UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934


For the Quarterly Period Ended ~~MARCH 31,~~SEPTEMBER 30, 2004		Commission File Number 000-21329

TIB FINANCIAL CORP.

(Exact name of registrant as specified in its charter)


FLORIDA		65-0655973

(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		~~(I.R.S. Employer~~ Identification No.)

599 9^th STREET NORTH, SUITE 101, NAPLES, FLORIDA 34102-5624

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (239) 263-3344

Not Applicable

(Former name, former address and former fiscal year,

if changed since last report)

Check whether the issuer (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 issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X [X] or No [ ]

Indicate by check mark whether the issuer is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes [ ] or No X [X]

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:


Common Stock, $0.10 Par Value		~~5,644,264~~5,672,302

Class		Outstanding as of ~~May 6,~~November 5, 2004

TABLE OF CONTENTS


	Part I. FINANCIAL INFORMATION
	Item 1. Financial Statements
		CONSOLIDATED BALANCE SHEETS
		CONSOLIDATED STATEMENTS OF INCOME
		CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
		CONSOLIDATED STATEMENTS OF CASH FLOWS
		CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
	Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
	Item 4. CONTROLS AND PROCEDURES
Part II. OTHER INFORMATION
	Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
	Item 5. OTHER INFORMATION
	Item 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
Ex-31.1: Section 302 Certification of President and CEO
Ex-31.2: Section 302 Certification of Executive Vice President and CFO
Ex-32.1: Section 906 Certification of President and CEO
Ex-32.2: Section 906 Certification of Executive Vice President and CFO

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

TIB FINANCIAL CORP.

CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share amounts)


					September 30, 2004		December 31, 2003
	March 31, 2004		December 31, 2003		(Unaudited)
ASSETS	(Unaudited)
Cash and due from banks	$	21,825,893	$	17,196,506	$	17,363	$	17,197
Federal funds sold		42,022,000		16,484,000		—		16,484

Cash and cash equivalents		63,847,893		33,680,506		17,363		33,681
Investment securities available for sale		50,488,199		52,556,567		78,697		52,557
Loans, net of deferred loan costs and fees		551,568,116		540,412,620		620,333		540,413
Less: allowance for loan losses		5,346,576		5,215,901		6,089		5,216

Loans, net		546,221,540		535,196,719		614,244		535,197
Premises and equipment, net		22,143,207		21,073,176		26,898		21,073
Goodwill		155,232		155,232		155		155
Intangible assets, net		1,614,084		1,687,062		1,465		1,687
Accrued interest receivable and other assets		26,086,405		24,948,486		26,864		24,948

TOTAL ASSETS	$	710,556,560	$	669,297,748	$	765,686	$	669,298

LIABILITIES
Deposits:
Noninterest-bearing demand	$	150,887,956	$	121,727,734	$	133,888	$	121,728
Interest-bearing		466,545,061		432,085,199		504,411		432,085

Total Deposits		617,433,017		553,812,933		638,299		553,813
Federal Home Loan Bank (FHLB) advances		20,000,000		45,000,000		25,000		45,000
Short-term borrowings		5,347,202		4,041,399		9,353		4,041
Long-term borrowings		18,250,000		18,250,000		18,250		18,250
Accrued interest payable and other liabilities		6,251,266		6,947,570		7,257		6,948

TOTAL LIABILITIES		667,281,485		628,051,902		698,159		628,052

SHAREHOLDERS’ EQUITY
Common stock — $.10 par value: 7,500,000 shares authorized, 4,489,064 and 4,431,328 shares issued		448,906		443,133
Preferred stock - no par value: 5,000,000 and 0 shares authorized, 0 and 0 shares issued						—		—
Common stock - - $.10 par value: 20,000,000 and 7,500,000 shares authorized, 5,672,202 and 4,431,328 shares issued						567		443
Additional paid in capital		14,797,389		14,254,731		38,237		14,255
Retained earnings		26,970,780		26,202,982		28,291		26,203
Accumulated other comprehensive income		1,058,000		345,000		432		345

TOTAL SHAREHOLDERS’ EQUITY		43,275,075		41,245,846		67,527		41,246

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	710,556,560	$	669,297,748	$	765,686	$	669,298

TIB FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(dollars in thousands, except earnings per share amounts)


					Three months ended				Nine months ended
					September 30,				September 30,
	Three months ended March 31,				2004		2003		2004		2003
INTEREST AND DIVIDEND INCOME	2004		2003
Loans, including fees	$	8,600,646	$	7,578,275	$	9,648	$	7,974	$	27,208	$	23,250
Investment securities:
U.S. Treasury securities		1,879		1,889		43		2		81		6
U.S. Government agencies and corporations		355,621		526,960		573		577		1,475		1,546
States and political subdivisions, tax-exempt		93,680		61,326		107		92		312		236
States and political subdivisions, taxable		53,611		62,977		48		60		152		184
Marketable equity securities		58,793		—		66		—		186		—
Interest bearing deposits in other bank		752		576		4		1		9		2
Federal Home Loan Bank Stock		15,583		16,282		16		10		40		40
Federal funds sold		38,076		41,798		23		34		102		227

TOTAL INTEREST AND DIVIDEND INCOME		9,218,641		8,290,083		10,528		8,750		29,565		25,491

INTEREST EXPENSE
Deposits		1,892,269		1,979,560		2,231		1,952		6,103		6,056
Federal Home Loan Bank advances		93,921		68,947		95		44		259		146
Short-term borrowings		8,825		10,762		19		9		40		30
Long term borrowings		395,321		397,594		402		398		1,193		1,193

TOTAL INTEREST EXPENSE		2,390,336		2,456,863		2,747		2,403		7,595		7,425

NET INTEREST INCOME		6,828,305		5,833,220		7,781		6,347		21,970		18,066
PROVISION FOR LOAN LOSSES		369,000		330,000		471		447		1,489		1,035

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		6,459,305		5,503,220		7,310		5,900		20,481		17,031
NON-INTEREST INCOME
Service charges on deposit accounts		644,052		572,615		619		632		1,900		1,790
Investment securities gains, net		44,023		5,337		7		3		103		8
Merchant bankcard processing income		1,759,806		1,378,073		1,221		1,213		4,515		3,812
Gain on sale of government guaranteed loans		—		87,470		—		—		—		87
Fees on mortgage loans sold		398,323		601,752		363		589		1,406		1,800
Retail investment services		93,732		86,958		89		112		290		299
Gain on sale of investment in ERAS Joint Venture						—		—		—		202
Other income		333,109		345,796		344		347		1,033		1,065

TOTAL NON-INTEREST INCOME		3,273,045		3,078,001		2,643		2,896		9,247		9,063
NON-INTEREST EXPENSE
Salaries and employee benefits		3,441,925		3,166,777		3,699		3,271		10,755		9,512
Net occupancy expense		1,122,310		1,026,516		1,212		1,088		3,525		3,197
Other expense		3,229,997		2,589,224		3,013		2,681		9,591		7,983

TOTAL NON-INTEREST EXPENSE		7,794,232		6,782,517		7,924		7,040		23,871		20,692

INCOME BEFORE INCOME TAX EXPENSE		1,938,118		1,798,704		2,029		1,756		5,857		5,402
INCOME TAX EXPENSE		665,300		636,820		692		615		1,990		1,890

INCOME FROM CONTINUING OPERATIONS	$	1,272,818	$	1,161,884	$	1,337	$	1,141	$	3,867	$	3,512
DISCONTINUED OPERATIONS
Income from Keys Insurance Agency, Inc. operations		—		43,865		—		36		—		201
Income tax expense		—		16,480		—		14		—		75

INCOME FROM DISCONTINUED OPERATIONS		—		27,385		—		22		—		126

NET INCOME	$	1,272,818	$	1,189,269	$	1,337	$	1,163	$	3,867	$	3,638

BASIC EARNINGS PER SHARE:
Continuing operations	$	0.29	$	0.28	$	0.24	$	0.26	$	0.75	$	0.84
Discontinued operations		—		0.01		—		—		—		0.03

Basic earnings per share	$	0.29	$	0.29	$	0.24	$	0.26	$	0.75	$	0.87

DILUTED EARNINGS PER SHARE:
Continuing operations	$	0.27	$	0.27	$	0.23	$	0.25	$	0.72	$	0.80
Discontinued operations		—		0.01		—		—		—		0.03

Diluted earnings per share	$	0.27	$	0.28	$	0.23	$	0.25	$	0.72	$	0.83

TIB FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
(dollars in thousands, except per share amounts)

Additional Accumulated Other Total
Common Paid in Retained Comprehensive Comprehensive Shareholders'
Shares
Stock
Capital
Earnings
Income (Loss)
Income
Equity
Balance,December 31, 2003
4,431,328 $ 443,133 $ 14,254,731 $ 26,202,982 $ 345,000 $ 41,245,846
Comprehensive income:
Net income — — 1,272,818 — $ 1,272,818 1,272,818
Other comprehensive income, net of tax expense of $431,000:
Net market valuation adjustment on securities available for sale — — — — 740,470 740,470
Less: reclassification adjustment for gains included in net income — — — — (27,470 ) (27,470 )

Other comprehensive income, net of tax — — — 713,000 713,000

Comprehensive income $ 1,985,818

Exercise of stock options 57,736 5,773 420,778 — — 426,551
Income tax benefit from stock options exercised 121,880 121,880
Cash dividends declared, $.1125 per share — — (505,020 ) — (505,020 )

Balance,March 31, 2004
4,489,064 $ 448,906 $ 14,797,389 $ 26,970,780 $ 1,058,000 $ 43,275,075


					Additional					Accumulated Other					Total							Additional					Accumulated Other			Total
			Common		Paid in		Retained			Comprehensive		Comprehensive			Shareholders'					Common		Paid in		Retained			Comprehensive			Shareholders’
	Shares		Stock		Capital		Earnings			Income (Loss)		Income			Equity			Shares		Stock		Capital		Earnings			Income (Loss)			Equity
Balance,December 31, 2002		4,035,625	$	403,563	$	8,965,816	$	23,021,698		$	1,115,000				$	33,506,077
Balance,July 1, 2004																			5,657,957	$	566	$	38,090	$	27,591		($	1,081	)	$	65,166
Comprehensive income:
Net income				—		—		1,189,269			—	$	1,189,269			1,189,269					—		—		1,337			—			1,337
Other comprehensive income, net of tax expense of $35,000:
Other comprehensive income, net of tax expense of $913:
Net market valuation adjustment on securities available for sale				—		—		—			—		60,331			60,331					—		—		—			1,517
Less: reclassification adjustment for gains included in net income				—		—		—			—		(3,331	)		(3,331	)				—		—		—			(4	)

