FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

         (Mark One)
  X      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
-----    EXCHANGE ACT OF 1934


                  For the quarterly period ended June 30, 2003

                                       OR

         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
-----    EXCHANGE ACT OF 1934

         For the transition period from _____ to _____

                         Commission File Number 0-24683

                               FLORIDA BANKS, INC.
             (Exact name of registrant as specified in its charter)

              FLORIDA                                         58-2364573
     (State or other jurisdiction of                     (I.R.S. Employer
      incorporation or organization)                      Identification No.)

                          5210 BELFORT ROAD, SUITE 310
                                JACKSONVILLE, FL
                                      32256
                    (Address of principal executive offices)

                                 (904) 332-7770
              (Registrant's telephone number, including area code)


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

Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes |_| No |X|

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.

Title                                     Outstanding
COMMON STOCK, $.01 PAR VALUE              6,798,368 OUTSTANDING AT July 31, 2003
PER SHARE

<PAGE>

                                Table of Contents
Part I  Financial Information

Item 1.  Financial Statements ......................................      Page 3


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

Item 3.  Qualitative and Quantitative Disclosures about
           Market Risk .............................................     Page 23

Item 4.  Controls and Procedures ...................................     Page 24


Part II   Other Information

Item 1.  Legal Proceedings .........................................     Page 24

Item 2.  Changes in Securities .....................................     Page 24

Item 3.  Defaults Upon Senior Securities ...........................     Page 24

Item 4.  Submission of Matters to a Vote of Security Holders .......     Page 25

Item 5.  Other Information .........................................     Page 25

Item 6.  Exhibits and Reports on Form 8-K ..........................     Page 25

Signatures .........................................................     Page 27

Exhibits ...........................................................     Page 28

<PAGE>

PART I.  Financial Information,  Item 1. Financial Statements
FLORIDA BANKS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS  (Unaudited)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                    June 30,            December 31,
ASSETS                                                                                                2003                  2002
<S>                                                                                              <C>                  <C>
CASH AND DUE FROM BANKS                                                                          $  92,850,657        $  26,964,504
FEDERAL FUNDS SOLD AND REPURCHASE AGREEMENTS                                                        27,372,000           62,515,000
                                                                                                 -------------        -------------
           Total cash and cash equivalents                                                         120,222,657           89,479,504
INVESTMENT SECURITIES:
  Available for sale, at fair value (cost $45,727,698 and $50,155,158 at June
    30, 2003 and December 31, 2002)                                                                 46,142,241           50,930,650
  Held to maturity, at cost (fair value $0 and $229,475 at June 30, 2003 and
    December 31, 2002)                                                                                 227,925
  Other investments                                                                                  3,304,050            2,493,350
                                                                                                 -------------        -------------
           Total investment securities                                                              49,446,291           53,651,925
MORTGAGE LOANS HELD FOR SALE                                                                       106,602,354           54,674,248
LOANS:
  Commercial real estate                                                                           381,213,368          313,120,588
  Commercial                                                                                       164,341,868          166,122,230
  Residential mortgage                                                                              31,130,448           23,080,140
  Consumer                                                                                          48,135,545           45,859,704
  Credit card and other loans                                                                        2,497,060            2,791,678
                                                                                                 -------------        -------------
           Total loans                                                                             627,318,289          550,974,340
  Allowance for loan losses                                                                         (7,997,368)          (7,263,029)
  Net deferred loan fees                                                                              (686,750)            (519,271)
                                                                                                 -------------        -------------
           Net loans                                                                               618,634,171          543,192,040
PREMISES AND EQUIPMENT, NET                                                                          5,824,760            5,466,332
ACCRUED INTEREST RECEIVABLE                                                                          2,512,374            2,375,102
DEFERRED INCOME TAXES, NET                                                                           3,563,619            3,908,751
DERIVATIVE INSTRUMENTS                                                                               2,677,306            2,321,643
OTHER REAL ESTATE OWNED                                                                                652,500              652,500
OTHER ASSETS                                                                                        11,676,790              343,505
                                                                                                 -------------        -------------
TOTAL ASSETS                                                                                     $ 921,812,822        $ 756,065,550
                                                                                                 =============        =============

LIABILITIES AND SHAREHOLDERS' EQUITY
DEPOSITS:
  Noninterest-bearing demand                                                                     $  94,871,769        $ 141,395,150
  Interest-bearing demand                                                                           51,114,265           52,803,427
  Regular savings                                                                                   73,750,262           66,940,672
  Money market accounts                                                                             25,886,843           19,210,512
  Time $100,000 and over                                                                           430,008,463          314,852,717
  Other time                                                                                        91,813,016           69,707,230
                                                                                                 -------------        -------------
          Total deposits                                                                           767,444,618          664,909,708
REPURCHASE AGREEMENTS SOLD                                                                          50,966,436            4,653,878
OTHER BORROWED FUNDS                                                                                18,867,449            9,921,898
ACCRUED INTEREST PAYABLE                                                                             2,588,192            2,377,963
TRUST PREFERRED SECURITIES                                                                           3,000,000
ACCOUNTS PAYABLE AND ACCRUED EXPENSES                                                                7,292,088            4,765,136
                                                                                                 -------------        -------------
          Total liabilities                                                                        850,158,783          686,628,583
                                                                                                 -------------        -------------
COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES
   OF SUBSIDIARY TRUST                                                                              16,534,243           16,473,092
                                                                                                 -------------        -------------
SHAREHOLDERS' EQUITY:
  Series C Preferred Stock, $100.00 par value, 50,000 shares authorized, 50,000
    shares issued and outstanding                                                                    5,000,000            5,000,000
  Common stock, $.01 par value; 30,000,000 shares authorized; 6,788,935 and
    6,768,362 shares issued, respectively                                                               67,890               67,684
  Additional paid-in capital                                                                        52,567,902           52,287,390
  Accumulated deficit (deficit of $8,134,037
     eliminated upon quasi-reorganization on December 31, 1995)                                     (2,774,546)          (4,874,873)
  Accumulated other comprehensive income, net of tax                                                   258,550              483,674
                                                                                                 -------------        -------------
          Total shareholders' equity                                                                55,119,796           52,963,875
                                                                                                 -------------        -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                       $ 921,812,822        $ 756,065,550
                                                                                                 =============        =============
</TABLE>

See notes to condensed financial statements


<PAGE>
<PAGE>

FLORIDA BANKS, INC.

<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
                                                                               Three-Month Period Ended      Six-Month Period Ended
                                                                                        June 30,                   June 30,
                                                                               -----------------------------------------------------
                                                                                   2003          2002         2003           2002
                                                                               -----------   -----------   -----------   -----------
INTEREST INCOME:
<S>                                                                            <C>           <C>           <C>           <C>
      Loans, including fees                                                    $10,733,616   $ 7,947,575   $20,019,244   $15,177,735
      Investment securities                                                        308,810       571,360       717,489     1,146,494
      Federal funds sold                                                           118,298       156,728       222,660       359,587
                                                                               -----------   -----------   -----------   -----------
                Total interest income                                           11,160,724     8,675,663    20,959,393    16,683,816
                                                                               -----------   -----------   -----------   -----------
INTEREST EXPENSE:
      Deposits                                                                   3,906,341     3,454,760     7,640,569     6,940,273
      Repurchase agreements                                                        106,382       125,323       207,274       251,458
      Borrowed funds                                                               170,251       107,967       274,914       225,103
                                                                               -----------   -----------   -----------   -----------
                Total interest expense                                           4,182,974     3,688,050     8,122,757     7,416,834
                                                                               -----------   -----------   -----------   -----------
NET INTEREST INCOME                                                              6,977,750     4,987,613    12,836,636     9,266,982
PROVISION FOR LOAN LOSSES                                                          963,686     1,027,516     1,852,725     1,407,950
                                                                               -----------   -----------   -----------   -----------
NET INTEREST INCOME AFTER
           PROVISION FOR LOAN LOSSES                                             6,014,064     3,960,097    10,983,911     7,859,032
                                                                               -----------   -----------   -----------   -----------
NONINTEREST INCOME:
      Service fees                                                                 598,291       401,070     1,116,736       769,518
      Gain on sale of mortgage loans                                             3,068,609                   5,340,235
      Mortgage loan processing fees                                                858,078                   1,335,631
      Mortgage loan origination fees                                               341,089        79,696       523,026       172,132
      Other noninterest income                                                     301,963        87,781       536,211       164,105
                                                                               -----------   -----------   -----------   -----------
                                                                                 5,168,030       568,547     8,851,839     1,105,755
NONINTEREST EXPENSES:
      Salaries and benefits                                                      6,390,489     2,522,202    11,504,383     4,711,045
      Occupancy and equipment                                                      652,953       506,740     1,281,757       973,290
      Data processing                                                              278,248       200,282       537,234       397,196
      Dividends on preferred security of subsidiary trust                          203,759       140,758       425,835       223,740
      Other                                                                      1,616,238       899,734     2,827,562     1,597,604
                                                                               -----------   -----------   -----------   -----------
                                                                                 9,141,687     4,269,716    16,576,771     7,902,875
INCOME BEFORE PROVISION
      FOR INCOME TAXES                                                           2,040,407       258,928     3,258,979     1,061,912
PROVISION FOR INCOME TAXES                                                         671,226        97,427     1,097,008       404,089
                                                                               -----------   -----------   -----------   -----------
NET INCOME                                                                       1,369,181       161,501     2,161,971       657,823
                                                                               -----------   -----------   -----------   -----------
PREFERRED STOCK DIVIDENDS                                                           62,329        20,008       123,973       140,058
                                                                               -----------   -----------   -----------   -----------
NET INCOME APPLICABLE TO COMMON SHARES                                         $ 1,306,852   $   141,493   $ 2,037,998   $   517,765
                                                                               ===========   ===========   ===========   ===========

INCOME PER COMMON SHARE:
      Basic                                                                    $      0.19   $      0.02   $      0.30   $      0.08

      Diluted                                                                  $      0.19   $      0.02   $      0.29   $      0.08

</TABLE>


See notes to condensed financial statements.


