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, 2005		Commission File Number
~~JUNE 30, 2004~~		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]~~þ or No ~~[ ]~~o

Indicate by check mark whether the issuer is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ~~[ ]~~þ or 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		~~5,658,057~~5,710,564

Class		Outstanding as of ~~July 31, 2004~~April 30, 2005

~~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 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS~~
		~~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 CEO Certification~~
~~Ex-31.2 Section 302 CFO Certification~~
~~Ex-32.1 Section 906 CEO Certification~~
~~Ex-32.2 Section 906 CFO Certification~~

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

TIB FINANCIAL CORP.

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


	June 30, 2004			December 31, 2003		March 31, 2005			December 31, 2004
	(Unaudited)					(Unaudited)
ASSETS
Cash and due from banks	$	25,607		$	17,197	$	20,216		$	27,410
Federal funds sold		10,889			16,484		62,391			15,528

Cash and cash equivalents		36,496			33,681		82,607			42,938

Investment securities available for sale		81,652			52,557		80,735			77,807
Loans, net of deferred loan costs and fees		592,459			540,413		719,285			655,678
Less: allowance for loan losses		5,806			5,216		6,541			6,243

Loans, net		586,653			535,197		712,744			649,435

Premises and equipment, net		24,455			21,073		27,141			27,559
Goodwill		155			155		155			155
Intangible assets, net		1,541			1,687		1,320			1,392
Accrued interest receivable and other assets		29,568			24,948		34,624			30,039

TOTAL ASSETS	$	760,520		$	669,298	$	939,326		$	829,325


LIABILITIES
Deposits:
Noninterest-bearing demand	$	145,393		$	121,728	$	185,012		$	152,035
Interest-bearing		479,001			432,085		614,269			535,824

Total Deposits		624,394			553,813		799,281			687,859
Federal Home Loan Bank (FHLB) advances		38,500			45,000		25,000			35,000
Short-term borrowings		6,874			4,041		19,922			12,157
Long-term borrowings		18,250			18,250		17,000			18,250
Accrued interest payable and other liabilities		7,336			6,948		9,844			7,945

TOTAL LIABILITIES		695,354			628,052		871,047			761,211


SHAREHOLDERS’ EQUITY
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, 5,657,957 and 4,431,328 shares issued		566			443
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		38,090			14,255		38,629			38,284
Retained earnings		27,591			26,203		29,859			28,968
Accumulated other comprehensive income		(1,081	)		345		(780	)		294

TOTAL SHAREHOLDERS’ EQUITY		65,166			41,246		68,279			68,114

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	760,520		$	669,298	$	939,326		$	829,325

(See notes to consolidated financial statements)

TIB FINANCIAL CORP.

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


	Three months ended				Six months ended				Three months ended
	June 30,				June 30,				March 31,
	2004		2003		2004		2003		2005		2004
INTEREST AND DIVIDEND INCOME
Loans, including fees	$	8,960	$	7,698	$	17,560	$	15,277	$	11,310	$	8,601
Investment securities:
U.S. Treasury securities		36		2		38		4
U.S. Government agencies and corporations		546		442		902		969
States and political subdivisions, tax-exempt		111		83		205		144
States and political subdivisions, taxable		51		62		104		125
Marketable equity securities		61		—		120		—
Taxable										636		410
Tax-exempt										160		153
Interest bearing deposits in other bank		4		—		5		1		4		1
Federal Home Loan Bank Stock		9		14		24		30		27		15
Federal funds sold		41		151		79		193		209		38

TOTAL INTEREST AND DIVIDEND INCOME		9,819		8,452		19,037		16,743		12,346		9,218

INTEREST EXPENSE
Deposits		1,980		2,124		3,872		4,104		3,101		1,892
Federal Home Loan Bank advances		70		33		164		102		175		94
Short-term borrowings		12		10		21		21		73		9
Long term borrowings		396		397		791		795		383		395

TOTAL INTEREST EXPENSE		2,458		2,564		4,848		5,022		3,732		2,390


NET INTEREST INCOME		7,361		5,888		14,189		11,721		8,614		6,828

PROVISION FOR LOAN LOSSES		649		258		1,018		588		586		369

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		6,712		5,630		13,171		11,133		8,028		6,459

NON-INTEREST INCOME
Service charges on deposit accounts		637		586		1,281		1,158		608		644
Investment securities gains, net		52		—		96		5		—		44
Merchant bankcard processing income		1,534		1,221		3,294		2,599		1,896		1,760
Gain on sale of government guaranteed loans		—		—		—		88
Fees on mortgage loans sold		645		609		1,043		1,211		492		398
Retail investment services		107		99		201		186
Gain on sale of investment in ERAS Joint Venture		—		202		—		202
Other income		356		371		689		717		398		427

TOTAL NON-INTEREST INCOME		3,331		3,088		6,604		6,166		3,394		3,273

NON-INTEREST EXPENSE
Salaries and employee benefits		3,614		3,074		7,056		6,241		4,212		3,442
Net occupancy expense		1,191		1,082		2,313		2,109		1,276		1,122
Other expense		3,348		2,713		6,578		5,302		3,565		3,230

TOTAL NON-INTEREST EXPENSE		8,153		6,869		15,947		13,652		9,053		7,794


INCOME BEFORE INCOME TAX EXPENSE		1,890		1,849		3,828		3,647		2,369		1,938

INCOME TAX EXPENSE		633		638		1,298		1,275		822		665

INCOME FROM CONTINUING OPERATIONS	$	1,257	$	1,211	$	2,530	$	2,372
DISCONTINUED OPERATIONS
Income from Keys Insurance Agency, Inc. operations		—		121		—		165
Income tax expense		—		46		—		62

INCOME FROM DISCONTINUED OPERATIONS		—		75		—		103

NET INCOME	$	1,257	$	1,286	$	2,530	$	2,475	$	1,547	$	1,273


BASIC EARNINGS PER SHARE:									$	0.27	$	0.29
Continuing operations	$	0.23	$	0.29	$	0.51	$	0.57
Discontinued operations		—		0.02		—		0.03

Basic earnings per share	$	0.23	$	0.31	$	0.51	$	0.60

DILUTED EARNINGS PER SHARE:									$	0.26	$	0.27
Continuing operations	$	0.22	$	0.28	$	0.49	$	0.56
Discontinued operations		—		0.02		—		0.02

Diluted earnings per share	$	0.22	$	0.30	$	0.49	$	0.58

(See notes to consolidated financial statements)

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			Shareholders’
	Shares		Stock		Capital		Earnings			Income (Loss)			Equity
Balance,January 1, 2005		5,679,239	$	568	$	38,284	$	28,968		$	294		$	68,114
Comprehensive income:
Net income								1,547						1,547
Other comprehensive income, net of tax
benefit of $645:
Net market valuation adjustment on
securities available for sale											(1,074	)
Other comprehensive income, net of tax														(1,074	)

Comprehensive income														473

Exercise of stock options		27,700		3		280								283
Income tax benefit from stock options exercised						65								65
Cash dividends declared, $.115 per share						—		(656	)					(656	)

Balance,March 31, 2005		5,706,939	$	571	$	38,629	$	29,859		$	(780	)	$	68,279

Additional Accumulated Other Total
Common Paid in Retained Comprehensive Shareholders’
Shares
Stock
Capital
Earnings
Income (Loss)
Equity
Balance,April 1, 2004
4,489,064 $ 449 $ 14,797 $ 26,971 $ 1,058 $ 43,275
Comprehensive income:
Net income — — 1,257 — 1,257
Other comprehensive income, net of tax benefit of $1,290:
Net market valuation adjustment on securities available for sale — — — (2,106 )
Less: reclassification adjustment for gains included in net income — — — (33 )
Other comprehensive income, net of tax — — — (2,139 )

Comprehensive income (882 )

