SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                               -------------------
                                    FORM 10-K
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934

                   For the Fiscal Year Ended December 31, 2005

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

               For the transition period from ________ to ________
                         Commission File No. 000-1170902

                          Florida Community Banks, Inc.
             (Exact name of registrant as specified in its charter)

         Florida                                          35-2164765
-------------------------------               --------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
Incorporation or organization)

1400 North 15th Street, Immokalee, Florida               34142-2202
------------------------------------------         -----------------------
  Address of principal executive offices)           (Including zip code)

                                 (239) 657-3171
                (Issuer's Telephone Number, Including Area Code)

              SECURITIES REGISTERED UNDER SECTION 12(b) OF THE ACT:

                                                        Name of each exchange
           Title of each class                           on which registered
                 None                                            None

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                          Common Stock, $0.01 Par Value
                                (Title of Class)

Indicate by check mark if the  registrant is a well-known  seasoned  issuer,  as
defined in Rule 405 of the Securities Act. Yes |_| No |X|

Indicate by check mark if the  registrant  is not  required to file  reports
pursuant to Section 13 or Section  15(d) of the Act.  Yes |_| No |X|

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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. | |

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
One):

Large accelerated filer  |_|  Accelerated filer |X|   Non-accelerated filer  |_|

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act).            Yes |_| No |X|

The  aggregate  market value of the voting and  non-voting  common stock held by
non-affiliates of the registrant,  computed by reference to the closing price of
such stock on June 30, 2005, was approximately $100,918,350.

The number of shares of the Registrant's common stock, $0.01 par value,
outstanding on March 10, 2006, was 5,493,141.

                       Document Incorporated by Reference

This statement has not been reviewed or confirmed for accuracy or relevance by
the Federal Deposit Insurance Corporation.

Certain information  required for Part III of this report is incorporated herein
by reference to the Proxy Statement for the 2006 Annual Meeting of the Company's
stockholders


<PAGE>




                          FLORIDA COMMUNITY BANKS, INC.

                          2005 Form 10-K Annual Report


                                TABLE OF CONTENTS
<TABLE>
<CAPTION>


<S>     <C>    <C>    <C>    <C>    <C>    <C>
    Item Number                                                                                         Page or
   in Form 10-K                                          Description                                    Location


   PART I

   Item 1.            Business...................................................................            3

   Item 1A.           Risk Factors...............................................................            8

   Item 1B.           Unresolved Staff Comments..................................................           10

   Item 2.            Properties.................................................................           10

   Item 3.            Legal Proceedings..........................................................           10

   Item 4.            Submission of Matters to a Vote of Security Holders........................           10

   PART II

   Item 5.            Market for the Registrant's Common Equity and Related
                      Shareholder Matters........................................................           11

   Item 6.            Selected Financial Data....................................................           12

   Item 7.            Management's Discussion and Analysis of Financial
                      Condition and Results of Operations........................................           13

   Item 7A.           Quantitative and Qualitative Disclosures About Market Risk.................           13

   Item 8.            Financial Statements and Supplementary Data................................           35

   Item 9.            Changes in and Disagreements with Accountants on Accounting
                      and Financial Disclosure...................................................           81

   Item 9A.           Controls and Procedures....................................................           81

   Item 9B.           Other Information..........................................................           82

   PART III

   Item 10.           Directors, Executive Officers, Promoters and Control Persons;
                      Compliance with Section 16(a) of the Exchange Act..........................           82

   Item 11.           Executive Compensation.....................................................           82

   Item 12.           Security Ownership of Certain Beneficial Owners and Management.............           82

   Item 13.           Certain Relationships and Related Transactions.............................           82

   Item 14.           Principal Accountant Fees and Service......................................           82

   PART IV

   Item 15.           Exhibits and Financial Statements Schedules................................           83

   Signatures

   Certification of Periodic Financial Reports

</TABLE>



<PAGE>



                                     PART I


ITEM 1.    BUSINESS

General

     Florida  Community Banks,  Inc. ("FCBI" or the "Company") is a bank holding
company, which owns all of the common stock of Florida Community Bank ("Bank" or
"FCB") and a special  purpose  business trust organized to issue Trust Preferred
Securities.  The  special  purpose  business  trust is not  consolidated  in the
financial  statements  that are  included  elsewhere  herein.  FCBI is a Florida
corporation registered with the Board of Governors of the Federal Reserve System
as a bank  holding  company  under  the Bank  Holding  Company  Act of 1956,  as
amended.  Through its subsidiary bank, FCBI is engaged in the commercial banking
business in southwestern  Florida with offices in Collier,  Lee, Hendry,  Glades
and  Charlotte  counties.  At  December  31,  2005,  FCBI had  total  assets  of
approximately  $907 million,  total deposits of  approximately  $737 million and
stockholders' equity of approximately $70 million.

     Florida  Community  Bank  is a  Florida-chartered  commercial  bank,  which
commenced operations in Everglades City, Florida on May 19, 1923, under the name
"Bank of the Everglades." The Bank changed its place of business from Everglades
City, Florida to Immokalee, Florida in September 1962. FCB changed its name from
Bank of the  Everglades  to "First Bank of  Immokalee"  in July 1967 and then to
"Florida Community Bank" in July 1996 as part of its merger with Tri-County Bank
of Lehigh Acres. The Bank is subject to regulation by the Florida  Department of
Financial Services  ("Department") and the Federal Deposit Insurance Corporation
("FDIC").  The  Bank's  main  office  is  located  at 1400  North  15th  Street,
Immokalee,  Florida and its telephone  number is (239) 657-3171.  In addition to
the main banking office in Immokalee,  the Bank currently operates  full-service
branches  in the  southwest  Florida  cities of Lehigh  Acres,  LaBelle,  Naples
(Golden Gate area), Port Charlotte, Punta Gorda, Cape Coral and Ft. Myers.

         The Company employs approximately 164 persons and it believes that its
relationship with these employees is good.

     The Bank is engaged  primarily  in  soliciting  deposits  from the  general
public and investing  such  deposits,  together with other funds,  in commercial
loans,  consumer loans,  agricultural  loans, and real estate loans. To a lesser
extent,  the Bank  invests  its  funds in  securities  issued or  guaranteed  by
agencies of the United States Government and municipalities.

     The Bank  operates as a locally  operated  institution  aimed at  providing
prompt,   efficient  and   personalized   service  to  individuals,   small  and
medium-sized businesses, professionals and other local organizations. The Bank's
primary service area  encompasses  Charlotte,  Lee,  Collier,  Glades and Hendry
Counties (the "PSA"). The Bank's principal markets within the PSA are:

          (i)  commercial and small business lending and deposit services;

          (ii) residential  real estate  mortgage and retail lending and deposit
               services; and

          (iii) commercial and residential real estate development lending.

     The principal  sources of funds for the Bank's loans and other  investments
are demand,  time,  savings and other deposits,  amortization  and prepayment of
loans,  sales to other lenders or  institutions  of loans or  participations  in
loans,   principal  payments  or  maturities  of  investment   securities,   and
borrowings.  The principal  sources of income for the Bank are interest and fees
collected on loans,  including  fees received for servicing  loans sold to other
lenders  or  institutions,  and  to a  lesser  extent,  interest  and  dividends
collected on other investments.  The principal expenses of the Bank are interest
paid on savings and other  deposits,  interest  paid on other  borrowings by the
Bank, employee compensation,  office expenses and other overhead and operational
expenses.

     The  Bank  offers  several  deposit  accounts,   including  demand  deposit
accounts,  negotiable  order  of  withdrawal  accounts  ("NOW"  and  "Super-NOW"
accounts), money market accounts, certificates of deposit and various retirement
accounts. In addition, the Bank belongs to an electronic banking network so that
its  customers  may use the  automated  teller  machines  (the  "ATMs") of other
financial  institutions  and  operates  drive-in  teller  services  and  24-hour
depository vaults.

                                       3

<PAGE>

         The Bank offers the following loan services:

          (a)  consumer  loans,  automobile  loans,  real estate equity lines of
               credit,   education  loans  and  real  estate  loans  secured  by
               single-family residences;

          (b)  commercial   and  business   loans  for  small  to   medium-sized
               companies,  including  Small  Business  Administration  and other
               government-guaranteed financing;

          (c)  individual  and  builder  short-term   residential   construction
               financing;

          (d)  home improvement loans; and

          (e)  commercial and residential real estate development loans.

     The  Bank  provides  a full  range  of  competitive  banking  services  and
emphasizes  the manner in which the services are delivered.  Management  focuses
its  efforts  on  filling  the  void  created  by  the   decreasing   number  of
locally-owned  community  banks due to  acquisitions  by large regional  holding
companies,  which it believes has negatively impacted the personal nature of the
delivery,  quality and availability of banking services available in the PSA and
surrounding areas.

Primary Service Area

     The PSA enjoys an abundant work force,  attractive  business  climate and a
good relationship between the private and public sectors.

     In general,  commercial  real estate in the PSA consists of small  shopping
centers and office buildings. The type of residential real estate within the PSA
varies, with a number of condominiums,  townhouses, apartments and single-family
housing developments dispersed throughout the PSA.

Competition

     The business of banking is highly competitive. The Bank competes with other
banks,  savings and loan associations and credit unions within the PSA. The Bank
believes that its operation as a locally owned and controlled  bank with a broad
base of  ownership  in the PSA  enhances  its  ability  to  compete  with  those
non-local financial  institutions now operating in its market, but no assurances
can be given in this regard.

     The Bank's competitive strategy with respect to the financial  institutions
described above consists of:

          o    reviewing   and  acting  upon  loan   requests   quickly  with  a
               locally-based loan committee,

          o    maintaining flexible but prudent lending policies,

          o    personalizing   service   by   establishing   long-term   banking
               relationships with its customers; and

          o    maintaining  an  appropriate  ratio of  employees to customers to
               enhance the level of service.

Facilities

     The Bank's main office in  Immokalee,  Florida was  purchased  in 1962.  At
December 31, 2005,  the Bank  operated ten branch  offices,  with a new Valencia
office  scheduled to open in late 2006 or early 2007,  replacing the branch that
is currently in a convenience  store (in the same area).  The Bank hopes to open
at least three new  branches in 2007.  The Lehigh  Acres  branch was acquired in
1996 as a result of the  acquisition  of Tri-County  Bank of Lehigh  Acres.  The
Golden Gate branch  operates in a facility  leased in 1997, on a  month-to-month
basis,  with  adjustments  made annually to the lease cost based on the Consumer
Price Index.  The LaBelle branch was acquired as a result of the  acquisition of
Hendry County Bank by merger in 1998. The land for the Port Charlotte branch was
purchased  in  1998  and  the  branch  opened  in 1999  after  construction  was
completed.  The  facility  for the Ft. Myers branch is leased for 15 years (with
renewal  options after that period) and opened in 2000.  The Bank owns the Punta
Gorda  branch  and the  underlying  land is subject  to a 99-year  lease,  which
commenced in 2000. Land for a second Cape Coral branch was purchased in 2003 and
the branch opened  operations in January 2005. All of the branch  facilities are
in good condition.

                                       4

<PAGE>


Regulation

     The  Bank  is  subject  to   comprehensive   regulation,   examination  and
supervision  by the  Department  and the FDIC,  and is subject to other laws and
regulations  applicable to banks. Such regulations  include limitations on loans
to a single  borrower  and to the  Bank's  directors,  officers  and  employees;
restrictions  on the opening and closing of branch  offices;  the maintenance of
required  capital and liquidity  ratios;  the granting of credit under equal and
fair  conditions;  disclosure  of the  costs  and  terms  of  such  credit;  and
restrictions as to permissible investments. The Bank is examined periodically by
both the  Department  and the FDIC and submits  periodic  reports  regarding its
financial  condition and other matters to each of them.  Both the Department and
the FDIC  have a broad  range of  powers  to  enforce  regulations  under  their
respective jurisdictions, and to take discretionary actions determined to be for
the  protection  of  the  safety  and  soundness  of  the  Bank,  including  the
institution  of cease  and  desist  orders  and the  removal  of  directors  and
officers.

     FDIC  Regulations.  The Bank's  deposit  accounts  are  insured by the Bank
Insurance  Fund of the FDIC up to a maximum of $100,000  per insured  depositor.
The FDIC issues regulations, conducts periodic examinations, requires the filing
of reports and generally  supervises the  operations of its insured  banks.  The
approval  of the FDIC is  required  prior to a merger  or  consolidation  or the
establishment  or  relocation  of  an  office  facility.  This  supervision  and
regulation  is intended  primarily for the  protection of depositors  and not of
stockholders.

     The  Federal  Deposit  Insurance   Corporation   Improvement  Act  of  1991
("FDICIA")  substantially  revised the  depository  institution  regulatory  and
funding  provisions of the Federal  Deposit  Insurance  Act. Among other things,
FDICIA requires the federal banking  regulators to take prompt corrective action
in respect to  depository  institutions  that do not meet minimum  requirements.
FDICIA   established  five  capital  tiers:  "well   capitalized,"   "adequately
capitalized,"   "undercapitalized,"    "significantly   undercapitalized,"   and
"critically  undercapitalized." A depository  institution is well capitalized if
it  significantly  exceeds the minimum  level  required by  regulation  for each
relevant capital measure,  adequately capitalized if it meets each such measure,
undercapitalized   if  it  fails  to  meet  any  such   measure,   significantly
undercapitalized  it is  significantly  below any such  measure  and  critically
undercapitalized if it fails to meet any critical capital level set forth in the
regulations.  The critically undercapitalized level occurs where tangible equity
is less  than 2% of  total  tangible  assets  or less  than  65% of the  minimum
leverage ratio  prescribed by regulation  (except to the extent that 2% would be
higher than such 65% level).  A depository  institution may be deemed to be in a
capitalization  category  that is lower than is indicated by its actual  capital
position if it receives an unsatisfactory examination rating.

     FDICIA generally prohibits a depository institution from making any capital
distribution  (including  payment of a dividend) if the  depository  institution
would thereafter be undercapitalized.  In addition,  undercapitalized depository
institutions  are  subject  to growth  limitations  and are  required  to submit
capital  restoration  plans to the FDIC.  The federal  banking  agencies may not
accept a capital plan without determining,  among other things, that the plan is
based on  realistic  assumptions  and is  likely to  succeed  in  restoring  the
depository  institution's capital. If a depository fails to submit an acceptable
plan, it is treated as if it is significantly undercapitalized.

     Significantly  undercapitalized depository institutions may be subject to a
number of requirements  and  restrictions,  including  orders to sell sufficient
voting  stock to become  adequately  capitalized,  requirements  to reduce total
assets and  cessation  of the  receipt of  deposits  from  correspondent  banks.
Critically   undercapitalized   depository   institutions  are  subject  to  the
appointment of a receiver or conservator.

     FDICIA provides authority for special  assessments against insured deposits
and for the development of a general risk-based insurance assessment system. The
risk-based  insurance  assessment system would be used to calculate a depository
institution's  semi-annual deposit insurance assessment based on the probability
(as  defined in the FDICIA)  that the BIF will incur a loss with  respect to the
institution.  In accordance  with FDICIA,  the FDIC  implemented a  transitional
risk-based insurance premium system and increased deposit insurance premiums for
commercial banks to an average of 25.4 basis points.

     FDICIA  also  contains  various  provisions  related  to  an  institution's
interest rate risk. Under certain circumstances,  an institution may be required
to provide  additional  capital or  maintain  higher  capital  levels to address
interest rate risks.

                                       5

<PAGE>


     In  addition,  the FDIC has  adopted a minimum  leverage  ratio of 4%.  The
minimum  leverage  ratio is the ratio of common  equity,  retained  earnings and
certain  amounts of perpetual  preferred stock (after  subtracting  goodwill and
after making certain other  adjustments) to the total assets of the institution.
Generally,  banking organizations are expected to operate well above the minimum
required  capital  level of 4% unless  they  meet  certain  specified  criteria,
including  that  they  have  the  highest  regulatory   ratings.   Most  banking
organizations are required to maintain a leverage ratio of 4% plus an additional
cushion of 1% to 2%. The  guidelines  also provide  that  banking  organizations
experiencing  internal  growth or making  acquisitions  are expected to maintain
strong capital  positions  substantially  above the minimum  supervisory  levels
without significant reliance upon intangible assets.

     Dividend  Restrictions.  In addition to dividend restrictions placed on the
Bank by the FDIC based on the Bank's minimum capital  requirements,  the Florida
Financial  Institutions  Code prohibits the  declaration of dividends in certain
circumstances.  Section 658.37 (Florida Statutes),  prohibits the declaration of
any  dividend  until a bank has  charged off bad debts,  depreciation  and other
worthless  assets,  and has made  provision  for  reasonably-anticipated  future
losses on loans and other assets. Such dividends are limited to the aggregate of
the net profits of the  dividend  period,  combined  with a bank's  retained net
profits for the preceding two years. A bank may declare a dividend from retained
net profits that accrued  prior to the  preceding two years with the approval of
the Department.  However, a bank will be required, prior to the declaration of a
dividend on its common stock, to carry 20% of its net profits for such preceding
period to its surplus fund, until the surplus fund equals at least the amount of
the bank's common and preferred stock then issued and  outstanding.  In no event
may a bank  declare  a  dividend  at any time in which its net  income  from the
current year, combined with its retained net income from the preceding two years
is a loss or which would  cause the  capital  accounts of the bank to fall below
the minimum amount required by law,  regulation,  order or any written agreement
with the Department or other state or federal regulatory agency.

     Riegle-Neal   Interstate   Banking  and  Branching   Efficiency   Act.  The
Riegle-Neal  Interstate  Banking and Branching  Efficiency  Act of 1994 provides
that as of June 1, 1997,  adequately  capitalized and managed banks will be able
to  engage  in  interstate  branching  by  merging  banks in  different  states,
including  Florida,  which did not opt out of the application of this provision.
If a state did not opt out,  banks  will be  required  to  comply  with the host
state's regulations with respect to branching across state lines.

     Gramm-Leach-Bliley Act. On November 12, 1999, President Clinton signed into
law the  Gramm-Leach-Bliley  Act which reforms and  modernizes  certain areas of
financial  services  regulation.  The law permits the creation of new  financial
services  holding  companies  that can offer a full range of financial  products
under a regulatory  structure  based on the principle of functional  regulation.
The legislation  eliminates the legal barriers to  affiliations  among banks and
securities firms,  insurance companies,  and other financial services companies.
The law also provides financial  organizations with the opportunity to structure
these  new  financial  affiliations  through a holding  company  structure  or a
financial subsidiary. The new law reserves the role of the Federal Reserve Board
as the supervisor for bank holding companies. At the same time, the law provides
a system of  functional  regulation,  which is  designed  to utilize the various
existing federal and state regulatory bodies.

     The law also  includes a minimum  federal  standard of  financial  privacy.
Financial  institutions  are required to have written privacy policies that must
be disclosed to customers.  The disclosure of a financial  institution's privacy
policy must take place at the time a customer  relationship  is established  and
not less than annually during the continuation of the relationship. The act also
provides for the functional  regulation of bank securities  activities.  The law
repeals the exemption  that banks were afforded from the definition of "broker,"
and replaces it with a set of limited  exemptions that allow the continuation of
some  historical  broker  activities  performed by banks.  In addition,  the act
amends the  securities  laws to include  banks within the general  definition of
dealer.  Regarding new bank products,  the law provides a procedure for handling
products sold by banks that have securities elements.

     In the area of CRA  activities,  the law generally  requires that financial
institutions address the credit needs of low-to-moderate  income individuals and
neighborhoods  in the  communities  in which they operate.  Bank  regulators are
required  to take the CRA  ratings  of a bank or of the bank  subsidiaries  of a
holding company into account when acting upon certain branch and bank merger and
acquisition  applications  filed by the  institution.  Under the law,  financial
holding  companies and banks that desire to engage in new  financial  activities
are required to have  satisfactory  or better CRA ratings when they commence the
new activity.

     Most of the provisions of the law took effect on March 11, 2000, with other
provisions  being  phased  in over a one to two year  period  thereafter.  It is
anticipated that the effects of the law, while providing additional  flexibility
to bank holding  companies and banks,  may result in additional  affiliations of
different financial services

                                       6

<PAGE>


providers,  as well as increased  competition,  resulting in lower prices,  more
convenience, and greater financial products and services available to consumers.

     USA Patriot  Act. On October 26, 2001,  President  Bush signed into law the
Uniting and  Strengthening  America by Providing  Appropriate  Tools Required to
Intercept and Obstruct  Terrorism Act of 2001 (the "USA Patriot Act"),  which is
designed  to deny  terrorists  and  others the  ability to obtain  access to the
United  States  financial  system.  Title  III of  the  USA  Patriot  Act is the
International  Money Laundering  Abatement and  Anti-Terrorist  Financing Act of
2001.  Among its  provisions,  the USA  Patriot  Act  mandates  or will  require
financial  institutions  to implement  additional  policies and procedures  with
respect to, or  additional  measures,  including  additional  due  diligence and
recordkeeping,  designed to address, any or all of the following matters,  among
others:  money  laundering;   suspicious  activities  and  currency  transaction
reporting;  and  currency  crimes.  The  U.S.  Department  of  the  Treasury  in
consultation  with  the  Federal  Reserve  Board  and  other  federal  financial
institution  regulators has promulgated  rules and regulations  implementing the
USA Patriot Act which (i)  prohibits  U.S.  correspondent  accounts with foreign
banks that have no physical presence in any jurisdiction; (ii) require financial
institutions to maintain certain records for  correspondent  accounts of foreign
banks; (iii) require financial  institutions to produce certain records relating
to anti-money  laundering  compliance  upon request of the  appropriate  federal
banking  agency;  (iv) require due diligence with respect to private banking and
correspondent banking accounts;  (v) facilitate  information sharing between the
government and financial  institutions;  and (vi) require financial institutions
to have in  place a money  laundering  program.  In  addition,  an  implementing
regulation  under  the  USA  Patriot  Act  regarding  verification  of  customer
identification  by  financial  institutions  has been  proposed,  although  such
regulation has not yet been  finalized.  The Company has  implemented,  and will
continue to implement,  the provisions of the USA Patriot Act as such provisions
become effective.  The Company currently maintains and will continue to maintain
policies and procedures to comply with the USA Patriot Act requirements. At this
time,  the  Company  does not  expect  that  the USA  Patriot  Act  will  have a
significant impact on the financial position of the Company.

     Federal  Reserve  System.  FCBI is a bank  holding  company  subject to the
supervision  and  regulations  of the Board of Governors of the Federal  Reserve
System  ("Federal  Reserve").  As such, the Company is required to file periodic
reports and such other  information as the Federal  Reserve may deem  necessary.
The Federal  Reserve also  conducts  examinations  of the  Company.  The Federal
Reserve  maintains  the  position  that the Company  should serve as a source of
financial  and  managerial  strength  for  the  Bank  and may  not  conduct  its
operations in an unsound manner.

     Corporate  Governance.  The  Sarbanes-Oxley  Act of  2002  ("Sarbanes-Oxley
Act"),  which became law on July 30, 2002, and added new legal  requirements for
public  companies  affecting  corporate  governance,  accounting  and  corporate
reporting.

The Sarbanes-Oxley Act provides for, among other things:

          o    a prohibition on personal loans made or arranged by the issuer to
               its directors and executive  officers (except for loans made by a
               bank subject to Regulation O);

          o    independence requirements for audit committee members;

          o    independence requirements for company auditors;

          o    certification  of  financial  statements  on Forms 10-K and 10-Q,
               reports  by the  chief  executive  officer  and  chief  financial
               officer;

          o    the  forfeiture  by the  chief  executive  officer  and the chief
               financial   officer   of   bonuses   or   other   incentive-based
               compensation and profits from the sale of an issuer's  securities
               by such officers in the twelve month period following the initial
               publication  of  any  financial  statements  that  later  require
               restatement due to corporate misconduct;

          o    disclosure of off-balance sheet transactions;

          o    two-business day filing requirements for insiders filing Form 4s;

          o    disclosure of a code of ethic for financial officers and filing a
               Form 8-K for a change in or waiver of such code;


                                       7

<PAGE>


          o    the  reporting of securities  violations  "up the ladder" by both
               in-house and outside attorneys;

          o    restrictions  on the use of  non-GAAP  financial  measures in the
               press release and SEC filings;

          o    the formation of a public accounting oversight board; and

          o    various increase criminal  penalties for violations of securities
               laws.

     The  Sarbanes-Oxley  Act contains  provisions,  which became effective upon
enactment on July 30, 2002 and  provisions  that became  effective  over varying
periods.  The SEC has been  delegated  the task of enacting  rules to  implement
various  provisions.  In addition,  each of the  national  stock  exchanges  has
adopted new corporate governance rules,  including rules strengthening  director
independence requirements for boards, the adoption of corporate governance codes
and charters for the nominating, corporate governance and audit committees.

Recent Regulatory Developments

     Changes in the federal deposit  insurance  program were recommended  during
2003 by the FDIC and in the federal budget. A deposit insurance reform bill that
would,  among  other  things,  merge  the BIF and the SAIF,  increase  the index
deposit  insurance  coverage,  give  the FDIC  flexibility  in  setting  premium
assessments, and replace a fixed deposit reserve ratio with a reserve range, was
passed  by the  House of  Representatives  in April  2003,  but no action on the
subject  was taken by the Senate  during the  remainder  of the year.  It is not
possible to predict if deposit insurance reform legislation will be enacted,  or
if enacted, what its effect will be on our banking subsidiary.

     Federal banking  regulators  continued their  preparations for the expected
issuance  by the Basel  Committee  on Banking  Supervision  of final  "Basel II"
regulatory capital guidelines,  would mandate changes for large banks in the way
in which their risk-based  capital  requirements are calculated.  The guidelines
are widely  believed  likely to permit  significant  reductions in the levels of
required  capital for such banks.  It is  uncertain  at the present  time if our
banking  subsidiary  or the  Holding  Company  will  be  either  required  to or
permitted to make changes in the regulatory capital structure in accordance with
Basel II guidelines.

     The foregoing is necessarily a general description of certain provisions of
federal and state law and does not purport to be  complete.  Proposals to change
the  laws  and  regulations   governing  the  banking  industry  are  frequently
introduced in Congress,  in the state  legislatures  and before the various bank
regulatory  agencies.  The  likelihood  and timing of any such  changes  and the
impact such changes might have on the Company cannot be determined at this time.

Available Information

     The  Company   presently   maintains   an  internet   website   located  at
www.floridacommunitybank.net  on which,  among other  things,  the Company makes
available,  free of charge, select reports that it files with the Securities and
Exchange Commission.

     Also, paper copies of the Annual Report on Form 10-K,  quarterly reports on
Form 10-Q, current reports on Form 8-K, and a copy of the Company Code of Ethics
as adopted and filed with the Securities  and Exchange  Commission are available
at no charge  because all reports are currently  not on the  Company's  website.
Those who would like a paper copy should contact Guy W. Harris,  Chief Financial
Officer,  Florida  Community  Banks,  Inc.,  1400 North 15th Street,  Immokalee,
Florida  34142.  Currently  periodic  reports are filed with the  Securities and
Exchange Commission (including Form 10-Ks, Form 10-Qs, Proxy Statements,  etc.).
These  periodic  reports  are  filed  electronically  via  EDGAR and they can be
reviewed at the Securities and Exchange Commission's website: www.sec.gov.

ITEM 1A.   RISK FACTORS

Industry Factors

     The  commercial  banking  business can be affected by general  business and
economic  conditions.  Our business and earnings are affected by conditions that
include  short-term  and  long-term  interest  rates,  inflation,  money supply,
fluctuations  in both debt and equity  capital  markets and the  strength of the
U.S. and local economy.  The local economy can be affected by weather conditions
that  include  but are not  limited to  tropical  storms,  hurricanes  and below
freezing temperatures. For example, an economic downturn that suddenly decreased
property

                                       8

<PAGE>


values,  caused an increase in  unemployment,  or other  events that  negatively
impact  household  and/or  corporate  customers  could  decrease  ability to pay
interest  or  principal  on loans  or cause a  decrease  in the  demand  for the
Company's products and services.

     The fiscal and  monetary  policy of the Board of  Governors  of the Federal
Reserve System can significantly affect the earnings of the Company. The Federal
Reserve  generally  sets the cost of funds for  lending  and  investing  and the
return we earn on loans and investments,  which in turn has an impact on our net
interest  margin.  The  rate  policy  can also  affect  the  value of  financial
instruments we hold such as debt securities.  The Federal Reserve policy is hard
to predict and beyond the control of the Company.

     The  Company  is  subject  to  extensive   governmental   regulation.   The
regulations are designed for the protection of the  depositors,  federal deposit
insurance  funds,  federal crimes  prevention and the banking system as a whole.
Federal and state law limits the Company's ability to declare and pay dividends.
Also,  failure to comply  with laws,  regulations  or policies  could  result in
sanctions by the regulatory  agencies and damage to our  reputation.  Changes to
regulations,  including changes in interpretation or implementation of statures,
regulations or policies can have a substantial and  unpredictable  effect on the
Company,  refer to the discussions in Item 1 - Business and Note 11 - Regulatory
Capital.

Company Factor

     There is no established  trading market for the Company's  stock, and there
can be no assurance  that a trading  market will develop during the near future.
See Item 5 - Market For The  Registrants  Common Equity And Related  Shareholder
Matters.

     The Company  continuously  is  adapting  to changes to mitigate  risks that
challenge  the  success of the  business.  If the  Company  were unable to fully
adjust to any specific risk, or make changes imposed by the risk environment, it
could have an effect on financial  performance.  The Company competes,  and will
continue to compete,  with well  established  banks,  credit  unions,  insurance
companies and other financial institutions, some of which have greater resources
and lending limits than the Company.  Some of these competitors may also provide
certain services that the Company does not provide.

     If a significant  number of loans are not repaid,  it would have an adverse
effect on our  earnings  and overall  financial  condition.  Like all  financial
institutions,  we  maintain an  allowance  for loan losses to provide for losses
inherent in the loan  portfolio.  The  allowance  for loan losses  reflects  our
management's  best  estimate of  probable  losses in the loan  portfolio  at the
relevant balance sheet date. This evaluation is primarily based upon a review of
our and the banking  industry's  historical  loan loss  experience,  known risks
contained in the loan  portfolio,  composition and growth of the loan portfolio,
and economic factors. However, the determination of an appropriate level of loan
loss  allowance  is an  inherently  difficult  process  and is based on numerous
assumptions.  As a result,  our allowance for loan losses may not be adequate to
cover actual losses,  and future provisions for loan losses may adversely affect
our earnings.

     A significant  portion of our loan portfolio  consists of mortgages secured
by  real  estate  located  in  the  Charlotte/Hendry/Glades/Collier/Lee   County
markets.  Real estate values and real estate markets are generally  affected by,
among other things, changes in national,  regional or local economic conditions;
fluctuations  in  interest  rates  and the  availability  of loans to  potential
purchasers; changes in the tax laws and other governmental statutes, regulations
and policies;  and acts of nature. If real estate prices decline in any of these
markets,  the value of the real estate  collateral  securing  our loans could be
reduced.  Such a reduction  in the value of our  collateral  could  increase the
number of non-performing loans and adversely affect our financial performance.

     Our success is largely  dependent on the personal  contacts of our officers
and  employees in our market areas.  If we lose key  employees,  temporarily  or
permanently,  our business could be hurt. We could be  particularly  hurt if our
key employees went to work for our  competitors.  Our future success  depends on
the  continued  contributions  of  our  existing  senior  management  personnel,
including  our President and Chief  Executive  Officer  Stephen L. Price and our
market area Presidents.

     Our directors,  if acting together, will be able to significantly influence
all matters  requiring  approval by our  shareholders,  including  elections  of
directors   and  the   approval  of  mergers  or  other   business   combination
transactions.  Our executive officers and directors own approximately


                                       9

<PAGE>


1,358,000 shares,  representing  approximately 25% of the total number of shares
outstanding. The interest of these shareholders may differ from the interests of
our other shareholders, and these shareholders, acting together, will be able to
influence all matters  requiring  approval by shareholders.  As a result,  these
shareholders  could  approve  or  cause  us to take  actions  of  which  you may
disapprove  or that  may be  contrary  to your  interests  and  those  of  other
investors.

