##### 



Report of Independent Registered Public Accounting Firm - 2006
    
    
    F-1Report of Independent Registered Public Accounting Firm - 2005
    
    
    F-2Consolidated Balance Sheets
    
    
    F-3Consolidated Statements of Income
    
    
    F-4Consolidated Statements of Shareholders Equity
    
    
    F-5Consolidated Statements of Cash Flows
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7




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##### 



Report of Independent Registered Public Accounting Firm
 
    Share-Based
Payment
 
 F-1




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##### 



Report Of Independent Registered Public Accounting Firm
 
    
 F-2




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##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Consolidated Balance Sheets
($ in thousands, except per share amounts)
 At December 31,2006
    
    
    2005AssetsCash and due from banks
    
    $
    11,238
    
    
    $
    21,604Federal funds sold
    
    
    71,334
    
    
    
    126,119Total cash and cash equivalents
    
    
    82,572
    
    
    
    147,723Securities available for sale
    
    
    152,301
    
    
    
    164,050Securities held to maturity
    
    
    51,125
    
    
    
    21,119Loans, net of allowance for loan losses of $5,557 and $4,580
    
    
    439,085
    
    
    
    360,425Accrued interest receivable
    
    
    3,444
    
    
    
    2,599Property and equipment, net
    
    
    10,754
    
    
    
    7,527Net deferred tax asset
    
    
    2,891
    
    
    
    2,771Goodwill
    
    
    950
    
    
    
    950Core deposit intangible, net
    
    
    133
    
    
    
    200Bank-owned life insurance
    
    
    6,047
    
    
    
    Other assets
    
    
    1,537
    
    
    
    530Total assets
    
    $
    750,839
    
    
    $
    707,894Liabilities and Shareholders EquityLiabilities:Deposits:Noninterest-bearing demand deposits
    
    $
    103,169
    
    
    $
    98,082Savings, NOW and money-market deposits
    
    
    227,103
    
    
    
    272,895Time deposits
    
    
    327,511
    
    
    
    245,559Total deposits
    
    
    657,783
    
    
    
    616,536Borrowings
    
    
    22,503
    
    
    
    31,884Other liabilities
    
    
    1,580
    
    
    
    1,687Total liabilities
    
    
    681,866
    
    
    
    650,107Commitments and contingencies (Notes 6, 11 and 13)Shareholders equity:Common stock, $.01 par value, 20 million shares authorized,
5,033,741 and 4,871,908 shares issued and outstanding
    
    
    50
    
    
    
    49Additional paid-in capital
    
    
    57,606
    
    
    
    54,361Retained earnings
    
    
    12,682
    
    
    
    5,338Accumulated other comprehensive loss
    
    
    (1,365
    )
    
    
    (1,961
    )Total shareholders equity
    
    
    68,973
    
    
    
    57,787Total liabilities and shareholders equity
    
    $
    750,839
    
    
    $
    707,894
  F-3




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##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Consolidated Statements of Income
(In thousands, except per share amounts)
 Year Ended December 31,2006
    
    
    2005
    
    
    2004Interest income:Loans
    
    $
    33,504
    
    
    $
    21,070
    
    
    $
    14,202Securities
    
    
    7,987
    
    
    
    4,849
    
    
    
    1,633Other
    
    
    4,396
    
    
    
    3,363
    
    
    
    820Total interest income
    
    
    45,887
    
    
    
    29,282
    
    
    
    16,655Interest expense:Deposits
    
    
    20,128
    
    
    
    11,993
    
    
    
    5,888Borrowings
    
    
    1,086
    
    
    
    213
    
    
    
    25Total interest expense
    
    
    21,214
    
    
    
    12,206
    
    
    
    5,913Net interest income
    
    
    24,673
    
    
    
    17,076
    
    
    
    10,742Provision for loan losses
    
    
    974
    
    
    
    1,540
    
    
    
    617Net interest income after provision for loan losses
    
    
    23,699
    
    
    
    15,536
    
    
    
    10,125Noninterest income:Service charges and fees on deposit accounts
    
    
    760
    
    
    
    581
    
    
    
    409Other
    
    
    326
    
    
    
    220
    
    
    
    138Total noninterest income
    
    
    1,086
    
    
    
    801
    
    
    
    547Noninterest expense:Salaries and employee benefits
    
    
    7,025
    
    
    
    5,764
    
    
    
    3,505Occupancy and equipment
    
    
    2,742
    
    
    
    2,181
    
    
    
    1,411Other
    
    
    3,722
    
    
    
    3,128
    
    
    
    2,430Total noninterest expense
    
    
    13,489
    
    
    
    11,073
    
    
    