Other comprehensive income, net of tax				—		—		—			57,000		57,000																		1,513

Comprehensive income												$	1,246,269																		2,850

Exercise of stock options		78,800		7,880		448,165		—			—					456,045			14,245		1		98		—			—			99
Cash dividends declared, $.11 per share				—		—		(452,587	)		—					(452,587	)
Income tax benefit from stock options exercised																					—		49		—			—			49
Cash dividends declared, $.1125 per share																					—		—		(637	)		—			(637	)

Balance,March 31, 2003		4,114,425	$	411,443	$	9,413,981	$	23,758,380		$	1,172,000				$	34,755,804
Balance,September 30, 2004																			5,672,202	$	567	$	38,237	$	28,291		$	432		$	67,527


					Additional						Accumulated Other			Total
			Common		Paid in			Retained			Comprehensive			Shareholders’
	Shares		Stock		Capital			Earnings			Income (Loss)			Equity
Balance,July 1, 2003		4,407,578	$	441	$	13,843		$	24,559		$	1,511		$	40,354
Comprehensive income:
Net income				—		—			1,163			—			1,163
Other comprehensive income, net of tax benefit of $647:
Net market valuation adjustment on securities available for sale				—		—			—			(1,072	)
Less: reclassification adjustment for gains included in net income				—		—			—			(2	)
Other comprehensive income, net of tax															(1,074	)

Comprehensive income															89

Exercise of stock options		500		—		7			—			—			7
Private Placement of 280,653 common shares				—		(1	)		—			—			(1	)
Cash dividends declared, $.11 per share				—		—			(485	)		—			(485	)

Balance,September 30, 2003		4,408,078	$	441	$	13,849		$	25,237		$	437		$	39,964

~~(See notes to consolidated financial statements)~~(continued)


					Additional					Accumulated Other			Total
			Common		Paid in		Retained			Comprehensive			Shareholders’
	Shares		Stock		Capital		Earnings			Income (Loss)			Equity
Balance,January 1, 2004		4,431,328	$	443	$	14,255	$	26,203		$	345		$	41,246
Comprehensive income:
Net income				—		—		3,867			—			3,867
Other comprehensive income, net of tax expense of $54:
Net market valuation adjustment on securities available for sale				—		—		—			151
Less: reclassification adjustment for gains included in net income				—		—		—			(64	)
Other comprehensive income, net of tax				—		—		—						87

Comprehensive income														3,954

Public offering of 1,150,000 shares		1,150,000		115		23,115								23,230
Exercise of stock options		90,874		9		624		—			—			633
Income tax benefit from stock options exercised		—		—		243								243
Cash dividends declared, $.3375 per share				—		—		(1,779	)		—			(1,779	)

Balance,September 30, 2004		5,672,202	$	567	$	38,237	$	28,291		$	432		$	67,527

~~TIB FINANCIAL CORP.~~
~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~
~~INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS~~
~~(Unaudited)~~

For the three month period ended
March 31,
2004
2003
CASH FLOWS FROM OPERATING ACTIVITIES

Net Income $ 1,272,818 $ 1,189,269
Adjustments to reconcile net income to net cash provided by operating activities:
Net amortization of investments 11,456 14,959
Amortization of intangible assets 72,978 73,017
Depreciation of premises and equipment 453,759 422,842
Provision for loan losses 369,000 330,000
Provision for losses on unfunded loan commitments (2,000 ) —
Deferred income tax benefit (114,522 ) (11,717 )
Deferred net loan costs and fees (108,335 ) (35,434 )
Investment securities net gains (44,023 ) (5,337 )
Net gain on sale/disposal of premises and equipment (1,141 ) (726 )
Gain on sales of government guaranteed loans, net — (87,470 )
Mortgage loans originated for sale (27,194,867 ) (28,174,270 )
Proceeds from sale of mortgage loans 24,901,284 31,619,652
Fees on mortgage loans sold (398,323 ) (601,752 )
Increase in accrued interest receivable and other assets (12,491 ) (673,817 )
Decrease in accrued interest payable and other liabilities (578,920 ) (491,943 )

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
(1,373,327 ) 3,567,273

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of investment securities available for sale — (1,661,382 )
Repayments of principal and maturities of investment securities available for sale 1,199,315 5,123,064
Sales of investment securities available for sale 2,045,620 —
Net (purchase) sale of FHLB stock 1,250,000 (139,700 )
Proceeds from sales of government guaranteed loans 568,719 2,241,119
Loans originated or acquired, net of principal repayments (11,854,205 ) (19,000,358 )
Purchases of premises and equipment (1,525,018 ) (876,653 )
Sales of premises and equipment 2,369 1,287

NET CASH USED BY INVESTING ACTIVITIES
(8,313,200 ) (14,312,623 )

CASH FLOWS FROM FINANCING ACTIVITIES

Net increase in federal funds purchased and securities sold under agreements to repurchase 1,305,803 425,242
Net decrease in FHLB short-term advances (15,000,000 ) —
Proceeds from FHLB long-term advances — 10,000,000
Repayments of FHLB long-term advances (10,000,000 ) (20,000,000 )
Net increase in demand, money market and savings accounts 54,250,246 22,588,350
Net increase in time deposits 9,369,838 40,737,479
Proceeds from exercise of stock options 426,551 456,045
Cash dividends paid (498,524 ) (443,918 )

NET CASH PROVIDED BY FINANCING ACTIVITIES
39,853,914 53,763,198

NET INCREASE IN CASH AND CASH EQUIVALENTS
30,167,387 43,017,848
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
33,680,506 24,069,659

CASH AND CASH EQUIVALENTS AT END OF PERIOD
$ 63,847,893 $ 67,087,507

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS:

Cash paid for:
Interest $ 3,621,186 $ 3,357,811
Income taxes — —


					Additional					Accumulated Other			Total
			Common		Paid in		Retained			Comprehensive			Shareholders’
	Shares		Stock		Capital		Earnings			Income (Loss)			Equity
Balance,January 1, 2003		4,035,625	$	403	$	8,966	$	23,022		$	1,115		$	33,506
Comprehensive income:
Net income				—		—		3,638			—			3,638
Other comprehensive income, net of tax benefit of $408:
Net market valuation adjustment on securities available for sale				—		—		—			(673	)
Less: reclassification adjustment for gains included in net income				—		—		—			(5	)
Other comprehensive income, net of tax				—		—		—						(678	)

Comprehensive income														2,960

Exercise of stock options		91,800		10		568		—			—			578
Private Placement of 280,653 common shares		280,653		28		4,315								4,343
Cash dividends declared, $.33 per share				—		—		(1,423	)		—			(1,423	)

Balance,September 30, 2003		4,408,078	$	441	$	13,849	$	25,237		$	437		$	39,964

(See notes to consolidated financial statements)

TIB FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(Unaudited)
(dollars in thousands)


	For the nine month period ended
	September 30,
	2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	3,867		$	3,638
Adjustments to reconcile net income to net cash provided by operating activities:
Net amortization of investments		42			45
Amortization of intangible assets		222			219
Depreciation of premises and equipment		1,393			1,307
Provision for loan losses		1,489			1,035
Provision for losses on unfunded loan commitments		18			—
Deferred income tax benefit		(98	)		(571	)
Deferred net loan costs and fees		(224	)		(840	)
Investment securities net gains		(103	)		(8	)
Net (gain) loss on sale/disposal of premises and equipment		—			(2	)
Loss on sale of assets of Keys Insurance Agency, Inc.		—			15
Gain on sale of investment in ERAS JV		—			(202	)
Gain on sales of government guaranteed loans, net		—			(87	)
Mortgage loans originated for sale		(83,534	)		(90,336	)
Proceeds from sale of mortgage loans		83,117			92,136
Fees on mortgage loans sold		(1,406	)		(1,800	)
(Increase) decrease in accrued interest receivable and other assets		(349	)		3,774
Increase (decrease) in accrued interest payable and other liabilities		346			(1,390	)

NET CASH PROVIDED BY OPERATING ACTIVITIES		4,780			6,933

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities available for sale		(38,368	)		(24,846	)
Repayments of principal and maturities of investment securities available for sale		3,149			13,101
Sales of investment securities available for sale		9,281			—
Net sale (purchase) of FHLB stock		1,000			(390	)
Purchase of life insurance policies		(700	)		(250	)
Proceeds from sales of government guaranteed loans		569			2,241
Proceeds from sales assets of Keys Insurance Agency, Inc.		—			184
Loans originated or acquired, net of principal repayments		(79,872	)		(69,294	)
Proceeds from the sale of investment in ERAS JV		—			327
Purchases of premises and equipment		(8,276	)		(2,944	)
Sales of premises and equipment		98			4

NET CASH USED BY INVESTING ACTIVITIES		(113,119	)		(81,867	)

CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase		5,312			(1,507	)
Net increase in FHLB short-term advances		10,000			15,000
Repayments of FHLB long-term advances		(30,000	)		—
Net increase in demand, money market and savings accounts		43,562			17,265
Net increase in time deposits		40,924			42,934
Proceeds from exercise of stock options		633			578
Proceeds from private placement of common stock		—			4,343
Proceeds from public offering of common stock		23,230			—
Cash dividends paid		(1,640	)		(1,381	)

NET CASH PROVIDED BY FINANCING ACTIVITIES		92,021			77,232

NET INCREASE IN CASH AND CASH EQUIVALENTS		(16,318	)		2,298
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		33,681			24,070

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	17,363		$	26,368

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS:

TIB FINANCIAL CORP.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
~~March 31,~~September 30, 2004
(Unaudited)

NOTE 1 – BASIS OF PRESENTATION & ACCOUNTING POLICIES

TIB Financial Corp. is a financial holding company headquartered in Naples, Florida. TIB Financial Corp. owns and operates TIB Bank of the Keys, which has a total of ~~fourteen~~sixteen branches in Florida that are located in Monroe, Miami-Dade, Collier and Lee counties.

The accompanying unaudited consolidated financial statements for TIB Financial Corp. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statement presentation. For further information and an additional description of the Company’s accounting policies, refer to the Company’s annual report for the year ended December 31, 2003.

