<PAGE>   1




                       CONSOLIDATED FINANCIAL STATEMENTS
                                       AND
                          INDEPENDENT AUDITORS' REPORT

                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES

                               BRADENTON, FLORIDA

                                DECEMBER 31, 1996




<PAGE>   2



                        CONSOLIDATED FINANCIAL STATEMENTS
                                       AND
                          INDEPENDENT AUDITORS' REPORT

                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES

                               BRADENTON, FLORIDA

                                DECEMBER 31, 1996











                                    CONTENTS
<TABLE>
<CAPTION>

                                                                  PAGE
                                                                  ----

<S>                                                               <C>
INDEPENDENT AUDITORS' REPORT                                        1

CONSOLIDATED BALANCE SHEET                                          2

CONSOLIDATED STATEMENT OF INCOME FOR KEY FLORIDA BANCORP,
INC. AND SUBSIDIARIES FOR THE YEAR ENDED DECEMBER 31, 1996,
AND STATEMENT OF INCOME FOR LIBERTY NATIONAL BANK FOR THE
YEAR ENDED DECEMBER 31, 1995                                        3

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR KEY
FLORIDA BANCORP, INC. AND SUBSIDIARIES FOR THE YEAR ENDED
DECEMBER 31, 1996, AND STATEMENT OF STOCKHOLDERS' EQUITY
FOR LIBERTY NATIONAL BANK FOR THE YEAR ENDED DECEMBER 31,
1995                                                                4

CONSOLIDATED STATEMENT OF CASH FLOWS FOR KEY FLORIDA
BANCORP, INC. AND SUBSIDIARIES FOR THE YEAR ENDED DECEMBER
31, 1996, AND STATEMENT OF CASH FLOWS FOR LIBERTY NATIONAL
BANK FOR THE YEAR ENDED DECEMBER 31, 1995                          5-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                        7-29

</TABLE>








<PAGE>   3
                                            [PURVIS GRAY & COMPANY LETTERHEAD]
================================================================================


                          INDEPENDENT AUDITORS' REPORT

Board of Directors
Key Florida Bancorp, Inc. and Subsidiaries
Bradenton, Florida

We have audited the accompanying consolidated balance sheet of Key Florida
Bancorp, Inc. and Subsidiaries as of December 31, 1996, and the related
consolidated statements of income, changes in stockholders' equity, and cash
flows for the year ended December 31, 1996. These consolidated financial
statements are the responsibility of Key Florida Bancorp, Inc.'s management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit. The accompanying statements of income, changes in
stockholders' equity and cash flows of Liberty National Bank for the year ended
December 31, 1995, were audited by other auditors whose report dated February 9,
1996, expressed an unqualified opinion on those statements.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Key
Florida Bancorp, Inc. and Subsidiaries at December 31, 1996, and the results of
their operations and cash flows for the year ended December 31, 1996, in
conformity with generally accepted accounting principles.


                                   /s/ Purvis, Gray and Company

March 7, 1997
Gainesville, Florida

                                       1

<PAGE>   4



                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 1996
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                               BRADENTON, FLORIDA

                                     ASSETS
<TABLE>
<S>                                                                             <C>          
Cash and Demand Deposits Due From Banks                                         $  10,542,883
Federal Home Loan Bank Overnight Account                                              971,647
Investment Securities - Available-For-Sale                                         27,414,233
Loans Receivable                                                                  155,106,748
 Less:
  Unearned Income                                                                     (76,914)
  Allowance For Loan Losses                                                        (1,321,331)
                                                                                -------------
Loans Receivable, Net                                                             153,708,503
Real Estate Owned                                                                     120,000
Premises and Equipment, Net                                                         4,542,646
Accrued Interest Receivable                                                         1,352,943
Other Assets                                                                        2,237,292
                                                                                -------------
TOTAL ASSETS                                                                      200,890,147
                                                                                =============

                                  LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
  Deposits:
   Noninterest-Bearing                                                             17,010,952
   Interest-Bearing                                                               170,335,869
                                                                                -------------
  Total Deposits                                                                  187,346,821
  Accrued Interest Payable                                                            549,342
  Other Liabilities                                                                   302,816
                                                                                -------------
TOTAL LIABILITIES                                                                 188,198,979
                                                                                -------------
STOCKHOLDERS' EQUITY
  Common Stock - Par Value $.01 Per Share -
   Authorized:  4,000,000 Shares; Issued
   2,758,129 Shares                                                                    27,581
  Additional Paid-In Capital                                                       11,400,484
  Retained Earnings                                                                 1,282,247
   Less:  Treasury Stock at Cost (143 Shares)                                            (490)
   Unrealized (Losses) on Certain Securities                                          (18,654)
                                                                                -------------
TOTAL STOCKHOLDERS' EQUITY                                                         12,691,168
                                                                                -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                      $ 200,890,147
                                                                                =============
</TABLE>



                             See accompanying notes.

                                        2

<PAGE>   5



                      CONSOLIDATED STATEMENT OF INCOME FOR
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                    FOR THE YEAR ENDED DECEMBER 31, 1996, AND
                  STATEMENT OF INCOME FOR LIBERTY NATIONAL BANK
                      FOR THE YEAR ENDED DECEMBER 31, 1995
                               BRADENTON, FLORIDA

<TABLE>
<CAPTION>
                                                                              1996                 1995
                                                                         ------------         ------------ 
<S>                                                                      <C>                  <C>         

INTEREST INCOME
 Loans, Including Fees                                                   $  9,545,406         $  5,281,899
                                                                         ------------         ------------
 Investment Securities:
   Taxable                                                                  1,373,622            1,416,228
   Exempt From Federal Income Taxes                                            26,353               23,995
                                                                         ------------         ------------
                                                                            1,399,975            1,440,223
 Federal Funds Sold and Overnight Accounts                                    132,530              134,735
                                                                         ------------         ------------
TOTAL INTEREST INCOME                                                      11,077,911            6,856,857
                                                                         ------------         ------------

INTEREST EXPENSE
 Deposits                                                                   5,776,277            3,677,228
 Other Interest Expense                                                        21,962                5,001
                                                                         ------------         ------------
TOTAL INTEREST EXPENSE                                                      5,798,239            3,682,229
                                                                         ------------         ------------

NET INTEREST INCOME                                                         5,279,672            3,174,628
PROVISION FOR LOAN LOSSES                                                     256,859              362,263
                                                                         ------------         ------------
NET INTEREST INCOME AFTER PROVISION FOR
 LOAN LOSSES                                                                5,022,813            2,812,365
                                                                         ------------         ------------

NONINTEREST INCOME
 Investment Securities Gains (Losses)                                         (14,080)              (6,498)
 Service Charges on Deposit Accounts                                          345,189              314,408
 Other Income                                                                 137,061              265,107
                                                                         ------------         ------------
TOTAL NONINTEREST INCOME                                                      468,170              573,017
                                                                         ------------         ------------

NONINTEREST EXPENSE
 Salaries and Employee Benefits                                             2,167,487            1,015,158
 Occupancy and Equipment                                                      719,189              438,749
 Data Processing                                                              202,325              179,467
 Federal Insurance Deposit Premium                                            530,969              112,036
 Legal and Professional                                                       162,145              206,831
 Amortization of Core Deposit Intangible                                      134,167                    0
 Other Expense                                                                854,232              520,138
                                                                         ------------         ------------
TOTAL NONINTEREST EXPENSE                                                   4,770,514            2,472,379
                                                                         ------------         ------------

INCOME BEFORE INCOME TAXES                                                    720,469              913,003
PROVISION FOR INCOME TAXES                                                    283,944              351,435
                                                                         ------------         ------------
NET INCOME                                                               $    436,525         $    561,568
                                                                         ============         ============

EARNINGS PER SHARE                                                       $        .25         $        .64
                                                                         ============         ============

WEIGHTED AVERAGE SHARES OUTSTANDING                                         1,714,885              879,087
                                                                         ============         ============
</TABLE>

                             See accompanying notes.

                                        3

<PAGE>   6




               CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                    FOR THE YEAR ENDED DECEMBER 31, 1996, AND
           STATEMENT OF STOCKHOLDERS' EQUITY FOR LIBERTY NATIONAL BANK
                      FOR THE YEAR ENDED DECEMBER 31, 1995
                               BRADENTON, FLORIDA


<TABLE>
<CAPTION>
                                                                                                                             
                                                                                                                             
                                               PREFERRED STOCK                  COMMON STOCK                TREASURY STOCK          
                                           -------------------------        -----------------------       -------------------
                                            SHARES           AMOUNT          SHARES         AMOUNT        SHARES      AMOUNT       
                                           --------          -------        --------       --------       -------     -------       
<S>                                        <C>              <C>             <C>            <C>            <C>         <C> 
BALANCE, JANUARY 1, 1995                                                      829,582      $  8,296                   
 Stock Options Exercised                                                       10,560           106                   
 Stock Split Partial Shares                                                       (81)           (1)                  
 Warrants Issued                                                              100,925         1,009                   
 Net Unrealized Gains on                                                                              
  Securities                                                                        0             0                   
 Net Income                                                                         0             0                   
                                                                            ---------      --------   
BALANCE, DECEMBER 31, 1995                                                    940,986         9,410          
 Merger of Key Florida Bancorp,                                                                       
  Inc. With Liberty National                                                                          
  Bank                                      43,025          $   430,250     1,798,861        17,989           360    $(1,953)
 Preferred Dividends Paid                        0                    0             0             0             0          0
 Stock Options Exercised                                                       18,282           182
  Treasury Stock Acquired                        0                    0             0             0            49       (191)
 Preferred Stock Retired                   (43,025)            (430,250)            0             0          (266)     1,654
 Net Unrealized Gain (Loss)                                                                           
  on Securities                                  0                    0             0             0             0          0 
Net Income                                       0                    0             0             0             0          0 
                                           -------          -----------     ---------      --------          ----    -------
BALANCE, DECEMBER 31, 1996                       0          $         0     2,758,129      $ 27,581           143    $  (490)
                                           =======          ===========     =========      ========          ====    =======
</TABLE>




<TABLE>
<CAPTION>
                                                                   UNREALIZED
                                                 ADDITIONAL        GAIN (LOSS)
                                                  PAID-IN          ON CERTAIN         RETAINED
                                                  CAPITAL           SECURITIES        EARNINGS             TOTAL
                                                 ---------        -----------     ---------------      --------------
<S>                                              <C>                 <C>                <C>             <C>
BALANCE, JANUARY 1, 1995                         $ 6,453,364         $(478,312)         $  302,847      $ 6,286,195
 Stock Options Exercised                              87,894                 0                   0           88,000
 Stock Split Partial Shares                           (1,034)                0                   0           (1,035)
 Warrants Issued                                      (1,009)                0                   0                0
 Net Unrealized Gains on                                          
  Securities                                               0           414,074                   0          414,074
 Net Income                                                0                 0             561,568          561,568
                                                 -----------         ---------          ----------      -----------
BALANCE, DECEMBER 31, 1995                         6,539,215           (64,238)            864,415        7,348,802
 Merger of Key Florida Bancorp,                                  
  Inc. With Liberty National                                      
  Bank                                             4,783,386                 0                   0        5,229,672
 Preferred Dividends Paid                                  0                 0             (18,693)         (18,693)
 Stock Options Exercised                              77,883                 0                   0           78,065
 Treasury Stock Acquired                                   0                 0                   0             (191)
 Preferred Stock Retired                                   0                 0                   0         (428,596)
 Net Unrealized Gain (Loss)                                       
  on Securities                                            0            45,584                   0           45,584
 Net Income                                                0                 0             436,525          436,525
                                                 -----------         ---------          ----------      -----------
BALANCE, DECEMBER 31, 1996                       $11,400,484         $ (18,654)         $1,282,247      $12,691,168
                                                 ===========         =========          ==========      ===========
</TABLE>
                                                                 



                           See accompanying notes.

                                      4

<PAGE>   7



                    CONSOLIDATED STATEMENT OF CASH FLOWS FOR
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                    FOR THE YEAR ENDED DECEMBER 31, 1996, AND
                STATEMENT OF CASH FLOWS FOR LIBERTY NATIONAL BANK
                      FOR THE YEAR ENDED DECEMBER 31, 1995
                               BRADENTON, FLORIDA

<TABLE>
<CAPTION>
                                                                                        1996             1995
                                                                                 ----------------- ---------------
<S>                                                                              <C>               <C>            
CASH FLOWS FROM OPERATING ACTIVITIES
 Net Income                                                                      $       436,525   $       561,568
 Adjustments to Reconcile Net Income to Net Cash
   Provided By Operating Activities:
    Amortization of Core Deposit Intangible                                              134,167                 0
    Depreciation                                                                         187,418            88,000
    (Accretion) of Premium/Discount                                                      (67,863)          (14,111)
    (Gain) on Sale of Property and Equipment                                             (16,752)                0
    Loss on Sale of Investment Securities                                                 14,080             6,498
    Provision For Loan Losses                                                            256,859           362,263
    Deferred Income Taxes                                                               (154,059)           18,565
    Changes in Assets and Liabilities:
      (Increase) in Accrued Interest Receivable                                         (223,977)         (115,691)
      Decrease (Increase) in Prepaid Expenses and Other Assets                            67,246           (16,046)
      (Decrease) Increase in Accrued Interest Payable                                   (101,697)          140,387
      (Decrease) Increase in Accrued Expenses and Other Liabilities                   (1,254,292)          318,144
                                                                                 ---------------   ---------------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES                                     (722,345)        1,349,577
                                                                                 ---------------   ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
 Proceeds From Sales of Premises and Equipment                                           309,624                 0
 Purchase of Premises and Equipment                                                   (2,015,190)         (703,312)
 Purchase of Investment Securities                                                   (15,637,059)      (11,282,648)
 Proceeds From Sales of Investment Securities                                          8,104,699         1,487,310
 Proceeds From Maturities and Calls of Investment Securities                          11,707,742        10,616,800
 Loan Originations, Net                                                              (18,583,354)      (16,852,026)
 Proceeds on Other Real Estate Owned                                                     195,228            31,965
 Cash Received Through Merger Acquisition,
   Net of Merger Costs Paid                                                            3,684,315                 0
                                                                                 ---------------   ---------------
NET CASH (USED IN) INVESTING ACTIVITIES                                              (12,233,995)      (16,701,911)
                                                                                 ---------------   ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
 Preferred Stock Dividends Paid                                                          (18,693)                0
 Purchase of Treasury Stock                                                                 (191)                0
 Preferred Stock Retired                                                                (428,596)                0
 Stock Issued For Stock Options Exercised                                                 78,065            86,965
 (Decrease) in Federal Funds Purchased                                                (2,000,000)                0
 Net Increase in Noninterest-Bearing Deposits                                          2,357,810           233,959
 Net Increase in Money Market Deposits                                                 1,294,147           561,977
 Net Increase in Savings and NOW Deposits                                              6,428,116         1,247,556
 Net Increase in Time Deposits                                                        10,510,633        13,194,276
                                                                                 ---------------   ---------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                             18,221,291        15,324,733
                                                                                 ---------------   ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                   5,264,951           (27,601)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                           6,249,579         6,277,180
                                                                                 ---------------   ---------------
CASH AND CASH EQUIVALENTS, END OF YEAR                                           $    11,514,530   $     6,249,579
                                                                                 ===============   ===============
</TABLE>

                             See accompanying notes.

                                        5

<PAGE>   8



                    CONSOLIDATED STATEMENT OF CASH FLOWS FOR
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                    FOR THE YEAR ENDED DECEMBER 31, 1996, AND
                STATEMENT OF CASH FLOWS FOR LIBERTY NATIONAL BANK
                      FOR THE YEAR ENDED DECEMBER 31, 1995
                               BRADENTON, FLORIDA


SHOWN IN THE BALANCE SHEET AS
<TABLE>
<CAPTION>
                                                              1996          1995
                                                          ------------  ------------
  <S>                                                     <C>           <C>         
  Cash and Demand Deposits Due From Banks                 $ 10,542,883  $  5,147,435
  Federal Home Loan Bank Overnight Account and
    Federal Funds Sold                                         971,647     1,102,144
                                                          ------------  ------------
  TOTAL CASH AND CASH EQUIVALENTS                         $ 11,514,530  $  6,249,579
                                                          ============  ============


SUPPLEMENTAL CASH DISCLOSURES

  Interest Paid                                           $  2,899,936  $  3,541,842
                                                          ============  ============

  Income Taxes Paid                                       $    396,374  $    173,000
                                                          ============  ============
</TABLE>



SUPPLEMENTAL NONCASH DISCLOSURES

  STOCK ISSUED FOR ACQUISITION OF KEY FLORIDA BANK, F.S.B.:
<TABLE>
    <S>                                                               <C>         
    ASSETS ACQUIRED
      Investment Securities                                           $ 10,232,422
      Loans Receivable, Net                                             69,667,007
      Real Estate Owned                                                    150,978
      Premises and Equipment, Net                                        1,252,876
      Accrued Interest Receivable                                          451,302
      Other Assets                                                       2,035,008
                                                                      ------------
    TOTAL ASSETS ACQUIRED                                               83,789,593
                                                                      ------------
    LIABILITIES ASSUMED
      Deposits                                                          78,801,408
      Federal Funds Purchased                                            2,000,000
      Accrued Interest Payable                                             255,619
      Other Liabilities                                                  1,187,209
                                                                      ------------
    (TOTAL LIABILITIES ASSUMED)                                        (82,244,236)
                                                                      ------------

    SUBTOTAL                                                             1,545,357
    CASH RECEIVED LESS MERGER COSTS PAID                                 3,684,315
                                                                      ------------
    EQUITY                                                            $  5,229,672
                                                                      ============
</TABLE>

                             See accompanying notes.

                                        6

<PAGE>   9



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                            AND LIBERTY NATIONAL BANK
                               BRADENTON, FLORIDA


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

              BUSINESS ACTIVITY
              Key Florida Bancorp, Inc. (the Company) is a commercial bank
              holding company, incorporated under the laws of Florida. It is the
              parent company of its wholly-owned subsidiary, Liberty National
              Bank (the Bank), a national bank. The Bank is engaged in bank and
              bank-related activities. The Liberty National Bank conducts a
              commercial banking business which consists of attracting deposits
              from the general public and applying those funds to the
              origination of commercial, consumer and real estate loans
              (including commercial loans collateralized by real estate). The
              Bank's profitability depends primarily on net interest income,
              which is the difference between interest income generated from
              interest-earning assets (i.e., loans and investments) less the
              interest expense incurred on interest-bearing liabilities (i.e.,
              customer deposits and borrowed funds). Net interest income is
              affected by the relative amounts of interest-earning assets and
              interest-bearing liabilities, and the interest rate earned and
              paid on these balances. Net interest income is dependent upon the
              Bank's interest rate spread, which is the difference between the
              average yield earned on its interest-earning assets and the
              average rate paid on its interest-bearing liabilities. When
              interest-earning assets approximate or exceed interest-bearing
              liabilities, any positive interest rate spread will generate net
              interest income. The interest rate spread is impacted by interest
              rates, deposit flows, and loan demand.