Public offering of 1,150,000 shares 1,150,000 115 23,115 23,230
Exercise of stock options 18,893 2 105 — — 107
Income tax benefit from stock options exercised 73 73
Cash dividends declared, $.1125 per share — — (637 ) — (637 )

Balance,June 30, 2004
5,657,957 $ 566 $ 38,090 $ 27,591 $ (1,081 ) $ 65,166

Additional Accumulated Other Total
Common Paid in Retained Comprehensive Shareholders’
Shares
Stock
Capital
Earnings
Income (Loss)
Equity
Balance,April 1, 2003
4,114,425 $ 412 $ 9,414 $ 23,758 $ 1,172 $ 34,756
Comprehensive income:
Net income — — 1,286 — 1,286
Other comprehensive income, net of tax expense of $204:
Net market valuation adjustment on securities available for sale — — — 339
Less: reclassification adjustment for gains included in net income — — — — —
Other comprehensive income, net of tax — — — 339

Comprehensive income 1,625

Exercise of stock options 12,500 1 113 — — 114
Private Placement of 280,653 common shares 280,653 28 4,316 4,344
Cash dividends declared, $.11 per share — — (485 ) — (485 )

Balance,June 30, 2003
4,407,578 $ 441 $ 13,843 $ 24,559 $ 1,511 $ 40,354


					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

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

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

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 — — 2,530 — 2,530
Other comprehensive income, net of tax benefit of $859:
Net market valuation adjustment on securities available for sale — — — (1,366 )
Less: reclassification adjustment for gains included in net income — — — (60 ) —
Other comprehensive income, net of tax — — — (1,426 )

Comprehensive income 1,104

Public offering of 1,150,000 shares 1,150,000 115 23,115 23,230
Exercise of stock options 76,629 8 526 — — 534
Income tax benefit from stock options exercised — — 194 194
Cash dividends declared, $.225 per share — — (1,142 ) — (1,142 )

Balance,June 30, 2004
5,657,957 $ 566 $ 38,090 $ 27,591 $ (1,081 ) $ 65,166


	For the three month period ended
	March 31,
	2005			2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	1,547		$	1,273
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		617			527
Provision for loan losses		586			369
Deferred income tax benefit		(120	)		(115	)
Investment securities net gains		—			(44	)
Net gain on sale/disposal of premises, equipment and intangibles		(32	)		(1	)
Mortgage loans originated for sale		(45,679	)		(27,195	)
Proceeds from sale of mortgage loans		43,153			24,901
Fees on mortgage loans sold		(492	)		(398	)
Increase in accrued interest receivable and other assets		(818	)		(109	)
Increase (decrease) in accrued interest payable and other liabilities		1,960			(581	)

NET CASH PROVIDED BY (USED BY) OPERATING ACTIVITIES		722			(1,373	)


CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities available for sale		(5,000	)		—
Repayments of principal and maturities of investment securities available for sale		332			1,199
Sales of investment securities available for sale		—			2,046
Net sale of FHLB stock		129			1,250
Proceeds from sales of government guaranteed loans		—			569
Loans originated or acquired, net of principal repayments		(63,988	)		(11,854	)
Purchases of premises and equipment		(186	)		(1,525	)
Sales of premises, equipment and intangibles		93			2

NET CASH USED BY INVESTING ACTIVITIES		(68,620	)		(8,313	)


CASH FLOWS FROM FINANCING ACTIVITIES
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		(10,000	)		(15,000	)
Repayments of FHLB long-term advances		—			(10,000	)
Repayments of notes payable		(1,250	)		—
Net increase in demand, money market and savings accounts		55,564			54,250
Net increase in time deposits		55,858			9,370
Proceeds from exercises of stock options		283			426
Cash dividends paid		(653	)		(499	)

NET CASH PROVIDED BY FINANCING ACTIVITIES		107,567			39,853


NET INCREASE IN CASH AND CASH EQUIVALENTS		39,669			30,167
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		42,938			33,681

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	82,607		$	63,848


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

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 — — 2,475 — 2,475
Other comprehensive income, net of tax expense of $239:
Net market valuation adjustment on securities available for sale — — — 399
Less: reclassification adjustment for gains included in net income — — — (3 ) —
Other comprehensive income, net of tax — — — 396

Comprehensive income 2,871

Exercise of stock options 91,300 10 561 — — 571
Private Placement of 280,653 common shares 280,653 28 4,316 4,344
Cash dividends declared, $.22 per share — — (938 ) — (938 )

Balance,June 30, 2003
4,407,578 $ 441 $ 13,843 $ 24,559 $ 1,511 $ 40,354

(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 six month period ended
June 30,
2004
2003
CASH FLOWS FROM OPERATING ACTIVITIES

Net Income $ 2,530 $ 2,475
Adjustments to reconcile net income to net cash provided by operating activities:
Net amortization of investments 24 32
Amortization of intangible assets 146 146
Depreciation of premises and equipment 926 862
Provision for loan losses 1,018 588
Provision for losses on unfunded loan commitments (11 ) —
Deferred income tax benefit (360 ) (213 )
Deferred net loan costs and fees (291 ) (502 )
Investment securities net gains (96 ) (5 )
Net (gain) loss on sale/disposal of premises and equipment 6 (1 )
Gain on sale of investment in ERAS JV — (202 )
Gain on sales of government guaranteed loans, net — (88 )
Mortgage loans originated for sale (62,472 ) (59,192 )
Proceeds from sale of mortgage loans 60,150 62,985
Fees on mortgage loans sold (1,043 ) (1,211 )
Increase in accrued interest receivable and other assets (361 ) (443 )
Increase (decrease) in accrued interest payable and other liabilities 455 (1,677 )

NET CASH PROVIDED BY OPERATING ACTIVITIES
621 3,554

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of investment securities available for sale (38,368 ) (4,592 )
Repayments of principal and maturities of investment securities available for sale 1,960 12,073
Sales of investment securities available for sale 5,099 —
Net sale of FHLB stock 325 201
Proceeds from sales of government guaranteed loans 569 2,241
Loans originated or acquired, net of principal repayments (52,751 ) (33,835 )
Proceeds from the sale of investment in ERAS JV 327
Purchases of premises and equipment (4,317 ) (2,438 )
Sales of premises and equipment 4 2

NET CASH USED BY INVESTING ACTIVITIES
(87,479 ) (26,021 )

CASH FLOWS FROM FINANCING ACTIVITIES

Net increase in federal funds purchased and securities sold under agreements to repurchase 2,832 676
Net increase in FHLB short-term advances 3,500 —
Proceeds from FHLB long-term advances — 10,000
Repayments of FHLB long-term advances (10,000 ) (20,000 )
Net increase in demand, money market and savings accounts 49,120 19,561
Net increase in time deposits 21,461 50,605
Proceeds from exercise of stock options 534 571
Proceeds from private placement of common stock — 4,344
Proceeds from public offering of common stock 23,230 —
Cash dividends paid (1,004 ) (897 )

NET CASH PROVIDED BY FINANCING ACTIVITIES
89,673 64,860

NET INCREASE IN CASH AND CASH EQUIVALENTS
2,815 42,393
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
33,681 24,070

CASH AND CASH EQUIVALENTS AT END OF PERIOD
$ 36,496 $ 66,463

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS:

Cash paid for:
Interest $ 5,993 $ 5,662
Income taxes 1,135 1,775

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

~~TIB FINANCIAL CORP.~~

UNAUDITED CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
~~June 30, 2004~~March 31, 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, ofand the ~~Keys,~~Bank’s subsidiary, TIB ~~Software and Services,~~Investment Center Inc. (this corporation was dissolved in ~~March 2004 –~~January 2005 — see Note 2), and Keys Insurance Agency, Inc. (whose assets were sold in August 2003 — see Note 10) and the Bank’s two subsidiaries, TIB Government Loan Specialists, Inc. (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).

