TIB Financial (TIBB) 10-Q 2005 Q2 Quarterly report

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	Commission File Number
June 30, 2005	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)	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. Yesþ Noo

Indicate by check mark whether the issuer is an accelerated filer (as defined in Rule 12b-2 of the Act). Yesþ Noo

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	5,747,540
Class	Outstanding as of July 31, 2005

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TABLE OF CONTENTS

Part I. FINANCIAL INFORMATION
	Item 1. 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
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
(dollars in thousands, except per share amounts)

	June 30, 2005		December 31, 2004
	(Unaudited)
ASSETS
Cash and due from banks	$	20,488	$	27,410
Federal funds sold		77,550		15,528
Cash and cash equivalents		98,038		42,938
Investment securities available for sale		86,992		77,807
Loans, net of deferred loan costs and fees		775,759		655,678
Less: allowance for loan losses		7,013		6,243
Loans, net		768,746		649,435
Premises and equipment, net		25,810		27,559
Goodwill		155		155
Intangible assets, net		1,247		1,392
Accrued interest receivable and other assets		31,897		30,039
TOTAL ASSETS	$	1,012,885	$	829,325
LIABILITIES
Deposits:
Noninterest-bearing demand	$	213,328	$	152,035
Interest-bearing		656,881		535,824
Total Deposits		870,209		687,859
Federal Home Loan Bank (FHLB) advances		25,000		35,000
Short-term borrowings		17,593		12,157
Long-term borrowings		17,000		18,250
Accrued interest payable and other liabilities		12,343		7,945
TOTAL LIABILITIES		942,145		761,211
SHAREHOLDERS’ EQUITY
Preferred stock — no par value: 5,000,000 shares authorized, 0 and 0 shares issued		—		—
Common stock — $.10 par value: 20,000,000 and 7,500,000 shares authorized, 5,712,264 and 5,679,239 shares issued		571		568
Additional paid in capital		38,715		38,284
Retained earnings		31,386		28,968
Accumulated other comprehensive income		68		294
TOTAL SHAREHOLDERS’ EQUITY		70,740		68,114
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,012,885	$	829,325

(See notes to consolidated financial statements)

2

TIB FINANCIAL CORP.

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

	Three months ended				Six months ended
	June 30,				June 30,
	2005		2004		2005		2004
INTEREST AND DIVIDEND INCOME
Loans, including fees	$	12,934	$	8,960	$	24,244	$	17,560
Investment securities:
Taxable		708		633		1,344		1,044
Tax exempt		161		172		321		325
Interest bearing deposits in other bank		2		4		6		5
Federal Home Loan Bank Stock		31		9		58		24
Federal funds sold		389		41		598		79
TOTAL INTEREST AND DIVIDEND INCOME		14,225		9,819		26,571		19,037
INTEREST EXPENSE
Deposits		3,895		1,980		6,996		3,872
Federal Home Loan Bank advances		193		70		368		164
Short-term borrowings		110		12		183		21
Long term borrowings		391		396		774		791
TOTAL INTEREST EXPENSE		4,589		2,458		8,321		4,848
NET INTEREST INCOME		9,636		7,361		18,250		14,189
PROVISION FOR LOAN LOSSES		730		649		1,316		1,018
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		8,906		6,712		16,934		13,171
NON-INTEREST INCOME
Service charges on deposit accounts		567		637		1,175		1,281
Investment securities gains, net		—		52		—		96
Merchant bankcard processing income		1,762		1,534		3,658		3,294
Fees on mortgage loans sold		582		645		1,074		1,043
Other income		668		463		1,066		890
TOTAL NON-INTEREST INCOME		3,579		3,331		6,973		6,604
NON-INTEREST EXPENSE
Salaries and employee benefits		4,410		3,614		8,622		7,056
Net occupancy expense		1,349		1,191		2,625		2,313
Other expense		3,311		3,348		6,876		6,578
TOTAL NON-INTEREST EXPENSE		9,070		8,153		18,123		15,947
INCOME BEFORE INCOME TAX EXPENSE		3,415		1,890		5,784		3,828
INCOME TAX EXPENSE		1,231		633		2,053		1,298
NET INCOME	$	2,184	$	1,257	$	3,731	$	2,530
BASIC EARNINGS PER SHARE:	$	0.38	$	0.23	$	0.66	$	0.51
DILUTED EARNINGS PER SHARE:	$	0.37	$	0.22	$	0.64	$	0.49

(See notes to consolidated financial statements)

3

TIB FINANCIAL CORP.