     Our primary market areas are Charlotte/Hendry/Glades/Collier/Lee  Counties,
Florida. The banking business in these areas is extremely  competitive,  and the
level of  competition  facing us  following  our  expansion  plans may  increase
further,  which  may  limit  our asset  growth  and  profitability.  Each of our
subsidiary  banks  experiences  competition in both lending and attracting funds
from other banks,  savings  institutions,  and non-bank  financial  institutions
located  within  its  market  area,  many  of  which  are  significantly  larger
institutions.  Non-bank  competitors  competing  for  deposits  and deposit type
accounts include mortgage bankers and brokers, finance companies, credit unions,
securities firms,  money market funds,  life insurance  companies and the mutual
funds industry.  For loans, we encounter  competition from other banks,  savings
associations,   finance  companies,  mortgage  bankers  and  brokers,  insurance
companies,  small loan and credit card companies,  credit unions, pension trusts
and securities firms.

         We have the power to issue common stock without shareholder approval,
up to the number of authorized shares set forth in our Articles of
Incorporation. Our Board of Directors may determine from time to time a need to
obtain additional capital through the issuance of additional shares of common
stock or other securities, subject to limitations imposed by the Federal Reserve
Board. There can be no assurance that such shares can be issued at prices or on
terms better than or equal to the terms obtained by our current shareholders.
The issuance of any additional shares of common stock by us in the future may
result in a reduction of the book value or market price, if any, of the
then-outstanding common stock. Issuance of additional shares of common stock
will reduce the proportionate ownership and voting power of our existing
shareholders.

     Pursuant to our Articles of  Incorporation,  we have the authority to issue
additional  series  of  preferred  stock  and  to  determine  the  designations,
preferences,  rights and  qualifications or restrictions of those shares without
any further vote or action of the shareholders. The rights of the holders of our
common stock will be subject to, and may be  materially  adversely  affected by,
the rights of the holders of any preferred stock that may be issued by us in the
future.

     Our shares of common  stock are not  deposits,  savings  accounts  or other
obligations of us, our subsidiaries or any other depository institution, are not
guaranteed by us or any other entity, and are not insured by the Federal Deposit
Insurance Corporation or any other governmental agency.

     We may need to incur additional debt or equity financing in the near future
to fund future growth and meet our capital needs. We cannot assure you that such
financing  will be  available  to us on  acceptable  terms or at all.  If we are
unable to obtain future  financing,  we may not have the resources  available to
fund our planned growth.

     Additional risk factors could have a negative impact on the Company and its
performance.  Many of these factors are general  economic and  financial  market
conditions,  competition,  consolidation  of the  financial  services  industry,
litigation, regulatory actions and operating conditions.

ITEM 1B.   UNRESOLVED STAFF COMMENTS

None.

ITEM 2.    PROPERTIES

         For the description of the property of the Company, see "ITEM I -
BUSINESS - Facilities."

ITEM 3.    LEGAL PROCEEDINGS

         There are no material proceedings to which the Company is a party.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were  submitted to a vote of security  holders during the fourth
quarter of 2005.

                                       10

<PAGE>


                                     PART II

ITEM 5.   MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
          MATTERS

     There is no established trading market for the Company's Common Stock, $.01
par value (the  "Common  Stock"),  which has been traded  inactively  in private
transactions.  Therefore,  no reliable  information is available as to trades of
the Common Stock or as to the prices at which Common Stock has traded.

     In October 2005,  the Company  issued 1.2 shares for 1.0 share stock split,
thereby increasing the number of shares outstanding from 4,519,321 to 5,423,185.

     Management has reviewed the limited information  available as to the ranges
at which the  Common  Stock has been sold and is aware of trades  that  occurred
during 2004 and 2005. To the best of management's  knowledge,  the last trade in
December was  executed at a price of $28.50 per share.  The per share price data
regarding the Common Stock is provided for information  purposes only and should
not be viewed as indicative of the actual or market value of the Common Stock.

<TABLE>
<CAPTION>

                                                                                           Estimated Price
                                                                                            Range Per Share
                                                                                        High               Low
2005 (Split Adjusted):
<S>                                                                                 <C>              <C>
   First Quarter.................................................................   $       22.50    $       21.88
   Second Quarter................................................................           24.58            19.10
   Third Quarter.................................................................           26.67            25.21
   Fourth Quarter................................................................           28.50            26.00

2004 (Split Adjusted):
   First Quarter.................................................................   $       20.83    $       17.19
   Second Quarter................................................................           19.44            18.75
   Third Quarter.................................................................           20.83            19.44
   Fourth Quarter................................................................           21.46            20.16
</TABLE>

     As of  March  10,  2006,  there  were  5,493,141  shares  of  Common  Stock
outstanding held by approximately 980 shareholders of record.

     The  payment  of future  dividends  will be at the sole  discretion  of the
Company's  Board of  Directors  and will depend on, among other  things,  future
earnings, capital requirements,  the general financial condition of the Company,
and general  business  conditions.  The Company paid dividends of $.21 per share
(split-adjusted)  in the  second and  fourth  quarter  of 2005,  $0.18 per share
(split-adjusted)  in the  second and fourth  quarters  of 2004,  $0.15 per share
(split-adjusted) in the fourth quarter of 2003.

Equity compensation plan

     At their  Annual  Meeting,  the Bank's  shareholders  adopted  the 2002 Key
Employee Stock Compensation Program ("Employee  Program"),  which was assumed by
FCBI upon its  acquisition of the Bank. The following  table reflects the number
of shares to be issued upon the exercise of options  granted  under the Employee
Program, the weighted-average  exercise price of all such options, and the total
number of shares of common stock  reserved for the issuance upon the exercise of
authorized, but not-yet-granted options, as of December 31, 2005.

<TABLE>
<CAPTION>

                                                                                         Number of Equity Securities
                                     Number of Securities to be    Weighted-average        Remaining Available for
                                      Issued Upon the Exercise    Exercise Price of         Future Issuance Under
            Plan Category              of Outstanding Options     Outstanding Options     Equity Compensation Plan
------------------------------------  ------------------------  ----------------------  ---------------------------

Equity Compensation Plans
<S>                                             <C>                  <C>                             <C>
   Approved by Shareholders.........            161,474              $       14.68                   46,461
Equity Compensation Plans
   Not Approved by Shareholders.....                 --                         --                       --
                                           ------------              -------------              -----------

   Total............................            161,474              $       14.68                   46,461
                                            ===========              =============              ===========
</TABLE>
                                       11

<PAGE>


ITEM 6.    SELECTED FINANCIAL DATA

     The following table presents on a historical basis selected  financial data
and ratios for the Company. All averages are daily averages.
<TABLE>
<CAPTION>

                                                                          Years Ended December 31,
                                                       ------------------------------------------------------------
                                                           2005         2004        2003        2002        2001
                                                       ----------    ---------   ---------   ----------  ----------
                                                                (Dollars in thousands except per share data)

Earnings Summary:
<S>                                                    <C>           <C>         <C>         <C>         <C>
   Interest income...................................  $   57,858    $  39,584   $  33,520   $   31,266  $   27,903
   Interest expense..................................      17,385        9,200      10,081       11,787      12,018
   Net interest income...............................      40,473       30,384      23,439       19,479      15,885
   Provision for loan losses.........................       1,762        1,971       1,700        2,510         720
   Net interest income after provision for loan losses     38,711       28,413      21,739       16,969      15,165
   Noninterest income................................       3,844        3,774       2,729        2,320       1,699
   Noninterest expense...............................      12,933       12,251      10,980        9,020       8,226
   Income before income taxes........................      29,622       19,936      13,488       10,269       8,638
   Income taxes expense..............................      11,404        7,694       5,091        3,851       3,292
   Net income........................................      18,218       12,242       8,397        6,418       5,346

Per Common Share Data:
(Retroactively adjusted for effects of stock
  dividends and stock splits)
   Net income - basic ...............................  $     3.33    $    2.26   $    1.56   $    1.19   $    0.99
   Net income - diluted..............................        3.29         2.23        1.54        1.18        0.99
   Cash dividends declared per common share..........        0.42         0.35        0.15        0.20        0.40

Selected Average Balances:
   Total assets......................................  $  791,418    $ 588,771   $ 513,583   $  446,318  $  324,188
   Total loans.......................................     670,885      490,521     425,278      370,062     255,294
   Securities........................................      70,213       43,567      32,618       41,106      40,418
   Earning assets....................................     750,433      552,930     486,643      426,374     307,524
   Deposits..........................................     640,504      483,135     411,084      366,632     271,431
   Long-term borrowings..............................      70,912       50,762      55,660       41,701      17,478
   Shareholders' equity..............................      62,280       48,365      38,867       32,025      28,009
   Shares outstanding (split adjusted, in thousands).       5,476        5,419       5,396        5,396       5,396

Selected Period-End Balances:
   Total assets......................................  $  907,082    $ 660,864   $ 525,508   $  521,758  $  388,061
   Total loans.......................................     791,609      552,509     437,593      416,414     318,666
   Securities........................................      66,242       74,265      38,938       36,524      35,001
   Earning assets....................................     863,042      627,722     491,153      498,509     364,012
   Deposits..........................................     737,256      520,585     423,284      423,935     317,861
   Long-term borrowings..............................      70,334       70,310      50,332       60,349      37,580
   Shareholders' equity..............................      70,076       52,928      42,086       34,464      29,139
   Shares outstanding (split adjusted, in thousands).       5,493        5,423       5,396        5,396       5,396

Selected Ratios:
   Return on average equity..........................       29.25 %      25.31%      21.60%      20.04%      19.09%
   Return on average assets..........................        2.30         2.08        1.63        1.44        1.65
   Net interest margin...............................        5.39         5.50        4.82        4.57        5.17
   Allowance for loan losses to loans................        1.46         1.77        1.84        1.52        1.19
   Net charge-offs to average loans..................        0.00         0.05       (0.01)       0.00        0.07
   Average equity to average assets..................        7.87         8.21        7.57        7.18        8.64

Cash Dividends Declared..............................  $    2,289    $   1,883   $     781   $    1,093  $    2,178
</TABLE>

                                       12
<PAGE>



ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     The purpose of this  discussion is to focus on  significant  changes in the
financial   condition   and  results  of  operations  of  the  Company  and  its
subsidiaries  during  the past three  years.  The  discussion  and  analysis  is
intended to supplement and highlight  information  contained in the accompanying
consolidated  financial  statements  and the selected  financial  data presented
elsewhere in this report.

ITEM 7A.   QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Forward-Looking Statements

     This report,  including  Management's  Discussion and Analysis of Financial
Condition  and  Results of  Operations,  and  documents  incorporated  herein by
reference,  may contain certain statements relating to the future results of the
Company  based upon  information  currently  available.  These  "forward-looking
statements"  (as defined in Section 21E of The  Securities  and  Exchange Act of
1934)  are  typically  identified  by  words  such  as  "believes",   "expects",
"anticipates",  "intends",  "estimates",  "projects",  and similar  expressions.
These forward-looking statements are based upon assumptions the Company believes
are  reasonable  and may relate to, among other  things,  the allowance for loan
loss adequacy,  simulation of changes in interest rates and litigation  results.
Such  forward-looking  statements are subject to risks and uncertainties some of
which are discussed in more detail in Item 1A. Risk  Factors,  which could cause
the Company's  actual results to differ  materially from those included in these
statements.  These risks and uncertainties  include, but are not limited to, the
following:  (1) changes in political and economic conditions;  (2) interest rate
fluctuations; (3) competitive product and pricing pressures within the Company's
markets;  (4) equity and fixed  income  market  fluctuations;  (5)  personal and
corporate  customers'   bankruptcies;   (6)  inflation;   (7)  acquisitions  and
integration of acquired  businesses;  (8) technological  changes; (9) changes in
law;  (10)  changes in  fiscal,  monetary,  regulatory  and tax  policies;  (11)
monetary  fluctuations;  (12)  success  in  gaining  regulatory  approvals  when
required; and (13) other risks and uncertainties listed from time to time in the
Company's SEC reports and announcements.

General

     The Company,  through its subsidiary  bank,  conducts a commercial  banking
business,  which  consists of attracting  deposits  from the general  public and
applying those funds to the origination of commercial,  consumer and real estate
loans (including  commercial loans collateralized by real estate). The Company's
profitability  depends primarily on net interest income, which is the difference
between interest income generated from interest-earning  assets (i.e., loans and
investments) less the interest expense incurred on interest-bearing  liabilities
(i.e., customer deposits and borrowed funds). Net interest income is affected by
the   relative   amounts  of   interest-earning   assets  and   interest-bearing
liabilities,  and the  interest  rate  paid and  earned on these  balances.  Net
interest income is dependent upon the Company's  interest rate spread,  which is
the difference between the average yield earned on its  interest-earning  assets
and  the  average   rate  paid  on  its   interest-bearing   liabilities.   When
interest-earning  assets approximates or exceeds  interest-bearing  liabilities,
any positive  interest rate spread will generate  interest income.  The interest
rate  spread is  impacted  by interest  rates,  deposit  flows and loan  demand.
Additionally, and to a lesser extent, the Company's profitability is affected by
such factors as the level of non-interest income and expenses, the provision for
loan losses and the effective tax rate.  Non-interest  income consists primarily
of deposit account service charges and other customer service fees. Non-interest
expenses consist of compensation and benefits,  occupancy-related  expenses, and
other expenses.

Summary

     Net income for 2005 was $18,218,031,  a 48.8% increase from 2004 net income
of $12,241,932.  Net income for 2004 was $12,241,932, a 45.8% increase over 2003
net income.  Net income for 2003 was $8,396,549,  a 30.8% increase over 2002 net
income.  Net  income for 2002 was  $6,418,306,  a 20.1%  increase  over 2001 net
income. Diluted net income per common share for 2005 was $3.29 compared to $2.23
in 2004 and $1.54 in 2003.

     The increases in net income from 2001 to 2002 were  primarily  attributable
to increased volume of loans, with the resulting  increase in interest and fees.
In 2001 and 2002, the volume  increase in loans more than offset the decrease in
loan  interest  rates as discussed  more fully below.  The increase from 2002 to
2003 and from 2003 to 2004 was primarily  attributable to an increase in the net
interest margin as deposit costs decreased more than

                                       13

<PAGE>

loan yields decreased. The increase from 2004 to 2005 was primarily attributable
to the increase in loan volume combined with an increase in rates.

Earning Assets

     During 2005,  earning  assets  averaged $750  million,  an increase of $197
million (35.7%) over 2004. During 2004, earning assets averaged $553 million, an
increase of $66 million (13.6%) over 2003. During 2003,  earning assets averaged
$487 million, an increase of $60 million (14.1%) over 2002.

     The management of the Company  considers many criteria in managing  earning
assets, including creditworthiness, diversification, maturity, and interest rate
sensitivity.  The  following  table  sets forth the  Company's  interest-earning
assets by category at December 31, in each of the last three years.
<TABLE>
<CAPTION>

                                                                                         December 31,
                                                                           ----------------------------------------
                                                                               2005          2004          2003
                                                                           -----------   -----------    -----------
                                                                                        (In thousands)

<S>                                                                        <C>           <C>            <C>
Interest-bearing deposits with banks....................................   $     5,003   $       948    $       857
Securities..............................................................        66,242        74,265         38,938
Federal funds sold......................................................           188            --         13,765
Loans:
   Real estate (1)......................................................       748,384       492,966        381,709
   Commercial and other.................................................        43,225        59,543         55,884
                                                                           -----------   -----------    -----------
     Total loans........................................................       791,609       552,509        437,593
                                                                           -----------   -----------    -----------

Interest-earning assets ................................................   $   863,042   $   627,722    $   491,153
                                                                           ===========   ===========    ===========
<FN>

(1) Real Estate loans included loans held-for-sale.
</FN>
</TABLE>


Loan Portfolio

     Loan and deposit growth is emphasized in each market the Company  operates.
The Company has been  successful  in competing  for loans  against  other larger
institutions   due  primarily  to  a  lending   strategy  that  includes  direct
involvement by local management. Different customers require different solutions
to their financial needs and appreciate  local banking  officers that understand
the local environment and can provide for their business requirements.

     Average loans  increased $180 million (36.8%) in 2005 compared to 2004. The
increase in loans was a result of the growth of the bank and the ability to make
larger loans as well as the  tremendous  growth in the real estate  construction
loan market.  Loan growth was again  funded  primarily by the issuance of broker
certificate  of deposits,  as well as by the growth in the bank's core deposits,
namely demand deposits, money market and savings.

     Average loans  increased $65 million  (15.3%) in 2004 compared to 2003. The
increase in loans was a result of successful marketing efforts to originate real
estate  construction loans and other real estate loans. Loan growth for 2004 was
funded primarily by issuance of brokered certificate of deposits,  as well as by
the  growth in the bank's  core  deposits  (demand  deposits,  money  market and
savings accounts).

     Average loans  increased $55 million  (14.9%) in 2003 compared to 2002. The
increase in loans was a result of successful marketing efforts to originate real
estate  construction loans and other real estate loans. Loan growth for 2003 was
funded primarily by issuance of brokered certificates of deposit.

                                       14

<PAGE>


         The following table sets forth the balances in certain categories of
loans at December 31 for each of the five years ending December 31, 2005.
<TABLE>
<CAPTION>

                                                     Loan Portfolio

                                                               December 31,
                            2005                2004                2003              2002               2001
                     -----------------   -----------------   ----------------   ----------------  -----------------
                               Percent             Percent             Percent            Percent           Percent
                      Amount   of Total   Amount  of Total    Amount  of Total  Amount   of Total  Amount  of Total
                     --------  --------  -------  --------   -------- --------  -------  -------- -------- --------
                             (Dollars in Thousands)

Commercial, financial
<S>                  <C>           <C>   <C>          <C>    <C>        <C>     <C>        <C>    <C>         <C>
  and agricultural.  $ 37,309      4.69% $ 51,378     9.26%  $ 45,274   10.31%  $42,876    10.27% $ 38,007    11.92%
Real estate -
  construction.....   467,854     58.81   270,016    48.69    172,890   39.37   140,723    33.70    93,049    29.17
Real estate -
  mortgage.........   280,230     35.22   222,374   40.10     208,819   47.55   220,697    52.84   179,261    56.20
Consumer...........     7,502      0.94     8,086     1.46     10,665    2.43    12,089     2.89     8,481     2.66
Loans held-for-sale       300      0.04       576     0.10        --     0.00        --     0.00        --     0.00
Other..............     2,356      0.30     2,181     0.39      1,487    0.34     1,226     0.30       157     0.05
                     --------  --------  --------  -------   --------  ------   -------  -------  --------  -------
                      795,551    100.00%  554,611   100.00%   439,135  100.00%  417,611   100.00%  318,955   100.00%
                               ========            =======             ======            =======            =======

Unearned income....    (3,942)             (2,102)             (1,542)           (1,197)              (289)
Allowance for loan
  losses...........   (11,523)             (9,791)             (8,067)           (6,319)            (3,803)
                     --------            --------            --------           -------           --------

Net loans..........  $780,086            $542,718            $429,526          $410,095           $314,863
                     ========            ========            ========          ========           ========

</TABLE>

     The  following  table shows the  maturity  distribution  of  selected  loan
classifications at December 31, 2005, and an analysis of those loans maturing in
over one year:
<TABLE>
<CAPTION>

                                          Selected Loan Maturity and Interest Rate Sensitivity

                                                                                        Rate Structure for Loans
                                                        Maturity                         Maturing Over One Year
                                                Over One
                                      One         Year         Over                    Predetermined   Floating or
                                    Year or      Through       Five                      Interest      Adjustable
                                     Less      Five Years      Years        Total          Rate           Rate
                                 -----------   -----------  -----------  -----------  -------------  --------------
                                                             (Amounts in thousands)

Commercial, financial
<S>                              <C>           <C>          <C>          <C>          <C>            <C>
   and agricultural............  $    22,005   $    14,695  $       609  $    37,309  $       6,349  $        8,955
Real estate - construction.....      215,807       226,534       25,513      467,854         45,632         206,415
                                 -----------   -----------  -----------  -----------  -------------  --------------

   Total.......................  $   237,812   $   241,229  $    26,122  $   505,163  $      51,981  $      215,370
                                 ===========   ===========  ===========  ===========  =============  ==============
</TABLE>

     For the  purposes  of this  schedule,  loans  that have  reached  the fixed
contractual floor rate are treated as having a pre-determined interest rate.

Securities Portfolio

     The  securities  portfolio  decreased  by $8  million or 10.8% from 2004 to
2005.  The securities  portfolio  increased by $35 million or 90.7% from 2003 to
2004.  The securities  portfolio  increased by $2.4 million or 6.6% from 2002 to
2003. The decrease in the securities portfolio from 2004 to 2005 was as a result
of the normal pay downs  during  the year and the fact that no  securities  were
purchased in 2005.  The increase in the  securities  portfolio from 2003 to 2004
was  largely  as a result of a $30  million  leverage  transaction  that was put
together to better utilize the banks excess capital.

                                       15

<PAGE>


     The Company  maintains an investment  strategy of seeking  portfolio yields
within acceptable risk levels, as well as providing liquidity through borrowings
secured by that  portfolio.  On a daily basis,  funds  available for  short-term
investment  are  determined.   Funds  available  for  long-term  investment  are
projected  based upon  anticipated  loan and deposit  growth,  liquidity  needs,
pledging requirements,  maturities of securities, and other factors. The Company
holds  two   classifications  of  securities:   "Held-to-Maturity"   and  "Other
Investment  Securities."  Other  Investment  Securities  are  carried at cost at
year-end  2005,  2004 and  2003.  Held-to-Maturity  securities  are  carried  at
amortized  cost and  represent  the  largest  portion  of the  total  securities
portfolio. At December 31, 2005, 2004 and 2003 there were no material unrealized
gains (losses) in the Other  Investment  Securities.  At December 31, 2005, 2004
and 2003,  net  unrealized  gains  (losses)  in the  Held-to-Maturity  portfolio
amounted to $(1,742,917), ($338,296), and ($456,579), respectively.

     The  following  table  presents  the  carrying  amounts  of the  securities
portfolio at December 31, in each of the last three years.
<TABLE>
<CAPTION>

                              Securities Portfolio

                                                                                      December 31,
                                                                     ----------------------------------------------
                                                                         2005             2004            2003
                                                                     -------------   -------------   --------------
                                                                                     (In thousands)

 Held-to-Maturity:
<S>                                                                  <C>             <C>             <C>
   U.S. government and agencies.................................     $       1,997   $       1,997   $        1,768
   Mortgage-backed securities...................................            59,036          67,333           33,985
                                                                     -------------   -------------   --------------
     Total Held-to-Maturity.....................................            61,033          69,330           35,753

Other Investment Securities.....................................             5,209           4,935            3,185
                                                                     -------------   -------------   --------------

Total Securities................................................     $      66,242   $      74,265   $       38,938
                                                                     =============   =============   ==============
</TABLE>

         The following table indicates the respective maturities and weighted
average yields of securities (dollars in thousands):
<TABLE>
<CAPTION>

                      Security Portfolio Maturity Schedule

                                                                       Maturing
                                    -------------------------------------------------------------------------------
                                         Within            After One But           After Five But            After
                                        One Year          Within Five Years        Within Ten Years         Ten Years
                                    -----------------    ---------------------   --------------------   -----------------
                                     Amount     Yield    Amount        Yield     Amount     Yield        Amount    Yield
                                    --------  -------    --------     ------     --------  --------     -------- --------
                                            (Amounts in thousands, except percentages)
Securities Held-to-Maturity

<S>                                 <C>           <C>    <C>            <C>    <C>           <C>    <C>          <C>
   U.S. Government agencies......   $      --     0.00%  $   1,997      3.55%    $     --     0.00%    $      --    0.00%
   Mortgage-backed securities....          --     0.00          57      5.14        3,076     4.36        55,903     4.16
   Other investment securities...          --     0.00          --      0.00           --     0.00            --     0.00

Other Investment Securities

   U.S. Government agencies......          --     0.00          --      0.00           --     0.00           --      0.00
   Mortgage-backed securities....          --     0.00          --      0.00           --     0.00           --      0.00
   Other investment securities...          --     0.00          --      0.00           --     0.00        5,209      5.27
                                    ---------            ---------               --------              --------

Total Securities.................   $      --     0.00   $   2,054      3.59     $  3,076     4.36     $ 61,112      4.26
                                    =========            =========               ========              ========
</TABLE>

     There were no securities  held by the Company of which the aggregate  value
at December 31, 2005, 2004 and 2003 exceeded ten percent of shareholders' equity
at that date.  (Securities,  which are  payable  from,  and  secured by the same
source of revenue or taxing  authority,  are  considered  to be  securities of a
single issuer.  Securities of the U.S.  Government and U.S.  Government agencies
and corporations are not included.)

                                       16

<PAGE>


Deposits and Borrowed Funds

     Average deposits increased $157.4 million (32.6%) in 2005 compared to 2004.
Average deposits increased $72 million (17.5%) in 2004 compared to 2003. Average
deposits  increased $44 million  (12.1%) in 2003 compared to 2002. In 2005,  the
largest  growth area was in broker  certificate  of  deposits,  which  increased
$156.0  million or 103.2% in total;  money  market,  non-interest  and  interest
bearing demand  deposits and savings  increased $62.8 million in total. In 2004,
the largest growth area was again in non-interest bearing demand deposits, money
market and savings deposits, which increased $45.7 million in total. The largest
area of growth in 2003 was in average money market,  savings,  and  non-interest
bearing demand deposits, which increased $29.7 million in total.

     The following table sets forth the Company's  deposit structure at December
31 in each of the last three years.
<TABLE>
<CAPTION>

                                                                                      December 31,
                                                                     ----------------------------------------------
                                                                         2005             2004            2003
                                                                     -------------   -------------   --------------
                                                                                     (In thousands)

Noninterest-bearing deposits:
<S>                                                                  <C>             <C>             <C>
   Individuals partnerships and corporations....................     $     122,897   $     106,569   $       72,498
   U.S. Government and states and political subdivisions........             2,537           2,290            3,201
   Certified and official checks................................             4,126           4,358            2,598
                                                                     -------------   -------------   --------------
     Total noninterest bearing deposits.........................           129,560         113,217           78,297
                                                                     -------------   -------------   --------------

Interest-bearing deposits:
   Interest - bearing demand accounts...........................            46,520          38,158           29,885
   Savings accounts.............................................           158,294         120,171          103,060
   Certificates of deposit, less than $100,000..................            61,065          64,417           69,096
   Certificates of deposit, more than $100,000..................           341,817         184,622          142,946
                                                                     -------------   -------------   --------------
     Total interest bearing deposits............................           607,696         407,368          344,987
                                                                     -------------   -------------   --------------

     Total deposits.............................................     $     737,256   $     520,585   $      423,284
                                                                     =============   =============   ==============
</TABLE>


     The following  table presents a breakdown by category of the average amount
of deposits  and the  weighted  average  rate paid on  deposits  for the periods
indicated:
<TABLE>
<CAPTION>

                                                                  Years Ended December 31,
                                           -----------------------------------------------------------------------
                                                    2005                    2004                     2003
                                           ----------------------  ----------------------   -----------------------
                                              Amount       Rate       Amount       Rate       Amount        Rate
                                           ----------  ----------  ----------   ---------   ---------    ----------
                                                                   (Dollars in thousands)

<S>                                        <C>             <C>     <C>              <C>     <C>              <C>
Noninterest bearing deposits.............  $  129,326      0.00%   $   94,085       0.00%   $  64,306        0.00%
Interest-bearing demand deposits.........      42,745      0.47        33,216       0.30       27,389        0.38
Savings deposits.........................     154,183      2.33       121,024       1.00      105,121        1.29
Time deposits............................     314,250      3.20       234,810       2.47      214,268        3.02
                                           ----------              ----------               ---------

  Total deposits.........................  $  640,504      2.16    $  483,135       1.47    $ 411,084        1.93
                                           ==========              ==========               =========
</TABLE>

                                       17

<PAGE>


     At December  31,  2005,  time  deposits  of $100,000 or greater  aggregated
approximately $341.8 million. The following table indicates,  as of December 31,
2005,  the dollar amount of $100,000 or more time deposits by the time remaining
until maturity (in thousands):
<TABLE>
<CAPTION>

                        Maturities of Large Time Deposits
                                 (In thousands)

<S>                                                                                                  <C>
   Three months or less..........................................................................    $       63,257
   Over three through six months.................................................................            49,186
   Over six through twelve months................................................................           126,685
   Over twelve months............................................................................           102,689
                                                                                                     --------------

     Total.......................................................................................    $      341,817
                                                                                                     ==============
</TABLE>

     At December 31, 2005, borrowed funds consisted of $25 million in short-term
(overnight)  borrowing  and  $70.3  million  in  long-term  debt.  The  Bank had
$55,000,000 in unsecured lines to purchase  federal funds, of which  $30,000,000
was  available  at  December  31,  2005.  The Bank had a separate  line with the
Federal  Reserve  Bank of  Atlanta,  secured  by  loans,  which  $4,200,000  was
available,  and the  Company  had a  $5,000,000  line  of  credit  with  another
financial institution that was available for borrowing purposes. At December 31,
2004 and 2003,  respectively,  borrowed funds  consisted  primarily of long-term
debt. The Bank had $50,150,000 in available lines to purchase  federal funds and
the Company had $5,000,000 in an available line from which to borrow funds, from
another  financial  institution.  At December 31, 2004,  the Bank had $3,851,000
advanced  against  those lines.  At December 31, 2003,  the Bank had  $7,000,000
advanced under one of those lines.

     At December 31, 2005, the Bank had credit available of  approximately  $136
million  with the Federal  Home Loan Bank of  Atlanta,  of which $76 million was
available and unused.  The ability to utilize the remaining line is dependent on
the amount of eligible  collateral  that is  available  to pledge to the Federal
Home Loan Bank,  which at December  31, 2005,  was $40 million.  At December 31,
2004, the amount of credit available with the Federal Home Loan Bank of Atlanta,
was approximately $99 million,  of which approximately $39 million was available
and unused. At December 31, 2003, the Bank had credit available of approximately
$79 million with the Federal Home Loan Bank of Atlanta. Of the credit available,
$46,000,000  (of which  $6,000,000  was a letter of credit used to secure public
funds)  had  been  utilized  at  December  31,  2003.  The  line is  secured  by
residential  and  commercial  real estate  loans and  investment  securities  at
December 31, 2005.

     The following  table sets forth the expected debt service for the next five
years based on interest rates and repayment provisions as of December 31, 2005.
<TABLE>
<CAPTION>

                          Maturities of Long-term Debt
                                 (In thousands)

                                                          2006        2007        2008         2009         2010
                                                       ---------   ---------    --------    ----------    ---------

<S>                                                    <C>         <C>          <C>         <C>         <C>
   Interest on indebtedness.........................   $   3,101   $   2,761    $  2,450    $    2,360  $     1,972
   Repayment of principal...........................       5,010      10,010       5,004         5,000        5,000
                                                       ---------   ---------    --------    ----------  -----------

                                                       $   8,111   $  12,771    $  7,454    $    7,360  $     6,972
                                                       =========   =========    ========    ==========  ===========
</TABLE>

Capital Resources

     Shareholders'  equity  increased  $17.2  million  to  $70.1  million  as of
December 31, 2005,  increased  $10.8 million to $52.9 million as of December 31,
2004,  increased  $7.6 million to $42.1  million as of December  31,  2003.  The
increase in shareholders' equity for 2005, 2004 and 2003 was attributable to net
income, less dividends declared.