The consolidated statements include the accounts of TIB Financial Corp. and its wholly-owned subsidiaries, TIB Bank of the Keys, TIB Software and Services, Inc. ~~(corporation~~(this corporation was dissolved in March 2004 – see Note 2), and Keys Insurance Agency, Inc. ~~(assets~~(whose assets were sold in August 2003 – see Note ~~11)~~10) and the Bank’s two subsidiaries, TIB Government Loan Specialists, Inc. ~~(corporation~~(this corporation was dissolved in March 2004 – see Note 2) and TIB Investment Center Inc., collectively known as the Company. All significant intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Certain amounts previously reported on have been reclassified to conform to the current period presentation.

As used in this document, the terms “we,” “us,” “our,” “TIB Financial,” and “Company” mean TIB Financial Corp. and its subsidiaries (unless the context indicates another meaning), and the term “Bank” means TIB Bank of the Keys and its subsidiaries (unless the context indicates another meaning).

~~RECENT DEVELOPMENTS~~

On April 15, 2004, we closed the sale of 1,000,000 shares of our common stock at a price of $22.00 per share before commissions and expenses which are estimated to be approximately $1,855,000. The shares were sold on a firm commitment basis through Advest, Inc. Advest, Inc. also purchased an additional 150,000 shares from the Company on May 6, 2004, at $22.00 per share before commissions and expenses. The net proceeds of the offering will be used to provide capital to support continued loan and deposit growth throughout our South Florida markets.

CRITICAL ACCOUNTING POLICIES

The accounting and reporting policies of the Company are in accordance with accounting principles generally accepted within the United States of America and conform to general practices within the banking industry. Accounting and reporting policies for the allowance for loan losses are deemed critical since they involve the use of estimates and require significant management judgments. Losses on loans result from a broad range of causes from borrower specific problems, to industry issues, to the impact of the economic environment. The identification of these factors that lead to default or non-performance under a borrower loan agreement and the estimation of loss in these situations are very subjective. In addition, a dramatic change in the performance of one or a small number of borrowers can have a significant impact on the estimate of losses. Management has implemented a process that has been applied consistently to systematically consider the many variables that impact the estimation of the allowance for loan losses.

Additional information with regard to the Company’s methodology and reporting of the allowance for loan losses is included in the 2003 Annual Report and 10-K.

~~Intangible amortization expense totaled $72,978 for the three months ended March 31, 2004.~~

Goodwill recorded at March 31, 2004 totals $155,232, and relates to our prior acquisition of a firm specializing in government guaranteed loans. There was no change in the carrying amount of goodwill from December 31, 2003.

Stock options for ~~20,082~~32,500 and ~~1,517~~5,000 shares of common stock were not considered in computing diluted earnings per common share for the three months ended September 30, 2004 and 2003 because they were anti-dilutive. Stock options for 28,786 and 2,326 shares of common stock were not considered in computing diluted earnings per common share for the nine months ended September 30, 2004 and 2003 because they were anti-dilutive. The effect of stock options is the sole common stock equivalent for purposes of calculating diluted earnings per common share.

Total stock options granted, exercised, and expired/forfeited during the ~~three~~nine months ended ~~March 31,~~September 30, 2004, were 37,500, ~~57,736,~~90,874, and ~~200,~~7,900, respectively. As of ~~March 31,~~September 30, 2004, ~~457,069~~there were 416,231 options for shares ~~were~~ outstanding.

Employee compensation expense under stock options is reported using the intrinsic value method. No stock-based compensation cost is reflected in net income, as all options granted had an exercise price equal to or greater than the market price of the underlying common stock at date of grant. The following table illustrates the effect on net income and earnings per share if expense was measured using the fair value recognition provisions of FASB Statement No. 123, “Accounting for Stock-Based Compensation.”

On February 24, 2004, the Board of Directors approved the 2004 Equity Incentive Plan for directors and employees, which was also approved by the shareholders at their annual meeting held on May 25, 2004. The Plan allows the Company to continue to provide equity compensation to employees and directors in order to enable the Company to attract and retain qualified persons to serve as directors and employees, to enhance their equity interest in the Company, and thereby to solidify their common interest with shareholders in enhancing the value and growth of the Company. Refer to the Company’s 2004 Proxy statement for additional information regarding the 2004 Equity Incentive Plan.

Federal banking regulators have established certain capital adequacy standards required to be maintained by banks and bank holding companies. The minimum requirements established in the regulations are set forth in the table below, along with the actual ratios at ~~March 31,~~September 30, 2004 and December 31, 2003:

Management believes, as of ~~March 31,~~September 30, 2004, that the Company and the Bank met all capital requirements to which they are subject. The Company has included ~~in Tier 1 Capital a portion of~~ the trust preferred securities that were issued in September 2000 and July ~~2001.~~2001 in Tier 1 capital.

~~As indicated in Note 1, we~~We completed an offering of 1,150,000 shares of our common stock during the second quarter of 2004.

TIB Financial Corp. has two reportable segments in their continuing operations: community banking and merchant bankcard processing. The community banking segment’s business is to attract deposits from the public and to use such deposits to make real estate, business and consumer loans in its primary service area. The merchant bankcard processing segment processes credit card transactions for local merchants. Parent and other includes the operations of the holding company and retail investment service operations of the Bank.

The results of Keys Insurance Agency, Inc. are not included in the segment reporting as they are classified separately as discontinued operations in our consolidated financial statements (see Note ~~11)~~10). ~~Total assets of Keys Insurance Agency, Inc. at March 31, 2004 and March 31, 2003 were $0 and $2,207,871 respectively.~~

The Company’s reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different marketing strategies.

Intercompany transactions have been ~~ignored~~eliminated in preparing the segment reporting amounts below.

The results of the Company’s segments are as ~~follows:~~follows (dollars in thousands):

The Company discontinued separate reporting of its “government guaranteed loan sales and servicing” segment in 2003. This segment is now included as part of the “Community Banking” segment above.12

NOTE 1110 – DISCONTINUED OPERATIONS

On August 15, 2003, ~~the Company~~we closed the sale of Keys Insurance Agency, Inc., a wholly owned subsidiary of the Company, to a former director of the Company and TIB Bank, ~~of the Keys,~~ and his partner. The transaction was structured as a sale of the agency assets. The buyer paid ~~$2,204,930~~$2.2 million in cash at the closing. Of the cash payment at closing, proceeds of ~~$2,020,938~~$2.0 million were pursuant to a loan from TIB Bank ~~of the Keys (a subsidiary of the Company)~~ to the buyer. ~~The Company~~We recognized a loss of ~~$14,676~~$15,000 on the transaction.

The results of Keys Insurance Agency, Inc. operations, which have been classified as discontinued operations in the accompanying consolidated financial statements, are summarized as follows:


	2004		2003
FOR THE THREE MONTHS ENDED MARCH 31:
(dollars in thousands)					2004		2003
For the three months ended September 30:
Other income	$	—	$	436,420	$	—	$	277
Depreciation and amortization		—		13,561		—		7
Other expense		—		378,994		—		234

Pretax income from discontinued operations	$	—	$	43,865	$	—	$	36

For the nine months ended September 30:
Other income					$	—	$	1,255
Depreciation and amortization						—		34
Other expense						—		1,020

Pretax income from discontinued operations					$	—	$	201

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain of the matters discussed under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Form 10-Q may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act and as such may involve known and unknown risk, uncertainties and other factors which may cause the actual results, performance or achievements of TIB Financial Corp. to be materially different from future results described in such forward-looking statements. Actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, without limitation: the effects of future economic conditions; governmental monetary and fiscal policies, as well as legislative and regulatory changes; the risks of changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral, and interest rate risks; the effects of

competition from other commercial banks, thrifts, consumer finance companies, and other financial institutions operating in the Company’s market area and elsewhere. All forward-looking statements attributable to the Company are expressly qualified in their entirety by these cautionary statements. The Company disclaims any intent or obligation to update these forward-looking statements, whether as a result of new information, future events or otherwise.

The following discussion addresses the factors that have affected the financial condition and results of operations of TIB Financial Corp. (the “Company”) as reflected in the unaudited consolidated statement of condition as of ~~March 31,~~September 30, 2004, and statement of income for the three months and nine months ended ~~March 31,~~September 30, 2004. Operating results for the three months and nine months ended ~~March 31,~~September 30, 2004 are not necessarily indicative of trends or results to be expected for the year ended December 31, 2004.

THREE MONTHS ENDED ~~MARCH 31,~~SEPTEMBER 30, 2004 AND 2003

RESULTS OF OPERATIONS

Our net income of ~~$1,272,818~~$1,337,000 for the ~~first~~third quarter of 2004 ~~was an $83,549~~increased $174,000, or ~~7.0% increase~~15.0%, compared to ~~$1,189,269~~$1,163,000 for the same period last year. Net income from continuing operations was ~~$1,272,818~~$1,337,000 for the ~~first~~third quarter of 2004, compared to ~~$1,161,884~~$1,141,000 for the ~~first~~third quarter of 2003, an increase of ~~$110,934~~$196,000 or ~~9.5%~~17.2%. As discussed in Note ~~11,~~10, the Company closed the sale of the assets of its wholly owned subsidiary, Keys Insurance Agency, Inc., in the third quarter of 2003.

Basic and diluted earnings per share for continuing operations for the ~~first~~third quarter of 2004 were ~~$0.29~~$0.24 and ~~$0.27~~$0.23, respectively, as compared to ~~$0.29~~$0.26 and ~~$0.28~~$0.25 per share in the previous year’s quarter. Basic weighted average common equivalent shares outstanding for the three months ended ~~March 31,~~September 30, 2004 were ~~4,462,493~~5,660,075 compared to ~~4,050,186.~~4,407,920 for the three months ended

September 30, 2003. This ~~10.2%~~28.4% increase in shares outstanding resulted from the exercise of stock options and the issuance of ~~280,653~~1,150,000 shares in ~~June 2003~~the second quarter of 2004 in connection with a ~~private placement that raised $4.3 million in new capital.~~public offering of our shares.

Annualized return on average assets was ~~0.75%~~0.72% and ~~0.82%~~0.74% for the ~~first~~third quarter of 2004 and 2003, while the annualized return on average shareholders’ equity was ~~12.04%~~8.06% and ~~13.91%~~11.64% for the same period. The decline in the return on average shareholders’ equity in the current year is primarily attributable to the 69.0% increase in shareholders’ equity from September 30, 2003 to September 30, 2004 due to the stock offering in the second quarter of 2004 and exercises of stock options.