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.

NOTE 2 –— ACQUISITIONS AND DIVESTITURES

On ~~May 29, 2003, TIB Software and Services, Inc. sold its remaining interest~~December 15, 2004, the Company closed the sale of certain intangible assets which primarily comprised a book of business which served as the foundation of the Company’s investment center operations. The buyer paid $50 in ~~ERAS Joint Venture for $326,667.~~cash at the closing. The Company recognized a ~~pretax~~ gain of ~~approximately $202,000~~$50 on the transaction. ~~In March 2004,~~Under the purchase agreement, additional cash payments totaling up to $60 may be paid to the Company subject to the achievement of certain production and customer and asset retention thresholds. Additionally, the Company will receive monthly cash payments of 10% of production related to new referrals made through December 31, 2005. On January 7, 2005, the Company filed Articles of Dissolution dissolving TIB ~~Software and Services,~~Investment Center, Inc.

On August 15, 2003, the Company closed the sale of the assets of Keys Insurance Agency, Inc., a wholly owned subsidiary of the Company. See Note 10 – “Discontinued Operations” for details on the transaction. In March 2004, the Company filed Articles of Dissolution dissolving Keys Insurance Agency, Inc.

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

NOTE 3 –— INVESTMENT SECURITIES

The amortized cost and estimated fair value of investment securities available for sale at ~~June 30, 2004~~March 31, 2005 and December 31, ~~2003~~2004 are presented below:


	June 30, 2004
	Amortized		Unrealized		Unrealized		Estimated		March 31, 2005
(dollars in thousands)	Cost		Gains		Losses		Fair Value		Amortized		Unrealized		Unrealized		Estimated
									Cost		Gains		Losses		Fair Value
U.S. Treasury securities	$	5,176	$	5	$	75	$	5,106	$	5,179	$	2	$	142	$	5,039
U.S. Government agencies and corporations		57,274		156		1,862		55,568		59,208		47		1,814		57,441
States and political subdivisions-tax-exempt		11,299		235		239		11,295		9,595		156		76		9,675
States and political subdivisions-taxable		3,213		17		189		3,041		2,691		10		13		2,688
Marketable equity securities		3,000		159		—		3,159		3,000		521		—		3,521
Mortgage-backed securities		3,422		61		—		3,483		2,311		60		—		2,371

	$	83,384	$	633	$	2,365	$	81,652	$	81,984	$	796	$	2,045	$	80,735


	December 31, 2003
	Amortized		Unrealized		Unrealized		Estimated		December 31, 2004
(dollars in thousands)	Cost		Gains		Losses		Fair Value		Amortized		Unrealized		Unrealized		Estimated
									Cost		Gains		Losses		Fair Value
U.S. Treasury securities	$	209	$	9	$	—	$	218	$	5,178	$	5	$	29	$	5,154
U.S. Government agencies and corporations		31,357		425		663		31,119		54,228		104		869		53,463
States and political subdivisions-tax-exempt		8,838		378		59		9,157		9,596		246		26		9,816
States and political subdivisions-taxable		3,559		42		101		3,500		2,862		17		23		2,856
Marketable equity securities		3,000		395		—		3,395		3,000		987		—		3,987
Mortgage-backed securities		5,041		128		1		5,168		2,473		58		—		2,531

	$	52,004	$	1,377	$	824	$	52,557	$	77,337	$	1,417	$	947	$	77,807

NOTE 4 –— LOANS

Major classifications of loans are as follows:


(dollars in thousands)	June 30, 2004		December 31, 2003		March 31, 2005		December 31, 2004
Real estate mortgage loans:
Commercial	$	329,542	$	297,221	$	393,362	$	351,346
Residential		61,461		60,104		70,490		67,204
Farmland		3,347		2,317		4,825		4,971
Construction and vacant land		36,972		32,089		67,552		49,815
Commercial and agricultural loans		57,934		63,624		57,647		64,622
Indirect auto dealer loans		76,821		59,437		98,633		91,890
Home equity loans		13,822		12,574		14,637		13,856
Other consumer loans		10,454		11,232		10,075		9,817

Total loans		590,353		538,598		717,221		653,521
Net deferred loan costs		2,106		1,815		2,064		2,157

Loans, net of deferred loan costs	$	592,459	$	540,413	$	719,285	$	655,678

NOTE 5 –— ALLOWANCE FOR LOAN LOSSES

Activity in the allowance for loan losses for the ~~six~~three months ended ~~June 30,~~March 31, 2005 and 2004 ~~and June 30, 2003~~ follows:


(dollars in thousands)	2004			2003			2005			2004
Balance, January 1	$	5,216		$	4,272		$	6,243		$	5,216
Provision for loan losses charged to expense		1,018			588			586			369
Loans charged off		(436	)		(320	)		(307	)		(243	)
Recoveries of loans previously charged off		8			14			19			5

Balance, June 30	$	5,806		$	4,554
Balance, March 31							$	6,541		$	5,347

NOTE 6 –— EARNINGS PER SHARE AND COMMON STOCK

Earnings per share have been computed based on the following weighted average number of common shares outstanding for the three months ~~and six months~~ ended ~~June 30:~~March 31:


	2004		2003		2005		2004
For the three months ended June 30:
For the three months ended March 31:
Basic		5,434,532		4,152,481		5,686,233		4,462,493
Dilutive effect of options outstanding		163,310		159,875		179,866		196,901

Diluted		5,597,842		4,312,356		5,866,099		4,659,394

For the six months ended June 30:
Basic		4,948,550		4,101,616
Dilutive effect of options outstanding		180,072		169,084

Diluted		5,128,622		4,270,700

Stock options for ~~33,736 and 1,923~~20,082 shares of common stock were not considered in computing diluted earnings per common share for the three months ended ~~June 30,~~March 31, 2004 ~~and 2003~~ because they were anti-dilutive. ~~Stock~~There were no anti-dilutive stock options ~~for 26,909 and 967 shares of common stock were not considered in computing diluted earnings per common share~~outstanding for the ~~six~~three months ended ~~June 30, 2004 and 2003 because they were anti-dilutive.~~March 31, 2005. The effect of stock options is the sole common stock equivalent for purposes of calculating diluted earnings per common share.

NOTE 7 –— STOCK-BASED COMPENSATION

Total stock options granted, exercised, and expired/forfeited during the ~~six~~three months ended ~~June 30, 2004,~~March 31, 2005, were ~~37,500, 76,629,~~69,500, 27,700 and ~~7,400,~~8,000, respectively. As of ~~June 30, 2004,~~March 31, 2005, there were ~~430,976~~442,994 options for shares 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.”

For the three months ended June 30,
(dollars in thousands, except per share amounts)
2004
2003
Net income, as reported $ 1,257 $ 1,286
Stock-based compensation expense determined under fair value based method, net of tax 47 60

Pro forma net income $ 1,210 $ 1,226

Basic earnings per share as reported $ 0.23 $ 0.31
Pro forma basic earnings per share 0.22 0.30
Diluted earnings per share as reported 0.22 0.30
Pro forma diluted earnings per share 0.22 0.28


For the six months ended June 30,
For the three months ended March 31,
(dollars in thousands, except per share amounts)	2004		2003		2005		2004

Net income, as reported	$	2,530	$	2,475	$	1,547	$	1,273
Stock-based compensation expense determined under fair value based method, net of tax		119		97		63		72

Pro forma net income	$	2,411	$	2,378	$	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

For the six months ended June 30,
(dollars in thousands, except per share amounts)
2004
2003
Basic earnings per share as reported $ 0.51 $ 0.60
Pro forma basic earnings per share 0.49 0.58
Diluted earnings per share as reported 0.49 0.58
Pro forma diluted earnings per share 0.47 0.56

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.