                                       -4-


<PAGE>

<TABLE>
<CAPTION>
FLORIDA BANKS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
                                                         Preferred Stock         Common Stock       Additional
                                                    ----------------------------------------------    Paid-In
                                                     Shares     Par Value     Shares     Par Value    Capital

<S>                                                  <C>       <C>          <C>           <C>       <C>
BALANCE, JANUARY 1, 2002                             102,283   $ 6,955,244  5,677,660     $ 56,777  $ 44,964,967
Comprehensive income:
  Net Income
  Unrealized gain on available for sale
    investment securities, net of tax of $144,482
    Comprehensive income
Conversion of Series B Preferred Stock into
    common stock                                    (102,283)   (6,955,244) 1,022,830       10,228     6,945,016
Exercise of stock options                                                       7,063           71        46,401
Issuance of common stock under employee
    stock purchase plan                                                        41,133          411       210,359
Issuance of restricted stock                                                   19,676          197       120,647
Issuance of Series C Preferred Stock, net             50,000     5,000,000
Series B Preferred Stock dividends paid
                                                     -------   -----------  ---------     --------  ------------
BALANCE, DECEMBER 31, 2002                            50,000     5,000,000  6,768,362       67,684    52,287,390
Comprehensive income:
  Net Income
  Unrealized gain on available for sale
    investment securities, net of tax of $94,254
Comprehensive income
Issuance of common stock to Employee
  Stock Purchase Plan                                                          14,842          148       101,816
Exercise of stock warrants                                                      4,000           40        39,960
Series C Preferred Stock offering costs                                                                  (10,677)
Exercise of stock options and issue of stock grants                             1,731           18       149,413
Series C Preferred Stock dividends paid
                                                     -------   -----------  ---------     --------  ------------
BALANCE, June 30, 2003 (Unaudited)                    50,000   $ 5,000,000  6,788,935     $ 67,890  $ 52,567,902
                                                     =======   ===========  =========     ========  ============
</TABLE>



<TABLE>
<CAPTION>
                                                                    Accumulated
                                                                       Other
                                                                  Comprehensive
                                                     Accumulated   (loss) income
                                                       Deficit       Net of Tax         Total

<S>                                                 <C>               <C>           <C>
BALANCE, JANUARY 1, 2002                            $ (6,079,156)     $ 244,202     $ 46,142,034
Comprehensive income:
  Net Income                                           1,467,058                       1,467,058
  Unrealized gain on available for sale
    investment securities, net of tax of $144,482                       239,472          239,472
    Comprehensive income                                                               1,706,530
Conversion of Series B Preferred Stock into
    common stock
Exercise of stock options                                                                 46,472
Issuance of common stock under employee
    stock purchase plan                                                                  210,770
Issuance of restricted stock                                                             120,844
Issuance of Series C Preferred Stock, net                                              5,000,000
Series B Preferred Stock dividends paid                 (262,775)                       (262,775)
                                                    ------------      ---------     ------------
BALANCE, DECEMBER 31, 2002                            (4,874,873)       483,674       52,963,875
Comprehensive income:
  Net Income                                           2,161,971                       2,161,971
  Unrealized gain on available for sale
    investment securities, net of tax of $94,254                       (225,124)        (225,124)
Comprehensive income                                                                   1,936,847
Issuance of common stock to Employee
  Stock Purchase Plan                                                                    101,964
Exercise of stock warrants                                                                40,000
Series C Preferred Stock offering costs                                                  (10,677)
Exercise of stock options and issue of stock grants                                      149,431
Series C Preferred Stock dividends paid                  (61,644)                        (61,644)
                                                    ------------      ---------     ------------
BALANCE, June 30, 2003 (Unaudited)                  $ (2,774,546)     $ 258,550      $55,119,796
                                                    ============      =========     ============
</TABLE>

See notes to condensed financial statements.

                                       -5-


<PAGE>

<TABLE>
<CAPTION>
FLORIDA BANKS, INC. CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Six-Month Period Ended
                                                                                                                June 30,
                                                                                                    -------------------------------
OPERATING ACTIVITIES:                                                                                    2003              2002
                                                                                                    -------------     -------------
<S>                                                                                                 <C>               <C>
 Net income                                                                                         $   2,161,971     $     657,823
 Adjustments to reconcile net income to net cash (used in) provided by operating activities:
   Depreciation and amortization                                                                          463,803           417,627
   Reinvested dividends on investment securities                                                          (52,536)          (69,062)
   Deferred income tax provision                                                                          480,957           392,089
   Accretion of premium on investments, net                                                              (286,903)          (39,124)
   Amortization of premium on loans                                                                        21,229            42,223
   Provision for loan losses                                                                            1,852,725         1,407,950
   (Gain) loss on foreign currency translation                                                            (24,181)           17,349
   Loss on derivative instruments                                                                          14,100            49,643
   Increase in mortgage loans held for sale                                                           (51,928,106)
   Increase in accrued interest receivable                                                               (137,272)         (233,837)
   Decrease (increase) in accrued interest payable                                                        210,229          (616,369)
   (Increase) decrease in other assets                                                                 (1,118,786)          136,745
   Increase in other liabilities                                                                        2,526,952            68,739
                                                                                                    -------------     -------------
     Net cash (used in) provided by operating activities                                              (45,815,818)        2,231,796
                                                                                                    -------------     -------------
INVESTING ACTIVITIES:
 Proceeds from sales, paydowns and maturities of investment securities:
   Available for sale                                                                                  19,119,671        12,600,564
   Held to maturity                                                                                       227,925         1,110,385
 Purchases of investment securities:
   Available for sale                                                                                 (14,352,772)      (14,200,037)
   Other investments                                                                                     (810,700)         (188,800)
 Net increase in loans held for investment                                                            (77,291,904)      (84,993,268)
 Increase in bank owned life insurance                                                                (10,214,499)
 Proceeds from sale of other real estate owned                                                                              242,979
 Purchases of premises and equipment                                                                     (822,231)       (1,199,159)
                                                                                                    -------------     -------------
   Net cash used in investing activities                                                              (84,144,510)      (86,627,336)
                                                                                                    -------------     -------------
FINANCING ACTIVITIES:
 Net decrease in demand deposits, money market accounts and savings accounts                          (34,994,421)      (23,729,780)
 Net increase in time deposits                                                                        137,261,532        97,761,976
 Increase in repurchase agreements                                                                     46,312,558        33,710,229
 Increase (decrease) in borrowed funds                                                                  8,945,551        (3,011,004)
 Proceeds from FHLB advances                                                                                              3,000,000
 Preferred stock offering costs                                                                           (10,677)
 Proceeds from exercise of stock options                                                                  149,431            63,969
 Preferred dividends paid                                                                                 (61,644)         (262,776)
 Proceeds from exercise of stock warrants                                                                  40,000
 Proceeds from issuance of trust preferred securities, net                                              3,061,151         7,706,201
                                                                                                    -------------     -------------
   Net cash provided by financing activities                                                          160,703,481       115,238,815
                                                                                                    -------------     -------------
NET INCREASE IN CASH AND CASH EQUIVALENTS                                                              30,743,153        30,843,275
CASH AND CASH EQUIVALENTS:
 Beginning of period                                                                                   89,479,504        73,989,159
                                                                                                    -------------     -------------
 End of period                                                                                      $ 120,222,657     $ 104,832,434
                                                                                                    =============     =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
 Cash paid for interest                                                                             $   7,912,528     $   8,033,203
                                                                                                    =============     =============
 Cash paid for income taxes                                                                         $   1,254,868
                                                                                                    =============     =============
NONCASH FINANCING ACTIVITIES:
 Proceeds from demand deposits used to purchase shares of
 common stock under Employee Stock Purchase Plan                                                    $     101,964     $      86,549
                                                                                                    =============     =============
</TABLE>

See notes to condensed financial statements.

                                       -6-

<PAGE>
FLORIDA BANKS, INC.


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX-MONTH PERIODS ENDED
JUNE 30, 2003 AND 2002 (UNAUDITED)
--------------------------------------------------------------------------------
1.           BASIS OF PRESENTATION

             Florida Banks,  Inc. (the "Company") was  incorporated  October 15,
             1997 to become a bank holding  company and acquire  First  National
             Bank of  Tampa  (the  "Bank").  On  August  4,  1998,  the  Company
             completed its initial public offering and its merger (the "Merger")
             with the Bank  pursuant  to which the Bank was merged with and into
             Florida Bank No.1, N.A., a wholly-owned  subsidiary of the Company,
             and renamed Florida Bank, N.A.

             The condensed  consolidated financial statements have been prepared
             in accordance  with the rules and regulations of the Securities and
             Exchange Commission related to interim financial statements.  These
             unaudited  condensed   consolidated  financial  statements  do  not
             include  all   disclosures   provided   in  the  annual   financial
             statements.  The condensed consolidated financial statements should
             be read in  conjunction  with the  financial  statements  and notes
             thereto  contained in the Company's  Annual Report to  Shareholders
             incorporated by reference into the Company's Form 10-K for the year
             ended  December 31, 2002.  All  adjustments  of a normal  recurring
             nature which, in the opinion of management, are necessary to fairly
             present the results of the interim periods have been made.  Results
             of operations  for the three and  six-month  periods ended June 30,
             2003 are not  necessarily  indicative of the results to be expected
             for the full year. The condensed  consolidated financial statements
             include  the  accounts of the  Company  and its  subsidiaries.  All
             significant   intercompany  balances  and  transactions  have  been
             eliminated in consolidation.

2.           EARNINGS PER COMMON SHARE

             The following is a  reconciliation  of the denominator  used in the
             computation of basic and diluted earnings per common share.


<TABLE>
                                                    Three-Month Period Ended               Six-Month Period Ended
                                                            June 30,                              June 30,

                                                     2003              2002               2003               2002
                                                  ---------          ---------          ---------          ---------
<S>                                               <C>                <C>                <C>                <C>
     Weighted average number of common
           shares outstanding - Basic             6,785,506          6,552,607          6,784,051          6,124,728
     Incremental shares from the assumed
           conversion of stock options              209,580             16,497            148,256             16,497
                                                  ---------          ---------          ---------          ---------
     Total - Diluted                              6,995,086          6,569,104          6,932,307          6,141,225
                                                  ---------          ---------          ---------          ---------
</TABLE>

             The incremental shares from the assumed conversion of stock options
             for the three and  six-month  periods  ended June 30, 2003 and 2002
             were  determined  using the treasury stock method,  under which the
             assumed  proceeds  were  equal to (1) the amount  that the  Company
             would  receive upon  exercise of the options plus (2) the amount of
             tax benefit that would be credited to  additional  paid-in  capital
             assuming exercise of the options.  The assumed proceeds are used to
             purchase  outstanding common shares at the Company's average market
             value for the period.


