114,731      (10,414,144)
Cash and cash equivalents:
  Beginning                                                                10,829,581          6,714,850       17,128,994
                                                                     -----------------------------------------------------
  Ending                                                                 $ 23,367,312       $ 10,829,581      $ 6,714,850
                                                                     =====================================================
</TABLE>

See Notes to Consolidated Financial Statements (Additional cash flow information
- Note 19).


                                       35
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of business: Indian River Banking Company and its wholly-owned
subsidiaries (collectively referred to as the "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 Bank'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. Indian
River Banking Company is a financial holding company incorporated in the State
of Florida.

Principles of consolidation: The accompanying consolidated financial statements
include the accounts of Indian River Banking Company ("Indian River") and its
wholly-owned subsidiaries, Indian River National Bank ("Indian River Bank"), a
federally-chartered independent community bank, and Indian River Title Company,
LLC. 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 generally accepted in
the United States of America 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 equivalents: 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 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 securities and related
accounting policies are as follows:

   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. The amortization of premiums and accretion of discounts, computed by
   the interest method over their contractual lives, are recognized in interest
   income.

   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.


                                       36
<PAGE>

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 accumulated 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 held for sale: Loans held for sale are carried at the lower of cost or
market value in the aggregate. Net unrealized losses, if any, are recognized
through a valuation allowance by charges to 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.

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. Larger groups of
smaller balance homogeneous loans are collectively evaluated for impairment.
Accordingly, the Bank does not separately identify individual consumer and
residential loans for impairment disclosures.

                                       37
<PAGE>

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 Bank, (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 Bank does not maintain effective control over
the transferred assets through an agreement to repurchase them before their
maturity.

Credit related financial instruments: In the ordinary course of business, the
Bank has entered into commitments to extend credit, including commitments under
standby letters of credit. Such financial instruments are recorded when they are
funded.

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:

                                                              Years
                                                       -------------------
   Land improvements                                         3 - 20
   Buildings and improvements                                5 - 39
   Leasehold improvements                                    5 - 15
   Furniture, fixtures and equipment                         3 - 10

Income taxes: Indian River and its subsidiaries file consolidated 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.


                                       38
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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, and is determined using the treasury stock method.

Fair value of financial instruments: The Bank discloses fair value information
about financial instruments, whether or not recognized in the balance sheet, 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. Certain financial instruments and all
nonfinancial assets and liabilities have been excluded from the 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, 2001 and 2000. 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 July 2001, the Financial Accounting Standards
Board issued Statement No. 141, Business Combinations, and Statement No. 142,
Goodwill and Other Intangible Assets. Statement 141 eliminates the pooling
method for accounting for business combinations; requires that intangible assets
that meet certain criteria be reported separately from goodwill; and requires
negative goodwill arising from a business combination to be recorded as an
extraordinary gain. Statement 142 eliminates the amortization of goodwill and
other intangibles that are determined to have an indefinite life; and requires,
at a minimum, annual impairment tests for goodwill and other intangible assets
that are determined to have an indefinite life. For the Bank, the provisions of
the Statements are effective January 1, 2002. Implementation of the Statements
will have no material impact on the Bank's financial statements.

The Financial Accounting Standards Board has issued Statement 144, Accounting
for the Impairment or Disposal of Long-Lived Assets. Statement 144 supersedes
FASB Statement 121 and the accounting and reporting provisions of APB Opinion
No. 30. Statement 144 establishes a single accounting model for long-lived
assets to be disposed of by sale which includes measuring a long-lived asset
classified as held for sale at the lower of its carrying amount or its fair
value less costs to sell and to cease depreciation/amortization. For the Bank,
the provisions of Statement 144 are effective January 1, 2002. Implementation of
the Statement is not expected to have a material impact on the Bank's financial
statements.


                                       39
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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, 2001 and 2000 were approximately $4,157,000
and $2,386,000, respectively.

NOTE 3.       INVESTMENT SECURITIES

Securities held to maturity: The amortized cost and fair values of securities
held to maturity as of December 31, 2001 and 2000 are summarized as follows.

<TABLE>
<CAPTION>
                                                                   December 31, 2001
                                     --------------------------------------------------------------------
                                                       Estimated          Estimated           Estimated
                                     Amortized         Unrealized         Unrealized            Market
                                       Cost               Gains             Losses              Value
                                     --------------------------------------------------------------------
<S>                                  <C>                <C>               <C>                <C>
U.S. Government agency securities    $  3,232,048       $      -          $  (11,698)        $  3,220,350
Mortgage-backed securities              5,036,610         38,040                   -            5,074,650
State, county and municipal
  securities                            5,293,261         38,359            (121,376)           5,210,244
                                     --------------------------------------------------------------------
                                     $ 13,561,919       $ 76,399          $ (133,074)        $ 13,505,244
                                     ====================================================================
</TABLE>

<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 and municipal
  securities                            2,024,869         74,782                   -            2,099,651
                                     --------------------------------------------------------------------
                                     $ 11,609,513       $ 81,527          $  (93,828)        $ 11,597,212
                                     ====================================================================
</TABLE>


                                       40
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3.       INVESTMENT SECURITIES (CONTINUED)

The amortized cost and fair values of securities held to maturity at December
31, 2001, 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.