              Additionally, and to a lesser extent, the Bank's profitability is
              affected by such factors as the level of noninterest income and
              expenses, the provision for credit losses, and the effective tax
              rate.

              PRINCIPLES OF CONSOLIDATION
              The consolidated financial statements include the accounts of Key
              Florida Bancorp, Inc. and its wholly-owned subsidiaries, Liberty
              National Bank and Key Florida Financing, Inc. (an inactive
              corporation) as described in note 2. All significant intercompany
              accounts and transactions have been eliminated. Assets held in an
              agency or fiduciary capacity are not assets of the Bank and,
              accordingly, are not included in the accompanying consolidated
              financial statements.

              ACCOUNTING ESTIMATES
              The preparation of financial statements in conformity with
              generally accepted accounting principles requires management to
              make estimates and assumptions that affect the reported amounts of
              assets and liabilities and disclosure of contingent assets and
              liabilities at the date of the financial statements and the
              reported amounts of revenues and expenses during the reporting
              period. Actual results could differ from those estimates.

              CASH EQUIVALENTS
              Cash equivalents include cash, demand deposits due from banks,
              overnight investment account, and federal funds sold. Generally,
              federal funds sold mature within ninety days.


                                        7

<PAGE>   10



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                            AND LIBERTY NATIONAL BANK
                               BRADENTON, FLORIDA
                                   (CONTINUED)

NOTE 1 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            SECURITIES 
            Effective January 1, 1994, the Company adopted the investment
            categorization and carrying value rules as required by Financial
            Accounting Standards Board Statement of Financial Accounting
            Standards Statement No. 115 (FASB No. 115), Accounting for Certain
            Investments in Debt and Equity Securities. Under FASB No. 115, the
            Company is required to classify acquired debt and equity securities
            into one of three categories: held-to-maturity, available-for-sale
            and trading.

            -     Investments in debt securities are classified as
                  held-to-maturity only if the Company has the positive intent
                  and ability to hold such securities to maturity. These
                  investments are carried in the balance sheet at amortized
                  cost, i.e., cost adjusted for amortization of premiums and
                  accretion of discounts as computed by the interest method.

            -     All investments not classified as either held-to-maturity
                  securities or trading securities are classified as
                  available-for-sale. These securities are carried at market
                  value as of the date of the balance sheet. The unrealized
                  gains and losses on these securities are excluded from
                  earnings for the year. Instead, the net unrealized gains or
                  losses, net of the applicable deferred income taxes, is shown
                  as a separate component of stockholders' equity in the balance
                  sheet.

            -     Securities that are acquired and held principally for the
                  purpose of selling them in the near term are classified as
                  trading securities. Such securities, if any, are carried at
                  market value and the unrealized gains and losses on such
                  securities are included in income for the current year.

            At December 31, 1996 and 1995, all investment securities are
            classified as available-for-sale. The unrealized gain (loss), net of
            tax, is included in the separate component of stockholders' equity
            as "Unrealized Gains (Losses) on Certain Securities."

            Realized gains and losses on the sale of investment securities are
            computed on the basis of specific identification of the adjusted
            cost of each security.

            LOANS RECEIVABLE 
            The Company adopted Statement of Financial Accounting Standards No.
            114, Accounting by Creditors for Impairment of a Loan (FASB No. 114)
            on January 1, 1995. FASB No. 114 addresses the accounting by
            creditors for impairment of certain loans, uncollateralized as well
            as collateralized, except large groups of smaller-balance
            homogeneous loans which the Bank considers to be credit card,
            consumer installment, residential real estate and home equity loans
            that are collectively evaluated for impairment. Also, FASB No. 114
            requires that impaired loans be measured either by the present value
            of expected future cash flows discounted at the loan's effective
            interest rate or at the loan's observable market price or the

                                        8

<PAGE>   11



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                            AND LIBERTY NATIONAL BANK
                               BRADENTON, FLORIDA
                                   (CONTINUED)

NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

              LOANS RECEIVABLE (CONCLUDED)
              fair value of the collateral if the loan is collateral dependent.
              Management considers a loan impaired when it becomes probable that
              there will be a loss resulting from the credit after foreclosure
              and liquidation of the collateral or as a result of not receiving
              payments when contractually agreed upon, which could result in a
              loss of principal or interest.

              Nonaccrual loans are loans on which the accrual of interest has
              been discontinued because either a reasonable doubt exists as to
              the full and timely collection of interest or principal, or when a
              loan becomes contractually past due ninety days or more with
              respect to interest or principal. A nonaccrual loan may not have
              an anticipated loss associated with it because of the collateral
              supporting the credit and, therefore, not be considered impaired.
              An impaired loan is anticipated to have a loss and may or may not
              be on nonaccrual. When a loan is placed on nonaccrual status, all
              interest previously accrued, but not collected, is reversed
              against current period interest income. Interest income on
              nonaccrual loans and impaired loans is recognized only to the
              extent cash is received and where the future collection of
              principal is probable. Interest accruals are resumed on such loans
              only when they are brought fully current with respect to interest
              and principal and when, in management's judgment, the loans are
              estimated to be fully collectible as to both principal and
              interest.

              Interest income on loans is recognized based upon the principal
              amounts outstanding, except that on consumer loans, the sum of the
              month's digits method is used.

              ALLOWANCE FOR LOAN LOSSES
              The allowance for loan losses is established through a provision
              for loan losses charged to expenses. Loans are charged against the
              allowance for loan losses when management believes that the
              collectibility of the principal is unlikely or, with respect to
              consumer installment loans, according to an established
              delinquency schedule. The allowance is an amount that management
              believes will be adequate to absorb losses inherent in existing
              loans and commitments to extend credit, based on evaluations of
              the collectibility and prior loss experience of loans and
              commitments to extend credit. The evaluations take into
              consideration such factors as changes in the nature and volume of
              the portfolio, overall portfolio quality, loan concentrations,
              specific problem loans, commitments, and current and anticipated
              economic conditions that may affect the borrower's ability to pay.
              Recoveries of previous charge-offs are added back to the
              allowance.

              REAL ESTATE OWNED
              Real estate acquired by foreclosure or deed in lieu of foreclosure
              is carried at the lower of its estimated fair value less estimated
              costs to sell or the balance of the related loan at the date the
              real estate is acquired. Costs relating to the development and
              improvement of the real estate are capitalized, whereas those
              costs relating to holding the real estate are charged to expense.

                                        9

<PAGE>   12



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                            AND LIBERTY NATIONAL BANK
                               BRADENTON, FLORIDA
                                   (CONTINUED)

NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

              REAL ESTATE OWNED (CONCLUDED)
              Sales of real estate owned are recorded under the full accrual
              method of accounting. Under this method, a sale is not recognized
              until payments received aggregate a specific required percentage
              of the contract sales price. Losses are charged to operations as
              incurred or when it is determined that the investment in such real
              estate is greater than the estimated net realizable value.

              PREMISES AND EQUIPMENT
              Land is stated at cost. The premises and equipment are stated at
              cost less accumulated depreciation. Depreciation is computed on
              the straight-line method over the assets' estimated useful lives.

              INCOME TAXES
              Federal and state income taxes are provided on income reported for
              financial statement purposes and include both current and deferred
              income tax expense. Current income tax expense is recorded to
              reflect income taxes based upon the tax returns filed with the
              appropriate taxing agencies. Deferred income taxes are recorded to
              reflect the tax consequences on future years of differences
              between the tax bases of assets and liabilities and their
              financial reporting amounts at year end. The change in deferred
              taxes attributable to the carrying value of investments
              categorized as "Available-for-Sale" is recognized as a change in
              stockholders' equity. The change in deferred income taxes
              attributable to all other timing differences is recognized as
              deferred income tax expense or benefit. The tax benefit related to
              operating loss and tax credit carryforwards, if any, are
              recognized if management believes, based on available evidence,
              that it is more likely than not that they will be realized.
              Investment tax credits, if any, are accounted for under the
              flow-through method.

              The Company files consolidated federal and state income tax
              returns with its subsidiaries. Federal and state income taxes are
              allocated between the Company and its subsidiaries in proportion
              to the respective contributions to consolidated taxable income.

              The Company uses the asset and liability method of accounting for 
              income taxes as required by FASB No. 109, Accounting for Income 
              Taxes.

              EARNINGS PER SHARE
              Earnings per share are based on the weighted average number of
              shares of common stock outstanding, retroactively adjusted for the
              merger and resulting recapitalization discussed in note 2.

              LOAN ORIGINATION FEES
              Loan origination fees and certain direct origination costs are
              capitalized and recognized as an adjustment of the yield on the
              related loan.


                                       10

<PAGE>   13



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                            AND LIBERTY NATIONAL BANK
                               BRADENTON, FLORIDA
                                   (CONTINUED)

NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONCLUDED)

              LOAN-SERVICING RIGHTS
              The cost of loan-servicing rights acquired is amortized in
              proportion to, and over the period of, estimated net servicing
              revenues. When loans sold have an average contractual interest
              rate, adjusted for normal servicing fees, that differs from the
              agreed yield to the purchaser, gains or losses are recognized
              equal to the present value of such differential over the estimated
              remaining life of such loans. The resulting "excess servicing fees
              receivable" is amortized over the estimated life using a method
              approximating the level-yield method.

              CONCENTRATION OF CREDIT RISK
              The Bank grants agribusiness, commercial, residential and consumer
              loans primarily to customers in Manatee and Sarasota Counties in
              the state of Florida. Although the Bank has a diversified loan
              portfolio, a substantial portion of its debtors' ability to honor
              their contracts is dependent upon the real estate economic sector
              as shown in note 5.

              RECLASSIFICATIONS
              Certain prior year amounts have been reclassified to conform with
              current financial reporting to facilitate comparison of the
              financial data.


NOTE 2 -      BUSINESS COMBINATION AND COMPARABILITY OF FINANCIAL STATEMENTS
              
              MERGER WITH KEY FLORIDA BANK, F.S.B.
              On July 30, 1996, effective the close of business, the Company and
              the Bank closed the merger of Key Florida Bank, F.S.B. with and
              into the Bank. Due to the change in majority ownership interest to
              that of the Liberty National Bank shareholders, the merger is
              considered to be an acquisition by the Bank of the Company and its
              subsidiary, Key Florida Bank, F.S.B. The Key Florida Bank,
              F.S.B./Liberty National Bank merger transaction has been accounted
              for under the purchase method of accounting. As a result of the
              merger, the outstanding shares of the Bank were converted into an
              aggregate of 1,798,861 shares of Key Florida Bancorp, Inc. common
              stock resulting in 2,739,847 shares of Key Florida Bancorp, Inc.
              common stock outstanding after the merger. The cost of assets
              minus liabilities recorded as a result of Liberty National Bank's
              acquisition was $5,229,672. In connection with the merger, the
              Bank recorded intangible assets, including a core deposit
              intangible in the amount of $975,000, which is being amortized
              over ten years in accordance with guidelines promulgated by the
              Office of the Comptroller of the Currency (OCC).

              COMPARABILITY OF FINANCIAL STATEMENTS
              Due to the aforementioned merger transaction, the resultant change
              in control to Liberty National Bank shareholders, the operating
              results of Liberty National Bank have been included in the
              accompanying financial statements for the year ended December 31,
              1996, along with those of the Company and Key Florida Bank, F.S.B.
              (the acquired companies) from July 31, 1996 through December 31,
              1996. At the time of the merger, each share of Liberty National
              Bank common stock was converted into 1.5 shares of the Company's
              common stock or a total of 1,798,861 shares (cash was paid

                                       11

<PAGE>   14



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                            AND LIBERTY NATIONAL BANK
                               BRADENTON, FLORIDA
                                   (CONTINUED)

NOTE 2 -      BUSINESS COMBINATION AND COMPARABILITY OF FINANCIAL STATEMENTS 
              (CONCLUDED)

              COMPARABILITY OF FINANCIAL STATEMENTS (CONCLUDED)
              in lieu of fractional shares). The 940,986 shares of the Company's
              common stock issued and outstanding at the time of the merger
              remained unchanged as shares of Key Florida Bancorp, Inc. common
              stock. As previously mentioned, the conversion of Liberty National
              Bank's common shares plus the original issued and outstanding
              shares of the Company yielded an aggregate number of the Company's
              common shares issued of 2,739,847. Due to the number of shares of
              the Company's stock issued to Liberty National Bank shareholders
              in the merger, a change of control of the Company was deemed to
              have occurred. Because control changed to Liberty National Bank
              shareholders at merger, the comparative financial statements
              presented for the preceding fiscal year ended December 31, 1995,
              are those of Liberty National Bank.

              RECAPITALIZATION RESULTING FROM MERGER
              As a result of the merger transaction, the January 1, 1995,
              balance of the Bank's common stock outstanding and the related
              balance in par value have been retroactively restated to reflect
              the number of shares outstanding of the Company and the Company's
              one-cent par value. Additionally, additional paid-in capital at
              that date has been restated to reflect the corresponding
              adjustment of the balance in par value. These adjustments were
              made to give retroactive application to the aforementioned
              recapitalization resulting from the merger on July 30, 1996. The
              amounts as originally reported and as adjusted at January 1, 1995,
              are as follows:
<TABLE>
<CAPTION>

                                                                      COMMON STOCK      ADDITIONAL
                                                                 ---------------------    PAID-IN
                                                                 SHARES       AMOUNT      CAPITAL
                                                                 ------       ------      -------
              <S>                                                <C>       <C>          <C>       
              As Originally Reported ($5 Par Value)              845,606   $ 4,228,030  $2,233,630
              Adjustment For Recapitalization                    (16,024)   (4,219,734)  4,219,734
                                                                 -------   -----------  ----------
              As Adjusted (One-Cent Par Value)                   829,582   $     8,296  $6,453,364
                                                                 =======   ===========  ==========
</TABLE>


NOTE 3 -      SAVINGS ASSOCIATION INSURANCE FUND (SAIF) SPECIAL ASSESSMENT

              On September 30, 1996, the President of the United States signed
              the omnibus appropriations bill into law. This legislation was
              aimed at recapitalizing the SAIF through a one-time special
              assessment on the insured deposits of SAIF member institutions.
              Though Liberty National Bank is a member of the Federal Deposit
              Insurance Corporation (FDIC) Bank Insurance Fund (BIF), it holds
              assessable deposits acquired in the merger with Key Florida Bank,
              F.S.B. and due to its participation in a Section 5(d)(3) "Oakar"
              transaction is subject to the SAIF special assessment. Based upon
              the amount of assessable deposits held by the Bank at March 31,
              1995, the calculated special assessment payable by the Bank to the
              FDIC was $400,150, which the Bank expensed by September 30, 1996,
              and was paid on November 27, 1996. The charge to income was not
              reported as an extraordinary item.

                                       12

<PAGE>   15



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                            AND LIBERTY NATIONAL BANK
                               BRADENTON, FLORIDA
                                   (CONTINUED)

NOTE 4 -      SECURITIES

              The carrying value of securities, including information regarding
              amortized cost, gross unrealized gains, gross unrealized losses
              and market value is tabulated below:
<TABLE>
<CAPTION>

                                                                          CARRYING VALUE SUMMARY
                                                                         1996 (AVAILABLE-FOR-SALE)
                                                       ----------------------------------------------------------
                                                                          GROSS          GROSS
                                                         AMORTIZED     UNREALIZED    UNREALIZED         MARKET
                                                           COST           GAINS         LOSSES          VALUE
                                                           ----           -----         ------          -----
              <S>                                       <C>            <C>            <C>            <C>          
              U.S. Treasury Securities                 $   6,443,876  $      31,741  $       5,307  $   6,470,310
              U.S. Government Agencies                    15,798,228         21,822         97,498     15,722,552
              Mortgage-Backed Securities                   4,061,703         28,480         15,474      4,074,709
              Obligations of State and
                Political Subdivisions                       426,789          7,973              0        434,762
                                                       -------------  -------------  -------------  -------------
              Total Debt Securities                       26,730,596         90,016        118,279     26,702,333
              Equity Securities                              711,900              0              0        711,900
                                                       -------------  -------------  -------------  -------------
              TOTAL SECURITIES                         $  27,442,496  $      90,016  $     118,279  $  27,414,233
                                                       =============  =============  =============  =============


                                                                          CARRYING VALUE SUMMARY
                                                                         1995 (AVAILABLE-FOR-SALE)
                                                       ----------------------------------------------------------
                                                                          GROSS          GROSS
                                                         AMORTIZED     UNREALIZED    UNREALIZED         MARKET
                                                           COST           GAINS         LOSSES          VALUE
                                                           ----           -----         ------          -----
              U.S. Treasury Securities                 $   2,849,720  $      14,612  $       7,847  $   2,856,485
              U.S. Government Agencies                    15,972,297         71,115        163,005     15,880,407
              Mortgage-Backed Securities                   1,944,974          3,502         17,215      1,931,261
              Obligations of State and
                Political Subdivisions                       413,461              0              0        413,461
                                                       -------------  -------------  -------------  -------------
              Total Debt Securities                       21,180,452         89,229        188,067     21,081,614
              Equity Securities                              211,900              0              0        211,900
                                                       -------------  -------------  -------------  -------------
              TOTAL SECURITIES                         $  21,392,352  $      89,229  $     188,067  $  21,293,514
                                                       =============  =============  =============  =============
</TABLE>

              The amortized cost, carrying (market) value and weighted average
              yields of investment securities at December 31, 1996, by
              contractual maturity are shown below. The weighted average yield
              is determined using the amortized cost of securities. Expected
              maturities will differ from contractual maturities because
              borrowers may have the right to call or prepay obligation with or
              without call or prepayment penalties.
<TABLE>
<CAPTION>
                                                                                 CARRYING
                                                                AMORTIZED        (MARKET)          WEIGHTED
                                                                  COST             VALUE         AVERAGE YIELD
                                                                  ----             -----         -------------
              <S>                                           <C>              <C>                     <C>
              Due in One Year or Less                       $     2,510,639  $     2,505,070         5.56%
              Due After One Year Through Five Years              19,649,725       19,618,654         6.09%
              Due After Five Years Through Ten Years                508,529          503,900         6.55%
              Mortgage-Backed Securities                          4,061,703        4,074,709         6.42%
              Equity Securities                                     711,900          711,900
                                                            ---------------  ---------------
              TOTAL                                         $    27,442,496  $    27,414,233
                                                            ===============  ===============
</TABLE>

                                       13

<PAGE>   16



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                            AND LIBERTY NATIONAL BANK
                               BRADENTON, FLORIDA
                                   (CONTINUED)

NOTE 4 -      SECURITIES (CONCLUDED)

              Proceeds from sales of investment securities classified as
              available-for-sale during 1996 were $8,104,699, with gross gains
              of $21,356 and gross losses of $35,436. During 1995, proceeds from
              sales of investment securities classified as available-for-sale
              were $1,487,310, with gross gains of $4,813 and gross losses of
              $11,311. In computing recognized gains and losses, cost is
              determined using specific identification of securities.