                                     - 7 -
<PAGE>

FLORIDA BANKS, INC.


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX-MONTH PERIODS ENDED
JUNE 30, 2003 AND 2002 (UNAUDITED) (Continued)
--------------------------------------------------------------------------------

3.           DERIVATIVE INSTRUMENTS

             The  following  instruments  qualify as  derivatives  as defined by
             Statement of Accounting  Standards  (SFAS) No. 133,  Accounting for
             Derivative Instruments and Hedging Activities, as amended:

<TABLE>
                                                                              June 30, 2003
                                                                 ------------------------------------
                                                                 Contract/Notional            Fair
                                                                      Amount                  Value

             <S>                                                    <C>                    <C>
             Interest rate swap agreements                          $131,000,000           $2,640,526
             Foreign currency swap agreements                       $  2,000,000           $   36,780
             Commitments to fund mortgage loans                     $153,688,618           $  595,097
</TABLE>

             Interest  rate swap  agreements  at June 30, 2003 consist of twenty
             agreements,  which effectively convert the interest rate on certain
             certificates  of deposit  from a fixed  rate to a variable  rate to
             more closely match the interest rate  sensitivity  of the Company's
             assets and liabilities. The Company has designated and assessed the
             derivatives as highly  effective  fair value hedges,  as defined by
             SFAS No.  133.  Additionally,  the Company  entered  into a foreign
             currency swap agreement  during the first quarter of 2001 that does
             not qualify for hedge accounting  under SFAS No. 133.  Accordingly,
             all  changes  in the  fair  value  of  the  foreign  currency  swap
             agreement are reflected in the earnings of the Company. The Company
             recognized  gains of $2,714 and $10,081,  respectively,  during the
             three- and  six-month  periods  ended June 30,  2003 as a result of
             changes in the fair value of the foreign currency agreement and the
             related translation adjustment.

             The  Company  has  adopted  the   provisions  of  the   Derivatives
             Implementation  Group,   Implementation  Issue  C13,  When  a  Loan
             Commitment  is  Included  in the Scope of  Statement  No. 133 ("DIG
             C13").  DIG C13 requires that loan  commitments  that relate to the
             origination  or acquisition of mortgage loans that will be held for
             resale  must  be  accounted  for  as  derivative   instruments   in
             accordance with SFAS No. 133. The fair value of commitments to fund
             mortgage loans is included in mortgage loans held for sale.

4.           PREFERRED STOCK

             On December 31, 2002,  the Company issued 50,000 shares of Series C
             preferred  stock  for  $100.00  per  share to a single  shareholder
             through a private  placement.  The Series C preferred  stock is not
             convertible  or  redeemable,  except  as a result  of a  change  in
             control.  Non-cumulative  dividends accrue at five percent annually
             and  are  payable  quarterly  in  arrears.  In  the  event  of  any
             liquidation,  dissolution  or winding up of affairs of the Company,
             holders  of  Series C  preferred  stock at the time  shall  receive
             $100.00  per  share  plus an amount  equal to  accrued  and  unpaid
             dividends  thereon  through and including the date of  distribution
             prior to any distribution to holders of common stock. The


                                      - 8 -
<PAGE>


FLORIDA BANKS, INC.


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX-MONTH PERIODS ENDED
JUNE 30, 2003 AND 2002 (UNAUDITED) (Continued)

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

             liquidation preference at June 30, 2003 was $5,063,356.

             In August 2003, subject to regulatory approval, the Company intends
             to  exchange  all of the  Series C  preferred  stock for  shares of
             Series D preferred stock,  which will be  substantially  similar to
             the Series C preferred  stock,  except the Series D preferred stock
             will be immediately  converted into 500,000 shares of the Company's
             common stock.  The preferred  shareholder has formally  applied for
             the necessary regulatory approvals for this exchange.

5.           RECENT ACCOUNTING PRONOUNCEMENTS

             In November 2002, the Financial Accounting Standards Board ("FASB")
             issued  FASB   Interpretation   No.  45  ("FIN  45"),   Guarantor's
             Accounting and Disclosure  Requirements  for Guarantees,  Including
             Guarantees of Indebtedness of Others. This Interpretation addresses
             the disclosures to be made by a guarantor in its interim and annual
             financial  statements about its obligations  under  guarantees.  In
             addition, the Interpretation  clarifies the requirements related to
             the recognition of a liability by a guarantor at the inception of a
             guarantee for the obligations  that the guarantor has undertaken in
             issuing  the   guarantee.   The  Company   adopted  the  disclosure
             requirements of FIN 45 for the fiscal year ended December 31, 2002,
             and the recognition provisions on January 1, 2003. Adoption of this
             Interpretation  did not have a  material  impact  on the  Company's
             consolidated  financial  position,  results of  operations  or cash
             flows.

             In January 2003, the FASB issued FASB  Interpretation  No. 46 ("FIN
             46"),   Consolidation   of   Variable   Interest   Entities.   This
             Interpretation  applies to variable interest entities created after
             January 31,  2003,  and to variable  interest  entities in which an
             enterprise  obtains an interest  after that date. FIN 46 applies in
             the first fiscal year or interim  period  beginning  after June 15,
             2003, to variable  interest  entities in which an enterprise held a
             variable  interest that is acquired on or before  January 31, 2003.
             The  Company  will  adopt the FIN 46 as of July 31,  2003,  however
             management  does  not  expect  adoption  to have an  impact  on the
             Company's consolidated financial position, results of operations or
             cash flows.

             In April 2003, the FASB issued SFAS No. 149, Amendment of Statement
             133 on Derivative  Instruments and Hedging  Activities  (SFAS 149).
             SFAS  149  amends  and  clarifies  the  accounting  for  derivative
             instruments,  including certain derivative  instruments embedded in
             other  contracts,  and for hedging  activities.  In  addition,  the
             statement  clarifies  when a contract  is a  derivative  and when a
             derivative  contains a financing  component  that warrants  special
             reporting  in the  statement  of cash flows.  SFAS 149 is generally
             effective prospectively for contracts entered into or modified, and
             hedging relationships  designated,  after June 30, 2003. Management
             adopted the  statement  effective  July 1, 2003 and does not expect
             adoption to have a material  impact on the  Company's  consolidated
             financial position, results of operations or cash flows.


                                     - 9 -
<PAGE>

FLORIDA BANKS, INC.


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX-MONTH PERIODS ENDED
JUNE 30, 2003 AND 2002 (UNAUDITED) (Continued)
--------------------------------------------------------------------------------

             In May 2003,  the FASB issued SFAS No. 150,  Accounting for Certain
             Financial  Instruments with Characteristics of both Liabilities and
             Equity (SFAS 150). SFAS 150 establishes standards for how an issuer
             classifies  and  measures   certain   financial   instruments  with
             characteristics of both liabilities and equity, and imposes certain
             additional disclosure requirements.  The provisions of SFAS 150 are
             generally  effective  for  financial  instruments  entered  into or
             modified after May 31, 2003.  Additionally,  the Company must apply
             the provisions of SFAS 150 to all financial  instruments on July 1,
             2003.  Upon the  adoption  of SFAS  150,  the  company's  obligated
             mandatorily  redeemable  preferred  securities of subsidiary trusts
             will be reclassified  from mezzanine  equity to debt. The dividends
             related to these  securities will be reflected as interest  expense
             on a  prospective  basis.  At June 30, 2003,  the Company had $16.5
             million  outstanding as company  obligated  mandatorily  redeemable
             preferred   securities  of  subsidiary  trusts.  The  Company  paid
             dividends  related  to  those  instruments  of  approximately  $204
             thousand  and $426  thousand for the three- and  six-month  periods
             ended June 30, 2003, respectively.  Additionally, on June 26, 2003,
             the Company  entered into a $3 million  trust  preferred  offering,
             which is classified as a liability at June 30, 2003.

6.           TRUST PREFERRED SECURITIES

             On June 26,  2003,  the  Company  participated  in a  pooled  trust
             preferred  offering.  In  connection  with  the  transaction,   the
             Company,  through its  subsidiary  trust,  Florida Banks  Statutory
             Trust III (the "Statutory Trust III"),  issued  $3,000,000 in trust
             preferred  securities.  The  Statutory  Trust III also  issued  $93
             thousand  of common  securities  to the  Company and used the total
             proceeds to purchase $3,093,000 in 30-year subordinated  debentures
             of the Company.  The trust preferred securities pay dividends at an
             initial rate of 4.16%  through  September  26, 2003.  The rate then
             becomes a floating rate based on 3-month LIBOR plus 3.10%, adjusted
             quarterly after each dividend payment date.  Dividend payment dates
             are March 26, June 26,  September  26 and December 26 of each year.
             There is a par call option  beginning  June 26, 2008. In accordance
             with SFAS 150, the trust  preferred  securities  are reflected as a
             liability  in  the  company's  condensed   consolidated   financial
             statements.

7.           GUARANTEES

             The  Company  issues  standby  letters of credit to provide  credit
             support for some creditors in case of default. As of June 30, 2003,
             the  carrying  amount  of the  liability  was $0  and  the  maximum
             potential payment was $10,575,257.


                                     - 10 -
<PAGE>

FLORIDA BANKS, INC.


