<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D. C.  20549
                              ___________________

                                  FORM 10-QSB
                                  (Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the quarterly period ended September 30, 2001
or

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the transition period from ____________________ to __________________

                        Commission file number 0-24891

                            ADMIRALTY BANCORP, INC.

            (Exact Name of Registrant as Specified in its Charter)

             Delaware                                    65-0405207
--------------------------------------------------------------------------------
 (State of Other Jurisdiction of           (I.R.S. Employer Identification No.)
 Incorporation or Organization)


4400 PGA Boulevard, Palm Beach Gardens, Florida                33410
--------------------------------------------------------------------------------
   (Address of Principal Executive Offices)                  (Zip Code)

                                (561) 624-4701
                                --------------
               (Issuer's Telephone Number, Including Area Code)


  (Former Name, Former Address and Former Fiscal Year, if Changed Since Last
                                    Report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities and 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
                                       ------

As of November 9, 2001 there were 5,030,642 shares of Class B common stock
outstanding.
<PAGE>

                    ADMIRALTY BANCORP, INC. AND SUBSIDIARY

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
Part I. Financial Information

Item 1. Financial Statements
                                                                                                 Page
                                                                                                 ----
<S>                                                                                              <C>
        Condensed Consolidated Balance Sheets (unaudited) -
         At September 30, 2001 and at December 31, 2000........................................   3

        Condensed Consolidated Statements of Operations (unaudited) -
         Three months ended September 30, 2001 and 2000........................................   4

        Condensed Consolidated Statements of Operations (unaudited) -
         Nine months ended September 30, 2001 and 2000.........................................   5

        Condensed Consolidated Statements of Cash Flows (unaudited) -
         Nine months ended September 30, 2001 and 2000.........................................   6

        Notes to Condensed Consolidated Financial Statements (unaudited).......................   7

Item 2.  Management's Discussion and Analysis of Financial Condition
          And Results of Operations............................................................  14

Part II. Other Information

         Item 1.  Legal Proceedings............................................................  29

         Item 2. Changes in Securities and Use of Proceeds.....................................  29

         Item 3. Defaults Upon Senior Securities...............................................  29

         Item 4. Submission of Matters to a Vote of Security Holders...........................  29

         Item 5. Other Information.............................................................  29

         Item 6. Exhibits and Reports on Form 8-K..............................................  29

                 Signature Page................................................................  30
</TABLE>

                                       2
<PAGE>

                    Admiralty Bancorp, Inc. and subsidiary

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                            (dollars in thousands)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                      September 30, 2001    December 31, 2000
                                                                      ------------------    -----------------
<S>                                                                   <C>                   <C>
ASSETS
Cash and cash equivalents
        Cash and due from banks .........................................  $  13,235            $  11,221
        Interest bearing due from banks .................................         25                1,035
        Federal funds sold ..............................................     43,358               21,189
                                                                           ---------            ---------
              Total cash and cash equivalents ...........................     56,618               33,445
Investment securities available for sale,
        at fair market value ............................................     20,965               13,628
Investment securities held to maturity, at cost
        (fair market value of $36.5 million and $24.8 million at
        September 30, 2001 and December 31, 2000, respectively) .........     35,417               24,549
Loans, net ..............................................................    357,741              218,629
Accrued interest receivable .............................................      1,877                1,439
Federal Reserve Bank and FHLB stock .....................................      1,992                1,337
Premises and equipment, net .............................................      5,457                2,666
Deferred tax asset, net .................................................        628                  774
Goodwill, net ...........................................................      3,271                3,387
Other assets ............................................................      1,943                1,507
                                                                           ---------            ---------
        Total assets ....................................................  $ 485,909            $ 301,361
                                                                           =========            =========

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits ................................................................  $ 434,218            $ 261,315
Securities sold under agreement to repurchase ...........................      5,900                5,900
Advances from FHLB ......................................................      1,000                4,000
Accrued interest payable ................................................        739                  597
Other liabilities .......................................................      1,060                  831
                                                                           ---------            ---------
        Total liabilities ...............................................    442,917              272,643
                                                                           ---------            ---------
SHAREHOLDERS' EQUITY
Preferred stock, no par value, 2,000,000 shares
        authorized, no shares issued or outstanding .....................         --                   --
Common stock, Class A, no par value, 1,000,000 shares authorized, no
        shares issued and outstanding at September 30, 2001 and
        117,500 shares issued and outstanding at December 31, 2000,......         --                  990
Common stock, Class B, no par value, 7,500,000 shares authorized,
        5,029,142 and 3,555,431 shares issued and outstanding
        at September 30, 2001 and December 31, 2000, respectively .......     44,594               30,507
Accumulated deficit .....................................................     (1,897)              (2,831)
Accumulated other comprehensive income, net .............................        295                   52
                                                                           ---------            ---------
        Total shareholders' equity ......................................     42,992               28,718
                                                                           ---------            ---------
        Total liabilities and shareholders' equity ......................  $ 485,909            $ 301,361
                                                                           =========            =========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                       3
<PAGE>

                    Admiralty Bancorp, Inc. and subsidiary

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (dollars in thousands, except per-share data)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                    Three Months             Three Months
                                                                       Ended                    Ended
                                                                 September 30, 2001        September 30, 2000
                                                                 ------------------        ------------------
<S>                                                              <C>                       <C>
Interest and dividend income
        Loans ...................................................... $     6,976              $     3,632
        Mortgage-backed securities .................................         812                      506
        Other debt securities ......................................          46                      107
        Federal funds sold .........................................         256                      190
        Dividends from FRB and FHLB stock ..........................          30                       23
        Other ......................................................           3                        4
                                                                     -----------              -----------
              Total interest and dividend income ...................       8,123                    4,462
                                                                     -----------              -----------

Interest expense
        Deposits ...................................................       3,856                    1,977
        Securities sold under repurchase agreement .................          94                      142
        Advances from FHLB .........................................          10                      123
                                                                     -----------              -----------
              Total interest expense ...............................       3,960                    2,242
                                                                     -----------              -----------

              Net interest and dividend income .....................       4,163                    2,220
Provision for loan losses ..........................................         526                      370
                                                                     -----------              -----------

              Net interest and dividend income after
              provision for loan losses ............................       3,637                    1,850
                                                                     -----------              -----------

Non-interest income
        Service charges and fees ...................................         274                      231
        Insurance commissions ......................................         (10)                      12
        Gain on sale of securities .................................          --                        1
        Gain on sale of loans ......................................          --                       28
        Other income ...............................................           1                       --
                                                                     -----------              -----------
              Total non-interest income ............................         265                      272
                                                                     -----------              -----------

Non-interest expense
        Salaries and employee benefits .............................       1,654                    1,000
        Occupancy ..................................................         461                      278
        Furniture and equipment ....................................         187                      123
        Amortization of goodwill ...................................          38                       38
        Other expense ..............................................         788                      525
                                                                     -----------              -----------
              Total non-interest expense ...........................       3,128                    1,964
                                                                     -----------              -----------

              Income before income tax expense .....................         774                      158
Income tax expense .................................................         311                       40
                                                                     -----------              -----------
        Net income ................................................. $       463              $       118
                                                                     ===========              ===========
Per share data
  Net income per share - basic ..................................... $      0.09              $      0.04
                                                                     ===========              ===========
  Net income per share - diluted ................................... $      0.08              $      0.04
                                                                     ===========              ===========
  Weighted average shares outstanding - basic ......................   5,280,599                3,093,912
                                                                     ===========              ===========
  Weighted average shares outstanding - diluted ....................   5,523,040                3,093,912
                                                                     ===========              ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                       4
<PAGE>

                    Admiralty Bancorp, Inc. and subsidiary

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (dollars in thousands, except per-share data)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                  Nine Months          Nine Months
                                                                     Ended                Ended
                                                               September 30, 2001    September 30, 2000
                                                               -------------------   ------------------
<S>                                                                <C>               <C>
Interest and dividend income
        Loans ...............................................       $   18,991            $    9,023
        Mortgage-backed securities ..........................            2,173                 1,442
        Other debt securities ...............................              207                   325
        Federal funds sold ..................................              788                   283
        Dividends from FRB and FHLB stock ...................               77                    62
        Other ...............................................               17                     6
                                                                    ----------            ----------
              Total interest and dividend income ............           22,253                11,141
                                                                    ----------            ----------
Interest expense
        Deposits ............................................           10,935                 4,204
        Federal funds purchased .............................               --                    23
        Securities sold under repurchase agreement ..........              280                   424
        Advances from FHLB ..................................               95                   335
                                                                    ----------            ----------
              Total interest expense ........................           11,310                 4,986
                                                                    ----------            ----------
              Net interest and dividend income ..............           10,943                 6,155
Provision for loan losses ...................................            1,629                   813
                                                                    ----------            ----------
              Net interest and dividend income after
              provision for loan losses .....................            9,314                 5,342
                                                                    ----------            ----------

