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 SEPTEMBER 30, 2003		Commission File Number 000-21329

TIB FINANCIAL CORP.

(Exact name of registrant as specified in its charter)


FLORIDA		65-0655973

(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		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			4,412,778

Class			Outstanding as of November 3, 2003

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 AND REPORTS ON FORM 8-K
SIGNATURES
EX-31.1 Section 302 Certification of CEO
EX-31.2 Section 302 Certification of CFO
EX-32.1 Section 906 Certification of CEO
EX-32.2 Section 906 Certification of CFO
EX-99.1 Report of Independent Accountants

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

TIB FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS


			September 30, 2003		December 31, 2002

			(Unaudited)
ASSETS
Cash and due from banks			$	16,515,191	$	18,397,659
Federal funds sold				9,852,000		5,672,000
Investment securities available for sale				64,890,631		54,267,830
Loans, net of deferred loan costs and fees				512,076,093		442,527,934
Less: allowance for loan losses				4,854,919		4,272,499

	Loans, net			507,221,174		438,255,435
Premises and equipment, net				20,974,167		19,457,150
Goodwill				155,232		2,234,024
Intangible assets, net				1,760,047		1,978,918
Accrued interest receivable and other assets				24,529,837		26,885,630

	TOTAL ASSETS		$	645,898,279	$	567,148,646

LIABILITIES
Deposits:
	Noninterest-bearing demand		$	114,166,811	$	105,199,483
	Interest-bearing demand and money market			188,082,579		186,426,703
	Savings			38,083,078		31,440,801
	Time deposits of $100,000 or more			95,109,597		73,509,232
	Other time deposits			107,441,053		86,107,232

		Total Deposits		542,883,118		482,683,451
Federal Home Loan Bank advances				35,000,000		20,000,000
Short-term borrowings				3,072,256		4,578,959
Notes payable				5,250,000		5,250,000
Trust preferred securities				13,000,000		13,000,000
Accrued interest payable and other liabilities				6,728,953		8,130,159

	TOTAL LIABILITIES			605,934,327		533,642,569

STOCKHOLDERS’ EQUITY
Common stock — $.10 par value: 7,500,000 shares authorized, 4,408,078 and 4,035,625 shares issued				440,808		403,563
Additional paid in capital				13,849,087		8,965,816
Retained earnings				25,237,057		23,021,698
Accumulated other comprehensive income				437,000		1,115,000

		TOTAL STOCKHOLDERS’ EQUITY		39,963,952		33,506,077

	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	645,898,279	$	567,148,646

(See notes to consolidated financial statements)

TIB FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)


			Three months ended				Nine months ended
			September 30,				September 30,

			2003		2002		2003		2002

INTEREST INCOME
Loans, including fees			$	7,973,693	$	7,002,674	$	23,249,944	$	20,421,818
Investment securities:
		U.S. Treasury securities		1,909		40,160		5,708		122,119
		U.S. Government agencies and corporations		576,585		542,842		1,545,653		1,759,617
		States and political subdivisions, tax-exempt		91,930		65,705		236,154		198,657
		States and political subdivisions, taxable		59,554		106,498		184,350		282,759
		Other investments		—		—		—		46,447
Interest bearing deposits in other bank				797		1,026		1,743		4,094
Federal Home Loan Bank Stock				9,902		19,849		39,985		60,750
Federal funds sold				34,001		116,796		227,313		267,854

	TOTAL INTEREST INCOME			8,748,371		7,895,550		25,490,850		23,164,115

INTEREST EXPENSE
Interest-bearing demand and money market				275,212		559,213		1,061,250		1,530,117
Savings				35,631		59,167		133,512		170,266
Time deposits of $100,000 or more				814,924		688,476		2,373,504		2,028,955
Other time deposits				826,629		831,951		2,488,058		2,498,307
Long term debt – trust preferred securities				276,440		285,062		832,969		855,628
Federal Home Loan Bank advances				44,116		95,372		146,124		293,840
Notes payable				121,243		121,243		359,792		359,792
Short-term borrowings				8,842		16,445		29,577		28,971

	TOTAL INTEREST EXPENSE			2,403,037		2,656,929		7,424,786		7,765,876

	NET INTEREST INCOME			6,345,334		5,238,621		18,066,064		15,398,239
PROVISION FOR LOAN LOSSES				447,000		103,000		1,035,000		369,000

	NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES			5,898,334		5,135,621		17,031,064		15,029,239
NON-INTEREST INCOME
Service charges on deposit accounts				631,536		547,556		1,789,725		1,625,138
Investment securities gains, net				3,152		5,118		8,489		143,245
Merchant bankcard processing income				1,213,195		961,952		3,812,093		3,421,796
Gain on sale of government guaranteed loans				—		—		87,470		23,179
Fees on mortgage loans sold				589,398		404,985		1,800,038		1,078,363
Retail investment services				112,361		36,862		298,612		168,281
Gain on sale of investment in ERAS Joint Venture (Note 2)				—		—		202,393		—
Other income				347,489		345,323		1,064,500		1,037,993

	TOTAL NON-INTEREST INCOME			2,897,131		2,301,796		9,063,320		7,497,995
NON-INTEREST EXPENSE
Salaries and employee benefits				3,270,788		2,646,168		9,511,590		7,699,338
Net occupancy expense				1,088,344		945,390		3,196,877		2,738,840
Other expense				2,681,062		2,148,440		7,983,336		7,006,566

	TOTAL NON-INTEREST EXPENSE			7,040,194		5,739,998		20,691,803		17,444,744

	INCOME BEFORE INCOME TAX EXPENSE			1,755,271		1,697,419		5,402,581		5,082,490
INCOME TAX EXPENSE				614,800		529,130		1,890,100		1,709,230

	INCOME FROM CONTINUING OPERATIONS		$	1,140,471	$	1,168,289	$	3,512,481	$	3,373,260

TIB FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)


		Three months ended				Nine months ended
		September 30,				September 30,

		2003		2002		2003		2002

DISCONTINUED OPERATIONS
	Income from Keys Insurance Agency, Inc. operations		35,974		84,239		200,587		224,452
	Income Tax Expense		13,500		31,870		75,400		84,570

INCOME FROM DISCONTINUED OPERATIONS			22,474		52,369		125,187		139,882

NET INCOME		$	1,162,945	$	1,220,658	$	3,637,668	$	3,513,142

BASIC EARNINGS PER SHARE:
	Continuing Operations	$	0.26	$	0.29	$	0.84	$	0.85
	Discontinued Operations		0.00		0.01		0.03		0.03