NOTE 8 — CAPITAL ADEQUACY

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 ~~June 30, 2004~~March 31, 2005 and December 31, ~~2003:~~2004:


	Well			Adequately									Well	Adequately
	Capitalized			Capitalized			June 30, 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	%		10.4	%		7.8	%	³5%	³4%	9.1%		10.0	%
Bank		³5	%		³4	%		11.1	%		8.5	%	³5%	³4%	9.5%		10.5	%

Tier 1 Capital (to Risk Weighted Assets)
Consolidated		³6	%		³4	%		11.8	%		8.8	%	³6%	³4%	9.9%		10.9	%
Bank		³6	%		³4	%		12.6	%		9.6	%	³6%	³4%	10.3%		11.4	%

Total Capital (to Risk Weighted Assets)
Consolidated		³10	%		³8	%		13.6	%		10.6	%	³10%	³8%	11.2%		12.6	%
Bank		³10	%		³8	%		13.5	%		10.5	%	³10%	³8%	11.1%		12.4	%

Management believes, as of ~~June 30, 2004,~~March 31, 2005, that the Company and the Bank met all capital requirements to which they are subject. The Company has included the trust preferred securities that were issued in September 2000 and July 2001 in Tier 1 and Total capital.

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

NOTE 9 — SEGMENT REPORTING

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 10). Total assets of Keys Insurance Agency, Inc. at June 30, 2004 and June 30, 2003 were $0 and $2.3 million 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 (dollars in thousands):


			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


			Merchant		Parent
Three months ended	Community		Bankcard		and
March 31, 2004	Banking		Processing		Other			Totals

Interest and dividend income	$	9,218	$	—	$	—		$	9,218
Interest expense		1,995		—		395			2,390

Net interest and dividend income (expense)		7,223		—		(395	)		6,828
Other income		1,414		1,760		99			3,273
Depreciation and amortization		515		11		1			527
Other expense		6,009		1,433		194			7,636

Pretax segment profit (loss)	$	2,113	$	316	$	(491	)	$	1,938


Segment Assets	$	710,065	$	37	$	455		$	710,557

Merchant Parent
Six months ended Community Bankcard And
June 30, 2004
Banking
Processing
Other
Totals
Interest and dividend income $ 19,037 $ — $ — $ 19,037
Interest expense 4,057 — 791 4,848

Net interest and dividend income 14,980 — (791 ) 14,189
Other income 3,104 3,294 206 6,604
Depreciation and amortization 1,049 21 2 1,072
Other expense 12,595 2,745 553 15,893

Pretax segment profit (loss) $ 4,440 $ 528 $ (1,140 ) $ 3,828

Segment Assets $ 760,068 $ 30 $ 422 $ 760,520

Merchant Parent
Six months ended Community Bankcard and
June 30, 2003
Banking
Processing
Other
Totals
Interest and dividend income $ 16,743 $ — $ — $ 16,743
Interest expense 4,227 — 795 5,022

Net interest and dividend income 12,516 — (795 ) 11,721
Other income 3,179 2,599 388 6,166
Depreciation and amortization 955 23 2 980
Other expense 10,784 2,104 372 13,260

Pretax segment profit (loss) $ 3,956 $ 472 $ (781 ) $ 3,647

Segment Assets $ 630,440 $ 55 $ 450 $ 630,945

Merchant Parent
Three months ended Community Bankcard And
June 30, 2004
Banking
Processing
Other
Totals
Interest and dividend income $ 9,819 $ — $ — $ 9,819
Interest expense 2,062 — 396 2,458

Net interest and dividend income 7,757 — (396 ) 7,361
Other income 1,690 1,534 107 3,331
Depreciation and amortization 534 10 1 545
Other expense 6,586 1,312 359 8,257

Pretax segment profit (loss) $ 2,327 $ 212 $ (649 ) $ 1,890

Merchant Parent
Three months ended Community Bankcard and
June 30, 2003
Banking
Processing
Other
Totals
Interest and dividend income $ 8,452 $ — $ — $ 8,452
Interest expense 2,167 — 397 2,564

Net interest and dividend income 6,285 — (397 ) 5,888
Other income 1,566 1,221 301 3,088
Depreciation and amortization 485 12 1 498
Other expense 5,425 976 228 6,629

Pretax segment profit (loss) $ 1,941 $ 233 $ (325 ) $ 1,849

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.

~~NOTE 10 – DISCONTINUED OPERATIONS~~

On August 15, 2003, 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, and his partner. The transaction was structured as a sale of the agency assets. The buyer paid $2.2 million in cash at the closing. Of the cash payment at closing, proceeds of $2.0 million were pursuant to a loan from TIB Bank to the buyer. We recognized a loss of $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:~~

(dollars in thousands)
2004
2003
For the three months ended June 30:
Other income $ — $ 542
Depreciation and amortization — 14
Other expense — 407

Pretax income from discontinued operations $ — $ 121

For the six months ended June 30:
Other income $ — $ 978
Depreciation and amortization — 27
Other expense — 786

Pretax income from discontinued operations $ — $ 165

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

FORWARD-LOOKING STATEMENTS

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 ~~June 30, 2004,~~March 31, 2005, and statement of income for the three months ~~and six months~~ ended ~~June 30, 2004.~~March 31, 2005. Operating results for the three months ~~and six months~~ ended ~~June 30, 2004~~March 31, 2005 are not necessarily indicative of trends or results to be expected for the year ended December 31, 2005.

QUARTERLY SUMMARY

Our first quarter 2005 net income of $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 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 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 ~~JUNE 30,~~MARCH 31, 2005 AND 2004 ~~AND 2003~~

RESULTS OF OPERATIONS

Our net income of ~~$1,257,000~~$1.5 million for the ~~second~~first quarter of ~~2004 was a $29,000 or 2.3% decrease~~2005 increased 21.5%, compared to ~~$1,286,000~~$1.3 million for the same period last year. Net income from continuing operations was $1,257,000 for the second quarter of 2004, compared to $1,211,000 for the second quarter of 2003, an increase of $46,000 or 3.8%. 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 ~~continuing operations for~~ the ~~second~~first quarter of ~~2004~~2005 were ~~$0.23~~$0.27 and ~~$0.22~~$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 June 30, 2004 were 5,434,532 compared to 4,152,481 for the three~~

months ended June 30, 2003. This 30.9% increase in shares outstanding resulted from the exercise of stock options and the issuance of 1,150,000 shares in the second quarter of 2004 in connection with a public stock offering of our shares.

Annualized return on average assets was ~~0.69%~~0.72% and ~~0.83%~~0.76% for the ~~second~~first quarter of 2005 and 2004, ~~and 2003,~~respectively, while the annualized return on average shareholders’ equity was ~~8.31%~~9.20% and ~~14.29%~~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.~~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 ~~$1,473,000, or 25.0%~~26.2%, to ~~$7,361,000~~$8.6 million in the three months ended ~~June 30, 2004~~March 31, 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 at 4.25% and in June 2003 it declined to 4.00% and~~ remained at ~~that rate until July~~4.00% for the first quarter of ~~2004.~~2004 it increased from 5.25% at the beginning of 2005 to 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 ~~second~~first 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,~~as the effects of the higher rates are reflected in variable loan re-pricings and new loan production. Increased loan volume is the primary driver affecting the increased ~~loan~~net interest income in the current period.

In April 2002, the Bank began a program to acquire indirect automobile loans. We predominantly buy loans from auto dealers in 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, 2005 we had $98.6 million of indirect auto dealer loans outstanding, compared to $66.8 million at March 31, 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 average yield on interest-earning assets for the first three months of 2005 was 6.29% which was an increase of 23 basis points compared to the 6.06% yield earned during the first three months of 2004. The average cost of interest-bearing deposits increased 44 basis points from 1.72% during the first three months of 2004 to 2.16% for the comparable period in 2005, and the rate of all interest-bearing liabilities increased 44 basis points, from 1.93% in 2004 to 2.37% in 2005. The Company’s net interest margin decreased to 4.40% in the first three months of 2005 compared to 4.50% in the first three months of 2004. We anticipate interest rates to continue slowly trending up over the next six months. If this occurs or if rates remain stable, net interest margin should be fairly consistent as our mix of assets and liabilities should grow in roughly the same proportions that exist currently on our 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.

