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, ~~2004~~2005		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 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 þor Noo

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

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~~ 5,710,564

Class		Outstanding as of ~~May 6, 2004~~April 30, 2005

~~TABLE OF CONTENTS~~


	~~Part I. FINANCIAL INFORMATION~~
	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~~
~~Certification~~
~~Certification~~
~~Certification~~
~~Certification~~

~~Part I. FINANCIAL INFORMATION~~

~~Item 1. Financial Statements~~

TIB FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share amounts)


					March 31, 2005			December 31, 2004
	March 31, 2004		December 31, 2003		(Unaudited)
ASSETS	(Unaudited)
Cash and due from banks	$	21,825,893	$	17,196,506	$	20,216		$	27,410
Federal funds sold		42,022,000		16,484,000		62,391			15,528

Cash and cash equivalents		63,847,893		33,680,506		82,607			42,938

Investment securities available for sale		50,488,199		52,556,567		80,735			77,807
Loans, net of deferred loan costs and fees		551,568,116		540,412,620		719,285			655,678
Less: allowance for loan losses		5,346,576		5,215,901		6,541			6,243

Loans, net		546,221,540		535,196,719		712,744			649,435

Premises and equipment, net		22,143,207		21,073,176		27,141			27,559
Goodwill		155,232		155,232		155			155
Intangible assets, net		1,614,084		1,687,062		1,320			1,392
Accrued interest receivable and other assets		26,086,405		24,948,486		34,624			30,039

TOTAL ASSETS	$	710,556,560	$	669,297,748	$	939,326		$	829,325


LIABILITIES
Deposits:
Noninterest-bearing demand	$	150,887,956	$	121,727,734	$	185,012		$	152,035
Interest-bearing		466,545,061		432,085,199		614,269			535,824

Total Deposits		617,433,017		553,812,933		799,281			687,859
Federal Home Loan Bank (FHLB) advances		20,000,000		45,000,000		25,000			35,000
Short-term borrowings		5,347,202		4,041,399		19,922			12,157
Long-term borrowings		18,250,000		18,250,000		17,000			18,250
Accrued interest payable and other liabilities		6,251,266		6,947,570		9,844			7,945

TOTAL LIABILITIES		667,281,485		628,051,902		871,047			761,211


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, 5,706,939
and 5,679,239 shares issued						571			568
Additional paid in capital		14,797,389		14,254,731		38,629			38,284
Retained earnings		26,970,780		26,202,982		29,859			28,968
Accumulated other comprehensive income		1,058,000		345,000		(780	)		294

TOTAL SHAREHOLDERS’ EQUITY		43,275,075		41,245,846		68,279			68,114

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	710,556,560	$	669,297,748	$	939,326		$	829,325

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


					Three months ended
					March 31,
	Three months ended March 31,				2005		2004
INTEREST AND DIVIDEND INCOME	2004		2003
Loans, including fees	$	8,600,646	$	7,578,275	$	11,310	$	8,601
Investment securities:
U.S. Treasury securities		1,879		1,889
U.S. Government agencies and corporations		355,621		526,960
States and political subdivisions, tax-exempt		93,680		61,326
States and political subdivisions, taxable		53,611		62,977
Marketable equity securities		58,793		—
Taxable						636		410
Tax-exempt						160		153
Interest bearing deposits in other bank		752		576		4		1
Federal Home Loan Bank Stock		15,583		16,282		27		15
Federal funds sold		38,076		41,798		209		38

TOTAL INTEREST AND DIVIDEND INCOME		9,218,641		8,290,083		12,346		9,218

INTEREST EXPENSE
Deposits		1,892,269		1,979,560		3,101		1,892
Federal Home Loan Bank advances		93,921		68,947		175		94
Short-term borrowings		8,825		10,762		73		9
Long term borrowings		395,321		397,594		383		395

TOTAL INTEREST EXPENSE		2,390,336		2,456,863		3,732		2,390


NET INTEREST INCOME		6,828,305		5,833,220		8,614		6,828

PROVISION FOR LOAN LOSSES		369,000		330,000		586		369

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		6,459,305		5,503,220		8,028		6,459

NON-INTEREST INCOME
Service charges on deposit accounts		644,052		572,615		608		644
Investment securities gains, net		44,023		5,337		—		44
Merchant bankcard processing income		1,759,806		1,378,073		1,896		1,760
Gain on sale of government guaranteed loans		—		87,470
Fees on mortgage loans sold		398,323		601,752		492		398
Retail investment services		93,732		86,958
Other income		333,109		345,796		398		427

TOTAL NON-INTEREST INCOME		3,273,045		3,078,001		3,394		3,273

NON-INTEREST EXPENSE
Salaries and employee benefits		3,441,925		3,166,777		4,212		3,442
Net occupancy expense		1,122,310		1,026,516		1,276		1,122
Other expense		3,229,997		2,589,224		3,565		3,230

TOTAL NON-INTEREST EXPENSE		7,794,232		6,782,517		9,053		7,794


INCOME BEFORE INCOME TAX EXPENSE		1,938,118		1,798,704		2,369		1,938

INCOME TAX EXPENSE		665,300		636,820		822		665

INCOME FROM CONTINUING OPERATIONS	$	1,272,818	$	1,161,884
DISCONTINUED OPERATIONS
Income from Keys Insurance Agency, Inc. operations		—		43,865
Income tax expense		—		16,480

INCOME FROM DISCONTINUED OPERATIONS		—		27,385

NET INCOME	$	1,272,818	$	1,189,269	$	1,547	$	1,273


BASIC EARNINGS PER SHARE:					$	0.27	$	0.29
Continuing operations	$	0.29	$	0.28
Discontinued operations		—		0.01

Basic earnings per share	$	0.29	$	0.29

DILUTED EARNINGS PER SHARE:					$	0.26	$	0.27
Continuing operations	$	0.27	$	0.27
Discontinued operations		—		0.01