NET INTEREST INCOME

Net interest income represents the amount by which interest income on interest-earning assets exceeds interest expense incurred on interest-bearing liabilities. Net interest income is the largest component of our income, and is affected by the interest rate environment, and the volume and the composition of interest-earning assets and interest-bearing liabilities. Our interest earning assets include loans, federal funds sold, interest bearing deposits in other banks, and investment securities. Our interest-bearing liabilities include deposits, federal funds purchased, notes payable related to Company shares repurchased, subordinated debentures, advances from the Federal Home Loan Bank, and other short term borrowings.

Net interest income increased ~~$995,085,~~$1,434,000, or ~~17.1%~~22.6%, to ~~$6,828,305~~$7,781,000 in the three months ended ~~March 31,~~September 30, 2004 as compared to the same period last year. The prime rate as published in the Wall Street Journal began 2003 at 4.25% and in June 2003 it declined to 4.00% and remained at that rate until July of 2004 when it increased to 4.25%. In August the rate increased to 4.50% and increased again in September to 4.75%. Many of the Bank’s loans are indexed to this floating rate, although they may also include floors. The higher level of prime rate in the third quarter of 2004 compared to the comparative period in 2003 has not yet significantly impacted yields in the loan portfolio as the effects of the higher rates are just beginning to be reflected in variable loan re-pricings and new loan production. Increased loan volume is the primary driver affecting the increased net interest income in the current period.

PROVISION FOR LOAN LOSSES

The provision for loan losses represents the charge to income necessary to adjust the allowance for loan losses to an amount that represents management’s assessment of the estimated probable credit losses inherent in our loan portfolio which have been incurred at each balance sheet date.

The provision for loan losses increased $24,000, or 5.4%, to $471,000 in the third quarter of 2004 compared to $447,000 in the comparable prior year quarter. The higher provision for loan losses in 2004 was primarily attributable to the continued growth and change in composition of the loan portfolio coupled with slightly higher charge offs. Total loans outstanding grew $27.9 million, or 4.7%, during the third quarter of 2004, as compared to $37.3 million, or 7.9%, during the third quarter of 2003. The largest dollar increase during the third quarter of 2004 occurred in commercial real estate loans which increased $8.7 million, or 2.6%. This compares to an $8.0 million, or 2.8% increase in commercial real estate loans during the third quarter of 2003. We have also continued to expand our indirect lending portfolio. At September 30, 2004, indirect auto dealer loans accounted for $83.7 million, or 13.5%, of our loan portfolio. This compares to an indirect lending portfolio of $50.9 million at September 30, 2003 which represented 10.0% of our total loan portfolio.

Total loans outstanding were $618.3 million at September 30, 2004, compared to $510.5 million at September 30, 2003. Net charge-offs were $188,000 during the three months ended September 30, 2004 compared to $147,000 for the same period in 2003.

Management will continue to monitor the credit quality of the lending portfolio and will recognize additional provisions in the future as necessary, in the opinion of management, to maintain the allowance for loan losses at an appropriate level.

NON-INTEREST INCOME

Non-interest income for the third quarter of 2004 was $2,643,000. This represents a $253,000 or 8.7% decrease over the prior year quarter which totaled $2,896,000. The decrease in non-interest income is primarily attributable to a decrease of $226,000 in fees on mortgage loans sold. This decrease in fees on mortgage loans sold is primarily a result of delayed closings due to an abnormally active hurricane season in South Florida combined with a decline in South Florida market refinancing and mortgage loan application activity.

NON-INTEREST EXPENSE

Non-interest expense for the third quarter of 2004 was $7,924,000. This represents an $884,000, or 12.6%, increase over the prior year quarter which totaled $7,040,000. The increase in non-interest expense is attributable to salaries and employee benefits increasing $428,000, net occupancy expense increasing $124,000, and other expense increasing $332,000. The increases are primarily the result of costs associated with the growth of our business and continued investment and expansion in the Southwest Florida market.

At September 30, 2004 the Bank had 303 full-time employees, compared to 253 at September 30, 2003. The increase in staff was required to manage the growth of the organization.

In general, as we continue to renovate facilities and add branches, the net occupancy expense category will grow overall. In December 2003, we leased a new operations facility in Homestead, Florida. Building rent expense on this property for the three months ended September 30, 2004 totaled $35,000. Pursuant to the opening of the Metro Parkway and Prospect Ave locations in Southwest Florida, the third quarter of 2004 included approximately $70,000 in occupancy expenses associated with the operations of these newly opened branches.

In the category of other expense, professional fees increased approximately $112,000 due primarily to increased internal control documentation and testing costs related to the implementation of the Sarbanes Oxley Act of 2002.

INCOME TAXES

The provision for income taxes related to continuing operations totaled $692,000, for an effective tax rate of 34.1%, for the three months ended September 30, 2004, and $615,000, for an effective tax rate of 35.0%, for the three months ended September 30, 2003.

NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

RESULTS OF OPERATIONS

Our net income of $3,867,000 for the first nine months of 2004 increased $229,000, or 6.3%, compared to $3,638,000 for the same period last year. Net income from continuing operations was $3,867,000 for the first nine months of 2004, compared to $3,512,000 for the first nine months of 2003, an increase of $355,000 or 10.1%. As discussed in Note 10, the Company closed the sale of the assets of its wholly owned subsidiary, Keys Insurance Agency, Inc. in the third quarter of 2003.

Basic and diluted earnings per share for the first nine months of 2004 were $0.75 and $0.72 respectively as compared to $0.87 and $0.83 per share in the previous year’s period. Basic weighted average common equivalent shares outstanding for the nine months ended September 30, 2004 were 5,187,456 compared to 4,204,840 for the nine months ended September 30, 2003. This 23.4% increase in shares outstanding resulted from the issuance of an additional 1,150,000 shares in the second quarter of 2004 in connection with a public offering of our common stock that raised $23.2 million in new capital, the issuance of 280,653 shares in June 2003 in connection with a private placement of our stock that raised $4.3 million in new capital, and the exercise of stock options.

Annualized return on average assets was 0.71% and 0.79% for the first nine months of 2004 and 2003, while the annualized return on average shareholders’ equity was 9.15% and 13.21% for the same period. The decline in the return on average shareholders’ equity in the current year is primarily attributable to the stock offering in the second quarter of 2004.

NET INTEREST INCOME

Net interest income increased $3,904,000, or 21.6%, to $21,970,000 in the nine months ended September 30, 2004 as compared to the same period last year. The prime rate as published in the Wall Street Journal began 2003 at 4.25% and in June 2003 it declined to 4.00% and remained at that rate until July of 2004 when it increased to 4.25%. In August the rate increased to 4.50% and increased again in September to 4.75%. Many of the Bank’s loans are indexed to this floating rate, although they also include floors. ~~The lower level~~

With short-term interest rates increasing slowly, or as the Federal Reserve would say, stimulus being removed at a measured pace, our yields on assets and cost of ~~prime~~liabilities are increasing in roughly equal percentages. Both of these have been modest in degree as many loans are still below their floors and many deposits with administered rates have increased only slightly. Going forward, we would expect further market rate increases to more directly affect loan yields and deposit costs as more adjustable loans move through their floor levels and competitive pressures result in deposit rates increasing more rapidly. We believe he predominant driver in the first three months of 2004 compared to the comparative period in 2003 did result in a lower average yield in the loan portfolio, however, increased volumes more than compensated for this allowing for the reported increase in net interest ~~income.~~

~~The effect~~income is and will continue to be the growth of our balance sheet. Although the ~~low~~timing and possible effects of future changes in interest rates iscould be significant, we expect any such impact to ~~contract our net interest margin~~be considerably less in two ways. First, a low Prime rate directly affects yields on loans tied to that index and even loans not indexed to Prime are priced reflective of overall low asset yields. Second, deposit liabilities can only be priced down so far before the interest rate is too low to attract the volume of required funding. The net effect of this rate environment is a larger reduction in asset yields, generally,extent than the ~~corresponding reduction in liability costs.~~relative impact of asset growth.

We were able to mitigate the effects of the interest rate environment for the following reasons. First, even though we are at low relative levels of interest rates, net interest margins have stabilized and we were able to decrease liability costs to a similar extent that asset yields contracted. Second, we have expanded a practice of requiring an interest rate floor on many new commercial loans. This proved effective in slowing the average decline in loan yields. Finally, we continue to change our mix of assets to slightly increase the percentage of higher yielding loans.15

The average yield on interest-earning assets for the first ~~three~~nine months of 2004 was ~~6.06%~~6.04% which was a decrease of 4116 basis points compared to the ~~6.47%~~6.20% yield earned during the first ~~three~~nine months of 2003. The average cost of interest-bearing deposits declined 3220 basis points from ~~2.04%~~1.94% during the first ~~three~~nine months of 2003 to ~~1.72%~~1.74% for the comparable period in 2004, and the rate of all interest-bearing liabilities decreased 3723 basis points, from ~~2.30%~~2.19% in 2003 to ~~1.93%~~1.96% in 2004. The Company’s net interest margin ~~decreased~~increased to 4.50% in the first ~~three~~nine months of 2004 compared to ~~4.56%~~4.40% in the first ~~three~~nine months of 2003. We anticipate interest rates to continue slowly trending up over the next twelve months. If this occurs or if rates remain stable, net interest margin should ~~expand only slightly due principally to strong new loan production. However, due to~~be fairly consistent as our mix of assets and liabilities should grow in roughly the ~~cash generated from~~same proportions that exist currently on our ~~recent stock offering in April 2004, there will be some near term compression in net interest margin until these funds are invested.~~balance sheet. Our margin is derived from the rate difference between our average yields on our current mix of assets in excess of our average cost of liabilities. ~~It will take a little time to invest all of the funds raised in our recent stock offering in a similar mix of assets as currently exists on our balance sheet.~~

1216

The following table presents average balances of the Company, the taxable-equivalent interest earned, and the rate paid thereon during the ~~three~~nine months ended ~~March 31,~~September 30, 2004 and ~~March 31,~~September 30, 2003.