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX-MONTH PERIODS ENDED
JUNE 30, 2003 AND 2002 (UNAUDITED) (Continued)
--------------------------------------------------------------------------------

8.           SEGMENT REPORTING

             Prior to October 1, 2002, the Company had one reporting segment. In
             October,  2002,  the Company  started a mortgage  banking  division
             which is managed  as a  segment.  Accordingly,  from  October  2002
             forward,  the Company has two reporting  segments,  the  commercial
             bank and the mortgage bank. The  commercial  bank segment  provides
             its commercial  customers  such products as working  capital loans,
             equipment loans and leases,  commercial real estate loans and other
             business  related  products and services.  This segment also offers
             mortgage  loans to  principals  of its  commercial  customers.  The
             mortgage bank segment  originates  mortgage loans through a network
             of mortgage  brokers  and sells these loans (on a wholesale  basis)
             into the secondary market.  Information about reportable  segments,
             and   reconciliation   of  such  information  to  the  consolidated
             financial  statements  as of and for the  three-month  period ended
             June 30, 2003 follows:

             <TABLE>
                                               Commercial         Mortgage                           Intersegment    Consolidated
                                                  Bank              Bank              Other          Eliminations      Total
                                              ------------      ------------      ------------       ------------    ------------
             <S>                              <C>               <C>               <C>                                <C>
             Net interest income              $  5,749,975      $  1,192,436      $     35,339                       $  6,977,750
             Noninterest income                  1,223,368         3,926,686            17,976                          5,168,030
             Provision for loan losses             963,686                                                                963,686
             Noninterest expense                 4,451,941         3,367,485         1,322,261                          9,141,687
             Income (loss) before taxes          1,557,716         1,751,637        (1,268,946)                         2,040,407
             Assets                            806,484,010       108,629,995        83,933,588        (77,234,771)   $921,812,822
             Expenditures for additions
             to premises and equipment             228,328           265,720            70,828                            564,876
             </TABLE>








                                     - 11 -
<PAGE>

FLORIDA BANKS, INC.


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX-MONTH PERIODS ENDED
JUNE 30, 2003 AND 2002 (UNAUDITED) (Continued)
--------------------------------------------------------------------------------

             Information about reportable  segments,  and reconciliation of such
             information to the consolidated  financial statements as of and for
             the six-month period ended June 30, 2003 follows:

             <TABLE>
                                                Commercial          Mortgage                         Intersegment      Consolidated
                                                   Bank               Bank            Other          Eliminations         Total
                                                ------------      ------------     ------------      ------------      ------------
             <S>                                <C>               <C>              <C>                                 <C>
             Net interest income                $ 10,954,868      $  1,788,589     $     93,179                        $ 12,836,636
             Noninterest income                    2,148,343         6,675,866           27,630                           8,851,839
             Provision for loan losses             1,852,725                                                              1,852,725
             Noninterest expense                   8,470,833         5,736,337        2,369,601                          16,576,771
             Income (loss) before taxes            2,779,653         2,728,118       (2,248,792)                          3,258,979
             Assets                              806,484,010       108,629,995       83,933,588       (77,234,771)     $921,812,822
             Expenditures for additions
                   to premises and equipment         457,330           293,951           70,950                             822,231
             </TABLE>

             The  accounting  policies  of the  segments  are the  same as those
             described in the summary of significant  accounting  policies found
             in footnote 1 of the Company's  consolidated  financial  statements
             for the years  ended  December  31,  2002,  2001 and 2000  filed in
             conjunction  with the Company's  annual report on form 10-K for the
             year ended  December 31, 2002.  The Company  evaluates  performance
             based on profit or loss from operations before income taxes.

             The Company's reportable segments are strategic business units that
             offer different products and services.  They are managed separately
             because each segment  appeals to different  markets and accordingly
             requires different technology and marketing strategies.

             The Company derives a majority of its revenues from interest income
             and gain on sale of mortgage loans and the chief operating decision
             maker  relies  primarily  on net income  before taxes to assess the
             performance of the segments and make decisions  about  resources to
             be allocated to the segments.  Therefore, the segments are reported
             above using net income before taxes.  The Company does not allocate
             income taxes to the segments.  The Company does not have  operating
             segments  other  than  those  reported.  Parent  Company  financial
             information  is included in the other  category above and is deemed
             to represent an overhead function rather than an operating segment.
             The Company does not have a single external  customer from which it
             derives 10  percent or more of its  revenues  and  operates  in one
             geographical area.

                                     - 12 -
<PAGE>

FLORIDA BANKS, INC.


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX-MONTH PERIODS ENDED
JUNE 30, 2003 AND 2002 (UNAUDITED) (Continued)
--------------------------------------------------------------------------------

9.           STOCK OPTIONS

             Pursuant  to the  disclosure  requirements  of SFAS  No.  148,  the
             following table provides an expanded reconciliation for all periods
             presented  that adds  back to  reported  net  income  the  recorded
             expense under  Accounting  Principles Board Opinion ("APB") No. 25,
             net of related  income tax  effects,  deducts  the total fair value
             expense  under SFAS No. 123, net of related  income tax effects and
             shows the reported and pro forma earnings per share amounts.

             <TABLE>
                                                                     Three-Month Period Ended            Six-Month Period Ended
                                                                             June 30,                            June 30,
                                                                     ------------------------            ------------------------
                                                                      2003              2002             2003                2002
             Net income applicable to common shares
             <S>                                                  <C>               <C>               <C>               <C>
                   As reported                                    $ 1,306,852       $   141,493       $ 2,037,998       $   517,765
             Total stock-based employee com pensation
                   cost included in the determination of net
                   income, net of related tax effects                  46,877            37,685            87,112            37,685
             Total stock-based employee compensation
                   cost determined under fair value method
                   for all awards, net of related tax effects         (48,838)          (57,134)          (88,319)         (106,725)
                                                                  -----------       -----------       -----------       -----------
             Pro form a net income applicable
                   to common shares                               $ 1,304,891       $   122,044       $ 2,036,791       $   448,725
                                                                  ===========       ===========       ===========       ===========
             Earnings per share - Basic
                   As reported                                    $      0.19       $      0.02       $      0.30       $      0.08
                   Pro forma                                      $      0.19       $      0.02       $      0.30       $      0.07
             Earnings per share - Diluted
                   As reported                                    $      0.18       $      0.02       $      0.29       $      0.08
                   Pro forma                                      $      0.18       $      0.02       $      0.29       $      0.07
             Shares used for computation
                   Basic                                            6,785,506         6,552,607         6,784,051         6,124,728
                   Diluted                                          6,995,086         6,569,104         6,932,307         6,141,225
             </TABLE>


10.          SUBSEQUENT EVENT

             On July 16, 2003, the Company filed a  registration  statement with
             the Securities and Exchange  Commission for a planned  underwritten
             follow-on   primary  public  offering  of  its  common  stock.  The
             registration  statement covers 2,300,000 shares (including  300,000
             shares  which may be issued  solely  to cover  over-allotments)  of
             common stock for sale.

                                     - 13 -
<PAGE>

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

The  following  discussion  should  be read in  conjunction  with the  condensed
consolidated  financial statements and related notes appearing elsewhere in this
Quarterly Report on Form 10-Q.

Critical Accounting Policies

The preparation of the condensed  consolidated  financial  statements,  on which
this Management's  Discussion and Analysis is bases, requires Management to make
estimates,  which impact these condensed consolidated financial statements.  The
most critical of these estimates and accounting policies relate to the allowance
for loan losses, other real estate owned, and derivative financial  instruments.
For a more complete discussion of these and other accounting policies,  see Note
1 to the Company's consolidated financial statements for December 31, 2002, 2001
and 2000,  and the years then ended,  filed in  conjunction  with the  Company's
Annual Report on Form 10-K for the year ended December 31, 2002.

Allowance for Loan Losses - The Company carefully monitors the credit quality of
loan  portfolios and makes estimates about the amount of credit losses that have
been  incurred  at  each  financial   statement  reporting  date.  This  process
significantly impacts the financial statements and involves complex,  subjective
judgments.  The allowance is largely  determined  based upon the market value of
the underlying collateral.  Market values of collateral are generally based upon
appraisals obtained from independent  appraisers.  If market conditions decline,
the  allowance  for loan losses  would be  negatively  impacted  resulting  in a
negative  impact on the Company's  earnings.  The allowance for loan losses is a
significant estimate that can and does change based on management's  assumptions
about specific borrowers and applicable  economic and environmental  conditions,
among other factors.

Other Real Estate Owned - The Company  obtains real estate through  foreclosure.
Such  property  is  recorded  based  upon  the  market  value  determined  by an
independent  appraisal less estimated selling cost. If market conditions decline
in the area in which the  property  is  located,  then the  value of other  real
estate owned will be negatively impacted,  resulting in a negative impact to the
Company's earnings.

Derivative  Instruments - The Company has entered into several interest swaps, a
foreign currency swap and had provided interest rate swaps to loan participants.
As a result of these  activities  the  Company  recognizes  income  and  expense
related to such  derivative  instruments as determined by the change in the fair
market  value of these  derivative  instruments.  The fair market value of these
instruments is determined by quotes obtained from the related counter parties in
combination  with  a  valuation  model  utilizing  discounted  cash  flows.  The
valuation of these  derivative  instruments  is a  significant  estimate that is
largely  affected by changes in interest rates. If interest rates  significantly
increase or decrease,  the value of these instruments will significantly change,
resulting in an impact on the earnings of the Company.

Commitments to Originate Mortgage Loans - The Company enters into commitments to
originate  mortgage  loans  whereby the interest rate on the loans is determined
prior to funding (rate lock  commitments).  Rate lock  commitments on loans that
are intended to be sold are  considered  to be  derivatives  and are  therefore,
recorded at fair value with changes in fair value recorded in earnings. The fair
value of these commitments is included in mortgage loans held for sale.

                                     - 14 -
<PAGE>

RESULTS OF OPERATIONS

Three Months Ended June 30, 2003 Compared to Three Months Ended June 30, 2002

The Company's net income  applicable to common shares for the second  quarter of
2003 was $1.4 million, compared to $142 thousand for the second quarter of 2002.
Basic and  diluted  income per common  share for the second  quarter of 2003 was
$.19 compared to $.02 for the second quarter of 2002. The increase in net income
can be attributed to increased net interest income,  and increased  non-interest
income,  partially offset by an increase in the provision for loan losses and an
increase in non-interest expenses.

The  increase in net interest  income of $2.0 million or 39.9%,  to $7.0 million
for the second  quarter of 2003 compared to $5.0 million for the second  quarter
of 2002,  consists of an increase in interest income of $2.5 million,  or 28.6%,
and an increase in interest expense of $495 thousand,  or 13.4%. The increase in
interest  income in the second quarter of 2003 is primarily  attributable  to an
increase of $2.8 million in interest and fees on loans resulting from the growth
in the loan  portfolio,  partially  offset by decreases in interest  income from
investments  and federal funds sold. The increase in interest  expense  resulted
primarily  from an increase of $452  thousand  in interest on  deposits,  and an
increase of $62 thousand in interest on borrowed  funds,  partially  offset by a
decrease in interest on repurchase agreements.  The increase in interest expense
on deposits and borrowed funds is primarily attributable to an increase in these
liabilities,  partially  offset by a  decrease  in market  interest  rates.  The
decrease in interest expense on repurchase agreements is primarily  attributable
to the decline in market interest rates on these instruments.