Diluted earnings per share	$	0.27	$	0.28

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


	For the three month period ended						For the three month period ended
	March 31,						March 31,
	2004			2003			2005			2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	1,272,818		$	1,189,269		$	1,547		$	1,273
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
Depreciation and amortization								617			527
Provision for loan losses		369,000			330,000			586			369
Provision for losses on unfunded loan commitments		(2,000	)		—
Deferred income tax benefit		(114,522	)		(11,717	)		(120	)		(115	)
Deferred net loan costs and fees		(108,335	)		(35,434	)
Investment securities net gains		(44,023	)		(5,337	)		—			(44	)
Net gain on sale/disposal of premises and equipment		(1,141	)		(726	)
Gain on sales of government guaranteed loans, net		—			(87,470	)
Net gain on sale/disposal of premises, equipment and intangibles								(32	)		(1	)
Mortgage loans originated for sale		(27,194,867	)		(28,174,270	)		(45,679	)		(27,195	)
Proceeds from sale of mortgage loans		24,901,284			31,619,652			43,153			24,901
Fees on mortgage loans sold		(398,323	)		(601,752	)		(492	)		(398	)
Increase in accrued interest receivable and other assets		(12,491	)		(673,817	)		(818	)		(109	)
Decrease in accrued interest payable and other liabilities		(578,920	)		(491,943	)
Increase (decrease) in accrued interest payable and other liabilities								1,960			(581	)

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES		(1,373,327	)		3,567,273
NET CASH PROVIDED BY (USED BY) OPERATING ACTIVITIES								722			(1,373	)


CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities available for sale		—			(1,661,382	)		(5,000	)		—
Repayments of principal and maturities of investment securities available for sale		1,199,315			5,123,064			332			1,199
Sales of investment securities available for sale		2,045,620			—			—			2,046
Net (purchase) sale of FHLB stock		1,250,000			(139,700	)
Net sale of FHLB stock								129			1,250
Proceeds from sales of government guaranteed loans		568,719			2,241,119			—			569
Loans originated or acquired, net of principal repayments		(11,854,205	)		(19,000,358	)		(63,988	)		(11,854	)
Purchases of premises and equipment		(1,525,018	)		(876,653	)		(186	)		(1,525	)
Sales of premises and equipment		2,369			1,287
Sales of premises, equipment and intangibles								93			2

NET CASH USED BY INVESTING ACTIVITIES		(8,313,200	)		(14,312,623	)		(68,620	)		(8,313	)


CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in federal funds purchased and securities sold under agreements to repurchase		1,305,803			425,242
Net increase in federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings								7,765			1,306
Net decrease in FHLB short-term advances		(15,000,000	)		—			(10,000	)		(15,000	)
Proceeds from FHLB long-term advances		—			10,000,000
Repayments of FHLB long-term advances		(10,000,000	)		(20,000,000	)		—			(10,000	)
Repayments of notes payable								(1,250	)		—
Net increase in demand, money market and savings accounts		54,250,246			22,588,350			55,564			54,250
Net increase in time deposits		9,369,838			40,737,479			55,858			9,370
Proceeds from exercise of stock options		426,551			456,045
Proceeds from exercises of stock options								283			426
Cash dividends paid		(498,524	)		(443,918	)		(653	)		(499	)

NET CASH PROVIDED BY FINANCING ACTIVITIES		39,853,914			53,763,198			107,567			39,853


NET INCREASE IN CASH AND CASH EQUIVALENTS		30,167,387			43,017,848			39,669			30,167
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		33,680,506			24,069,659			42,938			33,681

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	63,847,893		$	67,087,507		$	82,607		$	63,848


SUPPLEMENTAL DISCLOSURES OF CASH FLOWS:
Cash paid for:
Interest	$	3,621,186		$	3,357,811		$	3,655		$	3,621

Income taxes		—			—		$	—		$	—

TIB FINANCIAL CORP.
UNAUDITED CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, ~~2004~~2005
~~(Unaudited)~~(In thousands except for share and per share amounts)

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.~~2004.

The consolidated statements include the accounts of TIB Financial Corp. and its wholly-owned ~~subsidiaries,~~subsidiary, TIB Bank, ~~of the Keys, TIB Software and Services, Inc. (corporation dissolved in March 2004 – see Note 2), and Keys Insurance Agency, Inc. (assets sold in August 2003 – see Note 11)~~ and the Bank’s ~~two subsidiaries, TIB Government Loan Specialists, Inc. (corporation dissolved in March 2004 – see Note 2) and~~subsidiary, TIB Investment Center Inc. (this corporation was dissolved in January 2005 — see Note 2), 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~~2004 Annual Report and 10-K.

In March 2004, the Company filed Articles of Dissolution dissolving the Florida corporation, TIB Government Loan Specialists, Inc. Activities performed through this corporation are now performed through TIB Bank of the Keys.

Stock options for 20,082 ~~and 1,517~~ shares of common stock were not considered in computing diluted earnings per common share for the three months ended March 31, 2004 ~~and 2003~~ because they were anti-dilutive. There were no anti-dilutive stock options outstanding for the three months ended March 31, 2005. 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 months ended March 31, ~~2004,~~2005, were ~~37,500, 57,736,~~69,500, 27,700 and ~~200,~~8,000, respectively. As of March 31, ~~2004, 457,069~~2005, there were 442,994 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.”

Management believes, as of March 31, ~~2004,~~2005, 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.~~

~~As indicated~~2001 in ~~Note~~Tier 1 ~~we completed an offering of 1,150,000 shares of our common stock during the second quarter of 2004.~~and Total capital.