              Equity securities consist of $211,900 of Federal Reserve stock and
              $500,000 of Federal Home Loan Bank stock. Both are restricted and
              required by regulators to be maintained by the Company.

              As of December 31, 1996, investment securities with a carrying
              value of $500,000 were pledged as collateral for public funds,
              trust deposits and repurchase agreements.

              UNREALIZED GAINS ON SECURITIES AVAILABLE-FOR-SALE
              As discussed in note 1, the Company adopted the investment
              categorization and carrying value rules as required by FASB No.
              115, Accounting for Certain Investments in Debt and Equity
              Securities. Under this statement, the unrealized gains or losses
              on investment securities available-for-sale, net of the applicable
              deferred income taxes, is shown as a separate component of
              stockholders' equity in the balance sheet.

              The following is a summary of the effects on the statement of
              stockholders' equity as of December 31:

<TABLE>
<CAPTION>
                                                                                  1996      1995
                                                                               --------- ---------
              <S>                                                              <C>       <C>    
              Gross Unrealized (Losses) Gains on Investment
                Securities Available-For-Sale                                  $(28,263) $ (98,838)
              Deferred Income Tax Asset (Liability) on
                Unrealized Gains                                                  9,609     34,600
                                                                               --------  ---------
              NET (DECREASE) IN STOCKHOLDERS' EQUITY                           $(18,654) $ (64,238)
                                                                               ========  =========
</TABLE>


              The following tabulation presents the net change in unrealized
              gains or losses on available-for-sale securities that is shown as
              a separate component of stockholders' equity.

<TABLE>
<CAPTION>
                                                                                 1996      1995
                                                                              ---------  ---------
              <S>                                                             <C>        <C>             
              Increase in Unrealized Gains or Losses                          $  70,575  $ 636,474
              (Increase) in Related Deferred Income Taxes                       (24,991)  (222,400)
                                                                              ---------  ---------
              NET INCREASE IN STOCKHOLDERS' EQUITY                            $  45,584  $ 414,074
                                                                              =========  =========
</TABLE>



                                       14

<PAGE>   17



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                            AND LIBERTY NATIONAL BANK
                               BRADENTON, FLORIDA
                                   (CONTINUED)

NOTE 5 -      LOANS AND ALLOWANCE FOR LOAN LOSSES

              Major categories of loans included in the loan portfolio are:

<TABLE>
              <S>                                                            <C>              
              Commercial, Financial and Agricultural                         $      22,592,750
              Real Estate                                                          121,533,213
              Installment Loans                                                     10,980,785
                                                                             -----------------
              Loans Receivable (Gross)                                             155,106,748
              (Unearned Income)                                                        (76,914)
                                                                             -----------------
              LOANS RECEIVABLE (NET OF UNEARNED INCOME)                      $     155,029,834
                                                                             =================
</TABLE>

              The maturity ranges of the loan portfolio and the amount of loans
              with predetermined interest rates and floating rates in each
              maturity range, as of December 31, 1996, are summarized as
              follows:
<TABLE>
<CAPTION>
                                                                      CONTRACTUAL MATURITY DISTRIBUTION
                                                            ---------------------------------------------------
                                                             WITHIN         ONE -         AFTER
                                                            ONE YEAR     FIVE YEARS    FIVE YEARS        TOTAL
                                                            --------     ----------    ----------        -----
              <S>                                        <C>            <C>           <C>           <C>           
              Commercial, Financial and Agricultural     $  10,381,659  $  9,176,160  $  3,003,558  $   22,561,377
              Real Estate                                   25,738,888    18,315,151    77,433,633     121,487,672
              Installment Loans                              2,809,097     6,559,971     1,611,717      10,980,785
                                                         -------------  ------------  ------------  --------------
              TOTAL LOANS (NET OF UNEARNED INCOME)          38,929,644    34,051,282    82,048,908     155,029,834
                                                         =============  ============  ============  ==============

              Loans With Predetermined Rate                  5,801,521    18,761,354    37,667,733      62,230,608
              Loans With a Floating Rate                    33,128,123    15,289,928    44,381,175      92,799,226
                                                         -------------  ------------  ------------  --------------
              TOTAL LOANS (NET OF UNEARNED INCOME)       $  38,929,644  $ 34,051,282  $ 82,048,908  $  155,029,834
                                                         =============  ============  ============  ==============

</TABLE>

              The Bank has granted loans to its executive officers, directors
              and principal equity holders and their associates. The aggregate
              dollar amount of these loans was approximately $2,413,516 and
              $1,586,592 at December 31, 1996 and 1995, respectively. During
              1996, approximately $757,084 in new loans were made, and $625,499
              added at purchase of Key Florida Bank, F.S.B. Repayments
              approximated $555,659.

              Loans on which the accrual of interest has been discontinued or
              reduced at December 31, 1996 and 1995, approximated $1,606,000 and
              $696,000, respectively. If interest on these loans had been
              accrued, such income would have approximated $122,000 and $33,000
              in 1996 and 1995, respectively.

              At December 31, 1996, the Bank had loans subject to floors and
              caps totalling $92,799,226. The floors and caps on these loans
              range from 1% to 18%.

              At December 31, 1996, there were no commitments to lend additional
              funds to borrowers whose loans are classified as nonaccrual.

              Mortgage servicing rights of $181,799 were acquired in the merger
              with Key Florida Bank, F.S.B., and are being amortized. Balance at
              December 31, 1996, was $141,084.

                                       15

<PAGE>   18



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                            AND LIBERTY NATIONAL BANK
                               BRADENTON, FLORIDA
                                   (CONTINUED)

NOTE 5 -      LOANS AND ALLOWANCE FOR LOAN LOSSES (CONCLUDED)

              Changes in the allowance for loan losses for 1996 and 1995 are
              summarized as follows:
<TABLE>
<CAPTION>
                                                                            1996            1995
                                                                      --------------  --------------
              <S>                                                      <C>             <C>           
              BALANCE, BEGINNING OF YEAR                              $      704,317  $      429,060
                                                                      --------------  --------------
                Provisions Charged to Expense                                256,859         362,263
                                                                      --------------  --------------
                Purchase of Key Florida Bank, F.S.B.                         528,109               0
                                                                      --------------  --------------
                Recoveries of Loans Previously Charged-Off:
                 Commercial, Financial and Agricultural                        6,117               0
                 Installment Loans                                                70           5,876
                                                                      --------------  --------------
                Total Recoveries                                               6,187           5,876
                                                                      --------------  --------------
                Loans Charged-Off:
                 Commercial, Financial and Agricultural                      110,885          13,088
                 Real Estate                                                  30,000               0
                 Installment Loans                                            33,256          79,794
                                                                      --------------  --------------
                Total Loans Charged-Off                                     (174,141)        (92,882)
                                                                      --------------  --------------
              BALANCE, END OF YEAR                                    $    1,321,331  $      704,317
                                                                      ==============  ==============
              RATIO OF NET CHARGE-OFFS TO
                AVERAGE LOANS OUTSTANDING                                    .16%            .15%
              RATIO OF ALLOWANCE FOR LOAN LOSSES AS A
                PERCENTAGE OF YEAR END LOANS                                 .85%           1.06%
</TABLE>

              As of December 31, 1996 and 1995, the allowance for loan losses
              was allocated as follows:
<TABLE>
<CAPTION>
                                                               1996                             1995
                                                  -----------------------------    ------------------------------
                                                                     PERCENT BY                        PERCENT BY
                                                      AMOUNT          CATEGORY         AMOUNT           CATEGORY
                                                  -------------     -----------    -------------    -------------
              <S>                                 <C>                    <C>       <C>                     <C>  
              Commercial                          $     595,973          45.1%     $     325,000           46.2%
              Real Estate                               584,969          44.3%           335,000           47.6%
              Installment                               140,389          10.6%            44,000            6.2%
                                                  -------------       -------      -------------       --------
              TOTAL ALLOWANCE FOR LOAN LOSSES     $   1,321,331         100.0%     $     704,000          100.0%
                                                  =============       =======      =============       ========
</TABLE>

              At December 31, 1996, the total recorded investment in impaired
              loans was $937,406, which had a related allowance for credit
              losses of $107,513. None of the recorded investment in impaired
              loans were without a related allowance for credit losses. The
              average recorded investment in impaired loans at December 31,
              1996, was $816,703. The amount of interest income recognized
              during the time within the year ended December 31, 1996, that the
              loans were impaired was $7,930. The amount of interest income
              recognized using a cash basis method of accounting during the time
              within the year ended December 31, 1996, that the loans were
              impaired was $7,767.


                                       16

<PAGE>   19


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                            AND LIBERTY NATIONAL BANK
                               BRADENTON, FLORIDA
                                   (CONTINUED)

NOTE 6 -      PREMISES AND EQUIPMENT

              A summary of premises and equipment is as follows:

<TABLE>
              <S>                                             <C>         
              Land and Land Improvements                      $  1,246,665
              Buildings                                          1,909,165
              Leasehold Improvements                               168,128
              Furniture, Fixtures and Equipment                  2,556,922
                                                              ------------
                                                                 5,880,880
              (Accumulated Depreciation)                        (1,338,234)
                                                              ------------
              TOTAL PREMISES AND EQUIPMENT                    $  4,542,646
                                                              ============
</TABLE>

              Depreciation expense for 1996 and 1995 was $187,418 and $88,000,
              respectively.


NOTE 7 -      DEPOSITS

              A summary of interest-bearing deposits is as follows:

<TABLE>
              <S>                                          <C>         
              Demand                                       $ 26,111,666
              Savings                                        19,590,395
              Time                                          124,633,808
                                                           ------------
              TOTAL INTEREST-BEARING DEPOSITS              $170,335,869
                                                           ============
</TABLE>

              Time deposit maturities for future years are presented in the
              following table:
<TABLE>
<CAPTION>

                   YEAR                                    AMOUNT
              ---------------                          -------------
                <S>                                    <C>
                   1997                                $  90,271,313
                   1998                                   16,914,704
                   1999                                    5,978,924
                   2000                                    8,788,260
                   2001                                    2,610,543
                Thereafter                                    70,064
                                                       -------------
                   TOTAL                               $ 124,633,808
                                                       =============
</TABLE>
              Included in interest-bearing deposits are certificates of deposit
              in amounts of $100,000 or more. These certificates and their
              remaining maturities at December 31, 1996, are as follows:

<TABLE>
              <S>                                         <C>        
              Three Months or Less                        $ 7,321,198
              Three Through Six Months                      4,829,065
              Six Through Twelve Months                     3,836,963
              Over Twelve Months                            4,146,655
                                                          -----------
              TOTAL                                       $20,133,881
                                                          ===========
</TABLE>

                                       17

<PAGE>   20



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                            AND LIBERTY NATIONAL BANK
                               BRADENTON, FLORIDA
                                   (CONTINUED)

NOTE 7 -      DEPOSITS (CONCLUDED)

              A summary of interest on deposits is as follows:
<TABLE>
<CAPTION>
                                                              1996             1995
                                                           ----------       ----------
              <S>                                          <C>              <C>       
              Interest-Bearing Demand Deposits             $  571,009       $  391,865
              Savings                                         393,540          111,541
              Time Deposits of $100,000 or More             1,129,581          658,882
              Other Time Deposits                           3,682,147        2,514,940
                                                           ----------       ----------
              TOTAL                                        $5,776,277       $3,677,228
                                                           ==========       ==========
</TABLE>


NOTE 8 -      INCOME TAXES

              As discussed in note 1, the Company uses the asset and liability
              method of accounting for income taxes as required by FASB No. 109,
              Accounting for Income Taxes.

              The total provision (benefit) for income taxes is as follows:

<TABLE>
<CAPTION>
                                                                                      1996       1995
                                                                                    ---------  --------
              <S>                                                                   <C>        <C>     
              CURRENT INCOME TAX EXPENSE
               Exclusive of Benefits of Net Operating Loss Carryover:
                  U.S. Federal                                                      $ 219,448  $398,575
                  State of Florida                                                     25,050    36,175
                                                                                    ---------  --------
               Subtotal                                                               244,498   434,750
                                                                                    ---------  --------
               Benefits of Net Operating Loss Carryover:
                  U.S. Federal                                                        (97,862)  (54,575)
                  State of Florida                                                    (16,751)  (10,175)
                                                                                    ---------  --------
               Subtotal                                                              (114,613)  (64,750)
                                                                                    ---------  --------
              TOTAL CURRENT INCOME TAX EXPENSE                                        129,885   370,000
                                                                                    ---------  --------

              DEFERRED INCOME TAX (BENEFIT)
               U.S. Federal                                                           141,987   (17,505)
               State of Florida                                                        12,072    (1,060)
                                                                                    ---------  --------
              TOTAL DEFERRED INCOME TAX (BENEFIT)                                     154,059   (18,565)
                                                                                    ---------  --------

              TOTAL INCOME TAX EXPENSE                                              $ 283,944  $351,435
                                                                                    =========  ========
</TABLE>


                                       18

<PAGE>   21



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                            AND LIBERTY NATIONAL BANK
                               BRADENTON, FLORIDA
                                   (CONTINUED)

NOTE 8 -      INCOME TAXES (CONTINUED)
<TABLE>
<CAPTION>
                                                                      1996              1995
                                                              ------------------  ------------------
                                                                AMOUNT       %     AMOUNT        %
                                                              ---------   ------  --------   -------
              <S>                                             <C>        <C>      <C>        <C> 
              Computed "Expected" Income Tax
               Expense                                        $ 244,960    34.0   $310,421     34.0
              Tax-Exempt Income and Nondeductible
               Expenses                                          (5,504)   (0.8)    14,700      1.6
              State Income Taxes, Net of Federal
               Income Tax Benefits                               24,500     3.4     16,200      1.8
              Other                                              19,988     2.8     10,114      1.1
                                                              ---------  ------   --------   ------
              TOTAL                                           $ 283,944    39.4   $351,435     38.5
                                                              =========  ======   ========   ======
</TABLE>

              Deferred tax liabilities (assets) are comprised of the following
              at December 31:
<TABLE>
<CAPTION>
                                                                                           1996          1995
                                                                                      -------------  -------------
              <S>                                                                     <C>            <C>          
              DEFERRED TAX LIABILITIES
                Basis Differences From Business Acquisition:
                  Loans                                                               $      65,806  $           0
                  Bank Premises                                                             112,326              0
                  Core Deposits                                                             316,405              0
                Basis Differences From Accrual to Cash Methods                              208,875         92,000
                Depreciation                                                                 36,966              0
                                                                                      -------------  -------------
              GROSS DEFERRED TAX LIABILITIES                                                740,378         92,000
                                                                                      -------------  -------------

              DEFERRED TAX ASSETS
                Net Operating Loss                                                          116,047              0
                Allowance For Loan Losses                                                   378,988        152,500
                Basis Differences From Business Acquisition:
                  Loans                                                                       2,088              0
                  Securities                                                                 20,584              0
                  Certificates of Deposit                                                    61,576              0
                Basis Differences From Accrual to Cash Methods                              134,630         28,000
                Basis Difference on Investment Securities Available-For-Sale                  9,609         34,600
                Other                                                                         2,211              0
                                                                                      -------------  -------------
              GROSS DEFERRED TAX ASSETS                                                    (725,733)      (215,100)
                                                                                      -------------  -------------

              VALUATION ALLOWANCE                                                            17,500         17,500
                                                                                      -------------  -------------

              NET DEFERRED TAX LIABILITIES (ASSETS)                                   $      32,145  $    (105,600)
                                                                                      =============  =============
</TABLE>


                                       19

<PAGE>   22



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                            AND LIBERTY NATIONAL BANK
                               BRADENTON, FLORIDA
                                   (CONTINUED)

NOTE 8 -      INCOME TAXES (CONCLUDED)

              The sources of timing differences and the related income tax
              effect of each of the years ended December 31, 1996 and 1995, were
              as follows:
<TABLE>
<CAPTION>
                                                                                           1996           1995
                                                                                      -------------  -------------
              <S>                                                                     <C>            <C>          
              Utilization of Net Operating Loss                                       $     114,613  $      64,750
              Provision For Loan Losses For Income Tax Purposes
                (Less) Than For Financial Statement Purposes                                (73,400)      (100,000)
              Basis of Securities Sold Greater For Income Tax
                Purposes Than For Financial Statement Purposes                               81,984              0
              Depreciation Deducted For Income Tax Purposes
                Greater (Less) Than For Financial Statements
                Purposes                                                                     36,850              0
              Amortization of Asset Bases Greater For Financial
                Reporting Purposes Than For Income Tax Purposes                              (6,012)             0
              Adjustment For Accrual Basis to Cash Basis Income
                and Expenses                                                                (24,748)          (856)
              Other, Including Revisions of Estimates                                        24,772             41
                                                                                      -------------  -------------
              Subtotal Before Change in Valuation Allowance                                 154,059        (36,065)
              Change in Valuation Allowance                                                       0         17,500
                                                                                      -------------  -------------
              TOTAL                                                                   $     154,059  $     (18,565)
                                                                                      =============  =============
</TABLE>

              As a result from gains and losses on sales of securities, income
              tax expense (decreased) by the following amounts: $(5,298) in
              1996; $(2,210) in 1995.


NOTE 9 -      DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

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

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

              INVESTMENT SECURITIES
              For marketable equity securities held for investment purposes,
              fair values are based on quoted market prices or dealer quotes.
              For other securities held as investments, fair value equals quoted
              market price, if available. If a quoted market price is not
              available, fair value is estimated using quoted market prices for
              similar securities.


                                       20

<PAGE>   23



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                            AND LIBERTY NATIONAL BANK
                               BRADENTON, FLORIDA
                                   (CONTINUED)

NOTE 9 -      DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

              LOANS
              For variable rate loans, fair values were based on repricing
              dates. The fair values of fixed-rate loans were based on
              discounted cash flows. Prepayment assumptions for real estate
              loans were based on Bloomberg estimates of mortgage pools with
              like characteristics. The discount rates used to determine the
              present value of these loans were based on interest rates
              currently charged by the bank on comparable loans as to credit
              risk and term.

              DEPOSIT LIABILITIES
              The fair value of demand deposits are, as required by FASB No.
              107, equal to the carrying value of such deposits. Demand deposits
              include noninterest-bearing demand deposits, savings accounts, NOW
              accounts, and money market demand accounts. Actual maturities have
              been used to value fixed-rate term deposits. The discount rates
              were based on interest rates currently being offered by the Bank
              on comparable deposits as to amount and term.