The  provision for loan losses  charged to operations  decreased $64 thousand to
$964  thousand  for the second  quarter of 2003 from $1.0  million in the second
quarter of 2002. This decrease primarily reflects a slowing in the growth of the
portfolio of loans held for investment in the second quarter of 2003 as compared
to the second quarter of 2002.  For a more detailed  discussion of the provision
for loan losses,  see "Allowance  for Loan Losses" in the "Financial  Condition"
section below.

Non-interest  income increased  809.0% or $4.6 million,  to $5.2 million for the
three months  ended June 30, 2003 from $569  thousand for the three months ended
June 30, 2002. The increase in non-interest income primarily resulted from gains
on sale of mortgage loans of $3.1 million and mortgage loan  processing  fees of
$858 thousand for the second quarter,  compared to zero for these categories for
the same  period  in 2002.  These  income  categories  relate  to the  wholesale
mortgage  division  of  Florida  Bank,  N.A.,  ("the  Bank"),   which  commenced
operations  in the  fourth  quarter  of 2002.  Due to the  short  time that this
division  has been in  operation,  and the  substantial  portion of its  revenue
attributable to mortgage refinance activity,  there can be no assurance that the
current  levels of income will continue in the future.  Service fees on deposits
increased  $197  thousand or 49.2% to $598  thousand  for the three months ended
June 30, 2003 from $401 thousand for the three months ended June 30, 2002.  This
increase is primarily attributable to an increase in deposit accounts.  Mortgage
loan  origination  fees  attributable  to the  commercial  bank  increased  $261
thousand or 328.0% to $341  thousand  for the three  months  ended June 30, 2003
from $80 thousand for the three  months  ended June 30, 2002.  This  increase is
primarily  attributable to increased volume in residential mortgage loans. Other
non-interest income increased $214 thousand,  or 243.2% to $302 thousand for the
three  months ended June 30, 2003 from $88 thousand for the same period in 2002.
The increase in other non-interest income is primarily attributable to increases
in Automated Clearing House fees, and other non-deposit related service charges.

Non-interest  expense  increased  $4.9 million or 114.1% to $9.1 million for the
three-month  period  ended  June  30,  2003  compared  to $4.3  million  for the
three-month  period ended June 30, 2002.  The increase in  non-interest  expense
resulted  primarily  from  increases  in salaries  and  benefits,  dividends  on


                                     - 15 -
<PAGE>

preferred  security  of  subsidiary  trust,  and other  expenses.  Salaries  and
benefits expenses  increased $3.9 million to $6.4 million for the second quarter
of 2003 compared to $2.5 million for the second  quarter of 2002.  This increase
is primarily the result of additional  staff  associated with the overall growth
of the  Company's  business  and with the  addition  of staff for the  wholesale
mortgage  division,  who were  hired  beginning  in the third  quarter  of 2002.
Dividends on preferred securities of subsidiary trusts increased $63 thousand or
44.8% to $204 thousand for the second quarter of 2003, compared to $141 thousand
for the second  quarter of 2002.  This  increase  was due to an  increase in the
amount of these securities outstanding.  Other expenses increased $717 thousand,
or 79.6%  to $1.6  million  for the  second  quarter  of 2003  compared  to $900
thousand for the second quarter of 2002.  This increase is primarily  attributed
to the expenses  associated  with supporting  operations  related to the overall
growth of the Company.  Specific  operational  expenses which increased  include
communications, recruitment expenses and postage/courier expenses.

A provision  for income  taxes of $671  thousand was  recognized  for the second
quarter of 2003  compared to $97  thousand  for the same  period in 2002.  These
provisions for income taxes represent an estimated  effective annual tax rate of
approximately 33% and 38%  respectively.  The decrease in the effective tax rate
results from a tax credit  obtained from a charitable  contribution  the Company
made in the second quarter of 2003.

Six Months Ended June 30, 2003 Compared to Six Months Ended June 30, 2002

The  Company's  net income  applicable to common shares for the six months ended
June 30, 2003 was $2.0 million, compared to $518 thousand for the same period in
2002.  Basic and diluted  income per common share for the first half of 2003 was
$.30 and $.29, respectively,  compared to $.08 and $.08,  respectively,  for the
first half of 2002.  The increase in net income can be  attributed  to increased
net interest income, and increased  non-interest income,  partially offset by an
increase  in the  provision  for loan  losses and an  increase  in  non-interest
expenses.

The increase in net interest  income of $3.6 million or 38.5%,  to $12.8 million
for the first half of 2003  compared to $9.3 million for the first half of 2002,
consists of an increase in interest income of $4.3 million, or 25.6%,  partially
offset by an  increase  in  interest  expense  of $706  thousand,  or 9.5%.  The
increase in interest income in the first half of 2003 is primarily  attributable
to an increase of $4.8 million in interest and fees on loans  resulting from the
growth in the loan portfolio,  partially  offset by decreases in interest income
from  investments  and federal  funds  sold.  The  increase in interest  expense
resulted  primarily  from an increase of $700  thousand in interest on deposits,
partially offset by decreases in interest on repurchase  agreements and borrowed
funds. The increase in interest expense on deposits is primarily attributable to
an increase in deposits, partially offset by a decrease in market interest rates
on  deposits.  The decrease in interest  expense on  repurchase  agreements  and
borrowed funds is primarily attributable to the decline in market interest rates
on these instruments.

The provision for loan losses  charged to operations  increased $445 thousand to
$1.9  million for the six months  ended June 30, 2003 from $1.4  million for the
same period in 2002. This increase primarily reflects growth of the overall loan
portfolio in the first six months of 2003 as compared to the first six months of
2002.  For a more detailed  discussion  of the  provision  for loan losses,  see
"Allowance for Loan Losses" in the "Financial Condition" section below.
 -------------------------

Non-interest  income increased  700.5% or $7.7 million,  to $8.9 million for the
six months  ended June 30, 2003 from $1.1  million for the six months ended June
30, 2002. The increase in non-interest  income primarily  resulted from gains on
sale of mortgage loans of $5.3 million and mortgage loan processing fees of $1.3
million  for the six months  ended  June 30,  2003,  compared  to zero for these
categories for the same period in 2002.  These income  categories  relate to the
Bank's  wholesale  mortgage division,  which commenced  operation  in the fourth

                                     - 16 -
<PAGE>

quarter of 2002. Due to the short time that this division has been in operation,
and the substantial  portion of its revenue  attributable to mortgage  refinance
activity,  there can be no  assurance  that the  current  levels of income  will
continue in the future.  Service  fees on deposits  increased  $347  thousand or
45.1% to $1.1 million for the six months ended June 30, 2003 from $770  thousand
for the six months ended June 30, 2002. This increase is primarily  attributable
to an increase in deposit  accounts.  Mortgage loan  origination  fees increased
$351  thousand or 203.9% to $523 thousand for the six months ended June 30, 2003
from $172  thousand  for the six months ended June 30,  2002.  This  increase is
primarily  attributable to increased volume in residential mortgage loans. Other
non-interest income increased $372 thousand,  or 226.8% to $536 thousand for the
six months ended June 30, 2003 from $164  thousand for the six months ended June
30, 2002. The increase in other non-interest income is primarily attributable to
increases  in  Automated  Clearing  House fees,  and other  non-deposit  related
service charges.

Non-interest  expense  increased $8.7 million or 109.8% to $16.6 million for the
six-month  period ended June 30, 2003 compared to $7.9 million for the six-month
period  ended June 30,  2002.  The  increase in  non-interest  expense  resulted
primarily  from  increases  in salaries  and  benefits,  dividends  on preferred
security of subsidiary trust, and other expenses. Salaries and benefits expenses
increased  $6.8 million to $11.5  million for the first half of 2003 compared to
$4.7 million for the first half of 2002.  This  increase is primarily the result
of additional staff associated with the overall growth of the Company's business
and with the addition of the staff of the wholesale  mortgage  division who were
hired beginning in the third quarter of 2002.  Dividends on preferred securities
of subsidiary  trusts  increased $202 thousand or 90.3% to $426 thousand for the
first six months of 2003, compared to $224 thousand for the same period in 2002.
This  increase  was  due  to an  increase  in the  amount  of  these  securities
outstanding. Other expenses increased $1.2 million, or 77.0% to $2.8 million for
the first half of 2003 compared to $1.6 million for the first half of 2002. This
increase is primarily  attributed  to the expenses  associated  with  supporting
operations  related to the overall growth of the Company.  Specific  operational
expenses  which  increased  include  communications,  recruitment  expenses  and
postage/courier expenses.

A provision  for income taxes of $1.1 million was  recognized  for the first six
months of 2003  compared to $404  thousand  for the same  period in 2002.  These
provisions for income taxes represent an estimated  effective annual tax rate of
approximately 34% and 38%  respectively.  The decrease in the effective tax rate
results from a tax credit  obtained from a charitable  contribution  the Company
made in the second quarter of 2003.

FINANCIAL CONDITION

Total assets at June 30, 2003 were $921.8 million, an increase of $165.7 million
or 21.9%, from $756.1 million at December 31, 2002. The increase in total assets
primarily  resulted from the growth in loans outstanding and mortgage loans held
for sale which were funded by new deposit growth and other borrowed funds. Total
investment  securities  decreased  $4.2 million or 7.8% to $49.4 million at June
30, 2003 as compared to $53.7  million at December 31, 2002.  Federal funds sold
decreased  $35.1  million or 56.2% to $27.4  million at June 30, 2003 from $62.5
million at December 31, 2002.

