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 September 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           6,814,628 OUTSTANDING AT OCTOBER 23, 2003
PER SHARE


                                       -1-
<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 25

Item 2.  Changes in Securities........................................   Page 25

Item 3.  Defaults Upon Senior Securities..............................   Page 25

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









                                       -2-
<PAGE>


<TABLE>
PART I.  Financial Information,  Item 1. Financial Statements
FLORIDA BANKS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS  (Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 September 30,         December 31,
ASSETS                                                                                                2003                  2002

<S>                                                                                              <C>                  <C>
CASH AND DUE FROM BANKS                                                                          $ 118,456,915        $  26,964,504
FEDERAL FUNDS SOLD AND REPURCHASE AGREEMENTS                                                        47,485,000           62,515,000
                                                                                                 -------------        -------------
           Total cash and cash equivalents                                                         165,941,915           89,479,504
INVESTMENT SECURITIES:
  Available for sale, at fair value (cost $45,727,698 and $50,155,158
    at September 30, 2003 and  December 31, 2002)                                                   42,358,807           50,930,650
  Held to maturity, at cost (fair value $0 and $229,475
    at September 30, 2003 and  December 31, 2002)                                                                           227,925
  Other investments                                                                                  3,304,050            2,493,350
                                                                                                 -------------        -------------
           Total investment securities                                                              45,662,857           53,651,925
MORTGAGE LOANS HELD FOR SALE                                                                        71,182,230           54,674,248
LOANS:
  Commercial real estate                                                                           415,558,472          313,120,588
  Commercial                                                                                       162,614,539          166,122,230
  Residential mortgage                                                                              33,143,631           23,080,140
  Consumer                                                                                          51,029,440           45,859,704
  Credit card and other loans                                                                        2,248,192            2,791,678
                                                                                                 -------------        -------------
           Total loans                                                                             664,594,274          550,974,340
  Allowance for loan losses                                                                         (8,587,417)          (7,263,029)
  Net deferred loan fees                                                                              (710,077)            (519,271)
                                                                                                 -------------        -------------
           Net loans                                                                               655,296,780          543,192,040
PREMISES AND EQUIPMENT, NET                                                                          4,921,669            5,466,332
ACCRUED INTEREST RECEIVABLE                                                                          2,396,520            2,375,102
DEFERRED INCOME TAXES, NET                                                                           4,232,535            3,908,751
DERIVATIVE INSTRUMENTS                                                                               1,777,685            2,321,643
OTHER REAL ESTATE OWNED                                                                                652,500              652,500
OTHER ASSETS                                                                                        13,014,116              343,505
                                                                                                 -------------        -------------
TOTAL ASSETS                                                                                     $ 965,078,807        $ 756,065,550
                                                                                                 =============        =============
LIABILITIES AND SHAREHOLDERS' EQUITY
DEPOSITS:
  Noninterest-bearing demand                                                                     $ 100,602,517        $ 141,395,150
  Interest-bearing demand                                                                           83,795,480           52,803,427
  Regular savings                                                                                   83,706,296           66,940,672
  Money market accounts                                                                             29,140,737           19,210,512
  Time $100,000 and over                                                                           422,955,846          314,852,717
  Other time                                                                                        91,429,118           69,707,230
                                                                                                 -------------        -------------
          Total deposits                                                                           811,629,994          664,909,708
REPURCHASE AGREEMENTS SOLD                                                                          43,513,648            4,653,878
OTHER BORROWED FUNDS                                                                                19,919,686            9,921,898
ACCRUED INTEREST PAYABLE                                                                             2,858,417            2,377,963
MANDATORY MORTGAGE FORWARD DELIVERY CONTRACTS                                                        1,072,391
TRUST PREFERRED SECURITIES                                                                          20,000,000
ACCOUNTS PAYABLE AND ACCRUED EXPENSES                                                                9,683,856            4,765,136
                                                                                                 -------------        -------------
          Total liabilities                                                                        908,677,992          686,628,583
                                                                                                 -------------        -------------
COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF
SUBSIDIARY TRUST                                                                                    16,473,092
SHAREHOLDERS' EQUITY:
  Series C Preferred Stock, $100.00 par value, 50,000 shares authorized, 50,000                      5,000,000            5,000,000
    shares issued and outstanding
  Common stock, $.01 par value; 30,000,000 shares authorized;
    6,814,628 and 6,768,362 shares issued, respectively                                                 68,147               67,684
  Additional paid-in capital                                                                        52,874,202           52,287,390
  Accumulated deficit (deficit of $8,134,037
     eliminated upon quasi-reorganization on December 31, 1995)                                     (1,663,028)          (4,874,873)
  Accumulated other comprehensive income, net of tax                                                   121,494              483,674
                                                                                                 -------------        -------------
          Total shareholders' equity                                                                56,400,815           52,963,875
                                                                                                 -------------        -------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                       $ 965,078,807        $ 756,065,550
                                                                                                 =============        =============
</TABLE>