Non-interest income
        Service charges and fees ............................              846                   686
        Insurance commissions ...............................               31                    12
        Gain on sale of securities ..........................               --                    17
        Gain on sale of loans ...............................               10                    37
        Gain on sale of other real estate ...................               --                    17
        Other income ........................................                4                     4
                                                                    ----------            ----------
              Total non-interest income .....................              891                   773
                                                                    ----------            ----------

Non-interest expense
        Salaries and employee benefits ......................            4,576                 2,487
        Occupancy ...........................................            1,231                   760
        Furniture and equipment .............................              503                   304
        Amortization of goodwill ............................              116                   115
        Other expense .......................................            2,185                 1,531
                                                                    ----------            ----------
              Total non-interest expense ....................            8,611                 5,197
                                                                    ----------            ----------
              Income before income tax expense ..............            1,594                   918
Income tax expense ..........................................              660                   362
                                                                    ----------            ----------
        Net income ..........................................       $      934            $      556
                                                                    ==========            ==========

Per share data
  Net income per share - basic ..............................       $     0.20            $     0.18
                                                                    ==========            ==========
  Net income per share - diluted ............................       $     0.19            $     0.18
                                                                    ==========            ==========
  Weighted average shares outstanding - basic ...............        4,648,138             3,093,916
                                                                    ==========            ==========
  Weighted average shares outstanding - diluted .............        4,808,555             3,093,916
                                                                    ==========            ==========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                       5
<PAGE>

                    Admiralty Bancorp, Inc. and subsidiary

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (dollars in thousands)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                           Nine months ended       Nine months ended
                                                                           September 30, 2001       September 30, 2000
                                                                           ------------------       ------------------
<S>                                                                        <C>                      <C>
Operating activities
        Net income .......................................................   $     934                  $     556
        Adjustments to reconcile net income to net cash provided by
          operating activities
          Provision for loan losses ......................................       1,629                        813
          Depreciation and amortization ..................................         695                        159
          Amortization, net of accretion, of investment securities .......          44                         11
          Gain on sale of securities .....................................          --                        (17)
          Gain on sale of loans ..........................................         (10)                       (37)
          Gain on sale of other real estate owned ........................          --                        (17)
          Increase in accrued interest receivable ........................        (438)                      (499)
          Increase in other assets .......................................        (436)                      (545)
          Increase in accrued interest payable ...........................         142                        180
          Increase in other liabilities ..................................         229                        407
                                                                             ---------                  ---------
              Net cash provided by operating activities ..................       2,789                      1,011
                                                                             ---------                  ---------

Investing activities
        Proceeds from maturities of investment securities
          available for sale .............................................       9,529                      1,339
        Proceeds from maturities of investment securities
          held to maturity ...............................................       7,673                      1,152
        Proceeds from sale of investment securities available for sale....          --                         17
        Purchases of investment securities available for sale ............     (16,486)                    (4,998)
        Purchases of investment securities held to maturity ..............     (18,576)                    (4,998)
        Purchase of Federal Reserve Bank & FHLB stock ....................        (655)                      (549)
        Net loan originations and principal collections on loans .........    (141,017)                   (64,027)
        Proceeds from loan sales .........................................         286                        944
        Proceeds from sales of other real estate owned ...................          --                        123
        Purchase of premises and equipment, net ..........................      (3,370)                      (837)
                                                                             ---------                  ---------
          Net cash used in investing activities ..........................    (162,616)                   (71,834)
                                                                             ---------                  ---------
Financing activities
        Net increase in deposits .........................................     172,903                     74,810
        Decrease in federal funds purchased ..............................          --                       (571)
        (Decrease) increase in FHLB advances .............................      (3,000)                     4,600
        Proceeds from issuance of common stock - net of costs of $21 .....      13,097                         --
                                                                             ---------                  ---------
          Net cash provided by financing activities ......................     183,000                     78,839
                                                                             ---------                  ---------

Net increase in cash and cash equivalents ................................      23,173                      8,016

Cash and cash equivalents, beginning of period ...........................      33,445                      5,136
                                                                             ---------                  ---------

Cash and cash equivalents, end of period .................................   $  56,618                  $  13,152
                                                                             =========                  =========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                       6
<PAGE>

                    Admiralty Bancorp, Inc. and subsidiary

             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

NOTE 1 - BASIS OF PRESENTATION

The unaudited condensed consolidated interim financial statements of Admiralty
Bancorp, Inc. (the "Company") and its wholly-owned subsidiary, Admiralty Bank
(the "Bank") reflect all adjustments (including normal recurring accruals)
which, in the opinion of management, are necessary to present fairly the
Company's consolidated financial condition and the consolidated results of
operations and the consolidated cash flows for interim periods. Certain prior
year amounts have been reclassified to conform to the 2001 presentation. The
results for interim periods are not necessarily indicative of trends or results
to be expected for the full year. These condensed consolidated interim financial
statements and notes should be read in conjunction with the Company's Annual
Report on Form 10-KSB for the year ended December 31, 2000.

The Company is incorporated in the state of Delaware and is registered with the
Board of Governors of the Federal Reserve System as a financial holding company.
The Bank is a Florida state chartered commercial bank, with its main office in
Palm Beach Gardens, Florida, and branches in Altamonte Springs, Boca Raton,
Cocoa Beach, Juno Beach, Jupiter, Orlando (2) and Melbourne, Florida. On March
11, 2000, the Company converted from a one bank holding company to a financial
holding company under the Gramm-Leach-Bliley Financial Modernization Act of 1999
(the "Modernization Act"). This status permits the Company to undertake
financial activities which need not be closely related to banking, such as
insurance brokerage activities. Under the Modernization Act, the Company's bank
subsidiary must remain "well capitalized" (i.e., have a leveraged capital ratio
of 5% or greater and a risk based capital ratio of 10% or greater) and well
managed, or the Company could be required to divest itself of its non-banking
activities. In addition, the Company must maintain a rating of "satisfactory" or
better under the Community Reinvestment Act. The Company has entered into a
joint venture to sell insurance, and may seek alliances with other financial
service providers, as a way to enhance non-interest income.

The Company has formed Admiralty Insurance Services, LLC ("AIS") as a joint
venture with USI Florida ("USI") to offer a wide range of insurance products,
primarily to customers of the Bank. USI and the Company are each 50 percent
owners of AIS. USI and AIS will share equally in commissions on policies sold,
and the Company is entitled to 50 percent of the net income of AIS. Under the
agreement, USI will absorb all costs incurred by AIS for operating expenses.
During the nine months ended September 30, 2001, the Company recognized $31
thousand in income from AIS.


NOTE 2 - RECENT ACCOUNTING PRONOUNCEMENTS

In September 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("Statement 133"). The effective date of
Statement 133 was delayed by SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133." Statement 133 is now effective for all quarters of all
fiscal years beginning after September 15, 2000, with early adoption permitted.
Statement 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. It requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. The Company adopted

                                       7
<PAGE>

Statement 133 on January 1, 2001, and adoption of the statement did not have any
financial statement impact.

In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities," ("Statement
140") which replaces SFAS No. 125. Statement 140 provides consistent standards
for distinguishing transfers of financial assets that are sales from transfers
that are secured borrowings. Because Statement 140 focuses on control after a
transfer of financial assets, an entity is required to recognize the financial
and servicing assets it controls and the liabilities it has incurred,
derecognize financial assets when control has been surrendered, and derecognize
liabilities when extinguished. All measurements and allocations should be based
on fair value. Statement 140 is effective for transfers and servicing of
financial assets and extinguishments of liabilities occurring after September
30, 2001. This statement is effective for recognition and reclassification of
collateral and for disclosures relating to securitization transactions and
collateral for fiscal years ending after December 15, 2000. The implementation
of this statement did not have a material effect on the Company's financial
statements.

In July 2001, the FASB issued SFAS No. 141, "Business Combinations", ("Statement
141") and SFAS No. 142, "Goodwill and Other Intangible Assets," ("Statement
142"). Statement 141 requires that the purchase method of accounting be used for
all business combinations initiated after June 30, 2001. Statement 142 will
require that goodwill and intangible assets with indefinite useful lives no
longer be amortized, but instead be tested for impairment at least annually in
accordance with the provisions of Statement 142. Other intangible assets would
continue to be amortized over the estimated useful lives. In the transition, any
impairment loss will be measured as of the date of adoption and recognized as
the cumulative effect of a change in accounting principle in the first interim
period.