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

										Accumulated
					Additional					Other			Total
			Common		Paid in		Retained			Comprehensive			Shareholders’
	Shares		Stock		Capital		Earnings			Income (Loss)			Equity
Balance,April 1, 2005		5,706,939	$	571	$	38,629	$	29,859		$	(780	)	$	68,279
Comprehensive income:
Net income								2,184						2,184
Other comprehensive income, net of tax expense of $509:
Net market valuation adjustment on securities available for sale											848
Other comprehensive income, net of tax														848
Comprehensive income														3,032
Exercise of stock options		5,325		—		58								58
Income tax benefit from stock options exercised						28								28
Cash dividends declared, $.115 per share								(657	)					(657	)
Balance,June 30, 2005		5,712,264	$	571	$	38,715	$	31,386		$	68		$	70,740

										Accumulated
					Additional					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

(continued)

4

										Accumulated
					Additional					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								3,731						3,731
Other comprehensive income, net of tax benefit of $136:
Net market valuation adjustment on securities available for sale											(226	)
Other comprehensive income, net of tax														(226	)
Comprehensive income														3,505
Exercise of stock options		33,025		3		338								341
Income tax benefit from stock options exercised						93								93
Cash dividends declared, $.23 per share								(1,313	)					(1,313	)
Balance,June 30, 2005		5,712,264	$	571	$	38,715	$	31,386		$	68		$	70,740

										Accumulated
					Additional					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

(See notes to consolidated financial statements)

5

TIB FINANCIAL CORP.

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

	For the six month period ended
	June 30,
	2005			2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	3,731		$	2,530
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,235			1,072
Provision for loan losses		1,316			1,018
Deferred income tax benefit		(402	)		(360	)
Investment securities net gains		—			(96	)
Net (gain) loss on sale/disposal of premises and equipment		(312	)		6
Mortgage loans originated for sale		(66,210	)		(62,472	)
Proceeds from sale of mortgage loans		66,645			60,150
Fees on mortgage loans sold		(1,074	)		(1,043	)
Increase in accrued interest receivable and other assets		(522	)		(628	)
Increase in accrued interest payable and other liabilities		4,488			444
NET CASH PROVIDED BY OPERATING ACTIVITIES		8,895			621
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities available for sale		(10,000	)		(38,368	)
Repayments of principal and maturities of investment securities available for sale		411			1,960
Sales of investment securities available for sale		—			5,099
Net sale of FHLB stock		129			325
Proceeds from sales of government guaranteed loans		—			569
Loans originated or acquired, net of principal repayments		(119,774	)		(52,751	)
Purchases of premises and equipment		(738	)		(4,317	)
Sales of premises and equipment		609			4
NET CASH USED BY INVESTING ACTIVITIES		(129,363	)		(87,479	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in federal funds purchased and securities sold under agreements to repurchase		5,436			2,832
Net increase (repayment) of FHLB short-term advances		(10,000	)		3,500
Repayments of FHLB long-term advances		—			(10,000	)
Repayments of notes payable		(1,250	)		—
Net increase in demand, money market and savings accounts		91,829			49,120
Net increase in time deposits		90,521			21,461
Proceeds from exercise of stock options		341			534
Proceeds from public offering of common stock		—			23,230
Cash dividends paid		(1,309	)		(1,004	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		175,568			89,673
NET INCREASE IN CASH AND CASH EQUIVALENTS		55,100			2,815
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		42,938			33,681
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	98,038		$	36,496
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS:
Cash paid for:
Interest	$	7,259		$	5,993
Income taxes		1,737			1,135

(See notes to consolidated financial statements)

6

TIB FINANCIAL CORP.

UNAUDITED CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2005
(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, which has a total of 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, 2004.

The consolidated statements include the accounts of TIB Financial Corp. and its wholly-owned subsidiary, TIB Bank, and the Bank’s subsidiary, TIB Investment Center Inc. (this corporation was dissolved in January 2005 — see Note 2), collectively known as the Company. All significant intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Certain amounts previously reported on have been reclassified to conform to the current period presentation.

As used in this document, the terms “we,” “us,” “our,” “TIB Financial,” and “Company” mean TIB Financial Corp. and its subsidiaries (unless the context indicates another meaning), and the term “Bank” means TIB Bank 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 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 2004 Annual Report and 10-K.

NOTE 2 — ACQUISITIONS AND DIVESTITURES

On 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 cash at the closing. The Company recognized a gain of $50 on the transaction. 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 Investment Center, Inc. Consistent with prior period disclosures regarding segments, the Company does not consider the divestiture of the investment center operations a significant event.

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NOTE 3 — INVESTMENT SECURITIES

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

	June 30, 2005
	Amortized		Unrealized		Unrealized		Estimated
(dollars in thousands)	Cost		Gains		Losses		Fair Value
U.S. Treasury securities	$	5,180	$	3	$	55	$	5,128
U.S. Government agencies and corporations		64,187		80		768		63,499
States and political subdivisions-tax-exempt		9,595		216		3		9,808
States and political subdivisions-taxable		2,690		78		—		2,768
Marketable equity securities		3,000		490		—		3,490
Mortgage-backed securities		2,232		67		—		2,299
	$	86,884	$	934	$	826	$	86,992