Loans held for investment  increased $76.2 million,  or 13.8%, to $626.6 million
at June 30, 2003, from $551.0 million at December 31, 2002.  Mortgage loans held
for sale  increased  $51.9  million or 95.0% to $106.6  million at June 30, 2003
from $54.7 million at December 31, 2002. These increases in loans were funded by
increases  in  depository  accounts,   repurchase   agreements  sold  and  other
borrowings.  The  allowance  for loan losses  increased  $734  thousand or 10.1%
during the first six months of 2003. The increase  resulted from net charge-offs
of loans of $1.1 million plus additional  provisions of $1.8 million during that
period.  The  allowance  for loan  losses as a percent  of total  loans held for
investment was 1.28% at June 30, 2003 and 1.32% at December 31, 2002. Management
believes  that such  allowance for loan losses is sufficient to cover  estimated

                                     - 17 -
<PAGE>

losses in the Bank's loan portfolio. For further information, see "Allowance for
                                                                   -------------
Loan Losses" below.
-----------

Deposits increased $102.5 million,  or 15.4%, to $767.4 million at June 30, 2003
from $664.9  million at  December  31,  2002.  The  increase  in total  deposits
primarily  resulted from an increase of $115.2 million or 36.6% in time deposits
$100,000 and over,  combined with an increase of $22.1 million or 31.7% in other
time  deposits.  Time  deposits  often  fluctuate  in response to interest  rate
changes and can vary rather  significantly on a quarterly basis. The increase in
time deposits $100,000 and over resulted  primarily from an increase in brokered
deposits. Noninterest-bearing deposits decreased $46.5 million or 32.9%. This is
a result of the  transfer  of funds  into  demand  deposit  accounts  which were
previously  invested in repurchase  agreements sold. This transfer is related to
the customer's intangible tax strategy.  These funds flowed back into repurchase
agreements after year-end,  as can be seen by comparing the relative balances of
demand deposits and repurchase agreements sold at June 30, 2003 and December 31,
2002.  Savings deposits  increased $6.8 million or 10.2%.  Money market accounts
increased $6.7 million or 34.8%.  Growth in money market  accounts are primarily
attributable to continued  expansion of the Company's  customer base as a result
of ongoing marketing activities.

Repurchase  agreements sold increased $46.3 million, or 995.1%, to $51.0 million
at June 30, 2003 from $4.7 million at December 31, 2002,  for reasons  discussed
in the previous  paragraph,  together with continued  expansion of the Company's
customer base.  Other  borrowed  funds  increased $8.9 million or 90.2% to $18.9
million  at June 30,  2003 from $9.9  million  at  December  31,  2002.  Accrued
interest  payable  increased  $210 thousand or 8.8%, to $2.6 million at June 30,
2003 from $2.4 million at December 31, 2002.  This  increase is due primarily to
an increase in interest-bearing deposits and other interest-bearing  liabilities
highlighted herein.

Accounts  payable and accrued  expenses  increased $2.5 million or 53.0% to $7.3
million at June 30, 2003 from $4.8 million at December 31, 2002.  This  increase
is primarily  attributable to accrued  commissions and incentives related to the
mortgage banking division.

Shareholders'  equity  increased  by $2.2  million to $55.1  million at June 30,
2003,  from $53.0  million at December 31, 2002.  This increase is the result of
net income for the first six months of 2003 of $2.2  million,  combined with the
issue  of  stock  under  the  Company's  Employee  Stock  Purchase  Plan of $102
thousand, and the issue of stock related to exercise of warrants and options and
the issue of stock  grants of $189  thousand.  These  increases  were  partially
offset by a decrease in other comprehensive income related to an unrealized gain
in the Company's bond  portfolio of $225  thousand,  the payment of dividends on
the Series C Preferred  Stock of $62  thousand,  and the  recording  of offering
expenses of the Series C Preferred Stock issue to additional  paid-in capital of
$11 thousand.

Non-accrual  loans were $439  thousand  at June 30,  2003,  a  decrease  of $1.1
million or 71.4%,  compared to the balance of $1.5 million at December 31, 2002.
These loans were reclassified  under the Bank's policy of transferring  loans to
non-accrual  status  when  they  become  more  than 90 days  past due on  either
principal or interest. The Company believes the specific reserves placed against
these loans are adequate,  and payment is being sought from  secondary  sources,
such as the sale of collateral.

Allowance for Loan Losses
-------------------------

Management  determines  the allowance for loan losses by  establishing a general
allowance  by loan pool  determined  for  groups of  smaller,  homogenous  loans
possessing  similar  characteristics  and  non-homogeneous  loans  that  are not
classified. All classified loans are reviewed on an individual basis.



                                     - 18 -
<PAGE>

General Allowance

It is difficult for a lending  institution the size of the Bank to use migration
analysis  or other more  sophisticated  approaches  due to the small size of the
loan portfolio,  and the significant  changes in the lending strategy and mix of
the loan  portfolio from the date of the Merger.  For this reason,  a reasonable
indicator  of the  Bank's  potential  future  losses in the  non-criticized  and
non-specialized pools of loans is the historical  performance of the Bank's peer
group on a rolling  four-quarter  basis. This information is gathered  quarterly
from the Uniform  Bank  Performance  Report  provided  by the Federal  Financial
         ----------------------------------
Institutions Examination Council. As the bank matures, and growth stabilizes, it
is management's intention to replace this peer group methodology with the actual
loss experience of the Bank.

Added to the peer group historical performance are those current conditions that
are  probable  to impact  future  loan  losses.  To  account  for these  current
conditions,  management has reviewed  various factors to determine the impact on
the current loan portfolio.  This methodology  involves  determining a range for
each current  condition  adjustment,  "lower range to upper  range".  The "lower
range" represents  management's  opinion of a higher near term probability.  The
"upper range" represents  management's  opinion of a lower near term probability
that allows  management  to "shock" the loan  portfolio and look at the level of
reserves  required  should  an  "upper  range"  scenario  start to  unfold.  The
following current condition factors were considered in this analysis:

     o       Changes in lending policies and procedures,  including underwriting
             standards and collection, charge-off, and recovery practices.

     o       Changes in national and local  economic  and  business  conditions,
             including the condition of various market segments.

     o       Changes in the nature and volume of the portfolio.

     o       Changes in the experience, ability, and depth of lending management
             and staff.

     o       Changes  in the  volume  and  severity  of past due and  classified
             loans; and the volume of non-accruals,  trouble debt restructurings
             and other loan modifications.

     o       The  existence  and effect of any  concentrations  of  credit,  and
             changes in the level of such conditions.

     o       The effect of external  factors,  such as competition and legal and
             regulatory requirements, on the level of estimated credit losses in
             the Bank's portfolio.

Specific Allowance

Management  believes  that given the small number of classified  loans,  type of
historical loan losses,  and the nature of the underlying  collateral,  creating
specific  allowances  for  classified  assets  results in the most  accurate and
objective   allowance.   Should  the  number  of  these  types  of  assets  grow
substantially, other methods may have to be considered.

The method used in setting the specific  allowance uses current  appraisals as a
starting point, based on the Bank's possible  liquidation of the collateral.  On
assets other than real estate, which tend to depreciate rapidly, another current
valuation is used. For instance,  in the case of commercial loans collateralized
by automobiles,  the current NADA wholesale value is used. On collateral such as
over-the-road equipment,  trucks or heavy equipment,  valuations are sought from
firms or  persons  knowledgeable  in the area,  and  adjusted  for the  probable
condition of the collateral.  Other  collateral such as furniture,  fixtures and

                                     - 19 -
<PAGE>

equipment,  accounts receivable,  and inventory,  are considered separately with
more emphasis given to the borrower's financial condition and trends rather than
the  collateral  support.  The value of the  collateral is then  discounted  for
estimated selling cost.

Summary

"Loans" in the following two paragraphs refers to loans held for investment.
                                                  -------------------------

The various methodologies  included in this analysis take into consideration the
historic  loan  losses and  specific  allowances.  In  addition,  the  allowance
incorporates the results of measuring impaired loans as provided by Statement of
Financial  Accounting  Standards  (SFAS) No. 114,  "Accounting  by Creditors for
Impairment of a Loan" and SFAS No. 118,  "Accounting by Creditors for Impairment
of a Loan - Income  Recognition and  Disclosures".  These  accounting  standards
prescribe the measurement methods, income recognition and disclosures related to
impaired loans.  Specific  allowances totaled $2.6 million at June 30, 2003. The
range for the  allowance  for loan losses at June 30, 2003,  including  specific
allowances,  was  determined  to be between  $6.3 million or 1.00% of loans (low
range) and $10.3 million or 1.64% of loans (high range).

At June 30, 2003, the Bank's total allowance for loan losses was $8.0 million or
1.28% of loans as  compared to $7.3  million or 1.32% of loans at  December  31,
2002.  Criticized/Classified  assets have decreased when measured  against loans
outstanding.  This is primarily  attributable to the charge-off during the first
quarter of certain credits for which specific  reserves were  established at the
end of 2002. At June 30, 2003, this benchmark  (Criticized/Classified) was 3.50%
of loans outstanding  compared to 4.5% at December 31, 2002. Past due loans have
increased  to .68% of loans  outstanding  at June 30,  2003  compared to .14% at
December 31, 2002.  Non-Performing Assets have declined as a percentage of total
loans  including other real estate owned to .17% at June 30, 2003 versus .78% at
December  31,  2002.  Net loan losses for the first six months of 2003 were $1.1
million or .19% of average loans  outstanding  for the period,  compared to $131
thousand, or .03% of average loans for the same period in 2002.

LIQUIDITY

The Company,  through its  subsidiary,  the Bank, has  traditionally  maintained
levels of liquidity above levels required by regulatory authorities.  The Bank's
operational needs, demand for loan disbursements, and savings withdrawals can be
met by loan principal and interest payments received,  new deposits,  and excess
liquid  assets.   Significant  loan  demand,   deposit   withdrawal,   increased
delinquencies  and increased  real estate  acquired in settlement of loans could
alter this condition. Management does not foresee any liquidity problems for the
remainder of 2003.