	Basic earnings per share	$	0.26	$	0.30	$	0.87	$	0.88

DILUTED EARNINGS PER SHARE:
	Continuing Operations	$	0.25	$	0.28	$	0.80	$	0.82
	Discontinued Operations		0.00		0.01		0.03		0.03

	Diluted earnings per share	$	0.25	$	0.29	$	0.83	$	0.85

(See notes to consolidated financial statements)

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


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

Balance at June 30, 2003			$	40,353,779					$	24,559,001		$	1,511,000		$	440,758	$	13,843,020
Comprehensive Income
	Net Income			1,162,945		$	1,162,945			1,162,945
	Other comprehensive income, net of tax benefit of $647,000:
		Net market valuation adjustment on securities available for sale		(1,072,034	)		(1,072,034	)
		Less : reclassification adjustment for gains included in net income		(1,966	)		(1,966	)

	Other comprehensive income, net of tax						(1,074,000	)					(1,074,000	)

	Comprehensive income					$	88,945

Exercise of stock options				6,776												50		6,726
Private Placement of 280,653 common shares				(659	)													(659	)
Cash dividends declared, $.11 per share				(484,889	)					(484,889	)

Balance at September 30, 2003			$	39,963,952					$	25,237,057		$	437,000		$	440,808	$	13,849,087


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

Balance at June 30, 2002			$	31,027,378					$	21,454,778		$	610,000	$	399,380	$	8,563,220
Comprehensive Income
	Net Income			1,220,658		$	1,220,658			1,220,658
	Other comprehensive income, net of tax expense of $394,000:
		Net market valuation adjustment on securities available for sale		656,193			656,193
		Less: reclassification adjustment for gains included in net income		(3,193	)		(3,193	)

	Other comprehensive income, net of tax						653,000						653,000

	Comprehensive income					$	1,873,658

Exercise of stock options				136,965											2,432		134,533
Cash dividends declared, $.1075 per share				(431,949	)					(431,949	)

Balance at September 30, 2002			$	32,606,052					$	22,243,487		$	1,263,000	$	401,812	$	8,697,753

(See notes to consolidated financial statements)

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


												Accumulated
												Other					Additional
						Comprehensive			Retained			Comprehensive			Common		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			3,637,668		$	3,637,668			3,637,668
	Other comprehensive income, net of tax benefit of $408,000:
		Net market valuation adjustment on securities available for sale		(672,703	)		(672,703	)
		Less: reclassification adjustment for gains included in net income		(5,297	)		(5,297	)

	Other comprehensive income, net of tax						(678,000	)					(678,000	)

	Comprehensive income					$	2,959,668

Exercise of stock options				577,112												9,180		567,932
Private Placement of 280,653 common shares				4,343,404												28,065		4,315,339
Cash dividends declared, $.33 per share				(1,422,309	)					(1,422,309	)

Balance at September 30, 2003			$	39,963,952					$	25,237,057		$	437,000		$	440,808	$	13,849,087


												Accumulated
												Other				Additional
						Comprehensive			Retained			Comprehensive		Common		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			3,513,142		$	3,513,142			3,513,142
	Other comprehensive income, net of tax expense of $739,100:
		Unrealized holding gain on securities transferred into the available for sale category from the held to maturity category		270,480			270,480
		Net market valuation adjustment on securities available for sale		1,045,504			1,045,504
		Less: reclassification adjustment for gains included in net income		(89,384	)		(89,384	)

	Other comprehensive income, net of tax						1,226,600						1,226,600

	Comprehensive income					$	4,739,742

Exercise of stock options				479,993											7,202		472,791
Income tax benefit from stock options exercised				3,025													3,025
Cash dividends declared, $.3225 per share				(1,288,800	)					(1,288,800	)

Balance at September 30, 2002			$	32,606,052					$	22,243,487		$	1,263,000	$	401,812	$	8,697,753

(See notes to consolidated financial statements)

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


		For the nine month period ended
		September 30,
		2003			2002

CASH FLOWS FROM OPERATING ACTIVITIES
Net Income		$	3,637,668		$	3,513,142
Adjustments to reconcile net income to net cash provided by operating activities:
	Net amortization of investments		44,820			75,961
	Amortization of intangible assets		218,871			220,715
	Depreciation of premises and equipment		1,307,447			1,133,362
	Provision for loan losses		1,035,000			369,000
	Deferred income tax benefit		(570,557	)		(182,768	)
	Deferred net loan fees/costs		(839,663	)		(360,946	)
	Investment securities gains, net		(8,489	)		(143,245	)
	Net gain on sale/disposal of premises and equipment		(2,128	)		(2,493	)
	Loss on sale of assets of Keys Insurance Agency, Inc.		14,676			—
	Gain on sale of investment in ERAS JV		(202,393	)		—
	Gain on sales of government guaranteed loans, net		(87,470	)		(23,179	)
	Loss on sale of servicing rights		—			2,532
	Mortgage loans originated for sale		(90,335,784	)		(53,360,134	)
	Proceeds from sale of mortgage loans		92,135,822			54,438,497
	Fees on mortgage loans sold		(1,800,038	)		(1,078,363	)
	Decrease (increase) in accrued interest receivable and other assets		3,774,357			(2,801,157	)
	(Decrease) increase in accrued interest payable and other liabilities		(1,389,806	)		271,178

	NET CASH PROVIDED BY OPERATING ACTIVITIES		6,932,333			2,072,102

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities available for sale			(24,846,163	)		(19,194,484	)
Repayments of principal and maturities of investment securities available for sale			13,101,031			8,530,057
Sales of investment securities available for sale			—			12,025,792
Net purchase of FHLB stock			(389,700	)		—
Purchase of life insurance policies			(250,000	)		—
Proceeds from sales of government guaranteed loans			2,241,119			541,980
Proceeds from sale of assets of Keys Insurance Agency, Inc.			183,992			—
Loans originated or acquired, net of principal repayments			(69,293,787	)		(31,701,135	)
Net proceeds received from servicing rights sale			—			33,079
Proceeds from sale of investment in ERAS JV			326,667			—
Purchases of premises and equipment			(2,944,159	)		(2,097,041	)
Sales of premises and equipment			4,058			28,100

	NET CASH USED IN INVESTING ACTIVITIES		(81,866,942	)		(31,833,652	)

CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) increase in federal funds purchased and securities sold under agreements to repurchase			(1,506,703	)		4,947,364
Net increase (decrease) in FHLB advances			15,000,000			(5,000,000	)
Net increase in demand, money market and savings accounts			17,265,481			20,717,252
Net increase in time deposits			42,934,186			25,463,273
Proceeds from exercise of stock options			577,112			479,993
Proceeds from private placement of common stock			4,343,404			—
Cash dividends paid			(1,381,339	)		(1,281,057	)

	NET CASH PROVIDED BY FINANCING ACTIVITIES		77,232,141			45,326,825

NET INCREASE IN CASH AND CASH EQUIVALENTS			2,297,532			15,565,275
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD			24,069,659			21,269,909

CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	26,367,191		$	36,835,184


		For the nine month period ended
		September 30,
		2003		2002

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS:
Cash paid for:
	Interest	$	7,357,247	$	8,620,180
	Income taxes		2,900,000		2,091,000

NON CASH TRANSACTIONS:

In June 2002, the Company transferred investment securities in the held to maturity category with a book value totaling $18,507,916 to the available for sale category.

On August 15, 2003, the Company closed the sale of Keys Insurance Agency, Inc., a wholly owned subsidiary of the Company. The transaction was structured as a sale of the agency assets. The buyer paid $2,204,930 in cash at the closing. Of the cash payment at closing, proceeds of $2,020,938 were pursuant to a loan from TIB Bank of the Keys (a subsidiary of the Company) to the buyer.

(See notes to consolidated financial statements)

TIB FINANCIAL CORP.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003
(Unaudited)

NOTE 1 – BASIS OF PRESENTATION & ACCOUNTING POLICIES

TIB Financial Corp. is a financial holding company headquartered in Key Largo, Florida. TIB Financial Corp. owns and operates TIB Bank of the Keys, which has a total of fourteen 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, 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. (see Note 11) 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. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Certain amounts previously reported on have been reclassified to conform to the current period presentation.

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

RECENT ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board recently issued two new accounting standards, Statement 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities,” and Statement 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity,” both of which became effective in the third quarter of 2003. The adoption of these new statements did not have a material impact on the Company’s financial statements.

Additionally in 2003, the Financial Accounting Standards Board issued FASB Interpretation 46, “Consolidation of Variable Interest Entities”, which will become effective in the fourth quarter of 2003. Management does not believe that the adoption of this interpretation will have a material impact on its financial statements.

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. Application of assumptions different than those used by management could result in material changes in the Company’s financial position or results of operations. Additional information with regard to the Company’s methodology and reporting of the allowance for loan losses is included in the 2002 Annual Report and 10-K, Note 5 below and the “Non-Performing Assets” section of the “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

NOTE 2 – ACQUISITIONS AND DIVESTITURES

On May 29, 2003, TIB Software & Services sold its remaining interest in ERAS Joint Venture for $326,667. The Company recognized a pretax gain of approximately $202,000 on the transaction.

On August 15, 2003, the Company closed the sale of Keys Insurance Agency, Inc., a wholly owned subsidiary of the Company. See Note 11 – “Discontinued Operations” for details on the transaction.

NOTE 3 – INVESTMENT SECURITIES

The amortized cost and estimated fair value of investment securities available for sale at September 30, 2003 and December 31, 2002 are presented below:


	September 30, 2003

	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value

U.S. Treasury securities	$	210,067	$	9,870	$	—	$	219,937
U.S. Government agencies and corporations		41,368,496		555,934		599,501		41,324,929
States and political subdivisions-tax-exempt		8,832,984		367,148		143,462		9,056,670
States and political subdivisions-taxable		3,559,688		41,506		52,225		3,548,969
Mortgage-backed securities		10,218,396		521,730		—		10,740,126

	$	64,189,631	$	1,496,188	$	795,188	$	64,890,631


	December 31, 2002

	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair 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
Mortgage-backed securities		14,382,946		430,131		—		14,813,077

	$	52,480,830	$	1,795,521	$	8,521	$	54,267,830

NOTE 4 – LOANS

Major classifications of loans are as follows:


		September 30, 2003		December 31, 2002

Real estate mortgage loans:
	Commercial	$	291,337,267	$	265,112,947
	Residential		60,530,812		68,389,247
	Farmland		2,217,057		442,707
	Construction		20,249,882		14,892,626
Commercial and agricultural loans			60,247,423		49,212,393
Consumer loans			11,165,065		9,364,144
Indirect auto dealer loans			50,932,611		16,854,612
Home equity loans			13,772,594		17,475,539

	Total loans		510,452,711		441,744,215
Net deferred loan costs			1,623,382		783,719

	Loans, net of deferred loan costs	$	512,076,093	$	442,527,934

NOTE 5 – ALLOWANCE FOR LOAN LOSSES

Activity in the allowance for loan losses for the nine months ended September 30, 2003 and September 30, 2002 follows:


	2003			2002

Balance, January 1	$	4,272,499		$	3,674,842
Provision charged to expense		1,035,000			369,000
Loans charged off		(469,901	)		(239,652	)
Recoveries of loans previously charged off		17,321			40,573

Balance, September 30	$	4,854,919		$	3,844,763

NOTE 6 – 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		Net Book
at September 30, 2003:		Amount		Amortization		Value

Core Deposit Intangible		$	2,941,234	$	1,213,567	$	1,727,667
Servicing Rights			88,917		56,537		32,380

	Total	$	3,030,151	$	1,270,104	$	1,760,047

Intangible amortization expense totaled $218,871 for the nine months ended September 30, 2003.

The changes in the carrying amount of goodwill for the nine months ended September 30, 2003, are as follows:


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

Balance as of January 1, 2003	$	155,232	$	2,010,211		$	68,581		$	2,234,024
Goodwill associated with sale of remaining interest of Investment in ERAS JV		—		—			(68,581	)		(68,581	)
Goodwill associated with sale of Keys Insurance Agency, Inc.				(2,010,211	)					(2,010,211	)

Balance as of September 30, 2003	$	155,232	$	—		$	—		$	155,232

(a) Investment in ERAS JV is reported as “Parent and Other” in the segment reporting table in Note 10.