	December 31, 2004
	Amortized		Unrealized		Unrealized		Estimated
(dollars in thousands)	Cost		Gains		Losses		Fair Value
U.S. Treasury securities	$	5,178	$	5	$	29	$	5,154
U.S. Government agencies and corporations		54,228		104		869		53,463
States and political subdivisions-tax-exempt		9,596		246		26		9,816
States and political subdivisions-taxable		2,862		17		23		2,856
Marketable equity securities		3,000		987		—		3,987
Mortgage-backed securities		2,473		58		—		2,531
	$	77,337	$	1,417	$	947	$	77,807

NOTE 4 — LOANS

Major classifications of loans are as follows:

(dollars in thousands)	June 30, 2005		December 31, 2004
Real estate mortgage loans:
Commercial	$	411,504	$	351,346
Residential		75,540		67,204
Farmland		4,550		4,971
Construction and vacant land		85,134		49,815
Commercial and agricultural loans		62,864		64,622
Indirect auto dealer loans		108,178		91,890
Home equity loans		16,056		13,856
Other consumer loans		10,022		9,817
Total loans		773,848		653,521
Net deferred loan costs		1,911		2,157
Loans, net of deferred loan costs	$	775,759	$	655,678

NOTE 5 — ALLOWANCE FOR LOAN LOSSES

Activity in the allowance for loan losses for the six months ended June 30, 2005 and June 30, 2004 follows:

(dollars in thousands)	2005			2004
Balance, January 1	$	6,243		$	5,216
Provision for loan losses charged to expense		1,316			1,018
Loans charged off		(604	)		(436	)
Recoveries of loans previously charged off		58			8
Balance, June 30	$	7,013		$	5,806

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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:

	2005		2004
For the three months ended June 30:
Basic		5,708,745		5,434,532
Dilutive effect of options outstanding		176,850		163,310
Diluted		5,885,595		5,597,842
For the six months ended June 30:
Basic		5,693,090		4,948,550
Dilutive effect of options outstanding		178,405		180,072
Diluted		5,871,495		5,128,622

Stock options for 33,736 and 26,909 shares of common stock were not considered in computing diluted earnings per common share for the three and six months ended June 30, 2004 because they were anti-dilutive. There were no anti-dilutive stock options outstanding for the three and six months ended June 30, 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 months ended June 30, 2005, were 69,500, 33,025, and 13,800, respectively. As of June 30, 2005, there were 431,869 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)	2005		2004
Net income, as reported	$	2,184	$	1,257
Stock-based compensation expense determined under fair value based method, net of tax		64		47
Pro forma net income	$	2,120	$	1,210
Basic earnings per share as reported	$	0.38	$	0.23
Pro forma basic earnings per share		0.37		0.22
Diluted earnings per share as reported		0.37		0.22
Pro forma diluted earnings per share		0.36		0.22

For the six months ended June 30,
(dollars in thousands, except per share amounts)	2005		2004
Net income, as reported	$	3,731	$	2,530
Stock-based compensation expense determined under fair value based method, net of tax		126		119
Pro forma net income	$	3,605	$	2,411
Basic earnings per share as reported	$	0.66	$	0.51
Pro forma basic earnings per share		0.63		0.49
Diluted earnings per share as reported		0.64		0.49
Pro forma diluted earnings per share		0.61		0.47

9

In December 2004, the FASB issued FAS 123 (revised 2004), Share-Based Payment. Under this promulgation, companies are required to reflect costs associated with employee stock options in their income statements at fair value. In April 2005, the SEC amended the date for compliance with FAS 123 (revised 2004) so that each registrant that is not a small business issuer will be required to prepare financial statements in accordance with statement 123 (revised 2004) beginning with the first interim or annual reporting period of the registrant’s first fiscal year beginning on or after June 15, 2005. Accordingly, the Company will begin reflecting stock option costs under the fair value method commencing in the quarter beginning January 1, 2006 as required.

NOTE 8 — CAPITAL ADEQUACY

Federal banking regulators have established certain capital adequacy standards required to be maintained by banks and bank holding companies. The requirements established in the regulations for well and adequately capitalized banks are set forth in the table below, along with the actual ratios at June 30, 2005 and December 31, 2004:

	Well			Adequately
	Capitalized			Capitalized			June 30, 2005			December 31, 2004
	Requirement			Requirement			Actual			Actual
Tier 1 Capital (to Average Assets)
Consolidated		³5	%		³4	%		8.5	%		10.0	%
Bank		³5	%		³4	%		8.9	%		10.5	%
Tier 1 Capital (to Risk Weighted Assets)
Consolidated		³6	%		³4	%		9.8	%		10.9	%
Bank		³6	%		³4	%		10.3	%		11.4	%
Total Capital (to Risk Weighted Assets)
Consolidated		³10	%		³8	%		11.2	%		12.6	%
Bank		³10	%		³8	%		11.2	%		12.4	%

Management believes, as of June 30, 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.