See notes to condensed financial statements

                                      -3-
<PAGE>

<TABLE>
FLORIDA BANKS, INC.
CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
-----------------------------------------------------------------------------------------------------------------------------------
                                                                           Three-Month Period Ended         Nine-Month Period Ended
                                                                                 September 30,                  September 30,
                                                                         ---------------------------     --------------------------
                                                                             2003            2002            2003           2002
                                                                         -----------     -----------     -----------     ----------

INTEREST INCOME:
<S>                                                                      <C>             <C>             <C>             <C>
   Loans, including fees                                                 $10,753,474     $ 8,208,741     $30,772,718     $23,386,476
   Investment securities                                                     300,696         570,382       1,018,185       1,716,879
   Federal funds sold                                                        160,348         287,774         383,008         647,361
                                                                         -----------     -----------     -----------     -----------
           Total interest income                                          11,214,518       9,066,897      32,173,911      25,750,713
                                                                         -----------     -----------     -----------     -----------

INTEREST EXPENSE:
   Deposits                                                                3,907,489       3,899,450      11,548,058      10,839,723
   Repurchase agreements                                                     106,382         128,367         292,620         379,825
   Interest on Trust Preferred Securities                                    245,612         245,612
   Borrowed Funds                                                            186,023          98,299         460,937         323,402
                                                                         -----------     -----------     -----------     -----------

           Total interest expense                                          4,424,470       4,126,116      12,547,227      11,542,950
                                                                         -----------     -----------     -----------     -----------

NET INTEREST INCOME                                                        6,790,048       4,940,781      19,626,684      14,207,763

PROVISION FOR LOAN LOSSES                                                    599,433         699,286       2,452,158       2,107,236
                                                                         -----------     -----------     -----------     -----------

NET INTEREST INCOME AFTER
   PROVISION FOR LOAN LOSSES                                               6,190,615       4,241,495      17,174,526      12,100,527
                                                                         -----------     -----------     -----------     -----------

NONINTEREST INCOME:
  Service fees                                                               621,412         431,390       1,738,148       1,200,908
   Gain on sale of mortgage loans                                          1,626,442       6,966,677
   Mortgage loan processing fees                                             441,418       1,777,049
   Mortgage loan origination fees                                            330,686         150,445         853,712         322,577
   Gain on sale of commercial loans                                           42,888          42,888

   Other noninterest income                                                  308,471         130,366         844,682         294,471
                                                                         -----------     -----------     -----------     -----------
           Total noninterest income                                        3,328,429         755,089      12,180,268       1,860,844
                                                                         -----------     -----------     -----------     -----------

NONINTEREST EXPENSE:
   Salaries and benefits                                                   5,069,423       2,799,217      16,573,806       7,510,262
   Occupancy and equipment                                                   699,905         532,467       1,981,662       1,505,757
   Data processing                                                           288,184         224,260         825,418         621,456
   Dividends on preferred securities of subsidiary trusts                    205,126         425,835         428,866
   Other                                                                   1,633,397         817,120       4,460,959       2,414,724
                                                                         -----------     -----------     -----------     -----------

           Total noninterest expense                                       7,690,909       4,578,190      24,267,680      12,481,065
                                                                         -----------     -----------     -----------     -----------

INCOME  BEFORE PROVISION
  FOR INCOME TAXES                                                         1,828,135         418,394       5,087,114       1,480,306

PROVISION FOR INCOME TAXES                                                   654,973         152,950       1,751,981         557,039
                                                                         -----------     -----------     -----------     -----------

NET INCOME                                                                 1,173,162         265,444       3,335,133         923,267
                                                                         -----------     -----------     -----------     -----------

 PREFERRED STOCK DIVIDENDS                                                    63,014                         186,987         140,058
                                                                         -----------     -----------     -----------     -----------

 NET INCOME APPLICABLE TO COMMON SHARES                                  $ 1,110,148     $   265,444     $ 3,148,146     $   783,209
                                                                         ===========     ===========     ===========     ===========

 INCOME PER COMMON SHARE:
   Basic                                                                 $      0.16     $      0.04     $      0.46     $      0.12
                                                                         ===========     ===========     ===========     ===========
   Diluted                                                               $      0.16     $      0.04     $      0.45     $      0.12
                                                                         ===========     ===========     ===========     ===========
</TABLE>

 See notes to condensed financial statements.