TIB Financial Corp. has two reportable ~~segments in their continuing operations:~~segments: 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). 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.10

On August 15, 2003, the Company 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 in cash at the closing. Of the cash payment at closing, proceeds of $2,020,938 were pursuant to a loan from TIB Bank of the Keys (a subsidiary of the Company) to the buyer. The Company recognized a loss of $14,676 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:~~

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, ~~2004,~~2005, and statement of income for the three months ended March 31, ~~2004.~~2005. Operating results for the three months ended March 31, ~~2004~~2005 are not necessarily indicative of trends or results to be expected for the year ended December 31, ~~2004.~~2005.

~~THREE MONTHS ENDED MARCH 31, 2004 AND 2003~~QUARTERLY SUMMARY

~~RESULTS OF OPERATIONS~~

Our first quarter 2005 net income of ~~$1,272,818~~$1.5 million represents an increase of 22% over $1.3 million reported for the quarter ended March 31, 2004. On a per diluted share basis, earnings were $0.26 for the first quarter of 2005 as compared to $0.27 for the first quarter of 2004 due to dilution caused by a successful public offering in April 2004 of 1.15 million new common shares which provided the capital necessary to fuel our expansion strategy in southwest Florida. Credit quality remains excellent and we continue to see growth opportunities in our newer southwest Florida markets as well as our traditional base in the Florida Keys.

The high-growth Naples-Fort Myers area continues to reaffirm the exportability of our island banking culture as our new customers are rapidly discovering what our customers in the Florida Keys have known for years. Our continued focus on providing superior customer service is filling a much needed void in our local markets, which are realizing the effects of big bank mergers and acquisitions.

The increase in net income for the first quarter of 2005 over the respective prior-year period resulted primarily from a 26% increase in net interest income from $6.8 million a year ago to $8.6 million in the current quarter. The net interest margin on a tax equivalent basis for the three months ended March 31, 2005 was ~~an $83,549~~4.40%, compared with 4.50% for the three months ended March 31, 2004.

Non-interest expense for the first quarter of 2005 was $9.1 million, compared with $7.8 million for the first quarter of 2004. The increase in non-interest expense is primarily attributable to expenses associated with increased regulatory compliance and the Company’s ongoing expansion activities in the southwest Florida market, which included the addition of two new branch offices and several key senior staff personnel.

Credit quality remained solid during the first quarter of 2005 which ended with non-performing loans representing only 0.05% of gross loans. As of March 31, 2005, the allowance for loan losses totaled $6.5 million, or ~~7.0% increase~~0.91% of total loans and 1,673% of non-performing loans. These figures compare with 0.97% and 1,107%, respectively, as of March 31, 2004.

Total assets increased more than 32% to $939.3 million as of March 31, 2005, compared with $710.6 million a year ago. On a quarter over quarter basis, total assets increased more than 13%, which is reflective of the company’s solid organic growth since December 31, 2004. Total loans grew more than 30% to $717.2 million as of March 31, 2005, versus $549.6 million a year ago. Total deposits increased more than 29% to $799.3 million as of March 31, 2005, compared with $617.4 million a year ago.

THREE MONTHS ENDED MARCH 31, 2005 AND 2004

RESULTS OF OPERATIONS
Our net income of $1.5 million for the first quarter of 2005 increased 21.5%, compared to ~~$1,189,269~~$1.3 million for the same period last year. Net income from continuing operations was $1,272,818 for the first quarter of 2004, compared to $1,161,884 for the first quarter of 2003, an increase of $110,934 or 9.5%. As discussed in Note 11, 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 quarter of ~~2004~~2005 were ~~$0.29~~$0.27 and ~~$0.27~~$0.26, respectively, as compared to $0.29 and ~~$0.28~~$0.27 per share in the previous year’s quarter. Basic weighted average common equivalent shares outstanding for the three months ended March 31, 2004 were 4,462,493 compared to 4,050,186. This 10.2% increase in shares outstanding resulted from the exercise of stock options and the issuance of 280,653 shares in June 2003 in connection with a private placement that raised $4.3 million in new capital.

Annualized return on average assets was ~~0.75%~~0.72% and ~~0.82%~~0.76% for the first quarter of 2005 and 2004, ~~and 2003,~~respectively, while the annualized return on average shareholders’ equity was ~~12.04%~~9.20% and ~~13.91%~~12.04% for the same period. The decline in the return on average shareholders’ equity in the current year is primarily attributable to the 57.8% increase in shareholders’ equity from March 31, 2004 to March 31, 2005 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, or 17.1%~~26.2%, to ~~$6,828,305~~$8.6 million in the three months ended March 31, ~~2004~~2005 as compared to $6.8 million in the same period last year. ~~The~~While the prime rate as published in the Wall Street Journal ~~began 2003~~remained at ~~4.25% and in June 2003~~4.00% for the first quarter of 2004 it ~~declined~~increased from 5.25% at the beginning of 2005 to ~~4.00%.~~5.75% by the end of the first quarter 2005. Many of the Bank’s loans are indexed to this floating rate, although they may also include floors. The ~~lower~~higher level of prime rate in the first ~~three months~~quarter of ~~2004~~2005 compared to the comparative period in ~~2003 did result~~2004 is apparent in ~~a lower average yield~~the positive impact on yields in the loan portfolio ~~however, increased volumes more than compensated for this allowing for the reported increase in interest income.~~

The effect of the low interest rates is to contract our net interest margin 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, than the corresponding reduction in liability costs.

~~We were able to mitigate~~as the effects of the ~~interest rate environment for~~higher rates are reflected in variable loan re-pricings and new loan production. Increased loan volume is the ~~following reasons. First, even though we are at low relative levels of interest rates,~~primary driver affecting the increased 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 effectiveincome 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.~~current period.