NOTE 9 — SEGMENT REPORTING

TIB Financial Corp. has two reportable 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 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 eliminated in preparing the segment reporting amounts below. The results of the Company’s segments are as follows (dollars in thousands):

			Merchant		Parent
Six months ended	Community		Bankcard		And
June 30, 2005	Banking		Processing		Other			Totals
Interest and dividend income	$	26,571	$	—	$	—		$	26,571
Interest expense		7,547		—		774			8,321
Net interest and dividend income		19,024		—		(774	)		18,250
Other income		3,295		3,658		20			6,973
Depreciation and amortization		1,231		4		—			1,235
Other expense		14,944		3,035		225			18,204
Pretax segment profit (loss)	$	6,144	$	619	$	(979	)	$	5,784
Segment Assets	$	1,012,233	$	242	$	410		$	1,012,885

10

			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
Three months ended	Community		Bankcard		And
June 30, 2005	Banking		Processing		Other			Totals
Interest and dividend income	$	14,225	$	—	$	—		$	14,225
Interest expense		4,198		—		391			4,589
Net interest and dividend income		10,027		—		(391	)		9,636
Other income		1,807		1,762		10			3,579
Depreciation and amortization		616		2		—			618
Other expense		7,649		1,460		73			9,182
Pretax segment profit (loss)	$	3,569	$	300	$	(454	)	$	3,415

			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

NOTE 10 — SUBSEQUENT EVENT

On July 25, 2005, the Company approved the issuance of shares of its common stock as restricted stock grants to each of the seven non-employee members of the Company’s Board of Directors. Each of these directors received an award of 5,000 restricted shares under the Company’s 2004 Equity Incentive Plan previously approved by Company shareholders in 2004. The grants to the directors were effective on July 28, 2005 and will vest 1,000 shares each year over the next five years, subject to accelerated vesting upon a change in control of the Company (as defined in the Plan) or the death of the director. The grant date market value of the restricted stock grants will be recognized as an expense on a straight-line basis over the vesting period. In addition, the split-dollar life insurance benefits maintained by the Company for the same directors were terminated by the Company on July 25, 2005, and the Company has become the sole beneficiary of the related life insurance policies.

11

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

QUARTERLY SUMMARY

Our record second quarter 2005 exemplifies the continuing successful execution of our strategic plan. Net income of $2.18 million represents an increase of 74% over $1.26 million reported for the quarter ended June 30, 2004. On a per diluted share basis, earnings were $0.37 for the second quarter of 2005 as compared to $0.22 for the second quarter of 2004. Credit quality remains excellent and we continue to see growth opportunities in our newer southwest Florida markets. We believe our island banking culture focusing on providing superior customer service is filling a significant void in our local markets and has resulted in consistent growth in earnings and assets.

The increase in net income for the second quarter of 2005 over the respective prior-year period resulted primarily from a 31% increase in net interest income from $7.36 million a year ago to $9.64 million in the current quarter. The net interest margin on a tax equivalent basis for the three months ended June 30, 2005 was 4.40% which was a slight contraction from the 4.49% reported for the three months ended June 30, 2004.

Non-interest expense for the second quarter of 2005 was $9.07 million, compared with $8.15 million for the second 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. Net occupancy and other expenses for the second quarter of 2005 increased less than 3% over the second quarter of 2004, reflecting the Company’s continued focus on cost containment.

Credit quality remained solid during the second quarter of 2005 which ended with non-performing loans representing only 0.06% of gross loans. As of June 30, 2005, the allowance for loan losses totaled $7.01 million, or 0.91% of total loans and 1,455% of non-performing loans. These figures compare with 0.98% and 464%, respectively, as of June 30, 2004.

Total assets surpassed the $1 billion milestone for the first time on June 30, 2005 as total assets reached $1.01 billion compared with $939.3 million as of March 31, 2005, and $829.3 million as of December 31, 2004. Total loan growth exceeded 31% to $773.8 million as of June 30, 2005, versus $590.4 million the prior year. Total deposits increased approximately 39% to $870.2 million as of June 30, 2005, compared with $624.4 million a year ago.

12

THREE MONTHS ENDED JUNE 30, 2005 AND 2004

RESULTS OF OPERATIONS

Our net income of $2.18 million for the second quarter of 2005 increased 73.7% compared to $1.26 million for the same period last year. Basic and diluted earnings per share for the second quarter of 2005 were $0.38 and $0.37, respectively, as compared to $0.23 and $0.22 per share in the previous year’s quarter.

Annualized return on average assets was 0.91% and 0.69% for the second quarter of 2005 and 2004, respectively, while the annualized return on average shareholders’ equity was 12.62% and 8.31% for the same periods.

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 30.9%, to $9.64 million in the three months ended June 30, 2005 as compared to $7.36 million in the same period last year. The prime rate as published in the Wall Street Journal was 4.00% for the second quarter of 2004. At the beginning of the second quarter 2005 it had risen to 5.75% and increased twice to end the quarter at 6.25%. Many of the Bank’s loans are indexed to this floating rate, although they also include floors. The higher level of prime rate in the second quarter of 2005 compared to the second quarter of 2004 is apparent in the positive impact on yields in the loan portfolio as the higher rates are reflected in variable loan re-pricings and new loan production.