The Company is required to adopt the provisions of Statement 141 immediately and
the Company plans to adopt Statement 142 effective January 1, 2002. As of the
date of adoption, the Company expects to have unamortized goodwill in the amount
of $3.2 million that will be subject to the transition provisions of Statements
141 and 142. Pursuant to Statement 142 no further amortization of goodwill will
occur. Amortization expense related to goodwill was $116 thousand and $153
thousand for nine months ended September 30, 2001 and the year ended December
31, 2000, respectively. Because of the calculations involved, the Company cannot
reasonably estimate at the date of this filing whether any transitional
impairment losses will be required to be recognized as the cumulative effect of
a change in accounting principal.

In June 2001, the Financial Accounting Standards Board issued Statement No. 143,
"Accounting for Asset Retirement Obligations", which addresses financial
accounting and reporting for legal obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement costs. SFAS No.
143 is effective for fiscal years beginning after June 15, 2002. This Statement
is not expected to have a material impact on the Company's financial statements.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment of
Long-Lived Assets" which supercedes SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of" and the
accounting and reporting provisions of APB No. 30, "Reporting the Results of
Operation - Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions," for
the disposal of a segment of a business. While SFAS No. 144 retains many of the
fundamental provisions of SFAS No. 121, it establishes a single accounting model
for long-lived assets to be disposed of by sale, and resolves certain
implementation issues not previously addressed by SFAS No. 121. SFAS No. 144 is
effective for

                                       8
<PAGE>

fiscal years beginning after December 15, 2001. This Statement is not expected
to have a material impact on the Company's financial statements.


NOTE 3 - COMPREHENSIVE INCOME

The following table sets forth the components of the Company's comprehensive
income:

<TABLE>
<CAPTION>
                                                                          Nine months ended
                                                                   --------------------------------------
                                                                   September 30, 2001  September 30, 2000
                                                                   ------------------  ------------------
                                                                                (in thousands)
     <S>                                                           <C>                 <C>
     Net Income                                                        $       934        $       556

     Other comprehensive income, net of tax -
        Change in net unrealized gain on securities
                    held available for sale, net of taxes of $145
                    and $48 in 2001 and 2000, respectively............         243                 83
                                                                       -----------        -----------
     Comprehensive income                                              $     1,177        $       639
                                                                       ===========        ===========
</TABLE>

NOTE 4 - NET INCOME PER SHARE

The Company calculates net income per share in accordance with SFAS No. 128,
"Earnings Per Share."  Net income per share is computed by dividing net income
by the weighted average number of shares of common stock outstanding during the
periods presented.  Using this method, adjustments are to be made, where
material, to give effect to the shares that would be outstanding, assuming the
exercise of dilutive stock options and warrants, all of which are considered
common stock equivalents.

The following table illustrates the reconciliation of the numerator and
denominator of the basic and diluted earnings per share computations for the
nine months ended September 30, 2001 and 2000:

<TABLE>
<CAPTION>
                                        Nine months ended
                           ---------------------------------------
                           September 30, 2001   September 30, 2000
                           ------------------   ------------------
                            (dollars in thousands, except per share
                                           data)
<S>                        <C>                  <C>
Net income................ $         934        $        556
                           =============        ============

Weighted average
shares - basic............     4,648,138           3,093,916

Additional dilutive
shares related
to stock benefit plans....       160,417                   0
                           -------------        ------------

Weighted average
shares - diluted..........     4,808,555           3,093,916
                           =============        ============

Basic net income
per share ................ $        0.20        $       0.18
                           =============        ============

Diluted net income
per share ................ $        0.19        $       0.18
                           -------------        ------------
</TABLE>

The basic and diluted weighted average number of shares outstanding and net
income per share information reflect a 1:1.1291 conversion ratio for
discretionary conversions of Class A shares to Class B shares, resulting from
the change in the Class A conversion ratio caused by the 1999 stock dividend on
the

                                       9
<PAGE>

Class B shares. The 117,500 Class A shares which were outstanding at December
31, 2000 were converted to 132,670 Class B shares during the first six months of
2001. No Class A shares were outstanding during three month period ended
September 30, 2001. During the third quarter of 2001, the Board of Directors
resolved not to issue any of the authorized Class A shares at any time in the
future and to ask the shareholders to amend the Company's Certificate of
Incorporation to eliminate the Class A shares. These steps were taken in order
to have the Company's trading symbol on the NASDAQ shortened from AAABB to AAAB.

The basic and diluted weighted average number of shares outstanding and net
income per share information reflect an increase in the average number of shares
outstanding due to stock purchase warrants exercised during the period.  Under
the terms of the warrant agreement the Company had the right to accelerate the
warrant expiration date in the event that (i) the Class B common stock is traded
on a nationally recognized securities exchange or the NASDAQ National or
SmallCap Market, and (ii) the Class B common stock has traded at $13.28 per
share or above and has not traded below $13.28 per share for 20 consecutive
trading days.  Having met the two conditions, the Company accelerated the
expiration date of the warrants to June 15, 2001.  During the nine month period
ended September 30, 2001, 1,079,907 Class B shares were issued for the exercise
of warrants.  As of September 30, 2001 no warrants remained outstanding.

The basic and diluted number of shares outstanding, common stock equivalents
resulting from stock benefit plans and net income per share information also
reflect an increase, to give retroactive effect to a five percent stock dividend
declared by the Board of Directors on October 25, 2001 to shareholders of record
November 9, 2001, payable November 16, 2001.

                                       10
<PAGE>

NOTE 5 - INVESTMENT AND MORTGAGE BACKED SECURITIES

The amortized cost and fair value of investment securities and mortgage-backed
securities at September 30, 2001 are as follows:

<TABLE>
<CAPTION>
                                                      Amortized   Gross Unrealized    Gross Unrealized
                                                        Cost           Gains               Losses          Fair Value
                                                    ------------     ----------          ----------      -------------
     September 30, 2001                                                       (In thousands)
     ------------------
     <S>                                               <C>             <C>              <C>             <C>
     AVAILABLE FOR SALE:

     U.S. Government and Agency securities ..........   $ 2,000         $    36            $      0         $ 2,036

     Mortgage-backed securities .....................    18,480             435                   0          18,915

     Other  securities ..............................        14               0                   0              14
                                                        -------         -------            --------         -------

     Sub-total ......................................   $20,494         $   471            $      0         $20,965
                                                        -------         -------            --------         -------

     HELD TO MATURITY:

     U.S. Government and Agency securities ..........   $ 2,000         $    55            $      0         $ 2,055

     Mortgage-backed securities .....................    33,417             986                   0          34,403
                                                        -------         -------            --------         -------

     Sub-total ......................................   $35,417         $ 1,041            $      0         $36,458
                                                        -------         -------            --------         -------

     TOTAL ..........................................   $55,911         $ 1,512            $      0         $57,423
                                                        =======         =======            ========         =======
</TABLE>

                                       11
<PAGE>

The amortized cost and fair value of investment and mortgage-backed securities
at December 31, 2000 are as follows:

<TABLE>
<CAPTION>
                                    Amortized        Gross Unrealized       Gross Unrealized
                                      Cost                Gains                  Losses               Fair Value
                                  --------------    -------------------     -------------------     --------------
     December 31, 2000                                               (In thousands)
     -----------------
     <S>                          <C>                <C>                    <C>                       <C>
     AVAILABLE FOR SALE:

     U.S. Government and Agency
     securities....................     $  7,500            $      7                 $    (30)          $  7,477


     Mortgage-backed securities ...        6,031                 106                        0              6,137

     Other securities .............           14                   0                        0                 14
                                        --------            --------                 --------           --------

     Sub-total ....................     $ 13,545            $    113                 $    (30)          $ 13,628
                                        --------            --------                 --------           --------

     HELD TO MATURITY:

     U.S. Government and Agency
     securities ...................     $  1,000            $      5                 $     (1)          $  1,004

     Mortgage-backed securities...        23,549                 228                        0             23,777
                                        --------            --------                 --------           --------

     Sub-total ...................      $ 24,549            $    233                 $     (1)          $ 24,781
                                        --------            --------                 --------           --------

     TOTAL........................      $ 38,094            $    346                 $    (31)          $ 38,409
                                        ========            ========                 ========           ========
</TABLE>

The carrying value of securities pledged to secure deposits and for other
purposes required or permitted by law amounted to approximately $27.3 million
and $28.1 million at September 30, 2001 and December 31, 2000, respectively.