Liquidity and Sources of Capital
--------------------------------

Liquidity is the Company's ability to meet all deposit withdrawals  immediately,
while  also  providing  for the credit  needs of  customers.  The June 30,  2003
balance sheet evidences a satisfactory liquidity position as total cash and cash
equivalents  amounted to $120.2  million,  representing  13.0% of total  assets.
Investment securities available for sale amounted to $46.1 million, representing
5.0% of total assets.  These securities  provide a secondary source of liquidity
since they can be converted into cash in a timely manner.  The Company's ability
to maintain and expand its deposit base and  borrowing  capabilities  are also a
source of  liquidity.  For the  six-month  period  ended  June 30,  2003,  total
deposits  increased from $664.9 million at December 31, 2002 to $767.4  million,
or 15.4%.  During this period,  repurchase  agreements  sold increased from $4.7
million to $51.0 million,  or 995.1%,  and other  borrowed funds  increased from
$9.9 million to $18.9  million,  or 90.2%.  There can be no  assurance  that the
Company will be able to maintain this level of growth. The Company's  management
closely monitors and maintains appropriate levels of interest earning assets and

                                     - 20 -
<PAGE>

interest bearing liabilities so that maturities of assets are such that adequate
funds are provided to meet customer  withdrawals  and loan demand.  There are no
trends,  demands,  commitments,  events or uncertainties that will result in, or
are  reasonably  likely to result  in, the  Company's  liquidity  increasing  or
decreasing in any material way.

The  Company's  Board of  Directors  and  executive  officers  are  committed to
maintaining  capital at a level  sufficient to protect  depositors,  provide for
reasonable growth, and fully comply with all regulatory requirements.

In December  2001,  April 2002,  June 2002,  December  2002,  and June 2003, the
Company  participated  in pooled trust  preferred  offerings.  By issuing  trust
preferred  securities  through its  subsidiary  trusts,  the Company was able to
increase  its Tier 1  capital  for  regulatory  purposes  without  diluting  the
ownership interests of its common  shareholders.  Also,  dividends paid on trust
preferred securities are deductible as interest expense for income tax purposes.
For the specific transactions,  terms and rates of the Company's trust preferred
securities  issues,  please refer to footnote 6 of Item 1 above,  together  with
footnote 13 of the Company's  consolidated  financial  statements  for the years
ended December 31, 2002,  2001 and 2000 filed in conjunction  with the Company's
Annual  Report on Form 10-K for the year ended  December 31,  2002.  At June 30,
2003, the net proceeds from pooled trust preferred  trust offerings  included in
the calculation of Tier 1 capital for regulatory purposes is $19.5 million.

The table below  illustrates  the Bank's  regulatory  capital ratios at June 30,
2003:



                                                                   Minimum
                                           June 30,              Regulatory
Bank                                         2003                Requirement
----                                   -----------------      -----------------

Tier 1 Capital                               9.99%                  4.00%

Total risk-based capital ratio              11.06%                  8.00%

Leverage ratio                               8.70%                  4.00%


Neither the Company nor its subsidiaries have historically  incurred off-balance
sheet  obligations  through  the  use  of or  investment  in  off-balance  sheet
derivative  financial  instruments  or  structured  finance or  special  purpose
entities organized as corporations,  partnerships or limited liability companies
or trusts.

On July 16, 2003, the Company filed a registration statement with the Securities
and Exchange  Commission  for a planned  underwritten  follow-on  primary public
offering of its common stock. The registration statement covers 2,300,000 shares
(including  300,000 shares which may be issued solely to cover  over-allotments)
of common stock for sale.

CAUTIONARY STATEMENT RELATING TO FORWARD LOOKING STATEMENTS

The Company and its  representatives  may from time to time make written or oral
statements  that  are   "forward-looking"  and  provide  other  than  historical
information,  including  statements  contained in the Form 10-Q,  the  Company's
other filings with the Securities and Exchange  Commission or in  communications
to  its  shareholders.   These  statements  involve  known  and  unknown  risks,
uncertainties  and other factors that may cause actual  results to be materially
different  from any results,  levels of activity,  performance  or  achievements
expressed or implied by any  forward-looking  statement.  These factors include,
among other things, the risk factors listed below.

In some case,  the Company has  identified  forward-looking  statements  by such
words or  phrases as "will  likely  result,"  "is  confident  that,"  "expects,"
"should,"  "could,"  "may,"  "will  continue  to,"  "believes,"   "anticipates,"


                                     - 21 -
<PAGE>

"predicts,"  "forecasts,"  "estimates,"  "projects,"  "potential,"  "intends" or
similar expressions identifying  "forward-looking statements" within the meaning
of the Private Securities  Litigation Reform Act of 1995, including the negative
of those  words  and  phrases.  These  forward-looking  statements  are based on
management's  current views and  assumptions  regarding  future  events,  future
business conditions and the outlook for the Company based on currently available
information.  These forward-looking  statements are subject to certain risks and
uncertainties  that could cause actual results to differ  materially  from those
expressed  in, or implied by, these  statements.  The Company  wishes to caution
readers not to place  undue  reliance  on any such  forward-looking  statements,
which speak only as of the date made.

In  connection  with  the  safe  harbor  provisions  of the  Private  Securities
Litigation  Reform  Act of 1995,  the  Company is hereby  identifying  important
factors that could affect the Company's  financial  performance  and could cause
the Company's  actual results for future periods to differ  materially  from any
opinions or statements  expressed  with respect to future periods in any current
statements. Among the factors that could have an impact on the Company's ability
to achieve operating results and growth plan goals are:

     o       Management's ability to reduce and effectively manage interest rate
             risk and the impact of interest  rates in general on the volatility
             of the Company's net interest income;
     o       Fluctuations in the value of the Company's investment securities;
     o       The ability to attract and retain senior management  experienced in
             banking and financial services;
     o       The  sufficiency  of allowances  for possible loan losses to absorb
             the  amount  of  actual  future  losses  inherent  in the  existing
             portfolio of loans;
     o       The  Company's  ability  to  adapt  successfully  to  technological
             changes to compete effectively in the marketplace;
     o       Credit risks and risks from  concentrations (by geographic area and
             by industry) within the Bank's loan portfolio;
     o       The effects of competition  from other commercial  banks,  thrifts,
             mortgage banking firms, consumer finance companies,  credit unions,
             securities brokerage firms,  insurance companies,  money market and
             other mutual funds and other  financial  institutions  operating in
             the Company's market or elsewhere or providing similar services;
     o       The failure of assumptions underlying the establishment of reserves
             for loan losses and estimations of values of collateral and various
             financial assets and liabilities;
     o       Volatility of rate sensitive deposits;
     o       Operational  risks,  including data  processing  system failures or
             fraud;
     o       Asset/liability matching risks and liquidity risks;
     o       The limited operating history of our wholesale residential mortgage
             banking division;
     o       Risks  associated  with the operation of our wholesale  residential
             mortgage banking division;
     o       Changes in the economic  environment,  competition or other factors
             that  may  influence  the  anticipated  growth  rate of  loans  and
             deposits,  the quality of the loan  portfolio  and loan and deposit
             pricing and Company's  ability to successfully  pursue  acquisition
             and expansion strategies;
     o       The impact from  liabilities  arising from legal or  administrative
             proceedings the financial condition of the Company;
     o       Governmental  monetary and fiscal policies,  as well as legislative
             and regulatory changes,  that may result in the imposition of costs
             and  constraints  on the  Company  through  higher  FDIC  insurance
             premiums,  significant  fluctuations  in market  interest rates and
             operational limitations;
     o       Changes in general economic or industry  conditions,  nationally or
             in the communities in which the Bank conducts business;
     o       Changes in accounting principles,  policies or guidelines affecting
             the businesses conducted by the Company or its affiliates;
     o       Acts of war or terrorism; and

                                     - 22 -
<PAGE>


     o       Other economic, competitive, governmental, regulatory and technical
             factors affecting the Bank's operations,  products,  services,  and
             prices.

The Company wishes to caution that the foregoing  list of important  factors may
not be all-inclusive  and  specifically  declines to undertake any obligation to
publicly update or revise any forward-looking  statements that have been made to
reflect events or circumstances  after the date of such statements or to reflect
the occurrence of anticipated or unanticipated events.

Item 3.  Qualitative and Quantitative Disclosures About Market Risk

The  Company's  financial  performance  is  subject to risk from  interest  rate
fluctuations.  This  interest  rate risk arises due to  differences  between the
amount of interest-earning assets and the amount of interest-earning liabilities
subject  to  repricing  over a  specified  period  and the  amount  of change in
individual  interest  rates.  In the  current  interest  rate  environment,  the
liquidity and maturity  structure of the Company's  assets and  liabilities  are
important to the maintenance of acceptable performance levels. A decreasing rate
environment  negatively impacts earnings as the Company's  rate-sensitive assets
generally reprice faster than its rate-sensitive liabilities.  Conversely, in an
increasing   rate   environment,   earnings  are   positively   impacted.   This
asset/liability  mismatch in pricing is referred to as gap ratio and is measured
as rate sensitive  assets divided by rate  sensitive  liabilities  for a defined
time period. A gap ratio of 1.00 means that assets and liabilities are perfectly
matched as to  repricing.  Management  has targeted gap ratio  guidelines  for a
one-year  time  horizon of between .80 and 1.20 for the Bank.  At June 30, 2003,
the Bank had a  cumulative  gap  ratio of  approximately  1.18 for the  one-year
period  ending  June  30,  2004,  and a  cumulative  gap  ratio  of 2.05 for the
three-month  time  period.  Given  these gap ratios,  over the next  three-month
period,   rate-sensitive   assets  will  reprice   faster  than   rate-sensitive
liabilities, and for the following nine-month period, rate sensitive liabilities
will reprice faster than rate-sensitive assets.

Varying interest rate environments can create  unexpected  changes in prepayment
levels of  assets  and  liabilities,  which are not  reflected  in the  interest
sensitivity analysis.  Prepayments may have significant effects on the Company's
net  interest  margin.  Because of these  factors,  in a static  test,  interest
sensitivity  gap reports may not provide a complete  assessment of the Company's
exposure to changes in interest  rates.  Accordingly,  management  also utilizes
computerized  interest  rate  simulation  analysis to  determine  the  Company's
interest rate sensitivity. The Company is in an asset sensitive gap position for
the first year, then moves into a matched position through the five year period.
Overall,  due to the  factors  cited,  current  simulation  results  indicate  a
relatively  low  sensitivity to parallel  shifts in interest  rates. A liability
sensitive   company  will  generally   benefit  from  a  falling  interest  rate
environment as the cost of  interest-bearing  liabilities  falls faster than the
yields on interest-bearing  assets, thus creating a widening of the net interest
margin.  Conversely,  an asset  sensitive  company  will  benefit  from a rising
interest rate  environment  as the yields on earning assets rise faster than the
costs  of  interest-bearing  liabilities.  Management  also  evaluates  economic
conditions,  the pattern of market  interest rates and  competition to determine
the  appropriate  mix and repricing  characteristics  of assets and  liabilities
required to produce a targeted net interest margin.