                                      -4-
<PAGE>


<TABLE>
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 loss on available for sale
     investment securities,
     net of tax of $218,516
      Comprehensive income
Issuance of common stock under Employee
    Stock Purchase Plan                                                         30,935             309             222,835
Exercise of stock warrants                                                      12,800             128             127,872
Series C Preferred Stock offering costs                                                                            (10,677)
Exercise of stock options and
    issue of stock grants                                                        2,531              26             246,782
Series C Preferred Stock dividends paid
                                               ________        __________    _________       _________         ___________
BALANCE, September 30, 2003  (Unaudited)         50,000        $5,000,000    6,814,628       $  68,147         $52,874,202




                                                                        Accumulated
                                                                           Other
                                                                       Comprehensive
                                                       Accumulated     (loss) income
                                                         Deficit        Net of Tax            Total

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                                            3,335,133                             3,335,133
  Unrealized loss on available for sale
     investment securities,
     net of tax of $218,516                                                 (362,180)           (362,180)
      Comprehensive income                                                                     2,972,953
Issuance of common stock under Employee
    Stock Purchase Plan                                                                          223,144
Exercise of stock warrants                                                                       128,000
Series C Preferred Stock offering costs                                                          (10,677)
Exercise of stock options and
    issue of stock grants                                                                        246,808
Series C Preferred Stock dividends paid                   (123,288)                             (123,288)
                                                       ___________     _____________      ______________
BALANCE, September 30, 2003  (Unaudited)               $(1,663,028)    $     121,494      $   56,400,815
                                                       ===========     =============      ==============
</TABLE>

See notes to condensed financial statements.

                                      -5-
<PAGE>

<TABLE>
FLORIDA BANKS, INC.  CONDENSED STATEMENTS OF CASH FLOWS  (Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        Nine-Month Period Ended
                                                                                                              September 30,
                                                                                                 -----------------------------------
OPERATING ACTIVITIES:                                                                                    2003               2002
                                                                                                 ----------------------------------
<S>                                                                                                  <C>              <C>
  Net income                                                                                         $   3,335,133    $     923,267
  Adjustments to reconcile net income to net cash (used in) provided by operating activities:
      Depreciation and amortization                                                                        655,150          579,343
      Reinvested dividends on investment securities                                                        (90,301)        (116,826)
      Deferred income tax provision (benefit)                                                             (105,268)         537,751
      Accretion of premium on investments, net                                                            (689,170)         (37,177)
      Amortization of premium on loans                                                                      67,945           95,356
      Loss on sale of available for sale investment securities                                                                3,967
      Provision for loan losses                                                                          2,452,158        2,107,236
      Loss on foreign currency translation                                                                 124,139           41,675
      Gain on derivative instruments                                                                       (86,120)         (43,056)
      Increase in mortgage loans held for sale                                                         (16,507,982)
      Increase in accrued interest receivable                                                              (21,418)        (631,637)
      Decrease (increase) in accrued interest payable                                                      480,454         (297,601)
      (Increase) decrease in other assets                                                                 (635,231)          40,488
      Increase in other liabilities                                                                      4,918,720        1,053,929
                                                                                                     -------------    -------------
           Net cash (used in) provided by operating activities                                          (6,101,791)       4,256,715
                                                                                                     -------------    -------------
INVESTING ACTIVITIES:
  Proceeds from sales, paydowns and maturities of investment securities:
    Available for sale                                                                                  28,861,721       16,271,660
    Held to maturity                                                                                       227,925        2,360,879
  Purchases of investment securities:
    Available for sale                                                                                 (20,091,102)     (28,528,240)
    Other investments                                                                                     (810,700)        (188,800)
  Net increase in loans held for investment                                                           (114,524,353)    (113,968,736)
  Increase in bank owned life insurance                                                                (10,333,757)
  Proceeds from sale of other real estate owned                                                                             242,979
  Proceeds from sale of premises and equipment                                                           1,089,326
  Purchases of premises and equipment                                                                   (1,200,453)      (2,629,460)
                                                                                                     -------------    -------------
           Net cash used in investing activities                                                      (116,781,393)    (126,439,718)
                                                                                                     -------------    -------------
FINANCING ACTIVITIES:
  Net decrease in demand deposits, money market accounts and savings accounts                           16,895,269       20,754,787
  Net increase in time deposits                                                                        129,825,017       88,726,347
  Increase in repurchase agreements                                                                     38,859,770       37,603,204
  Increase (decrease) in borrowed funds                                                                  9,597,788       (2,405,911)
  Proceeds from FHLB advances                                                                              400,000        3,000,000
  Preferred stock offering costs                                                                           (10,677)
  Proceeds from exercise of stock options and issuance of stock grants                                     246,808          115,643
  Preferred dividends paid                                                                                (123,288)        (262,775)
  Proceeds from exercise of stock warrants                                                                 128,000
  Proceeds from issuance  of trust preferred securities, net                                             3,526,908        7,718,016
                                                                                                     -------------    -------------
           Net cash provided by financing activities                                                   199,345,595      155,249,311
                                                                                                     -------------    -------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                                               76,462,411       33,066,308
CASH AND CASH EQUIVALENTS:
  Beginning of period                                                                                   89,479,504       73,989,159
                                                                                                     -------------    -------------
  End of period                                                                                      $ 165,941,915    $ 107,055,467
                                                                                                     =============    =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
    Cash paid for interest                                                                           $  12,066,773    $  11,840,551
                                                                                                     =============    =============
    Cash paid for income taxes                                                                       $   2,043,449    $
                                                                                                     =============    =============
NONCASH FINANCING ACTIVITIES:
     Proceeds from demand deposits used to purchase shares of
     common stock under Employee Stock Purchase Plan                                                 $     223,144    $     210,771
                                                                                                     =============    =============
</TABLE>

See notes to condensed financial statements.



