TIB FINANCIAL CORP - 10-Q 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
MARCH 31, 2003		000-21329

TIB FINANCIAL CORP

(Exact name of registrant as specified in its charter)


FLORIDA		65-0655973

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

99451 OVERSEAS HIGHWAY, KEY LARGO, FLORIDA 33037-7808

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: 305-451-4660

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 or No

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

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		4,116,325

Class		Outstanding as of May 1, 2003

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

TIB FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS


			March 31, 2003		December 31, 2002

			(Unaudited)
ASSETS
Cash and due from banks			$	19,599,507	$	18,397,659
Federal funds sold				47,488,000		5,672,000
Investment securities available for sale				52,514,286		55,753,890
Loans, net of deferred loan costs and fees				459,176,975		442,527,934
Less: allowance for loan losses				4,513,397		4,416,499

	Loans, net			454,663,578		438,111,435
Premises and equipment, net				19,910,400		19,457,150
Goodwill				2,234,024		2,234,024
Intangible assets, net				1,905,901		1,978,918
Other assets				23,206,474		25,399,570

	TOTAL ASSETS		$	621,522,170	$	567,004,646

LIABILITIES
Deposits:
	Noninterest-bearing demand		$	120,379,914	$	105,199,483
	Interest-bearing demand and money market			192,004,960		186,426,703
	Savings			33,270,463		31,440,801
	Time deposits of $100,000 or more			93,365,421		73,509,232
	Other time deposits			106,988,522		86,107,232

		Total Deposits		546,009,280		482,683,451
Federal Home Loan Bank advances				10,000,000		20,000,000
Short-term borrowings				5,004,201		4,578,959
Notes payable				5,250,000		5,250,000
Trust preferred securities				13,000,000		13,000,000
Other liabilities				7,502,885		7,986,159

	TOTAL LIABILITIES			586,766,366		533,498,569

STOCKHOLDERS’ EQUITY
Common stock — $.10 par value: 7,500,000 shares authorized, 4,114,425 and 4,035,625 shares issued				411,443		403,563
Additional paid in capital				9,413,981		8,965,816
Retained earnings				23,758,380		23,021,698
Accumulated other comprehensive income				1,172,000		1,115,000

		TOTAL STOCKHOLDERS’ EQUITY		34,755,804		33,506,077

	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	621,522,170	$	567,004,646

(See notes to consolidated financial statements)

TIB FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)


			Three months ended
			March 31,

			2003		2002

INTEREST INCOME
Loans, including fees			$	7,578,275	$	6,637,969
Investment securities:
		U.S. Treasury securities		1,889		40,783
		U.S. Government agencies and corporations		526,960		589,809
		States and political subdivisions, tax-exempt		61,326		66,868
		States and political subdivisions, taxable		62,977		77,865
		Other investments		16,282		67,439
Interest bearing deposits in other bank				576		1,714
Federal funds sold				41,798		58,916

	TOTAL INTEREST INCOME			8,290,083		7,541,363

INTEREST EXPENSE
Interest-bearing demand and money market				403,478		483,859
Savings				47,325		52,787
Time deposits of $100,000 or more				735,598		684,065
Other time deposits				793,159		850,980
Long term debt – trust preferred securities				278,976		285,517
Federal Home Loan Bank advances				68,947		98,771
Notes payable				118,618		118,618
Short-term borrowings				10,762		4,879

	TOTAL INTEREST EXPENSE			2,456,863		2,579,476

	NET INTEREST INCOME			5,833,220		4,961,887
PROVISION FOR LOAN LOSSES				330,000		135,000

	NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES			5,503,220		4,826,887
OTHER INCOME
Service charges on deposit accounts				572,615		532,685
Investment securities gains, net				5,337		74,284
Merchant bank card processing income				1,378,073		1,333,336
Gain on sale of government guaranteed loans				87,470		—
Fees on mortgage loans sold				601,752		359,611
Commissions on sales by Keys Insurance Agency, Inc.				436,420		399,893
Retail investment services				86,958		89,653
Other income				345,796		351,914

	TOTAL OTHER INCOME			3,514,421		3,141,376
OTHER EXPENSE
Salaries and employee benefits				3,453,621		2,744,329
Net occupancy expense				1,082,022		963,283
Other expense				2,639,429		2,423,333

	TOTAL OTHER EXPENSE			7,175,072		6,130,945
	INCOME BEFORE INCOME TAX EXPENSE			1,842,569		1,837,318
INCOME TAX EXPENSE				653,300		646,400

	NET INCOME		$	1,189,269	$	1,190,918

BASIC EARNINGS PER SHARE:			$	0.29	$	0.30
DILUTED EARNINGS PER SHARE:			$	0.28	$	0.29

(See notes to consolidated financial statements)

TIB FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)


												Accumulated
												Other
						Comprehensive			Retained			Comprehensive		Common		Additional Paid in
			Total			Income			Earnings			Income (Loss)		Stock		Capital

Balance at December 31, 2002			$	33,506,077					$	23,021,698		$	1,115,000	$	403,563	$	8,965,816
Comprehensive Income
	Net Income			1,189,269		$	1,189,269			1,189,269
	Other comprehensive income, net of tax expense of $35,000:
		Net market valuation adjustment on securities available for sale		60,331			60,331
		Less: reclassification adjustment for gains included in net income		(3,331	)		(3,331	)

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

	Comprehensive income					$	1,246,269

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

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


													Accumulated
													Other
							Comprehensive			Retained			Comprehensive			Common		Additional Paid in
				Total			Income			Earnings			Income (Loss)			Stock		Capital

Balance at December 31, 2001				$	28,672,092					$	20,019,145		$	36,400		$	394,610	$	8,221,937
Comprehensive Income
	Net Income				1,190,918		$	1,190,918			1,190,918
	Other comprehensive income, net of tax benefit of $104,900:
		Net market valuation adjustment on securities available for sale			(127,047	)		(127,047	)
			Less: reclassification adjustment for gains included in net income		(46,353	)		(46,353	)