    7,346Income before income taxes
    
    
    11,296
    
    
    
    5,264
    
    
    
    3,326Income taxes
    
    
    3,952
    
    
    
    1,929
    
    
    
    1,285Net income
    
    $
    7,344
    
    
    $
    3,335
    
    
    $
    2,041Earnings per share:Basic
    
    $
    1.49
    
    
    $
    .74
    
    
    $
    .63Diluted
    
    $
    1.39
    
    
    $
    .72
    
    
    $
    .61
  F-4




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##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Consolidated Statements of Shareholders Equity
 Years Ended December 31, 2006, 2005 and 2004
($ in thousands)
 AccumulatedRetained
    
    
    OtherCommon Stock
    
    
    Additional
    
    
    Earnings
    
    
    Compre-
    
    
    TotalNumber of
    
    
    Par
    
    
    Paid-In
    
    
    (Accumulated
    
    
    hensive
    
    
    ShareholdersShares
    
    
    Value
    
    
    Capital
    
    
    Deficit)
    
    
    Loss
    
    
    EquityBalance at December 31, 2003
    
    
    3,256,888
    
    
    $
    33
    
    
    $
    31,970
    
    
    $
    (38
    )
    
    $
    (289
    )
    
    $
    31,676Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,041
    
    
    
    
    
    
    
    2,041Other comprehensive income-Change in unrealized loss
on securities available
for sale, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    22Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,063Proceeds from stock options exercised
    
    
    6,518
    
    
    
    
    
    
    
    51
    
    
    
    
    
    
    
    
    
    
    
    51Balance at December 31, 2004
    
    
    3,263,406
    
    
    
    33
    
    
    
    32,021
    
    
    
    2,003
    
    
    
    (267
    )
    
    
    33,790Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,335
    
    
    
    
    
    
    
    3,335Other comprehensive income:Change in unrealized loss
on securities available
for sale, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,694
    )
    
    
    (1,694
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,641Net proceeds from the sale of
common stock under a private
placement offering
    
    
    1,537,222
    
    
    
    15
    
    
    
    21,463
    
    
    
    
    
    
    
    
    
    
    
    21,478Proceeds from stock options exercised
    
    
    71,280
    
    
    
    1
    
    
    
    828
    
    
    
    
    
    
    
    
    
    
    
    829Tax benefit from stock options exercised
    
    
    
    
    
    
    
    
    
    
    49
    
    
    
    
    
    
    
    
    
    
    
    49Balance at December 31, 2005
    
    
    4,871,908
    
    
    
    49
    
    
    
    54,361
    
    
    
    5,338
    
    
    
    (1,961
    )
    
    
    57,787Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,344
    
    
    
    
    
    
    
    7,344Other comprehensive income:Change in unrealized loss
on securities available
for sale, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    596
    
    
    
    596Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,940Share-based compensation
    
    
    
    
    
    
    
    
    
    
    285
    
    
    
    
    
    
    
    
    
    
    
    285Proceeds from stock options exercised
    
    
    161,833
    
    
    
    1
    
    
    
    2,051
    
    
    
    
    
    
    
    
    
    
    
    2,052Tax benefit from stock options exercised
    
    
    
    
    
    
    
    
    
    
    909
    
    
    
    
    
    
    
    
    
    
    
    909Balance at December 31, 2006
    
    
    5,033,741
    
    
    $
    50
    
    
    $
    57,606
    
    
    $
    12,682
    
    
    $
    (1,365
    )
    
    $
    68,973
  F-5




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##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Consolidated Statements of Cash Flows
(In thousands)
 Year Ended December 31,2006
    
    
    2005
    
    
    2004Cash flows from operating activities:Net income
    
    $
    7,344
    
    
    $
    3,335
    
    
    $
    2,041Adjustments to reconcile net income to net cash
provided by operating activities:Deferred income tax benefit
    
    
    (479
    )
    
    
    (570
    )
    
    
    (218
    )Provision for loan losses
    
    
    974
    
    
    
    1,540
    
    
    
    617Income from Bank-owned life insurance
    
    
    (47
    )
    
    
    
    
    
    
    Depreciation
and amortization of property and equipment 870
    
    
    
    
    
    
    694
    
    
    
    533Amortization of core deposit intangible
    
    
    67
    
    
    
    67
    
    
    
    66Net
amortization of premiums and discounts on securities (311)
    
    
    
    
    
    
    743
    
    
    
    654Tax benefit from stock options exercised
    
    
    
    
    
    
    49
    
    
    
    Share-based compensation
    
    
    285
    
    
    
    
    
    
    
    Net change in year-end balances of:Accrued interest receivable and other assets
    
    
    (1,852
    )
    