                                      -6-
<PAGE>



FLORIDA BANKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE-MONTH PERIODS ENDED
SEPTEMBER 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 nine-month  periods ended  September 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           Nine-Month Period Ended
                                                        September 30,                     September 30,
                                               --------------------------------   -------------------------------
                                                    2003             2002             2003             2002
                                               ---------------  ---------------   --------------   --------------

      Weighted average number of common
      <S>                                         <C>             <C>              <C>             <C>
        shares outstanding - Basic                6,812,029       6,751,156        6,793,479       6,335,832

      Incremental shares from the assumed
        conversion of stock options                 256,823          97,729          201,625          85,233
                                                  ---------       ---------        ---------       ---------
      Total - Diluted                             7,068,852       6,848,885        6,995,104       6,421,065
                                                  =========       =========        =========       =========
</TABLE>


The  incremental  shares from the assumed  conversion  of stock  options for the
three and nine-month  periods ended  September 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 NINE-MONTH PERIODS ENDED
SEPTEMBER 30, 2003 AND 2002 (UNAUDITED) (Continued)
--------------------------------------------------------------------------------

3.    DERIVATIVE INSTRUMENTS

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

                                                      September 30, 2003
                                             -----------------------------------
                                             Contract/Notional          Fair
                                                  Amount               Value

      Interest rate swap agreements            $ 148,500,000        $ 1,889,225
      Foreign currency swap agreements         $   2,000,000        $  (111,540)
      Commitments to fund mortgage loans       $  58,748,408        $   334,918

      Interest rate swap  agreements at September 30, 2003 consist of twenty-one
      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 a loss of $1,422 and a gain of $8,660,
      respectively, during the three- and nine-month periods ended September 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 liquidation preference at
      September 30, 2003 was $5,061,643.


                                      -8-
<PAGE>

FLORIDA BANKS, INC.

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

      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  at  $10.00  per  share.  The  preferred
      shareholder  intends  to  formally  apply  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 FIN
      45 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 adopted FIN 46 as of July 31, 2003.  Adoption of FIN
      46 did not have a material 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.  The Company
      adopted SFAS 149 effective July 1, 2003. Adoption of SFAS 149 did not 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 NINE-MONTH PERIODS ENDED
SEPTEMBER 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 have been  reclassified  from mezzanine equity to debt.
      The dividends related to these securities after July 1, 2003 are reflected
      as interest  expense on a prospective  basis.  At September 30, 2003,  the
      Company had $20.0 million  outstanding  as company  obligated  mandatorily
      redeemable  preferred  securities of subsidiary  trusts.  The Company paid
      dividends  related to those  instruments  of  approximately  $246 thousand
      (classified as interest  expense) and $671 thousand (six months classified
      as noninterest  expense and three months  classified as interest  expense)
      for  the  three-  and  nine-month   periods  ended   September  30,  2003,
      respectively.

6.    GUARANTEES

      The Company issues standby letters of credit to provide credit support for
      some creditors in case of default.  As of September 30, 2003, the carrying
      amount of the liability was $10,544 and the maximum  potential payment was
      $10,477,317.

7.    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 third
      party mortgage  brokers and sells these loans (on a wholesale  basis) into
      the secondary market.




                                      -10-
<PAGE>



FLORIDA BANKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE-MONTH PERIODS ENDED
SEPTEMBER 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
      three-month period ended September 30, 2003 follows:



<TABLE>
                                     Commercial           Mortgage                              Intersegment       Consolidated
                                        Bank                Bank               Other            Eliminations           Total
                                  ----------------   ------------------  -----------------   ------------------   ----------------

      <S>                           <C>                <C>                 <C>                                       <C>
      Net interest income           $  5,904,673       $  1,168,988        $   (283,613)                             $  6,790,048

      Noninterest income               1,231,200          2,067,860              29,369                                 3,328,429

      Provision for loan losses          599,433            599,433

      Noninterest expense              4,415,916          2,539,801             735,192                                 7,690,909

      Income (loss) before taxes       2,120,524            697,047            (989,436)                                1,828,135

      Assets                         884,565,054         72,847,211          85,077,735           (77,863,584)       $964,626,416

      Expenditures for additions
        to premises and equipment        209,904             84,134              84,184                                   378,222
</TABLE>

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

<TABLE>
                                       Commercial       Mortgage                        Intersegment    Consolidated
                                          Bank            Bank             Other        Eliminations       Total
                                    --------------    -------------   --------------  ----------------  ---------------

      <S>                             <C>             <C>               <C>                              <C>
      Net interest income             $ 16,859,541    $ 2,957,577       $ (190,434)                      $ 19,626,684

      Noninterest income                 3,379,543      8,743,726           56,999                         12,180,268

      Provision for loan losses          2,452,158                                                          2,452,158

      Noninterest expense               12,886,749      8,276,138        3,104,793                         24,267,680

      Income (loss) before taxes         4,900,177      3,425,165       (3,238,228)                         5,087,114

      Assets                           884,565,054     73,919,602       84,457,735      (77,863,584)     $965,078,807

      Expenditures for additions
        to premises and equipment          667,234        378,085          155,134                       $  1,200,453
</TABLE>



                                      -11-
<PAGE>



FLORIDA BANKS, INC.