NOTE 7 – EARNINGS PER SHARE AND COMMON STOCK

For purposes of calculating basic and diluted earnings per share, we used the following weighted average common shares outstanding:


				2003		2002

For the three months ended September 30:
	Weighted average number of common shares outstanding:
		Basic			4,407,920		4,013,014
		Diluted			4,581,559		4,168,381
			Dilutive effect of outstanding options		173,639		155,367
			Anti-dilutive outstanding options		5,000		27,000
For the nine months ended September 30:
	Weighted average number of common shares outstanding:
		Basic			4,204,840		3,982,619
		Diluted			4,376,413		4,137,514
			Dilutive effect of outstanding options		171,573		154,895
			Anti-dilutive outstanding options		2,326		153,739

NOTE 8 – 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 nine months ended September, 2003, were 24,500, 91,800, and 12,850, respectively. As of September 30, 2003, 487,055 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 nine months ended September 30, 2003 and 2002.

The following tables present 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 SEPTEMBER 30,		2003		2002

Net income, as reported		$	1,162,945	$	1,220,658
Less: Stock-based employee and director compensation expense determined under fair value basis, net of tax			23,238		20,664

Pro forma net income		$	1,139,707	$	1,199,994

Earnings per share:
	Basic – as reported	$	0.26	$	0.30
	Basic – pro forma		0.26		0.30
	Diluted – as reported		0.25		0.29
	Diluted – pro forma		0.25		0.29


FOR THE NINE MONTHS ENDED SEPTEMBER 30,		2003		2002

Net income, as reported		$	3,637,668	$	3,513,142
Less: Stock-based employee and director compensation expense determined under fair value basis, net of tax			91,178		84,151

Pro forma net income		$	3,546,490	$	3,428,991

Earnings per share:
	Basic – as reported	$	0.87	$	0.88
	Basic – pro forma		0.84		0.86
	Diluted – as reported		0.83		0.85
	Diluted – pro forma		0.81		0.83

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 nine months ended September 30:


	2003			2002

Dividend yield		2.8	%		3.2	%
Risk-free interest rate		4.0	%		5.2	%
Expected lives	9 years			9 years
Volatility		.29			.29
Weighted average fair value of options granted during year	$	5.03		$	3.69

NOTE 9 - 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 September 30, 2003 and December 31, 2002:


		Well			Adequately
		Capitalized			Capitalized			September 30, 2003			December 31, 2002
		Requirement			Requirement			Actual			Actual

Tier 1 Capital (to Average Assets)
	Consolidated		³5	%		³4	%		7.8	%		7.1	%
	Bank		³5	%		³4	%		8.6	%		8.3	%
Tier 1 Capital (to Risk Weighted Assets)
	Consolidated		³6	%		³4	%		9.0	%		8.3	%
	Bank		³6	%		³4	%		9.9	%		9.8	%
Total Capital (to Risk Weighted Assets)
	Consolidated		³10	%		³8	%		10.9	%		10.9	%
	Bank		³10	%		³8	%		10.8	%		10.8	%

Management believes, as of September 30, 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.

In June 2003, the Company completed a private placement of 280,653 shares of its common stock to residents of Monroe County, Southwest Florida and Homestead/Florida City. The shares also were purchased by three members of the Company’s Board of Directors and an executive officer. The private placement raised approximately $4.3 million in capital at a sales price of $15.64 per share which was priced at 95% of the average closing bid price for the shares during the five consecutive trading days ending on the fifth business day prior to the commencement of the offering.

NOTE 10 - SEGMENT REPORTING

TIB Financial Corp. has two reportable segments in their continuing operations: community banking and merchant bankcard processing. The community banking segment’s business is to attract deposits from the public and to use such deposits to make real estate, business and consumer loans in its primary service area. The merchant bankcard processing segment processes credit card transactions for local merchants. The results of Keys Insurance Agency, Inc. are not included in the segment reporting as they are classified separately as discontinued operations in our consolidated financial statements (see Note 11). Total assets of Keys Insurance Agency, Inc. at September 30, 2003 and September 30, 2002 were $181,498 and $2,323,790, respectively.

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		Parent
Three months ended	Community		Bankcard		And
September 30, 2003	Banking		Processing		Other			Totals

Interest income	$	8,748,371	$	—	$	—		$	8,748,371
Interest expense		2,005,353		—		397,684			2,403,037

Net interest income		6,743,018		—		(397,684	)		6,345,334
Other income		1,571,575		1,213,195		112,361			2,897,131
Depreciation and amortization		498,778		11,441		1,023			511,242
Other expense		5,807,516		972,270		196,166			6,975,952

Pretax segment profit (loss)	$	2,008,299	$	229,484	$	(482,512	)	$	1,755,271


			Merchant		Parent
Three months ended	Community		Bankcard		and
September 30, 2002	Banking		Processing		Other			Totals

Interest income	$	7,886,556	$	—	$	8,994		$	7,895,550
Interest expense		2,249,952		—		406,977			2,656,929

Net interest income		5,636,604		—		(397,983	)		5,238,621
Other income		1,302,982		961,952		36,862			2,301,796
Depreciation and amortization		424,026		11,370		1,251			436,647
Other expense		4,474,522		790,926		140,903			5,406,351

Pretax segment profit (loss)	$	2,041,038	$	159,656	$	(503,275	)	$	1,697,419


			Merchant		Parent
Nine months ended	Community		Bankcard		and
September 30, 2003	Banking		Processing		Other			Totals

Interest income	$	25,490,850	$	—	$	—		$	25,490,850
Interest expense		6,232,024		—		1,192,762			7,424,786

Net interest income		19,258,826		—		(1,192,762	)		18,066,064
Other income		4,750,222		3,812,093		501,005			9,063,320
Depreciation and amortization		1,453,714		34,797		3,375			1,491,886
Other expense		16,590,722		3,075,923		568,272			20,234,917

Pretax segment profit (loss)	$	5,964,612	$	701,373	$	(1,263,404	)	$	5,402,581

Segment Assets	$	645,231,425	$	45,941	$	439,415		$	645,716,781


			Merchant		Parent
Nine months ended	Community		Bankcard		and
September 30, 2002	Banking		Processing		Other			Totals

Interest income	$	23,137,426	$	—	$	26,689		$	23,164,115
Interest expense		6,548,439		—		1,217,437			7,765,876

Net interest income		16,588,987		—		(1,190,748	)		15,398,239
Other income		3,909,488		3,421,796		166,711			7,497,995
Depreciation and amortization		1,274,228		32,928		3,804			1,310,960
Other expense		13,274,166		2,783,409		445,209			16,502,784