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, 2005 and March 31, 2004.


				2005								2004
	Average			Income/		Yields/			Average			Income/		Yields/
(dollars in thousands)	Balances			Expense		Rates			Balances			Expense		Rates
Interest-earning assets:
Loans (1)(2)	$	686,418		$	11,312		6.68	%	$	546,516		$	8,602		6.33	%
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		633			4		2.56	%		589			1		0.51	%
Federal Home Loan Bank stock		2,555			27		4.29	%		1,879			16		3.34	%
Federal funds sold		34,348			209		2.47	%		16,225			38		0.94	%

Total interest-earning assets		801,656			12,427		6.29	%		617,302			9,297		6.06	%


Non-interest-earning assets:
Cash and due from banks		22,560								18,568
Premises and equipment, net		27,414								20,433
Allowances for loan losses		(6,358	)							(5,292	)
Other assets		30,159								26,076

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

Total assets	$	875,431							$	677,087


Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts	$	91,727			178		0.79	%	$	70,636			56		0.32	%
Money market		158,655			633		1.62	%		122,444			226		0.74	%
Savings deposits		46,537			52		0.45	%		41,277			40		0.39	%
Time deposits		284,232			2,238		3.19	%		209,305			1,570		3.02	%

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

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

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


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

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

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


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

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

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

(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.

The table below details the components of the changes in net interest income for the three months ended March 31, 2005 and March 31, 2004. For each major category of interest-earning assets and interest-bearing liabilities, information is provided with respect to changes due to average volumes and ~~decreased deposit~~changes due to rates, ~~more than compensated for this allowing for~~with the ~~reported increase~~changes in ~~interest income.~~both volumes and rates allocated to these two categories based on the proportionate absolute changes in each category.

	2005 compared to 2004(1)
	Due to changes in
(dollars in thousands)							Net
	Average			Average			Increase
	Volume			Rate			(Decrease)

Interest income
Loans (2)	$	2,289		$	421		$	2,710
Investment securities (2)		264			(38	)		226
Marketable equity securities (2)		18			(9	)		9
Interest-bearing deposits in other banks		—			3			3
Federal Home Loan Bank Stock		7			4			11
Federal funds sold		70			101			171

Total interest income		2,648			482			3,130


Interest expense
NOW accounts		21			101			122
Money market		83			324			407
Savings deposits		5			7			12
Time deposits		587			81			668
Short-term borrowings and FHLB advances		15			130			145
Long-term borrowings		(29	)		17			(12	)

Total interest expense		682			660			1,342


Change in net interest income	$	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.

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 ~~$391,000, or 151.6%~~58.8%, to ~~$649,000~~$0.6 million in the ~~second~~first quarter of ~~2004~~2005 compared to ~~$258,000~~$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 ~~in the loan portfolio~~ and change in composition of the loan ~~portfolio.~~portfolio coupled with slightly higher charge offs. Total loans outstanding grew ~~$40.7~~$63.7 million, or ~~7.4%~~9.7%, during the ~~second~~first quarter of ~~2004,~~2005, as compared to ~~only $14.8~~$11.0 million, or ~~3.2%~~2.1%, during the ~~second~~first quarter of ~~2003.~~2004. The largest dollar increase during the ~~second~~first quarter of ~~2004~~2005 occurred in commercial real estate loans which increased ~~$35.8~~$42.0 million, or ~~12.2%~~12.0%. This compares to a ~~$10.4~~$3.5 million, or ~~3.8% increase~~1.2% decrease in commercial real estate loans during the ~~second~~first quarter of 2003. We have also continued to expand our indirect lending portfolio. At June 30, 2004, indirect auto dealer loans accounted for $76.8 million, or 13.0%, of our loan portfolio. This compares to an indirect lending portfolio of $39.2 million at June 30, 2003 which represented 8.3% of our total loan portfolio.2004.

Total loans outstanding were ~~$590.4~~$717.2 million at ~~June 30, 2004,~~March 31, 2005, compared to ~~$473.1~~$549.6 million at ~~June 30, 2003.~~March 31, 2004. Net charge-offs were ~~$190,000~~$0.3 million during the three months ended ~~June 30, 2004~~March 31, 2005 compared to ~~$73,000~~$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 ~~second~~first quarter of ~~2004~~2005 was ~~$3,331,000.~~$3.4 million. This represents a ~~$243,000 or 7.9%~~3.7% increase over the prior year quarter which totaled ~~$3,088,000.~~$3.3 million. The increase in non-interest income is primarily attributable to an increase ~~of $313,000~~ in ~~merchant~~Merchant bankcard processing income ~~partially offset by a $202,000 decrease from the gain~~and in fees on ~~sale of investment in ERAS JV.~~

mortgage loans sold. The ~~$313,000~~ increase in merchant bankcard processing income is primarily a

result of volume increases. ~~On May 29, 2003, we~~The increase in fees on mortgage loans sold ~~our remaining interest in ERAS Joint Venture and recognized~~is primarily a ~~pretax gain~~result of ~~$202,000 on this transaction.~~increased pass through loan volume during the 2005 quarter.

NON-INTEREST EXPENSE

Non-interest expense for the ~~second~~first quarter of ~~2004~~2005 was ~~$8,153,000.~~$9.1 million. This represents a ~~$1,284,000 or 18.7%~~16.2%, increase over the prior year quarter which totaled ~~$6,869,000.~~$7.8 million. The increase in non-interest expense is primarily attributable to salaries and employee benefits increasing ~~$540,000, 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 $109,000, and other expense increasing $635,000. The increases~~category are ~~primarily~~ the result of costs associated with the growth of our ~~business and continued expansion into the Southwest Florida market.~~business.

At June 30, 2004 the Bank had 275 full-time employees and 16 part-time employees, compared to 262 full-time employees and 14 part time employees at June 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 June 30, 2004 totaled $35,000.

In the category of other expense, interchange and other bankcard expense increased approximately $323,000 over the prior year amount. These expenses are primarily tied to volume, and are consistent with the increase in merchant bankcard processing income we experienced. We did, however, experience an increase in the rates charged by our card associations in April 2004 that also contributed to this increase. Also, in the second quarter of 2004, we incurred $191,000 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.

INCOME TAXES

The provision for income taxes ~~related to continuing operations totaled $633,000, for an~~includes federal and state income taxes. The effective tax ~~rate of 33.5%~~rates were 34.7% and 34.3%, for the three months ended ~~June 30,~~March 31, 2005 and 2004, ~~and $638,000, for an effective tax rate of 34.5%, for the three months ended June 30, 2003.~~respectively.

~~SIX MONTHS ENDED JUNE 30, 2004 AND 2003~~

~~RESULTS OF OPERATIONS~~

Our net income of $2,530,000 for the first six months of 2004 was a $55,000 or 2.2% increase compared to $2,475,000 for the same period last year. Net income from continuing operations was $2,530,000 for the first six months of 2004, compared to $2,372,000 for the first six months of 2003, an increase of $158,000 or 6.7%. 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 six months of 2004 were $0.51 and $0.49 respectively as compared to $0.60 and $0.58 per share in the previous year’s period. Basic weighted average common equivalent shares outstanding for the six months ended June 30, 2004 were 4,948,550 compared to 4,101,616. This 20.6% 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 0.72% and 0.82% for the first six months of 2004 and 2003, while the annualized return on average shareholders’ equity was 9.84% and 14.10% 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 $2,468,000, or 21.1%, to $14,189,000 in the six months ended June 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. Many of the Bank’s loans are indexed to this floating rate, although they also include floors. The lower level of prime rate in the first six months of 2004 compared to the comparative period in 2003 did result in a lower average yield in the loan portfolio, however, increased loan volumes and decreased deposit rates 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 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.