    
    (1,747
    )
    
    
    (195
    )Other liabilities
    
    
    (107
    )
    
    
    662
    
    
    
    123Net cash provided by operating activities
    
    
    6,744
    
    
    
    4,773
    
    
    
    3,621Cash flows from investing activities:Purchases of securities available for sale
    
    
    (21,687
    )
    
    
    (123,480
    )
    
    
    (31,121
    )Sales of securities available for sale
    
    
    
    
    
    
    
    
    
    
    106Maturities and principal collections on securities
available for sale
    
    
    34,712
    
    
    
    24,614
    
    
    
    18,117Purchases of securities held to maturity
    
    
    (30,016
    )
    
    
    (21,122
    )
    
    
    Net funding of loans
    
    
    (79,634
    )
    
    
    (120,751
    )
    
    
    (43,351
    )Purchase of property and equipment
    
    
    (4,097
    )
    
    
    (1,358
    )
    
    
    (1,986
    )Purchase of Bank-owned life insurance
    
    
    (6,000
    )
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (106,722
    )
    
    
    (242,097
    )
    
    
    (58,235
    )Cash flows from financing activities:Net increase in deposits
    
    
    41,247
    
    
    
    250,894
    
    
    
    79,070Net (decrease) increase in borrowings
    
    
    (9,381
    )
    
    
    25,875
    
    
    
    835Net proceeds from sale of common stock
    
    
    2,052
    
    
    
    22,307
    
    
    
    51Tax benefit from stock options exercised
    
    
    909
    
    
    
    
    
    
    
    Net cash provided by financing activities
    
    
    34,827
    
    
    
    299,076
    
    
    
    79,956Net (decrease) increase in cash and cash equivalents
    
    
    (65,151
    )
    
    
    61,752
    
    
    
    25,342Cash and cash equivalents at beginning of year
    
    
    147,723
    
    
    
    85,971
    
    
    
    60,629Cash and cash equivalents at end of year
    
    $
    82,572
    
    
    $
    147,723
    
    
    $
    85,971Supplemental disclosure of cash flow information:Cash paid for:Interest
    
    $
    20,991
    
    
    $
    12,045
    
    
    $
    5,498Income taxes
    
    $
    4,628
    
    
    $
    2,250
    
    
    $
    1,524Noncash transaction:Accumulated other comprehensive loss, net
change in unrealized loss on securities available
for sale, net of tax
    
    $
    596
    
    
    $
    (1,694
    )
    
    $
    22
  F-6




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##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Notes to Consolidated Financial Statements
 At December 31, 2006 and 2005 and for Each of the Three Years
in the Period Ended December 31, 2006
 (1) Organizational Background and Consolidation Policy
   (2) Summary of Significant Accounting Policies
 Use of Estimates.
 Cash and Cash Equivalents.
  Securities.
  F-7




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##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Notes to Consolidated Financial Statements, Continued
 (2) Summary of Significant Accounting Policies, Continued
 Securities, Continued.
 Loans.
    Allowance for Loan Losses.
     F-8




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##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Notes to Consolidated Financial Statements, Continued
 (2) Summary of Significant Accounting Policies, Continued
 Allowance for Loan Losses, Continued.
   Property and Equipment.
 Asset
    
    Estimated LivesBuildings
    
    40 yearsLand improvements
    
    15 yearsLeasehold improvements
    
    5-15 yearsFurniture and equipment
    
    5-10 years
   F-9




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##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Notes to Consolidated Financial Statements, Continued
 (2) Summary of Significant Accounting Policies, Continued
 Goodwill and Intangible Assets.
  Income Taxes.
  Transfer of Financial Assets.
  F-10




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##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Notes to Consolidated Financial Statements, Continued
 (2) Summary of Significant Accounting Policies, Continued
 Stock Option Plans.
 Accounting for
Stock Issued to Employees Accounting for Stock-Based Compensation Accounting for Stock-Based Compensation Transition and Disclosure Share-Based Payment ,
  Earnings Per Share.
 Year Ended December 31,2006
    
    2005
    
    2004Weighted-average common shares outstanding
    
    
    4,929,840
    
    
    
    4,512,372
    
    
    
    3,258,687Dilutive shares issuable under stock option plans
    
    
    367,822
    
    
    
    113,925
    
    
    
    101,037Weighted-average common shares on a diluted basis
    
    
    5,297,662
    
    
    
    4,626,297
    
    
    
    3,359,724
  F-11




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##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Notes to Consolidated Financial Statements, Continued
 (2) Summary of Significant Accounting Policies, Continued
 Off-Balance-Sheet Credit-Related Instruments.
 Comprehensive Income.
 Advertising.
 Recent Pronouncements.
   F-12