Pretax segment profit (loss)	$	5,950,081	$	605,459	$	(1,473,050	)	$	5,082,490

Segment Assets	$	540,855,478	$	74,288	$	1,031,794		$	541,961,560

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 11 – DISCONTINUED OPERATIONS

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

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


		2003		2002

FOR THE THREE MONTHS ENDED SEPTEMBER 30:
	Other income	$	276,998	$	488,257
	Depreciation and amortization		7,049		16,191


		2003		2002

	Other expense		233,975		387,827

Pretax income from discontinued operations		$	35,974	$	84,239

FOR THE NINE MONTHS ENDED SEPTEMBER 30:
	Other income	$	1,254,816	$	1,422,970
	Depreciation and amortization		34,432		43,117
	Other expense		1,019,797		1,155,401

Pretax income from discontinued operations		$	200,587	$	224,452

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 September 30, 2003, and statement of income for the three and nine months ended September 30, 2003. Operating results for the nine months ended September 30, 2003 are not necessarily indicative of trends or results to be expected for the year ended December 31, 2003.

THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002

RESULTS OF OPERATIONS

The Company’s net income of $1,162,945 for the third quarter of 2003, was a $57,713 or 4.7% decrease compared to $1,220,658 for the same period last year. Basic and diluted earnings per share for the third quarter of 2003 were $0.26 and $0.25 respectively as compared to $0.30 and $0.29 per share in the previous year’s quarter.

Net income from continuing operations was $1,140,471 for the third quarter of 2003, compared to $1,168,289 for the prior year period, a decrease of $27,818 or 2.4%. As discussed in Note 11 of the accompanying “Notes to Consolidated Financial Statements”, the Company closed the sale of its wholly owned subsidiary, Keys Insurance Agency, Inc., in the third quarter of 2003. Due to this sale, recorded goodwill was reduced by $2,010,211, resulting in a direct increase in regulatory capital that will be used to support further growth and expansion of the Company’s core business.

NET INTEREST INCOME

Net interest income represents the amount by which interest income on interest-earning assets exceeds interest incurred on interest-bearing liabilities. Net interest income is the largest component of the Company’s income, and is affected by the interest rate environment, and the volume and the composition of interest-earning assets and interest-bearing liabilities. 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 was $6,345,334 for the three months ended September 30, 2003, compared to $5,238,621 for the same period in 2002. The 21.1% increase was mainly attributable to increased volumes in the loan portfolio which is one of our highest yielding asset classes, and these funds came primarily from the deposit growth of the Bank. Partially offsetting this

was a relative increase in interest expense on time deposits, our highest cost deposit category as a percentage share of total deposits.

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 the Company’s loan portfolio which have been incurred at each balance sheet date.

The provision for loan losses increased $344,000 or 334.0% to $447,000 in the third quarter of 2003 compared to $103,000 in the third quarter of 2002. The higher provision for loan losses in 2003 was attributable to growth in the loan portfolio which this year included significant amounts of indirect automobile loans compared to very few in the prior year. Net charge-offs were $146,620 during the three months ended September 30, 2003, compared to $1,200 net recoveries for the same period in 2002. Management will continue to monitor the credit quality of the lending portfolio and will recognize additional provisions in the future as necessary, in the opinion of management, to maintain the allowance for loan losses at an appropriate level.

NON-INTEREST INCOME

Non-interest income for the third quarter of 2003 was $2,897,131. This represents a $595,335 or 25.9% increase over the prior year quarter which totaled $2,301,796. The increase in non-interest income is attributable to an increase of $83,980 in service charges on deposit accounts; an increase of $251,243 in merchant bankcard processing income; a $184,413 increase in fees on mortgage loans sold; a $75,499 increase in retail investment services; a $2,166 increase in other income; offset by a $1,966 decrease in net investment security gains.

The increases in merchant bankcard processing income, fees on mortgage loans sold and retail investment services are primarily a result of volume increases. Service charges on deposit accounts increased primarily due to an increase in service charge fees.

NON-INTEREST EXPENSE

Non-interest expense for the third quarter of 2003 was $7,040,194. This represents a $1,300,196 or 22.7% increase over the prior year quarter which totaled $5,739,998. The increase in non-interest expense is attributable to salaries and employee benefits increasing $624,620, net occupancy expense increasing $142,954, and other expense increasing $532,622. A portion of these increases are a result of the continuing expansion in the Southwest Florida market. The Bank added a new location there in the fourth quarter of 2002. The addition of this facility, as well as other branch openings in recent years and their continued growth, has caused the Bank to hire additional personnel and incur additional operating costs. Further, additional staffing has been required for the origination and servicing of indirect loans and to meet the compliance requirements under the Patriot Act and other new government regulations. We also had increased commission expense over the prior year, due to increased revenues from fees on mortgage loans sold and retail investment services. Additionally, this quarter the Bank reduced its carrying value of a foreclosed property by $168,000 to reflect a reduced market value, as discussed under the “Non-Performing Assets” section.

INCOME TAXES

The change in income tax expense is primarily attributable to the growth in income before income taxes. The provision for income taxes related to continuing operations totaled $614,800, for an effective tax rate of 35.0%, for the three months ended September 30, 2003, and $529,130 for an effective tax rate of 31.2%, for the three months ended September 30, 2002.

NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002

RESULTS OF OPERATIONS

The Company’s net income of $3,637,668 for the first nine months of 2003, was a $124,526 or 3.5% increase compared to $3,513,142 for the same period last year. Basic and diluted earnings per share for the first nine months of 2003 were $0.87 and $0.83 respectively as compared to $0.88 and $0.85 per share in the previous year’s nine month period.

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 nine months ended September 30, 2003 was 13.21% on average equity of $36,717,000, compared to 15.35% on average equity of $30,509,000 for the same period in 2002. Annualized return on average assets of $611,244,000 for the nine months ended September 30, 2003 was 0.79%, compared to 0.89% on average assets of $527,169,000 for the same period in 2002.

NET INTEREST INCOME

Net interest income represents the amount by which interest income on interest-earning assets exceeds interest incurred on interest-bearing liabilities. Net interest income is the largest component of the Company’s income, and is affected by the

interest rate environment, and the volume and the composition of interest-earning assets and interest-bearing liabilities. 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 $2,667,825, or 17.3%, to $18.1 million, in the nine months ended September 30, 2003 as compared to the same period last year. The prime rate as published in the Wall Street Journal began 2002 at 4.75%, by November 2002 it had declined to 4.25% and in June 2003 it declined to 4.00%. Many of the Bank’s loans are indexed to this floating rate, although they also include floors. The lower level of prime rate in the first nine months of 2003 compared to the comparative period 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.