In April 2002, the Bank began a program to acquire indirect automobile loans. We ~~predominately~~predominantly buy loans from auto dealers in ~~southwest~~Southwest Florida which are for the purchase of new or late model used cars. We serve customers over a broad range of creditworthiness and the required terms and rates are reflective of those risk profiles. As of March 31, ~~2004~~2005 we had ~~$66.8~~$98.6 million of indirect auto dealer loans outstanding, compared to ~~$24.9~~$66.8 million at March 31, ~~2003.~~2004. Coupled with the appropriate safeguards, we believe this product continues to offer us an opportunity to increase asset yields while not sacrificing our primary objective of maintaining strong asset quality.

The following table presents average balances of the Company, the taxable-equivalent interest earned, and the rate paid thereon during the three months ended March 31, ~~2004~~2005 and March 31, ~~2003.~~2004.


	2004								2003											2005								2004
	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	%	$	686,418		$	11,312		6.68	%	$	546,516		$	8,602		6.33	%
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)																		74,022			779		4.27	%		49,093			553		4.53	%
Marketable equity securities — 90% tax
exempt (2)																		3,680			96		10.58	%		3,000			87		11.74	%
Interest-bearing deposits in other banks		589			1		0.51	%		154			1		1.51	%		633			4		2.56	%		589			1		0.51	%
Federal Home Loan Bank stock		1,879			16		3.34	%		1,467			16		4.50	%		2,555			27		4.29	%		1,879			16		3.34	%
Federal funds sold		16,225			38		0.94	%		14,644			42		1.16	%		34,348			209		2.47	%		16,225			38		0.94	%

Total interest-earning assets		617,302			9,297		6.06	%		521,690			8,323		6.47	%		801,656			12,427		6.29	%		617,302			9,297		6.06	%


Non-interest-earning assets:
Cash and due from banks		18,568								16,120								22,560								18,568
Investment in ERAS		—								124
Premises and equipment, net		20,433								18,340								27,414								20,433
Allowances for loan losses		(5,292	)							(4,447	)							(6,358	)							(5,292	)
Other assets		26,076								30,701								30,159								26,076

Total non-interest-earning assets		59,785								60,838								73,775								59,785

Total assets	$	677,087							$	582,528							$	875,431							$	677,087


Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts	$	70,636			56		0.32	%	$	53,796			58		0.44	%	$	91,727			178		0.79	%	$	70,636			56		0.32	%
Money market		122,444			226		0.74	%		130,597			345		1.07	%		158,655			633		1.62	%		122,444			226		0.74	%
Savings deposits		41,277			40		0.39	%		32,198			47		0.60	%		46,537			52		0.45	%		41,277			40		0.39	%
Time deposits		209,305			1,570		3.02	%		176,583			1,529		3.51	%		284,232			2,238		3.19	%		209,305			1,570		3.02	%

Total interest-bearing deposits		443,662			1,892		1.72	%		393,174			1,979		2.04	%		581,151			3,101		2.16	%		443,662			1,892		1.72	%

Other interest-bearing liabilities:
Short-term borrowings and FHLB advances		35,109			103		1.18	%		22,419			80		1.44	%		39,814			248		2.53	%		35,109			103		1.18	%
Long-term borrowings		18,250			395		8.71	%		18,250			398		8.84	%		17,208			383		9.03	%		18,250			395		8.71	%

Total interest-bearing liabilities		497,021			2,390		1.93	%		433,843			2,457		2.30	%		638,173			3,732		2.37	%		497,021			2,390		1.93	%

Non-interest-bearing liabilities and shareholders’ equity:

Non-interest-bearing liabilities and
shareholders’ equity:
Demand deposits		129,855								107,180								158,525								129,855
Other liabilities		7,922								7,306								10,555								7,922
Shareholders’ equity		42,289								34,199								68,178								42,289

Total non-interest-bearing liabilities and shareholders’ equity		180,066								148,685								237,258								180,066

Total liabilities and shareholders’ equity	$	677,087							$	582,528							$	875,431							$	677,087


Interest rate spread (tax equivalent basis)							4.13	%							4.17	%							3.92	%							4.13	%

Net interest income (tax equivalent basis)				$	6,907							$	5,866							$	8,695							$	6,907

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

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 ~~$39,000 or 11.8%~~58.8%, to ~~$369,000~~$0.6 million in the first quarter of ~~2004~~2005 compared to ~~$330,000~~$0.4 million in the comparable prior year quarter. The higher provision for loan losses in ~~2004~~2005 was primarily attributable to the continued growth and change in composition of the loan ~~portfolio.~~portfolio coupled with slightly higher charge offs. Total loans outstanding grew $63.7 million, or 9.7%, during the first quarter of 2005, as compared to $11.0 million, or 2.1%, during the first quarter of 2004. The largest dollar increase during the first quarter of 2005 occurred in commercial real estate loans which increased $42.0 million, or 12.0%. This compares to a $3.5 million, or 1.2% decrease in commercial real estate loans during the first quarter of 2004.

Total loans outstanding were $717.2 million at March 31, 2005, compared to $549.6 million at March 31, ~~2004, compared to $458.4 million at March 31, 2003.~~2004. Net charge-offs were ~~$238,325~~$0.3 million during the three months ended March 31, ~~2004~~2005 compared to ~~$233,102~~$0.2 million for the same period in ~~2003.~~ 2004.

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 of ~~2004~~2005 was ~~$3,273,045.~~$3.4 million. This represents a ~~$195,044 or 6.3%~~3.7% increase over the prior year quarter which totaled ~~$3,078,001.~~$3.3 million. 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 in merchant~~Merchant bankcard processing ~~income; a $6,774 increase in retail investment services; offset by a $87,470 decrease in gain on sale of government guaranteed loans; a decrease of $203,429~~income and in fees on mortgage loans ~~sold and a $12,687 decrease in other income.~~

sold. 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 soldThe increase in ~~the first three months of 2003, and none sold in the first three months of 2004. Fees~~fees on mortgage loans sold is primarily a result ~~from~~of increased pass through loan volume during the immediate sale of fixed rate residential mortgages in the secondary market. The lower fees earned in the first quarter of 2004 compared to the year ago period are attributable to reduced refinancing activity, temporarily lower new sales activity, and thinner margins.2005 quarter.