	Other comprehensive income, net of tax							(173,400	)					(173,400	)

	Comprehensive income						$	1,017,518

Exercise of stock options					211,784												3,080		208,704
Cash dividends declared, $.1075 per share					(427,516	)					(427,516	)

Balance at March 31, 2002				$	29,473,878					$	20,782,547		$	(137,000	)	$	397,690	$	8,430,641

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


		For the three month period ended
		March 31,

		2003			2002

CASH FLOWS FROM OPERATING ACTIVITIES
Net Income		$	1,189,269		$	1,190,918
Adjustments to reconcile net income to net cash provided by operating activities:
	Net amortization of investments		14,959			14,262
	Amortization of intangible assets		73,017			73,973
	Depreciation of premises and equipment		422,842			382,082
	Provision for loan losses		330,000			135,000
	Deferred income tax provision (benefit)		(11,717	)		(138,535	)
	Deferred net loan fees/costs		(35,434	)		(39,194	)
	Investment securities (gains), net		(5,337	)		(74,284	)
	Net gain on sale/disposal of premises and equipment		(726	)		(891	)
	Gain on sales of government guaranteed loans, net		(87,470	)		—
	Gain on sale of servicing rights		—			(477	)
	Net proceeds received from servicing rights sale		—			36,088
	Decrease in other assets		2,169,813			1,458,517
	(Decrease)/increase in other liabilities		(491,943	)		135,974

	NET CASH PROVIDED BY OPERATING ACTIVITIES		3,567,273			3,173,433

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities available for sale			(1,801,082	)		(11,909,634	)
Repayments of principal and maturities of investment securities available for sale			5,123,064			1,147,894
Sales of investment securities available for sale			—			3,236,250
Proceeds from sales of government guaranteed loans			2,241,119			—
Loans originated or acquired, net of principal repayments			(19,000,358	)		(9,953,467	)
Purchases of premises and equipment			(876,653	)		(310,433	)
Sales of premises and equipment			1,287			11,666

	NET CASH USED IN INVESTING ACTIVITIES		(14,312,623	)		(17,777,724	)

CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in federal funds purchased and securities sold under agreements to repurchase			425,242			1,574,437
Net decrease in FHLB advances			(10,000,000	)		(5,000,000	)
Net increase in demand, money market and savings accounts			22,588,350			27,928,919
Net increase in time deposits			40,737,479			11,223,713
Proceeds from exercise of stock options			456,045			211,784
Cash dividends paid			(443,918	)		(424,205	)

	NET CASH PROVIDED BY FINANCING ACTIVITIES		53,763,198			35,514,648

NET INCREASE IN CASH AND CASH EQUIVALENTS			43,017,848			20,910,357
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD			24,069,659			21,269,909

CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	67,087,507		$	42,180,266

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS:
Cash paid for:
	Interest	$	3,357,811		$	3,501,473
	Income taxes		—			31,000

(See notes to consolidated financial statements)

TIB FINANCIAL CORP.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003
(Unaudited)

NOTE 1 – BASIS OF PRESENTATION

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. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2003 are not necessarily indicative of trends or results to be expected for the year ended December 31, 2003. For further information, refer to the Company’s consolidated financial statements and footnotes thereto for the year ended December 31, 2002.

The consolidated statements include the accounts of TIB Financial Corp. and its wholly-owned subsidiaries, TIB Bank of the Keys, TIB Software and Services, Inc., TIBFL Statutory Trust I, TIBFL Statutory Trust II, and Keys Insurance Agency, Inc. and the Bank’s two subsidiaries, TIB Government Loan Specialists, Inc. and TIB Investment Center Inc., collectively known as the Company. All significant intercompany accounts and transactions have been eliminated in consolidation.

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).

Certain amounts previously reported on have been reclassified to conform with current period presentation.

NOTE 2 – INVESTMENT SECURITIES

Securities available for sale are securities which management believes may be sold prior to maturity for liquidity or other reasons and are reported at fair value, with unrealized gains and losses, net of related income taxes, reported as a separate component of stockholders’ equity. Securities held to maturity are those securities for which management has both the ability and intent to hold to maturity and are carried at amortized cost.

In June 2002, the Company transferred all investments securities in the held to maturity category with a book value totaling $18,507,916 to the available for sale category. The difference between amortized historical cost and fair value for this portfolio of $433,461 was recorded net of tax in other comprehensive income. Therefore, there were no securities classified as held-to-maturity at March 31, 2003.

The amortized cost and estimated fair value of investment securities available for sale at March 31, 2003 and December 31, 2002 are presented below:


	March 31, 2003

	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value

U.S. Treasury securities	$	211,641	$	9,297	$	—	$	220,938
U.S. Government agencies and corporations		25,325,915		791,804		—		26,117,719
States and political subdivisions-tax-exempt		6,833,862		327,216		21,706		7,139,372
States and political subdivisions-taxable		3,959,047		82,618		29,718		4,011,947
Mortgage-backed securities		12,679,061		719,489		—		13,398,550
Other investments		1,625,760		—		—		1,625,760

	$	50,635,286	$	1,930,424	$	51,424	$	52,514,286


	December 31, 2002

	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value

U.S. Treasury securities	$	212,412	$	10,978	$	—	$	223,390
U.S. Government agencies and corporations		28,333,379		883,621		—		29,217,000
States and political subdivisions-tax-exempt		5,171,944		382,444		—		5,554,388
States and political subdivisions-taxable		4,380,149		88,347		8,521		4,459,975


	December 31, 2002

	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value

Mortgage-backed securities		14,382,946		430,131		—		14,813,077
Other investments		1,486,060		—		—		1,486,060

	$	53,966,890	$	1,795,521	$	8,521	$	55,753,890

Other investments consist of stock in the Independent Bankers Bank of Florida and the Federal Home Loan Bank of Atlanta.