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, 2005 we had $108.2 million of indirect auto dealer loans outstanding, compared to $76.8 million at June 30, 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 second quarter of 2005 was 6.48% which was an increase of 51 basis points compared to the 5.97% yield earned during the second quarter of 2004. The average cost of interest-bearing deposits increased 75 basis points from 1.69% during the second quarter of 2004 to 2.44% for the comparable period in 2005, and the rate of all interest-bearing liabilities increased 72 basis points, from 1.91% in 2004 to 2.63% in 2005. The Company’s net interest margin decreased slightly to 4.40% in the second quarter of 2005 compared to 4.49% in the second quarter of 2004. We anticipate interest rates to continue slowly trending up over the next three months. If this occurs or if rates remain stable, net interest margin should stabilize and increase slightly due principally to strong new loan production at higher interest rates. 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.

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 12.5%, to $0.7 million in the second quarter of 2005 compared to $0.6 million in the comparable prior year quarter. The higher provision for loan losses in 2005 was primarily attributable to the growth in the loan portfolio and change in composition of the loan portfolio. Total loans outstanding grew $56.6 million, or 7.9%, during the second quarter of 2005, as compared to only $40.7 million, or 7.4%, during the second quarter of 2004. At June 30, 2005, indirect auto dealer loans accounted for $108.2 million, or 14.0%, of our loan portfolio. This compares to an indirect lending portfolio of $76.8 million at June 30, 2004 which represented 13.0% of our total loan portfolio.

Total loans outstanding were $773.8 million at June 30, 2005, compared to $590.4 million at June 30, 2004. Net charge-offs were $258,000 during the three months ended June 30, 2005 compared to $190,000 for the same period in 2004.

13

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 quarter of 2005 was $3.58 million. This represents a 7.4% increase over the prior year quarter which totaled $3.33 million. The increase in non-interest income is primarily attributable to an increase in merchant bankcard processing income and a gain of $267,000 on the sale of vacant land in Homestead, Florida.

NON-INTEREST EXPENSE

Non-interest expense for the second quarter of 2005 was $9.07 million. This represents an 11.2% increase over the prior year quarter which totaled $8.15 million. The increase in non-interest expense is primarily attributable to salaries and employee benefits increasing $796,000. At June 30, 2005 the Bank had 311 full-time employees and 14 part-time employees, compared to 275 full-time employees and 16 part time employees at June 30, 2004. The increases are primarily the result of costs associated with the growth of our business and continued expansion into the southwest Florida market. Net occupancy and other expenses for the second quarter of 2005 increased less than 3% over the second quarter of 2004.

INCOME TAXES

The provision for income taxes includes federal and state income taxes. The effective tax rates were 36.0% and 33.5% for the three months ended June 30, 2005 and 2004, respectively.

SIX MONTHS ENDED JUNE 30, 2005 AND 2004

RESULTS OF OPERATIONS

Our net income of $3.73 million for the first six months of 2005 was a 47.5% increase compared to $2.53 million for the same period last year. Basic and diluted earnings per share for the first six months of 2005 were $0.66 and $0.64, respectively, as compared to $0.51 and $0.49 per share in the previous year’s period. Basic weighted average common equivalent shares outstanding for the six months ended June 30, 2005 were 5,693,090 compared to 4,948,550 for the same period in 2004. This 15.0% 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, and the exercise of stock options.

Annualized return on average assets was 0.82% and 0.72% for the first six months of 2005 and 2004, while the annualized return on average shareholders’ equity was 10.93% and 9.84% for the same periods.

NET INTEREST INCOME

Net interest income increased 28.6%, to $18.25 million in the six months ended June 30, 2005 as compared to $14.19 million in the same period last year. The prime rate as published in the Wall Street Journal began 2004 at 4.00% and remained at that rate through the end of the second quarter of the year. At the beginning of 2005 the rate had risen to 5.25% and increased four times to end the first half of 2005 at 6.25%. Many of the Bank’s loans are indexed to this floating rate, although they also include floors. The higher level of prime rate in the first half of 2005 compared to the comparable 2004 period is apparent in the positive impact on yields in the loan portfolio as the higher rates are reflected in variable loan re-pricings and new loan production.

The effect of rising interest rates has been to contract our net interest margin slightly in two ways. First, a relatively low prime rate directly affected yields on loans tied to that index and even loans not indexed to prime were priced reflective of overall low asset yields. Due to our practice of requiring an interest rate floor on many new commercial loans, many of these loans had been performing at their floors while interest rates were reaching historically low levels. This proved effective in slowing the average decline in loan yields as rates declined, however, it has had the opposite effect as rates increased, as these assets remained at their interest rate floors until just recently. Secondly, as deposit liabilities were priced as low as economically possible while attracting the volume of required funding, the net effect of this rising rate environment has been a larger increase in liability costs, generally, than the corresponding increase in asset yields during the current period. Due to the current level of prime rates, we expect this margin contraction to stabilize as we expect asset yields to expand to a similar extent that liability costs increase.