NON-INTEREST EXPENSE

Non-interest expense for the first quarter of ~~2004~~2005 was ~~$7,794,232.~~$9.1 million. This represents a ~~$1,011,715 or 14.9%~~16.2%, increase over the prior year quarter which totaled ~~$6,782,517.~~$7.8 million. The increase in non-interest expense is primarily attributable to salaries and employee benefits increasing ~~$275,148, net occupancy~~$0.8 million. At March 31, 2005 the Bank had 308 full-time employees and 15 part-time employees, compared to 267 full-time employees and 17 part-time employees at March 31, 2004. The increased staffing was attributable to the opening of two branches in Southwest Florida in the second half of 2004, additions to manage growth throughout the Company and additions to assist in security and regulatory compliance. Likewise, the majority of the other increases in the non-interest expense ~~increasing $95,794, and other expense increasing $640,773. The increases~~category are ~~primarily~~ the result of costs associated with the growth of our business.

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

In the category of other expense, interchange and other bankcard expensed increased approximately $290,000 over the prior year amount. This is primarily tied to volume, and is consistent with the increase in merchant bankcard processing income experienced. Our computer services expense increased approximately $79,000, primarily as a result of an increase in the number of loan and deposit accounts. Repossession and recovery costs associated with our indirect lending program increased $82,000 as a result of additional activity and volume in this portfolio. Director fees increased $55,000 due to a change in the fee structure and amount of fees paid compared to the prior year period.

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, for an~~includes federal and state income taxes. The effective tax ~~rate of~~rates were 34.7% and 34.3%, for the three months ended March 31, 2005 and 2004, ~~and $636,820, for an effective tax rate of 35.4%, for the three months ended March 31, 2003.~~

respectively.

BALANCE SHEET

Total assets at March 31, ~~2004~~2005 were ~~$710,556,560,~~$939.3 million, up ~~6.2%~~13.3% from total assets of ~~$669,297,748~~$829.3 million at December 31, ~~2003.~~2004. Asset growth was primarily funded by an increase in deposits of ~~$63,620,084,~~$111.4 million, or ~~11.5%, which is in part seasonal funds.~~16.2%. Loans net of deferred loan costs increased ~~$11,155,496,~~$63.6 million, or ~~2.1%~~9.7%, to ~~$551,568,116~~$719.3 million for the first three months of ~~2004~~2005 from year end ~~2003. Also,~~2004. The largest dollar increase came in the ~~same period, federal funds sold~~commercial real estate loan category which increased ~~$25,538,000, and investment securities decreased $2,068,368.~~

$42.0 million, or 12.0%. Although we have continued to expand our indirect dealer auto loan program, it has begun to decrease in percentage in proportion to the loan portfolio as a whole. At March 31, 2005, indirect auto loans accounted for $98.6 million, or 13.8%, of our loan portfolio as compared to $91.9 million, or 14.1%, at December 31, 2004.

During the first ~~quarter~~three months of ~~2004,~~2005, we ~~were able to repay $25 million of~~reduced our advances from the Federal Home Loan ~~Bank.~~Bank by $10.0 million. Total advances outstanding were ~~$20~~$25.0 million at March 31, ~~2004~~2005 as compared to ~~$45~~$35.0 million at December 31, ~~2003.~~2004.

Shareholders’ equity totaled ~~$43,275,075~~$68.3 million at March 31, ~~2004,~~2005, increasing ~~$2,029,229~~ from $68.1 million at December 31, ~~2003.~~2004. Book value per share ~~increased~~decreased to ~~$9.64~~$11.96 at March 31, ~~2004~~2005 from ~~$9.31~~$11.99 at December 31, ~~2003.~~2004 due primarily to the decrease in accumulated other comprehensive income related to unrealized losses on investments available-for-sale. Such unrealized losses arose primarily from increases in market interest rates. The Company declared a quarterly dividend of $0.115 per share in the first quarter of 2005 and $0.1125 per share in the first quarter of ~~2004 and $0.11 per share in the first quarter of 2003.~~

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. 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.2004.

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)						March 31, 2005			December 31, 2004
Total nonaccrual loans	$	483,317	��	$	390,316	$	391		$	704
Accruing loans delinquent 90 days or more (a)		—			—		—			—

Total non-performing loans	$	483,317		$	390,316	$	391		$	704

Repossessed personal property (indirect auto dealer loans)		560,646			597,790		814			688
Other real estate owned (b)		192,464			192,464		190			882
Other assets (b)		2,507,316			2,472,332		2,688			2,665

Total non-performing assets	$	3,743,743		$	3,652,902	$	4,083		$	4,939


Allowance for loan losses	$	5,346,576		$	5,215,901	$	6,541		$	6,243

Non-performing assets as a percent of total assets		0.53%			0.55%		0.43	%		0.60	%
Non-performing loans as a percent of gross loans		0.09%			0.07%		0.05	%		0.11	%
Allowance for loan losses as a percent of non-performing loans		1,106.23%			1,336.33%		1,672.9	%		886.8	%

~~(a)~~ ~~Non-performing loans exclude~~(a) Excludes the $1.6 million loan discussed below that is guaranteed for both principal and interest by the ~~USDA.~~U.S. Department of Agriculture (USDA).

~~(b)~~ (b) The Bank made a ~~$10,000,000~~$10.0 million loan to construct a lumber mill in northern Florida. Of this amount, ~~$6,400,000~~$6.4 million had been sold by the Bank to other lenders. The loan was partially guaranteed as to principal and interest by the USDA. In addition to business real estate and equipment, the loan was collateralized by the business owner’s interest in a trust. Under provisions of the trust agreement, beneficiaries cannot receive trust assets until November 2010.