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

      The accounting policies of the segments are the same as those described in
      the  summary of  significant  accounting  policies  found in Note 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 in
      the table 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.


8.    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  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.










                                      -12-
<PAGE>

FLORIDA BANKS, INC.

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

<TABLE>
                                                          Three-Month Period Ended              Nine-Month Period Ended
                                                                September 30,                         September 30,
                                                       ------------------------------        ------------------------------
                                                           2003                2002              2003               2002
<S>                                                    <C>                <C>                <C>                <C>
      Net income applicable to common shares
        As reported                                    $ 1,110,148        $   265,444        $ 3,148,146        $   783,209
      Total stock-based employee compensation
        cost included in the determination of net
        income, net of related tax effects                  57,425             18,843            144,537             56,528
      Total stock-based employee compensation
        cost determined under fair value method
        for all awards, net of related tax effects         (44,770)           (53,363)          (133,089)          (160,088)
                                                       -----------        -----------        -----------        -----------
      Pro forma net income applicable
        to common shares                               $ 1,122,803        $   230,924        $ 3,159,594        $   679,649
                                                       ===========        ===========        ===========        ===========

      Earnings per share - Basic
        As reported                                    $      0.16        $      0.04        $      0.46        $      0.12
        Pro forma                                      $      0.16        $      0.03        $      0.47        $      0.11
      Earnings per share - Diluted
        As reported                                    $      0.16        $      0.04        $      0.45        $      0.12
        Pro forma                                      $      0.16        $      0.03        $      0.45        $      0.11
      Shares used for computation
        Basic                                            6,812,029          6,751,156          6,793,479          6,335,832
        Diluted                                          7,068,852          6,848,885          6,995,104          6,421,065
</TABLE>

9.    SUBSEQUENT EVENT

      On October 2, 2003,  the Company  announced it was  postponing the planned
      public  offering  of its  common  stock for which it filed a  registration
      statement with the  Securities  and Exchange  Commission on July 16, 2003.
      However,  the Company will evaluate its capital plans during the remainder
      of 2003 and early in 2004 and may raise  additional  capital  during  this
      time period.







                                      -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 in Part 1, Item 1
of 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 based, 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 September 30, 2003 Compared to Three Months Ended
September 30, 2002

The  Company's  net income  applicable to common shares for the third quarter of
2003 was $1.1 million,  compared to $265 thousand for the third quarter of 2002.
Basic and diluted income per common share for the third quarter of 2003 was $.16
compared to $.04 for the third  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 non-interest expenses.

The  increase in net interest  income of $1.9 million or 37.4%,  to $6.8 million
for the third  quarter of 2003 compared to $4.9 million for the third quarter of
2002,  consists of an increase in interest income of $2.1 million, or 23.7%, and
an increase in  interest  expense of $298  thousand,  or 7.2%.  The  increase in
interest  income in the third  quarter of 2003 is primarily  attributable  to an
increase of $2.5 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 $246  thousand  in  interest on trust  preferred
securities, an increase of $88 thousand in borrowed funds, and an increase of $8
thousand in interest on deposits,  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 increase in interest on trust
preferred securities results primarily from the reclassification of this expense
as  interest  expense  under SFAS 150 (see Note 5 to the "Notes to  Consolidated
Condensed  Financial  Statements:  contained  in Part 1 Item 1). 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 $100 thousand to
$599  thousand  for the third  quarter of 2003 from $699  thousand  in the third
quarter of 2002. This decrease primarily reflects a slowing in the growth of the
portfolio of loans held for  investment in the third quarter of 2003 as compared
to the third 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  340.8% or $2.6 million,  to $3.3 million for the
three months ended  September  30, 2003 from $755  thousand for the three months
ended September 30, 2002. The increase in non-interest income primarily resulted
from  gains  on  sale of  mortgage  loans  of $1.6  million  and  mortgage  loan
processing  fees of $441  thousand for the third  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  $190  thousand or 44.1% to $621  thousand  for the three months ended
September 30, 2003 from $431  thousand for the three months ended  September 30,
2002.  This  increase  is  primarily  attributable  to an  increase  in  deposit
accounts.  Mortgage loan  origination  fees  attributable to the commercial bank
increased  $180  thousand or 119.8% to $331  thousand for the three months ended
September 30, 2003 from $150  thousand for the three months ended  September 30,
2002. This increase is primarily attributable to increased volume in residential
mortgage  loans.  Gain on sale of  commercial  loans for the three  months ended
September  30, 2003 was zero,  compared to $43  thousand  for the same period in
2002. The gain resulted from the sale of a commercial  loan in the third quarter
of 2002. Other  non-interest  income increased $178 thousand,  or 136.6% to $308
thousand for the three months ended  September  30, 2003 from $130  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.