	2004								2003											2004								2003
	AVERAGE			INCOME/		YIELDS/			AVERAGE			INCOME/		YIELDS/			Average			Income/		Yields/			Average			Income/		Yields/
(Dollars in thousands)	BALANCES			EXPENSE		RATES			BALANCES			EXPENSE		RATES
(dollars in thousands)																	Balances			Expense		Rates			Balances			Expense		Rates
Interest-earning assets:
Loans (1)(2)	$	546,516		$	8,602		6.33	%	$	452,579		$	7,579		6.79	%	$	574,003		$	27,212		6.33	%	$	469,225		$	23,254		6.63	%
Investment securities — taxable		40,253			411		4.11	%		47,464			592		5.06	%
Investment securities – tax exempt (2)		8,840			142		6.46	%		5,382			93		7.00	%
Marketable equity securities – partially tax exempt (2)		3,000			87		11.74	%		—			—		—
Investment securities (2)																		66,172			2,180		4.40	%		55,080			2,094		5.08	%
Marketable equity securities – 90% tax exempt (2)																		3,395			272		10.70	%		—			—		—
Interest-bearing deposits in other banks		589			1		0.51	%		154			1		1.51	%		970			9		1.18	%		327			2		0.71	%
Federal Home Loan Bank stock		1,879			16		3.34	%		1,467			16		4.50	%		1,445			40		3.70	%		1,476			40		3.62	%
Federal funds sold		16,225			38		0.94	%		14,644			42		1.16	%		13,635			102		1.00	%		26,132			227		1.16	%

Total interest-earning assets		617,302			9,297		6.06	%		521,690			8,323		6.47	%		659,620			29,815		6.04	%		552,240			25,617		6.20	%

Non-interest-earning assets:
Cash and due from banks		18,568								16,120								18,803								15,463
Investment in ERAS		—								124								—								69
Premises and equipment, net		20,433								18,340								21,209								19,247
Allowances for loan losses		(5,292	)							(4,447	)							(5,564	)							(4,561	)
Other assets		26,076								30,701								28,622								28,786

Total non-interest-earning assets		59,785								60,838								63,070								59,004

Total assets	$	677,087							$	582,528							$	722,690							$	611,244

Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts	$	70,636			56		0.32	%	$	53,796			58		0.44	%	$	75,193			214		0.38	%	$	57,636			170		0.39	%
Money market		122,444			226		0.74	%		130,597			345		1.07	%		128,056			793		0.83	%		127,772			891		0.93	%
Savings deposits		41,277			40		0.39	%		32,198			47		0.60	%		43,738			127		0.39	%		34,677			133		0.51	%
Time deposits		209,305			1,570		3.02	%		176,583			1,529		3.51	%		221,498			4,969		3.00	%		196,239			4,862		3.31	%

Total interest-bearing deposits		443,662			1,892		1.72	%		393,174			1,979		2.04	%		468,485			6,103		1.74	%		416,324			6,056		1.94	%
Other interest-bearing liabilities:
Short-term borrowings and FHLB advances		35,109			103		1.18	%		22,419			80		1.44	%		31,258			299		1.28	%		18,319			176		1.28	%
Long-term borrowings		18,250			395		8.71	%		18,250			398		8.84	%		18,250			1,193		8.73	%		18,250			1,193		8.74	%

Total interest-bearing liabilities		497,021			2,390		1.93	%		433,843			2,457		2.30	%		517,993			7,595		1.96	%		452,893			7,425		2.19	%

Non-interest-bearing liabilities and shareholders’ equity:
Demand deposits		129,855								107,180								139,733								114,214
Other liabilities		7,922								7,306								8,586								7,420
Shareholders’ equity		42,289								34,199								56,378								36,717

Total non-interest-bearing liabilities and shareholders’ equity		180,066								148,685								204,697								158,351

Total liabilities and shareholders’ equity	$	677,087							$	582,528							$	722,690							$	611,244

Interest rate spread (tax equivalent basis)							4.13	%							4.17	%							4.08	%							4.01	%

Net interest income (tax equivalent basis)				$	6,907							$	5,866							$	22,220							$	18,192

Net interest margin (3) (tax equivalent basis)							4.50	%							4.56	%							4.50	%							4.40	%

The table below details the components of the changes in net interest income for the ~~three~~nine months ended ~~March 31,~~September 30, 2004 and ~~March 31,~~September 30, 2003. For each major category of interest-earning assets and interest-bearing liabilities, information is provided with respect to changes due to average volumes and changes due to rates, with the changes in both volumes and rates allocated to these two categories based on the proportionate absolute changes in each category.


	2004 compared to 2003 (1)
(In thousands)	Due to changes in
							Net
	Average			Average			Increase			2004 compared to 2003 (1)
	Volume			Rate			(Decrease)			Due to changes in
INTEREST INCOME
																Net
										Average			Average			Increase
(dollars in thousands)										Volume			Rate			(Decrease)
Interest income
Loans (2)	$	1,500		$	(477	)	$	1,023		$	5,004		$	(1,046	)	$	3,958
Investment Securities (2)		(26	)		(106	)		(132	)
Investment securities (2)											387			(301	)		86
Marketable equity securities (2)		87			—			87			272			—			272
Interest-bearing deposits in other banks		1			(1	)		—			5			2			7
Federal Home Loan Bank Stock		4			(4	)		—			(1	)		1			—
Federal Funds sold		4			(8	)		(4	)
Federal funds sold											(97	)		(28	)		(125	)

Total interest income		1,570			(596	)		974			5,570			(1,372	)		4,198

INTEREST EXPENSE
NOW Accounts		16			(18	)		(2	)
Money Market		(20	)		(99	)		(119	)
Interest expense
NOW accounts											50			(6	)		44
Money market											2			(100	)		(98	)
Savings deposits		11			(18	)		(7	)		31			(37	)		(6	)
Time deposits		261			(220	)		41			592			(485	)		107
Short-term borrowings and FHLB advances		39			(16	)		23			123			—			123
Long-term borrowings		—			(3	)		(3	)		—			—			—

Total interest expense		307			(374	)		(67	)		798			(628	)		170

Change in net interest income	$	1,263		$	(222	)	$	1,041		$	4,772		$	(744	)	$	4,028

PROVISION FOR LOAN LOSSES

The provision for loan losses increased ~~$39,000~~$454,000 or ~~11.8%~~43.9% to ~~$369,000~~$1,489,000 in the first ~~quarter~~nine months of 2004 compared to ~~$330,000~~$1,035,000 in the comparable prior year ~~quarter.~~period. The higher provision for loan losses in 2004 was primarily attributable to the growth and change in composition of the loan portfolio. Total loans outstanding ~~were $549.6~~grew $79.7 million, or 14.8%, during the first nine months of 2004, as compared to $68.7 million, or 15.6%, during the first nine months of 2003. The largest dollar increase during the first nine months of 2004 occurred in commercial real estate loans which increased $41.0 million, or 13.8%. This compares to a $26.2 million, or 9.9%, increase in commercial real estate loans during the first nine months of 2003. We have also continued to expand our indirect lending portfolio. At September 30, 2004, indirect auto dealer loans accounted for $83.7 million, or 13.5%, of our loan portfolio. This compares to an indirect lending portfolio of $50.9 million at ~~March 31,~~September 30, 2003 which represented only 10.0% of our total loan portfolio. These increases in volume and concentration of commercial real estate and indirect auto dealer loans relative to the composition of the loan portfolio translate to a greater than average increase in the provision for loan losses as our risk management policies dictate generally higher allocations of such provisions for these categories of loans.

Total loans outstanding were $618.3 million at September 30, 2004, compared to ~~$458.4~~$510.5 million at ~~March 31,~~September 30, 2003. Net charge-offs were ~~$238,325~~$616,000 during the ~~three~~nine months ended ~~March 31,~~September 30, 2004 compared to ~~$233,102~~$453,000 for the same period in 2003. Management will continue to monitor the credit quality of the lending portfolio and will recognize additional provisions in the future as necessary, in the opinion of management, to maintain the allowance for loan losses at an appropriate level.

NON-INTEREST INCOME

Non-interest income for the first ~~quarter~~nine months of 2004 was ~~$3,273,045.~~$9,247,000. This represents ~~a $195,044~~an $184,000 or ~~6.3%~~2.0% increase over the prior year ~~quarter~~period which totaled ~~$3,078,001.~~$9,063,000. The increase in non-interest income is primarily attributable to an increase of ~~$71,437 in service charges on deposit accounts; a $38,686 increase in net investment security gains; an increase of $381,733~~$703,000 in merchant bankcard processing ~~income; a $6,774 increase in retail investment services;~~income, partially offset by a ~~$87,470 decrease in gain on sale of government guaranteed loans; a~~ decrease of ~~$203,429~~$394,000 in fees on mortgage loans sold, and a ~~$12,687~~$202,000 decrease related to the gain on sale of investment in ~~other income.~~

ERAS JV recognized in the prior year period.

The increase in merchant bankcard processing income is primarily a result of volume increases. Gain on sale of government guaranteed loans result from a relatively small number of transactions and, therefore, the revenue recognition from these transactions can vary considerably depending on the number of loans sold and the dollar amount of the transactions. There was one loan sold in the first three months of 2003, and none sold in the first three months of 2004. Fees on mortgage loans sold result from the immediate sale of various residential mortgages (primarily fixed rate ~~residential mortgages~~loans) in the secondary market. The lower fees earned in the first ~~quarter~~nine months of 2004 compared to the prior year ~~ago~~ period are attributable to reduced refinancing activity, ~~temporarily~~ lower new sales activity, and thinner margins. On May 29, 2003, we sold our remaining interest in ERAS Joint Venture and recognized a pretax gain of $202,000 on this transaction.

NON-INTEREST EXPENSE

Non-interest expense for the first ~~quarter~~nine months of 2004 was ~~$7,794,232.~~$23,871,000. This represents a ~~$1,011,715~~$3,179,000, or ~~14.9%~~15.4%, increase over the prior year ~~quarter~~period which totaled ~~$6,782,517.~~$20,692,000. The increase in non-interest expense is attributable to salaries and employee benefits increasing ~~$275,148,~~$1,243,000, net occupancy expense increasing ~~$95,794,~~$328,000, and other expense increasing ~~$640,773.~~$1,608,000. The increases are primarily the result of costs associated with the growth of our ~~business.~~

business and continued expansion into the Southwest Florida market.

At ~~March 31,~~September 30, 2004, the Bank had ~~267~~303 full-time ~~employees and 17 part-time~~ employees, compared to ~~252 full-time employee and 14 part time employees~~253 at ~~March 31,~~September 30, 2003. The increase in staff was required to manage the growth of the ~~organization, and to assist in security and regulatory compliance.~~organization.