                                       12
<PAGE>

NOTE 6 - LOANS

The following schedule presents the components of loans, net of unearned income,
by type, as of September 30, 2001 and December 31, 2000:

<TABLE>
<CAPTION>
                                                                September 30, 2001                December 31, 2000
                                                                ------------------                -----------------
                                                                          (Dollars in thousands)
                                                               Amount          Percent         Amount      Percent
                                                               ------          -------         ------      -------
     <S>                                                     <C>               <C>           <C>           <C>
     Commercial and Industrial............................   $   50,518          14%         $  43,006        19%

     Real Estate Non-Residential Properties...............      265,409          73%           147,996        67%

     Residential Properties...............................       25,159           7%            19,399         9%

     Construction.........................................       15,396           4%             7,869         3%

     Consumer.............................................        6,401           2%             3,424         2%
                                                             ----------         ---          ---------       ---

     Gross Loans..........................................      362,883         100%           221,694       100%
                                                                                ---                          ---

     less:  net deferred fees.............................        1,188                            684
                                                             ----------                      ---------

     Total loans..........................................      361,695                        221,010

     less:  allowance for loan losses.....................        3,954                          2,381
                                                             ----------                      ---------

     Net loans............................................   $  357,741                      $ 218,629
                                                             ==========                      =========
</TABLE>


     Changes in the allowance for loan losses are as follows:

<TABLE>
<CAPTION>
                                                                             Nine months ended
                                                         -----------------------------------------------------------
                                                             September 30, 2001             September 30, 2000
                                                         ----------------------------   ----------------------------
                                                                             (Dollars in thousands)
                                                                             ----------------------
       <S>                                                <C>                           <C>
       Balance at beginning of year                           $        2,381                 $        1,017
       Provision for loan losses                                       1,629                            813
       Charge-offs                                                       (61)                           (87)
       Recoveries                                                          5                              3
                                                         ----------------------------   ----------------------------
       Ending Balance                                         $        3,954                 $        1,746
                                                         ============================   ============================

       Ratio of net charge-offs to
       average loans outstanding                                        0.02%                          0.07%

       Balance of allowance as a % of
       total loans at period end                                        1.09%                          1.07%
</TABLE>

     Loans with unpaid principal balances of $535 and $402 thousand were 90 days
     or more contractually delinquent or on nonaccrual status at September 30,
     2001 and December 31, 2000, respectively.

                                       13
<PAGE>

Item 2.

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

                                   OVERVIEW
                                   --------

               Special Note Regarding Forward-Looking Statements

This report contains certain "forward-looking statements" as defined under
Section 21E of the Securities Exchange Act of 1934. The Company desires to take
advantage of the "safe harbor" provisions of Section 21E and is including this
statement for the express purpose of availing itself of the protection of the
safe harbor with respect to all such forward-looking statements. These forward-
looking statements, which are included in Management's Discussion and Analysis,
describe future plans or strategies and may include the Company's expectations
of future financial results. The words "believe", "expect", "anticipate",
"estimate", "project", and similar expressions identify forward-looking
statements. The Company's ability to predict results or the effect of future
plans or strategies or qualitative or quantitative changes based on market risk
exposure is inherently uncertain. Factors which could effect actual results
include but are not limited to i) changes in general market interest rates, ii)
general economic conditions, both in the United States generally and
specifically in the Company's market area, iii) legislative/regulatory changes,
iv) monetary and fiscal policies of the U.S. Treasury and the Federal Reserve,
v) changes in the quality or composition of the Company's loan and investment
portfolios, vi) demand for loan products, vii) deposit flows, viii) competition,
ix) demand for financial services in the Company's markets and x) world events
which may impact economic activity. These factors should be considered in
evaluating the forward-looking statements, and undue reliance should not be
placed on such statements.

                                       14
<PAGE>

                               Recent Expansion
                               ----------------

On August 1, 2000 the Company's Board of Directors approved expanding the
Company's market area to include the Orlando, Florida market. The Board viewed
this market as one of the most desirable Florida markets not currently served by
the Company. As a part of this planned expansion, the Board of Directors
approved a sale of $7 million to $11 million of Class B common stock, at a price
of $10 per share, and the addition of three Orlando based members to the Board.
The three Board members were appointed to the Boards of the Bank and the Company
in October 2000.

To undertake our capital offering we filed a registration statement on Form SB-2
with the Securities and Exchange Commission that became effective on November 7,
2000. The full 1.1 million shares offered were sold before January 31, 2001.

The Company opened a full service branch in downtown Orlando on September 7,
2000. The Company opened a full service South Orlando branch on March 19, 2001
and opened a full service branch in Altamonte Springs, a suburb of Orlando, on
June 15, 2001.

The Company is also expanding its operation in Brevard County, Florida. We
currently operate a full service branch in Melbourne, which opened in March
2000, and we opened a full service branch in Cocoa Beach, Florida in April 2001.

The Company announced its expansion into the Broward County, Florida market in
July 2001. We remodeled an existing bank branch and opened a full service
banking facility on August 15, 2001.

The Board of Directors and management has focused on the Company's continued
growth, as the Board believes the Company must reach a critical mass to maximize
profitability and shareholder value. This growth strategy has impacted the
Company's earnings through loan loss reserve provisions, to reflect the
increased size of the portfolio, and higher non-interest expense. The Company
expects to remain focused on franchise growth through the remainder of 2001, and
then to moderate growth and focus on enhancing profitability in 2002 and
thereafter.

                                       15
<PAGE>

                             RESULTS OF OPERATIONS
                             ---------------------


         Three Months Ended September 30, 2001 and September 30, 2000.

For the quarter ended September 30, 2001, the Company generated net income of
$463 thousand, an increase from net income of $118 thousand for the third
quarter of 2000.

At September 30, 2001, the Company's total assets reached $485.9 million, an
increase of 61.2% over total assets at December 31, 2000. The Company's net
loans totaled $357.7 million, an increase of 63.6% over net loans at December
31, 2000, and the Company's deposits totaled $434.2 million, an increase of
66.2% over total deposits at December 31, 2000.

Interest and Dividend Income. Total interest and dividend income increased $3.6
million, or 82.0%, to $8.1 million for the quarter ended September 30, 2001 from
$4.5 million for the same period of 2000. This increase in interest income
primarily relates to an increase in the Company's average balance of earning
assets, partially offset by a lower yield on the portfolio of interest earning
assets. Average balances increased by $195.2 million for loans, $18.5 million
for investment securities (including Federal Reserve Bank stock and FHLB stock)
and $18.7 million for federal funds sold. The average yield on the loan
portfolio decreased to 8.1% in the third quarter of 2001, compared to 9.6% in
the third quarter of 2000. The average yield on federal funds sold decreased to
3.4% in 2001 from 6.5% in 2000. The average yield on investment securities,
including Federal Reserve Bank and FHLB stocks, decreased to 6.5% in the third
quarter 2001 from 7.0% in the third quarter of 2000. During the three months
ended September 30, 2001 the yield on the Company's interest earning assets
decreased to 7.5% from 8.9% during the three months ended September 30, 2000.
All decreases are due primarily to lower market rates of interest.

Interest Expense. The Company's interest expense for the third quarter of 2001
increased $1.7 million, or 76.6%, to $3.9 million from $2.2 million for the same
period last year. The increase in interest expense reflects a 124.7% increase in
average interest bearing liabilities at September 30, 2001, as compared to the
same period in 2000. The average balance of time deposits and money market
deposits increased by $147.9 million, and $47.2 million, respectively, in the
third quarter of 2001 as compared to the same period in 2000. The increase in
time deposits reflects our need to aggressively compete for deposits to fund our
ongoing loan growth. The increase in money market deposit accounts reflects the
success of our tiered-rate money market accounts which offer competitive rates
based upon the size of the customer's account balance. In addition, the average
balance of the Company's non-interest bearing demand deposits increased by $19.7
million, to $52.4 million for the three months ended September 30, 2001 from
$32.7 million for the three months ended September 30, 2000. The Company's
average cost of deposits for the three months ended September 30, 2001,
decreased to 3.8% from 4.5% for the comparable period of 2000, primarily due to
the lower rates of interest on deposit accounts. The average balance of
securities sold under agreement to repurchase was $5.9 million, and the average
balance of advances from the FHLB was $1.0 million at average rates of 6.4% and
4.0% respectively, during the three months ended September 30, 2001. In the
quarter ended September 30, 2000 the average balance of securities sold under
agreement to repurchase was $9.0 million and the average of advances from the
FHLB was $7.1 million, at average rates of 6.3% and 6.9% respectively. The funds
obtained through the repurchase agreement and FHLB

                                       16
<PAGE>

advances were used to purchase securities under a leveraged growth and interest
rate risk reduction strategy. The Company's average cost of funds for the three
months ended September 30, 2001, decreased to 3.9% from 4.7% in the comparable
period of 2000.