                                      -15-
<PAGE>


Non-interest  expense  increased  $3.1  million or 68.0% to $7.7 million for the
three months  ended  September  30, 2003  compared to $4.6 million for the three
months ended September 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 $2.3 million to $5.1 million for the third quarter of 2003 compared to
$2.8  million for the third  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 are zero for the third quarter of 2003, compared
to $205  thousand  for the  third  quarter  of 2002,  because  this  item is now
classified as interest expense. Other expenses increased $816 thousand, or 99.9%
to $1.6 million for the third  quarter of 2003 compared to $817 thousand for the
third  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,
loan expenses and postage/courier expenses.

A provision  for income  taxes of $655  thousand  was  recognized  for the third
quarter of 2003  compared to $153  thousand  for the same period in 2002.  These
provisions for income taxes represent an estimated  effective annual tax rate of
approximately 31% and 37%  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,  reducing the  Company's  year-to-date  tax
rate, which  effectively  reduced the tax rate for the second and third quarters
of 2003.

Nine Months Ended September 30, 2003 Compared to Nine Months Ended
September 30, 2002

The Company's  net income  applicable to common shares for the nine months ended
September  30, 2003 was $3.1  million,  compared to $783  thousand  for the same
period in 2002.  Basic and  diluted  income per common  share for the first nine
months  of 2003 was $.46 and  $.45,  respectively,  compared  to $.12 and  $.12,
respectively,  for the first nine months 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 $5.4 million or 38.1%,  to $19.6 million
for the first nine months of 2003  compared to $14.2  million for the first nine
months of 2002,  consists of an increase in interest income of $6.4 million,  or
24.9%,  partially offset by an increase in interest expense of $1.0 million,  or
8.7%.  The  increase  in  interest  income in the first  nine  months of 2003 is
primarily  attributable  to an increase of $7.4  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 $708
thousand in interest on deposits,  a $246 thousand increase in interest on trust
preferred  securities,  and a $138  thousand  increase in interest on repurchase
agreements,  partially  offset by a decrease in interest on 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  increase  in  interest  on trust  preferred  securities  results
primarily from the  reclassification  of this expense as interest  expense under
SFAS  150  (see  Note  5 to  the  "Notes  to  Consolidated  Condensed  Financial
Statements:  contained in Part 1 Item 1 ). The  increase in interest  expense on
borrowed  funds  results from an increase in the balances of these  liabilities,
partially  offset by a decline in  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  increased $345 thousand to
$2.5 million for the nine months ended  September 30, 2003 from $2.1 million for
the same period in 2002. This increase  primarily reflects growth of the overall


                                      -16-
<PAGE>

loan  portfolio  in the first nine  months of 2003 as compared to the first nine
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.

Noninterest  income increased 554.6% or $10.3 million,  to $12.2 million for the
nine months ended September 30, 2003 from $1.9 million for the nine months ended
September 30, 2002. The increase in noninterest  income primarily  resulted from
gains on sale of mortgage  loans of $7.0  million and mortgage  loan  processing
fees of $1.8 million for the nine months ended  September 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 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 $537 thousand or
44.7% to $1.7  million for the nine months  ended  September  30, 2003 from $1.2
million for the nine months ended September 30, 2002. This increase is primarily
attributable to an increase in deposit accounts.  Mortgage loan origination fees
attributable  to the  commercial  bank increased $531 thousand or 164.7% to $854
thousand for the nine months ended September 30, 2003 from $323 thousand for the
nine months ended September 30, 2002. This increase is primarily attributable to
increased volume in residential mortgage loans. Gain on sale of commercial loans
for the nine months ended September 30, 2003 was zero,  compared to $43 thousand
for the same period in 2002.  This results from the sale of a commercial loan in
the third quarter of 2002. Other non-interest income increased $550 thousand, or
186.8% to $845  thousand for the nine months ended  September 30, 2003 from $294
thousand for the nine months  ended  September  30, 2002.  The increase in other
noninterest income is primarily  attributable to increases in Automated Clearing
House fees, and other non-deposit related service charges.

Noninterest  expense  increased  $11.8 million or 94.4% to $24.3 million for the
nine months  ended  September  30, 2003  compared to $12.5  million for the nine
months ended  September 30, 2002. The increase in noninterest  expense  resulted
primarily from increases in salaries and benefits and other  expenses.  Salaries
and benefits expenses increased $9.1 million to $16.6 million for the first nine
months of 2003 compared to $7.5 million for the first nine months 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.  Other expenses  increased $2.1 million,  or 84.7% to $4.5 million for the
first nine months of 2003  compared to $2.4 million for the first nine months 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 $1.8 million was  recognized  for the first nine
months of 2003  compared to $557  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 September  30, 2003 were $965.1  million,  an increase of $209.0
million or 27.6%,  from $756.1  million at December  31,  2002.  The increase in
total assets primarily resulted from the growth in loans  outstanding,  mortgage
loans  held for  sale,  and cash and due from  banks  which  were  funded by new
deposit growth and other borrowed funds. Total investment  securities  decreased
$8.0  million or 14.9% to $45.7  million at  September  30,  2003 as compared to


                                      -17-
<PAGE>

$53.7 million at December 31, 2002. Federal funds sold and repurchase agreements
decreased  $15.0  million or 24.0% to $47.5  million at September  30, 2003 from
$62.5 million at December 31, 2002.