                                       18

<PAGE>


     On June 21, 2002, FCBI Capital Trust I ("FCBI Trust"), a Delaware statutory
trust established by the Company,  received  $10,000,000 in proceeds in exchange
for $10,000,000  principal amount of FCBI Trust's floating rate cumulative trust
preferred  securities (the "preferred  securities") in a trust preferred private
placement.  The  proceeds  of that  transaction  were then used by FCBI Trust to
purchase  an  equal  amount  of  floating-rate   subordinated   debentures  (the
"subordinated   debentures")   of  the  Company.   The  Company  has  fully  and
unconditionally guaranteed all obligations of FCBI Trust on a subordinated basis
with respect to the preferred  securities.  The Company does not consolidate the
FCBI Trust preferred  securities and accounts for the debentures  issues to FCBI
Trust as debt. Subject to certain limitations,  the preferred securities qualify
as Tier 1 capital,  although the Federal Reserve  regulators are  re-considering
this treatment,  as a result of recent accounting rules changes,  discussed more
fully  elsewhere  herein.  The  sole  asset of FCBI  Trust  is the  subordinated
debentures  issued by the Company.  Both the preferred  securities of FCBI Trust
and the subordinated  debentures of the Company each have approximately  30-year
lives.  However,  both the Company and FCBI Trust have a call option  after five
years, subject to regulatory capital requirements.

     A strong capital position, which is vital to the continued profitability of
the Company,  also  promotes  depositor and investor  confidence  and provides a
solid  foundation  for the future growth of the  organization.  The objective of
management is to maintain a level of  capitalization  that is sufficient to take
advantage  of  profitable   growth   opportunities   while  meeting   regulatory
requirements.  This is achieved by improving  profitability  through effectively
allocating  resources to more  profitable  businesses,  improving asset quality,
strengthening service quality, and streamlining costs. The primary measures used
by  management  to monitor the results of these efforts are the ratios of return
on average assets, return on average common equity and average equity to average
assets.

     The table below  summarizes  these and other key ratios for the Company for
each of the last three years.
<TABLE>
<CAPTION>

                           Return on Equity and Assets

                                                                         2005             2004            2003
                                                                     -------------   -------------   --------------

<S>                                                                           <C>              <C>             <C>
Return on average assets...........................................           2.30%            2.08%           1.63%
Return on average common equity....................................          29.25            25.31           21.60
Dividend payout ratio..............................................          12.56            15.38            9.30
Average common shareholders' equity to average
   assets ratio....................................................           7.87             8.21            7.57
</TABLE>

     In addition,  bank holding  companies  are required to maintain  capital to
support, on a risk-adjusted  basis, certain off-balance sheet activities such as
loan commitments.  The Federal Reserve has adopted capital guidelines  governing
the  activities  of  bank  holding  companies.   These  guidelines  require  the
maintenance  of an  amount  of  capital  based on  risk-adjusted  assets so that
categories  of assets with  potentially  higher  credit risk will  require  more
capital backing than assets with lower risk.

     The capital guidelines classify capital into two tiers, referred to as Tier
I and Tier II. Under risk-based capital requirements,  Total Capital consists of
Tier I Capital,  which is generally common  shareholders'  equity less goodwill,
and Tier II  Capital,  which is  primarily a portion of the  allowance  for loan
losses and  certain  qualifying  debt  instruments.  In  determining  risk-based
capital requirements,  assets are assigned risk-weights of 0% to 100%, depending
primarily on the regulatory  assigned levels of credit risk associated with such
assets.   Off-balance   sheet  items  are  considered  in  the   calculation  of
risk-adjusted  assets through conversion factors  established by the regulators.
The framework for calculating risk-based capital requires banks and bank holding
companies to meet the regulatory  minimums of 4% Tier I and 8% total  risk-based
capital.  In  1990  regulators  added  a  leverage  computation  to the  capital
requirements,  comparing  Tier I Capital to total average  assets less goodwill.
Banks have similar capital requirements.

                                       19

<PAGE>


     The table below illustrates the Company's  regulatory  capital ratios under
federal guidelines at December 31, 2005, 2004 and 2003:

<TABLE>
<CAPTION>

                             Capital Adequacy Ratios

                                                             Statutory             Years ended December 31,
                                                                           ----------------------------------------
                                                              Minimum          2005          2004          2003
                                                            ------------   -----------   -----------    -----------
                                                                                    (Amounts in thousands)

<S>                                                                        <C>           <C>            <C>
  Tier I Capital...........................................                $    80,076   $    62,928    $    52,086
  Tier II Capital..........................................                     10,959         7,608          6,136
                                                                           -----------   -----------    -----------

  Total Qualifying Capital.................................                $    91,035   $    70,536    $    58,222
                                                                           ===========   ===========    ===========

  Risk Adjusted Total Assets (including
  off-balance sheet exposures).............................                $   876,172   $   606,473    $   488,931
                                                                           ===========   ===========    ===========

  Adjusted quarterly average assets........................                $   893,741   $   620,487    $   508,561
                                                                           ===========   ===========    ===========

  Tier I Capital Ratio.....................................         4.00%         9.14%        10.38%        10.65%

  Total Capital Ratio......................................         8.00         10.39         11.63         11.91

  Leverage Ratio...........................................         4.00          8.96         10.14         10.24

</TABLE>

     Information  on  the  Bank  capital  ratios  appears  in  Note  11  to  the
consolidated financial statements contained elsewhere herein.

     On December 31,  2005,  the Company and the Bank  exceeded  the  regulatory
minimums and qualified as well capitalized institutions under the regulations.

Liquidity Management

     Liquidity  is the ability of a company to convert  assets into cash without
significant  loss  and to  raise  funds  by  increasing  liabilities.  Liquidity
management  involves  having  the  ability  to meet  the  day-to-day  cash  flow
requirements of its customers,  whether they are depositors  wishing to withdraw
funds or borrowers requiring funds to meet their credit needs.  Additionally the
Parent Company requires cash for various operating needs including  dividends to
shareholders,  the  servicing  of debt,  and the  payment of  general  corporate
expenses.  The primary  source of liquidity for the Parent  Company is dividends
from the subsidiary  bank. At December 31, 2005, the subsidiary  bank could have
paid  additional  dividends to the Parent Company of  approximately  $28 million
while  continuing to meet their  regulatory  requirements.  The Company does not
anticipate  any  liquidity  requirements  in the near future that it will not be
able to meet.

     The primary  function of  asset/liability  management is not only to assure
adequate liquidity in order for the Bank to meet the needs of its customer base,
but to maintain an appropriate  balance  between  interest-sensitive  assets and
interest-sensitive liabilities so that the Bank can remain profitable in varying
interest rate  environments.  Both assets and liabilities are considered sources
of liquidity funding and both are, therefore, monitored on a daily basis.

     The asset portion of the balance sheet provides liquidity primarily through
loan repayments and maturities of or pledge of securities. Additional sources of
liquidity  are  investments  in  federal  funds  sold and  prepayments  from the
mortgage-backed securities in the securities portfolio.

     The  liability  portion of the balance  sheet  provides  liquidity  through
various interest bearing and non-interest-bearing deposit accounts. The Bank had
$30,000,000  and $50,150,000 of federal funds available at December 31, 2005 and
2004, respectively, and the Company had $5,000,000 of federal funds available at
December 31, 2005. The Bank also had available as a source of financing,  a line
of credit with the Federal  Home

                                       20

<PAGE>

Loan Bank of Atlanta of which  $76,000,000  and  $39,000,000  was  available and
unused at December 31, 2005 and 2004, respectively,  subject to the availability
of assets to pledge to secure such borrowings.

Contractual Obligations

     The Company and the Bank have  various  contractual  obligations  that they
must  fund as  part of  their  normal  operations.  The  following  table  shows
aggregate information about their contractual  obligations,  including interest,
and the periods in which  payments  are due.  The  amounts and time  periods are
measured from December 31, 2005.
<TABLE>
<CAPTION>

                                                               Payments due by period (in thousands)
                                            -----------------------------------------------------------------------
                                                             Less than                                   More than
                                                 Total        1 year         1-3 years    3-5 years       5 years
                                            --------------  ------------   -----------  ------------   ------------

<S>                                         <C>             <C>            <C>           <C>            <C>
  Long-Term Debt........................    $      103,444  $      8,111   $    20,224   $    14,332    $    60,777
  Capital Lease Obligations.............                --            --            --            --             --
  Operating Lease Obligations...........             2,781           185           371           371          1,854
  Time Deposits.........................           416,648       290,708       118,495         7,273            172
                                            --------------  ------------   -----------   -----------    -----------

  Total.................................    $      522,873  $    299,004   $   139,090   $    21,976    $    62,803
                                            ==============  ============   ===========   ===========    ===========
</TABLE>

Interest Rate Sensitivity Management

     Interest rate  sensitivity is a function of the re-pricing  characteristics
of  the  Company's  portfolio  of  assets  and  liabilities.   These  re-pricing
characteristics are the time frames within which the interest-bearing assets and
liabilities  are subject to change in interest  rates either at  replacement  or
maturity  during the life of the  instruments.  Sensitivity  is  measured as the
difference between the volume of assets and liabilities in the Company's current
portfolio that is subject to re-pricing in future time periods.  The differences
are known as interest sensitivity gaps and are usually calculated separately for
segments of time ranging from zero to thirty  days,  thirty-one  to ninety days,
ninety-one  days to one  year,  one to five  years,  over  five  years  and on a
cumulative basis.

     The following table shows interest sensitivity gaps for different intervals
as of December 31, 2005.
<TABLE>
<CAPTION>

                       Interest Rate Sensitivity Analysis
                                 (In thousands)

                                         0-30         31-90        90-365         1-5        Over 5
                                         Days          Days         Days         Years        Years        Total
                                      -----------  -----------  -----------  -----------  -----------   -----------

Interest-earning assets (1)
<S>                                   <C>          <C>          <C>          <C>          <C>           <C>
   Loans............................  $   547,582  $    16,873  $    69,070  $   158,701  $     2,831   $   795,057
   Securities and federal funds sold        1,804           --          251       39,847       24,528        66,430
   Interest-bearing deposits in banks       5,003           --           --           --           --         5,003
                                      -----------  -----------  -----------  -----------  -----------   -----------
                                          554,389       16,873       69,321      198,548       27,359       866,490
                                      -----------  -----------  -----------  -----------  -----------   -----------
Interest-bearing liabilities (2)
   Demand deposits (3)..............       15,507       15,507       15,507           --           --        46,521
   Savings deposits (3).............       52,765       52,765       52,765           --           --       158,295
   Time deposits....................       24,026       48,476      208,474      121,737          169       402,882
   Short-term borrowings............       25,088           --           --           --           --        25,088
   Long-term borrowings.............           --       10,002        5,008       25,014       30,310        70,334
                                      ------------  -----------  -----------  -----------  -----------  -----------
                                          117,386      126,750      281,754      146,751       30,479       703,120
                                      ------------  -----------  -----------  -----------  -----------  -----------

Interest sensitivity gap............  $   437,003  $  (109,877) $  (212,433) $    51,797  $    (3,120)  $   163,370
                                      ===========  ===========  ===========  ===========  ===========   ===========

Cumulative interest sensitivity gap.  $   437,003  $   327,126  $   114,693  $   166,490  $   163,370
                                      ===========  ===========  ===========  ===========  ===========

Ratio of interest-earning assets to
     Interest-bearing liabilities...         4.72         0.13         0.25         1.35          0.90

Cumulative ratio....................         4.72         2.34         1.22         1.25          1.23

Ratio of cumulative gap to total
   interest-earning assets..........         0.50         0.38         0.13         0.19          0.19
<FN>

(1)  Excludes  nonaccrual  loans.  Securities  maturities are based on projected re-payments at current interest rate levels.
(2)  Excludes  matured certificates,  which have not been redeemed by the customer and on which no interest is accruing.
(3)  Interests bearing demand and savings deposits are assumed to be subject to movement into other deposit instruments in equal
     amounts  during the 0-30 day period,  the 31-90 day period,  and the 91-365 day period.
</FN>
</TABLE>

                                       21


<PAGE>


     The above table indicates that in a rising interest rate  environment,  the
Company's  earnings may be positively  affected in the short-term,  (0-365 days)
due to earning assets re-pricing faster than  interest-bearing  liabilities.  As
seen in the preceding  table,  for the first 30 days of  re-pricing  opportunity
there is an  excess of  earning  assets  over  interest-bearing  liabilities  of
approximately  $437.0 million. For the first 365 days,  interest-earning  assets
exceed interest-bearing  liabilities by approximately $114.7 million. Changes in
the mix of earning  assets or  supporting  liabilities  can either  increase  or
decrease the net interest margin without affecting interest rate sensitivity. In
addition, the interest rate spread and the level of interest-bearing  assets and
liabilities may change,  thus impacting net interest income.  It should be noted
that a matched interest-sensitive position by itself does not ensure maximum net
interest income.

     Management  continually evaluates the condition of the economy, the pattern
of market  interest  rates,  and other  economic  data to determine the types of
investments  that should be made and at what  maturities.  Using this  analysis,
management  from  time to  time  assumes  calculated  interest  sensitivity  gap
positions to maximize net interest  income based upon  anticipated  movements in
the general level of interest rates.


Results of Operations

Net Interest Income

     Net interest income is the principal component of a financial institution's
income  stream  and  represents  the  spread  between  interest  and fee  income
generated  from  earning  assets and the  interest  expense paid on deposits and
borrowings. The following discussion is on a fully taxable equivalent basis.

     Net interest income increased  approximately $10.1 million (33.2%) to $40.5
million in 2005 compared to 2004. Net interest  income  increased  approximately
$6.9 million  (29.6%) to $30.4  million in 2004  compared to 2003.  Net interest
income  increased  approximately  $3.9 million  (20.3%) to $23.4 million in 2003
compared to 2002. The increase each year in the net interest income is primarily
due to increased volume in average loans outstanding during the periods.

     Interest income was $57.9 million in 2005, which represented an increase of
$18.3  million  (46.2%) over 2004.  Interest  income was $39.6  million in 2004,
which represented an increase of $6.1 million (18.1%) over 2003. Interest income
was $33.5 million in 2003, which  represented an increase of $2.2 million (7.2%)
over 2002. Interest income produced by the loan portfolio increased $3.0 million
(10.6%) in 2003 from 2002. The reason for the  significant  increase in interest
income in 2005 was the  tremendous  growth in the loan  volume  during  the year
(average loans increased $180.4 million compared to $65.2 million in 2004); this
combined with an increase in the loan rates (prime), and the loans coming off of
their floors,  resulted in the higher income. During 2004 and to a lesser extent
2003, the higher interest income from loans was the effect of contractual limits
on the lowest level to which variable rate loans could decline ("floors"). While
floors on interest  rates in loan  contracts  were  beneficial  in the  low-rate
environment,  when rates  started to rise in 2004 and  continued to rise in 2005
the loan rates did not  immediately  increase with each rate increase  until the
loan  rates got above  their  floors.  This  impacted  the net  interest  margin
negatively during 2005; however,  all loans are currently above their floor rate
and are adjusting with each change in the rates.

     Interest  income on securities  increased $1.3 million (77.7%) from 2004 to
2005.  The  increase  was  as a  result  of the  approximately  $30  million  in
securities that were purchased at the end of 2004. Interest income on securities
increased  $291 thousand  (21.9%) from 2003 to 2004.  The increase in income was
due to an increase in the securities  purchased,  which was partially  offset by
lower yields. Interest income on securities decreased $857 thousand (39.2%) from
2002 to 2003. The decrease in securities income from 2002 to 2003 was due to the
combined effects of lower rates earned and lower average balances invested.

                                       22
<PAGE>


     Interest income other than loans and securities,  increased by $67 thousand
in 2005,  decreased  by $95 thousand in 2004,  and  increased by $57 thousand in
2003.  In 2005,  the  average  amount  invested  in fed funds sold  declined  by
approximately $10 million,  however,  the average rates increased  significantly
during the year  offsetting  the  effects of the volume  decline.  In 2004,  the
average amount invested in fed funds sold declined,  which caused the decline in
interest income.  In 2003 the opposite was true and there was an increase in fed
funds sold, which caused the increase in interest income.

     Total interest expense increased by $8.2 million (88.9%) in 2005, decreased
by $881 thousand  (8.7%) in 2004, and decreased by $1.7 million  (14.5%) in 2003
compared to 2002.  The  increase  in interest  expense in 2005 was caused by the
increase  in rates  during  the  year and the  significant  increase  in  volume
(average interest bearing liabilities  increased $152.2 million in 2005 compared
to $38.2 million in 2004).  The decrease in interest  expense in 2004 was caused
by lower  deposit  rates in  general;  a carryover  from  2003's low rates.  The
decrease in  interest  expense in 2003 was caused by lower time  deposit  rates.
(See the "Rate/Volume Analysis" following this section.)

     The trend in net interest  income is commonly  evaluated  by measuring  the
average yield on earning assets, the average cost of funds, and the net interest
margin.  The Company's  average yield on earning assets (total  interest  income
divided by average interest earning assets)  increased in 2005 to 7.71% compared
to 7.16% in 2004,  and 6.89% in 2003.  The increases in the Prime rate (13 times
since June 2004) and the increases in the loan and security  volumes resulted in
these year over year  increases,  however,  the effect of the floor rates on the
loans caused the yield on loans to lag behind until a significant portion of the
portfolio  was free to  adjust  upwards  with  each  increase.  In line with the
national  interest  rate  markets,  the  Company's  average cost of funds (total
interest expense divided by average interest bearing  liabilities)  increased to
2.92% in 2005 from a low of 2.08% in 2004 and 2.49% in 2003; which was down from
3.30% in 2002.  The increase in 2005 was due to the rise in market rates paid on
deposits and borrowed funds throughout the year.

     The Bank's net  interest  margin (net  interest  income  divided by average
interest  earning assets)  decreased in 2005 to 5.39% compared to 5.50% in 2004,
which  increased  from  4.82% in 2003.  The  decrease  in 2005 was caused by the
increase in the cost of funds and the negative  impact that the loan floor rates
had on the yield during the first half of the year. The opposite was true during
the years 2003 thru 2004 when the floor rates  helped to  stabilize  the drop in
loan  yields  caused  by the drop in the prime  rate,  which  resulted  in lower
deposit rates (cost of funds) during that time period.




              [The remainder of this page intentionally left blank]

                                       23
<PAGE>



     The tables that follow show,  for the periods  indicated  the daily average
balances  outstanding for the major  categories of  interest-bearing  assets and
interest-bearing  liabilities,  and the  average  interest  rate  earned or paid
thereon. Such yields are calculated by dividing income or expense by the average
balance of the corresponding  assets or liabilities.  Also shown are the changes
in income attributable to changes in volume and changes in rate.
<TABLE>
<CAPTION>

           Average Balances, Interest Income/Expense and Yields/Rates
                            Taxable Equivalent Basis

                                                           Years Ended December 31,
                          ---------------------------------------------------------------------------------------------------------
                                        2005                                 2004                                 2003
                          --------------------------------  -------------------------------------  --------------------------------
                                       Interest    Average                Interest      Average                Interest     Average
                           Average     Income/     Yields/   Average      Income/       Yields/    Average      Income/     Yields/
                           Balance     Expense      Rates    Balance      Expense        Rates     Balance      Expense     Rates
                          ----------   ----------  -------  ----------   -----------  ----------  ----------   ---------  ----------

                                                            (Dollars in thousands)
 Assets:
   Earning assets:
     Loans, net of
<S>                  <C>   <C>           <C>        <C>       <C>           <C>           <C>      <C>           <C>         <C>
      unearned income(1)   $670,885      $54,709    8.15%     $490,521      $37,743       7.69%    $425,278      $31,874     7.49%
   Securities:
     Taxable............    70,213         2,883    4.11        43,567        1,622       3.72       32,618        1,331     4.08
     Tax-exempt.........        --            --    0.00            --           --       0.00          --            --     0.00
                          --------     ---------             ---------   ----------               ---------    ---------
       Total securities.    70,213         2,883    4.11        43,567        1,622       3.72       32,618        1,331     4.08
   Interest-bearing deposits
     in other banks.....     2,288            78    3.41         1,758           25       1.42        7,301           80     1.10
   Federal funds sold...     7,047           210    2.98        17,084          197       1.15       21,446          237     1.11
                          --------     ---------             ---------   ----------               ---------    ---------
      Total interest-
        earning assets(2)  750,433        57,880    7.71       552,930       39,587       7.16      486,643       33,522     6.89

   Non-interest earning assets:
    Cash and due from banks 24,710                              18,795                              19,688
     Accrued interest and
       other assets.....    26,252                              25,785                              14,373
     Allowance for loan
               losses       (9,977)                             (8,739)                             (7,121)
                         ---------                           ---------                            --------

       Total Assets.....  $791,418                            $588,771                            $513,583
                         =========                           =========                            ========

Liabilities and
  Shareholders' Equity:
   Interest-bearing
     liabilities:
     Demand deposits....   $42,745           203    0.47%      $33,216          101       0.30%    $27,389           104     0.38%
     Savings deposits...   154,183         3,600    2.33       121,024        1,213       1.00     105,121         1,353     1.29
     Time deposits......   314,250        10,061    3.20       234,810        5,796       2.47     214,268         6,467     3.02
                          --------     ---------             ---------   ----------               ---------    ---------
       Total deposits...   511,178        13,864    2.71       389,050        7,110       1.83     346,778         7,924     2.29

     Long-term borrowings   70,912         3,021    4.26        50,762        2,034       4.01      55,660         2,131     3.83
     Short-term borrowings  13,019           500    3.84         3,083           56       1.82       2,239            26     1.16
                          --------      --------             ---------   ----------               ---------    ---------
       Total interest-
        bearing
         liabilities       595,109        17,385    2.92       442,895        9,200       2.08     404,677        10,081     2.49
                         ---------      --------             ---------   ----------               ---------    ---------


   Non interest-bearing
     liabilities:
     Demand deposits....  129,326                              94,085                              64,306
     Accrued interest and
       other liabilities    4,703                               3,426                               5,733
     Shareholders' equity  62,280                              48,365                              38,867
                        ---------                            --------                             --------
       Total Liabilities
         and Shareholders'
         Equity......... $791,418                            $588,771                            $513,583
                         ========                            ========                            ========

   Net Interest Income/Net
     Interest Spread....                  40,495    4.79%                    30,387       5.08%                   23,441     4.40%
                                       =========                          =========                            =========

   Net yield on earning assets                      5.39%                                 5.50%                              4.82%
                                                  =======                               =======                            =======

   Taxable Equivalent
     adjustment:
     Securities.........                      --                                 --                                    --
     Loans..............                      22                                  3                                     2
                                       ---------                          ---------                            ----------
       Total taxable
         equivalent
         adjustment.....                      22                                  3                                     2
                                       ---------                          ---------                            ----------

   Net interest income..                 $40,473                           $ 30,384                              $ 23,439
                                       --=======                          =========                            ==========

<FN>

(1) Average loans include nonaccrual loans. All loans and deposits are domestic.
(2) Tax equivalent adjustments have been based on an assumed tax rate of 34
    percent, and do not give effect to the disallowance for federal income tax
    purpose of interest expense related to certain tax-exempt earning assets.
</FN>
</TABLE>

                                       24
<PAGE>


     The following tables set forth, for the years ended December 31, 2005, 2004
and 2003,  a summary of the  changes in  interest  income and  interest  expense
resulting from changes in interest rates and in changes in the volume of earning
assets and interest-bearing liabilities,  segregated by category. The change due
to volume is calculated by multiplying  the change in volume by the prior year's
rate. The change due to rate is calculated by multiplying  the change in rate by
the prior  year's  volume.  The change  attributable  to both volume and rate is
calculated by  multiplying  the change in volume by the change in rate.  Figures
are presented on a taxable equivalent basis.
<TABLE>
<CAPTION>

                          Rate/Volume Variance Analysis
                            Taxable Equivalent Basis

                                     Average Volume             Change in Volume                 Average Rate
                             -------------------------------  ------------------------  -------------------------------
                                2005       2004       2003     2005-2004     2004-2003    2005       2004       2003
                             ---------  ---------  ---------  -----------  -----------  ---------  ---------  ---------
                                                             (Dollars in thousands)
Earning assets:

Loans, net of unearned
<S>        <C>               <C>        <C>        <C>           <C>           <C>         <C>         <C>         <C>
    income (1)               $ 670,885  $ 490,521  $ 425,278     $ 180,364     $65,243     8.15 %      7.69%       7.49%

Securities
   Taxable.................     70,213     43,567     32,618        26,646      10,949      4.11       3.72        4.08
   Tax exempt..............         --         --         --            --          --      0.00       0.00        0.00
                             ---------  ---------  ---------    ----------  ----------
     Total Securities......     70,213     43,567     32,618        26,646      10,949      4.11       3.72        4.08
                             ---------  ---------  ---------    ----------  ----------

Interest-bearing deposits
   with other banks........      2,288      1,758      7,301           530     (5,543)      3.41       1.42       1.10
Federal funds sold.........      7,047     17,084     21,446       (10,037)    (4,362)      2.98       1.15       1.11
                             ---------  ---------  ---------     ---------  ---------

     Total Earning Assets..  $ 750,433  $ 552,930  $ 486,643     $ 197,503  $  68,287       7.71       7.16       6.89
                             =========  =========  =========     =========  =========

Interest-Bearing Liabilities
Deposits:
   Demand deposits.........  $  42,745  $  33,216  $  27,389     $   9,529  $   5,827       0.47       0.30       0.38
   Savings.................    154,183    121,024    105,121        33,159     15,903       2.33       1.00       1.29
   Time certificates.......    314,250    234,810    214,268        79,440     20,542       3.20       2.47       3.02
                             ---------  ---------  ---------     ---------  ---------
     Total Deposits........    511,178    389,050    346,778       122,128     42,272       2.71       1.83       2.29

Long-term borrowings.......     70,912     50,762     55,660        20,150     (4,898)      4.26       4.01       3.83
Other borrowings...........     13,019      3,083      2,239         9,936        844       3.84       1.82       1.16
                             ---------  ---------  ---------     ---------  ---------

     Total Interest-Bearing
       Liabilities.........  $ 595,109  $ 442,895  $ 404,677     $ 152,214  $  38,218       2.92       2.08       2.49
                             =========  =========  =========     =========  =========

Net interest income/net interest spread                                                     4.79       5.08       4.40

Net yield on earning assets                                                                 5.39       5.50       4.82

Net cost of funds..........                                                                 2.32       1.66       2.07

                                                                                             Variance Attributed to
                                   Interest
                               Income/Expense               Variance                 2005                     2004
                          ------------------------   ---------------------  ------------------------   ------------------------
                           2005     2004     2003     2005-2004   2004-2003   Volume     Rate     Mix    Volume     Rate    Mix
                          ------  -------  -------   ----------  ----------  ---------  -------  -----  ---------  ------- -----

                                                                 (Dollars in thousands)
Earning assets:
Loans, net of
  unearned income....... $54,709  $37,743  $31,873   $  16,966    $   5,870    $13,877   $2,259  $ 830     $4,888   $ 869  $ 113
Securities:
   Taxable..............   2,883    1,622    1,332       1,261          290        992      167    102        476    (205)    19
   Tax exempt...........      --       --       --          --           --         --       --     --         --      --     --
                         -------  -------  -------   ---------    ---------  ---------   ------  -----   --------  ------  -----
     Total securities...   2,883    1,622    1,332       1,261          290        992      167    102        476    (205)    19
                         -------  -------  -------   ---------    ---------  ---------   ------  -----   --------  ------  -----
Interest-bearing deposits
   with other banks.....      78       25       80          53          (55)         8       35     10        (61)     24    (18)
Federal funds sold......     210      197      237          13          (40)      (116)     312   (183)       (48)      9     (1)
                         -------  -------  -------   ---------    ---------   --------   ------  -----    -------  ------  -----
     Total earning
             assets       57,880   39,587   33,522      18,293        6,065     14,761    2,773    759      5,255     697    113
                         -------  -------  -------   ---------    ---------   --------   ------  -----    -------  ------  -----

Interest-bearing liabilities:
Deposits:
   Demand...............     203      101      104         102           (3)        29       57     16         22     (21)    (4)
   Savings..............   3,600    1,213    1,353       2,387         (140)       332    1,613    442        205    (302)   (43)
   Time certificates....  10,061    5,796    6,467       4,265       (  671)     1,961    1,722    582        620  (1,182)  (109)
                         -------  -------  -------   ---------    ---------   --------   ------  -----    -------  ------  -----
     Total deposits.....  13,864    7,110    7,924       6,754         (814)     2,322    3,392  1,040        847  (1,505)  (156)
                         -------  -------  -------   ---------    ---------   --------   ------ ------    -------  ------  -----

Long-term borrowings....   3,021    2,034    2,131         987          (97)       807      129     51       (188)     98     (7)
Short-term borrowings...     500       56       26         444           30        180       62    202         10      15      5
                         -------  -------  -------   ---------    ---------   --------   ------ ------    -------  ------  -----
     Total interest-
       bearing
      liabilities         17,385    9,200   10,081      8,185          (881)     3,309    3,583  1,293        669  (1,392)  (158)
                         -------  -------  -------   ---------    ---------   --------   ------ ------    -------  ------  -----


Net interest income/net
   interest spread......$40,495   $30,387  $23,441  $  10,108     $   6,946    $11,452   $ (810) $(534)   $ 4,586 $ 2,089  $ 271
                        =======   =======  =======  =========     =========    =======   ======  =====    ======= =======  =====
</TABLE>


                                       25

<PAGE>



Allowance for Loan Losses

     Each of the Bank's loans is assigned to a lending  officer  responsible for
the ongoing review and  administration  of that loan.  Lending officers make the
initial  identification of loans, which present some difficulty in collection or
where  there is an  indication  that the  probability  of loss  exists.  Lending
officers are responsible for the collection  effort on a delinquent loan. Senior
management  is  informed  of the status of  delinquent  and  problem  loans on a
monthly basis. In addition to the lending officers, there is an independent loan
review  officer  responsible  for  reviewing  the  credit  ratings  on loans and
administering the loans.

     Senior management makes  recommendations  monthly to the Board of Directors
as to charge-offs.  Senior management reviews the allowance for loan losses on a
monthly basis. The Bank's policy is to discontinue interest accrual when payment
of principal and interest is 90 days or more in arrears  unless the value of the
collateral exceeds the principal plus accrued interest.

     The allowance  for loan losses  represents  management's  assessment of the
risks  associated with extending credit and its evaluation of the quality of the
loan portfolio. Management analyzes the loan portfolio to determine the adequacy
of the  allowance  for  possible  loan  losses  and the  appropriate  provisions
required to maintain a level  considered  adequate  to absorb  anticipated  loan
losses. In assessing the adequacy of the allowance, management reviews the size,
quality  and risk of loans in the  portfolio.  Management  also  considers  such
factors as loan loss experience, the amount of past due and nonperforming loans,
specific known risk, the status and amount of nonperforming  assets,  underlying
collateral values securing loans,  current and anticipated  economic  conditions
and other  factors  which affect the  allowance  for  potential  credit  losses.
Although  recent  historical  loan losses have been minimal,  an increase in the
volume  of loans  that had been  down  graded  during  the  latter  half of 2005
required  an  additional  increase  in the  allowance.  During  2004  management
increased the allowance due to the significant  increase in nonperforming  loans
at the end of 2003.

     While it is the Bank's policy to charge-off in the current period the loans
in which a loss is considered  probable,  there are  additional  risks of future
losses,  which cannot be quantified  precisely or attributed to particular loans
or  classes of loans.  Because  these  risks  include  the  future  state of the
economy,   management's  judgment  as  to  the  adequacy  of  the  allowance  is
necessarily approximate and imprecise.

     Management  believes that  $11,522,910 on December 31, 2005,  $9,791,269 on
December 31, 2004,  and  $8,066,817  on December 31, 2003,  in the allowance for
loan losses were adequate to absorb known risks in the  portfolio.  No assurance
can be given,  however,  that adverse economic  circumstances will not result in
increased  losses in the loan  portfolio,  and require  greater  provisions  for
possible loan losses in the future.