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##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Notes to Consolidated Financial Statements, Continued
 (2) Summary of Significant Accounting Policies, Continued
 Recent Pronouncements, Continued.
    Reclassification.
  F-13




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##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Notes to Consolidated Financial Statements, Continued
 (3) Securities
  Gross
    
    
    Gross
    
    
    ApproximateAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueAt December 31, 2006:Available for Sale:U. S. Agency securities
    
    $
    17,797
    
    
    $
    3
    
    
    $
    (43
    )
    
    $
    17,757Mortgage-backed securities
    
    
    136,693
    
    
    
    319
    
    
    
    (2,468
    )
    
    
    134,544$
    154,490
    
    
    $
    322
    
    
    $
    (2,511
    )
    
    $
    152,301Held to Maturity:Municipal bonds
    
    $
    51,125
    
    
    $
    67
    
    
    $
    (314
    )
    
    $
    50,878At December 31, 2005:Available for Sale:U. S. Agency securities
    
    $
    15,963
    
    
    $
    
    
    
    $
    (220
    )
    
    $
    15,743Mortgage-backed securities
    
    
    151,231
    
    
    
    18
    
    
    
    (2,942
    )
    
    
    148,307$
    167,194
    
    
    $
    18
    
    
    $
    (3,162
    )
    
    $
    164,050Held to Maturity:Municipal bonds
    
    $
    21,119
    
    
    $
    3
    
    
    $
    (731
    )
    
    $
    20,391
    Available for Sale
    
    
    Held to MaturityApproximate
    
    
    
    
    
    
    ApproximateAmortized
    
    
    Fair
    
    
    Amortized
    
    
    FairCost
    
    
    Value
    
    
    Cost
    
    
    ValueDue after one year through
five years
    
    $
    500
    
    
    $
    488
    
    
    $
    
    
    
    $
    Due after five years through
ten years
    
    
    17,297
    
    
    
    17,269
    
    
    
    98
    
    
    
    100Due after ten years
    
    
    
    
    
    
    
    
    
    
    51,027
    
    
    
    50,778Mortgage-backed securities
    
    
    136,693
    
    
    
    134,544
    
    
    
    
    
    
    
    $
    154,490
    
    
    $
    152,301
    
    
    $
    51,125
    
    
    $
    50,878
   F-14




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##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Notes to Consolidated Financial Statements, Continued
 (3) Securities, Continued
  Less Than Twelve Months
    
    
    Twelve Months or OverGross
    
    
    Approximate
    
    
    Gross
    
    
    ApproximateUnrealized
    
    
    Fair
    
    
    Unrealized
    
    
    FairLosses
    
    
    Value
    
    
    Losses
    
    
    ValueDebt securities:Available for Sale:U. S. Agency securities
    
    $
    
    
    
    $
    
    
    
    $
    (43
    )
    
    $
    15,645Mortgage-backed securities
    
    
    (16
    )
    
    
    2,616
    
    
    
    (2,452
    )
    
    
    112,807Total available for sale securities
    
    $
    (16
    )
    
    $
    2,616
    
    
    $
    (2,495
    )
    
    $
    128,452Held to maturities:Municipal bonds
    
    $
    (149
    )
    
    $
    19,555
    
    
    $
    (165
    )
    
    $
    15,586
  (4) Loans
  At December 31,2006
    
    
    2005Real estate  mortgage
    
    $
    212,378
    
    
    $
    179,323Construction and land development
    
    
    146,297
    
    
    
    111,698Commercial, financial and agricultural
    
    
    79,462
    
    
    
    69,266Installment and consumer lines
    
    
    7,157
    
    
    
    5,349Total loans
    
    
    445,294
    
    
    
    365,636Allowance for loan losses
    
    
    (5,557
    )
    
    
    (4,580
    )Deferred loan fees, net
    
    
    (652
    )
    
    
    (631
    )Loans, net
    
    $
    439,085
    
    
    $
    360,425
  F-15




---



##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Notes to Consolidated Financial Statements, Continued
 (4) Loans, Continued
  Year Ended December 31,2006
    
    
    2005
    
    
    2004Balance at beginning of year
    
    $
    4,580
    
    
    $
    3,077
    
    
    $
    2,526Provision for loan losses
    
    
    974
    
    
    
    1,540
    
    
    
    617Net loan recoveries (charge-offs)
    
    
    3
    
    
    
    (37
    )
    
    
    (66
    )Balance at end of year
    
    $
    5,557
    
    
    $
    4,580
    
    
    $
    3,077
  At December 31,2006
    
    
    2005Impaired loans with a valuation allowance
    
    $
    49
    
    
    $
    44Impaired loans without a valuation allowance
    
    
    