                                                        Estimated
                                      Amortized           Market
                                         Cost             Value
                                     ------------------------------
Due after ten years                  $ 8,525,309       $  8,430,594
Mortgage-backed securities             5,036,610          5,074,650
                                     ------------------------------
                                     $ 3,561,919       $ 13,505,244
                                     ==============================



Securities available-for-sale: The amortized cost and fair values of securities
available-for-sale as of December 31, 2001 and 2000 are summarized as follows:

<TABLE>
<CAPTION>
                                                                December 31, 2001
                                     ----------------------------------------------------------------------
                                                         Estimated          Estimated           Estimated
                                       Amortized         Unrealized         Unrealized           Market
                                          Cost             Gains              Losses              Value
                                     ----------------------------------------------------------------------
<S>                                  <C>                <C>                 <C>                <C>
U.S. Government corporations
  and agencies                       $  58,971,913      $ 1,144,778         $ (396,807)       $  59,719,884
Corporate securities                    56,767,864          904,340           (193,417)          57,478,787
Mortgage-backed securities              11,434,272          166,184            (41,183)          11,559,273
                                     ----------------------------------------------------------------------
                                     $ 127,174,049      $ 2,215,302         $ (631,407)       $ 128,757,944
                                     ======================================================================


                                                                December 31, 2000
                                     ----------------------------------------------------------------------
                                                         Estimated          Estimated           Estimated
                                       Amortized         Unrealized         Unrealized           Market
                                          Cost             Gains              Losses              Value
                                     ----------------------------------------------------------------------
U.S. Government 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>

                                       41
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3.       INVESTMENT SECURITIES (CONTINUED)

The amortized cost and fair values of securities available for sale at December
31, 2001, 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.

                                                                  Estimated
                                                Amortized           Market
                                                  Cost              Value
                                              -------------------------------
Due after one through five years              $  68,715,232     $  69,531,435
Due after five years through ten years           40,944,797        41,672,327
Due after ten years                               6,079,748         5,994,909
Mortgage-backed securities                       11,434,272        11,559,273
                                              -------------------------------
                                              $ 127,174,049     $ 128,757,944
                                              ===============================


Securities available for sale with a carrying amount of $40,191,178 and
$36,012,503 at December 31, 2001 and 2000, 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 $221,709, $12,500, and $76,340 were realized from the sale of
securities available for sale in the years ended December 31, 2001, 2000 and
1999, respectively. The income tax impact of these gains was $83,100, $45,000
and $28,600 for the years ended December 31, 2001, 2000 and 1999, respectively.

Unrealized gains (losses) on securities available for sale for the years ended
December 31, 2001, 2000 and 1999 are as follows:

<TABLE>
<CAPTION>
                                                                   2001              2000              1999
                                                                -----------------------------------------------
<S>                                                             <C>              <C>                <C>
Unrealized holding gains (losses) arising during the period     $ 1,384,980      $  2,927,192       $(3,353,106)
Less reclassification adjustment for gains realized
  in net income                                                     221,709            12,500            76,340
                                                                -----------------------------------------------
Net unrealized gains (losses), before tax (expense) benefit       1,163,271         2,914,692        (3,429,446)
Tax (expense) benefit                                              (430,410)       (1,045,495)        1,234,600
                                                                -----------------------------------------------
Other comprehensive income (loss)                               $   732,861      $  1,869,197       $(2,194,846)
                                                                ===============================================
</TABLE>

                                       42
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3.       INVESTMENT SECURITIES (CONTINUED)

Other securities consist primarily of nonmarketable equity securities as follows
at December 31, 2001 and 2000:

                                                  2001              2000
                                              -----------------------------
Federal Reserve Bank stock                    $   181,750       $   127,750
Federal Home Loan Bank stock                    1,707,200         1,564,300
Other securities                                   10,000            10,000
                                              ------------------------------
                                              $ 1,898,950       $ 1,702,050
                                              ==============================


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.


NOTE 4.       LOANS

The composition of loans is as follows at December 31, 2001 and 2000:

                                                   2001              2000
                                              --------------------------------
Real estate:
  Construction and land development           $  32,778,044      $   8,882,746
  Farmland                                        2,943,193          2,690,061
  One to four family residential                 74,917,406         86,937,310
  Multifamily residential                         3,520,798          1,116,957
  Nonfamily, nonresidential                      62,659,892         62,772,176
Agriculture                                       2,454,421          3,236,348
Commercial and industrial                        14,947,985         13,048,200
Consumer                                         14,420,446         15,243,558
Other                                             2,225,378          3,171,631
                                              --------------------------------
                                                210,867,563        197,098,987
Unearned discounts and loan fees                     (4,902)            (5,516)
                                              --------------------------------
                                              $ 210,862,661      $ 197,093,471
                                              ================================


                                       43
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 4.       LOANS (CONTINUED)

The Bank's recorded investment in impaired loans for which a specific allowance
was recognized was $132,710 and $119,718 at December 31, 2001 and 2000,
respectively. The specific allowance associated with these loans was $50,000 and
$50,000 at December 31, 2001 and 2000, respectively. The average recorded
investment in impaired loans during 2001 and 2000 was $147,514 and $153,180,
respectively. Interest income recognized on impaired loans, recognized for cash
payments received in 2001, 2000 and 1999 was not significant.