              [The remainder of this page intentionally left blank]

                                       26
<PAGE>


     The  following  table sets forth  certain  information  with respect to the
Bank's loans, net of unearned income,  and the allowance for loan losses for the
five years ended December 31, 2005.
<TABLE>
<CAPTION>

                         Summary of Loan Loss Experience

                                                        2005         2004         2003         2002          2001
                                                     ---------    ---------     --------     --------     ---------
                                                                         (Dollars in thousands)

<S>                                                  <C>          <C>           <C>          <C>          <C>
Allowance for loan losses at beginning of year.....  $   9,791    $   8,067     $  6,319     $  3,803     $   3,267
Loans charged off:
  Commercial, financial and agricultural...........        131          209          139          161           162
  Real estate - mortgage...........................         --           85           10           --           185
  Consumer.........................................         50          161           74           46            43
                                                     ---------    ---------     --------     --------     ---------
    Total loans charged off........................        181          455          223          207           390
                                                     ---------    ---------     --------     --------     ---------

Recoveries on loans previously charged off:
  Commercial, financial and agricultural...........         24          143          245          193            47
  Real estate - mortgage...........................          2           30            2            3           131
  Consumer.........................................        125           35           23           17            28
                                                     ---------    ---------     --------     --------     ---------
    Total recoveries...............................        151          208          271          213           206
                                                     ---------    ---------     --------     --------     ---------

Net loans charged off (recovered)..................         30          247          (48)          (6)          184

Provision for loan losses..........................      1,762        1,971        1,700        2,510           720
                                                     ---------    ---------     --------     --------     ---------

Allowance for loan losses at end of period.........  $  11,523    $   9,791     $  8,067     $  6,319     $   3,803
                                                     =========    =========     ========     ========     =========

Loans, net of unearned income, at end of period....  $ 791,609    $ 552,509     $437,593     $416,414     $ 318,666

Average loans, net of unearned income,
  outstanding for the period.......................    670,885      490,521      425,278      370,062       255,294

Ratio of net charge-offs to net average loans......       0.00%        0.05%       (0.01)%       (0.00)%       0.07%
</TABLE>

     In evaluating the allowance,  management also considers the historical loan
loss  experience of the Bank,  the amount of past due and  nonperforming  loans,
current and  anticipated  economic  conditions,  lender  requirements  and other
appropriate  information.  From 2001  through  2002,  management  allocated  the
allowance  for loan losses to specific  loan  categories  based on an average of
historical  losses and the volume of each loan  category.  In 2003, as presented
below,  management  began to allocate the allowance for loan losses based on the
level of nonperforming  loans in each category.  The change in method was due to
the minimal historical loan losses on which to base the allocation.

     Management  allocated  the  allowance  for loan  losses  to  specific  loan
categories as follows:
<TABLE>
<CAPTION>

                                                    Allocation of Allowance for Loan Losses

                                                             December 31,
                      ---------------------------------------------------------------------------------------------
                             2005                2004               2003               2002               2001
                      ------------------   ----------------  -----------------    ---------------   ---------------
                                Percent            Percent           Percent              Percent            Percent
                                of Loans           of Loans          of Loans             of Loans           of Loans
                                in Each            in Each           in Each              in Each            in Each
                                Category           Category          Category             Category           Category
                                to Total           to Total          to Total             to Total           to Total
                        Amount   Loans      Amount   Loans    Amount   Loans     Amount     Loans    Amount   Loans
                      --------- --------   ------- --------  -------- --------  --------  --------  -------- --------

                             (Dollars in Thousands)
Domestic loans:
  Commercial, financial
<S>                   <C>           <C>    <C>         <C>    <C>        <C>     <C>        <C>    <C>        <C>
    and agricultural  $     724     6.28%  $   271     9.26%  $    22    10.31%  $2,494     10.27% $ 1,566    11.92%
  Real estate - mortgage
  and construction..     10,757    93.36     9,512    88.89     8,039    86.92    3,357     86.54    2,021    85.37
  Consumer..........         42     0.36         8     1.85         6     2.77      468      3.19      216     2.71
                      ---------  -------   -------  -------   -------  -------   ------  --------  -------  -------
                      $  11,523   100.00%  $ 9,791   100.00%  $ 8,067   100.00%  $6,319    100.00% $ 3,803   100.00%
                      =========  =======   =======  =======   =======  =======   ======  ========  =======  =======
</TABLE>

                                       27

<PAGE>


Nonperforming Assets

     Nonperforming assets include nonperforming loans and foreclosed real estate
held-for-sale.  Nonperforming  loans include  loans  classified as nonaccrual or
renegotiated.  The Bank's policy is to place a loan on nonaccrual status when it
is contractually past due 90 days or more as to payment of principal or interest
unless the  collateral  value is  greater  than both the  principal  due and the
accrued interest.  At the time a loan is placed on nonaccrual  status,  interest
previously  accrued but not  collected is reversed and charged  against  current
earnings.  Recognition  of any interest  while on nonaccrual is accounted for on
the cash basis when actually received.

     The Bank had  nonperforming  assets at December 31, 2005, 2004, 2003, 2002,
and 2001 of approximately $3,137,000, $10,012,000,  $22,269,000, $7,698,000, and
$2,367,000, respectively.

     The following table presents information concerning outstanding balances of
nonperforming assets at December 31, 2005, 2004, 2003, 2002, and 2001.
<TABLE>
<CAPTION>

                              Nonperforming Assets

                                                                           December 31,
                                               --------------------------------------------------------------------
                                                  2005          2004           2003          2002          2001
                                               -----------   -----------   -----------   -----------    -----------
                                                               (Amounts in thousands, except ratios)

<S>                                            <C>           <C>           <C>           <C>            <C>
Nonaccruing loans...........................   $       194   $       247   $     9,727   $     5,036    $     1,333
Accruing loans 90 days or more past due.....           106            --         6,420         2,662            984
Restructured loans..........................           634         7,562            --            --             --
                                               -----------   -----------   ------------   ------------  -----------
     Total nonperforming loans..............           934         7,809        16,147         7,698          2,317
Nonaccruing securities......................            --            --            --            --             --
Other real estate...........................         2,203         2,203         6,122            --             50
                                               -----------   -----------   -----------   ------------   -----------

     Total..................................   $     3,137   $    10,012   $    22,269   $     7,698    $     2,367
                                               ===========   ===========   ===========   ===========    ===========

Ratios:
   Loan loss allowance to total
     nonperforming assets...................         3.673         0.978         0.362          0.821         1.607
                                               ===========   ===========   ===========   ============   ===========
   Total nonperforming loans to total loans
     (net of unearned interest).............         0.001         0.014         0.036          0.018         0.007
                                               ===========   ===========   ===========   ============   ===========

     Total nonperforming assets to total
       assets                                        0.003         0.015         0.042          0.015         0.006
                                               ===========   ===========   ===========   ============   ===========
</TABLE>

     There  has  been  no  significant  impact  on  the  Company's  consolidated
financial  statements  as a result of the  provisions  of Statement of Financial
Accounting  Standards No. 114, Accounting by Creditors for Impairment of a Loan,
or Statement of Financial  Accounting Standards No. 118, Accounting by Creditors
for Impairment of a Loan-Income Recognition and Disclosures.

Noninterest Income

     Noninterest  income  consists of revenues  generated  from a broad range of
financial services and activities  including  fee-based services and profits and
commissions earned through credit life insurance sales and other activities.  In
addition,  gains  or  losses  realized  from the  sale of  investment  portfolio
securities  are  included  in  noninterest  income.   Total  noninterest  income
increased by $70 thousand (1.85%) for the year ended December 31, 2005, compared
to 2004.  The minimal  increase in 2005 is misleading  due to  approximately  $1
million  in gains  that  were  recognized  in 2004.  Take  away  the  gains  and
noninterest  income actually  increased $1.07 million or 38%. Total  noninterest
income  increased by $1.05 million (38.3%) for the year ended December 31, 2004,
compared  to 2003 due  primarily  to the gain on the sale of other  real  estate
owned of $589 thousand and a gain from the sale of the old  drive-thru  building
in LaBelle of $415 thousand. Total noninterest income increased by $408 thousand
(17.6%)  for the year ended  December  31,  2003  compared to 2002 due to higher
secondary market fees and service charges on deposit accounts. Total noninterest
income  increased by $621 thousand  (36.6%) for the year ended

                                       28

<PAGE>

     December 31, 2002 compared to 2001.  The increase was due to higher service
charges on  deposit  accounts  (increased  $507  thousand)  and gains on sale of
available-for-sale securities (increased $36 thousand).

     The table below sets forth the Company's noninterest income for the periods
indicated.
<TABLE>
<CAPTION>

                                                                                        2004/2005       2003/2004
                                                Years Ended December 31,                Percent          Percent
                                      --------------------------------------------
                                          2005           2004            2003            Change          Change
                                      ------------   ------------    -------------   -------------   --------------
                                                 (Dollars in thousands)

<S>                                   <C>            <C>             <C>                       <C>              <C>
Service charges on deposits........   $      1,466   $      1,350    $       1,228             8.6%             9.9%
Secondary market fees..............            972            534              555            82.0             (3.7)
Exchange fees......................            778            554              416            40.4             33.2
Bookkeeping fees...................            167            117              100            42.7             17.0
Securities gains...................             --             --               --             0.0              0.0
Income/gains on other real estate..             --            589               69          (100.0)           753.6
Gain on sale of fixed assets.......             21            415               --           (94.9)           100.0
Safe deposit box rental............             68             66               66             3.0              0.0
Other..............................            372            149              294           161.0            (49.4)
                                      ------------   ------------    -------------

                                      $      3,844   $      3,774    $       2,728            1.85             38.3
                                      ============   ============    =============
</TABLE>

Noninterest Expenses

     From 2004 to 2005,  noninterest  expense  increased  $682 thousand  (5.6%).
Salaries and employee  benefits in 2005 increased $122 thousand (1.6%) from 2004
to a total of $7.9 million.  The increase was due to the normal  increases  from
year to year for salaries,  benefits and insurance costs;  however, the increase
was offset by an increase ($217 thousand) in the deferred loan origination costs
(due to the increase in loan  volume)  that reduces the overall  expense in this
category.

     From 2003 to 2004,  noninterest  expense  increased  $1.3 million  (11.6%).
Salaries and employee benefits in 2004 increased $721 thousand (10.3%) from 2003
to a total of $7.7 million.  The increase was due to the normal  increases  from
year to year for salaries, benefits and insurance costs.

     From 2002 to 2003,  noninterest  expense  increased  $2.0 million  (21.7%).
Salaries and employee  benefits in 2003 increased $1.4 million (26.2%) from 2002
to a total of $7.0  million.  The  increase in 2003 was due to added staff for a
new branch and increased secondary market loan brokerage operations.

     Occupancy and equipment  expense  increased $476 thousand (27.5%) from 2004
to 2005,  increased $198 thousand  (12.9%) from 2003 to 2004, and decreased $133
thousand  (7.9%) from 2002 to 2003.  During  2005  occupancy  expense  increased
primarily due to increased insurance expense,  building repairs due to hurricane
damage in 2005,  increases  in  depreciation  and  maintenance  expense  (due to
additional  equipment added) and increases to electricity and real estate taxes.
During  2004  occupancy  expense  increased  primarily  due  to the  expense  of
additional  equipment  added during 2003 and 2004  (increased  depreciation  and
maintenance),  increased  building  repairs  due to the  hurricanes  in 2004 and
higher  property  taxes in general.  During  2003  occupancy  expense  decreased
primarily due to lower maintenance contract costs.

     Expenses  related to other real estate owned were down in 2005  compared to
2004 ($126  thousand  compared to $479  thousand) and the $349 thousand in 2003.
There were no additions to other real estate owned in 2005.

     Other expenses were significantly higher in 2005 compared to 2004 and 2003.
Part of the increase was due to the overall  growth of the bank (i.e.  supplies,
advertising,  ATM,  courier,  etc.) but also due to increased  professional fees
that were necessary to comply with increased regulatory requirements.

                                       29

<PAGE>


     The table  below  sets forth the  Company's  noninterest  expenses  for the
periods indicated.
<TABLE>
<CAPTION>

                                                                                        2004/2005       2003/2004
                                                Years Ended December 31,                Percent          Percent
                                      --------------------------------------------
                                          2005           2004            2003            Change          Change
                                      ------------   ------------    -------------   -------------   --------------
                                                 (Dollars in thousands)

<S>                                   <C>            <C>             <C>                        <C>            <C>
Salaries and employee benefits.....   $      7,851   $      7,729    $       7,008              1.6%           10.3%
Occupancy and equipment expense....          2,206          1,730            1,532             27.5            12.9
Professional fees..................            405            249              263             62.7            (5.3)
Advertising........................            288            265              222              8.7            19.4
Telephone..........................            264            188              175             40.4             7.4
Supplies...........................            224            171              152             31.0            12.5
Regulatory fees and assessments....            202            176              154             14.8            14.3
ATM expense........................            188            147              137             27.9             7.3
Courier fees.......................            176            127              113             38.6            12.4
Software maintenance...............            141            138              164              2.2           (15.9)
Postage............................            117            123              136             (4.9)           (9.5)
Correspondent bank fees............            117             91               70             28.6            30.0
Director and committee fees........             70             67               67              4.5             0.0
Employee education.................             66             70               69             (5.7)            1.5
Dues and subscriptions.............             57             48               44             18.8             9.1
Taxes and licenses.................             21             85               95            (75.3)          (10.5)
Other..............................            540            847              579            (36.3)           46.3
                                      ------------   ------------    -------------

   Total...........................   $     12,933   $     12,251    $      10,980              5.6            11.6
                                      ============   ============    =============
</TABLE>

Income Taxes

     Income tax expense  increased $3.7 million (48.2%) to $11.4 million for the
year ended December 31, 2005, increased $2.6 million (51.1%) to $7.7 million for
the year ended  December 31, 2004,  and increased  $1.2 million  (32.2%) to $5.1
million  for the year ended  December  31,  2003.  The  effective  tax rate as a
percentage of pretax income was 38.5% in 2005, 38.6% in 2004, and 37.7% in 2003.
The statutory  federal rate was 34 percent during 2005, 2004, and 2003. There is
no current or  pending  tax  legislation  of which  management  is aware that if
passed would have any material effect on the financial  statements.  For further
information  concerning the provision for income taxes, refer to Note 14, Income
Taxes, of the "Notes to Consolidated Financial Statements."

Impact of Inflation and Changing Prices

     A bank's asset and liability structure is substantially different from that
of an industrial  company in that virtually all assets and liabilities of a bank
are  monetary in nature.  Management  believes  the impact of  inflation  on its
financial  results  depends  upon the  Company's  ability to react to changes in
interest  rates  and by such  reaction  to  reduce  the  inflationary  impact on
performance. Interest rates do not necessarily move in the same direction, or at
the same  magnitude,  as the prices of other goods and  services.  As  discussed
previously,    management   seeks   to   manage   the    relationship    between
interest-sensitive  assets  and  liabilities  in order to protect  against  wide
interest rate fluctuations, including those resulting from inflation.

Market Risk

     Market risk is the risk arising  from adverse  changes in the fair value of
financial  instruments  due to a change in interest  rates,  exchange  rates and
equity prices. The Company's primary risk is interest rate risk.

                                       30

<PAGE>

     The primary  objective of  Asset/Liability  Management of the Company is to
manage  interest  rate risk and achieve  reasonable  stability  in net  interest
income  throughout  interest rate cycles.  This is achieved by  maintaining  the
proper balance of rate sensitive earning assets and rate sensitive  liabilities.
The relationship of rate sensitive earning assets to rate sensitive liabilities,
is the principal factor in projecting the effect that fluctuating interest rates
will have on future net  interest  income.  Rate  sensitive  earning  assets and
interest-bearing  liabilities  are those that can be re-priced to current market
rates  within a  relatively  short time  period.  Management  monitors  the rate
sensitivity of earning assets and  interest-bearing  liabilities over the entire
life of these instruments,  but places particular emphasis on the first year and
through three years.

     The  Company  uses  additional  tools to monitor and manage  interest  rate
sensitivity.  One  of the  primary  tools  is  simulation  analysis.  Simulation
analysis is the  primary  method of  estimating  earnings at risk and capital at
risk under varying interest rate conditions. Simulation analysis is used to test
the sensitivity of the Company's net interest income and shareholders' equity to
both the level of interest  rates and the slope of the yield  curve.  Simulation
analysis  accounts for the expected timing and magnitude of assets and liability
cash flows, as well as the expected timing and magnitude of deposits that do not
re-price on a  contractual  basis.  In addition,  simulation  analysis  includes
adjustments for the lag between  movements in market interest rates on loans and
interest-bearing deposits. These adjustments are made to reflect more accurately
possible  future cash flows,  re-pricing  behavior,  and ultimately net interest
income.  The  estimated  impact on the  Company's  net  interest  income  before
provision for loan loss sensitivity over a one-year time horizon is shown below.
Such  analysis  assumes a sustained  parallel  shift in  interest  rates and the
Company's estimate of how interest-bearing transaction accounts will re-price in
each scenario.  Actual results will differ from simulated results due to timing,
magnitude  and  frequency  of  interest  rate  changes  and  changes  in  market
conditions and management's strategies, among other factors.

     The Company has not  experienced a high level of volatility in net interest
income primarily  because of the relatively short duration of its balance sheet.
Management  is very  much  aware  of its  asset  sensitivity  and the  potential
interest rate risk in a declining rate environment;  however,  they believe that
there are  mitigating  factors,  such as the loan rate  floors that will help to
mitigate this risk. By keeping both sides of the balance sheet short, management
is reducing its interest  rate risk and  increasing  its  capability to react to
changes in interest rates quicker and more effectively than if they were longer.
<TABLE>
<CAPTION>

                                                                                             Percentage Increase
                                                                                            (Decrease) in Interest
                                                                                             Income/Expense Given
                                                                                             Interest Rate Shifts
                                                                                         Down 200             Up 200
                                                                                       Basis Points         Basis Points

         For the Twelve Months after December 31, 2005 Projected change in:
<S>                                                                                           <C>                <C>
           Interest income..........................................................          (9.64)%            9.41%
           Interest expense.........................................................         (10.10)             10.10
           Net interest income......................................................          (9.42)              9.07
</TABLE>

Other Accounting Issues

     In January 2003, the Auditing  Standards Board issued Statement on Auditing
Standards  ("SAS") No. 101,  Auditing Fair Value  Measurements  and Disclosures.
This statement  establishes standards on auditing the measurement and disclosure
of assets, liabilities, and specific components of equity presented or disclosed
at fair  value in  financial  statements.  This SAS is  effective  for audits of
financial  statements  for  periods  beginning  on or after June 15,  2003.  The
adoption  of SAS  No.  101 did  not  have a  material  impact  on the  Company's
consolidated financial statements.

                                       31

<PAGE>


     In April 2003, the FASB issued SFAS No. 149,  Amendment of Statement 133 on
Derivative Instruments and Hedging Activities.  The provisions of this statement
are effective for contracts  entered into or modified  after June 20, 2003,  and
hedging relationships designated after June 30, 2003, and generally require that
contracts with comparable characteristics be accounted for similarly. Except for
the  provisions  related  to  FASB  Statement  133,  Accounting  for  Derivative
Instruments and Hedging  Activities,  all provisions of this statement should be
applied prospectively.  The provisions of the statement related to Statement 133
Implementation  Issues that have been  effective for fiscal  quarters that begin
prior to June 15, 2003,  should  continue to be applied in accordance with their
respective effective dates. The adoption of the provisions of this statement did
not have a material effect on the Company's  consolidated  operating  results or
financial position.

     In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with  Characteristics of both Liabilities and Equity. This statement
establishes  standards  for  how  an  issuer  classifies  and  measures  certain
financial  instruments with  characteristics  of both liabilities and equity. It
requires  liability  treatment  for  certain  financial  instruments  which  had
previously  been  recognized as equity.  The  provisions  of this  statement are
effective for financial instruments entered into or modified after May 31, 2003,
and  otherwise  are  effective  at the  beginning  of the first  interim  period
beginning  after  June  15,  2003.  It is to be  implemented  by  reporting  the
cumulative effect of a change in accounting principle for financial  instruments
created  before May 15, 2003, and still existing at the beginning of the interim
period of adoption. Restatement is not permitted. The adoption of the provisions
of this statement did not have a material  effect on the Company's  consolidated
operating results or financial position.

     In December 2003, the Financial Accounting Standards Board ("FASB") revised
previously issued SFAS No. 132, Employers'  Disclosures about Pensions and Other
Postretirement  Benefits.  This statement revises  employers'  disclosures about
pension plans and other  postretirement  benefit  plans.  It does not change the
measurement or  recognition  of those plans required by FASB  Statements No. 87,
Employers'   Accounting  for  Pensions,   No.  88,  Employers'   Accounting  for
Settlements   and   Curtailments  of  Defined  Benefit  Pension  Plans  and  for
Termination  Benefits,  and No. 106,  Employers'  Accounting for  Postretirement
Benefits Other Than Pensions. This statement retains the disclosure requirements
contained in FASB Statement No. 132,  Employers'  Disclosures about Pensions and
Other  Postretirement  Benefits,  which  it  replaces.  It  requires  additional
disclosures  to those in the  original  Statement  No.  132  about  the  assets,
obligations,  cash  flows,  and net  periodic  benefit  cost of defined  benefit
pension  plans and other  defined  benefit  postretirement  plans.  The required
information  should  be  provided  separately  for  pension  plans and for other
postretirement benefit plans. The provisions of this statement are effective for
financial  statements  with fiscal  years ending  after  December 15, 2003.  The
interim-period  disclosures required by this statement are effective for interim
periods  beginning  after  December 15, 2003.  The adoption of the provisions of
this  revised  statement  did  not  have a  material  effect  on  the  Company's
consolidated financial position or operating results.

     In December 2003, the FASB revised previously issued FIN 46,  Consolidation
of Variable  Interest  Entities,  ("FIN 46R") which clarifies the application of
Accounting Research Bulletin ("ARB") 51, Consolidated  Financial Statements,  to
certain entities (called variable  interest  entities) in which equity investors
do not have the  characteristics  of a controlling  financial interest or do not
have sufficient equity at risk for the entity to finance its activities  without
additional  subordinated financial support from other parties. The reporting and
disclosure  requirements of this  Interpretation are effective for all financial
statements of public  companies  for the first period ending after  December 15,
2003 and for all other types of  entities  for  periods  ending  after March 15,
2004. The adoption of this  interpretation did not have a material impact on the
Company's consolidated financial statements.

     In December  2003,  the  Accounting  Standards  Executive  Committee of the
American  Institute of Certified Public Accountants issued Statement of Position
("SOP")  03-3,  Accounting  for Certain Loans or Debt  Securities  Acquired in a
Transfer,  which  addresses the accounting for differences  between  contractual
cash flows and expected  cash flows for loans  acquired in a transfer when those
differences  are  attributable  at least in part to a decline in credit quality.
The scope of SOP 03-3 includes loans where there is evidence of deterioration in
credit quality since origination,  and includes loans acquired individually,  in
pools or as part of a  business  combination.  Under  SOP 03-3,  the  difference
between  expected cash flows and the purchase price is accreted as an adjustment
to yield over the life. The adoption of SOP 03-03 did not have a material impact
on the Company's consolidated financial position or operating results.

                                       32

<PAGE>


     In March 2004, the Emerging Issues Task Force ("EITF")  reached a consensus
on the  remaining  portions of EITF 03-01,  The Meaning of  Other-Than-Temporary
Impairment and It's Application to Certain Investments,  effective for the first
fiscal year or interim period beginning after June 15, 2004. EITF 03-01 provides
guidance for  determining  when an investment is  considered  impaired,  whether
impairment is  other-than-temporary,  and measurement of an impairment  loss. An
investment  is considered  impaired if the fair value of the  investment is less
than its cost.  Generally,  an  impairment  is  considered  other-than-temporary
unless:  (1) the investor has the ability and intent to hold an investment for a
reasonable  period of time sufficient for an anticipated  recovery of fair value
up to (or beyond) the cost of the investment,  and (2) evidence  indicating that
the cost of the  investment is  recoverable  within a reasonable  period of time
outweighs  evidence  to  the  contrary.   If  impairment  is  determined  to  be
other-than-temporary,  then an impairment loss should be recognized equal to the
difference between the investment's cost and its fair value.  Certain disclosure
requirements of EITF 03-01 were adopted in 2003 and the Company began presenting
the new disclosure requirements in its consolidated financial statements for the
year ended December 31, 2003. The recognition  and  measurement  provisions were
initially effective for other-than-temporary impairment evaluations in reporting
periods  beginning  after June 15, 2004.  In June 2005,  the FASB decided not to
provide additional guidance on the meaning of  other-than-temporary  impairment,
but  directed  the  staff to issue  proposed  FSP  EITF  03-1-a,  Implementation
Guidance  for the  Application  of Paragraph 16 of EITF Issue No. 03-1 as final.
However,  in  November  2005 FASB  issued  FASB  Staff  Position  (retitled  FSP
115-1/124-1), The Meaning of Other-Than-Temporary Impairment and its Application
to  Certain  Investments.  This  FSP  provides  additional  guidance  on when an
investment in a debt or equity security  should be considered  impaired and when
that impairment  should be considered  other-than-temporary  and recognized as a
loss in earnings.  Specifically,  the guidance clarifies that an investor should
recognize  an  impairment  loss no later  than  when the  impairment  is  deemed
other-than-temporary, even if a decision to sell has not been made. The FSP also
requires  certain  disclosures  about  unrealized  losses  that  have  not  been
recognized as other-than-temporary impairments. The Company applied the guidance
in  this  FSP in 2005  and  there  was no  material  affect  to the  results  of
operations or the statement of financial position.

     In  March  2004,  the  Securities  and  Exchange  Commission  issued  Staff
Accounting  Bulletin  ("SAB") No. 105,  Application of Accounting  Principles to
Loan  Commitments.  SAB 105 requires that the fair value measurement of mortgage
loan commitments, which are derivatives,  exclude any expected future cash flows
related to the customer  relationship or servicing  rights.  The guidance in SAB
105 must be applied to mortgage  loan  commitments  entered into after March 31,
2004.  The impact on the Company is not material  given the declines in mortgage
banking volume,  but could be in the future.  The impact is primarily the timing
of when gains should be recognized in the consolidated financial statements.

     In December  2004,  the FASB issued SFAS No. 123 (revised  2004),  entitled
Share-Based  Payment ("SFAS No.  123(R)") that will require  compensation  costs
related to share-based  payment  transactions  to be recognized in the financial
statements.  This  statement  eliminates  the  alternative  to use Opinion  25's
intrinsic  value  method of  accounting  that was  provided  in SFAS No.  123 as
originally  issued.  Under  Opinion  25,  issuing  stock  options  to  employees
generally  resulted in  recognition  of no  compensation  cost.  This  statement
requires  entities  to  recognize  the cost of  employee  services  received  in
exchange for awards of equity  instruments based on the grant-date fair value of
those awards (with limited  exceptions).  Recognition of that  compensation cost
helps  users  of  financial   statements  to  better   understand  the  economic
transactions  affecting  an  entity  and  to  make  better  resource  allocation
decisions. The Company is currently evaluating the provisions of SFAS No. 123(R)
and will adopt it on January 1, 2006, the effective date of this statement.  The
adoption of this  statement  is not  expected  to have a material  impact on the
consolidated financial statements.

     On  December  16,  2004,  the  FASB  issued  SFAS  No.  153,  Exchanges  of
Nonmonetary  Assets, an amendment of APB Opinion No. 29. SFAS No. 153 amends the
principle that  exchanges of nonmonetary  assets should be measured based on the
fair  value  of the  assets  exchanged  and  more  broadly  provides  exceptions
regarding exchanges of nonmonetary assets that do not have commercial substance.
A nonmonetary  exchange has  commercial  substance when the future cash flows of
the entity are expected to change significantly as a result of the exchange. The
provisions  of SFAS  No.  153 are  effective  for  nonmonetary  asset  exchanges
occurring in periods beginning after June 15, 2005.  Management does not believe
that the adoption of this standard will have a material  impact on the financial
condition or the operating results of the Company.

     In May 2005,  the FASB issued SFAS No.  154,  Accounting  Changes and Error
Corrections, which replaces APB Opinion No. 20, Accounting Changes, and SFAS No.
3, Reporting Accounting Changes in Interim Financial Statements--An Amendment of
APB Opinion No. 28. SFAS No. 154 changes the requirements for the accounting and
reporting  of a change in  accounting  principle.  It applies  to all  voluntary
changes in accounting  principle as well as to

                                       33

<PAGE>

     changes  required  by an  accounting  pronouncement  that does not  include
specific transition  provisions.  SFAS No. 154 eliminates the requirement in APB
Opinion  No. 20 to  include  the  cumulative  effect of  changes  in  accounting
principle in the income statement in the period of change.  Instead,  to enhance
the  comparability of prior period financial  statements,  SFAS No. 154 requires
that  changes  in  accounting  principle  be  retrospectively   applied.   Under
retrospective  application,  the new  accounting  principle is applied as of the
beginning of the first period  presented  as if that  principle  had always been
used. The cumulative  effect of the change is reflected in the carrying value of
assets and  liabilities  as of the first  period  presented  and the  offsetting
adjustments are recorded to opening retained earnings.  Each period presented is
adjusted to reflect the period-specific effects of applying the change. SFAS No.
154 also redefines  "restatement" as the revising of previously issued financial
statements  to reflect the  correction of an error.  Only direct  effects of the
change will be included in the retrospective  application;  all indirect effects
will be recognized in the period of change.  If it is impracticable to determine
the cumulative effect for all prior periods, the new accounting principle should
be  applied  as  if  it  were  adopted  prospectively  from  the  earliest  date
practicable. SFAS No. 154 is effective for accounting changes and corrections of
errors made in fiscal years beginning after December 15, 2005.

     In February  2006,  the FASB issued SFAS No. 155  entitled  Accounting  for
Certain Hybrid Financial Instruments. SFAS No. 155 amends SFAS No. 133, entitled
Accounting for Derivative Instruments and Hedging Activities,  and SFAS No. 140,
entitled  Accounting  for  Transfers  and  Servicing  of  Financial  Assets  and
Extinguishments of Liabilities.  This statement permits fair value remeasurement
of certain hybrid  financial  instruments  containing  embedded  derivatives and
requires evaluation of securitized  financial assets for purposes of identifying
items of a derivative nature. The statement includes further clarification as to
the derivative classification of selected financial instruments.  The provisions
of SFAS No. 155 are effective for all financial  instruments  acquired or issued
after the  beginning of the first fiscal year that begins  after  September  15,
2006.  The fair value  "election"  within the  literature  may be utilized  upon
adoption  of the  guidance  related  to hybrid  financial  instruments.  Earlier
adoption is  permitted  as of the  beginning  of a fiscal  year,  provided  that
reporting  entities have not yet issued  financial  statements.  The  provisions
within SFAS No. 155 may be applied to instruments "held" at the date of adoption
on an  instrument-by-instrument  basis. At adoption,  any difference between the
total  carrying  amount of the  individual  components  of the  existing  hybrid
financial  instrument  and the  fair  value  of the  combined  hybrid  financial
instrument should be recognized as a  cumulative-effect  adjustment to beginning
retained earnings. Reporting entities should separately disclose the gross gains
and  losses  that make up the  cumulative-effect  adjustment,  determined  on an
instrument-by-instrument  basis.  Prior  periods  should  not be  restated.  The
Company does not expect the adoption of this statement to have a material effect
on the consolidated financial statements.



              [The remainder of this page intentionally left blank]


                                       34

<PAGE>





ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The financial  statements and supplementary data required by Regulation S-X
and by Item 302 of Regulation S-K are set forth in the pages listed below.