    
    
    
    Less  valuation allowance on impaired loans
    
    
    (6
    )
    
    
    (4
    )Total net impaired loans
    
    $
    43
    
    
    $
    40
  Year Ended December 31,2006
    
    
    2005
    
    
    2004Average net investment in impaired loans
    
    $
    49
    
    
    $
    51
    
    
    $
    349Interest income recognized on impaired loans
    
    $
    1
    
    
    $
    1
    
    
    $
    3Interest income received on impaired loans
    
    $
    1
    
    
    $
    1
    
    
    $
    3
  At December 31,2006
    
    
    2005Nonaccrual loans
    
    $
    49
    
    
    $
    44Accruing loans past due 90 days or more
    
    
    
    
    
    
    Total
    
    $
    49
    
    
    $
    44
  F-16




---



##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Notes to Consolidated Financial Statements, Continued
 (5) Property and Equipment
  At December 31,2006
    
    
    2005Land
    
    $
    2,863
    
    
    $
    994Buildings
    
    
    5,512
    
    
    
    3,921Land improvements
    
    
    177
    
    
    
    177Leasehold improvements
    
    
    1,649
    
    
    
    1,649Furniture and equipment
    
    
    3,452
    
    
    
    2,754Construction in process
    
    
    1
    
    
    
    71Total, at cost
    
    
    13,654
    
    
    
    9,566Less accumulated depreciation and amortization
    
    
    (2,900
    )
    
    
    (2,039
    )Total, net
    
    $
    10,754
    
    
    $
    7,527
  (6) Operating Leases
  Year Ended December 31,
    
    Amount2007
    
    $
    1,2602008
    
    
    1,2482009
    
    
    1,1752010
    
    
    1,1902011
    
    
    1,140Thereafter
    
    
    12,898Total
    
    $
    18,911
   F-17




---



##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Notes to Consolidated Financial Statements, Continued
 (7) Deposits
 The aggregate amount of time deposits with a minimum denomination of $100,000 is $248.5
million and $184.0 million at December 31, 2006 and 2005, respectively. At December 31,
2006, the scheduled maturities of time deposits are as follows (in thousands):
 Maturing During theYear Ending December 31,
    
    Amount2007
    
    $
    245,7642008
    
    
    72,7042009
    
    
    8,7132010
    
    
    1002011
    
    
    230$
    327,511
 (8) Borrowings
  At or For the Year EndedDecember 31,2006
    
    2005Balance at year-end
    
    $
    22,503
    
    
    $
    31,884Average balance during the year
    
    $
    24,785
    
    
    $
    6,707Interest expense during the year
    
    $
    1,085
    
    
    $
    212Average interest rate during the year
    
    
    4.38
    %
    
    
    3.16
    %
   F-18




---



##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Notes to Consolidated Financial Statements, Continued
 (9) Income Taxes
  2006
    
    
    2005
    
    
    2004Current
    
    
    Deferred
    
    
    Total
    
    
    Current
    
    
    Deferred
    
    
    Total
    
    
    Current
    
    
    Deferred
    
    
    TotalFederal
    
    $
    3,717
    
    
    $
    (402
    )
    
    $
    3,315
    
    
    $
    2,120
    
    
    $
    (484
    )
    
    $
    1,636
    
    
    $
    1,284
    
    
    $
    (187
    )
    
    $
    1,097State
    
    
    714
    
    
    
    (77
    )
    
    
    637
    
    
    
    379
    
    
    
    (86
    )
    
    
    293
    
    
    
    219
    
    
    
    (31
    )
    
    
    188$
    4,431
    
    
    $
    (479
    )
    
    $
    3,952
    
    
    $
    2,499
    
    
    $
    (570
    )
    
    $
    1,929
    
    
    $
    1,503
    
    
    $
    (218
    )
    
    $
    1,285
   At December 31,2006
    
    
    2005Allowance for loan losses
    
    $
    2,006
    
    
    $
    1,615Deferred compensation
    
    
    16
    
    
    
    Pre-opening and organizational costs
    
    
    12
    
    
    
    32Unrealized loss on securities available for sale
    
    
    824
    
    
    
    1,183Property and equipment basis difference
    
    
    83
    
    
    
    16Core deposit intangible
    
    
    (50
    )
    
    
    (75
    )Net deferred tax asset
    
    $
    2,891
    
    
    $
    2,771
  Year Ended December 31,2006
    
    
    2005
    
    
    2004Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    PercentComputed expected
income taxes
    
    $
    3,841
    
    
    
    34.0
    %
    
    $
    1,790
    
    
    