Bank to other lenders. The loan was partially guaranteed as to principal and interest by the U.S. Department of Agriculture (USDA). In addition to business real estate and equipment, the loan was collateralized by the business owner’s interest in a trust. Under provisions of the trust agreement, beneficiaries cannot receive trust assets until November 2010.

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)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 $1.9 million) 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, 2005 and December 31, 2004, and is accruing interest. Accrued interest on this loan totals approximately $703,000 and $677,000 at March 31, 2005 and December 31, 2004, 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 related to this property totaled $190,000 at March 31, 2005 and December 31, 2004. The non-guaranteed principal and interest ($2.0 million at March 31, 2005 and December 31, 2004) and the reimbursable capitalized liquidation costs and protective advance costs totaling approximately $784,000 and $704,000 at March 31, 2005 and December 31, 2004, 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.Florida law requires a bank to liquidate or charge off repossessed real property within five years, and repossessed personal property within six months. The Bank was awarded title to the real property on June 12, 2001, and an adjudicated interest in the owner’s trust proceeds. The time constraints imposed by Florida law required that the personal property be disposed of or charged off by December 2001. The Bank applied to the State of Florida for an extension to carry the personal property on the Bank’s books and was granted an extension to carry the personal property on its books until June 11, 2003. Since the property had not been liquidated as of such date, the Bank charged-off the non guaranteed principal and interest totaling $2.0 million ~~at March 31, 2004 and December 31, 2003, and is accruing interest. Accrued interest on this loan totals approximately $611,000 and $590,000 at March 31, 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 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 at March 31, 2004 and December 31, 2003. The non-guaranteed principal and interest ($1,961,000 at March 31, 2004 and December 31, 2003) and the reimbursable capitalized liquidation costs and protective advance costs totaling approximately $546,000 and $511,000 at March 31, 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.

Florida law requires a bank to liquidate or charge off repossessed real property within five years, and repossessed personal property within six months. The Bank was awarded title to the real property on June 12, 2001, and an adjudicated interest in the owner’s trust proceeds. The time constraints imposed by Florida law required that the personal property be disposed of or charged off by December 2001. The Bank applied to the State of Florida for an extension to carry the personal property on the Bank’s books and was granted an extension to carry the personal property on its books until June 11, 2003. Since the property had not been liquidated as of June 11th, the Bank 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~~$6.5 million and ~~$5,215,901~~$6.2 million at March 31, ~~2004~~2005 and December 31, ~~2003,~~2004, 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, ~~2004,~~2005, 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.

During 2004, as the indirect auto dealer loan portfolio began to mature, the loss history approached expected levels and the management processes, controls and monitoring and risk management tools implemented throughout recent years indicated that higher multipliers were necessary for the indirect loan portfolio. Contemporaneously, as the Florida economy has grown at an accelerated pace compared to other markets, real estate prices have escalated and local economies have benefited resulting in diminishing historical and expected loss factors. Analysis of these events resulted in these same tools indicating that lower multipliers were necessary for commercial loans collateralized by real estate. Looking forward, although the concentration of indirect auto dealer loan category has increased rapidly since the inception of this program, management believes that this growth has peaked slightly below 15% of the total loan portfolio composition. This category should continue to decrease as a percentage of the loan portfolio as we expect overall asset and loan growth to continue. As this occurs, if we make the assumption, however unlikely, that all other factors were to remain constant, we would expect that the allowance for loan losses would continue to decrease as a percentage of gross loans in the near term.

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 million at~~regulators subject to the pledging of sufficient collateral. At March 31, ~~2004, under which $20~~2005, there were $25.0 million ~~was outstanding. Borrowings against this line~~in advances outstanding in addition to a $15 million 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 $159.7 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, ~~2004~~2005 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		$	309,484		$	36,094		$	44,479		$	260,282		$	66,882		$	717,221
Investment securities-taxable		1,813			—			3,075			15,542			16,834				37,264			1,013			—			—			42,184			24,342			67,539
Investment securities-tax exempt		235			311			—			3,160			5,546				9,252			—			—			—			3,139			6,536			9,675
Marketable equity securities		3,972			—			—			—			—				3,972			3,521			—			—			—			—			3,521
Federal Home Loan Bank stock		1,000			—			—			—			—				1,000			2,781			—			—			—			—			2,781
Federal funds sold		42,022			—			—			—			—		��		42,022
Fed funds sold																					62,391			—			—			—			—			62,391
Interest bearing deposit in other bank		1,402			—			—			—			—				1,402			367			—			—			—			—			367

Total interest-bearing assets		283,125			34,440			49,081			186,093			91,818				644,557			379,557			36,094			44,479			305,605			97,760			863,495


Interest-bearing liabilities:
NOW accounts		75,807			—			—			—			—				75,807			89,055			—			—			—			—			89,055
Money Market		132,622			—			—			—			—				132,622			169,391			—			—			—			—			169,391
Savings Deposits		43,716			—			—			—			—				43,716			48,783			—			—			—			—			48,783
Time deposits		35,573			52,828			55,527			70,458			14				214,400			46,509			22,471			151,002			87,053			5			307,040
Notes payable		—			—			—			—			5,250				5,250			—			—			—			—			4,000			4,000
Subordinated debentures		5,000			—			—			—			8,000				13,000			5,000			—			—			—			8,000			13,000
Other borrowings		25,347			—			—			—			—				25,347			44,922			—			—			—			—			44,922

Total interest-bearing liabilities		318,065			52,828			55,527			70,458			13,264				510,142			403,660			22,471			151,002			87,053			12,005			676,191


Interest sensitivity gap	$	(34,940	)	$	(18,388	)	$	(6,446	)	$	115,635		$	78,554			$	134,415		$	(24,103	)	$	13,623		$	(106,523	)	$	218,552		$	85,755		$	187,304


Cumulative interest sensitivity gap	$	(34,940	)	$	(53,328	)	$	(59,774	)	$	55,861		$	134,415			$	134,415		$	(24,103	)	$	(10,480	)	$	(117,003	)	$	101,549		$	187,304		$	187,304


Cumulative sensitivity ratio		(5.4	)%		(8.3	)%		(9.3	)%		8.7	%		20.9	%			20.9	%		(2.8	)%		(1.2	)%		(13.5	)%		11.8	%		21.7	%		21.7	%

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 non-indexed 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~~$117 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%~~-20% to +10% range. At March 31, ~~2004,~~2005 we were within this range with a one year cumulative sensitivity ratio of ~~(9.3)%~~-13.5%.