<TABLE>
<CAPTION>

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS

                                                                                                              Page(s)

<S>                                                                                                              <C>
Report of Independent Registered Public Accounting Firm....................................................      36
Consolidated Statements of Financial Condition as of December 31, 2005 and 2004............................      38
Consolidated Statements of Income for the Years Ended December 31, 2005, 2004 and 2003.....................      39
Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 2005, 2004 and 2003.......      40
Consolidated Statements of Cash Flows for the Years Ended December 31, 2005, 2004 and 2003.................      41
Notes to Consolidated Financial Statements.................................................................      43
Quarterly Results (Unaudited)..............................................................................      80
</TABLE>

                                       35

<PAGE>




[GRAPHIC OMITTED]  Schauer Taylor, PC
                   Certified Public Accountants and Consultants




             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Board of Directors and Stockholders
Florida Community Banks, Inc. and subsidiary:

     We have  audited the  accompanying  consolidated  statements  of  financial
condition of Florida  Community Banks, Inc. and subsidiary (the "Company") as of
December 31, 2005 and 2004, and the related  consolidated  statements of income,
shareholders'  equity,  and cash  flows for each of the years in the  three-year
period ended  December 31, 2005. We also have audited  management's  assessment,
included  in the  accompanying  "Management  Report  on  Internal  Control  Over
Financial  Reporting," that the Company  maintained  effective  internal control
over financial reporting as of December 31, 2005, based on criteria  established
in Internal Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission  ("COSO").  The Company's management is
responsible  for  these  consolidated  financial  statements,   for  maintaining
effective internal control over financial  reporting,  and for its assessment of
the   effectiveness   of  internal   control  over  financial   reporting.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements,  an  opinion  on  management's  assessment,  and an  opinion  on the
effectiveness of the Company's  internal control over financial  reporting based
on our audits.

     We  conducted  our audits in  accordance  with the  standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audits to obtain reasonable  assurance about whether the
financial  statements are free of material  misstatement  and whether  effective
internal  control  over  financial  reporting  was  maintained  in all  material
respects. Our audit of the consolidated financial statements included examining,
on a  test  basis,  evidence  supporting  the  amounts  and  disclosures  in the
financial  statements,  assessing the accounting principles used and significant
estimates made by management,  and  evaluating the overall  financial  statement
presentation.  Our audit of internal control over financial  reporting  included
obtaining  an  understanding  of  internal  control  over  financial  reporting,
evaluating  management's  assessment,  testing  and  evaluating  the  design and
operating   effectiveness  of  internal  control,   and  performing  such  other
procedures as we considered necessary in the circumstances.  We believe that our
audits provide a reasonable basis for our opinions.

     A company's internal control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial  statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial  reporting  includes those policies and procedures that (1) pertain to
the  maintenance  of records that, in reasonable  detail,  accurately and fairly
reflect the  transactions  and  dispositions  of the assets of the company;  (2)
provide  reasonable  assurance  that  transactions  are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting  principles,  and that receipts and  expenditures  of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of  unauthorized  acquisition,  use, or  disposition  of the company's
assets that could have a material effect on the financial statements.

                                       36

<PAGE>



     Because  of its  inherent  limitations,  internal  control  over  financial
reporting  may not prevent or detect  misstatements.  Also,  projections  of any
evaluation  of  effectiveness  to future  periods  are  subject to the risk that
controls may become  inadequate  because of changes in  conditions,  or that the
degree of compliance with the policies or procedures may deteriorate.

     In our opinion,  the financial statements referred to above present fairly,
in all  material  respects,  the  consolidated  financial  position  of  Florida
Community  Banks,  Inc. and subsidiary as of December 31, 2005 and 2004, and the
consolidated  results of their  operations  and their cash flows for each of the
years in the  three-year  period  ended  December  31, 2005 in  conformity  with
accounting principles generally accepted in the United States of America.  Also,
in our opinion,  management's  assessment that Florida Community Banks, Inc. and
subsidiary  maintained effective internal control over financial reporting as of
December 31, 2005,  is fairly  stated,  in all material  respects,  based on the
criteria  established in Internal Control - Integrated Framework issued by COSO.
Furthermore,  in our opinion,  Florida  Community  Banks,  Inc.  and  subsidiary
maintained, in all material respects,  effective internal control over financial
reporting  as of December 31, 2005,  based on criteria  established  in Internal
Control - Integrated Framework issued by COSO.


Birmingham, Alabama
March 2, 2006
                                                              Schauer Taylor, PC

                                       37

<PAGE>


                          FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                           December 31, 2005 and 2004

<TABLE>
<CAPTION>

                                                                                  2005                  2004
                                                                           ------------------    ------------------
Assets
<S>                                                                        <C>                   <C>
   Cash and due from banks.............................................    $       27,177,610    $       18,665,823
   Interest-bearing demand deposits with banks.........................             5,002,739               948,255
   Federal funds sold..................................................               188,000                    --
                                                                           ------------------    ------------------
       Cash and Cash Equivalents.......................................            32,368,349            19,614,078

   Securities held-to-maturity, fair value of $59,290,254 in
     2005 and $68,991,864 in 2004......................................            61,033,171            69,330,160
   Other investment securities.........................................             5,209,265             4,935,077
   Loans held-for-sale.................................................               300,000               576,200

   Loans, net of unearned income.......................................           791,308,855           551,932,955
   Allowance for loan losses...........................................           (11,522,910)           (9,791,269)
                                                                           ------------------    ------------------
       Net Loans.......................................................           779,785,945           542,141,686

   Premises and equipment, net.........................................            13,776,233            13,345,071
   Accrued interest....................................................             4,941,241             3,289,678
   Foreclosed real estate..............................................             2,203,435             2,203,435
   Deferred taxes, net.................................................             5,830,225             4,313,485
   Other assets........................................................             1,633,670             1,115,434
                                                                           ------------------    ------------------

       Total Assets....................................................    $      907,081,534    $      660,864,304
                                                                           ==================    ==================

Liabilities and Shareholders' Equity

Liabilities

   Deposits
     Noninterest-bearing...............................................    $      129,559,895    $      113,217,461
     Interest-bearing..................................................           607,695,861           407,367,970
                                                                           ------------------    ------------------
       Total Deposits..................................................           737,255,756           520,585,431

   Short-term borrowings...............................................            25,088,000            14,057,000
   Accrued interest....................................................             2,399,280             1,407,563
   Deferred compensation...............................................               281,629               313,622
   Notes payable.......................................................                23,939                    --
   FHLB advances.......................................................            60,000,000            60,000,000
   Subordinated debentures.............................................            10,310,000            10,310,000
   Other liabilities...................................................             1,647,148             1,262,989
                                                                           ------------------    ------------------
       Total Liabilities...............................................           837,005,752           607,936,605

Shareholders' Equity
   Common stock - par value $0.01 per share, 10,000,000 shares authorized,
     5,493,141 shares issued and outstanding at December 31, 2005 and 5,423,185
     issued and outstanding at December 31, 2004.......................                54,931                54,231
   Paid-in capital.....................................................            18,364,812            17,146,496
   Retained earnings...................................................            51,656,039            35,726,972
                                                                           ------------------    ------------------
       Total Shareholders' Equity......................................            70,075,782            52,927,699
                                                                           ------------------    ------------------

       Total Liabilities and Shareholders' Equity......................    $      907,081,534    $      660,864,304
                                                                           ==================    ==================
</TABLE>

                 See notes to consolidated financial statements

                                       38
<PAGE>


                          FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                        CONSOLIDATED STATEMENTS OF INCOME

                  Years Ended December 31, 2005, 2004 and 2003

<TABLE>
<CAPTION>

                                                            2005                  2004                  2003
                                                     ------------------    ------------------    ------------------
Interest Income
<S>                                                  <C>                   <C>                   <C>
   Interest and fees on loans.....................   $       54,686,904    $       37,739,970    $       31,871,196
   Interest and dividends on taxable securities...            2,883,246             1,622,283             1,331,446
   Interest on federal funds sold.................              210,213               197,144               237,388
   Interest on deposits in banks..................               78,047                24,378                79,717
                                                     ------------------    ------------------    ------------------
       Total Interest Income......................           57,858,410            39,583,775            33,519,747
                                                     ------------------    ------------------    ------------------

Interest Expense
   Interest on deposits...........................           13,863,702             7,109,471             7,923,935
   Interest on FHLB advances......................            2,308,069             1,503,145             1,604,325
   Interest on short-term borrowings..............              500,749                56,072                27,801
   Interest on subordinated debentures............              712,617               530,931               524,680
                                                     ------------------    ------------------    ------------------
       Total Interest Expense.....................           17,385,137             9,199,619            10,080,741
                                                     ------------------    ------------------    ------------------

Net interest income...............................           40,473,273            30,384,156            23,439,006
Provision for loan losses.........................            1,762,000             1,970,768             1,700,000
                                                     ------------------    ------------------    ------------------

Net Interest Income After Provision
   For Loan Losses................................           38,711,273            28,413,388            21,739,006

Noninterest Income
   Customer service fees..........................            1,465,639             1,350,302             1,365,106
   Income and gain on sale from other real
     estate owned.................................                   --               588,982               154,373
   Secondary market loan fees.....................              972,349               533,847               555,103
   Other operating income.........................            1,405,812             1,300,643               653,588
                                                     ------------------    ------------------    ------------------
       Total Noninterest Income...................            3,843,800             3,773,774             2,728,170
                                                     ------------------    ------------------    ------------------

Noninterest Expenses
   Salaries and employee benefits.................            7,851,022             7,728,811             7,007,575
   Occupancy and equipment expense................            2,205,868             1,730,033             1,532,288
   Expenses, write-downs, and losses on
     sale from other real estate owned............              126,082               479,159               349,052
   Other operating expenses.......................            2,750,343             2,313,330             2,091,035
                                                     ------------------    ------------------    ------------------
       Total Noninterest Expenses.................           12,933,315            12,251,333            10,979,950
                                                     ------------------    ------------------    ------------------

Income before income taxes........................           29,621,758            19,935,829            13,487,226
Income tax expense................................           11,403,727             7,693,897             5,090,677
                                                     ------------------    ------------------    ------------------

Net Income........................................   $       18,218,031    $       12,241,932    $        8,396,549
                                                     ==================    ==================    ==================

Earnings Per Common Share
   Basic..........................................   $            3.33     $            2.26     $            1.56
   Diluted........................................                3.29                  2.23                  1.54

Cash Dividends Declared Per
   Common Share...................................                0.42                  0.35                  0.15

Weighted Average Shares Outstanding
   Basic..........................................            5,476,205             5,419,554             5,396,603
   Diluted........................................            5,529,177             5,478,143             5,438,176
</TABLE>


                 See notes to consolidated financial statements

                                       39
<PAGE>


                          FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                  Years Ended December 31, 2005, 2004 and 2003

<TABLE>
<CAPTION>

                                             Common             Paid-in            Retained
                                              Stock             Capital            Earnings              Total
                                       ----------------    ----------------   -----------------   -----------------

Balance at
<S>         <C> <C>                    <C>                 <C>                <C>                 <C>
   December 31, 2002................   $         53,965    $     16,657,323   $      17,752,512   $      34,463,800

Net income - 2003...................                 --                  --           8,396,549           8,396,549
                                                                                                  -----------------
Comprehensive income................                 --                  --                  --           8,396,549
                                                                                                  -----------------
Issuance of stock options...........                 --               6,249                  --               6,249
Cash dividends - Common
   $0.15 per share..................                 --                  --            (780,829)           (780,829)
                                       ----------------    ----------------   -----------------   -----------------

Balance at
   December 31, 2003................             53,965          16,663,572          25,368,232          42,085,769

Net income - 2004...................                 --                  --          12,241,932          12,241,932
                                                                                                  -----------------
Comprehensive income................                 --                  --                  --          12,241,932
                                                                                                  -----------------
Sale of common stock................                266             464,936                  --             465,202
Issuance of stock options...........                 --              17,988                  --              17,988
Cash dividends - Common
   $0.35 per share..................                 --                  --          (1,883,192)         (1,883,192)
                                       ----------------    ----------------   -----------------   -----------------

Balance at
   December 31, 2004................             54,231          17,146,496          35,726,972          52,927,699

Net income - 2005...................                 --                  --          18,218,031          18,218,031
                                                                                                  -----------------
Comprehensive income................                 --                  --                  --          18,218,031
                                                                                                  -----------------
Sale of common stock................                700           1,161,533                  --           1,162,233
Issuance of stock options...........                 --              56,783                  --              56,783
Cash dividends - Common
   $0.42 per share..................                 --                  --          (2,288,964)         (2,288,964)
                                       ----------------    ----------------   -----------------   -----------------

Balance at
   December 31, 2005................   $         54,931    $     18,364,812   $      51,656,039   $      70,075,782
                                       ================    ================   =================   =================
</TABLE>

                 See notes to consolidated financial statements

                                       40
<PAGE>


                          FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                  Years Ended December 31, 2005, 2004 and 2003

<TABLE>
<CAPTION>

                                                            2005                  2004                  2003
                                                     ------------------    ------------------    ------------------

Operating Activities
<S>                                                  <C>                   <C>                   <C>
   Net income.....................................   $       18,218,031    $       12,241,932    $        8,396,549
   Adjustments to reconcile net income to
     net cash provided by operating activities:
       Provision for loan losses..................            1,762,000             1,970,768             1,700,000
       Depreciation, amortization,
         and accretion, net.......................            1,181,656               943,682               917,628
       Deferred tax benefit.......................           (1,512,872)           (1,150,602)           (1,202,370)
       Gain on disposition of other
         real estate..............................                   --              (579,244)                   --
       Gain on disposition of
         premises and equipment...................              (21,216)             (414,508)                   --
       (Increase) decrease in accrued
         interest receivable......................           (1,651,563)             (580,576)              195,047
       Increase (decrease) in accrued
         interest payable.........................              991,717               548,780            (1,008,041)
       Other, net.................................             (157,099)              829,720                40,660
                                                     ------------------    ------------------    ------------------
       Net Cash Provided By
         Operating Activities.....................           18,810,654            13,809,952             9,039,473
                                                     ------------------    ------------------    ------------------

Investing Activities
   Purchases of other securities..................             (274,188)           (1,750,100)             (500,000)
   Purchases of investment securities
     held-to-maturity.............................                   --           (40,246,598)          (29,251,273)
   Proceeds from sales, maturities, calls
     and pay-downs of investment
     securities held-to-maturity..................            7,950,335             6,437,208            26,647,486
   Proceeds from sale of other securities ........                   --                    --               500,000
   Net increase in loans to customers.............         (239,099,700)         (111,333,522)          (27,502,464)
   Purchase of premises and equipment.............           (1,329,146)           (1,593,109)           (3,345,158)
   Proceeds from disposition of
     premises and equipment.......................               41,000               718,505                21,842
   Proceeds from disposition of
     foreclosed real estate.......................                   --               715,564                    --
                                                     ------------------    ------------------    ------------------
       Net Cash Used In
         Investing Activities.....................         (232,711,699)         (147,052,052)          (33,429,567)
                                                     ------------------    ------------------    ------------------
</TABLE>


                          (Continued on following page)


                 See notes to consolidated financial statements

                                       41
<PAGE>


                          FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

                  Years Ended December 31, 2005, 2004 and 2003

<TABLE>
<CAPTION>

                                                            2005                  2004                  2003
                                                     ------------------    ------------------    ------------------

Financing Activities
   Net increase in demand deposits, NOW
<S>                                                  <C>                   <C>                   <C>
     accounts, and savings accounts...............   $       16,342,434    $       60,294,535    $       39,881,549
   Net increase (decrease) in certificates
     of deposit...................................          200,327,891            37,006,494           (40,531,669)
   Net increase in short-term borrowings..........           11,031,000             6,457,000             7,500,000
   Issuance of long-term debt.....................                   --            25,000,000                    --
   Repayments of long-term debt...................                   --            (5,021,698)          (10,000,000)
   Increase in other debt, net....................               23,939                    --                    --
   Sale of common stock...........................            1,162,233               465,202                    --
   Compensation associated with the
     issuance of options, net of tax..............               56,783                17,988                 6,227
   Cash dividends.................................           (2,288,964)           (1,883,192)             (780,829)
                                                     ------------------    ------------------    ------------------
       Net Cash Provided By (Used In)
          Financing Activities....................          226,655,316           122,336,329            (3,924,722)
                                                     ------------------    ------------------    ------------------

Net (Decrease) Increase in Cash and
   Cash Equivalents...............................           12,754,271           (10,905,771)          (28,314,816)

Cash and Cash Equivalents
   at Beginning of Year...........................           19,614,078            30,519,849            58,834,665
                                                     ------------------    ------------------    ------------------

Cash and Cash Equivalents
   at End of Year.................................   $       32,368,349    $       19,614,078    $       30,519,849
                                                     ==================    ==================    ==================
</TABLE>



                 See notes to consolidated financial statements

                                       42
<PAGE>


                          FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003



Note 1 - Summary of Significant Accounting Policies

     Florida  Community  Banks,  Inc.  ("FCBI") (a Florida  corporation) and its
wholly  owned  subsidiary,  Florida  Community  Bank  (the  "Bank")  (a  Florida
corporation)  collectively referred to herein as the "Company," is headquartered
in Immokalee, Florida. The Bank's main office is in Immokalee, Florida with nine
additional  branch  offices  in  Southwest  Florida;  a new  Valencia  branch is
scheduled to open in December 2006 or early 2007,  which will replace the branch
that is  currently  in a  convenience  store.  The Company  plans to open three,
possibly  four new branches in 2007.  The Bank  provides a full range of banking
services to individual and corporate  customers in Charlotte,  Collier,  Glades,
Hendry, and Lee counties and the surrounding areas.

     The accounting and reporting  policies of the Company conform to accounting
principles  generally  accepted  in the United  States  and to general  practice
within the banking  industry.  The following  summarizes the most significant of
these policies.

Basis of Consolidation

     The  consolidated  financial  statements  include  the  accounts of Florida
Community Banks, Inc., and the Bank. All significant  inter-company balances and
transactions have been eliminated.

Use of Estimates

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

     The determination of the adequacy of the allowance for loan losses is based
on estimates that are  particularly  susceptible  to significant  changes in the
economic environment and market conditions. In connection with the determination
of the estimated losses on loans,  management obtains independent appraisals for
significant collateral. While management uses available information to recognize
losses on loans,  further  reductions  in the  carrying  amounts of loans may be
necessary based on changes in local economic conditions. In addition, regulatory
agencies, as an integral part of their examination process,  periodically review
the estimated  losses on loans.  Such agencies may require the Bank to recognize
additional losses based on their judgments about  information  available to them
at the time of their  examination.  Because of these  factors,  it is reasonably
possible  that the estimated  losses on loans may change  materially in the near
term.  However,  the amount of the change that is reasonably  possible cannot be
estimated.

Securities

     Securities are classified as either  held-to-maturity,  available-for-sale,
trading, or other.

                                       43
<PAGE>

                          FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003


Note 1 - Summary of Significant Accounting Policies - Continued

     Securities  held-to-maturity  are those securities for which management has
the  ability and intent to hold on a long-term  basis or until  maturity.  These
securities are carried at amortized cost,  adjusted for amortization of premiums
and accretion of discount, to the earlier of the maturity or call date.

     Securities  available-for-sale  represent those  securities  intended to be
held for an indefinite  period of time,  including  securities  that  management
intends to use as part of its asset/liability  strategy,  or that may be sold in
response to changes in interest rates,  changes in prepayment  risk, the need to
increase   regulatory   capital,   or   other   similar   factors.    Securities
available-for-sale are recorded at market value with unrealized gains and losses
net of any tax effect, added or deducted directly from shareholders' equity.

     Securities  carried in trading  accounts  are carried at market  value with
unrealized gains and losses reflected in income.

     Securities  classified as other represent  investments in equity securities
carried at cost. These investments have no readily  ascertainable  market value;
however, management is not aware of any conditions that would require adjustment
to the reflected carrying values.

     Realized  and  unrealized  gains  and  losses  are  based  on the  specific
identification method.

     Declines   in  the  fair   value   of   individual   held-to-maturity   and
available-for-sale  securities  below  their cost that are  other-than-temporary
result in  write-downs  of the  individual  securities to their fair value.  The
related write-downs are included in earnings as realized losses.

The Company has no available-for-sale or trading securities.

Loans Held-for-Sale

     Loans  held-for-sale  are carried at the lower of aggregate cost or market.
The cost of loans  held-for-sale is the note amount plus certain net origination
costs less discounts  collected.  Gains and losses resulting from changes in the
market value of the inventory are netted. Any net gain that results is deferred;
any net loss that results is recognized  when  incurred.  The aggregate  cost of
loans held-for-sale at December 31, 2005 and 2004,  approximates their aggregate
net realizable  value.  Gains or losses on the sale of loans  held-for-sale  are
included in other income.

Loans

     Loans are stated at unpaid principal balances,  less the allowance for loan
losses, unearned discounts, and net deferred loan fees.

     Unearned  discounts on installment  loans are recognized as income over the
term of the loans using a method that approximates the interest method.


                                       44
<PAGE>

                          FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003

Note 1 - Summary of Significant Accounting Policies - Continued

     Loan origination and commitment fees, as well as certain direct origination
costs,  are deferred and amortized as a yield  adjustment  over the lives of the
related loans using the interest method or the straight-line method.

Allowance for Loan Losses

     A loan is considered impaired,  based on current information and events, if
it is probable that the Bank will be unable to collect the scheduled payments of
principal or interest  when due according to the  contractual  terms of the loan
agreement.  Uncollateralized  loans are  measured  for  impairment  based on the
present  value of  expected  future  cash  flows  discounted  at the  historical
effective interest rate, while all  collateral-dependent  loans are measured for
impairment  based  on  the  fair  value  of  the  collateral.   Smaller  balance
homogeneous  loans,  which consist of residential  mortgages and consumer loans,
are evaluated collectively and reserves are established based on historical loss
experience.

     The allowance for loan losses is established through charges to earnings in
the  form of a  provision  for  loan  losses.  Increases  and  decreases  in the
allowance due to changes in the measurement of the impaired loans are considered
in the  provision for loan losses.  Loans  continue to be classified as impaired
unless they are brought fully current and the  collection of scheduled  interest
and  principal  is  considered  probable.  When a loan or  portion  of a loan is
determined to be  uncollectible,  the portion  deemed  uncollectible  is charged
against the allowance  and  subsequent  recoveries,  if any, are credited to the
allowance.

     Management's  periodic evaluation of the adequacy of the allowance is based
on the  Bank's  past  loan loss  experience,  known  and  inherent  risks in the
portfolio,  adverse  situations that may affect the borrowers' ability to repay,
estimated  value  of any  underlying  collateral,  and an  analysis  of  current
economic  conditions.  While  management  believes that it has  established  the
allowance in accordance with generally  accepted  accounting  principles and has
taken into  account the views of banking  regulators  and the  current  economic
environment,  there can be no assurance that in the future the Bank's regulators
or its economic environment will not require further increases in the allowance.

Income Recognition on Impaired and Nonaccrual Loans

     Loans,  including impaired loans, are generally classified as nonaccrual if
they are past due as to  maturity  or payment of  principal  or  interest  for a
period of more than 90 days,  unless such loans are well  collateralized  and in
the process of  collection.  If a loan or a portion of a loan is  classified  as
doubtful or is  partially  charged  off,  the loan is  generally  classified  as
nonaccrual.  Loans that are on a current payment status or past due less than 90
days may also be  classified  as  nonaccrual  if  repayment in full of principal
and/or interest is in doubt.

     Loans may be returned to accrual  status when all  principal  and  interest
amounts  contractually  due  are  reasonably  assured  of  repayment  within  an
acceptable  period  of  time,  and  there is a  sustained  period  of  repayment
performance  by the  borrower,  in  accordance  with  the  contractual  terms of
interest and principal.

                                       45
<PAGE>

                          FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003

Note 1 - Summary of Significant Accounting Policies - Continued

     While a loan is classified as nonaccrual and the future  collectability  of
the recorded loan balance is doubtful, collections of interest and principal are
generally applied as a reduction to principal outstanding, except in the case of
loans with scheduled amortizations where the payment is generally applied to the
oldest payment due. When the future  collectability of the recorded loan balance
is expected,  interest  income may be  recognized  on a cash basis.  In the case
where a nonaccrual loan has been partially charged off,  recognition of interest
on a cash  basis is limited to that  which  would  have been  recognized  on the
recorded loan balance at the  contractual  interest rate.  Receipts in excess of
that amount are recorded as  recoveries  to the  allowance for loan losses until
prior  charge-offs  have been fully recovered.  Interest income  recognized on a
cash basis was immaterial for the years ended December 31, 2005, 2004 and 2003.

Premises and Equipment

     Land is carried at cost.  Other  premises and  equipment are stated at cost
less accumulated depreciation. Expenditures for additions and major improvements
that  significantly  extend  the useful  lives of the  assets  are  capitalized.
Expenditures for repairs and maintenance are charged to expense as incurred. The
carrying  values of assets  traded in are used to adjust the carrying  values of
the new assets  acquired by trade.  Assets that are disposed of are removed from
the accounts and the resulting gains or losses are recorded in operations.

     Depreciation is provided generally by accelerated and straight-line methods
based on the estimated useful lives of the respective assets.

Foreclosed Real Estate

     Foreclosed  real estate  includes  both  formally  foreclosed  property and
in-substance  foreclosed property.  In-substance foreclosed properties are those
properties for which the institution has taken physical  possession,  regardless
of whether formal foreclosure proceedings have taken place.

     At the time of foreclosure, foreclosed real estate is recorded at the lower
of the  carrying  amount or fair  value  less cost to sell,  which  becomes  the
property's new basis. Any write-downs based on the asset's fair value at date of
acquisition  are charged to the  allowance for loan losses.  After  foreclosure,
these assets are carried at the lower of their new cost basis or fair value less
cost  to  sell.  Costs  incurred  in  maintaining  foreclosed  real  estate  and
subsequent  adjustments  to the carrying  amount of the property are included in
income (loss) on foreclosed real estate.

Retirement Plan

     During 2003 the Company had a defined  contribution Pension Plan, which was
terminated as of December 31, 2003. The Company also has a  Profit-Sharing  Plan
covering all  eligible  employees  that was amended as of December 31, 2003,  to
allow employee elective  contributions under Internal Revenue Code section 401K.
The Company also adopted an Employee Stock  Ownership Plan ("ESOP"),  which also
allows elective employee contributions.  Employer contributions to the plans are
included in salaries


                                       46
<PAGE>

                          FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003

Note 1 - Summary of Significant Accounting Policies - Continued

     and employee benefits expense.  Pension Plan contributions were required at
10 percent of total  eligible  employee  compensation.  Profit-Sharing  and ESOP
contributions  are  determined by the board of  directors.  The Company also has
deferred  compensation plans with certain executive officers and directors.  The
Company  contributes  amounts to the pension fund  sufficient to satisfy funding
requirements of the Employee Retirement Income Security Act.

Advertising Costs

     The  Company's  policy  is  to  expense   advertising  costs  as  incurred.
Advertising  expense  for the  years  ended  December  31,  2005,  2004 and 2003
amounted to approximately $288,000, $265,000, and $222,000, respectively.

Income Taxes

     Income taxes are provided for the tax effects of the transactions  reported
in the  financial  statements  and consist of taxes  currently due plus deferred
taxes related  primarily to  differences  between the basis of the allowance for
loan  losses,  accumulated  depreciation,  and  accrued  employee  benefits  for
financial  and income tax  reporting.  The deferred  tax assets and  liabilities
represent the future tax return  consequences of those  differences,  which will
either be taxable or deductible when the assets and liabilities are recovered or
settled.  Deferred tax assets and  liabilities are reflected at income tax rates
applicable  to the period in which the  deferred tax assets or  liabilities  are
expected to be realized or settled. As changes in tax laws or rates are enacted,
deferred tax assets and  liabilities  are  adjusted  through the  provision  for
income taxes.

Stock-Based Compensation

     The Company has a stock-based employee compensation plan. The plan has been
accounted  for  under  the  provisions  of  Statement  of  Financial  Accounting
Standards ("SFAS") No. 123, Accounting for Stock-Based Compensation, as provided
by SFAS No. 148,  Accounting  for  Stock-Based  Compensation  -  Transition  and
Disclosure. SFAS No. 148 allows for a prospective method of adoption of SFAS No.
123, whereas,  the Company can prospectively  account for the current expense of
options  granted  during  2003 and  thereafter.  Options  granted  prior to 2003
continue to be accounted for under the recognition and measurement provisions of
APB  No.  25,  Accounting  for  Stock  Issued  to  Employees,  and  the  related
Interpretations.  The compensation  cost recognized for stock options granted in
2003,  2004,  and 2005  was  calculated  based on the fair  value at the date of
grant.  In  accordance  with the  transition  provisions  of SFAS No. 148,  this
compensation  expense has been included in net income for all periods presented.
The  unrecognized  compensation  expense for options  granted  prior to 2003 was
immaterial for the years ended December 31, 2003,  2004, and 2005.  Accordingly,
the pro forma basic and  diluted  earnings  per share of the Company  that would
result from this  unrecognized  compensation are  approximately the same as that
reported.  On  January  1st of  2006,  the  Company  adopted  SFAS  No.  123(R),
Share-Based  Payment.  The Company  adopted  SFAS No.  123(R) using the modified
prospective method for interim periods for stock option expense,  as provided by
SFAS No. 148. The adoption of SFAS No. 123(R) is not expected to have a material
effect on the Company's consolidated operating results.

                                       47
<PAGE>

                          FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003

Note 1 - Summary of Significant Accounting Policies - Continued

     The  following  table  illustrates  the total  stock  compensation  expense
recorded in salaries and employee benefits expense for each quarter of 2005.
<TABLE>
<CAPTION>

                                             First         Second          Third          Fourth          Total
                                        -------------  -------------   -------------  -------------  --------------

<S>                                     <C>            <C>             <C>            <C>            <C>
Stock option expense..................  $      13,553  $      15,947   $      23,222  $       4,061  $       56,783
Tax benefit...........................             --             --              --             --              --
</TABLE>

     The Company has used the  Black-Scholes  option pricing model for all grant
date  estimations of fair value under SFAS No. 123 and will continue to use this
model as the Company  believes that its stock options have  characteristics  for
which the Black-Scholes  model provides an acceptable measure of fair value. The
expected  term of an option  represents  the  period  of time  that the  Company
expects the options granted to be  outstanding.  The Company bases this estimate
on a number of factors  including  vesting  period,  historical  data,  expected
volatility,  and blackout  periods.  The expected  volatility used in the option
pricing calculation is estimated considering historical volatility.  The Company
believes  that  historical  volatility  is a  good  predictor  of  the  expected
volatility.  The expected  dividend yield represents the expected  dividend rate
that will be paid out on the  underlying  shares during the expected term of the
option,  taking into  account any expected  dividend  increases.  The  Company's
options do not permit  option  holders to receive  dividends  and  therefore the
expected dividend yield was factored into the calculation. The risk-free rate is
assumed to be a short-term  treasury  rate on the date of grant,  such as a U.S.
Treasury zero-coupon issue with a term equal to the expected term of the option.

     Stock  option  expense was computed  with the  following  weighted  average
assumptions as of the grant dates:
<TABLE>
<CAPTION>

                                                                        Years Ended December 31,
                                                     --------------------------------------------------------------
                                                            2005                  2004                  2003
                                                     ------------------    ------------------    ------------------
Assumptions:
<S>                                                                <C>                  <C>                   <C>
   Average risk free interest rate................                 4.47%                3.97%                 3.31%
   Average expected volatility....................                13.00                11.10                  6.60
   Expected dividend yield........................                 1.50                 3.75                  3.17
   Expected life..................................            8.0 Years             8.0 Years             6.6 Years
</TABLE>

     Prior to the adoption of SFAS No. 123(R),  forfeitures  were  recognized as
they occurred. The effect of adopting SFAS No. 123(R), which includes the impact
of changing from the prior method of  recognizing  forfeitures  as they occur to
estimating forfeitures at the grant date, is not expected to be material.