NOTE 5.       ALLOWANCE FOR LOAN LOSSES

Changes in the allowance for loan losses for the years ended December 31, 2001
and 2000 are as follows:

<TABLE>
<CAPTION>
                                                           2001               2000              1999
                                                       ------------------------------------------------
<S>                                                    <C>                 <C>               <C>
Balance, beginning                                     $ 2,453,198        $ 1,904,417       $ 1,510,272
Provision for loan losses                                  600,000            660,000           590,000
Loans charged off                                         (267,252)          (153,180)         (249,068)
Recoveries of amounts charged off                           33,598             41,961            53,213
                                                       ------------------------------------------------
Balance, ending                                        $ 2,819,544        $ 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,
                                                       -----------------------------
                                                           2001              2000
                                                       -----------------------------
<S>                                                    <C>                <C>
Land and improvements                                  $ 1,691,361       $ 1,331,901
Buildings and improvements                               1,422,871         1,430,398
Leasehold improvements                                     700,549           596,738
Furniture, fixtures and equipment                        4,297,175         3,929,860
                                                       -----------------------------
                                                         8,111,956         7,288,897
Less accumulated depreciation and amortization           4,060,026         3,471,903
                                                       -----------------------------
                                                       $ 4,051,930       $ 3,816,994
                                                       =============================
</TABLE>


                                       44
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 7.       TIME DEPOSITS

At December 31, 2001, the scheduled maturities of time deposits are as follows:

Year Ending
December 31,                                               Amount
---------------------------------------------------------------------
2002                                                   $ 113,118,087
2003                                                       5,225,035
2004                                                         666,092
2005                                                         306,746
2006                                                       1,342,972
Thereafter                                                    66,723
                                                       --------------
                                                       $ 120,725,655
                                                       ==============



NOTE 8.       INCOME TAXES

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

<TABLE>
<CAPTION>
                                                                   ------------------------------
                                                                            December 31,
                                                                   ------------------------------
                                                                      2001                2000
                                                                   ------------------------------
<S>                                                                <C>                 <C>
Deferred tax assets:
  Loan loss allowances                                             $  970,000          $  807,000
  Other                                                                17,000              44,000
                                                                   ------------------------------
Total deferred tax assets                                             987,000             851,000
                                                                   ------------------------------
Deferred tax liabilities:
  Unrealized gain on available-for-sale securities                   (586,041)           (155,631)
  Other                                                               (55,000)            (28,000)
                                                                   ------------------------------
Total deferred tax liabilities                                       (641,041)           (183,631)
                                                                   ------------------------------
Net deferred tax assets                                            $  345,959          $  667,369
                                                                   ==============================

</TABLE>


                                       45
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 8.       INCOME TAXES (CONTINUED)

The provision for income taxes charged to operations for the years ended
December 31, 2001, 2000, and 1999 consists of the following:


                                                 December 31,
                              --------------------------------------------------
                                   2001               2000              1999
                              --------------------------------------------------
Current tax expense
  Federal                     $  1,894,640      $  1,377,178       $  1,088,455
  State                            325,970           243,031            179,312
Deferred tax expense              (109,000)         (192,000)          (125,000)
                              --------------------------------------------------
                              $  2,111,610      $  1,428,209       $  1,142,767
                              ==================================================


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>
                                                                     Year Ended December 31,
                                           ------------------------------------------------------------------------
                                                    2001                    2000                      1999
                                           ------------------------------------------------------------------------
                                              AMOUNT     PERCENT       Amount     Percent      Amount      Percent
                                           ------------------------------------------------------------------------
<S>                                        <C>            <C>       <C>           <C>       <C>              <C>
Computed "expected" federal tax expense    $ 2,027,624    35.0 %    $ 1,420,663   35.0 %    $ 1,100,878      35.0 %
Increase in income taxes resulting from:
  State income taxes, net of federal tax
    benefit                                    204,580     3.5          137,458    3.4           45,168        1.4
  Other                                       (120,594)   (2.1)        (129,912)  (3.2)          (3,279)      (0.1)
                                           ------------------------------------------------------------------------
Provision for income taxes                 $ 2,111,610    36.4 %    $ 1,428,209   35.2 %    $ 1,142,767      36.3 %
                                           ========================================================================
</TABLE>


                                       46
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9.       OTHER BORROWINGS, LINES OF CREDIT AND PLEDGED ASSETS

Other borrowings consist of the following at December 31, 2001 and 2000:
<TABLE>
<CAPTION>
                                                                                          2001               2000
                                                                                      ------------------------------
<S>                                                                                   <C>               <C>
Term loan payable to a correspondent bank.  The loan is due in
  equal installments of principal plus interest of 90 day Libor plus 135 basis          $  570,000          $      -
  points (3.38% at December 31, 2001), through September 29, 2006.
  The loan is collateralized by the common stock of Indian River
  Bank.  The Company has agreed to various conditions, which
  require, among other things, compliance with specified financial covenants.
Federal Home Loan Bank advances (a):
  Convertible advance due May 25, 2011, interest payable quarterly at a fixed
    rate of 3.945%. In May 25, 2002, 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.                                                                  15,000,000                 -
  Convertible advance due January 25, 2011,  interest payable
    quarterly at a fixed rate of 4.41%.  In January 2002, 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.              10,000,000                 -
  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                                                                 857,143         1,142,857
  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
                                                                                      ------------------------------
                                                                                      $ 28,427,143      $ 13,142,857
                                                                                      ==============================
</TABLE>

 (a) Indian River Bank has a secured line of credit with the Federal Home Loan
Bank under which Indian River Bank can borrow up to thirteen percent (13%) of
total assets or approximately $50,685,000 at December 31, 2001. Advances under
the line are collateralized by residential first mortgage loans with a balance
of approximately $55,027,000 at December 31, 2001 and Indian River Bank's stock
in the Federal Home Loan Bank in the amount of $1,707,200 at December 31, 2001.