In April 2002, the Bank began a program to acquire indirect automobile loans. We predominantly buy loans from auto dealers in 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 June 30, 2004 we had $76.8 million of indirect auto dealer loans outstanding, compared to $39.2 million at June 30, 2003. 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 average yield on interest-earning assets for the first six months of 2004 was 6.01% which was a decrease of 24 basis points compared to the 6.25% yield earned during the first six months of 2003. The average cost of interest-bearing deposits declined 32 basis points from 2.02% during the first six months of 2003 to 1.70% for the comparable period in 2004, and the rate of all interest-bearing liabilities decreased 35 basis points, from 2.27% in 2003 to 1.92% in 2004. The Company’s net interest margin increased to 4.50% in the first six months of 2004 compared to 4.39% in the first six months of 2003. We anticipate interest rates 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 the cash generated from our recent stock offering in April 2004, there will be some near term compression in net interest margin until these funds are invested. 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. By the end of 2004, we anticipate the funds raised in our recent stock offering will be invested in a similar mix of assets as currently exists on our balance sheet.

~~The following table presents average balances of the Company, the taxable-equivalent interest earned, and the rate paid thereon during the six months ended June 30, 2004 and June 30, 2003.~~

2004
2003

Average Income/ Yields/ Average Income/ Yields/
(dollars in thousands)
Balances
Expense
Rates
Balances
Expense
Rates
Interest-earning assets:
Loans (1)(2) $ 558,197 $ 17,562 6.33 % $ 457,724 $ 15,279 6.73 %
Investment securities (2) 60,830 1,355 4.48 % 50,644 1,317 5.24 %
Marketable equity securities – 90% tax exempt (2) 3,448 175 10.23 % — — —
Interest-bearing deposits in other banks 948 5 0.98 % 199 1 0.96 %
Federal Home Loan Bank stock 1,518 24 3.21 % 1,424 30 4.26 %
Federal funds sold 17,038 79 0.94 % 32,413 193 1.20 %

Total interest-earning assets 641,979 19,200 6.01 % 542,404 16,820 6.25 %

Non-interest-earning assets:
Cash and due from banks 19,781 15,600
Investment in ERAS — 104
Premises and equipment, net 20,776 18,850
Allowances for loan losses (5,405 ) (4,503 )
Other assets 28,504 29,399

Total non-interest-earning assets 63,656 59,450

Total assets $ 705,635 $ 601,854

Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts $ 74,269 120 0.32 % $ 56,269 124 0.45 %
Money market 126,115 494 0.79 % 130,053 662 1.03 %
Savings deposits 42,860 82 0.39 % 33,472 98 0.59 %
Time deposits 213,760 3,176 2.99 % 190,863 3,220 3.40 %

Total interest-bearing deposits 457,004 3,872 1.70 % 410,657 4,104 2.02 %
Other interest-bearing liabilities:
Short-term borrowings and FHLB advances 32,052 185 1.16 % 18,091 123 1.37 %
Long-term borrowings 18,250 791 8.71 % 18,250 795 8.79 %

Total interest-bearing liabilities 507,306 4,848 1.92 % 446,998 5,022 2.27 %

Non-interest-bearing liabilities and shareholders’ equity:
Demand deposits 138,656 112,560
Other liabilities 8,265 7,201
Shareholders’ equity 51,408 35,095

Total non-interest-bearing liabilities and shareholders’ equity 198,329 154,856

Total liabilities and shareholders’ equity $ 705,635 $ 601,854

Interest rate spread (tax equivalent basis) 4.09 % 3.98 %

Net interest income (tax equivalent basis) $ 14,352 $ 11,798

Net interest margin (3) (tax equivalent basis) 4.50 % 4.39 %

~~(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.~~

The table below details the components of the changes in net interest income for the six months ended June 30, 2004 and June 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, 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)
Due to changes in
Net
Average Average Increase
(dollars in thousands)
Volume
Rate
(Decrease)
Interest income
Loans (2) $ 3,201 $ (918 ) $ 2,283
Investment securities (2) 242 (204 ) 38
Marketable equity securities (2) 175 — 175
Interest-bearing deposits in other banks 4 — 4
Federal Home Loan Bank Stock 2 (8 ) (6 )
Federal funds sold (78 ) (36 ) (114 )

Total interest income 3,546 (1,166 ) 2,380

Interest expense
NOW accounts 34 (38 ) (4 )
Money market (19 ) (149 ) (168 )
Savings deposits 23 (39 ) (16 )
Time deposits 363 (407 ) (44 )
Short-term borrowings and FHLB advances 83 (21 ) 62
Long-term borrowings — (4 ) (4 )

Total interest expense 484 (658 ) (174 )

Change in net interest income $ 3,062 $ (508 ) $ 2,554

~~(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.

~~PROVISION FOR LOAN LOSSES~~

The provision for loan losses increased $430,000 or 73.1% to $1,018,000 in the first six months of 2004 compared to $588,000 in the comparable prior year period. The higher provision for loan losses in 2004 was primarily attributable to the growth in the loan portfolio and change in composition of the loan portfolio. Total loans outstanding grew $51.8 million, or 9.6%, during the first six months of 2004, as compared to only $31.4 million, or 7.1%, during the first six months of 2003. The largest dollar increase during the first six months of 2004 occurred in commercial real estate loans which increased $32.3 million, or 10.9%. This compares to a $18.2 million, or 6.9%, increase in commercial real estate loans during the first six months of 2003. We have also continued to expand our indirect lending portfolio. At June 30, 2004, indirect auto dealer loans accounted for $76.8 million, or 13.0%, of our loan portfolio. This compares to an indirect lending portfolio of $39.2 million at June 30, 2003 which represented 8.3% of our total loan portfolio.

Total loans outstanding were $590.4 million at June 30, 2004, compared to $473.1 million at June 30, 2003. Net charge-offs were $428,000 during the six months ended June 30, 2004 compared to $306,000 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 six months of 2004 was $6,604,000. This represents a $438,000 or 7.1% increase over the prior year period which totaled $6,166,000. The increase in non-interest income is primarily attributable to an increase of

~~$695,000 in merchant bankcard processing income, partially offset by a decrease of $168,000 in fees on mortgage loans sold, and a $202,000 decrease from the gain on sale of investment in ERAS JV.~~

The increase in merchant bankcard processing income is primarily a result of volume increases. Fees on mortgage loans sold result from the immediate sale of various residential mortgages (primarily fixed rate loans) in the secondary market. The lower fees earned in the first six months of 2004 compared to the year ago period are attributable to reduced refinancing activity, 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 six months of 2004 was $15,947,000. This represents a $2,295,000 or 16.8% increase over the prior year period which totaled $13,652,000. The increase in non-interest expense is attributable to salaries and employee benefits increasing $815,000, net occupancy expense increasing $204,000, and other expense increasing $1,276,000. The increases are primarily the result of costs associated with the growth of our business and continued expansion into the Southwest Florida market.

In the category of other expense, interchange and other bankcard expensed increased approximately $613,000 over the prior year amount. These expenses are primarily tied to volume, and are consistent with the increase in merchant bankcard processing income we experienced. We did, however, experience an increase in the rates charged by our card associations in April 2004 that also contributed to this increase. Also, in the first six 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.

~~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 $1,298,000, for an effective tax rate of 33.9%, for the six months ended June 30, 2004, and $1,275,000, for an effective tax rate of 35.0%, for the six months ended June 30, 2003.