Off-Balance Sheet Financial Instruments

     In the ordinary course of business the Company has entered into off-balance
sheet  financial  instruments   consisting  of  commitments  to  extend  credit,
commercial  letters of credit and  standby  letters  of credit.  Such  financial
instruments are recorded in the financial statements when funded.

                                       48
<PAGE>

                          FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003

Note 1 - Summary of Significant Accounting Policies - Continued

     The Bank has  available  as a source of financing a line of credit with the
Federal   Home  Loan  Bank  of  Atlanta   that  is  limited  to  15%  of  assets
(approximately  $136,000,000  at  December  31,  2005),  of which  approximately
$76,000,000 was available and unused.  The ability to utilize the remaining line
is dependent on the amount of eligible collateral that is available to pledge to
the Federal Home Loan Bank.

     The Bank has  available  as a source of financing a line of credit with the
Federal  Reserve  Bank of Atlanta  that is  limited  to a percent of  collateral
value, the percent  determined by the type of collateral.  At December 31, 2005,
approximately  $4,200,000  was available and unused.  The ability to utilize the
line is  dependent  on the amount of eligible  collateral  that is  available to
pledge to the Federal Reserve Bank of Atlanta.

     The Bank  also  has  available  as a source  of  short-term  financing  the
purchase of federal funds from other  commercial  banks and commercial  lines of
credit.  At  December  31,  2005,  the total  amount  available  for  short-term
financing was $30,000,000.

     The Company  has  available  a  $5,000,000  line of credit with the Bankers
Bank.  This line is  secured  by 51% of the  Bank's  common  stock and is due on
demand by the  lender.  At December  31,  2005,  $5,000,000  was  available  for
additional funding.

Segment Information

     All of the  Company's  offices offer  similar  products and  services,  are
located in the same geographic  region,  and serve the same customer segments of
the market. As a result, management considers all units as one operating segment
and therefore feels that the basic consolidated financial statements and related
footnotes provide details related to segment reporting.

Reclassifications

     Certain amounts in 2004 and 2003 have been reclassified to conform with the
2005 presentation.

Recently Issued Accounting Standards

     In January 2003, the Auditing  Standards Board issued Statement on Auditing
Standards  ("SAS") No. 101,  Auditing Fair Value  Measurements  and Disclosures.
This statement  establishes standards on auditing the measurement and disclosure
of assets, liabilities, and specific components of equity presented or disclosed
at fair  value in  financial  statements.  This SAS is  effective  for audits of
financial  statements  for  periods  beginning  on or after June 15,  2003.  The
adoption  of SAS  No.  101 did  not  have a  material  impact  on the  Company's
consolidated financial statements.

     In April 2003, the Financial  Accounting  Standards  Board ("FASB")  issued
SFAS No. 149,  Amendment of Statement 133 on Derivative  Instruments and Hedging
Activities. The provisions of this statement are effective for contracts entered
into or modified after June 20, 2003, and hedging relationships designated after
June  30,  2003,  and  generally   require  that   contracts   with   comparable
characteristics be accounted for similarly. Except for the provisions related to
FASB Statement 133, Accounting for Derivative


                                       49
<PAGE>

                          FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003

Note 1 - Summary of Significant Accounting Policies - Continued

     Instruments and Hedging Activities, all provisions of this statement should
be applied  prospectively.  The provisions of the statement related to Statement
133  Implementation  Issues that have been  effective  for fiscal  quarters that
begin prior to June 15, 2003,  should  continue to be applied in accordance with
their  respective  effective  dates.  The  adoption  of the  provisions  of this
statement did not have a material effect on the Company's  operating  results or
financial position.

     In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with  Characteristics of both Liabilities and Equity. This statement
establishes  standards  for  how  an  issuer  classifies  and  measures  certain
financial  instruments with  characteristics  of both liabilities and equity. It
requires  liability  treatment  for  certain  financial  instruments  which  had
previously  been  recognized as equity.  The  provisions  of this  statement are
effective for financial instruments entered into or modified after May 31, 2003,
and  otherwise  are  effective  at the  beginning  of the first  interim  period
beginning  after  June  15,  2003.  It is to be  implemented  by  reporting  the
cumulative effect of a change in accounting principle for financial  instruments
created  before May 15, 2003, and still existing at the beginning of the interim
period of adoption. Restatement is not permitted. The adoption of the provisions
of this  statement  did not have a material  effect on the  Company's  operating
results or financial position.

     In  December  2003,  the FASB  revised  previously  issued  SFAS  No.  132,
Employers'  Disclosures about Pensions and Other Postretirement  Benefits.  This
statement  revises   employers'   disclosures  about  pension  plans  and  other
postretirement  benefit plans. It does not change the measurement or recognition
of those plans  required by FASB  Statements No. 87,  Employers'  Accounting for
Pensions,  No. 88,  Employers'  Accounting for Settlements  and  Curtailments of
Defined  Benefit  Pension  Plans  and for  Termination  Benefits,  and No.  106,
Employers'  Accounting for  Postretirement  Benefits  Other Than Pensions.  This
statement  retains the disclosure  requirements  contained in FASB Statement No.
132, Employers'  Disclosures about Pensions and Other  Postretirement  Benefits,
which it replaces.  It requires additional  disclosures to those in the original
Statement No. 132 about the assets,  obligations,  cash flows,  and net periodic
benefit  cost of  defined  benefit  pension  plans  and  other  defined  benefit
postretirement plans. The required information should be provided separately for
pension plans and for other postretirement benefit plans. The provisions of this
statement are effective for financial  statements with fiscal years ending after
December 15, 2003. The interim-period disclosures required by this statement are
effective for interim periods beginning after December 15, 2003. The adoption of
the provisions of this revised  statement did not have a material  effect on the
Company's consolidated financial position or operating results.

     In  December   2003,   the  FASB  revised   previously   issued   Financial
Interpretation  ("FIN") No. 46,  Consolidation  of Variable  Interest  Entities,
which  clarifies the  application of Accounting  Research  Bulletin  ("ARB") 51,
Consolidated Financial Statements, to certain entities (called variable interest
entities)  in  which  equity  investors  do not have  the  characteristics  of a
controlling  financial interest or do not have sufficient equity at risk for the
entity to finance  its  activities  without  additional  subordinated  financial
support from other  parties.  The new  interpretation  is referred to as FIN No.
46(R).  The reporting and disclosure  requirements  of this  Interpretation  are
effective for all financial  statements of public companies for the first period
ending after  December 15, 2003, and for all other types of entities for periods
ending after March 15, 2004. The adoption of this  Interpretation did not have a
material impact on the Company's consolidated financial statements.

                                       50
<PAGE>

                          FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003

Note 1 - Summary of Significant Accounting Policies - Continued

     In December  2003,  the  Accounting  Standards  Executive  Committee of the
American  Institute of Certified Public Accountants issued Statement of Position
("SOP")  03-3,  Accounting  for Certain Loans or Debt  Securities  Acquired in a
Transfer,  which  addresses the accounting for differences  between  contractual
cash flows and expected  cash flows for loans  acquired in a transfer when those
differences  are  attributable  at least in part to a decline in credit quality.
The scope of SOP 03-3 includes loans where there is evidence of deterioration in
credit quality since origination,  and includes loans acquired individually,  in
pools or as part of a  business  combination.  Under  SOP 03-3,  the  difference
between  expected cash flows and the purchase price is accreted as an adjustment
to yield over the life. The adoption of SOP 03-03 did not have a material impact
on the Company's consolidated financial position or operating results.

     In March 2004, the Emerging Issues Task Force ("EITF")  reached a consensus
on the  remaining  portions of EITF 03-01,  The Meaning of  Other-Than-Temporary
Impairment and It's Application to Certain Investments,  effective for the first
fiscal year or interim period beginning after June 15, 2004. EITF 03-01 provides
guidance for  determining  when an investment is  considered  impaired,  whether
impairment is  other-than-temporary,  and measurement of an impairment  loss. An
investment  is considered  impaired if the fair value of the  investment is less
than its cost.  Generally,  an  impairment  is  considered  other-than-temporary
unless:  (1) the investor has the ability and intent to hold an investment for a
reasonable  period of time sufficient for an anticipated  recovery of fair value
up to (or beyond) the cost of the investment,  and (2) evidence  indicating that
the cost of the  investment is  recoverable  within a reasonable  period of time
outweighs  evidence  to  the  contrary.   If  impairment  is  determined  to  be
other-than-temporary,  then an impairment loss should be recognized equal to the
difference between the investment's cost and its fair value.  Certain disclosure
requirements of EITF 03-01 were adopted in 2003 and the Company began presenting
the new disclosure requirements in its consolidated financial statements for the
year ended December 31, 2003. The recognition  and  measurement  provisions were
initially effective for other-than-temporary impairment evaluations in reporting
periods  beginning  after June 15, 2004.  In June 2005,  the FASB decided not to
provide additional guidance on the meaning of  other-than-temporary  impairment,
but  directed  the  staff to issue  proposed  FSP  EITF  03-1-a,  Implementation
Guidance  for the  Application  of Paragraph 16 of EITF Issue No. 03-1 as final.
However,  in  November  2005 FASB  issued  FASB  Staff  Position  (retitled  FSP
115-1/124-1), The Meaning of Other-Than-Temporary Impairment and its Application
to  Certain  Investments.  This  FSP  provides  additional  guidance  on when an
investment in a debt or equity security  should be considered  impaired and when
that impairment  should be considered  other-than-temporary  and recognized as a
loss in earnings.  Specifically,  the guidance clarifies that an investor should
recognize  an  impairment  loss no later  than  when the  impairment  is  deemed
other-than-temporary, even if a decision to sell has not been made. The FSP also
requires  certain  disclosures  about  unrealized  losses  that  have  not  been
recognized as other-than-temporary impairments. The Company applied the guidance
in  this  FSP in 2005  and  there  was no  material  affect  to the  results  of
operations or the statement of financial position.

     In  March  2004,  the  Securities  and  Exchange  Commission  issued  Staff
Accounting  Bulletin  ("SAB") No. 105,  Application of Accounting  Principles to
Loan Commitments. SAB 105 requires that the fair value


                                       51
<PAGE>

                          FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003

Note 1 - Summary of Significant Accounting Policies - Continued

     measurement of mortgage loan  commitments,  which are derivatives,  exclude
any expected future cash flows related to the customer relationship or servicing
rights.  The  guidance in SAB 105 must be applied to mortgage  loan  commitments
entered  into after March 31,  2004.  The impact on the Company is not  material
given the declines in mortgage banking volume,  but could be in the future.  The
impact is  primarily  the  timing of when  gains  should  be  recognized  in the
financial statements.

     In December  2004,  the FASB issued SFAS No. 123 (revised  2004),  entitled
Share-Based  Payment ("SFAS No.  123(R)") that will require  compensation  costs
related to share-based  payment  transactions  to be recognized in the financial
statements.  This  statement  eliminates  the  alternative  to use Opinion  25's
intrinsic  value  method of  accounting  that was  provided  in SFAS No.  123 as
originally  issued.  Under  Opinion  25,  issuing  stock  options  to  employees
generally  resulted in  recognition  of no  compensation  cost.  This  statement
requires  entities  to  recognize  the cost of  employee  services  received  in
exchange for awards of equity  instruments based on the grant-date fair value of
those awards (with limited  exceptions).  Recognition of that  compensation cost
helps  users  of  financial   statements  to  better   understand  the  economic
transactions  affecting  an  entity  and  to  make  better  resource  allocation
decisions. The Company is currently evaluating the provisions of SFAS No. 123(R)
and will adopt it on January 1, 2006, the effective date of this statement.  The
adoption of this  statement  is not  expected  to have a material  impact on the
consolidated financial statements.

     On  December  16,  2004,  the  FASB  issued  SFAS  No.  153,  Exchanges  of
Nonmonetary  Assets, an amendment of APB Opinion No. 29. SFAS No. 153 amends the
principle that  exchanges of nonmonetary  assets should be measured based on the
fair  value  of the  assets  exchanged  and  more  broadly  provides  exceptions
regarding exchanges of nonmonetary assets that do not have commercial substance.
A nonmonetary  exchange has  commercial  substance when the future cash flows of
the entity are expected to change significantly as a result of the exchange. The
provisions  of SFAS  No.  153 are  effective  for  nonmonetary  asset  exchanges
occurring in periods beginning after June 15, 2005.  Management does not believe
that the adoption of this standard will have a material  impact on the financial
condition or the operating results of the Company.

     In May 2005,  the FASB issued SFAS No.  154,  Accounting  Changes and Error
Corrections, which replaces APB Opinion No. 20, Accounting Changes, and SFAS No.
3, Reporting Accounting Changes in Interim Financial Statements--An Amendment of
APB Opinion No. 28. SFAS No. 154 changes the requirements for the accounting and
reporting  of a change in  accounting  principle.  It applies  to all  voluntary
changes in accounting  principle as well as to changes required by an accounting
pronouncement that does not include specific transition provisions. SFAS No. 154
eliminates  the  requirement  in APB Opinion  No. 20 to include  the  cumulative
effect of changes in accounting  principle in the income statement in the period
of change.  Instead,  to enhance the  comparability  of prior  period  financial
statements,  SFAS No. 154  requires  that  changes in  accounting  principle  be
retrospectively  applied.  Under retrospective  application,  the new accounting
principle is applied as of the  beginning  of the first  period  presented as if
that  principle  had always been used.  The  cumulative  effect of the change is
reflected in the carrying value of assets and liabilities as of the first period
presented  and the  offsetting  adjustments  are  recorded  to opening  retained
earnings.  Each period  presented  is  adjusted  to reflect the  period-specific
effects of applying the change. SFAS No. 154 also redefines "restatement" as the
revising of previously issued


                                       52
<PAGE>

                          FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003

Note 1 - Summary of Significant Accounting Policies - Continued

     financial  statements to reflect the  correction  of an error.  Only direct
effects of the change  will be included in the  retrospective  application;  all
indirect  effects  will  be  recognized  in  the  period  of  change.  If  it is
impracticable to determine the cumulative effect for all prior periods,  the new
accounting principle should be applied as if it were adopted  prospectively from
the earliest date practicable.  SFAS No. 154 is effective for accounting changes
and  corrections  of errors made in fiscal years  beginning  after  December 15,
2005.

     In February  2006,  the FASB issued SFAS No. 155  entitled  Accounting  for
Certain Hybrid Financial Instruments. SFAS No. 155 amends SFAS No. 133, entitled
Accounting for Derivative Instruments and Hedging Activities,  and SFAS No. 140,
entitled  Accounting  for  Transfers  and  Servicing  of  Financial  Assets  and
Extinguishments of Liabilities.  This statement permits fair value remeasurement
of certain hybrid  financial  instruments  containing  embedded  derivatives and
requires evaluation of securitized  financial assets for purposes of identifying
items of a derivative nature. The statement includes further clarification as to
the derivative classification of selected financial instruments.  The provisions
of SFAS No. 155 are effective for all financial  instruments  acquired or issued
after the  beginning of the first fiscal year that begins  after  September  15,
2006.  The fair value  "election"  within the  literature  may be utilized  upon
adoption  of the  guidance  related  to hybrid  financial  instruments.  Earlier
adoption is  permitted  as of the  beginning  of a fiscal  year,  provided  that
reporting  entities have not yet issued  financial  statements.  The  provisions
within SFAS No. 155 may be applied to instruments "held" at the date of adoption
on an  instrument-by-instrument  basis. At adoption,  any difference between the
total  carrying  amount of the  individual  components  of the  existing  hybrid
financial  instrument  and the  fair  value  of the  combined  hybrid  financial
instrument should be recognized as a  cumulative-effect  adjustment to beginning
retained earnings. Reporting entities should separately disclose the gross gains
and  losses  that make up the  cumulative-effect  adjustment,  determined  on an
instrument-by-instrument  basis.  Prior  periods  should  not be  restated.  The
Company does not expect the adoption of this statement to have a material effect
on the consolidated financial statements.

Earnings Per Common Share

     Basic earnings per common share are computed by dividing earnings available
to  stockholders  by the weighted  average  number of common shares  outstanding
during the period.  Diluted  earnings per share  reflect per share  amounts that
would have  resulted if dilutive  potential  common stock had been  converted to
common stock, as prescribed by SFAS No. 128,  Earnings per Share.  All per share
amounts  included  in  these   consolidated   financial   statements  have  been
retroactively  adjusted to reflect the effects of the  1.2-for-1.0  stock splits
which  occurred  during 2005,  2004,  and 2003.  The  following  reconciles  the
weighted average number of shares outstanding:
<TABLE>
<CAPTION>

                                                            2005                  2004                  2003
                                                     ------------------    ------------------    ------------------

Weighted average of common
<S>                                                           <C>                   <C>                   <C>
   shares outstanding.............................            5,476,205             5,419,554             5,396,603
Effect of dilutive options........................               52,972                58,589                41,573
                                                     ------------------    ------------------    ------------------

Weighted average of common shares
   outstanding effected for dilution..............            5,529,177             5,478,143             5,438,176
                                                     ==================    ==================    ==================
</TABLE>

                                       53
<PAGE>

                          FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003

Note 1 - Summary of Significant Accounting Policies - Continued

     In October 2005,  December  2004,  and December  2003,  the Company  issued
1.2-for-1.0 stock splits.  All per share amounts included in these  consolidated
financial  statements have been  retroactively  adjusted to give effect to these
splits.

Comprehensive Income

     Comprehensive  income is  generally  defined  as the  change in equity of a
business  enterprise  during a period  from  transactions  and other  events and
circumstances from non-owner sources. It includes all changes in equity during a
period except those resulting from  investments by owners and  distributions  to
owners.  Comprehensive income is the total of net income and all other non-owner
changes in equity. Items that are to be recognized under accounting standards as
components of comprehensive  income are displayed in statements of shareholders'
equity.

     In  the  calculation  of  comprehensive  income,  certain  reclassification
adjustments  are made to avoid double  counting items that are displayed as part
of net  income  for a  period  that  also had  been  displayed  as part of other
comprehensive  income in that period or earlier periods. The Company has no such
items to be reclassified at December 31, 2005, 2004 and 2003.

Statements of Cash Flows

     The Company  includes cash, due from banks, and certain cash equivalents in
preparing the statements of cash flows. The following is supplemental disclosure
to the statements of cash flows for the three years ended December 31, 2005.
<TABLE>
<CAPTION>

                                                                        Years Ended December 31,
                                                     --------------------------------------------------------------
                                                            2005                  2004                  2003
                                                     ------------------    ------------------    ------------------

<S>                                                  <C>                   <C>                   <C>
   Cash paid during the year for interest.........   $       16,393,420    $        8,650,839    $       11,088,782

   Cash paid during the year for income
     taxes, net...................................           12,644,132             8,159,604             6,550,908

   Non-cash Disclosures:

   Loans transferred to foreclosed
     real estate during the year..................                   --                62,346             6,371,833

   Proceeds from sale of foreclosed real
     estate financed through loans................                   --             3,891,469                    --
</TABLE>


                                       54
<PAGE>
                          FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003


Note 2 - Restrictions on Cash and Due from Bank Accounts

     The Bank is required by regulatory  authorities to maintain average reserve
balances  either in vault  cash or on  deposit  with the  Federal  Reserve.  The
average  amount of those reserves  required at December 31, 2005 and 2004,  were
approximately $12,364,000 and $8,879,000, respectively.


Note 3 - Securities

     The  carrying  amounts  of  securities  held-to-maturity  as  shown  in the
consolidated statements of financial condition and their approximate fair values
at December 31, 2005 and 2004 were as follows:
<TABLE>
<CAPTION>

                                                                      Gross            Gross           Estimated
                                                  Amortized        Unrealized       Unrealized           Fair
                                                    Cost              Gains           Losses             Value
                                               ---------------  ---------------   ---------------  ----------------

Securities Held-to-Maturity

December 31, 2005:
   U. S. Government and
<S>                                            <C>              <C>               <C>              <C>
     agency securities......................   $     1,997,481  $             --  $        58,681  $      1,938,800
   Mortgage-backed securities...............        59,035,690            18,534        1,702,770        57,351,454
                                               ---------------  ----------------  ---------------  ----------------

                                               $    61,033,171  $         18,534  $     1,761,451  $     59,290,254
                                               ===============  ================  ===============  ================

December 31, 2004:
   U. S. Government and
     agency securities......................   $     1,996,586  $             --  $         9,186  $      1,987,400
   Mortgage-backed securities...............        67,333,574            96,466          425,576        67,004,464
                                               ---------------  ----------------  ---------------  ----------------

                                               $    69,330,160  $         96,466  $       434,762  $     68,991,864
                                               ===============  ================  ===============  ================
</TABLE>

     The  carrying  amounts  of  other  investment  securities  as  shown in the
consolidated  statements  of  financial  condition at December 31, 2005 and 2004
were as follows:

Other Investment Securities
<TABLE>
<CAPTION>

                                                                                  2005                  2004
                                                                           ------------------    ------------------

<S>                                                                        <C>                   <C>
Federal Home Loan Bank stock...........................................    $        4,020,100    $        3,750,100
Investment in Capital Security Investors, LLC..........................               500,000               500,000
Independent Bankers Bank of Florida....................................               308,058               308,058
Investment in FCBI Capital Trust I.....................................               310,000               310,000
The Bankers Bank stock.................................................                71,107                66,919
                                                                           ------------------    ------------------

                                                                           $        5,209,265    $        4,935,077
                                                                           ==================    ==================
</TABLE>

                                       55
<PAGE>
                          FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003


Note 3 - Securities - Continued

     The following table shows our investments' gross unrealized losses and fair
value,  aggregated  by  investment  category and length of time that  individual
securities have been in a continuous  unrealized loss position,  at December 31,
2005.
<TABLE>
<CAPTION>

                                   Less Than 12 Months           12 Months or More                 Total
                               ---------------------------  --------------------------  ---------------------------
                                    Fair       Unrealized       Fair        Unrealized       Fair        Unrealized
   Description of Securities        Value        Losses         Value         Losses         Value         Losses
-----------------------------  -------------   -----------  -------------  -----------  -------------   -----------

U.S. Government and
<S>                            <C>              <C>           <C>            <C>          <C>             <C>
   agency securities.........  $          --   $        --  $   1,938,800  $    58,681  $   1,938,800   $    58,681
Mortgage-backed
   securities................      9,453,814       253,172     46,543,445    1,449,598     55,997,259     1,702,770
                               -------------   -----------  -------------  -----------  -------------   -----------

     Total...................  $   9,453,814   $   253,172  $  48,482,245  $ 1,508,279  $  57,936,059   $ 1,761,451
                               =============   ===========  =============  ===========  =============   ===========
</TABLE>

     U.S.  Government  and  Agency  Securities  - The  urealized  losses  on the
Company's  investments in direct  obligations of U.S.  government  agencies were
caused by interest rate increases, The contractual terms of those investments do
not  permit  the  issuer  to  settle  the  securities  at a price  less than the
amortized cost of the investment. Because the Company has the ability and intent
to hold this  investment  until  maturity,  the Company does not  consider  this
investment to be other-than-temporarily impaired at December 31, 2005

     Mortgage-Backed  Securities  -  The  unrealized  losses  on  the  Company's
investment in mortgage-backed securities were caused by interest rate increases.
The contractual  cash flows of those  investments are guaranteed by an agency of
the U.S. government.  Accordingly,  it is expected that the securities would not
be settled at a price less than the amortized cost of the Company's  investment.
Because the decline in market value is attributable to changes in interest rates
and not credit quality,  and because the Company has the ability and intent,  to
hold those  investments  until  maturity,  the Company does not  consider  those
investments to be other-than-temporarily impaired at December 31, 2005.

     Other Investment Securities - The aggregate carrying value of the Company's
cost-method   investments   totaled  $5,209,265  at  December  31,  2005.  These
investments  were not evaluated for  impairment  because (a) the Company did not
estimate the fair value of those  investments in accordance  with  paragraphs 14
and 15 of SFAS No.  107 and (b) the  Company  did not  identify  any  events  or
changes in circumstances  that may have had a significant  adverse effect on the
fair  value of those  investments.  The  Company  estimated  that the fair value
exceeded the cost of investments  (that is, the investments  were not impaired).
Included in this amount are restricted investments in the Federal Home Loan Bank
of Atlanta ($4,020,100), The Bankers Bank ($71,107), and the Independent Bankers
Bank of Florida  ($308,058).  The  investment in FCBI Capital Trust I represents
the Company's $310,000 capitalization of a newly-formed subsidiary trust created
to issue preferred  securities.  This  investment  represents 100 percent of the
common stock issued by the trust,  however, in accordance with the provisions of
FIN No. 46(R), this subsidiary has not been consolidated into these consolidated
financial statements (see Note 9).


                                       56
<PAGE>
                          FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003


Note 3 - Securities - Continued

     The  remaining  $500,000  of  cost-method  investments  consists  of a  20%
investment in Capital Security Investments,  LLC. The investment venture is held
with four other financial institutions for the purpose of buying trust preferred
securities.  The cost method is used because the Company  cannot  influence  the
decision making process by virtue of its 20% equal investment and the immaterial
nature of the LLC's operations.

     The contractual  maturities of securities  held-to-maturity at December 31,
2005, are shown below. Actual maturities may differ from contractual  maturities
because  borrowers  may have the  right to call or  prepay  obligations  with or
without call or prepayment penalties.
<TABLE>
<CAPTION>

                                                                                           Securities
                                                                                        Held-to-Maturity
                                                                           ----------------------------------------
                                                                                  Amortized                Fair
                                                                                    Cost                   Value
                                                                           ------------------    ------------------
<S>                                                                        <C>                    <C>
Due in one year or less................................................    $               --    $               --
Due after one year through five years..................................             2,054,667             1,995,823
Due after five years through ten years.................................             3,075,429             3,010,632
Due after ten years....................................................            55,903,075            54,283,799
                                                                           ------------------    ------------------

                                                                           $       61,033,171    $       59,290,254
                                                                           ==================    ==================
</TABLE>

     There were no gross  realized  gains and losses from the sale of securities
for the years ended December 31 2005, 2004, and 2003.

     Dispositions  through calls,  maturities,  and pay-downs resulted in no net
gain or loss during 2005, 2004 and 2003.

     Investment  securities  pledged to secure  public  funds on  deposit,  FHLB
advances  and for other  purposes as required by law  amounted to  approximately
$59,812,000 and $52,912,000 at December 31, 2005 and 2004, respectively.



              [The remainder of this page intentionally left blank]


                                       57
<PAGE>
                          FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003


Note 4 - Loans

     The Company  grants loans to customers  primarily  in  Charlotte,  Collier,
Glades, Hendry and Lee Counties of Southwest Florida.

     The major  classifications of loans as of December 31, 2005 and 2004 are as
follows:
<TABLE>
<CAPTION>

                                                                                  2005                  2004
                                                                           ------------------    ------------------

<S>                                                                        <C>                   <C>
Commercial, financial and agricultural.................................    $       37,308,721    $       51,378,263
Real estate - construction.............................................           467,853,910           270,016,418
Real estate - mortgage.................................................           280,229,840           222,373,241
Consumer...............................................................             7,501,870             8,086,107
Other..................................................................             2,356,236             2,180,902
                                                                           ------------------    ------------------
   Total...............................................................           795,250,577           554,034,931
Unearned income........................................................            (3,941,722)           (2,101,976)
Allowance for loan losses..............................................           (11,522,910)           (9,791,269)
                                                                           ------------------    ------------------

Net loans..............................................................    $      779,785,945    $      542,141,686
                                                                           ==================    ==================
</TABLE>

     Deposit  overdrafts  reclassified  as loans and  included in the other loan
category  amounted  to $745,439  and  $382,482,  at December  31, 2005 and 2004,
respectively.

     Information  about impaired loans as of and for the years ended December 31
is as follows:
<TABLE>
<CAPTION>

                                                                                  2005                  2004
                                                                           ------------------    ------------------

<S>                                                                        <C>                    <C>
Impaired loans with a specific valuation allowance.....................    $               --    $               --
Impaired loans without a specific valuation allowance..................               827,553             7,808,893
                                                                           ------------------    ------------------

Total impaired loans...................................................    $          827,553    $        7,808,893
                                                                           ==================    ==================

Average monthly balance of impaired loans
   (based on month-end balances).......................................    $        1,061,913    $        9,600,345
Related allowance for credit losses....................................               130,628             1,171,334
Interest income recognized on impaired loans...........................                 3,412               464,673
</TABLE>


     At December  31,  2005 and 2004,  the Company had loans past due 90 days or
more  and  still  accruing   interest  of   approximately   $106,000  and  $-0-,
respectively.

                                       58
<PAGE>
                          FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003


Note 4 - Loans - Continued

     Total  nonaccrual  loans  at  December  31,  2005  and  2004  consisted  of
approximately $194,000 and $247,000,  respectively. For the years ended December
31, 2005 and 2004, the difference  between gross interest income that would have
been  recorded  in such  period if the  nonaccruing  loans had been  current  in
accordance  with their original terms and the amount of interest income on those
loans that was included in such  period's net income was  approximately  $14,000
and $32,000,  respectively. The Bank has no commitments to loan additional funds
to the borrowers of nonaccrual loans.

     The Company has no commitments to lend additional funds to the borrowers of
nonaccrual loans.

     Net  unamortized  deferred  loan fees and  origination  costs  included  in
unearned  income  amounted to $3,941,722  and $2,101,976 as of December 31, 2005
and 2004.

     Commercial and residential real estate loans pledged to secure Federal Home
Loan Bank advances and letters of credit amounted to  approximately  $40,340,000
and  $38,457,000  at  December  31,  2005 and 2004,  respectively  (see Note 9).
Commercial  and  residential  real  estate  loans  pledged to secure the Federal
Reserve Bank line of credit amounted to approximately  $4,170,000 and $9,880,000
at December 31, 2005 and 2004, respectively.


Note 5 - Allowance for Loan Losses

     Changes in the allowance  for loan losses for the years ended  December 31,
2005, 2004 and 2003 were as follows:
<TABLE>
<CAPTION>

                                                            2005                  2004                  2003
                                                     ------------------    ------------------    ------------------

<S>                                                  <C>                   <C>                   <C>
   Balance at beginning of year...................   $        9,791,269    $        8,066,817    $        6,319,298

   Charge-offs....................................             (180,471)             (455,318)             (222,911)
   Recoveries.....................................              150,112               209,002               270,430
                                                     ------------------    ------------------    ------------------
     Net (charge-offs) recoveries.................              (30,359)             (246,316)               47,519
   Provision for loan losses......................            1,762,000             1,970,768             1,700,000
                                                     ------------------    ------------------    ------------------

   Balance at end of year.........................   $       11,522,910    $        9,791,269    $        8,066,817
                                                     ==================    ==================    ==================

</TABLE>



              [The remainder of this page intentionally left blank]


                                       59
<PAGE>
                          FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003


Note 6 - Premises and Equipment

Premises and equipment as of December 31, 2005 and 2004 is as follows:
<TABLE>
<CAPTION>

                                                                                  2005                  2004
                                                                           ------------------    ------------------

<S>                                                                        <C>                   <C>
   Land...............................................................     $        3,128,438    $        3,128,438
   Land improvements...................................................               567,594               409,011
   Building............................................................            10,788,536             9,974,358
   Furniture and equipment.............................................             4,642,568             3,889,338
   Automobiles.........................................................               368,519               352,194
   Construction in progress............................................               573,115             1,147,838
                                                                           ------------------    ------------------
                                                                                   20,068,770            18,901,177
   Accumulated depreciation............................................            (6,292,537)           (5,556,106)
                                                                           ------------------    ------------------

                                                                           $       13,776,233    $       13,345,071
                                                                           ==================    ==================
</TABLE>

     The provision for depreciation  charged to occupancy and equipment  expense
for the years ended December 31, 2005, 2004 and 2003 was $835,001, $711,547, and
$669,386, respectively.