14

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, 2005 we had $108.2 million of indirect auto dealer loans outstanding, compared to $76.8 million at June 30, 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 six months of 2005 was 6.39%, an increase of 38 basis points compared to the 6.01% yield earned during the first six months of 2004. The average cost of interest-bearing deposits increased 61 basis points from 1.70% during the first six months of 2004 to 2.31% for the comparable period in 2005, and the rate of all interest-bearing liabilities increased 59 basis points, from 1.92% in 2004 to 2.51% in 2005. The Company’s net interest margin decreased to 4.40% in the first six months of 2005 compared to 4.50% in the first six months of 2004. We anticipate interest rates slowly trending up over the next three months. If this occurs or if rates remain stable, net interest margin should stabilize and increase slightly due principally to strong new loan production at higher interest rates. 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.

15

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, 2005 and June 30, 2004.

	2005								2004
	Average			Income/		Yields/			Average			Income/			Yields/
(dollars in thousands)	Balances			Expense		Rates			Balances			Expense			Rates
Interest-earning assets:
Loans (1)(2)	$	716,103		$	24,246		6.83	%	$	558,197		$	17,562			6.33	%
Investment securities (2)		77,381			1,630		4.25	%		60,830			1,355			4.48	%
Marketable equity securities – 90% tax exempt (2)		3,562			193		10.93	%		3,448			175			10.23	%
Interest-bearing deposits in other banks		463			6		2.53	%		948			5			0.98	%
Federal Home Loan Bank stock		2,669			58		4.38	%		1,518			24			3.21	%
Federal funds sold		43,732			598		2.76	%		17,038			79			0.94	%
Total interest-earning assets		843,910			26,731		6.39	%		641,979			19,200			6.01	%
Non-interest-earning assets:
Cash and due from banks		22,263								19,781
Premises and equipment, net		27,272								20,776
Allowances for loan losses		(6,531	)							(5,405	)
Other assets		30,879								28,504
Total non-interest-earning assets		73,883								63,656
Total assets	$	917,793							$	705,635
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts	$	92,846			385		0.84	%	$	74,269			120			0.32	%
Money market		167,087			1,560		1.88	%		126,115			494			0.79	%
Savings deposits		48,079			115		0.48	%		42,860			82			0.39	%
Time deposits		303,483			4,937		3.28	%		213,760			3,176			2.99	%
Total interest-bearing deposits		611,495			6,997		2.31	%		457,004			3,872			1.70	%
Other interest-bearing liabilities:
Short-term borrowings & FHLB advances		40,431			551		2.75	%		32,052			185			1.16	%
Long-term borrowings		17,104			774		9.13	%		18,250			791			8.71	%
Total interest-bearing liabilities		669,030			8,322		2.51	%		507,306			4,848			1.92	%
Non-interest-bearing liabilities and shareholders’ equity:														��
Demand deposits		168,787								138,656
Other liabilities		11,166								8,265
Shareholders’ equity		68,810								51,408
Total non-interest-bearing liabilities and shareholders’ equity		248,763								198,329
Total liabilities and shareholders’ equity	$	917,793							$	705,635
Interest rate spread (tax equivalent basis)							3.88	%								4.09	%
Net interest income (tax equivalent basis)				$	18,409							$	14,352
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.

16

The table below details the components of the changes in net interest income for the six months ended June 30, 2005 and June 30, 2004. 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.

	2005 compared to 2004 (1)
	Due to changes in
							Net
(dollars in thousands)	Average			Average			Increase
	Volume			Rate			(Decrease)
Interest income
Loans (2)	$	5,266		$	1,418		$	6,684
Investment securities (2)		352			(77	)		275
Marketable equity securities (2)		6			12			18
Interest-bearing deposits in other banks		(4	)		5			1
Federal Home Loan Bank Stock		23			11			34
Federal funds sold		231			288			519
Total interest income		5,874			1,657			7,531
Interest expense
NOW accounts		36			229			265
Money market		203			863			1,066
Savings deposits		11			22			33
Time deposits		1,436			325			1,761
Short-term borrowings and FHLB advances		60			306			366
Long-term borrowings		(59	)		42			(17	)
Total interest expense		1,687			1,787			3,474
Change in net interest income	$	4,187		$	(130	)	$	4,057

(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 29.3% to $1.3 million in the first six months of 2005 compared to $1.0 million in the comparable prior year period. The higher provision for loan losses in 2005 was primarily attributable to the growth in the loan portfolio and change in composition of the loan portfolio. Total loans outstanding grew $120.3 million, or 18.4%, during the first six months of 2005, as compared to only $51.8 million, or 9.6%, during the first six months of 2004. The largest dollar increase during the first six months of 2005 occurred in commercial real estate loans which increased $60.2 million, or 17.1%. This compares to a $32.3 million, or 10.9%, increase in commercial real estate loans during the first six months of 2004. We have also continued to expand our indirect lending portfolio. At June 30, 2005, indirect auto dealer loans accounted for $108.2 million, or 14.0%, of our loan portfolio. This compares to an indirect lending portfolio of $76.8 million at June 30, 2004 which represented 13.0% of our total loan portfolio.