Loans held for investment  increased $116.6 million, or 32.7%, to $664.6 million
at September 30, 2003, from $551.0 million at December 31, 2002.  Mortgage loans
held for sale increased $16.5 million or 30.2% to $71.2 million at September 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 $1.3 million or 18.2% during
the first nine months of 2003.  The increase  resulted from net  charge-offs  of
loans of $1.1 million plus  additional  provisions  of $2.5 million  during that
period.  The  allowance  for loan  losses as a percent  of total  loans held for
investment  was 1.29% at  September  30,  2003 and 1.32% at December  31,  2002.
Management  believes that such  allowance for loan losses is sufficient to cover
estimated  losses in the Bank's loan  portfolio.  For further  information,  see
"Allowance for Loan Losses" below.
 -------------------------

Deposits increased $146.7 million,  or 22.1%, to $811.6 million at September 30,
2003 from $664.9  million at December 31, 2002.  The increase in total  deposits
primarily  resulted from an increase of $108.1 million or 34.3% in time deposits
$100,000 and over,  combined with an increase of $21.7 million or 31.2% 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 $40.8 million or 28.9%. This
decrease  was a result of the  transfer  of funds into demand  deposit  accounts
which were previously invested in repurchase  agreements sold. This transfer was
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 September 30, 2003
and December 31, 2002.  Interest-bearing demand deposits increased $31.0 million
or 58.7%.  Savings  deposits  increased  $16.8  million or 25.1%.  Money  market
accounts increased $9.9 million or 51.7%. Growth in deposit accounts, other than
brokered time deposits, are primarily attributable to continued expansion of the
Company's customer base as a result of ongoing marketing activities.

Repurchase  agreements sold increased $38.9 million, or 835.0%, to $43.5 million
at  September  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 $10.0 million or 100.8%
to $19.9  million at September  30, 2003 from $9.9 million at December 31, 2002.
Accrued interest payable  increased $480 thousand,  or 20.2%, to $2.9 million at
September 30, 2003 from $2.4 million at December 31, 2002. This increase was due
primarily to an increase in interest-bearing deposits and other interest-bearing
liabilities highlighted herein.

Accounts payable and accrued  expenses  increased $4.9 million or 103.2% to $9.7
million at  September  30, 2003 from $4.8  million at December  31,  2002.  This
increase  was  primarily  attributable  to accrued  commissions  and  incentives
related to the mortgage banking  division.  Mandatory  mortgage forward delivery
contracts were $1.1 million at September 30, 2003,  compared to zero at December
31,  2002.  This  liability  results from  forward  commitments  imbedded in the
mortgage loans held for sale.  Trust preferred  securities were $20.0 million at
September 30, 2003,  resulting from the  reclassification  of company  obligated
manditorily  redeemable  preferred securities of subsidiary trust from mezzanine
financing  to a  liability,  together  with a new trust  preferred  issue in the
second  quarter  of  2003.  See  Notes  5 and 6 to the  "Notes  to  Consolidated
Condensed Financial Statements: contained in Part 1 Item 1.

Shareholders' equity increased by $3.4 million to $56.4 million at September 30,
2003,  from $53.0  million at December 31, 2002.  This increase is the result of
net income for the first nine months of 2003 of $3.3 million,  combined with the
issue  of  stock  under  the  Company's  Employee  Stock  Purchase  Plan of $223
thousand, and the issue of stock related to exercise of warrants and options and
the issue of stock  grants of $375  thousand.  These  increases  were  partially
offset by a decrease in other comprehensive income related to an unrealized loss


                                      -18-
<PAGE>

in the Company's bond  portfolio of $362  thousand,  the payment of dividends on
the Series C Preferred  Stock of $123  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 $617  thousand at September 30, 2003, a decrease of $918
thousand or 59.8%, 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.

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.


                                      -19-
<PAGE>

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
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 $1.9 million at September 30, 2003.
The range for the  allowance  for loan losses at September  30, 2003,  including
specific allowances, was determined to be between $7.4 million or 1.11% of loans
(low range) and $11.7 million or 1.76% of loans (high range).

At September  30,  2003,  the Bank's  total  allowance  for loan losses was $8.6
million  or  1.29% 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  September  30,  2003,  this  benchmark
(Criticized/Classified)  was  3.67% of  loans  outstanding  compared  to 4.5% at
December 31, 2002. Past due loans have increased to .66% of loans outstanding at
September 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 .19% at September 30, 2003 versus .78% at December 31, 2002.  Net loan losses
for the first nine  months of 2003 were $1.1  million  or .19% of average  loans
outstanding for the period,  compared to $415 thousand, or .09% of average loans
for the same period in 2002.