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 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. By the end of 2002, we were buying approximately $4 million per month of indirect automobile paper and as of September 30, 2003, we had approximately $50.9 million of indirect loans outstanding.

The average yield on interest-earning assets for the first nine months of 2003 was 6.20% which was a decrease of 35 basis points compared to the 6.55% yield earned during the first nine months of 2002. The average cost of interest-bearing deposits declined 40 basis points from 2.34% during the first nine months of 2002 to 1.94% for the comparable period in 2003, and the rate of all interest-bearing liabilities decreased 43 basis points, from 2.62% in 2002 to 2.19% in 2003. The Company’s net interest margin increased to 4.40% in the first nine months of 2003 compared to 4.36% in the first nine months of 2002. We anticipate interest rates slowly trending up over the next twelve months. If this occurs or if rates remain stable, net interest margin should expand only slightly due principally to strong new loan production.

The following table presents average balances of the Company, the taxable-equivalent interest earned, and the rate paid thereon during the nine months ended September 30, 2003 and September 30, 2002.


							2003								2002

				AVERAGE			INCOME/		YIELDS			AVERAGE			INCOME/		YIELDS
				BALANCES			EXPENSE		RATES			BALANCES			EXPENSE		RATES
(Dollars in thousands)
	Interest-earning assets:
			Loans (1)(2)	$	469,225		$	23,254		6.63	%	$	395,061		$	20,440		6.92	%
			Investment securities - taxable		47,886			1,736		4.85	%		51,765			2,211		5.71	%
			Investment securities – tax exempt (2)		7,194			358		6.65	%		5,545			301		7.26	%
			Interest-bearing deposits in other banks		327			2		0.71	%		307			4		1.78	%
			Federal Home Loan Bank stock		1,476			40		3.62	%		1,500			61		5.41	%
		Federal funds sold			26,132			227		1.16	%		21,329			268		1.68	%

Total interest-earning assets					552,240			25,617		6.20	%		475,507			23,285		6.55	%

Non-interest-earning assets:
	Cash and due from banks				15,463								13,553
	Investment in ERAS				69								255
	Premises and equipment, net				19,247								17,462
	Allowances for loan losses				(4,561	)							(3,897	)
	Other assets				28,786								24,289

Total non-interest-earning assets					59,004								51,662

Total assets				$	611,244							$	527,169

	Interest-bearing liabilities:
		Interest-bearing deposits:
		NOW accounts		$	57,636			170		0.39	%	$	50,496			211		0.56	%
		Money market			127,772			891		0.93	%		129,807			1,319		1.36	%
		Savings deposits			34,677			133		0.51	%		29,575			170		0.77	%
		Other time deposits			196,239			4,862		3.31	%		145,621			4,527		4.16	%


				2003							2002

		AVERAGE		INCOME/		YIELDS			AVERAGE		INCOME/		YIELDS
		BALANCES		EXPENSE		RATES			BALANCES		EXPENSE		RATES
(Dollars in thousands)
Total interest-bearing deposits			416,324		6,056		1.94	%		355,499		6,227		2.34	%
	Other interest-bearing liabilities:
	Notes payable		5,250		360		9.16	%		5,250		360		9.16	%
	Short-term borrowings and FHLB advances		18,319		176		1.28	%		22,441		323		1.92	%
	Trust preferred securities		13,000		833		8.57	%		13,000		856		8.80	%

Total interest-bearing liabilities			452,893		7,425		2.19	%		396,190		7,766		2.62	%

Non-interest-bearing liabilities and stockholders’ equity:
	Demand deposits		114,214							94,806
	Other liabilities		7,420							5,664
	Stockholders’ equity		36,717							30,509

Total non-interest-bearing liabilities and stockholders’ equity			158,351							130,979

Total liabilities and stockholders’ equity		$	611,244						$	527,169

Interest rate spread (tax equivalent basis)							4.01	%						3.93	%

Net interest income (tax equivalent basis)				$	18,192						$	15,519

Net interest margin (3) (tax equivalent basis)							4.40	%						4.36	%

(1) Average loans include non-performing loans.

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

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

The table below details the components of the changes in net interest income for the nine months ended September 20, 2003 and September 30, 2002. 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
		Average			Average			Increase
(In thousands)		Volume			Rate			(Decrease)

INTEREST INCOME
Loans (2)		$	4,174		$	(1,360	)	$	2,814
Investment Securities (2)			(61	)		(357	)		(418	)
Interest-bearing deposits in other banks			—			(2	)		(2	)
Federal Home Loan Bank Stock			(1	)		(20	)		(21	)
Federal Funds sold			76			(117	)		(41	)

	Total interest income		4,188			(1,856	)		2,332

INTEREST EXPENSE
NOW Accounts			42			(83	)		(41	)
Money Market			(20	)		(408	)		(428	)
Savings deposits			39			(76	)		(37	)
Other time deposits			1,770			(1,435	)		335
Notes payable			—			—			—
Trust preferred securities			—			(23	)		(23	)
Short-term borrowings and FHLB advances			(52	)		(95	)		(147	)

	Total interest expense		1,779			(2,120	)		(341	)

Change in net interest income		$	2,409		$	264		$	2,673

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

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

PROVISION FOR LOAN LOSSES

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

The provision for loan losses increased $666,000 or 180.5% to $1,035,000 in the first nine months of 2003 compared to $369,000 in the comparable prior year period. The higher provision for loan losses in 2003 was attributable to growth in the loan portfolio and higher net charge-offs. Net charge-offs were $452,580 during the nine months ended September 30, 2003, compared to $199,079 for the same period in 2002. 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 nine months of 2003 was $9,063,320. This represents a $1,565,325 or 20.9% increase over the prior year period which totaled $7,497,995. The increase in non-interest income is attributable to an increase of $164,587 in service charges on deposit accounts; an increase of $390,297 in merchant bankcard processing income; a $64,291 increase in gain on sale of government guaranteed loans; a $721,675 increase in fees on mortgage loans sold; a $130,331 increase in retail investment services; a $202,393 increase in gain on sale of investment in ERAS Joint Venture; a $26,507 increase in other income; offset by a $134,756 decrease in net investment security gains.