The aggregate amounts of other borrowings maturing in future years (based on the
outstanding balance and interest rates as of December 31, 2001) are as follows:
2002 $405,714; 2003 $405,714; 2004 $405,715; 2005 $120,000; 2006 $90,000;
thereafter $27,000,000.


                                       47
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9.       OTHER BORROWINGS, LINES OF CREDIT AND PLEDGED ASSETS (CONTINUED)

Indian River Bank had no overnight advances under the line of credit with the
Federal Home Loan Bank at December 31, 2001 and $7,900,000 outstanding at
December 31, 2000, in addition to the advances discussed above. These overnight
advances are included in federal funds purchased in the accompanying balance
sheet.

Indian River Bank also has unsecured lines of credit of $9,000,000 available for
federal funds purchases with other correspondent banks. There were no advances
at December 31, 2001 and $2,200,000 outstanding under these lines at December
31, 2000.

Indian River Bank has pledged securities with a carrying amount of approximately
$24,322,000 as collateral for repurchase agreements at December 31, 2001, with
borrowings of $13,156,163 and $5,143,931 at December 31, 2001 and 2000,
respectively.


NOTE 10.      STOCK OPTIONS

Under the terms of the 1999 Stock Option Plan, options to purchase shares of
Indian River'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. Options granted to employees under the plan
may be designated as incentive stock options. All options expire no more than
ten years from the date of the grant, or three months after an employee's
termination. 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 Indian River. At December 31, 2001, the number of shares
eligible to be issued under the Plan was 332,750, and approximately 180,000
shares remained available for granting.

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 (2,310 and 726 shares for 2001 and 2000, respectively) in
lieu of cash compensation for attendance at committee meetings. Options granted
have an exercise price equal to the fair value of the common stock at the date
of grant, are immediately exercisable and of limited exercisability.


                                       48
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10.      STOCK OPTIONS (CONTINUED)

A summary of the options activity for the years then ended December 31, 2001,
2000 and 1999 is presented below (after adjusting for 10% stock dividends in
2001, 2000 and 1999, a 2 for 1 stock split effective March 31, 2000, and a 10%
stock dividend declared in January 2002).

                                                             WEIGHTED-AVERAGE
                                            SHARES            EXERCISE PRICE
                                           ---------------------------------
Outstanding at December 31, 1998            39,254               $ 11.44
Granted                                     98,801                 15.51
Exercised                                     (303)                12.42
Forfeited                                   (7,831)                12.24
                                           -----------------------------
Outstanding at December 31, 1999           129,921                 14.55
Granted                                     53,774                 18.00
Exercised                                  (14,854)                13.59
Forfeited                                     (750)                12.85
                                           -----------------------------
Outstanding at December 31, 2000           168,091                 15.75
Granted                                     46,686                 21.48
Exercised                                  (76,605)                15.17
Forfeited                                   (5,701)                16.77
                                           -----------------------------
Outstanding at December 31, 2001           132,471               $ 18.35
                                           =============================


At December 31, 2001, the total options outstanding and exercisable were as
follows:
<TABLE>
<CAPTION>
                                OPTIONS OUTSTANDING
              ---------------------------------------------------------------         OPTIONS EXERCISABLE
  RANGE OF                        WEIGHTED-AVERAGE                           -----------------------------------
  EXERCISE         NUMBER            REMAINING           WEIGHTED-AVERAGE        NUMBER         WEIGHTED-AVERAGE
   PRICES        OUTSTANDING      LIFE (IN YEARS)         EXERCISE PRICE       EXERCISABLE       EXERCISE PRICE
----------------------------------------------------------------------------------------------------------------
<S>                <C>                <C>                   <C>                  <C>               <C>
  $12 - 14          16,082            0.94                  $ 12.42              12,866              $ 12.42
   14 - 17          13,697            2.29                    14.35               8,218                14.35
   17 - 19          57,240            8.01                    18.41              27,694                18.41
   19 - 22          43,802            9.01                    21.49              14,774                21.49
   22 - 24           1,650            9.50                    23.64               1,650                23.64
              --------------------------------------------------------------------------------------------------
    Total          132,471            6.91                  $ 18.35              65,201              $ 17.55
              ==================================================================================================
</TABLE>


                                       49
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10.      STOCK OPTIONS (CONTINUED)

The Bank has recognized no compensation cost for the stock options granted. 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>
                                                                 2001             2000              1999
                                                            -------------------------------------------------
<S>                                      <C>                <C>               <C>                <C>
Net income                               As reported        $ 3,681,601       $ 2,630,828        $ 2,002,600
                                         Pro forma            3,594,341         2,456,628          1,837,600

Basic earnings per share                 As reported               1.89              1.51               1.19
                                         Pro forma                 1.85              1.41               1.09


Diluted earnings per share               As reported               1.86              1.48               1.18
                                         Pro forma                 1.82              1.38               1.08
</TABLE>


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 2001, 2000 and 1999, respectively: risk-free
interest rates of 5.1%, 6.4% and 6.5%, no dividends and expected lives of 7
years, 7 years and 8 years. Volatility was assumed to be zero because there is
currently no market for Indian River's stock. The weighted-average fair value of
options granted during 2001, 2000 and 1999 were $7.38, $6.35 and $6.29,
respectively.