BALANCE SHEET

Total assets at ~~June 30, 2004~~March 31, 2005 were ~~$760,520,000,~~$939.3 million, up ~~13.6%~~13.3% from total assets of ~~$669,298,000~~$829.3 million at December 31, ~~2003.~~2004. Asset growth was primarily funded by an increase in deposits of ~~$70,581,000,~~$111.4 million, or ~~12.7%~~16.2%. Loans net of deferred loan costs increased ~~$52.0~~$63.6 million, or ~~9.6%~~9.7%, to ~~$592.5~~$719.3 million for the first ~~six~~three months of ~~2004~~2005 from year end ~~2003.~~2004. The largest dollar increase came in the commercial real estate loan category which increased ~~$32.3~~$42.0 million, or ~~10.9%~~12.0%. WeAlthough we have ~~also~~ continued to expand our indirect dealer auto loan ~~program.~~program, it has begun to decrease in percentage in proportion to the loan portfolio as a whole. At ~~June 30, 2004,~~March 31, 2005, indirect auto loans accounted for ~~$76.8~~$98.6 million, or ~~13.0%~~13.8%, of our loan portfolio as compared to ~~$59.4~~$91.9 million, or ~~11.0%~~14.1%, at December 31, ~~2003. Also, in the same period, investment securities increased $29.1 million as a result of purchases of securities from funds generated from the stock offering in the second quarter of~~ 2004.

During the first ~~six~~three months of ~~2004,~~2005, we reduced our advances from the Federal Home Loan Bank by ~~$6.5~~$10.0 million. Total advances outstanding were ~~$38.5~~$25.0 million at ~~June 30, 2004~~March 31, 2005 as compared to ~~$45.0~~$35.0 million at December 31, ~~2003.~~2004.

Shareholders’ equity totaled ~~$65.2~~$68.3 million at ~~June 30, 2004,~~March 31, 2005, increasing ~~$23.9~~from $68.1 million ~~from~~at December 31, ~~2003.~~2004. Book value per share ~~increased~~decreased to ~~$11.52~~$11.96 at ~~June 30, 2004~~March 31, 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 ~~both the first and second quarter of 2004 and $0.11 per share in both~~ the first quarter ~~and second 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 totaling $23.2 million provides 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:


(dollars in thousands)	June 30, 2004			December 31, 2003			March 31, 2005			December 31, 2004
Total nonaccrual loans	$	1,250		$	390		$	391		$	704
Accruing loans delinquent 90 days or more (a)		—			—			—			—

Total non-performing loans ~~(b)~~	$	1,250		$	390		$	391		$	704

Repossessed personal property (indirect auto dealer loans)		535			598			814			688
Other real estate owned (c)		192			193
Other assets (c)		2,531			2,472
Other real estate owned (b)								190			882
Other assets (b)								2,688			2,665

Total non-performing assets	$	4,508		$	3,653		$	4,083		$	4,939


Allowance for loan losses	$	5,806		$	5,216		$	6,541		$	6,243

Non-performing assets as a percent of total assets		0.59	%		0.55	%		0.43	%		0.60	%
Non-performing loans as a percent of gross loans		0.21	%		0.07	%		0.05	%		0.11	%
Allowance for loan losses as a percent of non-performing loans		464.5	%		1,336.33	%		1,672.9	%		886.8	%

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

(b) Nonaccrual loans increased $860,000 from December 31, 2003 to June 30, 2004. Of the increase, $591,000 is attributable to the addition of one loan to nonaccrual status during the second quarter of 2004. In July 2004, this loan was satisfactorily paid off.

(c) The Bank made a $10,000,000 loan to construct a lumber mill in northern Florida. Of this amount, $6,400,000 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.

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 June 30, 2004 and December 31, 2003, and is accruing interest. Accrued interest on this loan totals approximately $632,000 and $590,000 at June 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 $192,000 and $193,000 at June 30, 2004 and December 31, 2003, respectively. The non-guaranteed principal and interest ($1,961,000 at June 30, 2004 and December 31, 2003) and the reimbursable capitalized liquidation costs and protective advance costs totaling approximately $570,000 and $511,000 at June 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.

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 $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.

1915

(a) Excludes the $1.6 million loan discussed below that is guaranteed for both principal and interest by the U.S. Department of Agriculture (USDA).
(b) The Bank made a $10.0 million loan to construct a lumber mill in northern Florida. Of this amount, $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.
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 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 ~~$5,806,000~~$6.5 million and ~~$5,216,000~~$6.2 million at ~~June 30, 2004~~March 31, 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 ~~June 30, 2004,~~March 31, 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 subject to the pledging of sufficient collateral. At ~~June 30, 2004,~~March 31, 2005, there were ~~$38.5~~$25.0 million in advances outstanding in addition to a $15 million letter of credit 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 residential 1-4 family mortgage and commercial real estate secured loans was done to bring the collateral availability up to approximately ~~$138.8~~$159.7 million.

The Bank has an unsecured overnight federal funds purchased accommodation up to a maximum of $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

Closely related to liquidity management is the management of interest-earning assets and interest-bearing liabilities. The Company manages its rate sensitivity position to avoid wide swings in net interest margins and to minimize risk due to changes in interest rates.

2017

Our interest rate sensitivity position at ~~June 30, 2004~~March 31, 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			or less			Months			Months			years			Years			Total
Interest-earning assets:
Loans	$	244,921		$	29,509		$	42,205		$	199,300		$	74,418		$	590,353		$	309,484		$	36,094		$	44,479		$	260,282		$	66,882		$	717,221
Investment securities-taxable		1,418			—			—			33,113			32,667			67,198			1,013			—			—			42,184			24,342			67,539
Investment securities-tax exempt		308			234			—			3,069			7,684			11,295			—			—			—			3,139			6,536			9,675
Marketable equity securities		3,159			—			—			—			—			3,159			3,521			—			—			—			—			3,521
Federal Home Loan Bank stock		1,925		��	—			—			—			—			1,925			2,781			—			—			—			—			2,781
Federal funds sold		10,889			—			—			—			—			10,889
Fed funds sold																				62,391			—			—			—			—			62,391
Interest bearing deposit in other bank		930			—			—			—			—			930			367			—			—			—			—			367

Total interest-bearing assets		263,550			29,743			42,205			235,482			114,769			685,749			379,557			36,094			44,479			305,605			97,760			863,495


Interest-bearing liabilities:
NOW accounts		75,071			—			—			—			—			75,071			89,055			—			—			—			—			89,055
Money Market		134,216			—			—			—			—			134,216			169,391			—			—			—			—			169,391
Savings Deposits		43,223			—			—			—			—			43,223			48,783			—			—			—			—			48,783
Time deposits		54,726			29,257			71,609			70,888			11			226,491			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		45,374			—			—			—			—			45,374			44,922			—			—			—			—			44,922

Total interest-bearing liabilities		357,610			29,257			71,609			70,888			13,261			542,625			403,660			22,471			151,002			87,053			12,005			676,191


Interest sensitivity gap	$	(94,060	)	$	486		$	(29,404	)	$	164,594		$	101,508		$	143,124		$	(24,103	)	$	13,623		$	(106,523	)	$	218,552		$	85,755		$	187,304


Cumulative interest sensitivity gap	$	(94,060	)	$	(93,574	)	$	(122,978	)	$	41,616		$	143,124		$	143,124		$	(24,103	)	$	(10,480	)	$	(117,003	)	$	101,549		$	187,304		$	187,304


Cumulative sensitivity ratio		(13.7	)%		(13.6	)%		(17.9	)%		6.1	%		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 ~~$123~~$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 ~~June 30, 2004,~~March 31, 2005 we were within this range with a one year cumulative sensitivity ratio of ~~-17.9%~~-13.5%.

See also Item 3, “Quantitative and Qualitative Disclosures About Market Risk.”