NOTE 3 – LOANS

Loans are reported at the gross amount outstanding, reduced by net deferred loan costs and fees and an allowance for loan losses. Interest income on loans is recognized over the terms of the loans based on the unpaid daily principal amount outstanding. If the collectibility of interest appears doubtful, accrual thereof is discontinued and all unpaid interest is reversed. Loan origination fees and direct loan origination costs are deferred and recognized as an adjustment to income over the life of the related loan on a level-yield basis. Gains on sales of government guaranteed loans are recognized as income when the sales occur.

Major classifications of loans are as follows:


		March 31, 2003		December 31, 2002

Real estate mortgage loans:
	Commercial	$	272,975,416	$	265,112,947
	Residential		68,842,399		68,389,247
	Farmland		439,132		442,707
	Construction		16,377,591		14,892,626
Commercial loans			48,223,208		48,691,856
Consumer loans			8,658,678		9,364,144
Indirect auto dealer loans			24,867,170		16,854,612
Agricultural production and other loans to farmers			508,701		520,537
Home equity loans			17,465,527		17,475,539

	Total loans		458,357,822		441,744,215
Net deferred loan costs			819,153		783,719

	Loans, net of deferred loan costs	$	459,176,975	$	442,527,934

NOTE 4 – ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is established through a provision for loan losses charged to expense. The allowance represents an amount which, in management’s judgment, will be adequate to absorb probable losses on existing loans that may become uncollectible. Management’s judgment in determining the adequacy of the allowance is based on evaluations of the collectibility of loans and takes into consideration such factors as current economic conditions that may affect the borrower’s ability to pay, overall portfolio quality, review of specific problem loans, and changes in the nature and volume of the loan portfolio. Periodic revisions are made to the allowance when circumstances which necessitate such revisions become known. Recognized losses are charged to the allowance for loan losses, while subsequent recoveries are added to the allowance.

As indicated above, the determination of the allowance for loan losses rests upon management’s judgment. 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 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.

Activity in the allowance for loan losses for the three months ended March 31, 2003 and March 31, 2002 follows:


	2003			2002

Balance, January 1	$	4,416,499		$	3,793,842
Provision charged to expense		330,000			135,000
Loans charged off		(235,171	)		—
Recoveries of loans previously charged off		2,069			4,474

Balance, March 31	$	4,513,397		$	3,933,316

NOTE 5 – EARNINGS PER SHARE AND COMMON STOCK

Basic earnings per share have been computed based on the weighted average number of common equivalent shares outstanding during the period. Stock options are considered to be common stock equivalents for purposes of calculating diluted earnings per share.

The reconciliation of basic earnings per share to diluted earnings per share is as follows:


			Net Earnings		Common Shares		Per Share Amount

For the three months ended March 31, 2003:
	Basic earnings per common share		$	1,189,269		4,050,186	$	0.29
	Effect of dilutive stock options			—		177,043		(0.01	)

		Diluted earnings per common share	$	1,189,269		4,227,229	$	0.28

For the three months ended March 31, 2002:
	Basic earnings per common share		$	1,190,918		3,952,229	$	0.30
	Effect of dilutive stock options			—		149,828		(0.01	)

		Diluted earnings per common share	$	1,190,918		4,102,057	$	0.29

NOTE 6 – STOCK BASED COMPENSATION

Under the Bank’s 1994 Incentive Stock Option and Nonstatutory Stock Option Plan (“the Plan”) as amended and restated as of August 31, 1996, the Company may grant stock options to persons who are now or who during the term of the Plan become directors, officers, or key executives as defined by the Plan. Stock options granted under the Plan may either be incentive stock options or nonqualified stock options for federal income tax purposes. The Company’s Board of Directors may grant nonqualified stock options to any director, and incentive stock options or nonqualified stock options to any officer, key executive, administrative, or other employee including an employee who is a director of the Company. Subject to the provisions of the Plan, the maximum number of shares of Company common stock that may be optioned or sold is 978,000 shares. Such shares may be treasury, or authorized but unissued, shares of common stock of the Company. If options granted under the Plan expire or terminate for any reason without having been exercised in full, the shares not purchased shall again be available for option for the purposes of the Plan.

Total options granted, exercised, and cancelled/expired during the three months ended March 31, 2003, were 19,500, 78,800, and 0, respectively. As of March 31, 2003, 507,905 options for shares were outstanding.

As permitted by Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“Statement No. 123”), the Company accounts for its stock option plan under the recognition and measurement principles of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”), and its related interpretations. Because all options granted under the Company’s plan had an exercise price equal to the market value of the underlying common stock on the date of grant, no stock-based compensation cost is reflected in net income under the Company’s application of APB 25. Additionally, the Company did not issue any options to non-employees who were not directors for the three months ended March 31, 2003 and 2002.

The following table presents the effect on net income and net income per share if the Company had recognized compensation expense under the fair value recognition provisions of Statement No. 123 for the three months ended March 31:


		2003		2002

Net income, as reported		$	1,189,269	$	1,190,918
Stock-based employee and director compensation expense determined under fair value basis, net of tax			23,505		14,063

Pro forma net income		$	1,165,764	$	1,176,855

Earnings per share:
	Basic – as reported	$	0.29	$	0.30
	Basic – pro forma		0.29		0.30
	Diluted – as reported		0.28		0.29
	Diluted – pro forma		0.28		0.29

The fair value of each option is estimated as of the date of grant using the Black-Scholes Option Pricing Model and the following weighted average assumptions for options granted in the three months ended March 31:


	2003			2002

Dividend yield		2.8	%		3.2	%
Risk-free interest rate		4.0	%	4.4% to 5.4%
Expected lives	9 years			9 years
Volatility		.28			.29
Weighted average fair value of options granted during year	$	4.69		$	3.61

NOTE 7 – RECENT ACCOUNTING PRONOUNCEMENTS

During October 2002, the Financial Accounting Standards Board issued SFAS 147, “Acquisitions of Certain Financial Institutions”. This statement removes acquisitions of financial institutions, except for transactions between two or more mutual enterprises, from the scope of SFAS 72 and Interpretation 9 and requires these transactions to be accounted for in accordance with SFAS 141, “Business Combinations”, and SFAS 142, “Goodwill and Other Intangible Assets.” In addition, the provisions of this statement amend the scope of SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, to include long-term customer-relationship intangible assets such as depositor- and borrower-relationship intangible assets and credit cardholder intangible assets. This statement is effective for acquisitions on or after October 1, 2002. The provisions related to the impairment and disposal accounting for certain acquired long-term customer-relationship intangible assets were effective on October 1, 2002. Transition provisions for previously recognized unidentifiable intangible assets were effective on October 1, 2002. The Company has determined that adoption of this statement will not have a material impact on its financial statements.