Note 7 - Deposits

     The  aggregate  amounts of time  deposits of  $100,000  or more,  including
certificates  of deposit of $100,000 or more at December  31, 2005 and 2004 were
$341,816,538 and $184,621,865, respectively. Time deposits of less than $100,000
totaled $61,065,664 and $64,417,437 at December 31, 2005 and 2004, respectively.

     The  maturities  of time  certificates  of deposit and other time  deposits
issued by the Bank at December 31, 2005, are as follows:
<TABLE>
<CAPTION>

     Year Ending December 31,
<S>                <C>                                                                           <C>
                   2006......................................................................    $      280,976,026
                   2007......................................................................            98,150,481
                   2008......................................................................            16,620,761
                   2009......................................................................             3,693,885
                   2010......................................................................             3,272,125
                   2011......................................................................               168,924
                                                                                                 ------------------

                                                                                                 $      402,882,202
                                                                                                 ==================
</TABLE>



                                       60
<PAGE>
                          FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003


Note 8 - Short-term Borrowings

Short-term borrowings at December 31, 2005 and 2004 consist of the following:
<TABLE>
<CAPTION>

                                                                                  2005                  2004
                                                                           ------------------    ------------------

<S>                                                                        <C>                   <C>
Federal funds purchased................................................    $       24,988,000    $        3,851,000
Balance due on investment in limited liability
  investment company...................................................               100,000               100,000
Securities sold under agreements to repurchase.........................                    --            10,106,000
                                                                           ------------------    ------------------

                                                                           $       25,088,000    $       14,057,000
                                                                           ==================    ==================
</TABLE>

     Securities sold under  agreements to repurchase are reflected at the amount
of cash  received in connection  with the  transaction.  Information  concerning
securities sold under agreements to repurchase is summarized as follows:
<TABLE>
<CAPTION>

                                                                                  2005                  2004
                                                                           ------------------    ------------------

<S>                                                                        <C>                   <C>
Average balance during the year........................................    $        2,794,421    $          246,191
Average interest rate during the year..................................                 2.54%                 2.44%
Maximum month-end balance during the year..............................    $       10,106,000    $       10,106,000

U.S. Agency, municipal and mortgage-backed
  securities underlying the agreements at year end:

Carrying value.........................................................    $               --    $       10,302,842
Estimated fair value...................................................                    --            10,303,069

</TABLE>



              [The remainder of this page intentionally left blank]


                                       61
<PAGE>
                          FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003


Note 9 - Long-term Debt

     At December  31, 2005 and 2004,  the Company had  long-term  debt  totaling
$70,333,939 and $70,310,000, respectively.

Long-term debt consists of the following at December 31:
<TABLE>
<CAPTION>

                                                                                  2005                  2004
                                                                           ------------------    ------------------

Long-term  Federal Home Loan Bank advances,  with varying
  maturities from May 2006 through December 2014, the
  interest  rates have a variable base or are at a fixed rate between
  3.13% to 6.18%, secured by real estate mortgage loans and
<S>                                                                        <C>                  <C>
  pledged securities..................................................     $       60,000,000   $        60,000,000

Long-term  subordinated  debentures;  interest  rate prime plus
  0.5%,  the  debenture has a 30-year life with a call option of 5
  years, subject to regulatory approval...............................             10,310,000            10,310,000

Notes payable to Ford Motor Credit, with an interest rate of
  0.90%, interest and principal paid monthly over  a  3-year
  period, secured by a vehicle........................................                 23,939                    --
                                                                           ------------------    ------------------

                                                                           $       70,333,939   $        70,310,000
                                                                           ==================    ==================
</TABLE>

     In June 2002, the Company formed a wholly-owned Delaware statutory business
trust,  FCBI Capital Trust I, which issued  $10,000,000 of guaranteed  preferred
securities  representing  undivided  beneficial  interests  in the assets of the
trust ("Trust  Preferred  Securities").  The common  securities of the trust are
owned by the  Company.  The proceeds  from the  issuance of the Trust  Preferred
Securities ($10,000,000) and common securities ($310,000) were used by the trust
to purchase $10,310,000 of junior subordinated deferrable interest debentures of
the  Company.  The  debentures,  which  bear  interest  at Prime rate plus 0.5%,
represent the sole asset of the trust. The Company has fully and unconditionally
guaranteed all obligations of the Trust on a subordinated  basis with respect to
the Trust Preferred  Securities.  In accordance with the provisions of Financial
Interpretation No. 46R, the Company accounts for the Trust Preferred  Securities
as a long-term debt liability to the Trust in the amount of $10,310,000. Subject
to  certain  limitations,  the  Trust  Preferred  Securities  qualify  as Tier 1
capital.

     The Company has entered into an agreement,  which fully and unconditionally
guarantees  payment of accrued and unpaid  distributions  required to be paid on
the Trust Preferred  Securities,  with respect to any Trust Preferred Securities
called for redemption.

                                       62
                                     <PAGE>
                         FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003


Note 9 - Long-term Debt - Continued

     The Trust Preferred  Securities  mature in September 2032 and may be called
by the Company at any time after June 2007.

Maturities of long-term debt following December 31, 2005, are as follows:
<TABLE>
<CAPTION>

     Year Ending December 31,
<S>             <C>                                                                              <C>
                2006.........................................................................    $        5,009,906
                2007.........................................................................            10,009,906
                2008.........................................................................             5,004,127
                2009.........................................................................             5,000,000
                2010.........................................................................             5,000,000
                Thereafter...................................................................            40,310,000
                                                                                                 ------------------

                                                                                                 $       70,333,939
                                                                                                 ==================
</TABLE>


Note 10 - Shareholders' Equity

     At  December  31,  2005  and  2004,  shareholders'  equity  of the  Company
consisted of the following:

     Common Stock:  10,000,000  shares  authorized with a par value of $0.01 per
share. Voting rights equal to one vote per share.

     Paid-in Capital:  Represents the funds received in excess of par value upon
the  issuance  of stock,  net of issuance  costs and the related  effects of the
stock dividends and stock splits.

     Retained  Earnings:  Represents the accumulated net earnings of the Company
as reduced by dividends paid to  shareholders  and the effect of stock dividends
issued in previous periods.

     Stock Splits:  In December  2003,  the Company  issued a 1.2 for 1.0 common
stock split  resulting  in an increase  in the number of  outstanding  shares by
624,325.  In December  2004, the Company issued a 1.2 for 1.0 common stock split
resulting  in an increase  in the number of  outstanding  shares by 749,528.  In
October 2005, the Company  issued a 1.2 for 1.0 common stock split  resulting in
an  increase  in the  number of  outstanding  shares by  903,864.  All per share
amounts included in these consolidated  financial  statements have been adjusted
to give retroactive effect to the stock splits.



                                       63
<PAGE>
                         FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003


Note 11 - Regulatory Capital Matters

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

     Quantitative  measures established by regulation to ensure capital adequacy
require the Company and the Bank to maintain minimum amounts and ratios of Total
capital  and  Tier  I  capital  to  risk-weighted  assets  (as  defined  in  the
regulations),  and  Tier I  capital  to  adjusted  total  assets  (as  defined).
Management believes, as of December 31, 2005, that the Company and the Bank meet
all capital adequacy requirements to which they are subject.

     As of December 31, 2005, the most recent  notification  from the applicable
regulatory  agencies   categorized  the  Bank  as  well  capitalized  under  the
regulatory framework for prompt corrective action. To remain categorized as well
capitalized,  the Bank will  have to  maintain  minimum  Total  capital,  Tier 1
capital,  and Tier 1 leverage ratios as disclosed in the following table.  There
are no changes in conditions or events since the most recent  notification  that
management believes have changed the Bank's prompt corrective action category.




              [The remainder of this page intentionally left blank]


                                       64
<PAGE>


Note 11 - Regulatory Capital Matters - Continued

     The  Company's and the Bank's  actual  capital  amounts and ratios are also
presented in the table.
<TABLE>
<CAPTION>

                                                                                                  To Be Well
                                                                                              Capitalized Under
                                                                    For Capital               Prompt Corrective
                                          Actual                 Adequacy Purposes            Action Provisions
                                 -----------------------      -----------------------     ------------------------
                                    Amount        Ratio         Amount         Ratio         Amount        Ratio
                                 -----------    --------      -----------   ---------     -----------    ---------
                                                               (Dollars in thousands)

As of December 31, 2005:

Total Capital
<S>                              <C>               <C>        <C>                <C>
   Consolidated..............    $    91,035       10.39%     $    70,094        8.00%            N/A           N/A
   Florida Community
     Bank....................         90,415       10.33           70,028        8.00     $    87,535        10.00%
Tier 1 Capital
   Consolidated..............         80,076        9.14           35,047        4.00             N/A           N/A
   Florida Community
     Bank....................         79,466        9.08           35,014        4.00          52,521         6.00
Tier 1 Leverage
   Consolidated..............         80,076        8.96           35,750        4.00             N/A           N/A
   Florida Community
     Bank....................         79,466        8.90           35,700        4.00          44,625         5.00

As of December 31, 2004:

Total Capital
   Consolidated..............    $    70,536       11.63%     $    48,518        8.00%            N/A           N/A
   Florida Community
     Bank....................         69,844       11.53           48,477        8.00     $    60,597        10.00%
Tier 1 Capital
   Consolidated..............         62,928       10.38           24,259        4.00             N/A           N/A
   Florida Community
     Bank....................         62,242       10.27           24,239        4.00          36,358         6.00
Tier 1 Leverage
   Consolidated..............         62,928       10.14           24,819        4.00             N/A           N/A
   Florida Community
     Bank....................         62,242       10.05           24,774        4.00          30,968         5.00
</TABLE>

                                       65
<PAGE>
                         FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003


Note 12 - Stock Option Plans

     Options to purchase Florida  Community Banks,  Inc. stock have been granted
to  directors,  officers,  and  employees  under  the  2002 Key  Employee  Stock
Compensation  Program. The Florida Community Banks, Inc. 2002 Key Employee Stock
Compensation  Program  Plan  was  approved  by  Florida  Community  Banks,  Inc.
shareholders in 2002. Under the 2002 plan, options may be granted to purchase up
to a maximum of 269,855  common  shares as  adjusted  for all  subsequent  stock
dividends and splits.

     Under the  plan,  options  expire 10 years  after the date of grant and are
issued at an option price no less than the market price of the  Company's  stock
on the date of grant. Options granted are generally exercisable at 40% after one
year and in annual 20% increments thereafter.

     The following  table  presents the activity in the plan for the years ended
December 31, 2005, 2004 and 2003:
<TABLE>
<CAPTION>

                                                2005                       2004                       2003
                                    --------------------------  --------------------------   ----------------------
                                                    Weighted                    Weighted                 Weighted
                                                     Average                     Average                  Average
                                                    Exercise                    Exercise                 Exercise
                                       Shares        Price         Shares        Price        Shares      Price
                                    -------------  ------------ -----------  -------------   --------   -----------

Outstanding at January 1,........         204,394  $      13.62     125,914  $       10.20     95,386   $     8.68
<S>                                        <C>            <C>        <C>             <C>       <C>           <C>
   Granted.......................          19,000         26.00      78,480          19.10     30,528        14.93
   Exercised.....................         (46,932)        13.98          --           0.00         --         0.00
   Forfeited.....................         (14,988)        16.74          --           0.00         --         0.00
   Expired.......................              --          1.11          --           0.00         --         0.00
                                    --------------              -----------                  --------

Outstanding at December 31,......         161,474         14.68     204,394          13.62    125,914        10.20
                                    =============               ===========                  ========

Exercisable at December 31,......         105,120         11.32      88,519           9.54     57,232         8.68
                                    =============               ===========                  ========

Weighted average fair value
   of options granted............                  $       5.93              $        2.58              $     1.08
                                                   ============              =============              ==========
</TABLE>



              [The remainder of this page intentionally left blank]


                                       66
<PAGE>
                         FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003


Note 12 - Stock Option Plans - Continued

Options outstanding at year-end 2005 were as follows:
<TABLE>
<CAPTION>

                                             Outstanding                             Exercisable
                                    -----------------------------    ----------------------------------------------
                                                       Weighted                                         Weighted
                                                        Average                                          Average
                                                       Remaining                        Weighted        Remaining
                                                      Contractual                        Average       Contractual
       Grant          Exercise                           Life                           Exercise          Life
       Date            Prices          Number           (Years)         Number           Price           (Years)
----------------   -------------   --------------   -------------    -------------   -------------   --------------

<S>  <C>   <C>     <C>                     <C>               <C>            <C>               <C>              <C>
     10/25/01      $        8.68           74,650            5.81           74,650            8.68             5.81
     01/17/03              11.58            5,184            7.04            3,110           11.58             7.04
     12/22/03              16.67           11,520            7.97            6,912           16.67             7.97
     09/16/04              19.10           51,120            8.71           20,448           19.10             8.71
     12/15/05              26.00           19,000            9.96               --           26.00             9.96
                                   --------------                    --------------
                                          161,474            7.41          105,120           11.32             6.55
                                   ==============                    ==============
</TABLE>

     As  of  December  31,  2005,  there  was  $120,227  of  total  unrecognized
compensation  cost related to nonvested  share-based  compensation  arrangements
granted  under  the  plans.  This  cost  is  expected  to be  recognized  over a
weighted-average period of approximately 2.0 years.


Note 13 - Other Operating Expenses

     The major  components of other operating  expenses  included in noninterest
expenses at December 31, 2005, 2004 and 2003 are as follows (in thousands):
<TABLE>
<CAPTION>

                                                            2005                  2004                  2003
                                                     ------------------    ------------------    ------------------

<S>                                                  <C>                   <C>                   <C>
   Professional fees..............................   $              405    $              249    $              263
   Promotions and public relations................                  288                   265                   222
   Telephone......................................                  264                   188                   175
   Supplies.......................................                  224                   171                   152
   Examination and assessment.....................                  202                   176                   154
   ATM expense....................................                  188                   147                   137
   Courier........................................                  176                   127                   113
   Software maintenance...........................                  141                   138                   164
   Postage........................................                  117                   123                   136
   Bank charges...................................                  117                    91                    74
   Director's board and committee fees............                   70                    67                    67
   Employee educational expenses..................                   66                    70                    68
   Dues and subscriptions.........................                   57                    48                    44
   Other..........................................                  435                   453                   322
                                                     ------------------    ------------------    ------------------

                                                     $            2,750    $            2,313    $            2,091
                                                     ==================    ==================    ==================
</TABLE>

                                       67
<PAGE>
                         FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003


Note 14 - Income Taxes

     Federal and state income  taxes  (payable) as of December 31, 2005 and 2004
included in other liabilities, respectively, were as follows:
<TABLE>
<CAPTION>

                                                                                  2005                  2004
                                                                           ------------------    ------------------
Current
<S>                                                                        <C>                   <C>
   Federal.............................................................    $         (549,841)   $          (42,924)

   State...............................................................               (76,289)              (25,381)

The components of the deferred income tax asset included in other assets as of
December 31, 2005 and 2004 are as follows:

                                                                                  2005                  2004
                                                                           ------------------    ------------------

Deferred tax asset:
   Federal.............................................................    $        5,266,822    $        3,969,027
   State...............................................................               877,804               661,505
                                                                           ------------------    ------------------
     Total deferred income tax asset...................................             6,144,626             4,630,532
                                                                           ------------------    ------------------

Deferred tax liability:
   Federal.............................................................              (269,487)             (271,755)
   State...............................................................               (44,914)              (45,292)
                                                                           ------------------    ------------------
     Total deferred income tax liability...............................              (314,401)             (317,047)
                                                                           ------------------    ------------------

Net deferred tax asset.................................................    $        5,830,225    $        4,313,485
                                                                           ==================    ==================

The tax effects of each type of income and expense item that gave rise to
deferred taxes are:

                                                                                  2005                  2004
                                                                           ------------------    ------------------

   Depreciation........................................................    $         (314,401)   $         (317,047)
   Allowance for loan losses...........................................             4,300,107             3,497,212
   Directors benefit plan..............................................               108,428               120,744
   Deferred loan fees..................................................             1,517,455               808,526
   Write-down of other real estate owned...............................               204,050               204,050
   Issuance of stock options...........................................                14,586                    --
                                                                           ------------------    -------------------

   Net deferred tax asset..............................................    $        5,830,225    $        4,313,485
                                                                           ==================    ==================
</TABLE>

                                       68
<PAGE>
                         FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003


Note 14 - Income Taxes - Continued

     The components of income tax expense for the years ended December 31, 2005,
2004 and 2003 were as follows:
<TABLE>
<CAPTION>

                                                            2005                  2004                  2003
                                                     ------------------    ------------------    ------------------
   Current
<S>                                                  <C>                   <C>                   <C>
     Federal......................................   $       11,071,080    $        7,615,497    $        4,962,156
     State........................................            1,845,519             1,232,895               865,210

   Deferred
     Federal......................................           (1,296,782)             (989,535)             (631,451)
     State........................................             (216,090)             (164,960)             (105,238)
                                                     ------------------    ------------------    ------------------

                                                     $       11,403,727    $        7,693,897    $        5,090,677
                                                     ==================    ==================    ==================
</TABLE>

     There were no material tax effects of securities transactions for the years
ended December 31, 2005, 2004 and 2003.

     The principal  reasons for the difference in the effective tax rate and the
federal  statutory  rate are as follows for the years ended  December  31, 2005,
2004 and 2003.
<TABLE>
<CAPTION>

                                                  2005                     2004                        2003
                                       ------------------------   -----------------------    -----------------------

Federal income tax
<S>                                    <C>                 <C>    <C>                <C>     <C>                <C>
   at statutory rates................  $   10,071,398      34.0%  $    6,778,182     34.0%   $   4,585,657      34.0%
Add (deduct)
   State income tax, net of
     federal tax benefit.............       1,075,423       3.6          704,837      3.5          501,582       3.7
   Other.............................         256,906       0.9          210,878      1.1            3,438       0.0
                                       --------------  --------   --------------  -------    -------------  --------

Totals...............................  $   11,403,727      38.5%  $    7,693,897     38.6%   $   5,090,677      37.7%
                                       ==============  ========   ==============  =======    =============  ========
</TABLE>


Note 15 - Benefit Plans

     During the years ended  December 31, 2005,  2004 and 2003,  the Company had
three qualified  employee  benefit plans: 1) a Pension Plan, 2) a Profit Sharing
Plan  and  3) an  Employee  Stock  Ownership  Plan  ("ESOP").  The  Plans  cover
substantially all employees,  subject to similar eligibility  requirements.  The
Pension  Plan was  terminated  as of December  31, 2003.  The  Company's  annual
contribution  to the Profit Sharing Plan is  discretionary  as determined by the
board of directors.  For the years ended  December 31, 2005,  2004 and 2003, the
Company's  contributions  charged  to  operations  for the Profit  Sharing  Plan
amounted to $511,518, $506,733, and $438,163, respectively. Effective January 1,
2003, the Company  adopted the ESOP. The Company's  annual  contribution  to the
ESOP is  discretionary  as determined  by the board of directors.  The Company's
contribution to the ESOP for 2005,  2004, and 2003 was $442,101,  $575,626,  and
$433,523, respectively.

                                       69
<PAGE>
                         FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003


Note 15 - Benefit Plans - Continued

     The  Company  also has a  Director's  Benefit  Plan  (the  "Benefit  Plan")
covering certain  directors and a Salary  Continuation  Plan (the "Salary Plan")
for a former  officer.  These  plans  were  obtained  resulting  from a business
combination that occurred in 1998.

     The Benefit  Plan  provides  for the payment of  scheduled  benefits to the
participants or their  beneficiaries at age 65 or their normal  retirement date,
whichever  occurs later. If the participant  dies prior to receiving 180 monthly
payments,  the  participant's  beneficiary  shall receive any remaining  monthly
payments.  Payment  of  benefits  under  the  Benefit  Plan  requires  that  the
participant fulfill certain conditions related to age and length of service. The
Company is accruing  the present  value of the future  benefits to be paid under
the Benefit Plan over the term of each participant's service period.

     The Salary Plan provides for the payment of a retirement benefit of $30,000
per year for a period of ten  years.  Payment  of these  benefits  commenced  on
January 1, 1995,  and  continued  throughout  the current year  according to the
terms of the Plan.  The Company  has  accrued  the  present  value of the future
benefits to be paid under the Salary Plan.

     The Company has determined  that the following  disclosures are relevant to
the Benefit Plan and the Salary Plan,  however,  the plans are non-qualified and
unfunded.  Payments  to  retired  directors  and  officers  are  funded  through
operations.

     Net  pension  cost  for  the   Director's   Benefit  Plan  and  the  Salary
Continuation Plan for 2005, 2004 and 2003 included the following components:
<TABLE>
<CAPTION>

                                                            2005                  2004                  2003
                                                     ------------------    ------------------    ------------------

<S>                                                  <C>                   <C>                   <C>
   Service cost (benefit).........................   $             (315)   $           29,369    $           27,952
   Interest cost..................................               26,489                29,233                36,608
                                                     ------------------    ------------------    ------------------

     Net periodic pension cost....................   $           26,174    $           58,602    $           64,560
                                                     ==================    ==================    ==================
</TABLE>

     The following  table sets forth the accumulated  benefit  obligation of the
Director's  Benefit  Plan and the Salary  Continuation  Plan  recognized  in the
Company's statements of financial condition at December 31, 2005 and 2004.
<TABLE>
<CAPTION>

                                                                                  2005                  2004
                                                                           ------------------    ------------------

Present value of benefit obligation:
<S>                                                                        <C>                   <C>
   Vested..............................................................    $          281,629    $          313,622
   Non-vested..........................................................                    --                    --
                                                                           ------------------    ------------------

Accumulated benefit obligation/pension liability.......................    $          281,629    $          313,622
                                                                           ==================    ==================
</TABLE>

     The weighted average discount rate used in determining present value of the
projected  benefit  obligation  for  the  Director's  Benefit  Plan  and  Salary
Continuation Plan was nine percent.

                                       70
<PAGE>
                         FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003


Note 15 - Benefit Plans - Continued

     The  aggregate  benefit  cost  expected-to-be  accrued  for the year ending
December 31, 2006, is $-0-.

     The measurement  date for the plans is December 31 of each year.  There are
no plan assets on which to compute long-term rates of return.

     Expected  benefit  payments  for  the  Benefit  Plan  and the  Salary  Plan
following December 31, 2005, are as follows:
<TABLE>
<CAPTION>

     Year Ending December 31,
<S>               <C>                                                                            <C>
                  2006.......................................................................    $           58,482
                  2007.......................................................................                58,482
                  2008.......................................................................                58,482
                  2009.......................................................................                58,482
                  2010.......................................................................                39,351
                  2011 - 2016................................................................               108,750
                                                                                                 ------------------

                  Total expected benefit payments............................................    $          382,029
                                                                                                 ==================
</TABLE>


Note 16 - Commitments and Contingencies

     In the normal course of business, the Company offers a variety of financial
products  to its  customers  to aid  them  in  meeting  their  requirements  for
liquidity, credit enhancement, and interest rate protection.  Generally accepted
accounting  principles  recognize these  transactions as contingent  liabilities
and,  accordingly,  they  are not  reflected  in the  accompanying  consolidated
financial statements.

     Loan  commitments  are  made to  accommodate  the  financial  needs  of the
Company's  customers.  Standby  letters  of credit  commit  the  Company to make
payments on behalf of customers  when certain  specified  future  events  occur.
Historically, most loan commitments and standby letters of credit expire unused.
The  Company's  exposure  to credit loss in the event of  nonperformance  by the
counter-party  to the  financial  instrument  for loan  commitments  and standby
letters of credit is represented by the contractual amount of those instruments.
The Company  uses the same  underwriting  standards  in making  commitments  and
conditional obligations as it does for on-balance sheet instruments.  The amount
of  collateral  obtained  is  based on  management's  credit  evaluation  of the
customer.   Collateral  held  varies,  but  may  include  accounts   receivable,
inventory,  property,  plant,  and equipment,  and  income-producing  commercial
properties. The estimated value of the collateral held to secure standby letters
of credit at December  31,  2005,  was  approximately  $22,750,632.  The Company
records a liability  for the estimated  fair value of standby  letters of credit
based on the fees charged for these arrangements.  At December 31, 2005 and 2004
these recorded liabilities amounted to $41,933 and $40,712, respectively.

                                       71
<PAGE>
                         FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003


Note 16 - Commitments and Contingencies - Continued



     The total  amounts of loan  commitments  and standby  letters of credit are
summarized as follows at December 31:
<TABLE>
<CAPTION>

                                                                                          Contract or
                                                                                        Notional Amount
                                                                                  2005                  2004
                                                                           ------------------    ------------------

<S>                                                                        <C>                   <C>
Loan commitments.......................................................    $      208,082,000    $      133,865,000
Standby letters of credit..............................................             2,771,000             3,715,000
                                                                           ------------------    ------------------

   Total unfunded commitments..........................................    $      210,853,000    $      137,580,000
                                                                           ==================    ==================
</TABLE>

     Management  conducts regular reviews of these  instruments on an individual
customer basis,  and the results are considered in assessing the adequacy of the
Company's  allowance for loan losses.  The total reserve  allocated for unfunded
commitments  was  approximately  $348,000  and $386,000 at December 31, 2005 and
2004, respectively.

     The Company,  as part of its retail  mortgage loan  production  activities,
routinely enters into short-term commitments to originate fixed rate loans. Most
of the loans will be sold to third party correspondent  banks upon closing.  For
those loans, the Company enters into individual forward sales commitments at the
same time the  commitment  to originate is  finalized.  While the forward  sales
commitments  function  as  an  economic  hedge  and  effectively  eliminate  the
Company's  financial risk of rate changes during the rate lock period,  both the
commitment to originate  mortgage  loans that will be sold and the commitment to
sell  the  mortgage  loans  are  derivatives,  the  fair  values  of  which  are
essentially  equal and  offsetting.  The fair  values  are  calculated  based on
changes in market interest rates after the commitment date. The notional amounts
of these mortgage loan  origination  commitments  and the related  forward sales
commitments were immaterial at December 31, 2005. The unrealized gains/losses of
the origination and sales commitments were not material at December 31, 2005.


Note 17 - Concentrations of Credit

     Most of the  Company's  loans,  commitments,  and  commercial  and  standby
letters of credit have been granted to customers in the  Company's  market area.
Many such customers are depositors of the Company.  The concentrations of credit
by type of loan are set  forth in Note 4. The  distribution  of  commitments  to
extend credit related primarily to unused real estate draw lines. Commercial and
standby letters of credit were granted primarily to commercial borrowers.

     The Company maintains its cash accounts at various  commercial banks in the
United  States.  The balances in commercial  banks are insured by the FDIC up to
$100,000.  Total  uninsured  balances  held at  correspondent  commercial  banks
amounted  to  $10,887,886   and  $1,720,085  at  December  31,  2005  and  2004,
respectively.

                                       72
<PAGE>
                         FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003


Note 18 - Restrictions on Dividends

     The Bank is subject  to the  dividend  restrictions  set forth by the State
Banking Department (Florida). Under such restrictions, the Bank may not, without
the prior approval of the State Banking Department,  declare dividends in excess
of the sum of the current  year's  earnings plus the retained  earnings from the
prior two years.  For the year ending  December 31,  2006,  the Bank can declare
dividends,  without prior regulatory approval, of approximately $27,873,000 plus
an additional amount equal to its net profits for 2006.


Note 19 - Litigation

     While the Company is party to various  legal  proceedings  arising from the
ordinary course of business,  management  believes after consultation with legal
counsel that there are no proceedings  threatened or pending against the Company
that will,  individually or in the aggregate,  have a material adverse effect on
the business or financial condition of the Company.


Note 20 - Leases

     The Company leased facilities under non-cancelable  operating leases during
2005,  2004 and 2003.  The leases  provided  for renewal  options and  generally
required the Company to pay maintenance,  insurance, and property taxes. For the
years ended December 31, 2005, 2004 and 2003, rental expense for such leases was
$184,045, $177,520 and $175,620,  respectively.  The Company also entered into a
sale/leaseback  transaction  with a related  party in January  2001 for a branch
facility,  future  minimum  payments  under this lease are included in the table
below (see also Note 21).

     Future minimum lease payments under such non-cancelable operating leases at
December 31, 2005, are as follows:
<TABLE>
<CAPTION>

     Year Ending December 31,
<S>               <C>                                                                            <C>
                  2006.......................................................................    $          184,890
                  2007.......................................................................               188,792
                  2008.......................................................................               182,380
                  2009.......................................................................               183,089
                  2010.......................................................................               187,413
                  Thereafter.................................................................             1,854,311
                                                                                                 ------------------

     Total minimum lease payments............................................................    $        2,780,875
                                                                                                 ==================
</TABLE>



                                       73
<PAGE>
                         FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003


Note 21 - Related Party Transactions

     Loans: Certain directors,  executive officers, and principal  shareholders,
including  their  immediate  families and associates  were loan customers of the
Company  during  2005 and 2004.  Such loans are made in the  ordinary  course of
business at normal credit terms,  including interest rates and collateral and do
not represent more than a normal risk of  collection.  A summary of activity and
amounts outstanding are as follows:
<TABLE>
<CAPTION>

                                                                                  2005                  2004
                                                                           ------------------    ------------------

<S>                                                                        <C>                   <C>
Balance at Beginning of Year...........................................    $        8,132,367    $        6,254,498
New loans..............................................................             1,858,748             4,402,105
Repayments.............................................................            (6,464,664)           (2,524,236)
Change in related parties..............................................                    --                    --
                                                                           ------------------    ------------------

Balance at End of Year.................................................    $        3,526,451    $        8,132,367
                                                                           ==================    ==================
</TABLE>

     Deposits:   Deposits  held  from  related  parties  were   $15,200,405  and
$14,428,433 at December 31, 2005 and 2004, respectively.

     Other:  The Company leases the land and premises of the Cypress Lake branch
from a director.  The lease was  initiated  in 2001 for a term of 15 years at an
arms length fair  rental.  Noncancelable  lease  payments  for the years  ending
December 31, 2006 through 2010 are $160,275,  $164,282,  $168,282, $172,599, and
$176,914,  respectively.  The  agreement  provides  for annual  increases of 2.5
percent.

     The  Company,   through  the  normal   course  of   business,   sells  loan
participations  to certain  directors  and  parties  related to  directors.  The
transactions  are at arms  length and do not have  terms that are  significantly
different  from  other  participations  sold  by the  Company.  The  balance  of
participations  sold to these parties at December 31, 2005,  2004, and 2003 were
$4,701,415, $2,003,380, and $1,819,055, respectively.


Note 22 - Fair Value of Financial Instruments

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

     Cash and Short-Term  Investments:  For those  short-term  instruments,  the
carrying amount is a reasonable estimate of fair value.

     Securities:  For  securities  held-to-maturity,  fair  values  are based on
quoted market prices or dealer quotes. For other securities held as investments,
fair value equals quoted market price, if available. If a quoted market price is
not available, fair value is estimated to be approximately the carrying amount.

                                       74
<PAGE>
                         FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003


Note 22 - Fair Value of Financial Instruments - Continued

     Loans:  For  certain   homogeneous   categories  of  loans,  such  as  some
residential  mortgage,  credit card receivables,  and other consumer loans, fair
value is  estimated  using the quoted  market  prices for  securities  backed by
similar loans, adjusted for differences in loan characteristics.  The fair value
of other types of loans is estimated by discounting  the future cash flows using
the current rates at which similar loans would be made to borrowers with similar
credit ratings and for the same remaining maturities.

     Accrued  Interest  Receivable:  The  carrying  amount of  accrued  interest
receivable approximates its fair value.

     Deposits: The fair value of demand deposits,  savings accounts, and certain
money market deposits is the amount payable on demand at the reporting date. The
fair value of  fixed-maturity  certificates  of deposit is  estimated  using the
rates currently offered for deposits of similar remaining maturities.