In the category of other expense, interchange and other bankcard ~~expensed~~expense increased approximately ~~$290,000~~$648,000 over the prior year amount. ~~This is~~These expenses are primarily tied to volume, and isare consistent with the increase in merchant bankcard processing income we experienced. ~~Our computer services expense increased approximately $79,000, primarily as a result of~~We did, however, experience an increase in the ~~number of loan and deposit accounts. Repossession and recovery costs associated with~~rates charged by our ~~indirect lending program increased $82,000 as a result of additional activity and volume~~card associations in April 2004 that also contributed to this ~~portfolio. Director fees increased $55,000 due to a change~~increase. Also, in the ~~fee structure and amount~~first nine months of 2004, we incurred $196,000 in employee relocation costs. These costs were incurred to relocate various employees, including the Company’s Chief Executive Officer, in connection with the relocation of our corporate headquarters from the Florida Keys to the Southwest Florida area. Another factor contributing to the increase in other expense was the increase in professional fees ~~paid compared to~~of approximately $184,000 over the prior year ~~period.~~period due primarily to increased internal control documentation and testing costs related to the implementation of the Sarbanes Oxley Act of 2002.

INCOME TAXES

The change in income tax expense is primarily attributable to the growth in income before income taxes. The provision for income taxes related to continuing operations totaled ~~$665,300,~~$1,990,000, for an effective tax rate of ~~34.3%~~34.0%, for the ~~three~~nine months ended ~~March 31,~~September 30, 2004, and ~~$636,820,~~$1,890,000, for an effective tax rate of ~~35.4%~~35.0%, for the ~~three~~nine months ended ~~March 31,~~September 30, 2003.

BALANCE SHEET

Total assets at ~~March 31,~~September 30, 2004 were ~~$710,556,560,~~$765,686,000, up ~~6.2%~~14.4% from total assets of ~~$669,297,748~~$669,298,000 at December 31, 2003. Asset growth was primarily funded by an increase in deposits of ~~$63,620,084,~~$84,486,000, or ~~11.5%, which is in part seasonal funds.~~15.3%. Loans net of deferred loan costs increased ~~$11,155,496,~~$79.9 million, or ~~2.1%~~14.8%, to ~~$551,568,116~~$620.3 million for the first ~~three~~nine months of 2004 from year end 2003. The largest dollar increase came in the commercial real estate loan category which increased $41.0 million, or 13.8%. We have also continued to expand our indirect dealer auto loan program. At September 30, 2004, indirect auto loans accounted for $83.7 million, or 13.5%, of our loan portfolio as compared to $59.4 million, or 11.0%, at December 31, 2003. Also, in the same period, ~~federal funds sold increased $25,538,000, and~~ investment securities ~~decreased $2,068,368.~~

increased $26.1 million as a result of purchases of securities from funds generated from the stock offering in the second quarter of 2004.

During the first ~~quarter~~nine months of 2004, we ~~were able to repay $25 million of~~reduced our advances from the Federal Home Loan ~~Bank.~~Bank by $20.0 million. Total advances outstanding were ~~$20~~$25.0 million at ~~March 31,~~September 30, 2004 as compared to ~~$45~~$45.0 million at December 31, 2003.

NON-PERFORMING ASSETS

Non-performing assets include nonaccrual loans, accruing loans contractually past due 90 days or more, repossessed personal property, and other real estate. Loans are placed on nonaccrual status when management has concerns relating to the ability to collect the loan principal and interest and generally when such loans are 90 days or more past due. A loan is considered impaired when it is probable that not all principal and interest amounts will be collected according to the loan contract.

Non-performing assets were as follows:


	March 31,			December 31,
	2004			2003
(dollars in thousands)						September 30, 2004			December 31, 2003
Total nonaccrual loans	$	483,317	��	$	390,316	$	1,174		$	390
Accruing loans delinquent 90 days or more (a)		—			—		—			—

Total non-performing loans	$	483,317		$	390,316	$	1,174		$	390
Repossessed personal property (indirect auto dealer loans)		560,646			597,790		720			598
Other real estate owned (b)		192,464			192,464		190			193
Other assets (b)		2,507,316			2,472,332		2,528			2,472

Total non-performing assets	$	3,743,743		$	3,652,902	$	4,612		$	3,653

Allowance for loan losses	$	5,346,576		$	5,215,901	$	6,089		$	5,216
Non-performing assets as a percent of total assets		0.53%			0.55%		0.60	%		0.55	%
Non-performing loans as a percent of gross loans		0.09%			0.07%		0.19	%		0.07	%
Allowance for loan losses as a percent of non-performing loans		1,106.23%			1,336.33%		518.65	%		1,336.33	%

During 2001, upon completion of foreclosure on the underlying collateral, the non-guaranteed portion of this loan and interest accrued through the foreclosure date was reclassified into other real estate ($550,000) and other assets (approximately $1,886,000) based on the fair value of the underlying-collateral. The portion of this loan guaranteed by the USDA was approximately $1.6 million at ~~March 31,~~September 30, 2004 and December 31, 2003, and is accruing interest. Accrued interest on this loan totals approximately ~~$611,000~~$654,000 and $590,000 at ~~March 31,~~September 30, 2004 and December 31, 2003, respectively.

The Bank is pursuing a sale of the property and equipment and has incurred various expenditures. The Bank capitalized the liquidation costs and a portion of the protective advances which it expects will be fully reimbursed by the USDA. Other real estate recorded on the Bank’s books totaled ~~$192,464~~$190,000 and $193,000 at ~~March 31,~~September 30, 2004 and December 31, ~~2003.~~2003, respectively. The non-guaranteed principal and interest ($1,961,000 at ~~March 31,~~September 30, 2004 and December 31, 2003) and the reimbursable capitalized liquidation costs and protective advance costs totaling approximately ~~$546,000~~$567,000 and $511,000 at ~~March 31,~~September 30, 2004 and December 31, 2003, respectively, are included as “other assets” in the financial statements.

The Bank sold certain pieces of equipment associated with the lumber mill property. Proceeds from the sales were used to reduce the other real estate amount and liquidation cost amounts recorded on the Bank’s books. In 2003, the Bank wrote down the carrying amount of the other real estate by $262,000 based upon anticipated proceeds from the sale of the property and remaining equipment.

charged-off the non guaranteed principal and interest totaling $1,961,000 at June 30, 2003, for regulatory purposes. Since we believe this amount is ultimately realizable, we did not write off this amount for financial statement purposes under generally accepted accounting principles.

The allowance for loan losses amounted to ~~$5,346,576~~$6,089,000 and ~~$5,215,901~~$5,216,000 at ~~March 31,~~September 30, 2004 and December 31, 2003, respectively.

The allowance for loan losses is a valuation allowance for probable incurred credit losses in the loan portfolio. Our process for assessing the adequacy of the allowance for loan losses and the resultant need, if any, for periodic provisions to the allowance charged to income, includes both individual loan analyses and loan pool analyses. Individual loan analyses are periodically performed on loan relationships of a significant size, or when otherwise deemed necessary, and primarily encompass commercial real estate and other commercial loans. The result is that commercial real estate loans and commercial loans are divided into the following risk categories: Pass, Special Mention, and Substandard or worse. When appropriate, a specific reserve will be established for individual loans. Otherwise, we allocate an allowance for each risk category. The allocations are based on factors including historical loss rate, perceived economic conditions (local, national and global), perceived strength of our management, recent trends in loan loss history, and concentrations of credit.

Home equity loans, indirect auto dealer loans, residential loans and consumer loans generally are not analyzed individually. These loans are grouped into pools and assigned risk categories based on their current payment status and management’s assessment of risk inherent in the various types of loans. As above, when appropriate, a specific reserve will be established for individual loans. Otherwise, we allocate an allowance for each loan classification. The allocations are based on the same factors mentioned above.

Based on an analysis performed by management at ~~March 31,~~September 30, 2004, the allowance for loan losses is considered to be adequate to cover estimated loan losses in the portfolio as of that date. However, management’s judgment is based upon a number of assumptions about future events, which are believed to be reasonable, but which may or may not prove valid. Thus, there can be no assurance that charge-offs in future periods will not exceed the allowance for loan losses or that significant additional increases in the allowance for loan losses will not be required. In addition, various regulatory agencies, as an integral part of their examination process, periodically review our allowance for loan losses. Such agencies may require us to recognize additions to the allowance based on their judgments about information available to them at the time of their examination.

LIQUIDITY

The goal of liquidity management is to ensure the availability of an adequate level of funds to meet the loan demand and deposit withdrawal needs of the Company’s customers. We manage the levels, types and maturities of earning assets in relation to the sources available to fund current and future needs to ensure that adequate funding will be available at all times.

In addition to maintaining a stable core deposit base, we maintain adequate liquidity primarily through the use of investment securities and unused borrowing capacity. The Bank has invested in Federal Home Loan Bank stock for the purpose of establishing credit lines with the Federal Home Loan Bank. The credit availability to the Bank is equal to 20 percent of the Bank’s total assets as reported on the most recent quarterly financial information submitted to the ~~regulators. The credit availability approximated $142~~regulators subject to the pledging of sufficient collateral. At September 30, 2004, there were $25.0 million ~~at March 31, 2004, under which $20~~in advances outstanding in addition to a $15 million ~~was outstanding. Borrowings against this line~~letter of credit ~~are collateralized by~~used in lieu of pledging securities to the State of Florida. In July 2004, new agreements were executed with the FHLB and a blanket floating lien pledge of the Bank’s ~~one-to-four~~residential 1-4 family ~~residential~~ mortgage ~~loans.~~and commercial real estate secured loans was done to bring the collateral availability up to approximately $158.0 million.

The Bank has an unsecured overnight federal funds purchased accommodation up to a maximum of ~~$7.5~~$12.0 million from its principal correspondent bank.

In the second quarter of 2004, we completed the sale of 1,150,000 shares of our common stock at a price of $22.00 per share before commissions and expenses. The net proceeds provided additional liquidity along with additional capital to the Company. The net proceeds of the offering will be used to provide capital to support continued loan and deposit growth throughout our South Florida markets.