Net Interest and Dividend Income. Net interest and dividend income for the three
months ended September 30, 2001, increased by $1.9 million, or 87.5%, over the
same period last year.

The Company's net interest spread decreased 21 basis points to 3.09% for the
three months ended September 30, 2001, from 3.30% for the comparable period of
2000, reflecting a greater decline in the Company's yield on earning assets than
the decline in its cost of interest bearing liabilities during a period of
rapidly declining market interest rates.

Provision for Loan Losses. The increase to $526 thousand from $370 thousand in
the provision for loan losses for the three months ended September 30, 2001, as
compared to the same period of 2000, reflects the growth in the loan portfolio
in the third quarter of 2001 as well as management's view of the current state
of the economy. The Company's provision for loan losses maintained the reserve
at a level management believes appropriate in light of the Company's lending
activities, the quality of the loan portfolio, historical experience, volume and
type of lending conducted by the Company, the status of past due and non-
performing loans, the general economic conditions of the Company's lending area
and other factors affecting collectibility of the Company's loan portfolio. The
provision for the three months ended September 30, 2001 was due to growth
primarily in the non-residential real estate loan portfolio and to a lesser
extent due to growth in the commercial and industrial, residential real estate
and construction loan portfolios. The Company had no material recoveries or
charge offs against the reserve during the quarter. The Company did not
experience any material change in its level of classified loans during the three
month period ended September 30, 2001, while the Company's ratio of non-
performing assets to total assets declined to 0.10% at September 30, 2001 from
0.18% at December 31, 2000. While the Company's management uses available
information to recognize losses on loans, future additions to the allowance may
be necessary based on changes in economic conditions, the financial status of
borrowers and regulatory requirements.

Non-Interest Income. For the third quarter of 2001, total non-interest income
decreased $7 thousand, or 2.6%, from the same period of last year. The decrease
includes $43 thousand more in service charges and fees, $22 thousand less in
commissions earned by Admiralty Insurance Services, LLC, the Company's insurance
affiliate and $28 thousand less in gains on sales of loans as the Company sold
no loans during the quarter.

Non-Interest Expense. For the three month period ended September 30, 2001, the
Company experienced increases of $1.1 million in its non-interest expense over
the comparable period of 2000. For the three month period ended September 30,
2001, the Company's total non-interest expense was $3.1 million, compared to
total non-interest expense of $2.0 million for the 2000 period. The increase in
non-interest expense in the three month period of 2001 reflects a $654 thousand
increase in salaries and employee benefit expense as the Company hired
additional staff to administer growth in its loan and deposit portfolios and to
staff its new full service branches in downtown Orlando (which opened in
September 2000), South Orlando (which opened in March 2001), Cocoa Beach (which
opened in April 2001), Altamonte Springs (which opened in September 2001) and
Fort Lauderdale (which opened in August 2001). Full time equivalent employees
increased to 117 at September 30, 2001, from 85 at September 30, 2000. Occupancy
expense increased by $183 thousand, or 65.8%, in the three months ended
September

                                       17
<PAGE>

30, 2001 as compared to the same period in 2000. Rents at the South Orlando
office, Cocoa Beach office and Altamonte Springs office were $46 thousand, $21
thousand and $32 thousand, respectively, in the third quarter of 2001 while the
Company did not have these locations in the third quarter of 2000. Additionally,
rents at the downtown Orlando office were $71 thousand greater in 2001 as the
branch was not open for the full third quarter of 2000. Furniture and equipment
expenses increased to $187 thousand in the third quarter of 2001 from $123
thousand in the third quarter of 2000. Furniture and equipment expenses at the
Cocoa Beach office, Altamonte Springs office, and the South Orlando office were
$11 thousand, $6 thousand and $11 thousand respectively in 2001 while the
Company did not have these locations in 2000. Furniture and equipment expenses
for the downtown Orlando office were $17 thousand greater in the third quarter
of 2001 as compared to the same period in 2000 as a result of the opening of the
branch in its temporary quarters during the period. The Company also had $11
thousand more in furniture and equipment expenses related to its administrative
and operational functions, primarily related to its new in-house data processing
and items processing functions which were put into service in April 2000.
Goodwill amortization totaled $38 thousand for the third quarter of 2001 and
2000. The Company also experienced the following increases in other non-interest
expenses related primarily to its growth: telephone expense increased $14
thousand, or 30.6%, stationery and supplies expense increased $45 thousand, or
100.4%, business development expense increased $22 thousand, or 76.7%, data
processing costs increased $23 thousand, or 22.6%, donations increased $21
thousand, or 4100.0%, directors fees and expenses increased $20 thousand, or
80.0%, and FDIC and State assessments increased $20 thousand, or 141.2%.

Separately, the Company intends to change its policies regarding management
severance and retention. Existing agreements with certain members of senior
management and the Chairman of the Board made severance payments available to
the participants upon a change in control only if the participant's employment
was terminated either voluntarily or involuntarily within a specified period
around the qualifying event. In order to remove the incentive for management to
leave immediately after a change in control, the Company is revising the
agreements to make the payments to the participants immediately upon a change in
control, regardless of whether their employment is terminated. Additionally, the
Company has approved a second change in control plan for senior management and
the Board of Directors under which the annual senior management bonus for 2002
will be terminated and fees paid to Directors will cease for 2002, in exchange
for lump sum payments upon a change in control, again regardless of whether the
individual's service is terminated. The effect of this second plan will be to
reduce non-interest expenses in 2002, as the Company will not accrue for year
end bonuses and will not pay Directors fees.

Income Taxes. Income tax expense increased to $311 thousand for the quarter
ended September 30, 2001, compared to $40 thousand for the same period last
year, due to more taxable income in the current quarter. The effective tax rate
for the third quarter of 2001 was 40.2% compared to 25.3% in the third quarter
of 2000. The increase in the effective rate for the quarter results from changes
in estimates of the annual effective tax rate from quarter to quarter and due to
a reversal of $50 thousand of the valuation allowance for the deferred tax asset
in the third quarter of 2000.

                                       18
<PAGE>

         Nine months Ended September 30, 2001 and September 30, 2000.

For the period ended September 30, 2001, the Company generated net income of
$934 thousand, an increase from net income of $556 thousand for the same period
in 2000.

Interest and Dividend Income. Total interest and dividend income increased $11.1
million, or 99.7%, to $22.2 million for the period ended September 30, 2001 from
$11.1 million for the same period of 2000. This increase in interest income
primarily relates to an increase in the Company's average balance of earning
assets, partially offset by a lower yield on the portfolio of interest earning
assets. Average balances increased by $168.7 million for loans, $14.7 million
for investment securities (including Federal Reserve Bank stock and FHLB stock)
and $18.4 million for federal funds sold. The average yield on the loan
portfolio decreased to 8.5% in the nine month period ended September 30, 2001,
compared to 9.4% in the same period in 2000. The average yield on federal funds
sold decreased to 4.3% in 2001 from 6.5% in 2000. The average yield on
investment securities, including Federal Reserve Bank and FHLB stocks, decreased
to 6.6% in the period ended September 30, 2001 from 7.0% in the same period in
2000. During the nine months ended September 30, 2001 the yield on the Company's
interest earning assets decreased to 8.0% from 8.8% earned during the nine
months ended September 30, 2000. These decreases are due primarily to lower
market rates of interest.