              These estimated fair values do not include the intangible value of
              core deposit relationships which comprise a portion of the Bank's
              deposit base. Management believes that the Bank's core deposit
              relationships provide a relatively stable, low-cost funding source
              which has a substantial intangible value separate from the value
              of the deposit balances.

              COMMITMENTS TO EXTEND CREDIT AND STANDBY LETTERS OF CREDIT
              Substantially all of the Bank's commitments to extend credit and
              standby letters of credit are at variable rates and are subjected
              to the same credit criteria as for recognized loans receivable.
              The variable rates ascribed to these commitments to extend credit
              and standby letters of credit approximate market rates for such
              instruments. Accordingly, the carrying amount is considered a
              reasonable estimate of fair value.

              The estimated fair values of the Bank's financial instruments are
              as follows:
<TABLE>
<CAPTION>
                                                                     (IN THOUSANDS)
                                                            ---------------------------------
                                                                CARRYING            FAIR
                                                                 AMOUNT            VALUE
                                                            ---------------  ----------------
              <S>                                           <C>              <C>            
              FINANCIAL ASSETS
               Cash and Short-Term Investments              $        11,515  $        11,515
               Investment Securities                                 27,414           27,414
               Loans Receivable, Net                                153,709          153,806

              FINANCIAL LIABILITIES
               Deposits                                             187,347          188,178

              UNRECOGNIZED FINANCIAL INSTRUMENTS
                  Commitments to Extend Credit                        7,019            7,019
                  Standby Letters of Credit                             546              546
</TABLE>

                                       21

<PAGE>   24



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                            AND LIBERTY NATIONAL BANK
                               BRADENTON, FLORIDA
                                   (CONTINUED)

NOTE 9 -    DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (CONCLUDED)

            COMMITMENTS TO EXTEND CREDIT AND STANDBY LETTERS OF CREDIT
            (CONCLUDED) The Bank is a party to financial instruments with
            off-balance-sheet risk in the normal course of business to meet the
            financing needs of its customers and to reduce its own exposure to
            fluctuations in interest rates. These financial instruments include
            commitments to extend credit, standby letters of credit and interest
            rate caps and floors written. Those instruments involve, to varying
            degrees, elements of credit and interest rate risk in excess of the
            amount recognized in the statement of financial position. The
            contract or notional amounts of those instruments reflect the extent
            of involvement the Bank has in particular classes of financial
            instruments.

            The Bank's exposure to credit loss in the event of nonperformance by
            the other party to the financial instrument for commitments to
            extend credit and standby letters of credit written is represented
            by the contractual notional amount of those instruments. The Bank
            uses the same credit policies in making commitments and conditional
            obligations as it does for on-balance-sheet instruments. For
            interest rate caps and floors, the contract or notional amounts do
            not represent exposure to credit loss.

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

            Standby letters of credit and financial guarantees written are
            conditional commitments issued by the Bank to guarantee the
            performance of a customer to a third party. Those guarantees are
            primarily issued to support public and private borrowing
            arrangements, including commercial paper, bond financing, and
            similar transactions. Most guarantees extend for only one year and
            expire in decreasing amounts through 1997. The credit risk involved
            in issuing letters of credit is essentially the same as that
            involved in extending loan facilities to customers. The Bank holds
            marketable securities, certificates of deposit, securities sold
            under agreements to repurchase and real estate, as collateral
            supporting those commitments for which collateral is deemed
            necessary.



                                       22

<PAGE>   25



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                            AND LIBERTY NATIONAL BANK
                               BRADENTON, FLORIDA
                                   (CONTINUED)

NOTE 10 -     COMMITMENTS AND CONTINGENCIES

              In the normal course of business, the Bank has various commitments
              and contingent liabilities outstanding, such as commitments to
              extend credit and standby letters of credit which are not
              reflected in the consolidated financial statements. At December
              31, 1996, the Bank had commitments to customers of approximately
              $546,000 for standby letters of credit, $2,878,506 for approved
              lines of credit and unfunded loan commitments were $4,140,719. No
              losses are anticipated as a result of these transactions.

              The Bank is involved in legal proceedings primarily concerning the
              recovery of loans previously charged-off or adequately provided
              for in the allowance for loan losses. Management, after a review
              of all litigation with counsel, believes that the resolution of
              these matters will not have a material effect on the accompanying
              consolidated financial statements.

              LEASE COMMITMENTS
              At December 31, 1996, the Bank was obligated under three
              noncancelable operating lease agreements with renewal options on
              properties used principally for branch operations. The Bank
              expects to renew such agreements at expiration in the normal
              course of business. The leases contain escalation clauses
              commencing at various times during the lives of the leases. Such
              clauses provide for increases in the annual rental, based on
              increases in the consumer price index.

              Minimum commitments for rental expenditures under all
              noncancellable operating leases are presented for future years in
              the following table:

<TABLE>
<CAPTION>
                                 YEAR                          AMOUNT
                              ----------                     ---------
                              <S>                            <C>        
                                 1997                        $ 173,407
                                 1998                          120,816
                                 1999                          120,816
                                 2000                          120,816
                                 2001                           68,544
                              Thereafter                             0
                                                             ---------
                       TOTAL MINIMUM LEASE PAYMENTS          $ 604,399
                                                             =========
</TABLE>


              Rental expense for all operating leases was $175,894 and $72,000
              in 1996 and 1995, respectively.



                                       23

<PAGE>   26



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                            AND LIBERTY NATIONAL BANK
                               BRADENTON, FLORIDA
                                   (CONTINUED)

NOTE 11 -     STOCKHOLDERS' EQUITY

              REGULATORY MATTERS
              There are no restrictions on the ability of the Company to pay
              dividends from its retained earnings; however, banking regulations
              limit the amount of dividends national banks may declare without
              receiving prior approval from the Comptroller of the Currency. At
              December 31, 1996, approximately $852,452 was available for
              payment of dividends by the Bank without such approval.

              The Bank is subject to regulatory capital requirements
              administered by the federal banking agencies. Failure to meet
              minimum capital requirements can initiate certain mandatory--and
              possibly additional discretionary--actions by regulators that, if
              undertaken, could have a direct material effect on the Bank's
              financial statements. Under capital adequacy guidelines and the
              regulatory framework for prompt corrective action, the Bank must
              meet specific capital guidelines that involve quantitative
              measures of the Bank's assets, liabilities, and certain
              off-balance-sheet items as calculated under regulatory accounting
              practices. The Bank's capital amounts and classification are also
              subject to qualitative judgments by the regulators about
              components, risk weightings, and other factors.

              Quantitative measure established by regulation to ensure capital
              adequacy require the Bank to maintain minimum amounts and ratios
              (set forth in the table below) of total and Tier I capital (as
              defined in the regulations) to risk-weighted assets (as defined),
              and of Tier I capital (as defined) to average assets (as defined).
              Management believes, as of December 31, 1996, that the Bank meets
              all capital adequacy requirements to which it is subject.

              As of December 31, 1996, the most recent notification from the
              Office of the Comptroller of the Currency categorized the Bank as
              well capitalized under the regulatory framework for prompt
              corrective action. To be categorized as adequately capitalized,
              the Bank must maintain minimum total risk-based, Tier I risk-
              based, and Tier I leverage ratios as set forth in the table. There
              are no conditions or events since that notification that
              management believes have changed the Bank's category.

<TABLE>
<CAPTION>
                                                                                  (IN THOUSANDS)
                                                                  ---------------------------------------------
                                                                                                 TO BE WELL
                                                                                              CAPITALIZED UNDER
                                                                                              PROMPT CORRECTIVE
                                                                          ACTUAL              ACTION PROVISIONS
                                                                  --------------------    ---------------------
                                                                    AMOUNT       RATIO      AMOUNT       RATIO
                                                                  ----------     -----    -----------  --------
              <S>                                                   <C>          <C>        <C>        <C><C>
              Tier I Capital (To Risk-Weighted Assets)              $11,869       9.04%     $ 7,875    >   6.0%
                                                                                                       -
              Tier I Leverage Capital (To Average Assets)           $11,869       8.50%     $ 6,982    >   5.0%
                                                                                                       -
              Total Capital (To Risk-Weighted Assets)               $13,190      10.05%     $13,125    >  10.0%
                                                                                                       -


</TABLE>

                                       24

<PAGE>   27



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                            AND LIBERTY NATIONAL BANK
                               BRADENTON, FLORIDA
                                   (CONTINUED)

NOTE 11 -     STOCKHOLDERS' EQUITY (CONCLUDED)

              STOCK OPTION PLAN
              During 1991, Liberty National Bank adopted a Nonqualified Employee
              Stock Option Plan (the plan). Under the plan, a committee
              designated by the Board of Directors is authorized to grant
              options to purchase up to 78,125 shares of common stock to
              officers and employees of the Bank. The option price per share
              with respect to each option shall be determined by the committee.
              The committee administers the plan and designates the optionee and
              all terms. Prior to the merger, 14,531 shares had been exercised
              and 2,187 shares had expired. Upon the merger, the 61,407
              outstanding shares were converted on a 1.5 to 1.0 ratio to Key
              Florida Bancorp, Inc. options totalling 92,110 shares. Subsequent
              to that date, 18,282 options were exercised, leaving 73,828
              options outstanding at December 31, 1996. The options granted must
              be exercised by March 14, 2000.

              STOCK WARRANT PLAN
              In 1989, certain shareholders received one warrant to purchase one
              share of the Bank's stock for each share purchased by that
              shareholder in the initial offering of the Bank's stock. The
              exercise price of the warrants was $8 per share, and the warrants
              were to expire on January 1, 2000. During the year ended December
              31, 1995, the Bank implemented a warrant exchange program, whereby
              each warrant holder could exchange the warrants for common stock
              at the ratio of .5066 shares of stock for each warrant
              surrendered. All of the 253,906 warrants outstanding were
              exchanged for 128,638 shares of common stock during 1995.


NOTE 12 -     FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

              The Bank is a party to financial instruments with
              off-balance-sheet risk in the normal course of business to meet
              the financing needs of its customers and to reduce its own
              exposure to fluctuations in interest rates. These financial
              instruments include commitments to extend credit and standby
              letters of credit. Those instruments involve, to varying degrees,
              elements of credit and interest rate risk in excess of the amounts
              recognized in the consolidated balance sheets. The contract or
              notional amounts of those instruments reflect the extent of
              involvement the Bank has in particular classes of financial
              instruments.

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



                                       25

<PAGE>   28



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                            AND LIBERTY NATIONAL BANK
                               BRADENTON, FLORIDA
                                   (CONTINUED)

NOTE 13 -     QUARTERLY FINANCIAL DATA (UNAUDITED)

              The following represents summarized quarterly financial data of
              the Company which, in the opinion of management, reflects
              adjustments (comprising only normal recurring accruals) necessary
              for fair presentation:

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED (IN THOUSANDS)
                                            ------------------------------------------------------------------
                          1996                 DECEMBER 31         SEPTEMBER 30        JUNE 30        MARCH 31
              ----------------------------  ------------------  -----------------  --------------  -----------
              <S>                           <C>                 <C>                <C>             <C>           
              Interest Income               $            3,873  $           3,209  $        2,110  $     1,886
              Interest Expense                           2,120              1,685           1,017          976
              Net Interest Income                        1,753              1,524           1,093          910
              Provision For Losses on Loans                  0                 62             135           60
              Security Gains (Losses)                      (15)                 0               0            1
              Net Income                                   128                (14)            123          199
              Earnings Per Share*                          .05               (.01)            .13          .21
</TABLE>


<TABLE>
<CAPTION>

                                                              THREE MONTHS ENDED (IN THOUSANDS)
                                            ------------------------------------------------------------------
                          1995                 DECEMBER 31         SEPTEMBER 30        JUNE 30        MARCH 31
              ----------------------------  ------------------  -----------------  --------------  -----------
              <S>                           <C>                 <C>                <C>             <C>       
              Interest Income               $            1,891  $           1,810  $        1,661  $     1,495
              Interest Expense                             992                998             937          755
              Net Interest Income                          899                812             724          740
              Provision For Losses on Loans                 78                 94             145           45
              Security Gains (Losses)                       (1)                 0               0           (6)
              Net Income                                   196                134             113          119
              Earnings Per Share                           .21                .15             .14          .14
</TABLE>

              *The sum of the quarters' earnings per share does not equal the
               year-to-date earnings per share due to changes in average share
               calculations. This is in accordance with prescribed reporting
               requirements.


NOTE 14 -     EMPLOYEE BENEFIT PLANS

              EMPLOYEE STOCK OPTION PLAN (ESOP)
              Prior to the merger, Key Florida Bank had an ESOP. Subsequent to
              the merger, unallocated preferred stock held by the ESOP was
              retired. Subsequent to year end, the ESOP was terminated and the
              allocated shares are to be distributed to the participants. No
              expense for the ESOP was incurred during the period covered by
              these financial statements and there is no unfunded commitment or
              liability remaining with respect to the ESOP.

              401(K) RETIREMENT PLAN
              Effective March 1, 1997, the Company instituted a 401(k) plan for
              substantially all of its employees. The Company has not currently
              established a matching percentage.



                                       26

<PAGE>   29



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                            AND LIBERTY NATIONAL BANK
                               BRADENTON, FLORIDA
                                   (CONTINUED)

NOTE 15 -     OTHER NONINTEREST EXPENSE

              Other noninterest expense consists of the following:

<TABLE>
<CAPTION>
                                                                                            1996          1995
                                                                                       ------------  ------------
              <S>                                                                      <C>           <C>         
              Taxes (Other Than Payroll and Income Taxes)                              $     80,495  $     39,887
              Loans Expense                                                                 125,883        37,518
              Postage                                                                        86,145        50,726
              Advertising and Public Relations                                              135,340        92,817
              Stationery and Supplies                                                       123,875        77,919
              Miscellaneous                                                                 302,494       221,271
                                                                                       ------------  ------------
              TOTAL OTHER EXPENSES                                                     $    854,232  $    520,138
                                                                                       ============  ============
</TABLE>


NOTE 16 -     PRO FORMA INCOME STATEMENTS

              Had the aforementioned business combination occurred at the
              beginning of each of the periods presented, the Company's pro
              forma unaudited results of operations are presented below:
<TABLE>
<CAPTION>
                                                                                               (UNAUDITED)
                                                                                       --------------------------
                                                                                              FOR THE YEAR
                                                                                           ENDED DECEMBER 31,
                                                                                             (IN THOUSANDS)
                                                                                       --------------------------
                                                                                           1996          1995
                                                                                       ------------  ------------ 
              <S>                                                                      <C>           <C>         
              Interest Income                                                          $     14,880  $     13,927
              Interest Expense                                                                8,387         8,318
                                                                                       ------------  ------------
              Net Interest Income                                                             6,493         5,609
              Provision For Loan Losses                                                         253           472
                                                                                       ------------  ------------
              Net Interest Income After Provision For
                Loan Losses                                                                   6,240         5,137
              Noninterest Income                                                                875           942
              Noninterest Expense                                                             6,163         5,152
                                                                                       ------------  ------------
              Net Income Before Income Taxes                                                    952           927
              Income Taxes                                                                      349           171
                                                                                       ------------  ------------
              Net Income                                                               $        603  $        756
                                                                                       ============  ============
</TABLE>

              The unaudited pro forma results are not necessarily indicative of
              the results that would have been attained had the merger occurred
              at the beginning of 1996 or 1995, or of the results which may
              occur in the future.



                                       27

<PAGE>   30



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                            AND LIBERTY NATIONAL BANK
                               BRADENTON, FLORIDA
                                   (CONTINUED)

NOTE 17 -     PARENT COMPANY ONLY FINANCIAL STATEMENTS

              Following are the condensed financial statements of Key Florida
              Bancorp, Inc. (Parent Company Only) for December 31, 1996. The
              period of activity in the Parent Company Only financial statements
              consists of the activity described in note 2:


                             CONDENSED BALANCE SHEET



                                     ASSETS
<TABLE>

              <S>                                                                                 <C>            
              Cash                                                                                $         6,839
              Investment in Wholly-Owned Subsidiaries,
                at Equity in Underlying Assets                                                         12,793,549
              Premises and Equipment, Net                                                                  49,054
              Other Assets                                                                                116,024
                                                                                                  ---------------
              TOTAL ASSETS                                                                             12,965,466
                                                                                                  ===============

                         LIABILITIES AND STOCKHOLDERS' EQUITY

              LIABILITIES
                Notes Payable                                                                             143,053
                Other                                                                                     131,245
                                                                                                   --------------
              TOTAL LIABILITIES                                                                           274,298
                                                                                                   --------------

              STOCKHOLDERS' EQUITY
                Common Stock                                                                               27,581
                Capital Surplus                                                                        11,400,484
                Retained Earnings                                                                       1,282,247
                (Treasury Stock)                                                                             (490)
                Unrealized Gains (Losses) on
                 Certain Securities                                                                       (18,654)
                                                                                                  ---------------
              TOTAL STOCKHOLDERS' EQUITY                                                               12,691,168
                                                                                                  ---------------  

              TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                          $    12,965,466
                                                                                                  ===============
</TABLE>




                                       28

<PAGE>   31



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   KEY FLORIDA BANCORP, INC. AND SUBSIDIARIES
                            AND LIBERTY NATIONAL BANK
                               BRADENTON, FLORIDA
                                   (CONCLUDED)

NOTE 17 -     PARENT COMPANY ONLY FINANCIAL STATEMENTS (CONCLUDED)

                          CONDENSED STATEMENT OF INCOME
<TABLE>
<CAPTION>
              <S>                                                         <C>            
              INCOME
                Cash Dividends From Subsidiaries                          $       250,000
                Interest                                                            3,723
                                                                          ---------------
              TOTAL INCOME                                                        253,723
                                                                          ---------------
              EXPENSES
                Salaries                                                           69,461
                Interest                                                            5,717
                Other Expense                                                      28,622
                                                                          ---------------
              TOTAL EXPENSES                                                      103,800
                                                                          ---------------
              INCOME BEFORE INCOME TAX BENEFIT AND EQUITY IN
                UNDISTRIBUTED EARNINGS OF SUBSIDIARIES                            149,923
              INCOME TAX BENEFIT RESULTING FROM FILING
                CONSOLIDATED INCOME TAX RETURNS                                    37,660
              EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARIES                      248,942
                                                                          ---------------
              NET INCOME                                                  $       436,525
                                                                          ===============