     Short-Term  Borrowings:  The  carrying  amounts  of  short-term  borrowings
approximate their fair values.

     Long-Term  Debt:  Rates  currently  available  to the Company for debt with
similar  terms and  remaining  maturities  are used to  estimate  fair  value of
existing debt.

     Accrued Interest  Payable:  The carrying amount of accrued interest payable
approximates its fair value.

     Commitments  to Extend  Credit,  Standby  Letters of Credit,  and Financial
Guarantees  Written:  The fair value of  commitments,  letters  of  credit,  and
financial guarantees is estimated to be approximately the fees charged for these
arrangements.




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                                       75
<PAGE>
                         FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003


Note 22 - Fair Value of Financial Instruments - Continued

     The estimated  fair values of the  Company's  financial  instruments  as of
December 31, 2005 and 2004 are as follows:
<TABLE>
<CAPTION>

                                                             2005                               2004
                                               ---------------------------------  ---------------------------------
                                                  Carrying            Fair           Carrying            Fair
                                                   Amount             Value            Amount            Value
                                               ---------------  ----------------  ---------------  ----------------
                                                        (in thousands)                     (in thousands)
Financial Assets
<S>                                            <C>              <C>               <C>              <C>
   Cash and short-term investments..........   $        32,368  $         32,368  $        19,614  $         19,614
   Securities...............................            66,242            64,499           74,265            73,927
   Loans....................................           791,609           795,098          552,509           552,948
   Accrued interest receivable..............             4,941             4,941            3,290             3,290
                                               ---------------  ----------------  ---------------  ----------------

     Total Financial Assets.................   $       895,160  $        896,906  $       649,678  $        649,779
                                               ===============  ================  ===============  ================

Financial Liabilities
   Deposits.................................   $       737,256  $        737,840  $       520,585  $        521,618
   Short-term borrowings....................            25,088            25,088           14,057            14,057
   Long-term debt...........................            70,334            70,334           70,310            70,310
   Accrued interest payable.................             2,399             2,399            1,408             1,408
                                               ---------------  ----------------  ---------------  ----------------

     Total Financial Liabilities............   $       835,077  $        835,661  $       606,360  $        607,393
                                               ===============  ================  ===============  ================

Financial Instruments
   Commitments to extend credit.............   $       208,082  $          2,081  $       133,865  $          1,339
   Standby letters of credit................             2,771                42            3,715                41
                                               ---------------  ----------------  ---------------  ----------------

     Total Unrecognized Financial
       Instruments..........................   $       210,853  $          2,123  $       137,580  $          1,380
                                               ===============  ================  ===============  ================
</TABLE>




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                                       76
<PAGE>
                         FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003


Note 23 - Condensed Parent Company Information


Statements of Financial Condition
<TABLE>
<CAPTION>

                                                                                  2005                  2004
                                                                           ------------------    ------------------
Assets

<S>                                                                        <C>                   <C>
   Cash and due from banks.............................................    $          375,320    $          400,493
   Other investment securities.........................................               810,000               810,000
   Investment in subsidiaries (equity method) -
     eliminated upon consolidation.....................................            79,466,176            62,242,329
   Other assets........................................................               107,420               156,422
                                                                           ------------------    ------------------

     Total Assets......................................................    $       80,758,916    $       63,609,244
                                                                           ==================    ==================

Liabilities and Shareholders' Equity

Liabilities

   Subordinated debentures.............................................    $       10,310,000    $       10,310,000
   Other debt..........................................................               100,000               100,000
   Other liabilities...................................................               273,134               271,545
                                                                           ------------------    ------------------
     Total Liabilities.................................................            10,683,134            10,681,545

     Total Shareholders' Equity........................................            70,075,782            52,927,699
                                                                           ------------------    ------------------

     Total Liabilities and Shareholders' Equity........................    $       80,758,916    $       63,609,244
                                                                           ==================    ==================
</TABLE>




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                                       77
<PAGE>
                          FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003


Note 23 - Condensed Parent Company Information - Continued


Statements of Income
<TABLE>
<CAPTION>

                                                                                  2005                  2004
                                                                           ------------------    ------------------
Income
<S>                                                                        <C>                   <C>
   Dividends from subsidiaries - eliminated upon consolidation.........    $        1,535,743    $        2,030,304
   Interest and other..................................................                69,886                34,319
                                                                           ------------------    ------------------
     Total Income......................................................             1,605,629             2,064,623
                                                                           ------------------    ------------------

Expenses
   Interest............................................................               712,618               531,660
   Salaries and employee benefits......................................                91,954                94,476
   Other expenses......................................................               156,192               120,933
                                                                           ------------------    ------------------
     Total Expenses....................................................               960,764               747,069
                                                                           ------------------    ------------------

Income before income taxes and equity in
   undistributed earnings of subsidiary................................               644,865             1,317,554
Income tax benefit.....................................................               349,319               274,943
                                                                           ------------------    ------------------

Income before equity in undistributed
   earnings of subsidiary..............................................               994,184             1,592,497
Equity in undistributed earnings of subsidiary.........................            17,223,847            10,649,435
                                                                           ------------------    ------------------

     Net Income........................................................    $       18,218,031    $       12,241,932
                                                                           ==================    ==================
</TABLE>




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                                       78
<PAGE>
                         FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003


Note 23 - Condensed Parent Company Information - Continued


Statements of Cash Flows
<TABLE>
<CAPTION>

                                                                                  2005                  2004
                                                                           ------------------    ------------------
Operating Activities
<S>                                                                        <C>                   <C>
   Net income..........................................................    $       18,218,031    $       12,241,932
   Adjustments to reconcile net income to net
     cash provided by operating activities:
     Equity in undistributed income of subsidiary......................           (17,223,847)          (10,649,435)
     Other.............................................................                50,591               316,786
                                                                           ------------------    ------------------
       Net Cash Provided By Operating Activities.......................             1,044,775             1,909,283
                                                                           ------------------    ------------------

Financing Activities
   Sale of common stock................................................             1,162,233               465,202
   Repayment of short-term debt........................................                    --              (400,000)
   Costs associated with the issuance of options.......................                56,783                17,988
   Cash dividends......................................................            (2,288,964)           (1,883,192)
                                                                           ------------------    ------------------
     Net Cash Used In Financing Activities.............................            (1,069,948)           (1,800,002)
                                                                           ------------------    ------------------

Net (Decrease) Increase In Cash and Cash Equivalents...................               (25,173)              109,281

Cash and Cash Equivalents at Beginning of Year.........................               400,493               291,212
                                                                           ------------------    ------------------

Cash and Cash Equivalents at End of Year...............................    $          375,320    $          400,493
                                                                           ==================    ==================

Cash Paid During the Year For:
   Interest............................................................    $          712,618    $          531,660
</TABLE>




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                                       79
<PAGE>
                         FLORIDA COMMUNITY BANKS, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2005, 2004 and 2003


Note 24 - Quarterly Results of Operations (Unaudited)

     Selected  quarterly  results  of  operations  for the four  quarters  ended
December 31 are as follows:
<TABLE>
<CAPTION>

                                          First          Second          Third         Fourth
                                         Quarter         Quarter        Quarter        Quarter           Total
                                      -------------  -------------   -------------  -------------  ----------------
                                                                    (In Thousands)
2005:
<S>                                   <C>            <C>             <C>            <C>            <C>
Total interest income..............   $      11,734  $      13,667   $      15,113  $      17,344  $         57,858
Total interest expense.............           3,172          3,821           4,577          5,815            17,385
Provision for loan losses..........              --             --              32          1,730             1,762
Net interest income after
   provision for loan losses.......           8,562          9,846          10,504          9,799            38,711
Other noninterest income...........             901          1,023             847          1,073             3,844
Other noninterest expense..........           2,885          3,162           3,354          3,532            12,933
Income tax expense.................           2,535          2,970           3,080          2,819            11,404
Net income.........................           4,043          4,737           4,917          4,521            18,218
Per common share
   Basic earnings..................            0.73           0.87            0.90           0.83              3.33
   Diluted earnings................            0.73           0.86            0.88           0.82              3.29

2004:
Total interest income..............   $       9,058  $       9,596   $      10,141  $      10,789  $         39,584
Total interest expense.............           2,172          2,245           2,283          2,500             9,200
Provision for loan losses..........             300            200             750            721             1,971
Net interest income after
   provision for loan losses.......           6,586          7,151           7,108          7,568            28,413
Other noninterest income...........             727          1,118             659          1,270             3,774
Other noninterest expense..........           2,848          3,028           2,962          3,413            12,251
Income tax expense.................           1,680          1,975           1,805          2,234             7,694
Net income.........................           2,785          3,266           3,000          3,191            12,242
Per common share
   Basic earnings..................            0.52           0.61            0.55           0.58              2.26
   Diluted earnings................            0.51           0.60            0.55           0.57              2.23

2003:
Total interest income..............   $       8,304  $       8,447   $       8,502  $       8,267  $         33,520
Total interest expense.............           2,818          2,737           2,381          2,145            10,081
Provision for loan losses..........             300            300             700            400             1,700
Net interest income after
   provision for loan losses.......           5,186          5,410           5,421          5,722            21,739
Other noninterest income...........             626            666             663            773             2,728
Other noninterest expense..........           2,557          2,647           2,934          2,842            10,980
Income tax expense.................           1,226          1,302           1,185          1,377             5,090
Net income.........................           2,029          2,127           1,965          2,276             8,397
Per common share
   Basic earnings..................            0.38           0.40            0.36           0.42              1.56
   Diluted earnings................            0.38           0.39            0.36           0.41              1.54
</TABLE>



                                       80
<PAGE>





ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE.

          None.

ITEM 9A.  CONTROLS AND PROCEDURES

          Disclosure Controls and Procedures

          Management  of the  Company,  with the  participation  and  under  the
          supervision  of  the  Chief  Executive  Officer  and  Chief  Financial
          Officer,  has evaluated the effectiveness of the Company's  disclosure
          controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as
          of the end of the period covered by this annual report.  Based on this
          evaluation the Chief  Executive  Officer and Chief  Financial  Officer
          have concluded that the Company's  disclosure  controls and procedures
          are  effective  as of the end of the  period  covered  by this  annual
          report to  provide  reasonable  assurance  that  material  information
          required to be  disclosed  by the Company in the reports that it files
          or submits under the Exchange Act is recorded,  processed,  summarized
          and reported  within the time periods  specified by the Securities and
          Exchange  Commission's  rules and forms. A controls system,  no matter
          how well designed and operated, cannot provide absolute assurance that
          the  objectives of the controls are met, and no evaluation of controls
          can provide  absolute  assurance  that all controls  and  instances of
          fraud, if any, within a company have been detected.

          Management Report On Internal Control Over Financial Reporting

          The  management of the Company is  responsible  for  establishing  and
          maintaining   adequate  internal  control  over  financial  reporting.
          Internal control over financial reporting is defined in Rule 13a-15(f)
          or 15d-15(f)  promulgated under the Securities Exchange Act of 1934 as
          a process  designed  by, or under the  supervision  of, the  Company's
          principal  executive and principal  financial officers and effected by
          the Company's board of directors,  management and other personnel,  to
          provide  reasonable  assurance  regarding the reliability of financial
          reporting and the  preparation  of financial  statements  for external
          purposes in accordance with generally accepted  accounting  principles
          and includes those policies and procedures that:

          o    Pertain to the  maintenance of records that in reasonable  detail
               accurately and fairly reflect the  transactions  and dispositions
               of the assets of the Company;

          o    Provide  reasonable  assurance that  transactions are recorded as
               necessary  to  permit  preparation  of  financial  statements  in
               accordance with generally  accepted  accounting  principles,  and
               that receipts and expenditures of the Company are being made only
               in accordance with  authorizations of management and directors of
               the Company; and

          o    Provide  reasonable  assurance  regarding  prevention  or  timely
               detection of unauthorized acquisition,  use or disposition of the
               Company's  assets  that  could  have  a  material  effect  on the
               financial statements.

          Because of its inherent  limitations,  internal control over financial
          reporting may not prevent or detect misstatements.  Projections of any
          evaluation of  effectiveness to future periods are subject to the risk
          that controls may become inadequate  because of changes in conditions,
          or that the degree of compliance  with the policies or procedures  may
          deteriorate.

          The Company's  management  assessed the effectiveness of the Company's
          internal control over financial  reporting as of December 31, 2005. In
          making this assessment, the Company's management used the criteria set
          forth by the  Committee of  Sponsoring  Organizations  of the Treadway
          Commission ("COSO") in Internal Control-Integrated Framework.

          Based on our assessment,  management believes that, as of December 31,
          2005,  the  Company's  internal  control over  financial  reporting is
          effective based on those criteria.

                                       81
<PAGE>


          The Company's  independent auditors have issued an audit report on our
          assessment of the Company's internal control over financial reporting.
          This report appears in Part II, Item 8 of this report.

          There was no change in the Company's  internal  control over financial
          reporting that occurred  during the Company's most recently  completed
          fiscal quarter that materially  affected,  or is reasonably  likely to
          materially  affect,  the  Company's  internal  control over  financial
          reporting.

ITEM 9B.  OTHER INFORMATION

          The  Company  did not  fail to  file  any  Form  8-K to  disclose  any
          information required to be disclosed therein during the fourth quarter
          of 2005.


                                    PART III



ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
          COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

     The  information  appearing  under the headings  "ELECTION  OF  DIRECTORS,"
"BOARD OF  DIRECTORS"  and  "COMPLIANCE  WITH  SECTION  16(a) OF THE  SECURITIES
EXCHANGE ACT OF 1934" on pages 3 to 7 and 13 in the Proxy  Statement  (the "2006
Proxy Statement") relating to the annual meeting of shareholders of the Company,
scheduled to be held on April 20, 2006, is incorporated herein by reference.  On
March 3,  2003,  the  Company  adopted a Code of Ethic  applicable  to its Chief
Financial Officer and its Chief Executive Officer.


ITEM 11.  EXECUTIVE COMPENSATION

     The information  appearing under the headings "EXECUTIVE  COMPENSATION" and
"EMPLOYEE BENEFITS" on pages 7 to 12 of the 2006 Proxy Statement is incorporated
herein by reference.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The  information  appearing  under the heading  "ELECTION OF  DIRECTORS" on
pages 3 to 4 of the 2006 Proxy  Statement and from Item 5 above is  incorporated
herein by reference.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information  appearing  under the heading  "CERTAIN  RELATIONSHIPS  AND
RELATED  TRANSACTIONS"  on  pages  12 to 13  of  the  2006  Proxy  Statement  is
incorporated herein by reference.


ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

     Audit Fees The aggregate fees billed for  professional  services by Schauer
Taylor in connection with the audit of the annual  financial  statements and the
reviews of the financial  statements included in the Company's quarterly filings
with the Securities and Exchange  Commission for the fiscal years ended December
31, 2005 and 2004, were $166,005 and $64,501, respectively.

     Audit-Related  Fees:  In 2005 and 2004,  Schauer  Taylor  also  billed  the
Company $135,730 and $92,997,  respectively,  for fees reasonably related to the
performance of its audit and reviews of financial statements. Such fees included
travel and miscellaneous related fees.

     Tax Fees: In 2005 and 2004,  Schauer Taylor also billed the Company $17,430
and  $11,550,  respectively,  for  tax  compliance  and  advice,  including  the
preparation of the Company's corporate tax returns.

     In all  instances,  Schauer  Taylor's  performance  of those  services  was
pre-approved by the Company's Audit Committee.

                                       82
<PAGE>


                                     PART IV


ITEM 15.  EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES

     (a)  1. Financial Statements.

          The following  consolidated financial statements are located in Item 8
          of this Report:

          Report of Independent Registered Public Accounting Firm
          Consolidated Statements of Financial Condition as of December
            31, 2005 and 2004
          Consolidated Statements of Income for the Years Ended December 31,
            2005, 2004 and 2003
          Consolidated Statements of Shareholders' Equity for the Years Ended
            December 31, 2005, 2004 and 2003
          Consolidated Statements of Cash Flows for the Years Ended December 31,
            2005, 2004 and 2003
          Notes to Consolidated Financial Statements
          Quarterly Results (Unaudited)

          2. Financial Statement Schedules.

          Schedules to the consolidated financial statements are omitted, as
          the required information is not applicable.

          3. Exhibits.

          The following exhibits are filed or incorporated by reference as part
             of this Report:
<TABLE>
<CAPTION>

Exhibit No.                                               Exhibit                                          Page

<S> <C>                                                               <C>
    3.1        Articles of Incorporation of FCBI (included as Exhibit 3.1 to
               FCBI's Registration Statement on Form 8-A filed with the SEC on
               April 15, 2002 and incorporated herein by reference).

    3.2        By-laws of FCBI (included as Exhibit 3.2 to FCBI's Registration
               Statement on Form 8-A filed with the SEC on April 15, 2002 and
               incorporated herein by reference).

    4.1        Subordinated Promissory Note, dated December 24, 2001, between
               Florida Community Bank and Independent Bankers Bank of Florida
               (included as Exhibit 4.1 to the Bank's Form 10-KSB for the year
               ended December 31, 2001, and incorporated herein by reference).

    4.2        Specimen Common Stock Certificate of FCBI (included as Exhibit
               4.1 to FCBI's Registration Statement on Form 8-A filed with the
               SEC on April 15, 2002 and incorporated herein by reference).

    10.1       Employment agreement with Thomas S. Junker dated December 9, 1997
               (included as Exhibit 10.1 to the Bank's Registration Statement on
               Form 10-SB-A for the year ended December 31, 1998 and
               incorporated herein by reference). *

    10.2       2002 Key Employee Stock Compensation Program of FCBI (included as
               Appendix D to the Bank's Definitive Schedule 14-A filed with the
               FDIC on March 22, 2002 and incorporated herein by reference). *

</TABLE>



                                       83
<PAGE>

<TABLE>
<CAPTION>

<S>     <C>    <C>    <C>    <C>    <C>                                                                    <C>
Exhibit No.                                               Exhibit                                          Page


    10.3       Amended and Restated Trust Agreement among Florida Community
               Banks, Inc. as depositor, Wilmington Trust Company as property
               trustee, Wilmington Trust Company, as Delaware trustee, and
               Stephen L. Price, and Thomas V. Ogletree as administrators, dated
               as of June 21, 2002 (included as Exhibit 10.3 to the Company's
               Form 10-Q for the quarter ended June 30, 2002, and incorporated
               herein by reference).

    10.4       Guarantee Agreement between Florida Community Banks, Inc. as
               guarantor, and Wilmington Trust Company as guarantee trustee,
               dated as of June 21, 2002 (included as Exhibit 10.4 to the
               Company's Form 10-Q for the quarter ended June 30, 2002, and
               incorporated herein by reference).

    10.5       Junior Subordinated Indenture between Florida Community Banks,
               Inc. (as Company) and Wilmington Trust Company (as trustee),
               dated as of June 21, 2002 (included as Exhibit 10.5 to the
               Company's Form 10-Q for the quarter ended June 30, 2002, and
               incorporated herein by reference).

    10.6       Term Loan Agreement between Florida Community Banks, Inc. and The
               Bankers Bank, Atlanta, Georgia, dated June 13, 2002 (included as
               Exhibit 10.6 to the Company's Form 10-Q for the quarter ended
               June 30, 2002, and incorporated herein by reference).

   10.7        Employee  Stock  Ownership  Plan (included as Exhibit 10.5 to the
               Company's Form S-8 filed May 6, 2004, and incorporated  herein by
               reference).

    11         Statement re: computation of per share earnings                                                   87

    12         Statement re: computation of ratios                                                               87

    14         Code of Ethics  (included as Exhibit 99.1 to the  Company's  Form
               8-K  filed  on  March  3,  2003,  and   incorporated   herein  by
               reference.)

    21         Subsidiaries of the Registrant                                                                    88

    24         Power of Attorney                                                                                 92

    31.1       Chief Executive  Officer - Certification  of principal  executive
               officer  pursuant to the Exchange Act Rule 13(a) - 14(a) or 15(d)
               - 14(a).                                                                                          89

    31.2       Chief Financial  Officer - Certification  of principal  financial
               officer  pursuant to the Exchange Act Rule 13(a) - 14(a) or 15(d)
               - 14(a).                                                                                          90

    32.1       Chief  Executive  Officer -  Certification  pursuant to 18 U.S.C.
               Section  1350,  as  adopted   pursuant  to  Section  906  of  the
               Sarbanes-Oxley Act of 2002                                                                        91

    32.2       Chief  Financial  Officer -  Certification  pursuant to 18 U.S.C.
               Section  1350,  as  adopted   pursuant  to  Section  906  of  the
               Sarbanes-Oxley Act of 2002                                                                        91
</TABLE>





* The referenced exhibit is a compensatory contract, plan or arrangement.


                                       84
<PAGE>


                                   SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) 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 COMMUNITY BANKS, INC.

Date:  March 14, 2006                      By:    /s/ Stephen L. Price
                                           -------------------------------------
                                           Stephen L. Price
                                           Chairman and Chief Executive Officer


Date:   March 14, 2006                     By:    /s/ Guy W. Harris
                                           -------------------------------------
                                           Guy W. Harris
                                           Chief Financial Officer

                                       85
<PAGE>


                                  EXHIBIT INDEX

     The  following  exhibits  are filed as part of this report (in  addition to
those  exhibits  listed in Item 15 which are filed as a part of this  report and
incorporated by reference):

<TABLE>
<CAPTION>

         Exhibit Number                                Description of Exhibit

<S>           <C>
              11                    Statement re: Computation of Per Share Earnings

              12                    Statement re: Computation of Ratios

              21                    Subsidiaries of the Registrant

              24                    Power of Attorney

              31.1                  Certification of President and Chief Executive  Officer Pursuant to Section 302 of
                                    Sarbanes-Oxley Act of 2002.

              31.2                  Certification   of  Chief   Financial   Officer   Pursuant   to  Section   302  of
                                    Sarbanes-Oxley Act of 2002.

              32.1                  Certification  of President and Chief  Executive  Officer  Pursuant to Section 906
                                    of Sarbanes-Oxley Act of 2002.

              32.2                  Certification   of  Chief   Financial   Officer   Pursuant   to  Section   906  of
                                    Sarbanes-Oxley Act of 2002.
</TABLE>


                                       86
<PAGE>


EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS

                          Florida Community Banks, Inc.
                   Computation of Net Income Per Common Share

The following tabulation presents the calculation of basic and diluted earnings
per common share for the years ended December 31, 2005, 2004 and 2003.
<TABLE>
<CAPTION>

                                                                        2005               2004             2003
                                                                 ----------------   ---------------    ---------------
Basic Earnings Per Share:
<S>                                                              <C>                <C>                <C>
   Net income................................................    $     18,218,031   $    12,241,932    $     8,396,549
                                                                 ================   ===============    ===============

   Earnings on common shares.................................    $     18,218,031   $    12,241,932    $     8,396,549
                                                                 ================   ===============    ===============

   Weighted average common shares outstanding - basic........           5,476,205         5,419,554          5,396,603
                                                                 ================   ===============    ===============

   Weighted average common shares outstanding - diluted......           5,529,177         5,478,143          5,438,176
                                                                 ================   ===============    ===============

   Basic earnings per common share...........................    $          3.33    $          2.26    $          1.56
                                                                 ===============    ===============    ===============

   Diluted earnings per common share.........................    $          3.29    $          2.23    $          1.54
                                                                 ===============    ===============    ===============
</TABLE>


EXHIBIT 12 - STATEMENT RE: COMPUTATION OF RATIOS

                          Florida Community Banks, Inc.
                Computation of Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>

                                                                               Year Ended December 31,
                                                                  -------------------------------------------------
                                                                       2005             2004              2003
                                                                  --------------    -------------    --------------
                                                                               (Dollars in thousands)

Pretax income.................................................    $       29,622    $      19,936    $       13,487
Add fixed charges:
<S>                                                                       <C>               <C>               <C>
   Interest on deposits.......................................            13,864            7,109             7,924
   Interest on borrowings.....................................             3,521            2,090             2,157
   Portion of rental expense representing interest expense....                61               59                60
                                                                  --------------    -------------    --------------
     Total fixed charges......................................            17,446            9,258            10,141
                                                                  --------------    -------------    --------------

Income before fixed charges...................................    $       47,068    $      29,194    $       23,628
                                                                  ==============    =============    ==============

Pretax income.................................................    $       29,622    $      19,936    $       13,487
Add fixed charges (excluding interest on deposits):
   Interest on borrowings.....................................             3,521            2,090             2,157
   Portion of rental expense representing interest expense....                61               59                60
                                                                  --------------    -------------    --------------
     Total fixed charges......................................             3,582            2,149             2,217
                                                                  --------------    -------------    --------------

Income before fixed charges (excluding interest on
   deposits)..................................................    $       33,204    $      22,085    $       15,704
                                                                  ==============    =============    ==============

Ratio of Earnings to Fixed Charges
   Including interest on deposits.............................             3.71              3.15              2.33
   Excluding interest on deposits.............................             9.27             10.28              7.08
</TABLE>

                                       87
<PAGE>


EXHIBIT 21 - SUBSIDIARIES OF THE REGISTRANT




Subsidiaries - Direct/Wholly-owned                 State of Incorporation

Florida Community Bank                                     Florida

FCBI Capital Trust I                                       Delaware



                                       88
<PAGE>


EXIHIBIT 31.1

                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Stephen L. Price, certify that:

1.   I have reviewed this annual report on Form 10-K of Florida Community Banks,
     Inc.

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material  fact or omit to state a  material  fact  necessary  to make the
     statements made, in light of the circumstances  under which such statements
     were made,  not  misleading  with  respect  to the  period  covered by this
     report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant, as of, and for, the periods presented in this report;

4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules  13a-15(e) and 15d-15(e))  and internal  control over
     financial  reporting  (as  defined  in  Exchange  Act Rules  13a-15(f)  and
     15d-15(f)) for the registrant and have:

     a)   designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          registrant,  including its consolidated subsidiaries, is made known to
          us by others within those entities,  particularly during the period in
          which this report is being prepared;

     b)   designed such internal  control over  financial  reporting,  or caused
          such internal  control over  financial  reporting to be designed under
          our  supervision,   to  provide  reasonable  assurance  regarding  the
          reliability  of financial  reporting and the  preparation of financial
          statements for external purposes in accordance with generally accepted
          accounting principles;

     c)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures and presented in this report our conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     d)   disclosed  in this  report  any  change in the  registrant's  internal
          control over financial reporting that occurred during the registrant's
          fourth quarter that has materially affected or is reasonably likely to
          materially  affect,  the registrant's  internal control over financial
          reporting; and

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's  auditors and the audit committee of registrant's board of
     directors (or persons performing the equivalent functions):

     a)   all significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the  registrant's  ability to
          record, process, summarize and report financial information; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          control over financial reporting.


Date:   March 14, 2006            By:   /s/  Stephen L. Price
                                  ----------------------------------------------
                                  Stephen L. Price, President, Chief Executive
                                  Officer and Chairman of the Board of Directors

                                       89
<PAGE>


EXIHIBIT 31.2

                    CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Guy W. Harris, certify that:

1.   I have reviewed this annual report on Form 10-K of Florida Community Banks,
     Inc.

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material  fact or omit to state a  material  fact  necessary  to make the
     statements made, in light of the circumstances  under which such statements
     were made,  not  misleading  with  respect  to the  period  covered by this
     report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant, as of, and for, the periods presented in this report;

4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules  13a-15(e) and 15d-15(e))  and internal  control over
     financial  reporting  (as  defined  in  Exchange  Act Rules  13a-15(f)  and
     15d-15(f)) for the registrant and have:

     a)   designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          registrant,  including its consolidated subsidiaries, is made known to
          us by others within those entities,  particularly during the period in
          which this report is being prepared;

     b)   designed such internal  control over  financial  reporting,  or caused
          such internal  control over  financial  reporting to be designed under
          our  supervision,   to  provide  reasonable  assurance  regarding  the
          reliability  of financial  reporting and the  preparation of financial
          statements for external purposes in accordance with generally accepted
          accounting principles;

     c)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures and presented in this report our conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     d)   disclosed  in this  report  any  change in the  registrant's  internal
          control over financial reporting that occurred during the registrant's
          fourth quarter that has materially affected or is reasonably likely to
          materially  affect,  the registrant's  internal control over financial
          reporting; and

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's  auditors and the audit committee of registrant's board of
     directors (or persons performing the equivalent functions):

     a)   all significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the  registrant's  ability to
          record, process, summarize and report financial information; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          control over financial reporting.


Date:   March 14, 2006            By: /s/  Guy W. Harris
                                  ----------------------------------------------
                                  Guy W. Harris
                                  Chief Financial Officer

                                       90
<PAGE>



EXHIBIT 32.1

                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
                    AS ADOPTED PURSUANT TO SECTION 906 OF THE
                           SARBANES-OXLEY ACT OF 2002


In connection with Florida Community Banks, Inc.'s ("Company") Annual Report on
Form 10-K for the period ended December 31, 2005 ("Report"), each of the
undersigned certify that:

1.   The Report fully complies with the  requirements  of Section 13(a) or 15(d)
     of the Securities Exchange Act of 1934; and

2.   The information  contained in the Report fairly  presents,  in all material
     respects, the financial condition and results of operations of the Company.





Date:   March 14, 2006             By:   /s/ Stephen L. Price
                                   -------------------------------------------
                                   Stephen L. Price
                                   President and Chief Executive Officer



EXHIBIT 32.2

                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
                    AS ADOPTED PURSUANT TO SECTION 906 OF THE
                           SARBANES-OXLEY ACT OF 2002


In connection with Florida Community Banks, Inc.'s ("Company") Annual Report on
Form 10-K for the period ended December 31, 2005 ("Report"), each of the
undersigned certify that:

1.   The Report fully complies with the  requirements  of Section 13(a) or 15(d)
     of the Securities Exchange Act of 1934; and

2.   The information  contained in the Report fairly  presents,  in all material
     respects, the financial condition and results of operations of the Company.





Date:    March 14, 2006           By:   /s/ Guy W. Harris
                                  -------------------------------------------
                                  Guy W. Harris
                                  Chief Financial Officer


                                       91
<PAGE>




EXHIBIT 24 - POWER OF ATTORNEY


                                POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS,  that each person whose signature  appears below
constitutes  and  appoints  Stephen L. Price and Guy W. Harris and each of them,
his true and lawful  attorney-in-fact,  as agent with full power of substitution
and  re-substitution  for him and in his name,  place and stead,  in any and all
capacity,  to sign any or all amendments to this Form 10-K and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Federal Deposit Insurance  Corporation,  granting unto said attorney-in-fact and
agents in full  power and  authority  to do and  perform  each and every act and
thing requisite and necessary to be done in and about the premises, as fully and
to all  intents  and  purposes  as they  might  or could  be in  person,  hereby
ratifying and confirming all that said  attorneys-in-fact  and agents, and their
substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in capacities and on the dates indicated.

                Directors                                     Date

/s/ Beauford E. Davidson                                 March 14, 2006
----------------------------------------
Beauford E. Davidson


/s/ Patrick B. Langford                                  March 14, 2006
----------------------------------------
Patrick B. Langford


/s/ Lewis J. Nobles, Jr.                                 March 14, 2006
----------------------------------------
Lewis J. Nobles, Jr.


/s/ Jon R. Olliff                                        March 14, 2006
----------------------------------------
Jon R. Olliff


/s/ James O'Quinn                                        March 14, 2006
----------------------------------------
James O'Quinn


/s/ Stephen L. Price                                     March 14, 2006
----------------------------------------
Stephen L. Price


/s/ Bernard T. Rasmussen                                 March 14, 2006
----------------------------------------
Bernard T. Rasmussen


/s/ Daniel G. Rosbough                                   March 14, 2006
----------------------------------------
Daniel G. Rosbough


/s/ James E. Williams, Jr.                               March 14, 2006
----------------------------------------
James E. Williams, Jr.

                                       92