In December 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure (“Statement No. 148”). Statement No. 148 amends Statement No. 123, to provide alternative methods of transition to Statement No. 123’s fair value method of accounting for stock-based employee compensation. Statement No. 148 also amends the disclosure provision of Statement No. 123 and Accounting Principles Board Opinion No. 28, “Interim Financial Reporting,” to require disclosure of the effects of an entity’s accounting policy with respect to stock-based employee compensation on reported net income and earnings per share in the summary of significant accounting policies within annual and interim financial statements. While Statement No. 148 does not amend Statement No. 123 to require companies to account for employee stock options using the fair value method, the disclosure provisions of Statement No. 148 are applicable to all companies with stock-based employee compensation, regardless of whether they account for that compensation using the fair value method of Statement No. 123 or the intrinsic value method of APB 25. The Company has adopted the required disclosures in the Notes herein.

In November 2002, the Financial Accounting Standards Board issued FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (“Interpretation No. 45”), which addresses the accounting for and disclosures of guarantees. Interpretation No. 45 requires a guarantor to recognize a liability for the fair value of a guarantee at inception. The recognition of the liability is required even if it is not probable that payments will be required under the guarantee. The disclosure requirements are effective for interim and annual financial statements ending after December 15, 2002. In accordance with Interpretation No. 45, the Company will apply the initial recognition and measurement provisions on a prospective basis for all guarantees within the scope of Interpretation No. 45 issued or modified after December 31, 2002. The Company has determined that adoption of this statement will not have a material impact on its financial statements.

NOTE 8 — SEGMENT REPORTING

TIB Financial Corp. has three reportable segments: community banking, merchant bankcard processing, and insurance sales. 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. The insurance agency offers a full line of commercial and residential coverage as well as life, health and annuities.

Segment information is presented in accordance with SFAS 131, “Disclosures about Segments of an Enterprise and Related Information.” This standard is based on a management approach, which requires segmentation based upon the Company’s internal organization and disclosure of operating results based upon internal accounting methods.

The results of the Company’s segments are as follows:


			Merchant		Insurance		Parent
Three months ended	Community		Bankcard		Agency		And
March 31, 2003	Banking		Processing		Sales		Other			Totals

Interest income	$	8,290,083	$	—	$	—	$	—		$	8,290,083
Interest expense		2,059,269		—		—		397,594			2,456,863

Net interest income		6,230,814		—		—		(397,594	)		5,833,220
Other income		1,612,970		1,378,073		436,420		86,958			3,514,421
Depreciation and amortization		469,832		11,246		13,561		1,220			495,859
Other expense		5,357,916		1,128,237		378,994		144,066			7,009,213

Pretax segment profit (loss)	$	2,016,036	$	238,590	$	43,865	$	(455,922	)	$	1,842,569

Segment Assets	$	618,663,944	$	61,652	$	2,207,871	$	588,703		$	621,522,170


			Merchant		Insurance		Parent
Three months ended	Community		Bankcard		Agency		and
March 31, 2002	Banking		Processing		Sales		Other			Totals

Interest income	$	7,532,564	$	—	$	—	$	8,799		$	7,541,363
Interest expense		2,174,668		—		—		404,808			2,579,476

Net interest income		5,357,896		—		—		(396,009	)		4,961,887
Other income		1,318,494		1,333,336		399,893		89,653			3,141,376
Depreciation and amortization		431,471		10,500		12,781		1,303			456,055
Other expense		4,254,447		1,082,664		349,549		123,230			5,809,890

Pretax segment profit (loss)	$	1,990,472	$	240,172	$	37,563	$	(430,889	)	$	1,837,318

Segment Assets	$	527,293,330	$	83,849	$	2,260,005	$	1,016,561		$	530,653,745

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 9 – GOODWILL AND INTANGIBLE ASSETS

In accordance with SFAS 142, the following information is presented on the Company’s goodwill and intangible assets:


Amortized Intangible Assets		Gross Carrying		Accumulated
at March 31, 2003:		Amount		Amortization		Net Book Value

Core Deposit Intangible		$	2,941,234	$	1,071,584	$	1,869,650
Excess Servicing Fees			88,917		52,666		36,251

	Total	$	3,030,151	$	1,124,250	$	1,905,901

Intangible amortization expense totaled $73,017 for the three months ended March 31, 2003.

There were no changes in the carrying amount of goodwill for the three months ended March 31, 2003. The components of goodwill were as follows:


	Government
	Guaranteed Loan		Insurance Agency		Investment in ERAS
	Sales and Servicing		Sales		JV (a)		Totals

Balance as of January 1, 2003 and March 31, 2003	$	155,232	$	2,010,211	$	68,581	$	2,234,024

(a)

Investment in ERAS JV is reported as “Parent and Other” in the segment reporting table in Note 8.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain of the matters discussed under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Form 10-Q may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act and as such may involve known and unknown risk, uncertainties and other factors which may cause the actual results, performance or achievements of TIB Financial Corp. to be materially different from future results described in such forward-looking statements. Actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, without limitation: the effects of future economic conditions; governmental monetary and fiscal policies, as well as legislative and regulatory changes; the risks of changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral, and interest rate risks; the effects of competition from other commercial banks, thrifts, consumer finance companies, and other financial institutions operating in the Company’s market area and elsewhere. All forward-looking statements attributable to the Company are expressly qualified in their entirety by these cautionary statements. The Company disclaims any intent or obligation to update these forward-looking statements, whether as a result of new information, future events or otherwise.