The increases in merchant bankcard processing income, fees on mortgage loans sold and retail investment services are primarily a result of volume increases. On May 29, 2003, we sold our remaining interest in ERAS Joint Venture for $326,667. We recognized a pretax gain of approximately $202,000 on this transaction. The net gain from the sale of investment securities will vary based upon the sales and calls of the individual securities in the investment portfolio. In 2002, the gain was primarily the result of the sale of two corporate securities which netted a gain of approximately $65,000 in the first quarter of 2002 and the sale of two agency securities in the second quarter of 2002 that netted a gain of approximately $64,000. The amount in 2003 relates to the gain on certain calls of investment securities in the first and third quarters. Gain on sale of government guaranteed loans result from a relatively small number of transactions and, therefore, the revenue recognition from these transactions can vary considerably depending on the number of loans sold and the dollar amount of the transactions. There was one loan sold in the first nine months of 2002 and one loan sold in the first nine months of 2003. Service charges on deposit accounts increased primarily due to an increase in service charge fees. Also included in non-interest income is an increase in fee income resulting from the Bank’s expansion of its residential mortgage origination function into the transaction rich market of Southwest Florida. These fees result from the immediate sale of fixed rate residential mortgages into the secondary market.

NON-INTEREST EXPENSE

Non-interest expense for the first nine months of 2003 was $20,691,803. This represents a $3,247,059 or 18.6% increase over the prior year period which totaled $17,444,744. The increase in non-interest expense is attributable to salaries and employee benefits increasing $1,812,252, net occupancy expense increasing $458,037, and other expense increasing $976,770. A portion of these increases are a result of the continuing expansion in the Southwest Florida market. The Bank added a new location there in the fourth quarter of 2002. The addition of this facility, as well as other branch openings in recent years and their continued growth, has caused the Bank to hire additional personnel and incur additional operating costs. Opening new branch facilities is dilutive to earnings in the near term but may be a factor in achieving sustainable long-term growth. Further, additional staffing has been required to handle the growing lending portfolios, increased customer activity and compliance with new government regulations, such as the Patriot Act. This includes additional staffing for the origination and servicing of indirect loans which began in the second quarter of 2002. Another reason for the salaries and employee benefits increase is the higher commission expense that resulted from increased revenues from non-interest income sources, such as fees on mortgage loans sold, retail investment services, and gain on sale of government guaranteed loans. Additionally, the Bank has reduced its carrying value of a foreclosed property by a total of $262,000 in 2003 to reflect a reduced market value as discussed under the “Non-Performing Assets” section.

INCOME TAXES

The change in income tax expense is primarily attributable to the growth in income before income taxes. The provision for income taxes related to continuing operations totaled $1,890,100, for an effective tax rate of 35.0%, for the nine months ended September 30, 2003, and $1,709,230, for an effective tax rate of 33.6%, for the nine months ended September 30, 2002.

BALANCE SHEET

Total assets at September 30, 2003 were $645,898,279, up 13.9% from total assets of $567,148,646 at December 31, 2002. Loans net of deferred loan costs increased $69,548,159, or 15.7%, to $512,076,093 for the first nine months of 2003 from year end 2002. Also, in the same period, federal funds sold increased $4,180,000, and investment securities increased $10,622,801.

Asset growth was primarily funded by an increase in deposits of $60,199,667, or 12.5%. At September 30, 2003, the Company had $3,072,256 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 $35 million at September 30, 2003 as compared to $20 million at December 31, 2002.

Shareholders’ equity totaled $39,963,952 at September 30, 2003, increasing $6,457,875 from December 31, 2002. In June 2003, the Company completed a private placement of 280,653 shares of its common stock to individuals who qualify as “accredited investors” under the federal and state securities laws. Residents of Monroe County, Southwest Florida and Homestead/Florida City purchased shares, along with three members of the Company’s Board of Directors and an executive officer. The private placement raised approximately $4.3 million in capital at a sales price of $15.64 per share which was priced at 95% of the average closing bid price for the shares during the five consecutive trading days ending on the fifth business day prior to the commencement of the offering. The shares of common stock in this offering were not registered under the Securities Act of 1933, or any state securities laws pursuant to the private offering exemption under Section 4(2) of the Securities Act of 1933 and other state securities laws. The common stock may not be resold or otherwise transferred unless subsequently registered under the 1933 Act and other applicable state securities law, or pursuant to an exemption from applicable state and federal registration requirements.

Book value per share increased to $9.07 at September 30, 2003 from $8.30 at December 31, 2002. The Company paid a quarterly dividend of $0.11 per share in the first, second and third quarters of 2003 and $0.1075 per share in the first, second and third quarters of 2002.

NON-PERFORMING ASSETS

Non-performing assets include nonaccrual loans, accruing loans contractually past due 90 days or more, restructured loans 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 for the periods ended September 30, 2003 and December 31, 2002 were as follows:


	September 30,			December 31,
	2003			2002

Total nonaccrual loans	$	587,002		$	545,523
Accruing loans delinquent 90 days or more		—			—

Total non-performing loans	$	587,002		$	545,523
Repossessed personal property		416,429			70,801
Other real estate owned (a)		239,964			550,000
Other assets (a)		2,515,715			2,519,022

Total non-performing assets	$	3,759,110		$	3,685,346

Allowance for loan losses		4,854,919			4,272,499
Non-performing assets as a percent of total assets		0.58	%		0.65	%
Non-performing loans as a percent of gross loans		0.11	%		0.12	%
Allowance for loan losses as a percent of non-performing loans		827.07	%		783.19	%

(a) 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 portion of this loan guaranteed by the USDA was approximately $1.6 million at September 30, 2003 and December 31, 2002, and is accruing interest. Accrued interest on this loan totals approximately $569,000 and $505,000 at September 30, 2003 and December 31, 2002, respectively.

The Bank has been pursuing a sale of the property and equipment and has incurred various expenditures. The Bank has capitalized those liquidation costs and protective advances which it expects will be fully reimbursed by the USDA. Other real estate recorded on the Bank’s books totaled $239,964 and $550,000 at September 30, 2003 and December 31, 2002, respectively. The non-guaranteed principal and interest ($1,961,000 at September 30, 2003 and December 31, 2002) and the capitalized liquidation costs and protective advance costs totaling approximately $555,000 and $558,000 at September 30, 2003 and December 31, 2002, respectively are included as “other assets” in the table above.