                        CONDENSED STATEMENT OF CASH FLOWS

              CASH FLOWS FROM OPERATING ACTIVITIES
                Net Income                                                $       436,525
                Adjustments to Reconcile Net Income to Net
                 Cash Provided By Operating Activities:
                   Depreciation                                                     3,122
                   Income From Subsidiaries                                      (248,942)
                   Tax Benefit                                                    (37,660)
                   Other                                                          (27,093)
                                                                          ---------------
              NET CASH PROVIDED BY OPERATING ACTIVITIES                           125,952
                                                                          ---------------
              CASH FLOWS FROM INVESTING ACTIVITIES
                Purchases of Premises and Equipment                               (52,176)
                                                                          ---------------
              CASH FLOWS FROM FINANCING ACTIVITIES
                Principal Payments on Notes Payable                               (10,882)
                Proceeds From Options Exercised                                    78,065
                Purchase of Treasury Stock                                           (191)
                Preferred Stock Retired                                          (428,596)
                Preferred Stock - Dividends Paid                                  (18,693)
                                                                          ---------------
              NET CASH (USED IN) FINANCING ACTIVITIES                            (380,297)
                                                                          ---------------
              (DECREASE) IN CASH                                                 (306,521)
              CASH, BEGINNING OF PERIOD                                           313,360
                                                                          ---------------
              CASH, END OF PERIOD                                         $         6,839
                                                                          ===============
</TABLE>

                                       29

<PAGE>   32



                             FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
                                                                                         KEY FLORIDA      LIBERTY
                                                                                          BANCORP,       NATIONAL
                                                                                            INC.           BANK
                                                                                        --------------------------  
(Dollars in thousands except per share data)                                                1996           1995
------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>            <C>       
FOR THE YEAR
Net interest income .................................................................   $      5,280   $    3,175
Provision for loan losses............................................................            257          362
Noninterest income:
  Investment securities gains (losses)...............................................            (14)          (7)
  Other..............................................................................            482          579
Noninterest expenses.................................................................          4,771        2,472
Income before income taxes...........................................................            720          913
Income taxes.........................................................................            284          351
Net income...........................................................................            436          562
Core earnings (3)....................................................................            963        1,280


Per share data (1):
  Net income.........................................................................   $       0.25   $     0.64    
  Cash dividends declared:  Common...................................................            .00          .00    
  Book value before adjustment for unrealized gains (losses)                                                         
   on certain securities.............................................................           4.61         7.88    
  Adjustment for unrealized gains (losses) on certain securities.....................           (.01)        (.07)   
  Book value.........................................................................           4.60         7.81    
Dividends to net income..............................................................            .00          .00    

AT YEAR END
Assets...............................................................................   $    200,890   $   96,069
Investment securities................................................................         27,415       21,293
Net loans............................................................................        153,709       65,744
Deposits.............................................................................        187,347       87,955
Shareholders' equity before adjustment for unrealized gains
  (losses) on certain securities.....................................................         12,710        7,413
Adjustment for unrealized gains (losses) on certain
  securities (4).....................................................................            (19)         (64)
Shareholders' equity.................................................................         12,691        7,349
Performance Ratios:
  Return on average assets...........................................................            .31%         .63%   
  Return on average equity...........................................................           4.43%        8.02%   
Net interest margin (2)..............................................................           4.03%        3.78%   
Average equity to average assets.....................................................           7.05%        7.90%   
--------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)   Per share data has been restated for stock splits and the
      recapitalization of stock due to merger on July 30, 1996.
(2)   On a tax equivalent basis.
(3)   Income before income taxes excluding the provision for loan losses,
      securities gains or losses, expenses associated with acquisition and
      disposition of foreclosed properties.
(4)   The adjustment for unrealized gains on certain securities results from the
      application of FASB No. 115, as described in Notes 1 and 4 to the
      consolidated financial statements.

                                       30

<PAGE>   33



                               FINANCIAL REVIEW
--------------------------------------------------------------------------------
                    1996 Management's Discussion and Analysis

The following discussion and analysis is designed to provide a better
understanding of the significant factors related to Key Florida Bancorp, Inc.'s
(Bancorp) results of operations and financial condition. Such discussion and
analysis should be read in conjunction with the Consolidated Financial
Statements of Bancorp and the notes thereto, and the Financial Highlights
provided on page 5 of this report.

MERGER WITH KEY FLORIDA BANK, F.S.B.
As discussed in note 2 of notes to the Bancorp's financial statements, on July
30, 1996, Bancorp and Liberty National Bank (the Bank) completed a merger of Key
Florida Bank, F.S.B. (formerly Bancorp's banking subsidiary) with and into the
Bank. Due to the change in majority ownership interest to that of the Bank's
shareholders, the merger is considered to be an acquisition by the Bank of the
Bancorp and its subsidiary, Key Florida Bank, F.S.B.

Due to the aforementioned merger transaction and the resultant change in control
to the Bank's shareholders, the operating results of the Bank for the entire
1996 calendar year and the operating results of Bancorp and Key Florida Bank,
F.S.B. (the acquired companies) from July 31, 1996 through December 31, 1996 are
combined. This transaction has been accounted for under the purchase method of
accounting. The operating results of the acquired companies from January 1, 1996
through July 30, 1996, have not been included in income for 1996.

Also, because control changed to the Bank's shareholders as a result of the
merger, the comparable financial statements presented for the preceding fiscal
year ended December 31, 1995, are those of the Bank.

Due to the transactions described above, the activity between the current and
prior year is not readily comparable. In the following analysis, discussion of
the effects of the merger are included in certain areas to assist in
understanding the Company's activity.

SUMMARY OF MERGER TRANSACTION
At the time of the merger, each share of the Bank's common stock was converted
into 1.5 shares of Bancorp's common stock, or a total of 1,798,861 shares (cash
was paid in lieu of fractional shares). The 940,986 shares of Bancorp's common
stock issued and outstanding at the time of the merger remained outstanding.
After completion of the merger, a total of 2,739,847 shares of the Company's
$.01 par value common stock was outstanding. As previously mentioned, the
acquisition was accounted for as a purchase by the Bank and acquired by issuance
of common stock. Following is a summary of the cost of assets and liabilities
acquired by the Bank at July 30, 1996:


<TABLE>
<S>                                         <C>        
Assets Acquired                             $87,473,908
Liabilities Assumed                         $82,244,236
Net Assets Acquired                         $ 5,229,672
</TABLE>


RECAPITALIZATION RESULTING FROM MERGER
As a result of the merger transaction, the January 1, 1995, balance of the
Bank's common stock outstanding and the related balance in par value have been
retroactively restated to reflect the number of shares outstanding of the
Company and the Company's one-cent par value. Additionally, additional paid-in
capital at that date has been restated to reflect the corresponding adjustment
of the balance in par value. These adjustments were made to give retroactive
application to the aforementioned recapitalization resulting from the merger on
July 30, 1996. The amounts as originally reported and as adjusted at January 1,
1995, are as follows:

<TABLE>
<CAPTION>
                                       COMMON STOCK           ADDITIONAL
                                       ------------            PAID-IN
                                   SHARES      AMOUNT          CAPITAL
                                   ------      ------          -------
<S>                               <C>       <C>           <C>           
As originally reported ($5
  par value).................     845,606   $  4,228,030  $    2,233,630
Adjustment for recapital-
  ization....................     (16,024)    (4,219,734)      4,219,734
                               ----------   ------------  --------------
As Adjusted (one-cent par
  value).....................     829,582   $      8,296  $    6,453,364
                               ==========   ============  ==============
</TABLE>

OVERVIEW OF OPERATIONS
Net income for 1996 totalled $436,000 or $.25 per share compared with $562,000
or $0.64 per share in 1995. Earnings were reduced by the payment of $400,000 in
the third quarter through the one-time SAIF Special Assessment since the Bank
holds assessable deposits acquired in the merger with Key Florida Bank, F.S.B.
(see "Capital Resources"). Return on average assets was 0.31 percent and return
on average shareholders' equity was 4.43 percent for 1996, compared to the prior
year's results of .63 percent and 8.02 percent, respectively. 

Core earnings (income before income taxes, excluding the provision for
loan losses, securities gains and losses, expenses associated with acquisition
and disposition of foreclosed properties) also were reduced by the SAIF Special
Assessment with a return on average assets from core earnings of .66 percent
and a return on average equity from core earnings of 9.78 percent.

--------------------------------------------------------------------------------
CONDENSED INCOME STATEMENT                                             [TABLE 1]
AS A PERCENT OF AVERAGE ASSETS
(Tax Equivalent Basis)
<TABLE>
<CAPTION>
                                                      1996       1995
-----------------------------------------------------------------------
<S>                                                  <C>         <C>  
Net interest income ..........................        3.78%      3.58%
Provision for loan losses ....................        (.18)      (.41)
Noninterest income:
 Investment securities gains (losses) ........        (.01)       .00
 Service charges on deposit accounts .........         .25        .35
 Other income ................................         .10        .31
Noninterest expenses .........................       (3.43)     (2.80)
                                                     -----       ----
Income before income taxes ...................         .51       1.03
Provision for income taxes including
 tax equivalent adjustment ...................        (.20)      (.39)
                                                     -----       ----
NET INCOME ...................................         .31%       .64%
                                                     =====       ====

------------------------------------------------------------------------
</TABLE>



<PAGE>   34


RESULTS OF OPERATIONS

NET INTEREST INCOME
Net interest income, on a fully tax equivalent basis (TEB), totalled $5,280,000
for 1996, an increase of $2,105,000 or 66.30 percent from Bancorp's year-earlier
performance. The average cost of interest-bearing liabilities decreased from
5.08 percent during 1995 to 4.93 percent during 1996, while the average yield on
earning assets increased from 8.17 percent during 1995 to 8.45 percent during
1996. The decrease in average interest costs and increased yields on earning
assets, coupled with increased noninterest-bearing deposits resulted in an
increase in the net interest income/yield on average earning assets from 3.78
percent in 1995 to 4.02 percent during 1996.

As a percent of average earning assets, net interest margin (TEB) was 3.76
percent in the fourth quarter, compared to 3.97 percent in the third quarter,
4.66 percent in the second quarter and 4.07 percent for the first quarter of
this year and 4.09 percent for the fourth quarter in 1995.

Average earning assets for 1996 increased $47,179,000 or 56.23 percent compared
to prior year as a result of increased loans and investment securities, along
with the increase in deposits during 1996 caused by the merger with Key Florida
Bank, F.S.B. Average loan balances increased $47,542,000 or 83.13 percent from
the prior year to $104,728,000 while average investment securities decreased
$802,000 or 3.28 percent to $23,679,000.

For the year ended December 31, 1996, average loans represented 79.90 percent of
average earning assets compared to 68.16 percent for 1995. Loan yields decreased
13 basis points, and investment security yields increased 3 basis points. Though
the loan yields decreased in 1996, the larger amount of average loans
outstanding during the year resulted in a yield increase of 28 basis points from
8.17 percent in 1995 to 8.45 percent for all earning assets. During 1996, the
Bank changed its prime rate three times beginning and ending at 8.25 percent.

For the years ended December 31, 1996 and 1995, Table 3 discloses the increases
and decreases in net interest income attributable to changes in the volume and
rates of individual earning assets and interest-bearing liabilities. The
balances of nonaccruing loans are included in average loans outstanding.


--------------------------------------------------------------------------------
CHANGES IN AVERAGE EARNING ASSETS                                      [TABLE 2]
(Dollars in thousands)
<TABLE>
<CAPTION>
                                  Increase/(Decrease)    Increase/(Decrease)
                                 --------------------  ------------------------
                                  1996    vs.  1995    1995       vs.     1994
-------------------------------------------------------------------------------
<S>                              <C>           <C>      <C>               <C>
Investment and
 mortgage-backed
 securities ................     $   (802)     (3)%     $  3,590           17%
Federal funds sold
 and other short-
 term investments ..........          439      20%         1,281          135%
Loans, net .................       47,542      83%        14,327           33%
                                 --------               --------         
 TOTAL .....................     $ 47,179      56%      $ 19,198           30%
                                 ========               ========         
</TABLE>


--------------------------------------------------------------------------------
RATE / VOLUME ANALYSIS (ON A TAX EQUIVALENT BASIS)                     [TABLE 3]
Amount of Increase (Decrease) (Dollars in thousands)
<TABLE>
<CAPTION>

                                                                       1996 vs. 1995                  1995 vs. 1994
                                                              ----------------------------     ----------------------------
                                                                     Due to Change in:              Due to Change in:
                                                              Volume      Rate      Total      Volume      Rate      Total
---------------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>        <C>       <C>       <C>          <C>       <C>     
INTEREST INCOME
Investment and mortgage-backed securities................    $    (35)  $     (5) $     (40)$      216   $    165  $    381
Federal funds sold and other short-term investments......          (1)        (1)        (2)        65         31        96
Loans....................................................       4,333        (70)     4,263      1,231        396     1,627
                                                             --------   --------  ---------  ---------   --------  --------

   TOTAL INTEREST INCOME.................................       4,297        (76)     4,221      1,512        592     2,104
                                                             --------   --------  ---------  ---------   --------  --------
INTEREST EXPENSE
Interest-bearing demand, NOW and money market............         190        (10)       180         86         92       178
Savings..................................................         223         58        281          3         20        23
Time deposits............................................       1,740       (102)     1,638        746        520     1,266
Federal funds purchased and securities sold 
 under agreement to repurchase...........................          18         (1)        17          2          1         3
                                                             --------   --------- --------- ----------   --------  --------

   TOTAL INTEREST EXPENSE................................       2,171        (55)     2,116        837        633     1,470
                                                             --------   --------  ---------  ---------   --------  --------

   NET INTEREST INCOME...................................    $  2,126   $    (21) $   2,105  $     675   $    (41) $    634
                                                             ========   ========  =========  =========   ========  ========
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>   35



CHANGES IN AVERAGE                                       [TABLE 4]
INTEREST-BEARING LIABILITIES
(Dollars in thousands)
<TABLE>
<CAPTION>
                         Increase/(Decrease)  Increase/(Decrease)
                            1996 vs. 1995        1995 vs. 1994
------------------------------------------------------------------
<S>                         <C>         <C>      <C>          <C>
Interest-bearing demand,
  NOW and money
  market.................   $ 6,537      51%     $ 3,266      34%
Savings..................     6,118     152%         141      36%
Time deposits............    32,065      58%      14,324      35%
Federal funds purchased
  and other borrowings...       459     588%          28      56%
                            -------              -------
  TOTAL..................   $45,179      62%     $17,759      32%
                            =======              =======
------------------------------------------------------------------
</TABLE>

Unlike earning asset yields, the interest rates paid on interest-bearing
liabilities decreased. The 15 basis point decrease from 5.08 percent one year
ago to 4.93 percent was primarily a result of the increase in lower rate
deposits acquired in the merger with Key Florida Bank, F.S.B. The average
balance for interest-bearing liabilities increased $45,179,000 or 62.36 percent
to $117,626,000 in 1996 compared to 1995. Table 4 shows the components
comprising this increase.

Net interest income (TEB) totalled $5,280,000 for 1996, an increase of
$2,105,000 or 66.30 percent from the prior year. Net interest income (TEB) as a
percent of average earning assets was 4.02 percent compared to 3.78 percent for
1995. The increase in this ratio during 1996 was attributed to the slight
increase in net interest margin.

Yields on earning assets increased in 1995 as a result of a change in the loan
portfolio mix from 1994 to 1995. The portfolio showed a decrease in lower
yielding residential real estate loans and a corresponding increase in higher
yielding commercial real estate loans. The yield on earning assets increased 82
basis points from 7.35 percent to 8.17 percent for the year 1995 compared to
1994. Approximately $19,000,000 of earning assets were acquired primarily with
cash received from increased deposits.

The increase in yields on average earning assets in 1995 was offset by a 104
basis point decrease in interest rates paid on average interest-bearing
liabilities from 4.04 percent in 1994 to 5.08 percent in 1995. Increasing market
interest rates caused bank management to increase the rates offered on demand
accounts, savings, money market accounts, and certificates of deposit. Rates
paid for time deposits increased 109 basis points during 1995. Average time
deposits increased 34.79 percent to $55,493.



<PAGE>   36




--------------------------------------------------------------------------------
TWO-YEAR SUMMARY                                                       [TABLE 5]

AVERAGE BALANCES, INTEREST INCOME AND EXPENSES, YIELDS AND RATES (1)

<TABLE>
<CAPTION>


(Dollars in thousands)                                                            1996                       1995
----------------------------------------------------------------------------------------------------------------------------
                                                                      AVERAGE             YIELD/   Average            Yield/
                                                                      BALANCE  INTEREST    RATE    Balance Interest    Rate
----------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>         <C>         <C>   <C>       <C>         <C>  
ASSETS

Earning assets:
Investment and mortgage-backed securities........................ $   23,679  $  1,400    5.91% $ 24,481  $  1,440    5.88%
Federal funds sold and other short-term investments..............      2,672       133    4.98%    2,233       135    6.05%
Loans, net (2)...................................................    104,728     9,545    9.11%   57,186     5,282    9.24%
                                                                    --------    ------          --------  --------
   TOTAL EARNING ASSETS..........................................    131,079    11,078    8.45%   83,900     6,857    8.17%
                                                                                ------                    --------

Allowance for loan losses........................................       (997)                       (540)
Cash and due from banks..........................................      4,504                       2,653
Bank premises and equipment......................................      3,194                       1,386
Other assets.....................................................      1,861                       1,351
                                                                    --------                    --------
   TOTAL ASSETS..................................................   $139,641                    $ 88,750
                                                                    ========                    ========


LIABILITIES AND SHAREHOLDERS' EQUITY

Interest-bearing liabilities:
Interest-bearing demand, NOW and money market....................   $ 19,380    $  571    2.95% $ 12,843  $    391    3.04%
Savings..........................................................     10,151       393    3.87%    4,033       112    2.78%
Time deposits....................................................     87,558     4,812    5.50%   55,493     3,174    5.72%
Federal funds purchased and other borrowings.....................        537        22    4.09%       78         5    6.41%
                                                                    --------    ------          --------  --------
   TOTAL INTEREST-BEARING LIABILITIES............................    117,626     5,798    4.93%   72,447     3,682    5.08%
                                                                                ------                    --------


Demand deposits:
Noninterest-bearing..............................................     11,296                       8,540
Other liabilities................................................        871                         756
                                                                    --------                    --------
   TOTAL LIABILITIES.............................................    129,793                      81,743


Shareholders' equity.............................................      9,848                       7,007
                                                                    --------                    --------
   TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY....................   $139,641                    $ 88,750
                                                                    ========                    ========

Interest expense as % of earning assets..........................                         4.42%                       4.39%


Net interest income/yield on earnings assets.....................               $5,280    4.03%           $  3,175    3.78%
                                                                                ======                    ========
----------------------------------------------------------------------------------------------------------------------------
</TABLE>


(1)   1996 Average balances are calculated using month-end totals, not daily
      average balances.
(2)   Nonaccrual loans are included in loan balances. Fees on loans have been
      included in interest on loans.



<PAGE>   37



PROVISION FOR LOAN LOSSES
Net charge-offs for 1996 increased $81,000 or 93.10 percent to $168,000. The
increase in net charge-offs and delinquencies in 1996 was offset by additions to
the allowance charged to expense. The allowance at December 31, 1996, increased
by $89,000 or 12.64 percent over that at year end 1995, before the addition of
$528,000 resulting from the merger with Key Florida Bank, F.S.B.