The following discussion addresses the factors that have affected the financial condition and results of operations of TIB Financial Corp. (the “Company”) as reflected in the unaudited consolidated statement of condition as of March 31, 2003, and statement of income for the three months ended March 31, 2003.

The Company’s net income of $1,189,269 for the first quarter of 2003 was a 0.1% decrease compared to $1,190,918 for the same period last year. The $1,649 decrease in net income is attributed to the net of the following: an increase of $676,333 or 14.0%, in net interest income after provision for loan losses; an increase of $373,045, or 11.9%, in other income; an increase in other expense of $1,044,127, or 17.0%; and an increase in income tax expense of $6,900 or 1.1%. Basic and diluted earnings per share for the first quarter of 2003 were $0.29 and $0.28 respectively as compared to $0.30 and $0.29 per share in the previous year’s quarter.

Book value per share increased to $8.45 at March 31, 2003 from $8.30 at December 31, 2002. The Company paid a quarterly dividend of $0.11 per share in the first quarter of 2003 and $0.1075 per share in the first quarter of 2002.

Performance of banks is often measured by various ratio analyses. Two widely recognized indicators are return on average equity and return on average assets. Annualized return on average equity for the three months ended March 31, 2003 was 13.91% on average equity of $34,199,000, compared to 16.27% on average equity of $29,286,000 for the same period in 2002. Annualized return on average assets of $582,528,000 for the three months ended March 31, 2003 was 0.82%, compared to 0.94% on average assets of $508,007,000 for the same period in 2002.

The Company’s expansion into Southwest Florida began in 2001 with the opening of two new branch facilities. On July 16, 2001, its office on J & C Boulevard in Naples opened and is located in an industrial park and trade center. This facility is targeted to serve the small to midsize commercial customer and houses the commercial lending support offices for the area. On December 3, 2001, a full service retail branch opened in Bonita Springs and is situated in the fast growing area north of Naples in southern Lee County. On November 25, 2002, we opened our headquarters office for Southwest Florida at 599 Ninth Street North in Naples, Florida. Opening new branch facilities is dilutive to earnings in the near term but is a factor in achieving sustainable long-term growth.

Net interest income is one measurement of how management has balanced the Company’s interest rate sensitive assets and liabilities. The Company’s net interest income is its principal source of income. Interest earning assets for the Company include loans, federal funds sold, interest bearing deposits in other banks, and investment securities. The Company’s interest-bearing liabilities include its deposits, federal funds purchased, notes payable related to Company shares repurchased, trust preferred securities, advances from the Federal Home Loan Bank, and other short-term borrowings. Net interest income increased $871,333, or 17.6%, to $5.8 million, in the three months ended March 31, 2003 as compared to the same period last year. The prime rate as published in the Wall Street Journal began 2002 at 4.75% and by November 2002 it had declined to 4.25%. Many of the Bank’s loans are indexed to this floating rate which has been stable at 4.25% since November 2002. The lower level of prime rate in the first quarter of 2003 compared to the comparative quarter in 2002 did result in a lower average yield in the loan portfolio, however, increased volumes more than compensated for this allowing for the reported increase in

interest income. In addition to this increase in interest income, the Company has been able to reprice maturing high-rate certificates of deposit and other funding sources resulting in a reduction in interest expense compared to the prior year. The average yield on interest earning assets for the first three months of 2003 was 6.47% which was a decrease of 28 basis points compared to the 6.75% yield earned during the first three months of 2002. The average cost of interest bearing deposits declined 41 basis points from 2.45% during the first three months of 2002 to 2.04% for the comparable period in 2003, and the rate of all interest bearing liabilities decreased 43 basis points, from 2.73% in 2002 to 2.30% in 2003. The Company’s net interest margin increased to 4.56% in the first three months of 2003 compared to 4.45% in the first three months of 2002.

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, 2003 and March 31, 2002.


							2003								2002

				AVERAGE			INCOME/		YIELDS			AVERAGE			INCOME/		YIELDS
(Dollars in thousands)				BALANCES			EXPENSE		RATES			BALANCES			EXPENSE		RATES

	Interest-earning assets:
			Loans (1)(2)	$	452,579		$	7,579		6.79	%	$	384,315		$	6,644		7.01	%
			Investment securities — taxable		48,931			608		5.04	%		50,908			776		6.18	%
			Investment securities — tax exempt (2)		5,382			93		7.00	%		5,596			101		7.34	%
			Interest bearing deposits in other banks		154			1		1.51	%		406			2		1.71	%
		Federal funds sold			14,644			42		1.16	%		14,263			59		1.68	%

Total interest-earning assets					521,690			8,323		6.47	%		455,488			7,582		6.75	%

Non-interest-earning assets:
	Cash and due from banks				16,120								13,875
	Investment in ERAS				124								255
	Premises and equipment, net				18,340								17,559
	Allowances for loan losses				(4,447	)							(3,841	)
	Other assets				30,701								24,671

Total non-interest earning assets					60,838								52,519

Total assets				$	582,528							$	508,007

	Interest-bearing liabilities:
		Interest bearing deposits:
		NOW accounts		$	53,796			58		0.44	%	$	49,987			71		0.57	%
		Money market			130,597			345		1.07	%		128,584			412		1.30	%
		Savings deposits			32,198			47		0.60	%		27,826			53		0.77	%
		Other time deposits			176,583			1,529		3.51	%		136,960			1,535		4.55	%

Total interest-bearing deposits					393,174			1,979		2.04	%		343,357			2,071		2.45	%
	Other interest-bearing liabilities:
	Notes payable				5,250			119		9.16	%		5,250			119		9.16	%
	Short-term borrowings and FHLB advances				22,419			80		1.44	%		21,555			104		1.95	%
	Trust preferred securities				13,000			279		8.70	%		13,000			285		8.91	%

Total interest-bearing liabilities					433,843			2,457		2.30	%		383,162			2,579		2.73	%

Non-interest bearing liabilities and stockholders’ equity:
	Demand deposits				107,180								90,105
	Other liabilities				7,306								5,454
	Stockholders’ equity				34,199								29,286

Total non-interest bearing liabilities and stockholders’ equity					148,685								124,845

Total liabilities and stockholders’ equity				$	582,528							$	508,007

Interest rate spread										4.17	%							4.02	%

Net interest income							$	5,866							$	5,003

Net interest margin (3)										4.56	%							4.45	%

(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 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.