Interest Expense. The Company's interest expense for the period ended September
30, 2001 increased $6.3 million, or 126.8%, to $11.3 million from $5.0 million
for the same period last year. The increase in interest expense reflects a
137.3% increase in average interest bearing liabilities at September 30, 2001,
as compared to the same period in 2000. The average balance of time deposits and
money market deposits increased by $133.5 million and $44.5 million,
respectively, in the current period as compared to the same period in 2000. The
increase in time deposits reflects our need to aggressively compete for deposits
to fund our ongoing loan growth. The increase in money market deposit accounts
reflects the success of our tiered-rate money market accounts which offer
competitive rates based upon the size of the customer's account balance. In
addition, the average balance of the Company's non-interest bearing demand
deposits increased by $16.5 million, to $48.1 million for the nine months ended
September 30, 2001 from $31.6 million for the nine months ended September 30,
2000. The Company's average cost of deposits for the nine months ended September
30, 2001, decreased to 4.2% from 5.7% for the comparable period of 2000,
primarily due to lower rates of interest paid on the interest bearing deposit
accounts. The average balance of securities sold under agreement to repurchase
was $5.9 million, and the average balance of advances from the FHLB was $2.3
million at average rates of 6.3% and 5.5% respectively, during the nine months
ended September 30, 2001. For the period ended September 30, 2000 the average
balance of securities sold under agreement to repurchase was $9.0 million and
the average of advances from the Federal Home Loan Bank was $6.8 million, at
average rates of 6.2% and 6.6% respectively. The funds obtained through the
repurchase agreement and FHLB advances were used to purchase securities under a
leveraged growth and interest rate risk reduction strategy. The Company's
average cost of funds for the nine months ended September 30, 2001, increased to
4.3% from 4.1% in the comparable period of 2000.

Net-Interest and Dividend Income. Net interest and dividend income for the nine
months ended September 30, 2001, increased by $4.8 million, or 77.8%, over the
same period last year.

                                       19
<PAGE>

The Company's net interest spread decreased 57 basis points to 3.06% for the
nine months ended September 30, 2001, from 3.63% for the comparable period of
2000, reflecting a greater decline in the Company's yield on earning assets than
the decline in its cost of interest bearing liabilities during a period of
rapidly declining market rates of interest.

Provision for Loan Losses. The increase to $1.6 million from $813 thousand in
the provision for loan losses for the nine months ended September 30, 2001, as
compared to the same period of 2000, reflects the growth in the loan portfolio
in the period ended September 30, 2001 as well as management's view of the
current economic conditions. The Company's provision for loan losses maintained
the reserve at a level management believes appropriate in light of the Company's
lending activities, the quality of the loan portfolio, historical experience,
volume and type of lending conducted by the Company, the status of past due and
non-performing loans, the general economic conditions of the Company's lending
area and other factors affecting collectibility of the Company's loan portfolio.
The provision for the nine months ended September 30, 2001 was due to growth
primarily in the non-residential real estate loan portfolio and to a lesser
extent due to growth in the commercial and industrial, residential real estate
and construction loan portfolios. The Company had recoveries of $5 thousand and
charge-offs of $61 thousand against the reserve. The Company did not experience
any material change in its level of classified loans during the nine month
period ended September 30, 2001, while the Company's ratio of non-performing
assets to total assets declined to 0.10% at September 30, 2001 from 0.18% at
December 31, 2000. While the Company's management uses available information to
recognize losses on loans, future additions to the allowance may be necessary
based on changes in economic conditions, the financial status of borrowers and
regulatory requirements.

Non-Interest Income. For the first nine months of 2001, total non-interest
income increased $118 thousand, or 15.3%, from the same period of last year. The
increase includes $160 thousand more in service charges and fees and $19
thousand more in commissions earned by Admiralty Insurance Services, LLC, the
Company's insurance affiliate. These increases were partially offset by the
absence of any gains on sales of securities or gains on sales of other real
estate in the period ended September 30, 2001, while the Company had $17
thousand in gains on sales of securities and $17 thousand in gains on sale of
other real estate in the period ended September 30, 2000. The Company also had
$10 thousand in gains on sales of loans in the period ended September 30, 2001
compared to $37 thousand in gains on sales of loans in the comparable period of
2000.

Non-Interest Expense. For the nine month period ended September 30, 2001, the
Company experienced increases in its non-interest expense over non-interest
expense for the comparable period of 2000. For the nine month period ended
September 30, 2001, the Company's total non-interest expense was $8.6 million,
compared to total non-interest expense of $5.2 million for the comparable period
in 2000. The increase in non-interest expense in the first nine months of 2001
reflects a $2.1 million increase in salaries and employee benefit expense as the
Company hired additional staff to administer growth in its loan and deposit
portfolios and to staff its new full service branches in downtown Orlando (which
opened in September 2000), South Orlando (which opened in March 2001), Cocoa
Beach (which opened in April 2001), Altamonte Springs (which opened in September
2001) and Fort Lauderdale, (which opened in August 2001). Full time equivalent
employees increased to 117 at September 30, 2001, from 85 at September 30, 2000.

                                       20
<PAGE>

Occupancy expense increased by $471 thousand, or 62.0%, in the nine months ended
September 30, 2001 as compared to the same period in 2000. Rents at the downtown
Orlando office, South Orlando office, Altamonte Springs office, Cocoa Beach
office and Melbourne office totaled $204 thousand, $91 thousand, $44 thousand,
$48 thousand and $31 thousand, respectively, in the period ended September 30,
2001 while the Company either did not have these locations in 2000 or they were
not open for the full nine month period of 2000. Furniture and equipment
expenses increased to $503 thousand in the nine month period ended September 30,
2001 from $304 thousand in the comparable period of 2000. Furniture and
equipment expense increases at the Melbourne office, Cocoa Beach office,
downtown Orlando office, Altamonte Springs office, and the South Orlando office
were $20 thousand, $20 thousand, $53 thousand, $10 thousand and $20 thousand
respectively in 2001 while the Company either did not have these locations in
the comparable period of 2000 or they were not open for the full nine month
period in 2000. The Company also had $69 thousand more in furniture and
equipment expenses related to its administrative and operational functions,
primarily related to its new in-house data processing and items processing
functions which were put into service in April 2000. Goodwill amortization
totaled $116 thousand for the nine month period ended September 30, 2001 and
$115 thousand for the comparable period in 2000. The Company also experienced
the following increases in other non-interest expenses related primarily to its
growth: telephone expense increased $52 thousand, or 46.9%, waived check
printing fees increased $35 thousand, or 118.4%, stationery and supplies expense
increased $99 thousand, or 80.1%, business development expense increased $84
thousand, or 98.7%, data processing costs increased $64 thousand, or 23.4%,
directors fees and expenses increased $65 thousand, or 92.9%, and FDIC and State
assessments increased $74 thousand, or 171.7%. ATM processing fees decreased $33
thousand, or 52.6% and other losses decreased $52 thousand, or 90.7%.

Income Taxes. Income tax expense increased to $660 thousand for the period ended
September 30, 2001, compared to $362 thousand for the same period last year, due
to higher taxable income in the current period. The effective tax rate for the
current period was 41.4% compared to 39.4% in the 2000 period. The increase in
the effective rate for 2001 results from changes in estimates of the annual
effective tax rate from period to period and due to a reversal of $50 thousand
of the valuation allowance for the deferred tax asset in the third quarter of
2000.

                                       21
<PAGE>

                              FINANCIAL CONDITION
                              -------------------

               September 30, 2001 compared to December 31, 2000

Total assets increased to $485.9 million, an increase of $184.5 million, or
61.2%, from total assets of $301.4 million at December 31, 2000. Increases in
total assets included increases of $2.0 million in cash and demand balances due
from banks, $139.1 million in net loans, $10.9 million in investment securities
held to maturity, $7.3 million in investment securities available for sale, $2.8
million in net premises and equipment, $438 thousand in accrued interest
receivable, $22.2 million in federal funds sold and a decrease of $1.0 million
in interest bearing due from banks.

The $139.1 million increase in net loans is comprised primarily of $7.5 million
in commercial loans, $117.4 million in non-residential real estate loans, $5.8
million in residential real estate loans, and $7.5 million in construction
loans. The net increase is the result of the management team's efforts to
attract new business and expand relationships with existing customers. Loans
originated in the recently opened Orlando, Florida branches contributed $66
million toward the overall increase in loans.

At September 30, 2001, cash and due from banks increased $2.0 million partially
as a result of additional cash for the newly opened branches and partially due
to larger cash letters associated with the larger depositor base. Interest
bearing due from banks decreased $1.0 million as one bank account which was no
longer needed was closed and funds were drawn down from the Federal Home Loan
Bank account. The Company added to its investment portfolio to enhance its
return on its liquid assets and maintain adequate liquidity. Securities
available for sale and securities held to maturity increased $7.3 million and
$10.9 million respectively during the first nine months of 2001. Federal Reserve
Bank stock and FHLB stock increased $655 thousand as the Company increased its
holdings of Federal Reserve Bank stock in compliance with its membership
requirements. Accrued interest receivable increased $438 thousand as a result of
growth in the loan and investment portfolios. The Company's net investment in
premises and equipment increased $2.8 million, including $1.1 million for land
to be used for the Altamonte Springs branch. The Altamonte Springs branch opened
September 15, 2001 in a leased modular building. A permanent branch will be
built on the remaining portion of the land. The site occupied by the permanent
building is a corner lot with access from two roads. After the permanent
facility is opened the Company expects to return the modular unit and sell the
excess land. The increase in net premises and equipment also includes net
increases of $591 thousand, $300 thousand, $411 thousand and $205 thousand for
improvements at the South Orlando, downtown Orlando, Cocoa Beach and Fort
Lauderdale branches, respectively. The South Orlando branch opened during March
2001, the downtown Orlando branch moved into its permanent location in February
2001, the Cocoa Beach office opened in April 2001 and the Fort Lauderdale branch
opened in August 2001. Other assets increased $436 thousand, including increases
of $155 thousand in prepaid expenses and $310 thousand in taxes receivable.