COMMITMENTS

The Bank is a party to financial instruments with off-balance sheet risk, entered into in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of

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 ~~June 30, 2004,~~March 31, 2005, total unfunded loan commitments were approximately ~~$74.7~~$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 ~~June 30, 2004,~~March 31, 2005, commitments under standby letters of credit aggregated approximately ~~$2.2~~$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 ~~June 30, 2004~~March 31, 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 ~~$224~~$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.

2219

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

Interest Rates Decrease
Interest Rates Interest Rates Increase
(dollars in thousands)
200 BP
100 BP
Remain Constant
100 BP
200BP
Interest Income $ 40,244 $ 42,519 $ 44,883 $ 47,067 $ 49,686
Interest Expense 8,021 9,402 11,763 14,783 17,803

Net Interest Income $ 32,223 $ 33,117 $ 33,120 $ 32,284 $ 31,883

Change in net income after tax vs. constant rates $ (560 ) $ (2 ) $ (522 ) $ (772 )

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

~~At the Annual Meeting of Shareholders of TIB Financial Corp. held May 25, 2004, ballot totals for the reelection of Directors standing for reelection were as follows:~~

DIRECTORS
FOR
AGAINST
ABSTAIN
Armando J. Henriquez, PhD 3,804,524 20,093 —
James R. Lawson III 3,798,368 26,249 —
Richard C. Bricker, Jr. 3,798,368 26,249 —
Paul O. Jones, Jr. M.D. 3,804,524 20,093 —
Thomas J. Longe 3,798,368 26,249 —

Not applicable

The directors continuing in office following the meeting were: Richard C. Bricker, Jr., Armando J. Henriquez, PhD, Gretchen K. Holland, Paul O. Jones, Jr. M.D., James R. Lawson, III, Edward V. Lett, Thomas J. Longe, John G. Parks, Jr., Marvin F. Schindler, Otis T. Wallace, Millard J. Younkers, Jr., and Robert A. Zolten, M.D.

~~Ballot totals for the approval of the Restated Articles of Incorporation were as follows:~~

FOR
AGAINST
ABSTAIN
3,728,374 95,821 422

~~Ballot totals for the approval of the Company 2004 Equity Incentive Plan were as follows:~~

FOR
AGAINST
ABSTAIN
3,708,600 111,220 4,797

~~Total shares voted were 3,824,617 which represent 85.2% of the outstanding shares.~~

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

~~(b)~~ ~~Reports on Form 8-K~~
(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

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.

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

SIGNATURES

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


		TIB FINANCIAL CORP.

	~~/s/~~	/s/ Edward V. Lett
Date: ~~August 12, 2004~~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

2720


	For the six month period ended
	June 30,
	2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	2,530		$	2,475
Adjustments to reconcile net income to net cash provided by operating activities:
Net amortization of investments		24			32
Amortization of intangible assets		146			146
Depreciation of premises and equipment		926			862
Provision for loan losses		1,018			588
Provision for losses on unfunded loan commitments		(11	)		—
Deferred income tax benefit		(360	)		(213	)
Deferred net loan costs and fees		(291	)		(502	)
Investment securities net gains		(96	)		(5	)
Net (gain) loss on sale/disposal of premises and equipment		6			(1	)
Gain on sale of investment in ERAS JV		—			(202	)
Gain on sales of government guaranteed loans, net		—			(88	)
Mortgage loans originated for sale		(62,472	)		(59,192	)
Proceeds from sale of mortgage loans		60,150			62,985
Fees on mortgage loans sold		(1,043	)		(1,211	)
Increase in accrued interest receivable and other assets		(361	)		(443	)
Increase (decrease) in accrued interest payable and other liabilities		455			(1,677	)

NET CASH PROVIDED BY OPERATING ACTIVITIES		621			3,554

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities available for sale		(38,368	)		(4,592	)
Repayments of principal and maturities of investment securities available for sale		1,960			12,073
Sales of investment securities available for sale		5,099			—
Net sale of FHLB stock		325			201
Proceeds from sales of government guaranteed loans		569			2,241
Loans originated or acquired, net of principal repayments		(52,751	)		(33,835	)
Proceeds from the sale of investment in ERAS JV					327
Purchases of premises and equipment		(4,317	)		(2,438	)
Sales of premises and equipment		4			2

NET CASH USED BY INVESTING ACTIVITIES		(87,479	)		(26,021	)

CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in federal funds purchased and securities sold under agreements to repurchase		2,832			676
Net increase in FHLB short-term advances		3,500			—
Proceeds from FHLB long-term advances		—			10,000
Repayments of FHLB long-term advances		(10,000	)		(20,000	)
Net increase in demand, money market and savings accounts		49,120			19,561
Net increase in time deposits		21,461			50,605
Proceeds from exercise of stock options		534			571
Proceeds from private placement of common stock		—			4,344
Proceeds from public offering of common stock		23,230			—
Cash dividends paid		(1,004	)		(897	)

NET CASH PROVIDED BY FINANCING ACTIVITIES		89,673			64,860

NET INCREASE IN CASH AND CASH EQUIVALENTS		2,815			42,393
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		33,681			24,070

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	36,496		$	66,463

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS:
Cash paid for:
Interest	$	5,993		$	5,662
Income taxes		1,135			1,775


For the three months ended June 30,
(dollars in thousands, except per share amounts)	2004		2003
Net income, as reported	$	1,257	$	1,286
Stock-based compensation expense determined under fair value based method, net of tax		47		60

Pro forma net income	$	1,210	$	1,226

Basic earnings per share as reported	$	0.23	$	0.31
Pro forma basic earnings per share		0.22		0.30
Diluted earnings per share as reported		0.22		0.30
Pro forma diluted earnings per share		0.22		0.28

(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.

~~(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.~~


	2004 compared to 2003 (1)
	Due to changes in
							Net
	Average			Average			Increase
(dollars in thousands)	Volume			Rate			(Decrease)
Interest income
Loans (2)	$	3,201		$	(918	)	$	2,283
Investment securities (2)		242			(204	)		38
Marketable equity securities (2)		175			—			175
Interest-bearing deposits in other banks		4			—			4
Federal Home Loan Bank Stock		2			(8	)		(6	)
Federal funds sold		(78	)		(36	)		(114	)

Total interest income		3,546			(1,166	)		2,380

Interest expense
NOW accounts		34			(38	)		(4	)
Money market		(19	)		(149	)		(168	)
Savings deposits		23			(39	)		(16	)
Time deposits		363			(407	)		(44	)
Short-term borrowings and FHLB advances		83			(21	)		62
Long-term borrowings		—			(4	)		(4	)

Total interest expense		484			(658	)		(174	)

Change in net interest income	$	3,062		$	(508	)	$	2,554

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

	(b) The Bank made a $10.0 million loan to construct a lumber mill in northern Florida. Of this amount, $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.

	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 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.


	Interest Rates Decrease						Interest Rates		Interest Rates Increase
(dollars in thousands)	200 BP			100 BP			Remain Constant		100 BP			200BP
Interest Income	$	40,244		$	42,519		$	44,883	$	47,067		$	49,686
Interest Expense		8,021			9,402			11,763		14,783			17,803

Net Interest Income	$	32,223		$	33,117		$	33,120	$	32,284		$	31,883

Change in net income after tax vs. constant rates	$	(560	)	$	(2	)			$	(522	)	$	(772	)


DIRECTORS	FOR		AGAINST		ABSTAIN
Armando J. Henriquez, PhD		3,804,524		20,093		—
James R. Lawson III		3,798,368		26,249		—
Richard C. Bricker, Jr.		3,798,368		26,249		—
Paul O. Jones, Jr. M.D.		3,804,524		20,093		—
Thomas J. Longe		3,798,368		26,249		—

~~(b)~~	~~Reports on Form 8-K~~
	(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