                                       50
<PAGE>

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, 2001, 2000 and 1999 (after adjusting for 10%
stock dividends in 2001 and 2000, a 2 for 1 stock split effective March 31, 2000
and a 10% stock dividend declared in January 2002):
<TABLE>
<CAPTION>
                                                                                                    PER-SHARE
                                                               NUMERATOR        DENOMINATOR          AMOUNTS
                                                           --------------------------------------------------------
<S>                                                            <C>                 <C>                <C>
Year Ended December 31, 2001:
  Basic earnings per share, income available to
    common stockholders                                        $ 3,681,601         1,943,064          $    1.89
                                                                                                 ==================
  Effect of dilutive securities, options                                 -            37,285
                                                           -------------------------------------
  Diluted earnings per share, income available
    to common stockholders plus assumed
    exercise of options                                        $ 3,681,601         1,980,349          $    1.86
                                                           ========================================================

Year Ended December 31, 2000:
  Basic earnings per share, income available to
    common stockholders                                        $ 2,630,828         1,740,754          $    1.51
                                                                                                 ==================
  Effect of dilutive securities, options                                 -            39,554
                                                             ----------------- -----------------
  Diluted earnings per share, income available
    to common stockholders plus assumed
    exercise of options                                        $ 2,630,828         1,780,308          $   1.48
                                                             ======================================================

Year Ended December 31, 1999:
  Basic earnings per share, income available to
    common stockholders                                        $ 2,002,600         1,686,621          $   1.19
                                                                                                 ==================
  Effect of dilutive securities, options                                 -             9,533
                                                             ----------------- -----------------
  Diluted earnings per share, income available
    to common stockholders plus assumed
    exercise of options                                        $ 2,002,600         1,696,154          $   1.18
                                                             ======================================================
</TABLE>


                                       51
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 $3,821,000 and
$4,022,000 at December 31, 2001 and 2000, respectively. Aggregate borrowings on
these loans totaled $634,000 and repayments totaled $834,000 for the year ended
December 31, 2001. Commitments to extend additional credit to these related
parties totaled approximately $1,841,750 at December 31, 2001.


NOTE 13.      LEASES

The Bank utilizes certain office spaces under operating leases expiring through
2011. 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, 2001 were as follows:

Year Ending
December 31,                                                Amount
--------------------------------------------------------------------
2002                                                      $  353,506
2003                                                         244,292
2004                                                         185,564
2005                                                         186,052
2006                                                         186,052
Thereafter                                                   559,041
                                                         -----------
                                                         $ 1,714,507
                                                         ===========

Total rent expense (including basic operating expenses) recorded by the Bank for
the years ended December 31, 2001, 2000 and 1999, was $377,700, $311,028 and
$238,172, respectively.


                                       52
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14.      OTHER OPERATING EXPENSES

A summary of other operating expenses is as follows for the years ended December
31, 2001 and 2000:
<TABLE>
<CAPTION>
                                                   2001               2000               1999
                                                -------------------------------------------------
<S>                                             <C>                  <C>                 <C>
Data processing                                 $ 1,288,028        $   874,955        $   331,636
Advertising and business development                206,583            312,977            427,930
Professional fees                                   298,024            137,645            250,123
Supplies and postage                                594,713            414,095            368,120
Directors' fees                                     164,600            166,450            265,556
Miscellaneous                                     1,546,126          1,306,390          1,472,250
                                                -------------------------------------------------
                                                $ 4,098,074        $ 3,212,512        $ 3,115,615
                                                =================================================
</TABLE>


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 $105,587, $81,816, and $59,814 for the years ended December 31,
2001, 2000, and 1999, respectively.


NOTE 16.      RESTRICTIONS ON RETAINED EARNINGS AND REGULATORY MATTERS

Indian River 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, 2001, that the Bank could declare, without the approval of the OCC, amounted
to approximately $6,000,000.

Indian River (on a consolidated basis) and Indian River Bank are subject to
various regulatory capital requirements administered by the federal banking
agencies. 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 the Bank's financial
statements. Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, Indian River and Indian River Bank must meet specific
capital guidelines that involve quantitative measures of their assets,
liabilities, and certain off-balance-sheet items as calculated under regulatory
accounting practices. The capital amounts and classification are also subject to
qualitative judgments by the regulators about components, risk weightings, and
other factors. Prompt corrective action provisions are not applicable to bank
holding companies.

Quantitative measures established by regulation to ensure capital adequacy
require Indian River and Indian River Bank 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). Management believes Indian River and Indian River Bank meet
all capital adequacy requirements to which they are subject as of December 31,
2001.