Bancorp's internal loan monitoring systems provide monthly analyses of
delinquencies, nonperforming assets, and potential problem loans, which are
reviewed periodically by the Board of Directors.

Management determines the provision for loan losses which is charged to
operations by analyzing and monitoring delinquencies, nonperforming loans and
the level of outstanding balances for each loan category, as well as the amount
of net charge-offs, and by assessing losses inherent in its portfolio. While
Bancorp's policies and procedures used to estimate the monthly provision for
loan losses charged to operations are considered adequate by management and are
reviewed from time to time by the Office of the Comptroller of the Currency
(OCC), there exist factors beyond the control of Bancorp, including general
economic conditions both locally and nationally, which make management's
judgment as to the adequacy of the provision necessarily approximate.

For the year ended December 31, 1996, the provision for loan losses charged to
expense was $257,000, compared to $362,000 for 1995, a 29.01 percent decrease.

For the year ended December 31, 1995, the provision for loan losses was $362,000
compared to $276,000 for 1994. The increase resulted from management's
assessment of the economic environment and the commercial real estate market and
the increase in total volume of loans outstanding.

NONINTEREST INCOME
Table 6 shows Bancorp's noninterest income for the years indicated.

--------------------------------------------------------------------------------
                                                                       [TABLE 6]
NONINTEREST INCOME
(Dollars in thousands)
<TABLE>
<CAPTION>
                             Year Ended                % Change
                          ---------------         --------------------
                          1996       1995         96/95         95/94
----------------------------------------------------------------------
<S>                       <C>        <C>          <C>         <C>
Service charges on deposit
    accounts ............ $ 345      $ 314         10%          9%
Other income ............   137        265        (48%)        65%

Investment securities
    gain (loss) .........   (14)        (7)       133%        400%
                          -----      -----
           TOTAL ........ $ 468      $ 572        (18%)        29%
                          =====      =====
</TABLE>


Noninterest income, excluding securities losses, decreased in 1996 as a result
of a recovery of $132,000 from a lawsuit in 1995. Absent the 1995 effect of the
lawsuit, noninterest income, excluding securities losses, increased as a result
of an increase in service charges on deposit accounts and an increase in other
miscellaneous fee income.

Securities transactions resulted in losses of $14,000 for the year ended
December 31, 1996, compared to losses of $7,000 in 1995, or a total change of
$7,000. The losses incurred in 1996 resulted from the Bank selling a majority of
its structured notes and several mortgage-backed securities at a point in the
market where the structured notes and mortgage-backed securities could be
replaced by higher yielding U.S. Treasury and U.S. Government Agency securities.
The change to higher yielding U.S. Treasury and U.S. Government Agency
securities was expected to offset the losses incurred on the sale of the
aforementioned securities within a short period of time.




<PAGE>   38



NONINTEREST EXPENSES
Table 7 shows Bancorp's noninterest expenses for the years indicated.

--------------------------------------------------------------------------------
                                                                       [TABLE 7]
NONINTEREST EXPENSES
(Dollars in thousands)
<TABLE>
<CAPTION>
                                                                       Year Ended      % Change
                                             1996         1995            96/95          95/94
-------------------------------------------------------------------------------------------------
<S>                                          <C>        <C>              <C>              <C>  
Salaries and benefits....................... $2,167     $  1,015         113.5%           30.3%
Occupancy and equipment.....................    719          439          63.8%           11.4%
Data processing.............................    202          179          12.8%           40.0%
Federal insurance deposit premium...........    531          112         374.1%          (35.3%)
Legal and professional......................    162          207         (21.7%)          40.0%
Amortization of core deposit                
    intangible..............................    134            0         100.0%             .0%
Other expense...............................    856          520          64.6%           50.1%
                                              -----      -------

    TOTAL NONINTEREST EXPENSE............... $4,771     $  2,472          93.0%           (7.2%)
                                             ======     ========
</TABLE>


Noninterest expenses increased in 1996 by $2,299,000 or 93.00 percent over 1995.
This increase was primarily the result of the merger with Key Florida Bank,
F.S.B., which effectively doubled the size of the Bank during the third quarter
of 1996.

Included in 1996 is the amortization of the core deposit intangible, which is a
direct result of the purchase of Key Florida Bank, F.S.B. The gross amount
recorded at the purchase was $975,000. During 1996, $134,000 was expensed.

Occupancy and equipment expense increased by $280,000 in 1996 compared to 1995,
or 63.78 percent. This increase was primarily due to the merger with Key Florida
Bank, F.S.B., which added the occupancy costs and equipment (rent, utilities,
depreciation, insurance and property taxes) associated with the Key Florida
Bank, F.S.B. branches in Bradenton (2) and Long Boat Key (1). Also included in
the occupancy and equipment expense are the depreciation and maintenance costs
associated with the acquisition of approximately $300,000 of new computer
equipment for the Bank's new management information system.

In the third quarter of 1996, the omnibus appropriations bill was signed into
law. This legislation was aimed at recapitalizing the Savings Association
Insurance Fund (SAIF) through a one-time special assessment on the insured
deposits of SAIF member institutions. Though Bancorp is a member of the Federal
Deposit Insurance Corporation (FDIC) Bank Insurance Fund (BIF), it holds
assessable deposits acquired in the merger with Key Florida Bank, F.S.B., and
due to its participation in a Section 5(d)(3) "Oakar" transaction, it was
subject to the SAIF special assessment. Based upon the amount of assessable
deposits held by the Bank at March 31, 1995, the special assessment paid by the
Bank was $400,150. This one-time SAIF special assessment caused the federal
deposit insurance premiums to increase 374.10 percent over 1995 amounts. These
premiums increased by $19,000 or 16.96 percent without regard to the one-time
assessment. Future FDIC insurance rates assessed on deposits depend on the
capital adequacy and examination ratings imposed by governing bank regulatory
authorities on individual financial institutions.

The increase in noninterest expenses in 1995 was attributable in part to a 69
percent growth in salaries and employee benefits, general salary increases and
related increases in payroll taxes due to the increase in personnel as a result
of the merger and the increase in the number of employees in the fourth quarter
of 1996 for the staffing of the Bank's Ellenton Branch, which opened the first
week of 1997.

INCOME TAXES
Income taxes for the year 1996 were $284,000 or 19.09 percent below the $351,000
for 1995 which was above the $(51,000) in 1994. The effective rate in 1996 was
39.44 percent and was 38.44 percent in 1995.

FINANCIAL CONDITION
Bancorp increased its assets 109.11 percent between December 31, 1996 and
December 31, 1995, from $96,069,000 to $200,890,000. Included in this increase
was approximately $87,474,000 in assets acquired in the merger with Key Florida
Bank, F.S.B., leaving a net increase in assets of $17,347,000 or 18.06 percent
without regard to the merger.



<PAGE>   39



CAPITAL RESOURCES
Table 8 summarizes Bancorp's capital position and selected ratios.

-----------------------------------------------------------------
CAPITAL RESOURCES (1)                                   [TABLE 8]
(Dollars in thousands)

<TABLE>
<CAPTION>
December 31                                   1996        1995
-----------------------------------------------------------------
<S>                                         <C>        <C>       
TIER 1 CAPITAL
  Common stock...........................   $      28  $    4,797
  Additional paid-in capital.............      11,401       1,752
  Retained earnings......................       1,282         864
  Treasury stock.........................          (1)          0
  Intangible assets......................        (841)          0
                                            ---------  ----------
    Total Tier 1 capital.................      11,869       7,413
                                            ---------  ----------

TIER 2 CAPITAL
  Allowance for loan losses, as limited..       1,321         704
                                            ---------  ----------
    Total Tier 2 capital.................       1,321         704
                                            ---------  ----------

Total risk-based capital.................   $  13,190  $    8,117
                                            =========  ==========

Risk-weighted assets.....................   $ 131,245  $   66,942
                                            =========  ==========

Tier 1 risk-based capital ratio..........        9.04%      11.07%
Total risk-based capital ratio...........       10.05%      12.13%
Shareholders' equity to assets...........        6.32%       7.72%
Average shareholders' equity to average
  total assets...........................        7.05%       7.90%
-----------------------------------------------------------------
</TABLE>

(1)   Amounts are exclusive of adjustments made to recognize fair value of
      certain securities in accordance with FASB No. 115 (see Notes 1 and 2 to
      consolidated financial statements).


Bancorp's capital increased by $5,342,000 at December 31, 1996 compared to year
end 1995. Of this increase, $5,230,000 was attributable to the merger of Key
Florida Bank, F.S.B. with and into Liberty National Bank which was accounted for
under the purchase method of accounting. Additionally, capital decreased
$429,000 for retirement of preferred stock, and increased by shares issued upon
the exercise of employee stock options totalling $78,000 and by net income of
$436,000.

Bancorp's ratio of stockholders' equity to year end assets was 6.32 percent
compared to the year end 1995 ratio of 7.72 percent.

Book value per common share outstanding was $4.60 per share at December 31,
1996, compared to the book value per share at year end 1995 of $7.81.

LOAN PORTFOLIO
Table 9 shows total loans (net of unearned income) by category outstanding at
the indicated dates.

--------------------------------------------------------------------------
LOANS OUTSTANDING                                                [TABLE 9]
(Dollars in thousands)

<TABLE>
<CAPTION>
December 31                                           1996          1995
--------------------------------------------------------------------------
<S>                                                 <C>          <C>     
Real estate ...................................     $121,488     $ 48,358
Commercial, financial and agriculture .........       22,561       13,050
Installment loans .............................       10,981        5,127
                                                    --------     --------
     TOTAL ....................................     $155,030     $ 66,535
                                                    ========     ========
---------------------------------------------------------------------------
</TABLE>


Bancorp makes substantially all of its loans to customers located within the two
counties of Manatee and Sarasota in Florida. It has no foreign loans or highly
leveraged transaction (HLT) loans.

The increases in Bancorp's loan balances in 1996 were attributed to the merger
with Key Florida Bank, F.S.B. and growth in residential and commercial real
estate loans. During 1996, loans receivable increased by $88,572,000 to
$155,107,000, including $70,195,000 of increased loans acquired in the merger
with Key Florida Bank, F.S.B. The increase of $18,377,000, excluding the loans
acquired in the merger, represent a 27.62 percent growth over year end 1995
balances.

At December 31, 1996, Bancorp's portfolio of mortgage loan balances secured by
residential properties amounted to $95,420,000 or 61.52 percent of total loans.
Loans secured by commercial real estate totalled $23,410,000 or 15.09 percent of
total loans. Most of the commercial real estate loans were made to local
businesses and professionals secured by owner-occupied properties. Loans and
commitments for 1-4 family residential properties and commercial real estate are
generally secured with first mortgages on property, with the loan to fair market
value of the property not exceeding 80.00 percent on the date the loan is made.

Between December 31, 1995 and December 31, 1996, residential real estate
mortgage loans increased $70,788,000 or 287.38 percent and commercial real
estate mortgage loans increased $1,842,000 or 8.54 percent. 

Installment loans at December 31, 1996 showed an increase of $6,021,000 from
year end 1995 excluding installment real estate loans.



                     
<PAGE>   40



Bancorp's market is primarily a residential area with relatively little
commercial activity other than professional retail and service businesses
serving local residents. Therefore, real estate mortgage lending (particularly
residential properties) is expected to remain an important segment of Bancorp's
lending activities. Exposure to market interest rate volatility, with respect to
mortgage loans, is managed by attempting to match maturities and repricing
opportunities for assets against liabilities, when possible. At December 31,
1996, approximately $73,000,000 or 60 percent of Bancorp's total real estate
loans were adjustable rate 10- to 30-year residential mortgage loans (ARMs) that
reprice based upon the one-year constant maturity United States Treasury Index
plus a margin. Generally, the ARMs' interest rate adjustments are limited to two
percent per annum and six percent over the life of the loan. Such ARMs may be
originated at rates greater than the index rate, but below the total of the
index rate and the margin for an initial period ending on the first adjustment
date. All such loans are generally made to borrowers upon terms and conditions
that would make such loans eligible for resale, after seasoning, under Federal
National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation
(FHLMC) guidelines. Although the Company is not actively selling residential
real estate loans, approximately $1,199,000 of such loans were sold during 1996.
ARM borrowers are qualified based upon the initial ARM loan interest rate plus
200 basis points and upon various debt service ratios of the borrower, including
a total debt service ratio of not more than 36 percent of total income.


-------------------------------------------------------------------------------
LOAN MATURITY DISTRIBUTION                                           [TABLE 10]
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
                                                      Commercial,
                                                       Financial &    Real
December 31, 1996                        Installment  Agricultural    Estate        Total
-------------------------------------------------------------------------------------------
<S>                                        <C>          <C>          <C>          <C>     
In one year or less ..................     $  2,809     $ 10,382     $ 25,739     $ 38,930
After one year but
  within five years:
      Interest rates are
      floating or adjust-
      able ...........................        1,789        3,128       10,372       15,289
  Interest rates are
      fixed ..........................        4,771        6,047        7,944       18,762

In five years or more:
  Interest rates are
      floating or adjustable .........          352        2,575       41,455       44,382
  Interest rates are fixed ...........        1,260          429       35,978       37,667
                                           --------     --------     --------     --------
      TOTAL ..........................     $ 10,981     $ 22,561     $121,488     $155,030
                                           ========     ========     ========     ========
-------------------------------------------------------------------------------------------
</TABLE>


Commercial lending activities are directed principally towards businesses whose
demand for funds are within Bancorp's lending limits, such as small- to
medium-sized professional firms, retail and wholesale outlets, and light
industrial and manufacturing concerns. Those that exceed Bancorp's lending
limits are participations with other lending institutions. Most of such loans
are secured by real estate used by such businesses, although certain lines are
unsecured. Bancorp makes a variety of consumer loans, including installment
loans, loans for automobiles, boats, home improvements and other personal,
family and household purposes, and indirect loans through dealers to finance
automobiles. Most consumer loans are secured.

Second mortgage loans and home equity lines also are extended by Bancorp. No
negative amortization loans or lines are offered at the present time. Terms of
second mortgage loans include fixed rates for up to 10 years on smaller loans of
$25,000 or less. Such loans are sometimes made for larger amounts, with a fixed
rate, but with a balloon payment upon maturity not to exceed five years. Bancorp
offers variable-rate second mortgage loans with terms of up to 15 years.
Loan-to-value ratios for these loans generally do not exceed 80 percent of
appraised value. Home equity lines are offered on a variable rate basis only and
the maximum loan-to-value ratio for such loans is normally 80 percent of the
appraised value when the loan is extended.

Bancorp has commitments to make loans (excluding unused home equity lines) of
$4,141,000 at December 31, 1996. Bancorp attempts to reduce its exposure to the
risk of the local real estate market by making commercial real estate loans
primarily on owner-occupied properties. Bancorp presently has 15 percent of its
total loans in commercial real estate. The remainder of the real estate loan
portfolio is residential mortgages to individuals, and home equity loans, which
Bancorp generally considers less susceptible to adverse effects from a downturn
in the real estate market, especially given the area's percentage of retired
persons. Bancorp's net charge-off rates for real estate loans were .16 percent
for the year ended December 31, 1996.

ALLOWANCE FOR LOAN LOSSES
Table 11 provides certain information concerning Bancorp's allowances for loan
losses for the years indicated.

The allowance for loan losses was $1,321,000 at December 31, 1996, $617,000
higher than one year earlier. Included in this increase was $528,000 which was
attributable to the merger with Key Florida Bank, F.S.B. The ratio of the
allowance for loan losses to total loans outstanding (net of unearned income)
was .85 percent at December 31, 1996, compared to 1.06 percent at December 31,
1995. The allowance for loan losses as a percent of nonaccrual loans was 82.25
percent at December 31, 1996, compared to 101.19 percent at December 31, 1995.
There were no accruing loans past due 90 days or more at December 31, 1996 or
1995.

During 1996, Bancorp experienced net charge-offs of $168,000, compared to net
charge-offs of $87,000 one year earlier. Net charge-offs as a percent of average
loans outstanding were .16 percent for 1996, as compared to the .15 percent
Bancorp reported for 1995. Net installment loan losses were $33,000 in 1996,
versus $81,000 in 1995. Commercial, financial and agricultural losses were
$105,000 and $6,000, respectively, for the same periods. Real estate loan losses
were $30,000 in 1996. In 1995, there were no charge-offs of real estate loans.



<PAGE>   41



Table 12 summarizes Bancorp's allocation of the allowance for loan losses to
each type of loan and information regarding the composition of the loan
portfolio at the dates indicated.


-------------------------------------------------------------------------------
SUMMARY OF LOAN LOSS EXPERIENCE                                      [TABLE 11]
(Dollars in thousands)

<TABLE>
<CAPTION>
Year Ended December 31                                                                                      1996     1995
-------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                       <C>      <C>     

Allowance for loan losses
  Beginning balance...................................................................................    $    704 $    429
                                                                                                          -------- --------

  Provision for loan loss expense.....................................................................         257      362
                                                                                                          -------- --------
  Addition from merger................................................................................         528        0
                                                                                                          -------- --------
Gross loan charge-offs:
     Commercial, financial and agricultural...........................................................         111        6
     Installment......................................................................................          33       87
     Real estate......................................................................................          30        0
                                                                                                          -------- --------
        TOTAL CHARGE-OFFS.............................................................................         174       93
                                                                                                          -------- --------

Recoveries:
  Commercial, financial and agricultural..............................................................           6        0
  Installment.........................................................................................           0        6
  Real estate.........................................................................................           0        0
                                                                                                          -------- --------
        TOTAL RECOVERIES..............................................................................           6        6
                                                                                                          -------- --------

        ENDING BALANCE................................................................................    $  1,321 $    704
                                                                                                          ======== ========

Loans outstanding at end of year*.....................................................................    $155,030 $ 66,535

Ratio of allowance for loan losses to loans outstanding at
  end of year.........................................................................................         .85%    1.06%

Average loans outstanding*............................................................................    $104,728 $ 57,186

Ratio of net charge-offs to average loans outstanding.................................................         .16%     .15%
</TABLE>
* Net of unearned income
-------------------------------------------------------------------------------


<PAGE>   42



The allowance for loan losses represents management's estimate of an amount
adequate in relation to the risk of future losses inherent in the loan
portfolio. In its continuing evaluation of the allowance and its adequacy,
management considers, among other factors, Bancorp's loan loss experience, the
amount of past due and nonperforming loans, current and anticipated economic
conditions, and the values of certain loan collateral, and other assets. The
size of the allowance also reflects the large amount of permanent residential
loans held by Bancorp whose historical charge-offs and delinquencies have been
lower compared to nonresidential loans. Additionally, due to the merger with Key
Florida Bank, F.S.B., a larger percentage of the Bank's loan portfolio is now
comprised of residential real estate loans which management believes requires a
lower provision for losses. This contributed to the reduction in the allowance
for loan losses as a percentage of loans outstanding at December 31, 1996,
compared to December 31, 1995.