ASSET AND LIABILITY MANAGEMENT

Our interest rate sensitivity position at ~~March 31,~~September 30, 2004 is presented in the table below:


	3 months			4 to 6			7 to 12			1 to 5			Over 5							3 months			4 to 6			7 to 12			1 to 5			Over 5
(Dollars in thousands)	or less			Months			Months			years			Years				Total
(dollars in thousands)																				or less			Months			Months			years			Years			Total
Interest-earning assets:
Loans	$	232,681		$	34,129		$	46,006		$	167,391		$	69,438			$	549,645		$	245,829		$	42,286		$	36,794		$	226,579		$	66,806		$	618,294
Investment securities-taxable		1,813			—			3,075			15,542			16,834				37,264			1,311			—			—			38,265			25,419			64,995
Investment securities-tax exempt		235			311			—			3,160			5,546				9,252			232			—			—			2,875			7,062			10,169
Marketable equity securities		3,972			—			—			—			—				3,972			3,533			—			—			—			—			3,533
Federal Home Loan Bank stock		1,000			—			—			—			—				1,000			1,250			—			—			—			—			1,250
Federal funds sold		42,022			—			—			—			—		��		42,022
Interest bearing deposit in other bank		1,402			—			—			—			—				1,402			519			—			—			—			—			519

Total interest-bearing assets		283,125			34,440			49,081			186,093			91,818				644,557			252,674			42,286			36,794			267,719			99,287			698,760

Interest-bearing liabilities:
NOW accounts		75,807			—			—			—			—				75,807			83,835			—			—			—			—			83,835
Money Market		132,622			—			—			—			—				132,622			127,376			—			—			—			—			127,376
Savings Deposits		43,716			—			—			—			—				43,716			47,247			—			—			—			—			47,247
Time deposits		35,573			52,828			55,527			70,458			14				214,400			29,160			38,999			48,875			128,915			5			245,954
Notes payable		—			—			—			—			5,250				5,250			—			—			—			—			5,250			5,250
Subordinated debentures		5,000			—			—			—			8,000				13,000			5,000			—			—			—			8,000			13,000
Other borrowings		25,347			—			—			—			—				25,347			34,353			—			—			—			—			34,353

Total interest-bearing liabilities		318,065			52,828			55,527			70,458			13,264				510,142			326,971			38,999			48,875			128,915			13,255			557,015

Interest sensitivity gap	$	(34,940	)	$	(18,388	)	$	(6,446	)	$	115,635		$	78,554			$	134,415		$	(74,297	)	$	3,287		$	(12,081	)	$	138,804		$	86,032		$	141,745

Cumulative interest sensitivity gap	$	(34,940	)	$	(53,328	)	$	(59,774	)	$	55,861		$	134,415			$	134,415		$	(74,297	)	$	(71,010	)	$	(83,091	)	$	55,713		$	141,745		$	141,745

Cumulative sensitivity ratio		(5.4	)%		(8.3	)%		(9.3	)%		8.7	%		20.9	%			20.9	%		(10.6	)%		(10.2	)%		(11.9	)%		8.0	%		20.3	%		20.3	%

We are cumulatively liability sensitive through the one year time period, and asset sensitive in the over one year timeframes above. Certain liabilities such as NOW and passbook savings accounts, while technically subject to immediate repricing in response to changing market rates, historically do not reprice as quickly nor to the extent as other interest sensitive accounts. Accordingly, if market interest rates should decrease, it is anticipated that the net interest margin would decrease. Because of non-interest bearing liabilities, total interest-earning assets are substantially greater than the total interest-bearing liabilities and therefore it is anticipated that over time the effects on net interest income from changes in asset yield will be greater than the change in expense from liability cost. Therefore, if rates increase, it is anticipated that the net interest margin would, over time, increase, and this is particularly true over longer time horizons since the Company has more total assets subject to rate changes than total liabilities that are rate sensitive. However, over the next several months, the liquidity generated from our recent stock offering will cause some compression in net interest margin until these funds are fully invested, irrespective of changes in market interest rates.

Even in the near term, we believe the ~~$60~~$83 million one year cumulative negative sensitivity gap may exaggerate the probable effects on earnings in a ~~rising~~changing rate environment for two reasons. First, the liabilities subject to repricing are predominately not indexed to any specific market rate and therefore, offer the Company the opportunity to delay or diminish any rate repricings. Further, in this current rate environment, the Bank has been originating loans with interest rate floors. The effect of this has been to decrease the volatility of net interest margin and decrease asset sensitivity due to the fact that these loans behave similar to fixed rate loans in periods over a significant range of interest rate changes.

Interest-earning assets and other time deposits are presented based on their contractual terms. It is anticipated that run off in any deposit category will be approximately offset by new deposit generation. Since we have experienced steady growth in deposits, no net run off in any deposit category is assumed in the interest rate sensitivity table. It is our policy to maintain our cumulative one year gap ratio in the –20% to +10% range. At ~~March 31,~~September 30, 2004, we were within this range with a one year cumulative sensitivity ratio of ~~(9.3)%~~- -11.9%.

credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated balance sheets.

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

Commitments to extend credit are legally binding agreements to lend to a customer as long as there is no violation of any condition established in the contract. Since some of these commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. At ~~March 31,~~September 30, 2004, total unfunded loan commitments were approximately ~~$79.3~~$87.7 million.

Standby letters of credit are conditional commitments issued by the Bank to assure the performance or financial obligations of a customer to a third party. The credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loans to customers. The Bank generally holds collateral and/or obtains personal guarantees supporting these commitments. Since most of the letters of credit are expected to expire without being drawn upon, they do not necessarily represent future cash requirements. At ~~March 31,~~September 30, 2004, commitments under standby letters of credit aggregated approximately ~~$1.7~~$2.4 million.

The Company believes the likelihood of the unfunded loan commitments and unfunded letters of credit either needing to be totally funded or funded at the same time is low. However, should significant funding requirements occur, we have sufficient available borrowing capacity from various sources as discussed in the “Liquidity” section above.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Market risk is the risk that a financial institution’s earnings and capital, or its ability to meet its business objectives, will be adversely affected by movements in market rates or prices such as interest rates, foreign exchange rates, equity rates, equity prices, credit spreads and/or commodity prices. The Company has assessed its market risk as predominately interest rate risk.

The following interest rate sensitivity analysis information as of ~~March 31,~~September 30, 2004 was developed using simulation analysis of the Company’s sensitivity to changes in net interest income under varying assumptions for changes in market interest rates. Specifically, the model derives expected interest income and interest expense resulting from an immediate and parallel shift in the yield curve in the amounts shown.

These rate changes are matched with known repricing intervals and assumptions for new growth net of expected prepayments. The assumptions are based primarily on experience in the Company’s market under varying rate environments. The imbedded options that the Company’s loan customers possess to refinance are considered for purposes of this analysis along with scheduled and ~~cause the larger decreases in income in a declining rate scenario versus the income increases in the same size rising rate scenario.~~unscheduled principal reductions offset by anticipated loan orginations.

This analysis intentionally exaggerates interest sensitivity. For the sake of simplicity and comparability, an immediate change in rates is assumed. However, any significant change in actual market rates would probably be phased in over an extended period of time. This phase in would reduce the net interest income effects for any absolute change in rates. Also, the Company has been originating adjustable rate commercial loans with interest rate floors that are currently at rates higher than the index and margin on the loans would indicate. An example would be a loan at Prime plus 1% but with a 7.0% floor. The Company currently has in excess of ~~$199~~$214 million of these types of loans where the loan rates are at the floors. The effects of this are twofold. First, this has benefited our margins currently since we have assets earning yields higher than would be the case absent the floor rates. Second, in a declining rate environment and in a limited rising rate environment those “adjustable” rate loans act like fixed rate loans. This limits the Company’s loss of interest income when rates decline but does constrain income gains in a rising rate market. As rates increase beyond ~~200~~approximately 150 basis points from their current level the effect on net interest income turns around and begins to expand positively due to an increasing percentage of loans going past their floors. Also, the passage of time moderates the negative near term impact of rising rates as new loans are by definition originated at the current, now higher, rate levels. In general, having this significant amount of loans at their floors reduces the Company’s overall rate sensitivity.

The Company attempts to retain interest rate neutrality by generating mostly adjustable rate loans and managing the securities, wholesale funding, and Fed Funds positions to offset the repricing characteristics of the deposit liabilities.

Item 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

The Company maintains controls and procedures designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Based upon their evaluation of those controls and procedures performed as of the end of the period covered by this report, the Chief Executive Officer and Chief Financial Officer of the Company concluded that the Company’s disclosure controls and procedures were adequate. No significant deficiencies or material weaknesses in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize, and report financial data have been identified.

No fraud that involves management or other employees who have a significant role in the Company’s internal controls has been discovered.

Changes in internal controls

The Company made no significant changes in its internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation of those controls by the Chief Executive Officer and Chief Financial Officer; including any corrective actions with regard to significant deficiencies and material weaknesses.

Limitations on the Effectiveness of Controls

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures and internal controls over financial reporting will prevent all errors and all improper conduct. A control system, no matter how well conceived and operated can provide only reasonable, not absolute, assurance that the objectives of the controls system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of improper conduct, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.

2125

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

Exhibit 31.1 – Chief Executive Officer’s certification required under Section 302 of Sarbanes-Oxley Act of 2002

Exhibit 31.2 – Chief Financial Officer’s certification required under Section 302 of Sarbanes-Oxley Act of 2002

Exhibit 32.1 – Chief Executive Officer’s certification required under Section 906 of Sarbanes-Oxley Act of 2002

Exhibit 32.2 – Chief Financial Officer’s certification required under Section 906 of Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K

On ~~March 1,~~August 3, 2004, the Company issued a press release announcing certain financial results and additional information related to its ~~fourth~~second quarter ~~and annual~~2004 earnings.

On April 20, 2004, the Company reported on Form 8-K that on April 15, 2004, it closed the sale of 1,000,000 shares of common stock at a price of $22.00 per share before commissions and expenses in a firm commitment underwriting.

~~On April 29,~~November 4, 2004, the Company issued a press release announcing certain financial results and additional information related to its ~~first~~third quarter 2004 earnings.

On May 6, 2004, the Company reported on Form 8-K that on May 6, 2004, it closed the sale of an additional 150,000 shares of common stock at a price of $22.00 per share before commissions and expenses, pursuant to its previously filed registration statement.