                                      -20-
<PAGE>


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 September 30, 2003
balance sheet evidences a satisfactory liquidity position as total cash and cash
equivalents  amounted to $165.9  million,  representing  17.2% of total  assets.
Investment securities available for sale amounted to $42.4 million, representing
4.4% 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 nine-month  period ended September 30, 2003, total
deposits  increased from $664.9 million at December 31, 2002 to $811.6  million,
or 22.1%.  During this period,  repurchase  agreements  sold increased from $4.7
million to $43.5 million,  or 835.0%,  and other  borrowed funds  increased from
$9.9 million to $19.9  million,  or 100.8%.  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
interest bearing liabilities so that maturities of assets are such that adequate
funds are provided to meet  customer  withdrawals  and loan  demand.  Management
believes 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.  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 September 30, 2003,  the net proceeds from
pooled  trust  preferred  trust  offerings  included in the  calculation  of the
Company's consolidated Tier 1 capital for regulatory purposes is $19.1 million.

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

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

Tier 1 Capital                           10.08%                    4.00%

Total risk-based capital ratio           11.20%                    8.00%

Leverage ratio                           8.32%                     4.00%



                                      -21-
<PAGE>


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.

Recently Issued Accounting Pronouncements
-----------------------------------------

Refer to Note 5 of the Consolidated  Condensed Financial  Statements for further
discussion of new accounting  standards and their impact on earning beginning in
2003.

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 this Quarterly  Report on 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,"
"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;


                                      -22-
<PAGE>

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
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  September  30,
2003, the Bank had a cumulative gap ratio of approximately 0.95 for the one-year
period  ending  September 30, 2004,  and a cumulative  gap ratio of 1.80 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


                                      -23-
<PAGE>

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 September 30, 2003,  indicates that a 200 basis point
increase in rates would cause an increase in net interest income of $3.9 million
over the next  twelve-month  period.  Conversely,  a 200 basis point decrease in
rates would  cause a decrease  in net  interest  income of $1.8  million  over a
twelve-month period.

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 September 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  September  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 the Company must disclose in its filings
with the Securities and Exchange Commission is recorded, processed,  summarized,
and  reported  on a timely  basis,  the Company has  formalized  its  disclosure
controls  and  procedures.  The  Company's  Chief  Executive  Officer  and Chief
Financial Officer have reviewed and evaluated the effectiveness of the Company's
disclosure  controls and procedures,  as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e), as of September 30, 2003. Based on such evaluation, such officers


                                      -24-
<PAGE>

have concluded that, as of September 30, 2003, the Company's disclosure controls
and procedures  were effective in timely  alerting them to material  information
relating to the Company's (and the Company's consolidated subsidiaries) required
to be included in the Company's  periodic SEC filings.  There has been no change
in the Company's  internal  control over financial  reporting during the quarter
ended September 30, 2003 that has materially  affected,  or is reasonably likely
to materially affect, the Company's internal control over financial reporting.

     While management believes the Company's  disclosure controls and procedures
and the Company's  internal  control over financial  reporting are adequate,  no
system of controls  can prevent all error and all fraud.  A control  system,  no
matter  how well  designed  and  operated,  can  provide  only  reasonable,  not
absolute,  assurance that the controls system's objectives will be met. Further,
the design of a control  system must  reflect  the fact that there are  resource
constraints,  and the benefits of controls must be considered  relative to their
costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud,  if any,  within  the  Company  have  been  detected.  These  inherent
limitations  include the  realities  that  judgments in  decision-making  can be
faulty,  and that  breakdowns  can occur  because  of simple  error or  mistake.
Controls can also be  circumvented  by the individual  acts of some persons,  by
collusion of two or more people or by management  override of the controls.  The
design of any system of controls is based in part upon certain assumptions about
the likelihood of future  events,  and there can be no assurance that any design
will  succeed  in  achieving  its  stated  goals  under  all  potential   future
conditions.  Over time,  controls  may become  inadequate  because of changes in
conditions or  deterioration  in the degree of  compliance  with its policies or
procedures. Because of the inherent limitations in a cost-effect control system,
misstatements due to error or fraud may occur and not be detected.

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.

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

         No disclosure required.

Item 5.  Other Information

         No disclosure required.

Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits.

         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.



                                      -25-
<PAGE>

         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.

(b)      Reports on Form 8-K.

         On July 16, 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 June 30, 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:  November 13, 2003          By:  /s/ Charles E. Hughes, Jr.
                                       -------------------------
                                           Charles E. Hughes, Jr.
                                           President and Chief Executive Officer


Date:  November 13, 2003          By:  /s/ T. Edwin Stinson, Jr.
                                       -------------------------
                                           T. Edwin Stinson, Jr.
                                           Chief Financial Officer

















                                      -27-
<PAGE>

Exhibits.

         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-