-----------------------------------------------------------------
ALLOCATION OF THE ALLOWANCE FOR                        [TABLE 12]
LOAN LOSSES
(Dollars in thousands)
<TABLE>
<CAPTION>
                                               Percent of Loans
                                               in Each Category
                             Allowance Amount   to Total Loans
December 31                    1996     1995     1996      1995
---------------------------------------------------------------
<S>                         <C>       <C>        <C>      <C>  
Commercial and financial
  loans..................   $    596  $   325    45.1%    46.2%
Real estate loans........        585      335    44.3%    47.6%
Installment loans........        140       44    10.6%     6.2%
                            --------  -------   -----    -----
  TOTAL..................   $  1,321  $   704   100.0%   100.0%
                            ========  =======   =====    ======
-----------------------------------------------------------------
</TABLE>

It is Bancorp's policy to charge off loans in the current period in which a loss
is considered probable. There are always risks of future losses which cannot be
quantified precisely or attributed to particular loans or classes of loans.
Because these risks include the state of economy as well as conditions affecting
individual borrowers, management's judgment of the allowance is necessarily
approximate. It is also subject to regulatory examinations and determinations as
to adequacy, which may take into account such factors as the methodology used to
calculate the allowance for loan losses and the size of the allowance for loan
losses in comparison to peer group companies identified by the regulatory
agencies.

In assessing the adequacy of the allowance, management relies predominantly on
its periodic review of the loan portfolio, which is undertaken both to ascertain
whether there are probable losses which must be charged off and to assess the
risk characteristics of the portfolio in the aggregate. This review considers
the judgments of management, and also those of bank regulatory agencies that
review the loan portfolio as part of their regular examination process.

On December 31, 1995, the allowance for loan losses was $704,000, $275,000
higher than one year earlier. The ratio of the allowance for loan losses to net
loans outstanding was 1.06 percent at December 31, 1995, compared to .86 percent
at December 31, 1994.

For 1995, Bancorp had net charge-offs of $87,000 compared to $215,000 for the
same period in 1994. Total commercial, financial and agricultural loan net
(recoveries) were $0 for 1995 versus ($9,000) for the comparable period in 1994.
Total real estate net charge-offs were $0 in 1995 and $0 in 1994.


<PAGE>   43



NONPERFORMING ASSETS
Table 13 summarizes nonperforming loans and other real estate owned at the dates
indicated.
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------
NONPERFORMING ASSETS                                                          [TABLE 13]
(Dollars in thousands)


December 31                                                       1996            1995
----------------------------------------------------------------------------------------
<S>              <C>                                             <C>           <C>     
Nonaccrual loans (1) .......................................     $  1,606      $    696
Renegotiated loans .........................................            0             0
Other real estate owned and other repossessed assets .......          500           145
                                                                 --------      --------
   TOTAL NONPERFORMING ASSETS ..............................     $  2,106      $    841
                                                                 ========      ========

Amount of loans out standing at end of year (2) ............     $155,030      $ 66,535
Ratio of total nonperforming assets to loans
  outstanding and other real estate owned at
  end of period ............................................         1.36%         1.26%
Ratio of total nonperforming assets to
  total average assets .....................................         1.51%          .95%
Accruing loans past due 90 days or more ....................            0             0
-----------------------------------------------------------------------------------------
</TABLE>

(1)Interest income that could have been recorded during 1996 related to
   nonaccrual loans was $122, none of which was included in interest income or
   net income. All nonaccrual loans were secured.
(2)Net of unearned income.

--------------------------------------------------------------------------------
Nonperforming assets (other real estate owned, other repossessed assets and
nonaccrual loans) at December 31, 1996, were $2,106,000, an increase of
$1,265,000 or 150.42 percent from December 31, 1995. The increase was due to the
merger with Key Florida Bank, F.S.B., which increased the loan portfolio by
$70,195,000 effectively doubling the loans outstanding. Also, excluding the
loans acquired in the merger, loans increased $18,377,000, representing a 27.62
percent growth over year end 1995 balances. At December 31, 1996, Bancorp's
ratio of nonperforming assets to loans outstanding plus other real estate owned
was 1.36 percent, compared to 1.26 percent at December 31, 1995. The increase in
nonperforming assets from December 31, 1995 to December 31, 1996, included
increases in other real estate owned and other repossessed assets of $355,000
and increased nonaccrual loans of $910,000. At December 31, 1996, there were no
accruing loans 90 days or more past due.

At December 31, 1995, Bancorp's ratio of nonperforming assets to loans
outstanding plus other real estate owned was 1.26 percent, compared to 1.76
percent at December 31, 1994. The decrease in nonperforming assets from December
31, 1994 to December 31, 1995 included increases in other real estate owned of
$52,000, increased nonaccrual loans of $423,000 and a decrease in accruing loans
90 days or more past due of $513,000 from that at December 31, 1994.

Nonperforming assets are subject to changes in the economy, both nationally and
locally, changes in monetary and fiscal policies, and changes in conditions
affecting various borrowers from Bancorp's subsidiary bank. No assurance can be
given that nonperforming assets will not increase or otherwise change.


<PAGE>   44



INVESTMENT SECURITIES
YIELD, MATURITY AND MARKET VALUE
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                          ---------------------------------------------------------------
                                                                    U.S. Treasury
                                                            and U.S. Government Agencies      Mortgage-Backed Securities
                                                          ----------------------------------------------------------------
                                                           Market     Carrying    Weighted    Market    Carrying   Weighted
December 31, 1996                                           Value       Value      Yield      Value      Value       Yield
--------------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>         <C>           <C>     <C>        <C>            <C>
Maturity
  Within one year....................................    $    2,005  $   2,005     5.43%
  One to five years..................................        19,684     19,684     6.01%
  Five to ten years..................................           504        504     6.55%
  Over ten years and equity
    securities.......................................
Mortgage-backed securities...........................                                      $    4,075      4,075     6.42%
                                                         ----------  ---------             ---------- ----------
    TOTAL VALUE......................................    $   22,193  $  22,193     6.11%   $    4,075 $    4,075     6.42%
                                                         ==========  =========             ========== ==========

December 31, 1995....................................
    TOTAL VALUE......................................    $   18,737  $  18,737     5.40%   $    1,931 $    1,931     5.78%
                                                         ==========  =========             ========== ==========
--------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  On a tax-equivalent basis

<TABLE>
<CAPTION>
                                                                                       Securities Available For Sale
                                                                            ------------------------------------------------
                                                                                         Gross     Gross            Average
                                                                            Amortized Unrealized Unrealized  Market  Years to
December 31, 1996                                                             Cost       Gains    Losses     Value  Maturity
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>     <C>        <C>       <C>          <C> 

U.S. Treasury and U.S. Government
  Agencies................................................................   $22,242 $      54  $   (103) $ 22,193     2.54
Mortgage-backed securities................................................     4,062        28       (15)    4,075    16.80
Obligations of state and political
  subdivisions............................................................       427         8         0       435     2.25
Other securities..........................................................       712         0         0       712      .00
                                                                             ------- ---------  --------  --------
    TOTAL.................................................................   $27,443 $      90  $   (118) $ 27,415     4.51
                                                                             ======= =========  ========  ========

                                                                                       Securities Available For Sale
                                                                           ------------------------------------------------
                                                                                         Gross     Gross            Average
                                                                           Amortized  Unrealized Unrealized  Market Years to
December 31, 1995                                                            Cost        Gains    Losses     Value  Maturity
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>     <C>        <C>       <C>       <C>
U.S. Treasury and U.S. Government
  Agencies................................................................   $18,822 $      86  $   (171) $ 18,737    4.83
Mortgage-backed securities................................................     1,945         3       (17)    1,931    6.24
Obligations of state and political
  subdivisions............................................................       413         0         0       413   10.36
Other securities..........................................................       212         0         0       212    3.13
                                                                             ------- ---------  --------  --------
    TOTAL.................................................................   $21,392 $      89  $   (188) $ 21,293    5.04
                                                                             ======= =========  ========  ========
----------------------------------------------------------------------------------------------------------------------------
</TABLE>


INVESTMENT SECURITIES
Information relating to yields, amortized cost, market values, and unrealized
gains (losses) of Bancorp's investment securities is set forth in Table 14. The
yield data is determined using the amortized cost of the securities.

Effective January 1, 1994, Bancorp adopted the investment categorization and
carrying value rules as required by Financial Accounting Standards Board        
Statement of Financial Accounting Standards No. 115 (FASB 115), Accounting for
Certain Investments in Debt and Equity Securities. Under FASB 115, Bancorp
classifies its investment securities as either available-for-sale or
held-to-maturity or trading. Held-to-maturity investments are carried at
amortized cost. Securities available-for-sale and trading are carried at market
value.

Bancorp's investment in securities is classified and accounted for as securities
available-for-sale. Securities to be held for indefinite periods of time and not
intended to be held-to-maturity or on a long-term basis are classified as
available-for-sale and carried at fair value. Securities held for indefinite
periods of time include securities that management intends to use as part of its
asset and liability management strategy and that may be sold in response to
changes in interest rates, resultant prepayment risk and other factors related
to interest rate and resultant prepayment risk changes.

Bancorp has no securities classified as trading and currently has no plans to
hold or acquire any securities for trading. Other securities are classified as
held-to-maturity based on an individual analysis. All other securities are
classified as available-for-sale and represent 100 percent of the total carrying
value.


<PAGE>   45


<TABLE>
<CAPTION>
Obligations of States and Political                                                                     [TABLE 14]
          Subdivisions                               Other                                   Total
-------------------------------------------------------------------------------------------------------------------
Market     Carrying    Weighted          Market    Carrying     Weighted         Market     Carrying       Weighted
Value       Value      Yield (1)         Value      Value        Yield           Value       Value          Yield
--------------------------------------------------------------------------------------------------------------------
<C>        <C>         <C>               <C>         <C>                      <C>            <C>            <C>  
                                                                              $  2,005       $ 2,005        5.43%
$435       $  435      5.75%                                                    20,119        20,119        6.01%
                                                                                   504           504        6.55%

                                         $ 712       $ 712                         712           712
                                                                                 4,075         4,075        6.42%
----       ------                        -----       -----                    --------       -------   
$435       $  435      5.75%             $ 712       $ 712                    $ 27,415       $27,415        6.04%
====       ======                        =====       =====                    ========       =======


$413       $  413      5.75%             $ 212       $ 212                    $ 21,293       $21,293        5.88%
====       ======                        =====       =====                    ========       =======
-------------------------------------------------------------------------------------------------------------------
</TABLE>

Average outstanding investment securities during the year decreased by $802,000
to $23,679,000. The investment in securities was done after considering future
projected liquidity needs and then current economic conditions. U.S. Treasury
and Government agency securities with maturities from two to three years were
emphasized with the intent to hold these securities as available-for-sale. Also,
Bancorp continued to reduce its position in mortgage-backed securities due to
market price sensitivity. Bancorp maintained a small position in tax-exempt
securities to maximize long-term tax-equivalent yields. The changes made to the
investment securities portfolio occurred in the fourth quarter of 1996 and
increased the average yield from 5.88 percent to 5.91 percent. This was
primarily due to higher yield reinvestment opportunities.

The above-described transactions changed the composition of the investment
securities portfolio during 1996. At December 31, 1996, 80.95 percent of the
total carrying value of the $27,415,000 of the investment portfolio was
comprised of U.S. Treasury and Government agency securities. This compares to
88.00 percent at December 31, 1995. In addition, 14.86 percent of total
investment securities were represented by mortgage-backed securities compared to
9.07 percent at December 31, 1995.

The mortgage-backed securities consist of pass-through and collateralized
mortgage obligations issued by governmental agencies, primarily the Governmental
National Mortgage Association, and private issuers, primarily Federal National
Mortgage Association, Inc. Approximately seventy-five percent of the
mortgage-backed portfolio consisted of variable rate securities with the balance
invested in fixed rate securities. The primary risk associated with these
securities is an interest rate risk; that is, how a change in interest rates
influences the prepayments of the underlying mortgage obligations thereby
affecting the actual yield to maturity on the mortgage-backed security. A
decreasing trend in interest rates would increase the market value and shorten
the expected maturity of the portfolio due to the anticipated increase in
prepayments of the underlying mortgage obligations. Conversely, an increasing
trend in interest rates would have the opposite tendency to decrease the market
value and lengthen the expected maturity of the portfolio.

The unrealized net depreciation of the portfolio at December 31, 1996, was
$28,000. This represents .10 percent of amortized cost and .10 percent of
carrying value as compared unrealized net depreciation of .46 percent at
December 31, 1995. For investment securities, the largest segment of unrealized
loss at December 31, 1995, is represented by U.S. Treasury and Government agency
securities ($85,000 or .40 percent of the carrying value of the entire
portfolio). The largest segment of unrealized loss at December 31, 1996, is
represented by U.S. Treasury and government agency securities ($49,000 or .18
percent of the carrying value of the entire portfolio).

DEPOSITS
Total deposits increased $99,392,000 or 113.00 percent to $187,347,000 at
December 31, 1996, compared to one year earlier. The merger with Key Florida
Bank, F.S.B. contributed $78,801,000 of this increase, while other increases
totalled $20,591,000 or 23.41 percent increase over the 1995 balance. Although
total deposits increased, the composition of deposit type changed. As interest
rates increased, interest-bearing deposits and savings decreased while time
deposits increased by a greater amount.


<PAGE>   46
-------------------------------------------------------------------------------
MATURITY OF CERTIFICATES OF DEPOSIT                                  [TABLE 15]
OF $100,000 OR MORE
(Dollars in thousands)


<TABLE>
<CAPTION>
                                       % OF                % of
December 31                   1996     TOTAL     1995      Total
----------------------------------------------------------------
<S>                         <C>        <C>     <C>        <C>  
Maturity Group:
  Under 3 months..........  $  7,321   36.4%   $  3,021   27.2%
  3 to 6 months...........     4,830   24.0%      1,851   16.7%
  6 to 12 months..........     3,837   19.1%      1,851   16.7%
  Over 12 months..........     4,146   20.5%      4,390   39.4%
                            -------- ------    --------  -----
    TOTAL.................  $ 20,134  100.0%   $ 11,113  100.0%
                            ======== ======    ========  =====
</TABLE>
-------------------------------------------------------------------------------


Time deposits increased $65,878,000 or 112.12 percent to $124,634,000 at
December 31, 1996. Jumbo CDs increased $9,021,000 or 81.18 percent to
$20,134,000. Total time deposits increased due in part to product repricing and
increased competition for time deposits within Bancorp's market area.

The merger with Key Florida Bank, F.S.B. increased time deposits $55,367,000,
44.42 percent of the year-end balance.

Interest-bearing demand and savings increased $27,892,000, of which the merger
comprised $20,796,000. The $7,096,000 increase (excluding merger) to
$45,702,000 is 39.84 percent higher than 1995. Including the merger, there was
a 156.61 percent increase.

Noninterest-bearing demand accounts increased $5,623,000 or 49.38 percent to
$17,011,000. Excluding the additional $3,265,000 of deposits acquired in the    
merger, there was a 20.71 percent decrease.

Total deposits grew $15,238,000 or 21 percent to $87,955,000 at December 31,
1995, compared to one year earlier. Time deposits increased $13,194,000 or 29
percent to $58,756,000 at December 31, 1995. Included in this increase was an
increase in jumbo CDs of $630,000 or 6 percent to $11,113,000.

Savings deposits totalled $4,157,000 at December 31, 1995, $46,000 or 1 percent
less than at December 31, 1994. Noninterest-bearing demand deposits increased
$233,959 or 2 percent to $11,388,000 at December 31, 1995. Interest-bearing
demand and NOW accounts increased $1,856,000 or 14 percent to $13,654,000 at
December 31, 1995.

INTEREST RATE SENSITIVITY
Interest rate movements and deregulation of interest rates have made managing
Bancorp's interest rate sensitivity increasingly important. Bancorp's
Assets/Liability Management Committee is responsible for managing Bancorp's
exposure to changes in market interest rates. This committee attempts to
maintain stable net interest margins by generally matching the volume of assets
and liabilities maturing, or subject to repricing, and by adjusting rates to
market conditions and changing interest rates.

-------------------------------------------------------------------------------
INTEREST RATE SENSITIVITY ANALYSIS (1)                               [TABLE 16]
(Dollars in thousands)

<TABLE>
<CAPTION>
                               0-3            4-12           1-5           Over 5
December 31, 1996            Months          Months         Years          Years          Total
------------------------------------------------------------------------------------------------
<S>                         <C>            <C>            <C>              <C>          <C>     
Federal funds sold
  and other short-
  term investments ....     $    972       $      0       $      0              0      $    972
Investment securi-
  ties (2) ............          500          2,011         19,650          5,282        27,443
Loans .................       54,061         20,669         63,782         16,595       155,107
                              ------         ------         ------         ------       -------
Earning assets ........       55,533         22,680         83,432         21,877       183,522
                              ------         ------         ------         ------       -------

Savings deposits ......       45,702              0              0              0        45,702
Certificates of
  deposit .............       39,301         50,970         34,292             71       124,634
Federal funds purchased
  and other short-term
  borrowings ..........            0              0              0              0             0
                            --------       --------       --------       --------      --------
Interest-bearing
  liabilities .........     $ 85,003       $ 50,970       $ 34,292       $     71      $170,336
                            --------       --------       --------       --------      --------
Interest sensitivity
  gap .................     $(29,470)      $(28,290)      $ 49,140       $ 21,806      $ 13,186
                            ========       ========       ========       ========      ========

Cumulative gap ........     $(29,470)      $(57,760)      $ (8,620)      $ 13,186
                            ========       ========       ========       ========
Cumulative gap to
  earnings assets (%) .          (16%)          (31%)           (5%)            7%
Earnings assets to
  interest-bearing
  liabilities .........           65%            45%           243%           308%
--------------------------------------------------------------------------------------------------
</TABLE>


(1)   The repricing dates may differ from maturity dates for certain assets due
      to repayment assumptions.
(2)   Investment securities are stated at amortized cost.

Interest rate exposure is managed by monitoring the relationship between earning
assets and interest-bearing liabilities, focusing primarily on those that are
rate-sensitive. Rate-sensitive assets and liabilities are those that reprice at
market interest rates within a relatively short period, defined here as one year
or less. The difference between rate-sensitive assets and rate-sensitive
liabilities represents Bancorp's interest sensitivity gap, which may be either
positive (assets exceed liabilities) or negative (liabilities exceed assets).