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. In the second quarter of 2003, the Bank wrote down the carrying amount of the other real estate by $94,000 based upon anticipated proceeds from the sale of the property and remaining equipment. The Bank has since reduced the asking price of the property, and an additional write down of $168,000 was made in the third quarter of 2003.

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 owners trust proceeds. The time constraints imposed by Florida law required that the personal property be disposed of or charged off by December 2001. The Bank applied to the State of Florida for an extension to carry the personal property on the Bank’s books and was granted an extension to carry the personal property on its books until June 11, 2003. Since the property had not been liquidated as of June 11th, the Bank charged-off the non guaranteed principal and interest totaling $1,961,000 at June 30, 2003, for regulatory purposes. Since we believe this amount is ultimately realizable, we did not write off this amount for financial statement purposes under generally accepted accounting principles.

The allowance for loan losses amounted to $4,854,919 and $4,272,499 at September 30, 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 historical loss rate, economic conditions (local, national and global), 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 September 30, 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.

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.

In addition to maintaining a stable core deposit base, TIB Financial Corp’s banking subsidiary maintains 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 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 $90.2 million at September 30, 2003, under which $35 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.

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.

The Company’s interest rate sensitivity position at September 30, 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	$	203,420		$	36,565		$	33,702		$	166,724		$	70,042		$	510,453
Investment securities-taxable		12,375			—			—			20,553			22,906			55,834
Investment securities-tax exempt		235			—			317			2,910			5,595			9,057
Federal Home Loan Bank stock		1,750			—			—			—			—			1,750
Federal funds sold		9,852			—			—			—			—			9,852
Interest bearing deposit in other bank		425			—			—			—			—			425

Total interest-bearing assets		228,057			36,565			34,019			190,187			98,543			587,371

Interest-bearing liabilities:
NOW accounts		61,795			—			—			—			—			61,795
Money Market		126,287			—			—			—			—			126,287
Savings Deposits		38,083			—			—			—			—			38,083
Other time deposits		28,286			22,664			77,424			74,171			6			202,551
Notes payable		—			—			—			—			5,250			5,250
Trust preferred securities		5,000			—			—			—			8,000			13,000
Other borrowings		38,072			—			—			—			—			38,072

Total interest-bearing liabilities		297,523			22,664			77,424			74,171			13,256			485,038

Interest sensitivity gap	$	(69,466	)	$	13,901		$	(43,405	)	$	116,016		$	85,287		$	102,333

Cumulative interest sensitivity gap	$	(69,466	)	$	(55,565	)	$	(98,970	)	$	17,046		$	102,333		$	102,333

Cumulative sensitivity ratio		(11.8	)%		(9.5	)%		(16.8	)%		2.9	%		17.4	%		17.4	%

The Company is cumulatively liability sensitive thru the one year time period, and asset sensitive in the over one year timeframes above. Certain liabilities such as NOW and passbook savings accounts, while technically subject to immediate repricing in response to changing market rates, historically do not reprice as quickly nor to the extent as other interest sensitive accounts. Accordingly, if market interest rates should decrease, it is anticipated that the net interest margin would decrease. Because of non-interest bearing liabilities, total interest-earning assets are substantially greater than the total interest-bearing liabilities and therefore it is anticipated that over time the effects on net interest income from changes in asset yield will be greater than the change in expense from liability cost. Therefore, if rates increase it is anticipated that the net interest margin

would over time increase and this is particularly true over longer time horizons since the Company has more total assets subject to rate changes than total liabilities that are rate sensitive.

Even in the near term, the $99 million one year cumulative negative 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 September 30, 2003, the Company was within this range with a one year cumulative sensitivity ratio of (16.8)%.

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

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 September 30, 2003, total commitments to extend credit were approximately $69.7 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 September 30, 2003, commitments under standby letters of credit aggregated approximately $1.4 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.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

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

The following interest rate sensitivity analysis information as of September 30, 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 $173 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, wholesale funding, and Fed Funds positions to offset the repricing characteristics of the deposit liabilities.


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

2003 Interest Income	$	32,939		$	34,968		$	37,091	$	39,056		$	41,384
2003 Interest Expense		6,503			7,757			9,714		12,452			15,191

Net Interest Income	$	26,436			27,211		$	27,377	$	26,604			26,193

Change in net income after tax vs. constant rates	$	(587	)	$	(104	)			$	(482	)	$	(739	)

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. As we continue to expand our indirect lending program, management has continued to improve and strengthen its controls surrounding this area.

Part II. OTHER INFORMATION

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

Not applicable.

Item 5. OTHER INFORMATION

Not applicable

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

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

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

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

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

Exhibit 99.1 - Report of Independent Accountants

(b) Reports on Form 8-K

On July 28, 2003, the Company issued a press release announcing certain financial results and additional information related to its second quarter earnings.

On August 15, 2003, the Company reported it closed the sale of Keys Insurance Agency, Inc. to Richard Rosier and Derek Martin-Vegue.

On November 4, 2003, the Company issued a press release announcing certain financial results and additional information related to its third quarter earnings.

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.

		/s/ Edward V. Lett
Date:	November 7, 2003	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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(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.


	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 portion of this loan guaranteed by the USDA was approximately $1.6 million at September 30, 2003 and December 31, 2002, and is accruing interest. Accrued interest on this loan totals approximately $569,000 and $505,000 at September 30, 2003 and December 31, 2002, respectively.

	The Bank has been pursuing a sale of the property and equipment and has incurred various expenditures. The Bank has capitalized those liquidation costs and protective advances which it expects will be fully reimbursed by the USDA. Other real estate recorded on the Bank’s books totaled $239,964 and $550,000 at September 30, 2003 and December 31, 2002, respectively. The non-guaranteed principal and interest ($1,961,000 at September 30, 2003 and December 31, 2002) and the capitalized liquidation costs and protective advance costs totaling approximately $555,000 and $558,000 at September 30, 2003 and December 31, 2002, respectively are included as “other assets” in the table above.

			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

			Exhibit 99.1 - Report of Independent Accountants

			On July 28, 2003, the Company issued a press release announcing certain financial results and additional information related to its second quarter earnings.

			On August 15, 2003, the Company reported it closed the sale of Keys Insurance Agency, Inc. to Richard Rosier and Derek Martin-Vegue.

			On November 4, 2003, the Company issued a press release announcing certain financial results and additional information related to its third quarter earnings.