Total loans outstanding were $773.8 million at June 30, 2005, compared to $590.4 million at June 30, 2004. Net charge-offs were $546,000 during the six months ended June 30, 2005 compared to $428,000 for the same period in 2004. Management will continue to monitor the credit quality of the lending portfolio and will recognize additional provisions in the future as necessary, in the opinion of management, to maintain the allowance for loan losses at an appropriate level.

NON-INTEREST INCOME

Non-interest income for the first six months of 2005 was $7.0 million. This represents a 5.6% increase over the prior year period which totaled $6.6 million. The increase in non-interest income is primarily attributable to an increase in merchant bankcard processing income and a gain of $267,000 on the sale of vacant land in Homestead, Florida.

17

NON-INTEREST EXPENSE

Non-interest expense for the first six months of 2005 was $18.1 million. This represents a 13.6% increase over the prior year period which totaled $15.9 million. The increase in non-interest expense is primarily attributable to salaries and employee benefits increasing $1.6 million. At June 30, 2005 the Bank had 311 full-time employees and 14 part-time employees, compared to 275 full-time employees and 16 part time employees at June 30, 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. The majority of the other increases in the non-interest expense category are the result of costs associated with the growth of our business.

INCOME TAXES

The provision for income taxes includes federal and state income taxes. The effective tax rate was 35.5%, for the six months ended June 30, 2005, and 33.9%, for the six months ended June 30, 2004.

BALANCE SHEET

Total assets at June 30, 2005 were $1.01 billion, up 22.1% from total assets of $829.3 million at December 31, 2004. Asset growth was primarily funded by an increase in deposits of $182.4 million, or 26.5%. Loans net of deferred loan costs increased $120.1 million, or 18.3%, to $775.8 million for the first six months of 2005 from year end 2004. The largest dollar increase came in the commercial real estate loan category which increased $60.2 million, or 17.1%. Although we have continued to expand our indirect dealer auto loan program, it has begun to stabilize in percentage in proportion to the loan portfolio as a whole. At June 30, 2005, indirect auto loans accounted for $108.2 million, or 14.0%, of our loan portfolio as compared to $91.9 million, or 14.1%, at December 31, 2004. Also, in the same period, investment securities increased $9.2 million.

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

Shareholders’ equity totaled $70.7 million at June 30, 2005, increasing $2.6 million from December 31, 2004. Book value per share increased to $12.38 at June 30, 2005 from $11.99 at December 31, 2004. The Company declared a quarterly dividend of $0.115 per share in both the first and second quarters of 2005 and $0.1125 per share in both the first quarter and second quarters of 2004.

During the second quarter of 2004, we sold 1,150,000 shares of our common stock resulting in net proceeds totaling $23.2 million which provided capital necessary to support continued loan and deposit growth throughout our South Florida markets.

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, 2005			December 31, 2004
Total nonaccrual loans	$	482		$	704
Accruing loans delinquent 90 days or more (a)		—			—
Total non-performing loans	$	482		$	704
Repossessed personal property (indirect auto dealer loans)		673			688
Other real estate owned (b)		190			882
Other assets (b)		2,705			2,665
Total non-performing assets	$	4,050		$	4,939
Allowance for loan losses	$	7,013		$	6,243
Non-performing assets as a percent of total assets		0.40	%		0.60	%
Non-performing loans as a percent of gross loans		0.06	%		0.11	%
Allowance for loan losses as a percent of non-performing loans		1,455.0	%		886.8	%

18

(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)	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 June 30, 2005 and December 31, 2004, and is accruing interest. Accrued interest on this loan totals approximately $731,000 and $677,000 at June 30, 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 June 30, 2005 and December 31, 2004. The non-guaranteed principal and interest ($2.0 million at June 30, 2005 and December 31, 2004) and the reimbursable capitalized liquidation costs and protective advance costs totaling approximately $744,000 and $704,000 at June 30, 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 $7.0 million and $6.2 million at June 30, 2005 and December 31, 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.

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Based on an analysis performed by management at June 30, 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.

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, 2005, there were $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 $175.6 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.

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.