2227


	March 31, 2004								September 30, 2004
	Amortized		Unrealized		Unrealized		Estimated		Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
(dollars in thousands)									Cost		Gains		Losses		Fair Value
U.S. Treasury securities	$	208,469	$	10,719	$	—	$	219,188	$	5,177	$	33	$	—	$	5,210
U.S. Government agencies and corporations		29,342,914		379,995		230,984		29,491,925		54,248		264		556		53,956
States and political subdivisions-tax-exempt		8,842,702		433,125		24,169		9,251,658		9,826		347		4		10,169
States and political subdivisions-taxable		3,213,420		42,865		12,940		3,243,345		2,862		23		11		2,874
Marketable equity securities		2,999,989		972,000		—		3,971,989		3,000		533		—		3,533
Mortgage-backed securities		4,183,705		126,389		—		4,310,094		2,889		66		—		2,955

	$	48,791,199	$	1,965,093	$	268,093	$	50,488,199	$	78,002	$	1,266	$	571	$	78,697


	December 31, 2003								December 31, 2003
	Amortized		Unrealized		Unrealized		Estimated		Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
(dollars in thousands)									Cost		Gains		Losses		Fair Value
U.S. Treasury securities	$	209,269	$	8,965	$	—	$	218,234	$	209	$	9	$	—	$	218
U.S. Government agencies and corporations		31,356,782		424,790		662,621		31,118,951		31,357		425		663		31,119
States and political subdivisions-tax-exempt		8,837,687		378,482		59,225		9,156,944		8,838		378		59		9,157
States and political subdivisions-taxable		3,559,202		41,614		100,648		3,500,168		3,559		42		101		3,500
Marketable equity securities		2,999,989		395,000		—		3,394,989		3,000		395		—		3,395
Mortgage-backed securities		5,040,638		127,799		1,156		5,167,281		5,041		128		1		5,168

	$	52,003,567	$	1,376,650	$	823,650	$	52,556,567	$	52,004	$	1,377	$	824	$	52,557


	March 31, 2004		December 31, 2003
(dollars in thousands)					September 30, 2004		December 31, 2003
Real estate mortgage loans:
Commercial	$	293,732,644	$	297,221,372	$	338,198	$	297,221
Residential		58,338,838		60,104,032		64,624		60,104
Farmland		3,386,365		2,316,833		4,924		2,317
Construction and vacant land		40,551,662		32,088,657		41,510		32,089
Commercial and agricultural loans		62,128,782		63,623,676		62,851		63,624
Indirect auto dealer loans		66,800,359		59,437,058		83,680		59,437
Home equity loans		13,672,388		12,573,991		12,259		12,574
Other consumer loans		11,033,804		11,232,062		10,248		11,232

Total loans		549,644,842		538,597,681		618,294		538,598
Net deferred loan costs		1,923,274		1,814,939		2,039		1,815

Loans, net of deferred loan costs	$	551,568,116	$	540,412,620	$	620,333	$	540,413


	2004			2003
(dollars in thousands)							2004			2003
Balance, January 1	$	5,215,901		$	4,272,499		$	5,216		$	4,272
Provision for loan losses charged to expense		369,000			330,000			1,489			1,035
Loans charged off		(243,582	)		(235,171	)		(654	)		(470	)
Recoveries of loans previously charged off		5,257			2,069			38			17

Balance, March 31	$	5,346,576		$	4,369,397
Balance, September 30							$	6,089		$	4,854


	Gross Carrying		Accumulated
	Amount		Amortization		Net Book Value
Core Deposit Intangible	$	2,941,234	$	1,355,549	$	1,585,685
Servicing Rights		88,917		60,518		28,399

Total	$	3,030,151	$	1,416,067	$	1,614,084


	For the three month period ended
	March 31,
	2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	1,272,818		$	1,189,269
Adjustments to reconcile net income to net cash provided by operating activities:
Net amortization of investments		11,456			14,959
Amortization of intangible assets		72,978			73,017
Depreciation of premises and equipment		453,759			422,842
Provision for loan losses		369,000			330,000
Provision for losses on unfunded loan commitments		(2,000	)		—
Deferred income tax benefit		(114,522	)		(11,717	)
Deferred net loan costs and fees		(108,335	)		(35,434	)
Investment securities net gains		(44,023	)		(5,337	)
Net gain on sale/disposal of premises and equipment		(1,141	)		(726	)
Gain on sales of government guaranteed loans, net		—			(87,470	)
Mortgage loans originated for sale		(27,194,867	)		(28,174,270	)
Proceeds from sale of mortgage loans		24,901,284			31,619,652
Fees on mortgage loans sold		(398,323	)		(601,752	)
Increase in accrued interest receivable and other assets		(12,491	)		(673,817	)
Decrease in accrued interest payable and other liabilities		(578,920	)		(491,943	)

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES		(1,373,327	)		3,567,273

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities available for sale		—			(1,661,382	)
Repayments of principal and maturities of investment securities available for sale		1,199,315			5,123,064
Sales of investment securities available for sale		2,045,620			—
Net (purchase) sale of FHLB stock		1,250,000			(139,700	)
Proceeds from sales of government guaranteed loans		568,719			2,241,119
Loans originated or acquired, net of principal repayments		(11,854,205	)		(19,000,358	)
Purchases of premises and equipment		(1,525,018	)		(876,653	)
Sales of premises and equipment		2,369			1,287

NET CASH USED BY INVESTING ACTIVITIES		(8,313,200	)		(14,312,623	)

CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in federal funds purchased and securities sold under agreements to repurchase		1,305,803			425,242
Net decrease in FHLB short-term advances		(15,000,000	)		—
Proceeds from FHLB long-term advances		—			10,000,000
Repayments of FHLB long-term advances		(10,000,000	)		(20,000,000	)
Net increase in demand, money market and savings accounts		54,250,246			22,588,350
Net increase in time deposits		9,369,838			40,737,479
Proceeds from exercise of stock options		426,551			456,045
Cash dividends paid		(498,524	)		(443,918	)

NET CASH PROVIDED BY FINANCING ACTIVITIES		39,853,914			53,763,198

NET INCREASE IN CASH AND CASH EQUIVALENTS		30,167,387			43,017,848
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		33,680,506			24,069,659

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	63,847,893		$	67,087,507

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS:
Cash paid for:
Interest	$	3,621,186		$	3,357,811
Income taxes		—			—


For the three months ended September 30,
(dollars in thousands, except per share amounts)	2004		2003
Net income, as reported	$	1,337	$	1,163
Stock-based compensation expense determined under fair value based method, net of tax		48		37

Pro forma net income	$	1,289	$	1,126

Basic earnings per share as reported	$	0.24	$	0.26
Pro forma basic earnings per share		0.23		0.26
Diluted earnings per share as reported		0.23		0.25
Pro forma diluted earnings per share		0.22		0.25


For the nine months ended September 30,
(dollars in thousands, except per share amounts)	2004		2003
Net income, as reported	$	3,867	$	3,638
Stock-based compensation expense determined under fair value based method, net of tax		166		134

Pro forma net income	$	3,701	$	3,504


	Well			Adequately									Well			Adequately
	Capitalized			Capitalized			March 31, 2004			December 31, 2003			Capitalized			Capitalized			September 30, 2004			December 31, 2003
	Requirement			Requirement			Actual			Actual			Requirement			Requirement			Actual			Actual
Tier 1 Capital (to Average Assets)
Consolidated		³5	%		³4	%		7.8	%		7.8	%		³5	%		³4	%		10.4	%		7.8	%
Bank		³5	%		³4	%		8.4	%		8.5	%		³5	%		³4	%		11.0	%		8.5	%
Tier 1 Capital (to Risk Weighted Assets)
Consolidated		³6	%		³4	%		8.7	%		8.8	%		³6	%		³4	%		11.5	%		8.8	%
Bank		³6	%		³4	%		9.5	%		9.6	%		³6	%		³4	%		12.2	%		9.6	%
Total Capital (to Risk Weighted Assets)
Consolidated		³10	%		³8	%		10.5	%		10.6	%		³10	%		³8	%		13.2	%		10.6	%
Bank		³10	%		³8	%		10.4	%		10.5	%		³10	%		³8	%		13.2	%		10.5	%


			Merchant		Parent							Merchant		Parent
Three months ended	Community		Bankcard		And
March 31, 2004	Banking		Processing		Other			Totals
Nine months ended										Community		Bankcard		And
September 30, 2004										Banking		Processing		Other			Totals
Interest and dividend income	$	9,218,641	$	—	$	—		$	9,218,641	$	29,565	$	—	$	—		$	29,565
Interest expense		1,995,015		—		395,321			2,390,336		6,402		—		1,193			7,595

Net interest and dividend income		7,223,626		—		(395,321	)		6,828,305
Net interest and dividend income (expense)											23,163		—		(1,193	)		21,970
Other income		1,414,363		1,759,806		98,876			3,273,045		4,435		4,515		297			9,247
Depreciation and amortization		515,200		10,653		884			526,737		1,580		32		3			1,615
Other expense		6,009,659		1,432,689		194,147			7,636,495		19,235		3,766		744			23,745

Pretax segment profit (loss)	$	2,113,130	$	316,464	$	(491,476	)	$	1,938,118	$	6,783	$	717	$	(1,643	)	$	5,857

Segment Assets	$	710,065,233	$	37,014	$	454,313		$	710,556,560	$	765,241	$	20	$	425		$	765,686

(1)		Average loans include non-performing loans.

(2)		Interest income and rates include the effects of a tax equivalent adjustment using a Federal tax rate of 34% in adjusting tax exempt interest on tax exempt investment securities and loans to a fully taxable basis.

(3)		Net interest margin is net interest income divided by average total interest-earning assets.

(1)		The change in interest due to both rate and volume has been allocated to the volume and rate components in proportion to the relationship of the dollar amounts of the absolute change in each.

(2)		Interest income includes the effects of a tax equivalent adjustment using a federal tax rate of 34% in adjusting tax exempt interest on tax exempt investment securities and loans to a fully taxable basis.


(Dollars in thousands)	Interest Rates Decrease							Interest Rates		Interest Rates Increase
		200 BP			100 BP			Remain Constant		100 BP			200BP			Interest Rates Decrease					Interest Rates		Interest Rates Increase
(dollars in thousands)																200 BP			100 BP		Remain Constant		100 BP			200BP
Interest Income		$	37,236		$	39,378		$	41,610	$	43,673		$	46,142		$	40,739		$	43,284	$	45,882	$	48,254		$	51,077
Interest Expense			7,206			8,319			10,387		13,178			15,970			8,604			10,423		13,023		15,993			18,962

Net Interest Income		$	30,030		$	31,059		$	31,223	$	30,495		$	30,172		$	32,135		$	32,861	$	32,859	$	32,261		$	32,115

Change in net income after tax vs. constant rates		$	(744	)	$	(102	)			$	(454	)	$	(656	)	$	(452	)	$	1			$	(373	)	$	(464	)


~~Date: May 13, 2004~~	TIB FINANCIAL CORP.
Date: November 10, 2004	/s/ Edward V. Lett
	Edward V. Lett
	President and Chief Executive Officer

~~/s/ David P. Johnson~~ ~~David P. Johnson~~ ~~Executive Vice President and Chief Financial Officer~~


	/s/ David P. Johnson
	David P. Johnson
	Executive Vice President and Chief Financial Officer