    34.0
    %
    
    $
    1,131
    
    
    
    34.0
    %Increase (decrease) in
income taxes resulting
from:State income taxes, net
of federal income tax
    
    
    400
    
    
    
    3.5
    
    
    
    195
    
    
    
    3.7
    
    
    
    124
    
    
    
    3.6Tax-exempt income,
municipal bonds
    
    
    (427
    )
    
    
    (3.7
    )
    
    
    (99
    )
    
    
    (1.9
    )
    
    
    
    
    
    
    Share-based compensation
    
    
    97
    
    
    
    .9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    41
    
    
    
    .3
    
    
    
    43
    
    
    
    .8
    
    
    
    30
    
    
    
    1.0$
    3,952
    
    
    
    35.0
    %
    
    $
    1,929
    
    
    
    36.6
    %
    
    $
    1,285
    
    
    
    38.6
    %
  F-19




---



##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Notes to Consolidated Financial Statements, Continued
 (10) Related Party Transactions
  Year Ended December 31,2006
    
    
    2005
    
    
    2004Loans:Beginning balance
    
    $
    18,766
    
    
    $
    20,287
    
    
    $
    13,132Additions
    
    
    3,908
    
    
    
    5,841
    
    
    
    7,955Repayments
    
    
    (3,413
    )
    
    
    (7,362
    )
    
    
    (800
    )Ending balance
    
    $
    19,261
    
    
    $
    18,766
    
    
    $
    20,287Deposits at end of year
    
    $
    21,866
    
    
    $
    48,437
    
    
    $
    34,809
 (11) Off-Balance-Sheet Activities
     F-20




---



##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Notes to Consolidated Financial Statements, Continued
 (11) Off-Balance-Sheet Activities, Continued
   At December 31,2006
    
    
    2005Commitments to extend credit, including
unused lines of credit
    
    $
    85,155
    
    
    $
    66,177Standby letters of credit
    
    $
    7,807
    
    
    $
    6,189Undisbursed construction loans in process
    
    $
    75,096
    
    
    $
    66,222
  (12) Significant Group Concentration of Credit Risk
  (13) Legal Contingencies
  (14) Dividend Restrictions
   F-21




---



##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Notes to Consolidated Financial Statements, Continued
 (15) Stock Option Plans
    Weighted-Weighted-
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateNumber of
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicOptions
    
    
    Price
    
    
    Term
    
    
    Value(000)Outstanding at December 31, 2003
    
    
    335,992
    
    
    $
    10.62Granted
    
    
    217,242
    
    
    $
    12.53Exercised
    
    
    (6,518
    )
    
    $
    7.82Outstanding at December 31, 2004
    
    
    546,716
    
    
    $
    11.41Granted
    
    
    230,374
    
    
    $
    14.00Exercised
    
    
    (71,280
    )
    
    $
    11.63Forfeited
    
    
    (5,000
    )
    
    $
    7.82Outstanding at December 31, 2005
    
    
    700,810
    
    
    $
    12.22Granted
    
    
    21,200
    
    
    $
    15.03Exercised
    
    
    (161,833
    )
    
    $
    12.68Outstanding at December 31, 2006
    
    
    560,177
    
    
    $
    12.20
    
    
    6.9 years
    
    $
    15,713Exercisable at December 31, 2006
    
    
    408,419
    
    
    $
    11.56
    
    
    7.1 years
    
    $
    11,718
    F-22




---



##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Notes to Consolidated Financial Statements, Continued
 (15) Stock Option Plans, Continued
  Year Ended December 31,2006
    
    
    2005
    
    
    2004Risk-free interest rate
    
    
    4.45
    %
    
    
    4.41
    %
    
    
    4.27
    %Expected dividend yield
    
    
    
    %
    
    
    
    %
    
    
    
    %Expected stock volatility
    
    
    14.6
    %
    
    
    
    %
    
    
    
    %Expected life in years
    
    
    7.5
    
    
    
    10.0
    
    
    
    10.0Per share weighted average grant-date fair value
of options issued during the year
    
    $
    4.82
    
    
    $
    4.97
    
    
    $
    4.12
   Year EndedDecember 31,2005
    
    
    2004Net income, as reported
    
    $
    3,335
    
    
    $
    2,041Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards
    
    
    (380
    )
    
    
    (600
    )Pro forma net income
    
    $
    2,955
    
    
    $
    1,441Basic earnings per share:As reported
    
    $
    .74
    
    
    $
    .63Pro forma
    
    $
    .65
    
    
    $
    .44Diluted earnings per share:As reported
    
    $
    .72
    
    
    $
    .61Pro forma
    
    $
    .64
    
    
    $
    .43
  F-23




---



##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Notes to Consolidated Financial Statements, Continued
 (16) Regulatory Matters
    MinimumTo Be WellCapitalized UnderMinimum Capital
    