		2003 compared to 2002 (1)
		Due to changes in

								Net
(In thousands)		Average			Average			Increase
INTEREST INCOME		Volume			Rate			(Decrease)

Loans (2)		$	2,231		$	(1,296	)	$	935
Investment Securities (2)			(33	)		(143	)		(176	)
Interest bearing deposits in other banks			(1	)		—			(1	)
Federal Funds sold			10			(27	)		(17	)

	Total interest income		2,207			(1,466	)		741

INTEREST EXPENSE
NOW Accounts			30			(43	)		(13	)
Money Market			42			(109	)		(67	)
Savings deposits			37			(43	)		(6	)
Other time deposits			1,588			(1,594	)		(6	)
Notes payable			—			—			—
Trust preferred securities			—			(6	)		(6	)
Short-term borrowings and FHLB advances			26			(50	)		(24	)

	Total interest expense		1,723			(1,845	)		(122	)

Change in net interest income		$	484		$	379		$	863

(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.

Based on management’s evaluation of specific loans and inherent losses within the loan portfolio and other factors, the provision for loan losses was $330,000 for the first quarter of 2003 as compared to $135,000 for the first quarter of 2002. Gross charged off loans for the first quarter of 2003 were $235,171 with recoveries of $2,069, compared to $0 in charge offs and $4,474 in recoveries in the first quarter of 2002. $120,000 of the current year charge off relates to one commercial loan. The allowance for loan losses amounted to $4,513,397 and $4,416,499 at March 31, 2003 and December 31, 2002, respectively.

The Company’s formalized 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, the Company allocates an allowance for each risk category. The allocations are based on factors including perceived economic conditions (local, national and global), perceived strength of the Company’s management, recent trends in loan loss history, and concentrations of credit.

Home equity 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, the Company allocates an allowance for each loan classification. The allocations are based on the same factors mentioned above.

Based on an analysis performed by management at March 31, 2003, the allowance for loan losses is considered to be adequate to cover loan losses in the portfolio as of that date. However, because of the inherent uncertainty of the assumptions we use in our loan analyses, management cannot assure that loan losses in future periods will not exceed the allowance for loan losses or that additional allocations to the allowance will not be required.

Non-performing assets include non-accrual loans, accruing loans contractually past due 90 days or more, restructured loans and other real estate. Loans are placed on non-accrual 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 if it is in a nonaccruing status. Non-performing assets for the periods ended March 31, 2003 and December 31, 2002 were as follows:


	March 31, 2003			December 31, 2002

Loans on nonaccrual	$	206,176		$	545,523
Loans 90 days past due (a)		—			—
Other real estate owned (b)		508,190			550,000
Other assets (b)		2,456,445			2,519,022

Total non-performing assets	$	3,170,811		$	3,614,545

Percentage of non-performing assets to total loans (c)		0.69	%		0.81	%

(a)		Loans 90 days past due exclude loans on nonaccrual that are reported separately.

(b)		The Bank has made a loan originally totaling $10,000,000 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 U.S. Department of Agriculture (USDA). In addition to business real estate and equipment, the loan was collateralized by the business owner’s interest in a trust. Under provisions of the trust agreement, beneficiaries cannot receive trust assets until November 2010. At December 31, 2000, the loan was past due greater than 90 days but was still maintained as an accruing loan because of the USDA guarantee and collateral value. 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 Bank has capitalized liquidation costs and protective advances which they expect will be fully reimbursed by the USDA. The Bank has sold certain pieces of equipment associated with the lumber mill property. Proceeds from these sales were used to reduce the other real estate amount and liquidation cost amounts recorded on the Bank’s books. Other real estate recorded on the Bank’s books totaled $508,190 and $550,000 at March 31, 2003 and December 31, 2002, respectively. The non guaranteed principal and interest ($1,961,000 at March 31, 2003 and December 31, 2002) and the capitalized liquidation costs and protective advance costs totaling approximately $495,000 and $558,000 at March 31, 2003 and December 31, 2002, respectively are included as “other assets” in the table above.

The portion of this loan guaranteed by the USDA was approximately $1.6 million at March 31, 2003 and December 31, 2002, and is accruing interest. Accrued interest on this loan totals approximately $526,000 and $505,000 at March 31, 2003 and December 31, 2002, respectively. Under the USDA program, eligible portions of both principal and interest are covered under the USDA guarantee. Management believes the present value of all assets pledged as collateral for this loan exceeds the unpaid amount.

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 property on June 12, 2001, and, therefore, 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 repossessed personal property on the Bank’s books. The Florida Department of Financial Services granted an extension to the Bank to carry the personal property on its books until December 11, 2002. The Department has since extended this to June 11, 2003. There is no assurance that an extension will be granted for any additional periods, and, therefore, the possibility exists that the non guaranteed principal and interest totaling $1,961,000 at March 31, 2003, may need to be charged off for regulatory purposes in June 2003 if the property has not yet been liquidated. Since we believe this amount is ultimately realizable, we do not anticipate that this amount will be required to be written off for financial statement purposes under generally acceptable accounting principles. Even if the amount was required to be charged off for regulatory purposes on March 31, 2003, the Bank and

Company would have remained well capitalized under the capital adequacy guidelines established by the federal bank regulators as of that date.

(c)

For the purpose of this computation, total loans include other real estate owned and other assets.