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, ~~2004,~~2005, total unfunded loan commitments were approximately ~~$79.3~~$133.2 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, ~~2004,~~2005, 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, ~~2004~~2005 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 originations.

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~~$188 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 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.

~~Projections for the next twelve months are as follows:~~

(Dollars in thousands) Interest Rates Decrease
Interest Rates
Interest Rates Increase
200 BP
100 BP
Remain Constant
100 BP
200BP
Interest Income $ 37,236 $ 39,378 $ 41,610 $ 43,673 $ 46,142
Interest Expense 7,206 8,319 10,387 13,178 15,970

Net Interest Income $ 30,030 $ 31,059 $ 31,223 $ 30,495 $ 30,172

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

2019

Item 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the Corporation’s 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~~report. Based upon that evaluation, they have concluded that the ~~Company’s~~Corporation’s disclosure controls and procedures ~~were adequate. No significant deficiencies or~~are effective in ensuring that 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~~information related to the ~~date of the evaluation of those controls~~Corporation is made known to them 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,others 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.~~Corporation.

Part II. OTHER INFORMATION

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

Not ~~applicable.~~

applicable

Item 5. OTHER INFORMATION

Not applicable

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 –~~


(a) Exhibits

	3.1	Amendment to Restated Articles of Incorporation of TIB Financial Corp.
	3.2	Amendment to Bylaws
	31.1	Chief Executive Officer’s certification required under Section 302 of Sarbanes-Oxley Act of 2002
	31.2	Chief Financial Officer’s certification required under Section 302 of Sarbanes-Oxley Act of 2002
	32.1	Chief Executive Officer’s certification required under Section 906 of Sarbanes-Oxley Act of 2002
	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, 2004, the Company issued a press release announcing certain financial results and additional information related to its fourth quarter and annual 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, 2004, the Company issued a press release announcing certain financial results and additional information related to its first 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.


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

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

Comprehensive income												$	1,246,269

Exercise of stock options		78,800		7,880		448,165		—			—					456,045
Cash dividends declared, $.11 per share				—		—		(452,587	)		—					(452,587	)

Balance,March 31, 2003		4,114,425	$	411,443	$	9,413,981	$	23,758,380		$	1,172,000				$	34,755,804


					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								1,273						1,273
Other comprehensive income, net of tax
expense of $431:
Net market valuation adjustment on
securities available for sale											740
Less: reclassification adjustment for gains
included in net income											(27	)
Other comprehensive income, net of tax														713

Comprehensive income														1,986

Exercise of stock options		57,736		6		420								426
Income tax benefit from stock options exercised						122								122
Cash dividends declared, $.1125 per share						—		(505	)					(505	)

Balance,March 31, 2004		4,489,064	$	449	$	14,797	$	26,971		$	1,058		$	43,275


	March 31, 2004								March 31, 2005
	Amortized		Unrealized		Unrealized		Estimated
(dollars in thousands)									Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value
U.S. Treasury securities	$	208,469	$	10,719	$	—	$	219,188	$	5,179	$	2	$	142	$	5,039
U.S. Government agencies and corporations		29,342,914		379,995		230,984		29,491,925		59,208		47		1,814		57,441
States and political subdivisions-tax-exempt		8,842,702		433,125		24,169		9,251,658		9,595		156		76		9,675
States and political subdivisions-taxable		3,213,420		42,865		12,940		3,243,345		2,691		10		13		2,688
Marketable equity securities		2,999,989		972,000		—		3,971,989		3,000		521		—		3,521
Mortgage-backed securities		4,183,705		126,389		—		4,310,094		2,311		60		—		2,371

	$	48,791,199	$	1,965,093	$	268,093	$	50,488,199	$	81,984	$	796	$	2,045	$	80,735


	December 31, 2003								December 31, 2004
	Amortized		Unrealized		Unrealized		Estimated
(dollars in thousands)									Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value
U.S. Treasury securities	$	209,269	$	8,965	$	—	$	218,234	$	5,178	$	5	$	29	$	5,154
U.S. Government agencies and corporations		31,356,782		424,790		662,621		31,118,951		54,228		104		869		53,463
States and political subdivisions-tax-exempt		8,837,687		378,482		59,225		9,156,944		9,596		246		26		9,816
States and political subdivisions-taxable		3,559,202		41,614		100,648		3,500,168		2,862		17		23		2,856
Marketable equity securities		2,999,989		395,000		—		3,394,989		3,000		987		—		3,987
Mortgage-backed securities		5,040,638		127,799		1,156		5,167,281		2,473		58		—		2,531

	$	52,003,567	$	1,376,650	$	823,650	$	52,556,567	$	77,337	$	1,417	$	947	$	77,807


	March 31, 2004		December 31, 2003
(dollars in thousands)					March 31, 2005		December 31, 2004
Real estate mortgage loans:
Commercial	$	293,732,644	$	297,221,372	$	393,362	$	351,346
Residential		58,338,838		60,104,032		70,490		67,204
Farmland		3,386,365		2,316,833		4,825		4,971
Construction and vacant land		40,551,662		32,088,657		67,552		49,815
Commercial and agricultural loans		62,128,782		63,623,676		57,647		64,622
Indirect auto dealer loans		66,800,359		59,437,058		98,633		91,890
Home equity loans		13,672,388		12,573,991		14,637		13,856
Other consumer loans		11,033,804		11,232,062		10,075		9,817