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Our interest rate sensitivity position at June 30, 2005 is presented in the table below:

	3 Months			4 to 6			7 to 12			1 to 5			Over 5
(dollars in thousands)	or Less			Months			Months			Years			Years			Total
Interest-earning assets:
Loans	$	350,509		$	27,327		$	43,434		$	284,072		$	68,507		$	773,849
Investment securities-taxable		1,072			—			10,180			38,578			23,864			73,694
Investment securities-tax exempt		—			—			—			4,617			5,191			9,808
Marketable equity securities		3,490			—			—			—			—			3,490
Federal Home Loan Bank stock		2,781			—			—			—			—			2,781
Federal funds sold		77,550			—			—			—			—			77,550
Interest bearing deposit in other bank		201			—			—			—			—			201
Total interest-bearing assets		435,603			27,327			53,614			327,267			97,562			941,373
Interest-bearing liabilities:
NOW accounts		85,479			—			—			—			—			85,479
Money Market		179,815			—			—			—			—			179,815
Savings Deposits		49,884			—			—			—			—			49,884
Time deposits		35,143			92,673			114,991			98,891			5			341,703
Notes payable		—			—			—			—			4,000			4,000
Subordinated debentures		5,000			—			—			—			8,000			13,000
Other borrowings		42,593			—			—			—			—			42,593
Total interest-bearing liabilities		397,914			92,673			114,991			98,891			12,005			716,474
Interest sensitivity gap	$	37,689		$	(65,346	)	$	(61,377	)	$	228,376		$	85,557		$	224,899
Cumulative interest sensitivity gap	$	37,689		$	(27,657	)	$	(89,034	)	$	139,342		$	224,899		$	224,899
Cumulative sensitivity ratio		4.0	%		(2.9	)%		(9.5	)%		14.8	%		23.9	%		23.9	%

We are cumulatively liability sensitive in the 4 to 6 months and 7 to 12 months time periods, and asset sensitive in the 3 months or less and 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.

Even in the near term, we believe the $89 million one year cumulative negative sensitivity gap may exaggerate the probable effects on earnings in a rising rate environment for two reasons. First, the liabilities subject to repricing are predominately not indexed to any specific market rate and therefore offer the Company the opportunity to delay or diminish any rate repricings. Further, in this current rate environment, the Bank has been originating loans with interest rate floors. The effect of this has been to decrease the volatility of net interest margin and decrease asset sensitivity due to the fact that these loans behave similar to fixed rate loans in periods over a significant range of interest rate changes.

Interest-earning assets and other time deposits are presented based on their contractual terms. It is anticipated that run off in any deposit category will be approximately offset by new deposit generation. Since we have experienced steady growth in deposits, no net run off in any deposit category is assumed in the interest rate sensitivity table. It is our policy to maintain our cumulative one year gap ratio in the –20% to +10% range. At June 30, 2005, we were within this range with a one year cumulative sensitivity ratio of -9.5%.

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 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, 2005, total unfunded loan commitments were approximately $172.7 million.

Standby letters of credit are conditional commitments issued by the Bank to assure the performance or financial obligations of a customer to a third party. The credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loans to customers. The Bank generally holds collateral and/or obtains personal guarantees supporting these commitments. Since most of the letters of credit are expected to expire without being drawn upon, they do not necessarily represent future cash requirements. At June 30, 2005, commitments under standby letters of credit aggregated approximately $2.3 million.

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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 available borrowing capacity from various sources as discussed in the “Liquidity” section above.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES 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.

Interest rate sensitivity as of June 30, 2005 was analyzed using a 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 gradual and parallel shift in the yield curve. Rate changes are matched with known repricing intervals. The bank uses standardized assumptions run against bank data by an outsourced provider of Asset Liability reporting. The analysis indicates that the bank is benefited in an increasing rate environment more than it is harmed by a decreasing rate environment. This is primarily due to the fact that the Company has been originating adjustable rate commercial loans with interest rate floors. The effects of this are twofold. First, this has benefited our margins in the recent past and currently since we have had assets earning yields higher than would have been the case absent the floor rates. Second, in a declining 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 not constrain income gains in a rising rate market once these loans have moved past their floors.

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 re-pricing characteristics of the deposit liabilities.

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 as of the end of the period covered by this report. Based upon that evaluation, they have concluded that the Corporation’s disclosure controls and procedures are effective in ensuring that material information related to the Company is made known to them by others within the 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 April 26, 2005, ballot totals for the reelection of Directors standing for reelection were as follows:

DIRECTORS	FOR		AGAINST		ABSTAIN
Edward V. Lett		4,955,687		21,130		—

The directors continuing in office following the meeting were: Richard C. Bricker, Jr., Gretchen K. Holland, Paul O. Jones, Jr. M.D., Edward V. Lett, Thomas J. Longe, John G. Parks, Jr., Marvin F. Schindler, and Otis T. Wallace.

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

FOR		AGAINST	ABSTAIN
	4,925,154	38,307	13,356

Total shares voted were 4,976,817 which represented 87.6% of the outstanding shares.

Item 5. OTHER INFORMATION

Not applicable

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Item 6. EXHIBITS

(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

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/ Edward V. Lett
Date: August 9, 2005	Edward V. Lett
	President and Chief Executive Officer

  /s/ David P. Johnson  

David P. Johnson 

Executive Vice President and Chief Financial Officer 

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