Other income increased $373,045 to $3,514,421 for the three month period ended March 31, 2003 from $3,141,376 in the comparable period last year. The 11.9% increase in non interest income is attributable to an increase of $39,930 in service charges on deposit accounts; an increase of $44,737 in merchant bank card processing income; a $87,470 increase in gain on sale of government guaranteed loans; a $242,141 increase in fees on mortgage loans sold; a $36,527 increase in commissions on sales by Keys Insurance; offset by a $68,947 decrease in net investment security gains; a $2,695 decrease in retail investment services and a $6,118 decrease in other income. The increases in merchant bank card, commissions on sales by Keys Insurance and fees on mortgage loans sold are primarily a result of volume increases. The net gain from the sale of securities will vary based upon the sales and calls of the individual securities in the investment portfolio. In the first quarter of 2002, the Company sold two corporate securities which netted a gain of approximately $65,000.

Other expense increased $1,044,127 or 17.0% to $7,175,072 in the first three months of 2003 as compared to the prior year period. The increase in non interest expense is attributable to salaries and employee benefits increasing $709,292, net occupancy expense increasing $118,739, and other expense increasing $216,096. A significant portion of these increases are a result of the continuing expansion in the Southwest Florida market. The Bank added two new locations in the second half of 2001 and one new location was added in the fourth quarter of 2002. The addition of these facilities and their continued growth has caused the Bank to hire additional personnel and incur additional operating costs.

Total assets at March 31, 2003 were $621,522,170, up 9.6% from total assets of $567,004,646 at December 31, 2002. Loans net of deferred loan costs increased $16,649,041 to $459,176,975 for the first three months of 2003 from year end 2002. Also, in the same period, federal funds sold increased $41,816,000, and investment securities decreased $3,239,604. Asset growth was primarily funded by an increase in deposits of $63,325,829, or 13.1%. At March 31, 2003, the Company had $5,004,201 in short-term borrowings compared to $4,578,959 at December 31, 2002. Short-term borrowings consist of securities sold under agreements to repurchase and Treasury tax deposits. Advances from the Federal Home Loan Bank totaled $10 million at March 31, 2003 as compared to $20 million at December 31, 2002.

On October 31, 2000, the Company purchased Keys Insurance Agency of Monroe County, Inc. from a Company director. Keys Insurance Agency, Inc. (the new name subsequent to the purchase) has three offices in the Florida Keys and one office in Naples. Keys Insurance Agency, Inc. offers a full line of commercial and residential hazard insurance coverage as well as life and health insurance and annuities. Total consideration paid at closing for the agency was $1,870,000. This was comprised of $220,000 in the Company’s common stock and $1,650,000 in cash paid at closing. Under the purchase agreement, annual cash payments of $110,000 are to be made following each of the first three anniversaries of the closing date, subject to the agency’s ability to achieve certain earning thresholds. Any of this additional consideration that is paid at the end of each contingency period, will at that time be recorded as goodwill and increase the total recorded purchase price of the agency. No amount was required to be paid in 2001 or 2002.

On September 25, 2001, Keys Insurance Agency, Inc. purchased BonData Group Limited, Inc., a Ft. Myers, Florida based insurance agency specializing in surety bond underwriting and placement. Total consideration paid at closing for the agency was $273,000. This was comprised of approximately $68,000 in the Company’s common stock and approximately $205,000 in cash. Under the purchase agreement, annual cash payments of $24,000 are to be made following each of the first two anniversaries of the closing date, subject to the agency’s ability to achieve certain earning thresholds. Any of this additional consideration that is paid at the end of each contingency period, will at that time be recorded as goodwill and increase the total recorded purchase price of the agency. No amount was required to be paid in 2002.

In furtherance of our efforts to generate higher relative yielding assets, the Bank began a program to acquire indirect automobile loans. After significant study, we began in April 2002 to put together a department that we feel could safely acquire and service this type of product. We predominately buy loans from auto dealers in southwest Florida and they 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. By the end of 2002, we were buying approximately $4 million per month of indirect automobile paper and as of March 31, 2003, we had approximately $24.9 million of indirect loans outstanding.

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 March 31, 2003 and December 31, 2002:


		Well			Adequately
		Capitalized			Capitalized			March 31, 2003			December 31, 2002
		Requirement			Requirement			Actual			Actual

Tier 1 Capital (to Average Assets)
	Consolidated		>5	%		>4	%		7.1	%		7.1	%
	Bank		>5	%		>4	%		8.1	%		8.3	%
Tier 1 Capital (to Risk Weighted Assets)
	Consolidated		>6	%		>4	%		8.3	%		8.3	%
	Bank		>6	%		>4	%		9.5	%		9.8	%
Total Capital (to Risk Weighted Assets)
	Consolidated		>10	%		>8	%		10.6	%		10.9	%
	Bank		>10	%		>8	%		10.4	%		10.8	%

Management believes, as of March 31, 2003, that the Company and the Bank met all capital requirements to which they are subject. The Company has included in Tier 1 Capital a portion of the trust preferred securities that were issued in September 2000 and July 2001.

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. The Company manages 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.

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 14 percent of the Bank’s total assets as reported on the most recent quarterly financial information submitted to the regulators. The credit availability approximated $86.6 million at March 31, 2003, under which $10 million was outstanding. Any advances are secured by the Bank’s one-to-four family residential mortgage loans.

The Bank has an unsecured overnight federal funds purchased accommodation up to a maximum of $7.5 million from its principal correspondent bank. The Bank also has securities sold under agreements to repurchase with commercial account holders whereby the Bank sweeps the customer’s accounts on a daily basis and pays interest on these amounts. These agreements are collateralized by investment securities chosen by the Bank.

COMMITMENTS

The Bank is 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 and interest rate 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 customer on the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amounts of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. At March 31, 2003, total commitments to extend credit were approximately $56.9 million in unfunded loan commitments.

Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. Since most of the letters of credit are expected to expire without being drawn upon, they do not necessarily represent future cash requirements. At March 31, 2003, commitments under standby letters of credit aggregated approximately $2.1 million.

The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management’s credit evaluation of the borrower. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, residential real estate and income-producing commercial properties on those commitments for which collateral is deemed necessary.

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.