                                       53
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16.    RESTRICTIONS ON RETAINED EARNINGS AND REGULATORY MATTERS (CONTINUED)

As of December 31, 2001, the most recent notification from the OCC categorized
Indian River Bank as well capitalized under the regulatory framework for prompt
corrective action. To be categorized as well capitalized, an institution 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 Indian River Bank's category.

Indian River's and Indian River Bank's actual capital amounts and ratios as of
December 31, 2001 and 2000 are also presented in the table.
<TABLE>
<CAPTION>
                                                                                                          To Be Well
                                                                                                      Capitalized Under
                                                                             For Capital              Prompt Corrective
                                                Actual                    Adequacy Purposes            Action Provisions
                                             ---------------------------------------------------------------------------
<S>                                          <C>             <C>         <C>              <C>       <C>
As of December 31, 2001:
  Total Capital (to Risk-Weighted Assets):
   Consolidated                              $ 29,524,877    10.7%       $ 22,149,020     8.0%            n/a
   Indian River National Bank                  29,314,229    10.6          22,144,080     8.0       $ 27,680,100    10.0%
  Tier I Capital (to Risk-Weighted Assets):
   Consolidated                                26,705,333     9.6          11,074,510     4.0              n/a
   Indian River National Bank                  26,494,685     9.6          11,072,040     4.0         16,608,060    6.0
  Tier I Capital (to Average Assets):
   Consolidated                                26,705,333     7.0          15,201,470     4.0              n/a
   Indian River National Bank                  26,494,685     7.0          15,199,000     4.0         18,998,750    5.0
As of December 31, 2000:
  Total Capital (to Risk-Weighted Assets):
   Consolidated                                25,388,666    11.7          17,354,560     8.0              n/a
   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              n/a
   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              n/a
   Indian River National Bank                  22,511,902     6.9          13,000,920     4.0         16,251,150    5.0
</TABLE>


If Indian River Bank fails to remain categorized as well capitalized, Indian
River's designation as a financial holding company may be lost.


                                       54
<PAGE>

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, 2001 and 2000:

                                           2001                2000
                                     -----------------------------------
Commitments to extend credit         $  41,955,000        $  27,500,000
Credit card arrangements                 4,000,000            5,192,000
Standby letters of credit                2,029,000            1,314,000
                                     -----------------------------------
                                     $  47,984,000        $  34,006,000
                                     ===================================

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.

Credit card arrangements: Credit card arrangements represent unsecured
commitments to extend credit, which may be terminated by the Bank.


                                       55
<PAGE>

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, 2001. Such concentration consisted of
federal funds sold and a deposit account balance that totaled $18,782,168 and
$6,414,232, at December 31, 2001 and 2000, respectively. The Bank has not
experienced any losses on such accounts.


NOTE 19.      ADDITIONAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
                                                                         Year Ended December 31,
                                                             --------------------------------------------------
                                                                  2001              2000               1999
                                                             --------------------------------------------------
<S>                                                          <C>               <C>                <C>
Cash flows from securities:
  Securities available-for-sale:
    Proceeds from sales                                      $   13,317,915    $    3,012,500      $   8,074,063
    Maturities, calls and paydowns                               88,276,071        26,324,182         10,969,617
    Purchases                                                  (121,969,109)      (52,271,979)       (47,961,799)
  Securities held to maturity:
    Purchases                                                    (6,398,792)       (5,031,250)        (7,072,200)
    Maturities, calls and paydowns                                4,624,054           475,946                  -
  Purchase of other securities                                     (196,900)         (903,700)           (87,900)
                                                             ---------------------------------------------------
                                                             $  (22,346,761)    $ (28,394,301)     $ (36,078,219)
                                                             ===================================================
Supplemental disclosures of cash flow information
  Cash payments for interest                                 $   12,654,351    $   12,374,074      $   7,322,830
                                                             ===================================================
  Cash payments for income taxes                             $    2,684,882    $    1,717,000      $   1,382,000
                                                             ===================================================
Supplemental schedule of noncash investing and
  financing activities
  10% stock dividend                                         $    2,337,201    $    1,366,362      $   1,373,678
  2-for-1 stock split                                                     -           696,865                  -
</TABLE>


                                       56
<PAGE>

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 re-price 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 is nominal.

Deposit liabilities: The fair values of demand deposits and passbook savings
equal their carrying amounts which represent 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 approximates 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.


                                       57
<PAGE>

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, 2001 and 2000:
<TABLE>
<CAPTION>
                                              December 31, 2001                    December 31, 2000
                                        --------------------------------------------------------------------
                                          Carrying             Fair            Carrying            Fair
                                           Amount             Value             Amount             Value
                                        --------------------------------------------------------------------
<S>                                     <C>                <C>               <C>                <C>
Cash and cash equivalents               $  23,367,312      $ 23,367,312      $ 10,829,581       $ 10,829,581
Investment securities (including
  Federal Reserve Bank and
  Federal Home Loan Bank stock)           144,218,813       144,162,138       120,526,918        120,514,616
Loans receivable                          213,837,617       219,133,444       197,593,373        197,041,975
Accrued interest receivable                 2,783,081         2,783,081         2,990,440          2,990,440
Deposits                                  318,806,196       320,485,567       284,544,664        283,664,790
Other borrowings                           41,583,306        43,244,442        28,386,788         27,258,851
Other liabilities                           1,052,231         1,052,231           943,258            943,258
Commitments to extend credit                        -                 -                 -                  -
</TABLE>


NOTE 21.      STOCK ISSUANCE

Indian River 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
207,828 shares, less issuance costs of $121,739, are included in the financial
statements.