                                       22
<PAGE>

Total deposits increased 66.2%, to $434.2 million at September 30, 2001 from
$261.3 million at December 31, 2000. Deposits are summarized as follows:

<TABLE>
<CAPTION>
                                                            September 30, 2001             December 31, 2000
                                                       ----------------------------  -----------------------------
                                                                              (in thousands)
<S>                                                      <C>                              <C>
 Non-interest bearing demand..........................   $             54,102             $           41,025
 Savings, NOW and money market........................                154,560                         88,986
 Time deposits, under $100,000........................                105,527                         63,607
 Time deposits, $100,000 and over.....................                120,029                         67,697
                                                         --------------------             ------------------
                                                         $            434,218             $          261,315
                                                         ====================             ==================
</TABLE>

Money market accounts increased $47.9 million in the first nine months of 2001.
This increase reflects the market's acceptance of two, tiered rate money market
account products, which pay increased rates as the balance in the account
increases.

Time deposits increased $94.3 million in the nine months of 2001. The Company
subscribes to a deposit listing service on the internet which allows it to post
time deposit rates on a web site which is available to other subscribers who use
the site as an information source for investing in time deposits. The deposits
raised through this program are primarily deposits of credit unions, savings
banks and commercial banks, although $18.9 million in deposits have been raised
through deposit brokers utilizing the program. Certificates of deposit sold to
brokers are at the same rates and terms offered to the banks and credit unions
utilizing the program. The terms of the deposits offered through the internet
program are generally from ninety days to three years. The Company raised $68.6
million with this program in the first nine months of 2001. At September 30,
2001 the Company had $102.7 million in deposits raised through this program
compared to $34.1 million at December 31, 2000. The weighted average rate of
interest on the internet portfolio at September 30, 2001 was 4.57% and the
weighted average remaining life was 5.2 months. The weighted average rate of the
local time deposit portfolio, excluding public fund time deposits, at September
30, 2001 was 5.05% and the weighted average remaining life was 5.7 months.

The following table sets forth the average amounts of various types of deposits
for each of the periods indicated:

<TABLE>
<CAPTION>
                                                   September 30, 2001                  December 31, 2000
                                              ------------------------------   -------------------------------
                                                                 Average                          Average
                                                 Amount           Yield              Amount        Yield
                                                 ------           -----              ------        -----
                                                                   (dollars in thousands)
<S>                                            <C>               <C>                <C>            <C>
Non-Interest Bearing Demand .................  $   48,113         0.0%              $  32,738       0.0%
Interest-Bearing Demand......................      19,021         0.7%                 12,544       0.7%
Money Market Deposits........................      92,861         4.0%                 53,811       5.0%
Savings Deposits.............................       2,234         1.8%                  2,296       2.0%
Time Deposits................................     183,137         5.8%                 63,912       6.5%
                                               ----------                           ---------
Total........................................  $  345,366                           $ 165,301
                                               ==========                           =========
</TABLE>

The decreased average yield on time deposits is attributable to lower market
interest rates. The Company previously offered higher yielding certificates of
deposit to attract deposits to fund the growth in the loan portfolio.

                                       23
<PAGE>

FHLB advances totaled $1.0 million at September 30, 2001 compared to $4.0
million at December 31, 2000. The funds used to reduce the borrowing were raised
through the deposit portfolio. The funds obtained in this borrowing were used
toward the purchase of a $10 million GNMA II mortgage-backed security, of which
one half is classified as available for sale and one half is classified as held
to maturity. The security is pledged to secure the borrowing line and the
Company is required to maintain a specified margin between the market value of
the security and the amount advanced under the line.

The following table sets forth information regarding the Company's short-term
borrowing at and for the periods indicated:

<TABLE>
<CAPTION>
                                                                  Nine months ended               Twelve months ended
                                                                  September 30, 2001                December 31, 2000
                                                           ---------------------------------  -------------------------------
                                                                                  (dollars in thousands)
<S>                                                             <C>                             <C>
FHLB advances
  Balance outstanding..........................................  $         1,000                    $         4,000
  Weighted average interest rate at period end.................              3.9%                               6.6%
  Maximum balance at any month-end.............................  $         4,000                    $         9,400
  Average amount outstanding during period.....................  $         2,321                    $         6,118
  Weighted average interest rate during period.................              5.5%                               6.6%
</TABLE>

Accrued interest payable increased $142 thousand, or 23.8%, due primarily to an
increased volume of interest paying liabilities partially offset by lower rates
on some of those liabilities. Other liabilities increased $229 thousand, or
27.6%, due primarily to a $35 thousand decrease in loan commitment fees on loans
not yet closed and a $361 thousand increase in accrued expenses payable
partially offset by $93 thousand less in state income taxes payable.

ASSET QUALITY

The Company's principal earning assets are its loans. Inherent in the lending
function is the risk of the borrower's inability to repay their loan under its
existing terms. Risk elements include non-accrual loans, past due and
restructured loans, potential problem loans, loan concentrations and other real
estate.

Non-performing assets include loans that are not accruing interest (non-accrual
loans) as a result of principal or interest being in default for a period of 90
days or more. When a loan is classified as non-accrual, interest accruals
discontinue and all accumulated accrued interest receivable is backed out of
current period income. Until the loan becomes current, any payments received
from the borrower are applied to outstanding principal until such time as
management determines the financial condition of the borrower and other factors
merit recognition of such payments as interest.

The Company attempts to minimize overall credit risk through loan
diversification and its loan approval procedures. The Company's due diligence
begins at the time the borrower and the Company begin to discuss the origination
of the loan. Documentation, including the borrower's credit history, materials
establishing the value and liquidity of potential collateral, the purpose of the
loan, the source and timing of the repayment of the loan, and other factors are
analyzed before a loan is submitted for approval. Loans made are also subject to
periodic review.

                                       24
<PAGE>

Non-accrual loans increased to $488 thousand at September 30, 2001 from $402
thousand at December 31, 2000. The balance represents the unguaranteed portion
of four Small Business Administration loans, a $119 thousand first mortgage on a
residential construction loan and one $9 thousand automobile loan to an
individual. Management believes these loans are all adequately reserved and it
does not expect any material losses as a result of these credits.

The Company had no other real estate owned at September 30, 2001 or December 31,
2000.

The following table sets forth information concerning risk elements in the
Company's portfolio:


                                        September 30,         December 31,

                                             2001                 2000
                                        ---------------    --------------------

                                                (dollars in thousands)

          Non-accrual loans                     $   488              $   402

          Other real estate owned                     0                    0
                                                -------              -------
          Total non-performing assets (1)       $   488              $   402
                                                =======              =======

          Non-accrual loans to total loans         0.13%                0.18%

          Non-performing assets to total assets    0.10%                0.18%

          Allowance for loan losses as a
          percentage of non-performing assets    810.25%              592.29%

(1)  Excludes one loan with a balance of $47 thousand past due more than 90 days
     and still accruing interest at September 30, 2001. No loans were past due
     90 days or more and still accruing interest at December 31, 2001.


ALLOWANCE FOR LOAN LOSSES

The Company attempts to maintain an allowance for loan losses at a sufficient
level to provide for potential losses in the loan portfolio. Loan losses are
charged directly to the allowance when they occur and any recovery is credited
to the allowance. Risks within the portfolio are analyzed on an ongoing basis by
our officers, by outside, independent loan review auditors and by our Directors'
Loan Committee. A risk system, consisting of multiple grading categories, is
utilized as an analytical tool to assess the risk and appropriate reserves.
Along with the risk system, management further evaluates risk characteristics of
the loan portfolio under current and anticipated economic conditions and
considers such factors as the financial condition of the borrower, past and
expected loss experience, and other factors management feels deserve recognition
in establishing an appropriate reserve. These estimates are reviewed at least
quarterly, and, as adjustments become necessary, they are realized in the
periods in which they become known. Additions to the allowance are made by
provisions charged to expense and the allowance is reduced by net charge-offs
(i.e., loans judged to be uncollectible and charged against the reserve, less
any recoveries on such loans). Although management attempts to maintain the
allowance at a level deemed adequate, future additions to the allowance may be
necessary based upon changes in market conditions. In addition, various
regulatory agencies periodically review the Company's allowance for loan losses.
These agencies may require the Company to take additional provisions based on
their judgments about information available to them at the time of their
examination.