In  addition  to the gap  analysis,  management  uses rate shock  simulation  to
measure the rate  sensitivity of its balance sheet.  Rate shock  simulation is a
modeling  technique  used to  estimate  the  impact of  changes  in rates on the
Company's net interest  margin.  The Company  measures its interest rate risk by
estimating the changes in net interest income resulting from  instantaneous  and
sustained  parallel  shifts in interest  rates of plus or minus 200 basis points
over a period of twelve months.  The Company's most recent rate shock simulation
analysis,  performed  as of June 30,  2003,  indicates  that a 200  basis  point
increase in rates would cause an increase in net interest income of $4.8 million
over the next  twelve-month  period.  Conversely,  a 200 basis point decrease in
rates would  cause a decrease  in net  interest  income of $2.5  million  over a
twelve-month period.


                                     - 23 -
<PAGE>

This simulation is based on management's assumption as to the effect of interest
rate changes on assets and liabilities and assumes a parallel shift of the yield
curve. It also includes  certain  assumptions  about the future pricing of loans
and deposits in response to changes in interest rates.  Further, it assumes that
delinquency  rates  would not change as a result of changes  in  interest  rates
although  there can be no  assurance  that this  will be the  case.  While  this
simulation is a useful measure of the Company's  sensitivity to changing  rates,
it is not a forecast of the future results and is based on many assumptions that
if changed,  could  cause a different  outcome.  In  addition,  a change in U.S.
Treasury rates in the designated amounts accompanied by a change in the shape of
the  Treasury  yield curve would cause  significantly  different  changes to net
interest income than indicated above.

At June 30, 2003, the Company was not engaged in trading activities.

The Company enters into interest rate swap  agreements to manage its exposure to
changes  in  interest  rates and to convert  the fixed rate on certain  brokered
certificates  of  deposit  to a  floating  rate in order to more  closely  match
interest rate sensitivity  between selected assets and liabilities.  The Company
does not use derivative financial  instruments for speculative  purposes.  As is
customary  for  these  types  of  instruments,  the  Company  does  not  require
collateral or other security from other parties to these  instruments.  By their
nature  all  such  instruments  involve  risk,  including  the  credit  risk  of
nonperformance  by  counterparties.  However,  at June 30, 2003, in management's
opinion there was no significant risk of loss in the event of  nonperformance of
the counterparties to these financial instruments.

Item 4.  Controls and Procedures

In order to ensure that the information we must disclose in our filings with the
Securities  and Exchange  Commission  is recorded,  processed,  summarized,  and
reported on a timely  basis,  we have  formalized  our  disclosure  controls and
procedures.  Our Chief  Executive  Officer  and  Chief  Financial  Officer  have
reviewed  and  evaluated  the  effectiveness  of  our  disclosure  controls  and
procedures, as defined in Exchange Act Rules 13a-15(e) and 15d-15(e), as of June
30, 2003.  Based on such  evaluation,  such officers have concluded  that, as of
June 30, 2003, our disclosure  controls and procedures  were effective in timely
alerting  them to  material  information  relating  to us (and our  consolidated
subsidiaries)  required to be included in our periodic  SEC  filings.  There has
been no change in our  internal  control  over  financial  reporting  during the
quarter  ended June 30,  2003 that has  materially  affected,  or is  reasonably
likely to materially affect, our internal control over financial reporting.

Part II.  Other Information

Item 1.   Legal Proceedings

          No disclosure required.

Item 2.   Changes in Securities

          No disclosure required.

Item 3.   Defaults Upon Senior Securities

          No disclosure required.


                                     - 24 -
<PAGE>

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

     At the  annual  meeting of the  Company's  shareholders,  three  items were
submitted to a vote of the common shareholders:

     (a)  Clay M.  Biddinger,  Wilford C. Lyon,  Jr., M.G.  Sanchez and T. Edwin
          Stinson,  Jr. were re-elected as directors of the Company,  to succeed
          themselves  for a term of three years,  expiring at the annual meeting
          of shareholders  in 2006. Each of the directors  received a minimum of
          5,477,743  votes  to  re-elect,  or  95% of the  shares  voted  at the
          meeting.
     (b)  An amendment to the Company's  Second  Amended and Restated  Incentive
          Compensation  Plan was approved by the  shareholders,  with  2,133,214
          shares,  or 77% of the shares  voted on this  proposal at the meeting,
          voting  in favor of the  amendment,  624,783  shares  voting  against,
          17,855  shares  abstaining,  and 2,789,029  shares  recorded as broker
          non-votes.
     (c)  An amendment to the  Company's  1998 Stock Option Plan was approved by
          the shareholders,  with 2,166,201,  or 79% of the shares voted on this
          proposal at the  meeting,  voting in favor of the  amendment,  588,549
          shares voting against,  21,102 shares  abstaining and 2,789,029 shares
          recorded as broker non-votes.
     (d)  An  amendment  to the  Company's  Employee  Stock  Purchase  Plan  was
          approved by the  shareholders,  with 2,574,320  shares,  or 93% of the
          shares  voted on this  proposal  at the meeting  voting for  approval,
          164,927 shares voting against, 36,605 shares abstaining, and 2,789,029
          shares recorded as broker non-votes.

Item 5.   Other Information

          No disclosure required.

Item 6.   Exhibits and Reports on Form 8-K

          (a)     Exhibits.

          4.1     Indenture,  dated June 26, 2003,  between Florida Banks,  Inc.
                  and State Street Bank and U.S. Bank National Association.

          4.2     Amended  and  Restated  Declaration  of Trust,  dated June 26,
                  2003,  by and among State Street Bank and U.S.  Bank  National
                  Association,  Florida Banks, Inc. and the administrators named
                  therein.

          10.1    Placement  Agreement,  dated June 16,  2003,  between  Florida
                  Banks, Inc., FTN Capital Markets and Keefe,  Bruyette & Woods,
                  Inc.

          10.2.   Subscription  Agreement,  dated June 26, 2003, between Florida
                  Banks,  Inc.,  Florida Banks Statutory Trust III and Preferred
                  Term Securities X, Ltd.

          10.3    Guarantee  Agreement,  dated  June 26,  2003,  by and  between
                  Florida  Banks,  Inc.  and  State  Street  Bank and U.S.  Bank
                  National Association.

          31.1    Certification  of Chief  Executive  Officer  Pursuant  to Rule
                  13a-15(e) and 15d-15(e), as Adopted Pursuant to Section 302 of
                  the Sarbanes-Oxley Act of 2002.

          31.2    Certification  of Chief  Financial  Officer  Pursuant  to Rule
                  13a-15(e) and 15d-15(e), as Adopted Pursuant to Section 302 of
                  the Sarbanes-Oxley Act of 2002.


                                     - 25 -
<PAGE>

          32.1    Certification of Chief Executive Officer Pursuant to 18 U.S.C.
                  Section  1350,  As  Adopted  Pursuant  to  Section  906 of the
                  Sarbanes-Oxley Act of 2002.

          32.2    Certification of Chief Financial Officer Pursuant to 18 U.S.C.
                  Section  1350,  As  Adopted  Pursuant  to  Section  906 of the
                  Sarbanes-Oxley Act of 2002.

          (b)     Reports on Form 8-K.

                  On April  25,  2003,  the  Company  filed a report on Form 8-K
                  (furnishing  information  under  Items  7 and  12) to  release
                  financial  results  for the  quarter  ended March 31, 2003 and
                  announce conference call information.





                                     - 26 -
<PAGE>




                                   SIGNATURES


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

                                           Florida Banks, Inc.


Date:  August 14, 2003                     By:  /s/ Charles E. Hughes, Jr.
                                                --------------------------------
                                           Charles E. Hughes, Jr.
                                           President and Chief Executive Officer


Date:  August 14, 2003                     By:  /s/ T. Edwin Stinson, Jr.
                                                -------------------------
                                           T. Edwin Stinson, Jr.
                                           Chief Financial Officer









                                     - 27 -
<PAGE>




         Exhibits.

          4.1     Indenture,  dated June 26, 2003,  between Florida Banks,  Inc.
                  and State Street Bank and U.S. Bank National Association.

          4.2     Amended  and  Restated  Declaration  of Trust,  dated June 26,
                  2003,  by and among State Street Bank and U.S.  Bank  National
                  Association,  Florida Banks, Inc. and the administrators named
                  therein.

          10.1    Placement  Agreement,  dated June 16,  2003,  between  Florida
                  Banks, Inc., FTN Capital Markets and Keefe,  Bruyette & Woods,
                  Inc.

          10.2    Subscription  Agreement,  dated June 26, 2003, between Florida
                  Banks,  Inc.,  Florida Banks Statutory Trust III and Preferred
                  Term Securities X, Ltd.

          10.3    Guarantee  Agreement,  dated  June 26,  2003,  by and  between
                  Florida  Banks,  Inc.  and  State  Street  Bank and U.S.  Bank
                  National Association.

          31.1    Certification  of Chief  Executive  Officer  Pursuant  to Rule
                  13a-15(e) and 15d-15(e), as Adopted Pursuant to Section 302 of
                  the Sarbanes-Oxley Act of 2002.

          31.2    Certification  of Chief  Financial  Officer  Pursuant  to Rule
                  13a-15(e) and 15d-15(e), as Adopted Pursuant to Section 302 of
                  the Sarbanes-Oxley Act of 2002.

          32.1    Certification of Chief Executive Officer Pursuant to 18 U.S.C.
                  Section  1350,  As  Adopted  Pursuant  to  Section  906 of the
                  Sarbanes-Oxley Act of 2002.

          32.2    Certification of Chief Financial Officer Pursuant to 18 U.S.C.
                  Section  1350,  As  Adopted  Pursuant  to  Section  906 of the
                  Sarbanes-Oxley Act of 2002.





                                     - 28 -