RATE SENSITIVITY

The Company’s interest rate sensitivity position at March 31, 2003 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	$	203,501		$	29,270		$	36,511		$	121,165		$	67,911		$	458,358
Investment securities-taxable		7,647			—			10,269			10,946			16,513			45,375
Investment securities-tax exempt		—			128			238			1,250			5,523			7,139
Federal funds sold		47,488			—			—			—			—			47,488
Interest bearing deposit in other bank		138			—			—			—			—			138

Total interest-bearing assets		258,774			29,398			47,018			133,361			89,947			558,498

Interest-bearing liabilities:
NOW accounts (A)		23,520			—			—			—			35,280			58,800
Money Market		133,205			—			—			—			—			133,205
Savings Deposits (B)		—			—			33,270			—			—			33,270
Other time deposits		34,451			27,894			34,921			103,088			—			200,354
Notes payable		—			—			—			—			5,250			5,250
Trust preferred securities		5,000			—			—			—			8,000			13,000
Other borrowings		15,004			—			—			—			—			15,004

Total interest-bearing liabilities		211,180			27,894			68,191			103,088			48,530			458,883

Interest sensitivity gap	$	47,594		$	1,504		$	(21,173	)	$	30,273		$	41,417		$	99,615

Cumulative interest sensitivity gap	$	47,594		$	49,098		$	27,925		$	58,198		$	99,615		$	99,615

Cumulative sensitivity ratio		8.5	%		8.8	%		5.0	%		10.4	%		17.8	%		17.8	%

(A)		40% of outstanding balance considered repriceable immediately and 60% repriceable in the furthest time period.

(B)		Savings Deposits considered repriceable in the one year time horizon.

The Company is cumulatively asset sensitive in each of the timeframes above. Certain liabilities such as NOW and passbook savings accounts, while technically subject to immediate repricing in response to changing market rates, historically do not reprice as quickly nor to the extent as other interest sensitive accounts. Therefore, to include the entire balance of these liability accounts in the earliest repricing period would be unrealistic. To compensate for the fact that changes in general market interest rates will not be fully reflected in changes in NOW rates, only 40% of NOW balances are included as immediately rate sensitive based on the Company’s own and industry repricing experience. Also, passbook savings will not reprice as quickly as market rates and therefore the repricing of savings deposits is included in the 7 to 12 month repricing period, based on the Company’s repricing experience. Because of non-interest bearing liabilities, total interest-earning assets are substantially greater than the total interest-bearing liabilities and therefore over time the effects on net interest income from changes in asset yield will be greater than the change in expense from liability cost. Accordingly, if market interest rates should decrease, the net interest margin would decrease. Conversely, if rates increase 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, the $27.9 million one year cumulative positive sensitivity gap exaggerates 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 the Company has experienced steady growth in deposits, no net run off in any deposit category is assumed in the interest rate sensitivity table. It is the Company’s policy to maintain its cumulative one year gap ratio in the –20% to +10% range. At March 31, 2003, the Company was within this range with a one year cumulative sensitivity ratio of 5.0%.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

All financial institutions have financial instruments which are subject to market risk comprised of interest rate risk, foreign currency exchange rate risk, commodity price risk and other relevant market risks, such as equity price risks. The Company has assessed its market risk as predominately interest rate risk.

The following interest rate sensitivity analysis information as of March 31, 2003 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 and cause the larger decreases in income in a declining rate scenario versus the income increases in the same size rising rate scenario.

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 $136 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. 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 and Fed Funds positions to offset the repricing characteristics of the deposit liabilities.


(Dollars in thousands)	Interest Rates Decrease						Interest Rates		Interest Rates Increase
	200 BP			100 BP			Remain Constant		100 BP			200BP

2003 Interest Income	$	31,874		$	34,152		$	36,631	$	38,903		$	41,508
2003 Interest Expense		7,104			8,210			10,257		12,652			15,047

Net Interest Income		24,770			25,942			26,374		26,251			26,461

Change in net income after tax vs constant rates	$	(1,001	)	$	(270	)			$	(77	)	$	54

Part II. OTHER INFORMATION

Item 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

The Company maintains controls and procedures designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Based upon their evaluation of those controls and procedures performed within 90 days of the filing date of this report, the Chief Executive Officer and Chief Financial Officer of the Company concluded that the Company’s disclosure controls and procedures were adequate. No significant deficiencies or material weaknesses in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize, and report financial data have been identified.

Changes in internal controls

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

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibit 99.1 — Report of Independent Certified Public Accountants

(b) Exhibit 99.2 — Chief Executive Officer’s certification required under Section 906 of Sarbanes-Oxley Act of 2002

(c) Exhibit 99.3 — Chief Financial Officer’s certification required under Section 906 of Sarbanes-Oxley Act of 2002

(d) On February 26, 2003, the Company issued a press release announcing certain financial results and additional information.

SIGNATURES

In accordance with 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.

Date:	May 9, 2003	/s/ Edward V. Lett Edward V. Lett President and Chief Executive Officer

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

CERTIFICATIONS

I, Edward V. Lett, President and CEO, certify that:

1. I have reviewed this quarterly report on Form 10-Q of TIB Financial Corp.;

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

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

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

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

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.


Date:	May 9, 2003

		/s/ Edward V. Lett Edward V. Lett, President and Chief Executive Officer

I, David P. Johnson, Executive Vice President and CFO, certify that:


Date: May 9, 2003

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

(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.

	(a)		Exhibit 99.1 — Report of Independent Certified Public Accountants

	(b)		Exhibit 99.2 — Chief Executive Officer’s certification required under Section 906 of Sarbanes-Oxley Act of 2002

	(c)		Exhibit 99.3 — Chief Financial Officer’s certification required under Section 906 of Sarbanes-Oxley Act of 2002
	(d)		On February 26, 2003, the Company issued a press release announcing certain financial results and additional information.

1.		I have reviewed this quarterly report on Form 10-Q of TIB Financial Corp.;

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

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

4.		The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

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

b)		evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c)		presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.		The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a)		all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.		The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.