On December 31, 1996, Bancorp had a negative gap position based on contractual
maturities and prepayment assumptions for the next twelve months with a negative
interest rate sensitivity gap as a percent of total earning assets of 16
percent. This means that Bancorp's assets reprice more slowly than its deposits.
In a declining interest rate environment, the cost of Bancorp's deposits and
other liabilities may be expected to fall faster than the interest received on
its earnings assets, thus increasing the net interest spread. If interest rates
generally increase, the negative gap means that the interest received on earning
assets may be expected to increase more slowly than the interest paid on
Bancorp's liabilities, therefore decreasing the net interest spread.


<PAGE>   47



Management monitors the gap position on an periodic basis to keep interest rate
risk within levels acceptable to Bancorp.

LIQUIDITY MANAGEMENT
The objective of liquidity management is to ensure the availability of
sufficient cash flows to meet all financial commitments and to capitalize on
opportunities for business expansion. Liquidity management addresses Bancorp's
ability to meet deposit withdrawals either on demand or at contractual maturity
and to make new loans and investments as opportunities arise.

Contractual maturities for assets and liabilities are reviewed to meet current
and future liquidity requirements. Sources of liquidity, both anticipated and
unanticipated, are maintained through a portfolio of high-quality marketable
assets, such as residential mortgage loans, investment securities, and federal
funds sold. Bancorp has access to federal funds lines of credit and is able to
provide short-term financing of its activities by selling, under agreement to
repurchase, U.S. Treasury and Government agency securities (including certain
mortgage-backed securities) not pledged to secure public deposits or trust
funds. At December 31, 1996, Bancorp had available federal funds lines of credit
of $13,000,000. At December 31, 1996, Bancorp had $500,000 U.S. Treasury and
Government agency securities pledged. At December 31, 1995, the amount of
securities pledged was also $500,000.

Liquidity, as measured in the form of cash and cash equivalents, totalled
$11,515,000 at December 31, 1996. At December 31, 1995, cash and cash
equivalents totalled $6,250,000. Cash and cash equivalents vary with seasonal
deposit movements and are generally higher in the winter than in the summer, and
vary with the level of principal repayments occurring in Bancorp's investment
securities portfolio and loan portfolio.

As is typical of financial institutions, cash flows from investing (primarily in
loans and securities) and from financing (primarily through deposit generation
and short-term borrowings) are greatly in excess of cash flows from operations.
In 1996, the cash flow used in operations of $722,000 was 53.52 percent more
than the $1,350,000 provided by operations during the same period of 1995. Cash
flows from investing and financing activities reflect the increase in
securities, loans and deposit balances experienced in 1996. In 1995, cash flows
from operations of $1,350,000 were 5 percent higher than in 1994.

CONTINGENCIES AND LEGAL MATTERS
Bancorp and Liberty National Bank are periodically parties to or otherwise
involved in legal proceedings arising in the normal course of business, such as
claims to enforce liens, claims involving the making and servicing of real
property loans, and other issues incident to its business. Management does not
believe that there is any pending or threatened proceeding against Bancorp or
Liberty National Bank which, if determined adversely, would have a material
adverse effect on the business, results of operations, or financial position of
Bancorp.

EFFECTS OF INFLATION AND CHANGING INTEREST RATES
The financial statements presented herein were prepared in accordance with
generally accepted accounting principles and do not attempt to consider changes
in the relative value of money due to inflation over a period of time.

Changing property values, in a weak economy could have a negative impact on the
value of real estate owned by Bancorp acquired through foreclosure as well as
real estate securing Bancorp's loans.  Accordingly, management conducts a
periodic review of the property owned through foreclosure and the collateral
securing delinquent loans and will write down or reserve for marginal equity
positions as deemed necessary.

Interest rates have a greater impact on a financial institutions performance
than the general levels of inflation and asset/liability analysis will continue
in order to quantify and maintain interest rate risks within levels acceptable
to Bancorp.

FASB 107 DISCLOSURES ABOUT FAIR VALUES OF
FINANCIAL INSTRUMENTS
Bancorp has calculated and reported the fair value of its financial instruments
in accordance with the Statement of Financial Accounting Standards No. 107.
While market value information has been reported for its investment securities
portfolio in prior years based on quoted market prices, this statement also
requires the estimating of fair values for financial instruments with no quoted
market prices. For most instruments with no quoted market values, there are a
variety of judgments which must be applied with a wide variation in reported
results. Management has followed the requirements of the statement and used an
acceptable method to estimate fair value for these instruments. However, various
other values could result if different assumptions were used. Therefore,
management believes it is not relevant and potentially misleading to compare the
amount of appreciation or depreciation of financial instruments with no quoted
values to any other financial institution.




<PAGE>   48



CURRENT DEVELOPMENTS:

BRANCH OPENINGS
In April 1996, Bancorp opened its University Parkway Branch, which is located in
Sarasota County. The addition of this location brought the total number of
branches to six. During the fourth quarter of 1996, Bancorp purchased an
existing structure in Ellenton, Florida (Manatee County), and renovated it for
use as its seventh branch location. The Ellenton Branch opened in early January
1997.

DIVIDENDS
During 1996, Liberty National Bank paid a dividend of $250,000 to its parent,
Key Florida Bancorp. Prior to that dividend, Liberty National Bank had never
paid cash dividends and Bancorp has not paid any cash dividends since February
1991. For the foreseeable future, Bancorp intends to retain earnings to finance
continued growth rather than pay cash dividends on Bancorp common stock. If at
any time the Bancorp Board determines to pay dividends on Bancorp common stock,
the timing and the extent to which dividends are paid by Bancorp will be
determined by such Board in light of then-existing circumstances, including
Bancorp's rate of growth, profitability, financial condition, existing and
anticipated capital requirements, the amount of funds legally available for the
payment of cash dividends, regulatory constraints and such other factors as the
Board determines relevant. The source of funds for payment of dividends by
Bancorp will be Liberty National Bank. Payments made by the Bank to Bancorp are
limited by law and regulations of the bank regulatory authorities. Under the
National Bank Act, a national bank may not pay dividends from its capital. All
dividends must be paid out of net profits then on hand, after deducting losses
and bad debts. Payments of dividends out of net profits is further limited by 12
U.S.C. Section 60(a), which prohibits a bank from declaring a dividend on its
shares of common stock until its surplus equals its stated capital, unless there
has been transferred to surplus not less than 10 percent of the bank's net
profits of the preceding two consecutive half-year periods (in the case of an
annual dividend). Pursuant to 12 U.S.C. Section 60(b), the approval of the OCC
is required if the total of all dividends declared by a bank in any calendar
year exceeds the total of its net profits for that year combined with its
retained net profits for the preceding two years, less any required transfer to
surplus.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
SFAS 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of, issued by the Financial Accounting Standards Board
(FASB) in March 1995, is effective for the Company for fiscal years beginning on
or after December 15, 1995. SFAS 121 requires that long-lived assets and certain
identifiable intangibles to be held and used by an entity, be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an assets may not be recoverable. In performing the review
for recoverability, the entity should estimate the future cash flows expected to
result from the use of that asset and its eventual disposition. If the sum of
the expected future cash flows (undiscounted and without interest charges) is
less than the carrying amount of the asset, an impairment loss is recognized.
Measurement of an impairment loss for long-lived assets and identifiable
intangibles that an entity expects to hold and use should be based on the fair
value of the asset. Management has determined that the impact of SFAS 121 on the
Company's financial statements as of December 31, 1996, is not material.

In May 1995, the Financial Accounting Standards Board issued SFAS 122,
Accounting for Mortgage Services Rights, SFAS 122 requires companies that engage
in mortgage banking activities to allocate the total cost of the mortgage loans
it acquires or originates and then sells with servicing rights retained between
the estimated fair value of the loans and the capitalized mortgage servicing
rights, if practical. SFAS 122 also requires that capitalized mortgage servicing
rights be assessed for impairment based on the fair value of those rights. SFAS
applies prospectively to fiscal years beginning after December 15, 1995. The
adoption of the provision of SFAS 122 did not have a material impact on the
financial position of the Company.

In October 1995, the FASB issued SFAS 123, Accounting for Stock-Based
Compensation, effective for fiscal years beginning after December 15, 1995. SFAS
123 requires a fair value-based method of accounting for stock-based
compensation. SFAS 123 did not have a material impact on the financial position
or results of operations of the Company.

The FASB recently issued SFAS 125, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities. This statement provides
consistent standards for distinguished transfers of financial assets that are
sales from transfers that are secured borrowings. The statement breaks new
ground in resolving long-standing questions about whether transactions should be
accounted for as secured borrowings or as sales. The approach that is used
focuses on control. A company is required to recognize the financial and
servicing assets that it controls and the liabilities that has incurred. The
opposite result would occur when control of financial assets has been
surrendered and liabilities extinguished. SFAS 125 applies prospectively to
fiscal years beginning after December 15, 1996. SFAS 127 is an amendment of SFAS
125 to defer the effective date of certain provisions of SFAS 125. No earlier or
retroactive application is allowed. The adoption of the provisions of SFAS 125
is not expected to have material impact of the financial position of the
Company.


<PAGE>   49



                        SELECTED QUARTERLY INFORMATION
--------------------------------------------------------------------------------
          Consolidated Quarterly Average Balances, Yields and Rate(1)

<TABLE>
<CAPTION>
(Dollars in thousands)                                 1996 Quarters (4)
-----------------------------------------------------------------------------------------------------------------------------------
                                               FOURTH (3)             Third (3)          Second                  First
-----------------------------------------------------------------------------------------------------------------------------------
                                           AVERAGE     YIELD/  Average    Yield/    Average     Yield/      Average        Yield/
                                           BALANCE     RATE    Balance     Rate     Balance      Rate       Balance        Rate
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>         <C>     <C>           <C>     <C>            <C>      <C>               <C>  
ASSETS                                                                                                                             
 Earnings assets:                                                                                                                  
  Investment and mortgage-backed                                                                                                   
   securities..........................   $   27,432  5.92%   $   27,204    5.83%   $   19,950     5.77%    $    20,468       5.67%
  Federal funds sold and other short-                                                                                              
   term investments    ................        4,635  5.26%        2,843    5.34%        2,141     8.03%          1,673       5.26%
  Loans, net (2).......................      154,393  8.82%      123,323    9.00%       71,728     9.92%         67,086       9.38%
                                          ----------          ----------            ----------              -----------            
   TOTAL EARNINGS ASSETS...............      186,460  8.30%      153,370    8.37%       93,819     9.00%         89,227       8.45%
Allowance for loan losses..............       (1,319)             (1,152)                 (772)                    (726)  
Cash and due from banks................        5,500               5,837                 3,732                    2,702            
Bank premises and equipment                    4,635               3,729                 2,399                    1,865            
Other assets...........................        1,934               2,567                 1,456                    2,108            
                                          ----------          ----------            ----------              -----------            
   TOTAL ASSETS........................   $  197,210          $  164,351            $  100,634              $    95,176            
                                          ==========          ==========            ==========              ===========            
                                                                                                                                   
LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                               
Interest-bearing liabilities:                                                                                                      
 Interest-bearing demand, NOW and                                                                                                  
  money market.........................   $   25,853  2.49%   $   23,512    2.44%   $   14,565     2.45%    $    13,910       2.44%
 Savings...............................       18,778  3.26%       12,868    2.86%        4,536     3.55%          4,410       3.54%
 Time deposits.........................      124,298  5.63%      102,171    5.60%       62,712     5.63%         58,942       5.78%
 Federal funds purchased and                                                                                                       
  sold under agreement to repurchase...          193  6.21%        1,497    4.75%          343     4.66%           215        5.58%
                                          ----------          ----------             ---------               ----------            
                                                                                                                                   
   TOTAL INTEREST-BEARING LIABILITIES        169,122  4.90%      140,048    4.81%       82,156     4.95%         77,477       5.05%
Demand deposits:                                                                                                                   
 Noninterest-bearing...................       14,345              12,084                10,128                    9,177            
Other liabilities......................          587                 976                   846                    1,035            
                                          ----------          ----------            ----------              -----------            
   TOTAL LIABILITIES...................      184,054             153,108                93,130                   87,689            
Shareholders' equity...................       13,156              11,243                 7,504                    7,487            
                                          ----------          ----------            ----------              -----------            
   TOTAL LIABILITIES AND                                                                                                           
     SHAREHOLDERS' EQUITY..............   $  197,210          $  164,351            $  100,634              $    95,176            
                                          ==========          ==========            ==========              ===========            
                                                                                                                                   
Interest expense as % of earning assets               4.54%                 4.39%                  4.33%                      4.38%
Net yield on earning assets............               3.76%                 3.97%                  4.66%                      4.07%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


(1)   The tax equivalent adjustment is based on a 34 percent tax rate.
(2)   Nonaccrual loans are included in loan balances. Fees on loans have been
      included in interest on loans.
(3)   Subsequent to merger with Key Florida Bank, F.S.B.
(4)   1996 Average balances are calculated using month-end totals, not daily
      average balances.


<PAGE>   50


                        SELECTED QUARTERLY INFORMATION
-------------------------------------------------------------------------------
          Consolidated Quarterly Average Balances, Yields and Rate(1)

<TABLE>
<CAPTION>

(Dollars in thousands)                                                           1995 Quarters                             
---------------------------------------------------------------------------------------------------------------------------------
                                                       FOURTH               Third               Second               First        
---------------------------------------------------------------------------------------------------------------------------------
                                                 AVERAGE    YIELD/    Average   Yield/     Average   Yield/    Average    Yield/ 
                                                 BALANCE    RATE      Balance    Rate      Balance    Rate     Balance     Rate  
---------------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>          <C>    <C>          <C>     <C>          <C>     <C>           <C>  
ASSETS                                                                                                                           
 Earnings assets:                                                                                                                 
  Investment and mortgage-backed                                                                                                   
    Securities............................      $   22,194   6.22%  $   27,051   5.83%   $   26,345   5.88%   $    21,717   5.80%
  Federal funds sold and other short-                                                                                             
     term investments.....................           1,009   7.14%       1,153  11.80%        2,241   6.85%         2,842   6.05%
  Loans, net (2)..........................          64,653   9.45%      59,367   9.31%       55,575   8.90%        50,072   9.08%
                                                ----------          ----------           ----------           -----------        
   TOTAL EARNINGS ASSETS..................          87,856   8.61%      87,571   8.27%       84,161   7.89%        74,631   8.01%
Allowance for loan losses.................            (666)               (576)                (503)                 (448)       
Cash and due from banks...................           3,866               3,469                3,989                 3,438        
Bank premises and equipment                          1,710               1,518                1,174                 1,135         
Other assets..............................           1,571               1,750                1,546                 1,795        
                                                ----------          ----------           ----------           -----------        
    TOTAL ASSETS..........................      $   94,337          $   93,732           $   90,367           $    80,551        
                                                ==========          ==========           ==========           ===========        
                                                                                                                                 
LIABILITIES AND SHAREHOLDERS' EQUITY                                                                            
Interest-bearing liabilities:                                                                                                    
  Interest-bearing demand, NOW and                                                                                
    money market..........................      $   14,213   2.87%  $   13,855   3.06%   $   12,291   3.35%   $    10,856   2.47%
  Savings.................................           4,114   2.72%       3,995   2.80%        3,937   3.20%         4,097   4.00%
  Time deposits...........................          58,065   5.94%      58,167   5.94%       56,872   5.64%        49,684   5.21%
  Federal funds purchased and securities                                                                        
    sold under agreement to...............                                                                                       
    repurchase............................               0                   0                    0                   112   7.14%
                                                ----------          ----------           ----------           -----------        
      TOTAL INTEREST-BEARING LIABILITIES            76,392   5.19%      76,017   5.27%       73,100   5.13%        64,749   4.68%
Demand deposits:                                                                                                                 
  Noninterest-bearing.....................           9,704               8,888                9,597                 8,988        
Other liabilities.........................             881               1,474                  634                   396        
                                                ----------          ----------           ----------           -----------        
      TOTAL LIABILITIES...................          86,977              86,379               83,331                74,133        
Shareholders' equity......................           7,360               7,353                7,036                 6,418        
                                                ----------          ----------           ----------           -----------        
      TOTAL LIABILITIES AND                                                                                                      
      SHAREHOLDERS' EQUITY................      $   94,337          $   93,732           $   90,367           $    80,551        
                                                ==========          ==========           ==========           ===========        
                                                                                                                                 
Interest expense as % of earning assets                      4.52%               4.56%                4.45%                 4.05%
Net yield on earning assets                                  4.09%               3.71%                3.44%                 3.96%
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)   The tax equivalent adjustment is based on a 34 percent tax rate.
(2)   Nonaccrual loans are included in loan balances. Fees on loans have been
      included in interest on loans.



<PAGE>   51


                        SELECTED QUARTERLY INFORMATION
--------------------------------------------------------------------------------
                 Quarterly Consolidated Income Statement (1)

<TABLE>
<CAPTION>
                                                         1996 Quarters                             1995 Quarters
                                             -------------------------------------    -------------------------------------
(Dollars in thousands except per share data)  FOURTH   Third     Second      First     Fourth     Third    Second    First
---------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>      <C>       <C>       <C>         <C>       <C>       <C>      <C>     
Net interest income:
  Interest income.......................     $  3,873 $  3,209  $  2,110  $  1,886    $  1,891  $  1,810  $  1,661 $  1,495
  Interest expense......................        2,120    1,685     1,017       976         992       998       937      755
                                             -------- --------  --------  --------    --------  --------  -------- --------
  Net interest income...................        1,753    1,524     1,093       910         899       812       724      740
                                             -------- --------  --------  --------    --------  --------  -------- --------
Provision for loan losses...............            0       62       135        60          78        94       145       45
                                             -------- --------  --------  --------    --------  --------  -------- --------

Noninterest income......................          106      118       117       127         129       120       210      113
                                             -------- --------  --------  --------    --------  --------  -------- --------

Noninterest expenses....................        1,626    1,604       882       659         629       622       605      616
                                             -------- --------  --------  --------    --------  --------  -------- --------

Income before income taxes..............          233      (24)      193       318         321       216       184      192

Provision for income taxes..............         (105)      10       (70)     (119)        125        82        71       73
                                             --------  -------  --------  --------    --------  --------  -------- --------

Net income .............................     $    128 $    (14) $    123  $    199    $    196  $    134  $    113 $    119
                                             ======== ========  ========  ========    ========  ========  ======== ========


PER SHARE DATA
  Net income (3)........................     $    .05 $   (.01) $    .13  $    .21    $    .21  $    .15  $    .14 $    .14
  Market price of common stock at                                                                                 
     end of period (2)..................     $   8.00 $   8.00  $   8.63  $   7.85    $   7.85  $   7.06  $   7.06 $   6.87
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)   The tax equivalent adjustment is based on a 34 percent tax rate.
(2)   Market price based on most recent stock sale.
(3)   The sum of the quarters' earnings per share does not equal the
      year-to-date earnings per share due to changes in average share
      calculations. This is in accordance with prescribed reporting
      requirements.