                                       25
<PAGE>

At September 30, 2001, the allowance for loan losses was $4.0 million, an
increase of $1.6 million from December 31, 2000. During the nine months ended
September 30, 2001 the Company had charge-offs of $61 thousand, recoveries of $5
thousand and provided a loan loss provision of $1.6 million.

INVESTMENT SECURITIES

At September 30, 2001, the Company's investment securities portfolio, both held
to maturity and available for sale, totaled $56.4 million, an increase of $18.2
million, from total investment securities of $38.2 million at December 31, 2000.
The Company invested primarily in mortgage-backed securities during the first
nine months of 2001. At September 30, 2001, $21.0 million of the Company's
investment securities were classified as available for sale and $35.4 million
were classified as held to maturity. At December 31, 2000, $13.6 million and
$24.5 million of securities were classified as available for sale and held to
maturity, respectively.

LIQUIDITY

Net cash provided by the Company's operating activities was $2.8 million in the
first nine months of 2001 compared to $1.0 million for the nine months ended
September 30, 2000. The increase is the result of the period's net income as
well as the non-cash increase in the allowance for loan losses.

Net cash used in investing activities was $162.6 million in the period ended
September 30, 2001 compared to $71.8 million in the comparable period of 2000.
The Company used $17.9 million for net investment securities in 2001, while in
2000 it used $7.5 million for its securities portfolio. Additionally, the
Company used $140.7 million and $63.1 million for net loans and loan sales in
the first nine months of 2001 and 2000, respectively. The Company used $3.4
million and $837 thousand for net premises and equipment purchases during the
nine month periods ended September 30, 2001 and 2000, respectively.

Net cash provided by the Company's financing activities was $183.0 million in
the first nine months of 2001, and $78.8 million in the comparable period of
2000. The increase in 2001 was due to a $172.9 million increase in deposits, net
proceeds of $13.1 million for stock issued and repayment of $3 million of FHLB
borrowings. Deposits provided an increase of $74.8 million and proceeds from
FHLB advances provided $4.6 million in the nine months ended September 30, 2000.

As a state chartered commercial bank, the Bank is required to maintain a daily
liquidity position equal to at least 15 percent of its total transaction
accounts and 8 percent of its total nontransaction accounts, less those deposits
of public funds for which security has been pledged. As of September 30, 2001,
the Bank had a liquidity ratio of 23.0% which was adequate to meet the statutory
requirement. The primary source of the Bank's liquidity is federal funds sold -
overnight loans to major commercial banks. At September 30, 2001, federal funds
sold totaled $43.4 million. Funds not required to meet loan and deposit demand
were invested primarily in mortgage-backed and U.S. Government Agency
securities. The Bank considers these investments to be secondary sources of
liquidity. The Bank's investment securities classified as available for sale had
a carrying value of $21.0 million at September 30, 2001.

                                       26
<PAGE>

An additional external source of liquidity is an unsecured $7.5 million federal
funds overnight borrowing line of credit and a secured line of credit with a
correspondent bank which during the fourth quarter of 2001 was increased to $12
million. The Company's unencumbered investment securities are the collateral for
the secured line of credit and serve to determine the total amount available
under the line. At September 30, 2001, no funds were drawn under either the
secured or unsecured line. The Company did not draw on either the secured or
unsecured lines of credit during the nine months ended September 30, 2001. The
Company also maintains a line of credit at the Federal Home Loan Bank of Atlanta
secured by securities and first mortgage loans. The total credit available under
this line is ten percent of the Bank's assets with the actual amount available
based on the market value of the collateral pledged.


CAPITAL RESOURCES

Total stockholders' equity increased to $43.0 million at September 30, 2001 from
$28.7 million at December 31, 2000. September 30, 2001 equity was affected by
net income of $934 thousand, $2.5 million raised through a public offering of
the Company's Class B common stock, $10.5 million raised as a result of the
exercise of warrants, $54 thousand from the exercise of stock options and an
increase of $243 thousand in net unrealized gains on available for sale
securities.

At September 30, 2001, the Company exceeded all regulatory capital requirements
as follows:


                               CAPITAL ADEQUACY
                            (dollars in thousands)

<TABLE>
<CAPTION>
                                                                                                            To be well capitalized
                                                                              For capital                  under prompt corrective
                                                   Actual                   adequacy purposes                 action provisions
                                     -------------------------------  -------------------------------   ---------------------------
                                            Amount        Ratio         Amount          Ratio             Amount          Ratio
                                            ------        -----         ------          -----             ------          -----
                                                                        (Dollars in thousands)
<S>                                        <C>              <C>          <C>            <C>                <C>            <C>
Total Capital
     (to risk weighted assets)............   43,141       10.73%        * 32,175        * 8.00%           * 40,219        * 10.00%

Tier I Capital
     (to risk weighted assets)............   39,187        9.74%        * 16,088        * 4.00%           * 24,131        *  6.00%

Tier I Capital
     (to average assets)..................   39,187        8.73%        * 17,960        * 4.00%           * 22,450        *  5.00%
</TABLE>

On March 11, 2000, the Company converted from a one bank holding company to a
financial holding company under the Gramm-Leach-Bliley Financial Modernization
Act of 1999 (the "Modernization Act"). This status permits the Company to
undertake financial activities which need not be closely related to banking,
such as insurance brokerage activities. Under the Modernization Act, the
Company's bank subsidiary must, among other requirements, remain "well
capitalized" or the Company could be required to divest itself of its
non-banking activities.

* greater than or equal to

                                      27
<PAGE>

At September 30, 2001, the Bank exceeded all regulatory capital requirements as
follows:

                               CAPITAL ADEQUACY
                            (dollars in thousands)

<TABLE>
<CAPTION>
                                                                                                   To be well capitalized
                                                                             For capital          under prompt corrective
                                                         Actual            adequacy purposes          action provisions
                                                -----------------------  -----------------------   -----------------------

                                                   Amount      Ratio     Amount       Ratio          Amount      Ratio
                                                   ------      -----     ------       -----          ------      -----
                                                                       (Dollars in thousands)
<S>                                                <C>        <C>       <C>         <C>             <C>        <C>
Total Capital
      (to risk weighted assets)............        42,621     10.60%     * 32,172    * 8.00%        * 40,215   * 10.00%

Tier I Capital
      (to risk weighted assets)............        38,667      9.61%     * 16,086    * 4.00%        * 24,129    * 6.00%

Tier I Capital
      (to average assets)..................        38,667      8.61%     * 17,960    * 4.00%        * 22,450    * 5.00%
</TABLE>

* Greater than or equal to.
                                       28
<PAGE>

                          Part II. Other Information


Item 1. Legal Proceedings
        -----------------

  The Company and the Bank are periodically involved in various legal
proceedings as a normal incident to their businesses. In the opinion of
management, no material loss is expected from any such pending lawsuit.

Item 2. Changes in Securities and Use of Proceeds
        -----------------------------------------

Not applicable

Item 3. Defaults Upon Senior Securities
        -------------------------------

 Not applicable

Item 4. Submission of Matters to a Vote of Security Holders
        ---------------------------------------------------

 Not applicable.


Item 5. Other Information
        -----------------

 Not applicable.


Item 6. Exhibits and Reports on Form 8-K
        --------------------------------

 (a) Exhibits

      Number      Description
      ------      -----------

      None.

 (b) Reports on Form 8-K


On August 14, 2001 the Company filed a Form 8-K announcing the change of its
stock ticker symbol from AAABB to AAAB.

On July 20, 2001 the Company file a Form 8-K announcing its second quarter
earnings results and its expansion into Fort Lauderdale, Broward County,
Florida.

                                       29
<PAGE>

                                   SIGNATURE
                                   ---------


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                           ADMIRALTY BANCORP, INC.


Date:   November 13, 2001                       By:/s/ Ward Kellogg
                                                   ----------------
                                              WARD KELLOGG, President


Date:    November 13, 2001                      By: /s/ Kevin M. Sacket
                                                    -------------------
                                              KEVIN M. SACKET, Treasurer
                                              (Principal Financial Officer)

                                       30