Total loans		549,644,842		538,597,681		717,221		653,521
Net deferred loan costs		1,923,274		1,814,939		2,064		2,157

Loans, net of deferred loan costs	$	551,568,116	$	540,412,620	$	719,285	$	655,678


	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 months ended March 31,
(dollars in thousands, except per share amounts)	2005		2004

Net income, as reported	$	1,547	$	1,273
Stock-based compensation expense determined under fair value based method, net of tax		63		72

Pro forma net income	$	1,484	$	1,201


Basic earnings per share as reported	$	0.27	$	0.29
Pro forma basic earnings per share		0.26		0.27
Diluted earnings per share as reported		0.26		0.27
Pro forma diluted earnings per share		0.25		0.26


	Well			Adequately									Well	Adequately
	Capitalized			Capitalized			March 31, 2004			December 31, 2003			Capitalized	Capitalized	March 31, 2005	December 31, 2004
	Requirement			Requirement			Actual			Actual			Requirement	Requirement	Actual	Actual
Tier 1 Capital (to Average Assets)
Consolidated		³5	%		³4	%		7.8	%		7.8	%	³5%	³4%	9.1%		10.0	%
Bank		³5	%		³4	%		8.4	%		8.5	%	³5%	³4%	9.5%		10.5	%

Tier 1 Capital (to Risk Weighted Assets)
Consolidated		³6	%		³4	%		8.7	%		8.8	%	³6%	³4%	9.9%		10.9	%
Bank		³6	%		³4	%		9.5	%		9.6	%	³6%	³4%	10.3%		11.4	%

Total Capital (to Risk Weighted Assets)
Consolidated		³10	%		³8	%		10.5	%		10.6	%	³10%	³8%	11.2%		12.6	%
Bank		³10	%		³8	%		10.4	%		10.5	%	³10%	³8%	11.1%		12.4	%


			Merchant		Parent
Three months ended	Community		Bankcard		And
March 31, 2005	Banking		Processing		Other			Totals

Interest and dividend income	$	12,346	$	—	$	—		$	12,346
Interest expense		3,349		—		383			3,732

Net interest and dividend income (expense)		8,997		—		(383	)		8,614
Other income		1,488		1,896		10			3,394
Depreciation and amortization		615		2		—			617
Other expense		7,295		1,575		152			9,022

Pretax segment profit (loss)	$	2,575	$	319	$	(525	)	$	2,369


Segment Assets	$	938,876	$	34	$	416		$	939,326


	2004		2003
FOR THE THREE MONTHS ENDED MARCH 31:
Other income	$	—	$	436,420
Depreciation and amortization		—		13,561
Other expense		—		378,994

Pretax income from discontinued operations	$	—	$	43,865

(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.

										2005 compared to 2004(1)
	2004 compared to 2003 (1)									Due to changes in
(In thousands)	Due to changes in
(dollars in thousands)																Net
							Net			Average			Average			Increase
	Average			Average			Increase			Volume			Rate			(Decrease)
	Volume			Rate			(Decrease)
INTEREST INCOME
Interest income
Loans (2)	$	1,500		$	(477	)	$	1,023		$	2,289		$	421		$	2,710
Investment Securities (2)		(26	)		(106	)		(132	)
Investment securities (2)											264			(38	)		226
Marketable equity securities (2)		87			—			87			18			(9	)		9
Interest-bearing deposits in other banks		1			(1	)		—			—			3			3
Federal Home Loan Bank Stock		4			(4	)		—			7			4			11
Federal Funds sold		4			(8	)		(4	)
Federal funds sold											70			101			171

Total interest income		1,570			(596	)		974			2,648			482			3,130

INTEREST EXPENSE
NOW Accounts		16			(18	)		(2	)
Money Market		(20	)		(99	)		(119	)

Interest expense
NOW accounts											21			101			122
Money market											83			324			407
Savings deposits		11			(18	)		(7	)		5			7			12
Time deposits		261			(220	)		41			587			81			668
Short-term borrowings and FHLB advances		39			(16	)		23			15			130			145
Long-term borrowings		—			(3	)		(3	)		(29	)		17			(12	)

Total interest expense		307			(374	)		(67	)		682			660			1,342


Change in net interest income	$	1,263		$	(222	)	$	1,041		$	1,966		$	(178	)	$	1,788

(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.

~~(a)~~		~~Non-performing loans exclude~~(a) Excludes the $1.6 million loan discussed below that is guaranteed for both principal and interest by the ~~USDA.~~U.S. Department of Agriculture (USDA).

~~(b)~~		(b) The Bank made a ~~$10,000,000~~$10.0 million loan to construct a lumber mill in northern Florida. Of this amount, ~~$6,400,000~~$6.4 million had been sold by the Bank to other lenders. The loan was partially guaranteed as to principal and interest by the USDA. In addition to business real estate and equipment, the loan was collateralized by the business owner’s interest in a trust. Under provisions of the trust agreement, beneficiaries cannot receive trust assets until November 2010.


(Dollars in thousands)	Interest Rates Decrease							Interest Rates		Interest Rates Increase
		200 BP			100 BP			Remain Constant		100 BP			200BP
Interest Income		$	37,236		$	39,378		$	41,610	$	43,673		$	46,142
Interest Expense			7,206			8,319			10,387		13,178			15,970

Net Interest Income		$	30,030		$	31,059		$	31,223	$	30,495		$	30,172

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


~~Date: May 13, 2004~~		TIB FINANCIAL CORP. ~~/s/~~

		/s/ Edward V. Lett
Date: May 10, 2005		Edward V. Lett
		President and Chief Executive Officer
	~~/s/~~
		/s/ David P. Johnson
		David P. Johnson
		Executive Vice President and Chief Financial Officer