    Prompt CorrectiveActual
    
    Requirement
    
    Action ProvisionsAmount
    
    %
    
    Amount
    
    %
    
    Amount
    
    %As of December 31, 2006:Total capital to Risk-
Weighted assets:Consolidated
    
    $
    74,812
    
    
    
    13.65
    %
    
    $
    43,854
    
    
    
    8.00
    %
    
    $
    
    
    
    
    N/ABank
    
    $
    70,848
    
    
    
    12.95
    %
    
    $
    43,775
    
    
    
    8.00
    %
    
    $
    54,719
    
    
    
    10.00
    %Tier I Capital to Risk-
Weighted Assets:Consolidated
    
    $
    69,255
    
    
    
    12.63
    %
    
    $
    21,927
    
    
    
    4.00
    %
    
    $
    
    
    
    
    N/ABank
    
    $
    65,291
    
    
    
    11.93
    %
    
    $
    21,888
    
    
    
    4.00
    %
    
    $
    32,831
    
    
    
    6.00
    %Tier I Capital
to Average Assets:Consolidated
    
    $
    69,255
    
    
    
    9.50
    %
    
    $
    29,156
    
    
    
    4.00
    %
    
    $
    
    
    
    
    N/ABank
    
    $
    65,291
    
    
    
    8.96
    %
    
    $
    29,133
    
    
    
    4.00
    %
    
    $
    36,416
    
    
    
    5.00
    %
  F-24




---



##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Notes to Consolidated Financial Statements, Continued
 (16) Regulatory Matters, Continued
 MinimumTo Be WellCapitalized UnderMinimum Capital
    
    Prompt CorrectiveActual
    
    Requirement
    
    Action ProvisionsAmount
    
    %
    
    Amount
    
    %
    
    Amount
    
    %As of December 31, 2005:Total capital to Risk-
Weighted assets:Consolidated
    
    $
    63,178
    
    
    
    13.96
    %
    
    $
    36,200
    
    
    
    8.00
    %
    
    $
    
    
    
    
    N/ABank
    
    $
    61,852
    
    
    
    13.59
    %
    
    $
    36,416
    
    
    
    8.00
    %
    
    $
    45,520
    
    
    
    10.00
    %Tier I Capital to Risk-
Weighted Assets:Consolidated
    
    $
    58,598
    
    
    
    12.95
    %
    
    $
    18,100
    
    
    
    4.00
    %
    
    $
    
    
    
    
    N/ABank
    
    $
    57,272
    
    
    
    12.58
    %
    
    $
    18,208
    
    
    
    4.00
    %
    
    $
    27,312
    
    
    
    6.00
    %Tier I Capital
to Average Assets:Consolidated
    
    $
    58,598
    
    
    
    8.97
    %
    
    $
    26,140
    
    
    
    4.00
    %
    
    $
    
    
    
    
    N/ABank
    
    $
    57,272
    
    
    
    8.77
    %
    
    $
    26,134
    
    
    
    4.00
    %
    
    $
    32,668
    
    
    
    5.00
    %
 (17) Fair Value of Financial Instruments
  Cash and Cash Equivalents.
 Securities.
  F-25




---



##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Notes to Consolidated Financial Statements, Continued
 (17) Fair Value of Financial Instruments, Continued
 Loans.
 Deposits.
 Borrowings.
 Off-Balance-Sheet Instruments.
  At December 31, 2006
    
    At December 31, 2005Carrying
    
    Fair
    
    Carrying
    
    FairAmount
    
    Value
    
    Amount
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    82,572
    
    
    $
    82,572
    
    
    $
    147,723
    
    
    $
    147,723Securities available for sale
    
    
    152,301
    
    
    
    152,301
    
    
    
    164,050
    
    
    
    164,050Securities held to maturity
    
    
    51,125
    
    
    
    50,878
    
    
    
    21,119
    
    
    
    20,391Net loans
    
    
    439,085
    
    
    
    436,598
    
    
    
    360,425
    
    
    
    357,643Accrued interest receivable
    
    
    3,444
    
    
    
    3,444
    
    
    
    2,599
    
    
    
    2,599Financial liabilities:Demand and savings deposits
    
    
    330,272
    
    
    
    330,272
    
    
    
    370,977
    
    
    
    370,977Time deposits
    
    
    327,511
    
    
    
    328,205
    
    
    
    245,559
    
    
    
    245,475Borrowings
    
    
    22,503
    
    
    