                                       58
<PAGE>

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, 2001 AND 2000


ASSETS                                              2001                2000
                                              ----------------------------------

Cash                                          $     212,824       $      61,286
Investment in wholly-owned subsidiaries          27,507,361          22,772,082
Other assets                                        560,405             367,093
                                              ----------------------------------
                                              $  28,280,590       $  23,200,461
                                              ==================================

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
  Notes payable                               $     570,000       $           -
  Other liabilities                                   7,403                   -
                                              ----------------------------------
                   TOTAL LIABILITIES                577,403                   -

Stockholders' equity                             27,703,187          23,200,461
                                              ----------------------------------
                                              $  28,280,590       $  23,200,461
                                              ==================================


INDIAN RIVER BANKING COMPANY
PARENT COMPANY ONLY STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
<TABLE>
<CAPTION>
                                                                     2001            2000            1999
                                                                 ---------------------------------------------
<S>                                                              <C>             <C>              <C>
Equity in net income of wholly-owned subsidiaries, net           $ 4,002,418     $ 2,811,932      $ 2,103,876
Interest income                                                       24,378          22,115                -
                                                                 ---------------------------------------------
                                                                   4,026,796       2,834,047        2,103,876
                                                                 ---------------------------------------------
Expenses:
  Interest expense                                                    18,640         169,939          123,742
  Other expenses                                                     519,867         142,406           32,486
                                                                 ---------------------------------------------
                                                                     538,507         312,345          156,228
                                                                 ---------------------------------------------
                    INCOME BEFORE INCOME TAXES                     3,488,289       2,521,702        1,947,648
Provision for income taxes (benefit)                                (193,312)       (109,126)         (54,952)
                                                                 ---------------------------------------------
                    NET INCOME                                   $ 3,681,601     $ 2,630,828      $ 2,002,600
                                                                 =============================================
</TABLE>


                                       59
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 22.      PARENT COMPANY ONLY FINANCIAL STATEMENTS (CONTINUED)

INDIAN RIVER BANKING COMPANY
PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
<TABLE>
<CAPTION>
Cash flow from operating activities:                                   2001             2000             1999
                                                                   -----------------------------------------------
<S>                                                                <C>              <C>              <C>
  Net income                                                       $  3,681,601     $  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           (4,002,418)      (2,811,932)      (2,103,876)
    Other                                                              (185,909)        (230,546)         (54,814)
                                                                   -----------------------------------------------
                         NET CASH USED IN OPERATING ACTIVITIES         (506,726)        (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                             570,000       (1,845,381)          81,061
  Proceeds from issuance of stock                                         8,190        5,073,961                -
  Proceeds from exercise of stock options                                83,535           38,923            4,119
  Cash paid for fractional shares                                        (3,461)          (3,623)          (4,411)
                                                                   -----------------------------------------------
      NET CASH PROVIDED BY FINANCING ACTIVITIES                         658,264        3,263,880           80,769
                                                                   -----------------------------------------------
      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                  151,538           52,230          (85,321)
Cash and cash equivalents:
  Beginning                                                              61,286            9,056           94,377
                                                                   -----------------------------------------------
  Ending                                                           $    212,824     $     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, 2001 to reflect a 10% stock dividend declared January 9, 2002.

NOTE 24.      LEGAL CONTINGENCIES

Various legal claims arise from time to time in the normal course of business,
which, in the opinion of management, will have no material effect on the Bank's
consolidated financial statements.


                                       60
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 25.      QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
                                                          Year Ended December 31,
                              ------------------------------------------------------------------------------------
                                              2001                                      2000
                              ------------------------------------------------------------------------------------
                               Fourth      Third    Second     First     Fourth     Third    Second     First
                               Quarter    Quarter   Quarter   Quarter    Quarter   Quarter   Quarter   Quarter
                              ------------------------------------------------------------------------------------
                                                     (In thousands, except per share data)
<S>                           <C>        <C>       <C>        <C>        <C>      <C>       <C>        <C>
Interest income               $  6,596   $  6,619  $  6,436   $ 6,390    $ 6,463  $  6,255  $  5,883   $  5,407
Interest expense                 2,879      3,281     3,239     3,317      3,508     3,398     2,997      2,620
                              ------------------------------------------------------------------------------------
Net interest income              3,717      3,338     3,197     3,073      2,955     2,857     2,886      2,787
Provision for loan losses          180        180       120       120        165       165       165        165
                              ------------------------------------------------------------------------------------
Net interest income, after
 provision for loan losses       3,537      3,158     3,077     2,953      2,790     2,692     2,721      2,622
Noninterest income               1,426        943     1,087       791        706       623       648        575
Noninterest expense              2,914      2,531     3,188     2,546      2,489     2,344     2,301      2,184
                              ------------------------------------------------------------------------------------
Income before taxes              2,049      1,570       976     1,198      1,007       971     1,068      1,013
Provision for income taxes         749        560       349       453        348       342       377        361
                              ------------------------------------------------------------------------------------
Net income                    $  1,300   $  1,010  $    627   $   745    $   659  $    629  $    691   $    652
                              ====================================================================================