    22,503
    
    
    
    31,884
    
    
    
    31,884Off-balance-sheet instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
   F-26




---



##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Notes to Consolidated Financial Statements, Continued
 (18) Other Noninterest Expense
  Year Ended December 31,2006
    
    
    2005
    
    
    2004Data processing
    
    $
    1,108
    
    
    $
    922
    
    
    $
    566Marketing and business development
    
    
    486
    
    
    
    388
    
    
    
    369Professional fees
    
    
    288
    
    
    
    297
    
    
    
    233Telephone
    
    
    302
    
    
    
    215
    
    
    
    169Other
    
    
    1,538
    
    
    
    1,306
    
    
    
    1,093$
    3,722
    
    
    $
    3,128
    
    
    $
    2,430
 (19) Holding Company-Only Condensed Financial Statements
  Condensed Balance Sheets
 At December 31,2006
    
    
    2005Cash
    
    $
    3,045
    
    
    $
    1,242Investment in bank subsidiary
    
    
    64,642
    
    
    
    55,311Goodwill
    
    
    950
    
    
    
    950Core deposit intangible, net
    
    
    133
    
    
    
    200Other assets
    
    
    253
    
    
    
    134Total assets
    
    $
    69,023
    
    
    $
    57,837Other liabilities
    
    $
    50
    
    
    $
    50Shareholders equity
    
    
    68,973
    
    
    
    57,787Total liabilities and shareholders equity
    
    $
    69,023
    
    
    $
    57,837
  F-27




---



##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Notes to Consolidated Financial Statements, Continued
 (19) Holding Company-Only Condensed Financial Statements, Continued
 Condensed Statements of Income
 Year Ended December 31,2006
    
    
    2005
    
    
    2004Professional fees
    
    $
    72
    
    
    $
    70
    
    
    $
    86Amortization of core deposit intangible
    
    
    67
    
    
    
    67
    
    
    
    66Director fees
    
    
    87
    
    
    
    
    
    
    
    Other expenses
    
    
    90
    
    
    
    103
    
    
    
    44Total expenses
    
    
    316
    
    
    
    240
    
    
    
    196Income tax benefit
    
    
    (119
    )
    
    
    (90
    )
    
    
    (74
    )Loss before equity in Banks earnings
    
    
    (197
    )
    
    
    (150
    )
    
    
    (122
    )Equity in Banks earnings
    
    
    7,541
    
    
    
    3,485
    
    
    
    2,163Net income
    
    $
    7,344
    
    
    $
    3,335
    
    
    $
    2,041
 Condensed Statements of Cash Flows
 Year Ended December 31,2006
    
    
    2005
    
    
    2004Cash flows from operating activities:Loss before equity in Banks earnings
    
    $
    (197
    )
    
    $
    (150
    )
    
    $
    (122
    )Deferred income tax benefit
    
    
    (119
    )
    
    
    (90
    )
    
    
    (13
    )Amortization of core deposit intangible
    
    
    67
    
    
    
    67
    
    
    
    66Change in other assets
    
    
    
    
    
    
    102
    
    
    
    (13
    )Change in other liabilities
    
    
    
    
    
    
    (12
    )
    
    
    (130
    )Net cash used in operating activities
    
    
    (249
    )
    
    
    (83
    )
    
    
    (212
    )Cash flows from investment activities:Additional investment in Bank
    
    
    
    
    
    
    (21,200
    )
    
    
    Cash flow from financing activities:Net proceeds from sale of common stock
    
    
    
    
    
    
    21,478
    
    
    
    Proceeds from stock options exercised
    
    
    2,052
    
    
    
    829
    
    
    
    51Net cash provided by financing activities
    
    
    2,052
    
    
    
    22,307
    
    
    
    51Net increase (decrease) in cash
    
    
    1,803
    
    
    
    1,024
    
    
    
    (161
    )Cash balance at beginning of year
    
    
    1,242
    
    
    
    218
    
    
    
    379Cash balance at end of year
    
    $
    3,045
    
    
    $
    1,242
    
    
    $
    218Noncash transactions:Accumulated other comprehensive loss,
change in unrealized loss on securities
available for sale, net of tax
    
    $
    596
    
    
    $
    (1,694
    )
    
    $
    22Increase in investment in Bank subsidiary from
tax benefit of option exercises
    
    $
    909
    
    
    $
    49
    
    
    $
    Increase in investment in Bank subsidiary from
share-based compensation
    
    $
    285
    
    
    $
    
    
    
    $
    
 F-28




---



##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. AND SUBSIDIARY
 Notes to Consolidated Financial Statements, Continued
 (20) Pending Sale of the Company
  F-29