Earnings per common share
  Basic                       $   0.66   $   0.52  $   0.33   $  0.38    $  0.34  $   0.37  $   0.41   $   0.39
                              ====================================================================================
  Diluted                     $   0.66   $   0.51  $   0.32   $  0.37    $  0.34  $   0.36  $   0.40   $   0.38
                              ====================================================================================
</TABLE>


                                       61
<PAGE>


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

         None

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         The information required by this Item is incorporated by reference to
the material appearing at pages 6 to 7, 12 and 16 of Indian River's definitive
proxy statement for the Annual Meeting of Shareholders to be held on April 24,
2002 under the captions "Election of Directors - Nominees for Election as
Directors, and "- Executive Officers who are not Directors" and "Compliance with
Section 16(a) of the Securities Exchange Act of 1934".

ITEM 11.  EXECUTIVE COMPENSATION.

         The information required by this Item is incorporated by reference to
the material appearing at pages 8 to 15 of Indian River's definitive proxy
statement for the Annual Meeting of Shareholders to be held on April 24, 2002,
under the captions "Directors' Compensation", "Executive Compensation", "Report
of the Compensation Committee, and Stock Performance Comparison.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The information required by this Item is incorporated by reference to
the material appearing at pages 4 to 5 of Indian River's definitive proxy
statement for the Annual Meeting of Shareholders to be held on April 24, 2002
under the caption "Voting Securities and Principal Shareholders".

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         The information required by this Item is incorporated by reference to
the material appearing at page 13 of Indian River's definitive proxy statement
for the Annual Meeting of Shareholders to be held on April 24, 2002 under the
caption "Certain Relationships and Related Transactions".

                                     PART IV

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

(a)(1)   Financial Statements

                  Consolidated Balance Sheets at December 31, 2000 and 2001
                  Consolidated Statements of Income for the years ended December
                    31, 1999, 2000 and 2001
                  Consolidated Statements of Cash Flows for the years ended
                    December 31, 1999, 2000 and 2001
                  Consolidated Statements of Changes in Stockholders' Equity for
                    the years ended December 31, 1999, 2000 and 2001
                  Notes to the Consolidated Financial Statements
                  Report of Independent Auditors

(2)      Financial Statement Schedules

         All financial statement schedules have been omitted as the required
         information is either inapplicable or included in the consolidated
         financial statements or related notes.


                                       62
<PAGE>


(3)      Exhibits

Exhibit No.                Description of Exhibits
-----------                -----------------------

    3(a)          Articles of Incorporation of Indian River, as amended (1)
    3(b)          Bylaws of Indian River (1)
    10(a)         Indian River 1995 Stock Option Plan (2)
    10(b)         Indian River 1999 Stock Option Plan (3)
    11            Statement of Computation of Per Share Earnings
                           See Note 11 to the Consolidated Financial Statements
    21            Subsidiaries of the Registrant
    23            Consent of McGladrey & Pullen, LLP, Independent Auditors
--------------------------

(1)      Incorporated  by reference to exhibit of same number to Indian  River's
         registration  statement on Form SB-2 (No. 333-36688)
(2)      Incorporated by reference to exhibit 10(c) to Indian River's
         registration statement on Form SB-2 (No. 333-36688)
(3)      Incorporated by reference to exhibit 10(d) to Indian River's
         registration statement on Form SB-2 (No. 333-36688)

(B)  REPORTS ON FORM 8-K

         On October 15, 2001, Indian River filed a report on Form 8-K, under
Item 5, disclosing the issuance of a press release announcing third quarter
earnings.


                                       63
<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                           INDIAN RIVER BANKING COMPANY


Dated March 13, 2002                       By: /s/ Paul A. Beindorf
                                               ---------------------------------
                                               Paul A. Beindorf, President
                                                 and Chief Executive Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant 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            March 13, 2002
-----------------------------------                and Director (Principal Executive Officer)
Paul A. Beindorf


/s/ William C. Graves, IV                          Director                                      March 13, 2002
-----------------------------------
William C. Graves, IV


/s/ Robert A,. Grice                               Director                                      March 13, 2002
-----------------------------------
Robert A. Grice


/s/ Griffin A. Greene                              Director                                      March 13, 2002
-----------------------------------
Griffin A. Greene


/s/ William B. Marine                              Director                                      March 13, 2002
-----------------------------------
William B. Marine


/s/ John L. Minton                                 Chairman of the Board                         March 13, 2002
-----------------------------------
John L. Minton


/s/ Keith H. Morgan                                Director                                      March 13, 2002
-----------------------------------
Keith H. Morgan, Jr.


/s/ Daniel R. Richey                               Director                                      March 13, 2002
-----------------------------------
Daniel R. Richey


/s/ Mary M. Rogers                                 Director                                      March 13, 2002
-----------------------------------
Mary M. Rogers
</TABLE>


                                       64
<PAGE>


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

/s/ John David Smith                               Director                                      March 13, 2002
-----------------------------------
John David Smith


/s/ Michelle L. Hepfer                             Interim Treasurer and Chief                   March 13, 2002
-----------------------------------                Financial Officer (Principal
Michelle L. Hepfer                                 Accounting and Financial Officer)
                                                   Vice President and Controller -
                                                   Indian River National Bank
</TABLE>


                                       65