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U. S. SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

Form 10-Q

(Mark One)

For the quarterly period ended September 30, 2004

For the transition period from              to             

Commission file number 333-95087

CENTERSTATE BANKS OF FLORIDA, INC.

(Exact Name of Registrant as Specified in Its Charter)

1101 First Street South, Suite 202

Winter Haven, Florida 33880

(Address of Principal Executive Offices)

(863) 293-2600

(Issuer’s Telephone Number, Including Area Code)

Check whether the issuer: (1) filed all reports required to be filed by Section 12, 13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:    YES  x    NO  ¨

Check whether the registrant is an accelerated filer (defined in Rule 12b-2 of the Exchange Act):    YES  ¨    NO  x

State the number of shares outstanding of each of the issuer’s classes of common Equity, as of the latest practicable date:

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CENTERSTATE BANKS OF FLORIDA, INC. AND SUBSIDIARIES

INDEX

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Centerstate Banks of Florida, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(in thousands of dollars)

See notes to the accompanying condensed consolidated financial statements

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Centerstate Banks of Florida, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)

(in thousands of dollars, except per share data)

See notes to the accompanying condensed consolidated financial statements.

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Centerstate Banks of Florida, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(in thousands of dollars)

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Centerstate Banks of Florida, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(in thousands of dollars)

(continued)

See notes to the accompanying condensed consolidated financial statements.

CenterState Banks of Florida, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

NOTE 1: Holding company and subsidiaries background information

CenterState Banks of Florida, Inc (the “Company”) is a multi-bank holding company. The Company was formed on June 30, 2000, as part of the merger of First National Bank of Osceola County (“FNB/Osceola”), Community National Bank of Pasco County (“CNB/Pasco”) and First National Bank of Polk County (“FNB/Polk”), which were three previously independent banks in Central Florida. The Company subsequently acquired CenterState Bank of Florida (“CSB”) on December 31, 2002 in a stock and cash transaction. This transaction was accounted for using the purchase method of accounting. The excess of the purchase price over the fair market value of the tangible assets, core deposit intangible ($739,000) and liabilities was approximately $4.7 million. This amount was recognized and recorded as goodwill.

A 20% interest of C. S. Processing, Inc. (“CSP”) was sold to a Leesburg, Florida bank during the quarter ending June 30, 2004 for $120,000, which approximates the Company’s book value. CSP is now an 80% owned subsidiary, equally owned by the Company’s four subsidiary banks. It performs item processing and check rendering services for the Company’s four subsidiary banks and for the other financial institution which owns the remaining 20%.

The Company, through its subsidiary banks, provides traditional deposit and lending products and services to its retail and commercial customers. It operates through 25 locations in seven counties in Central Florida.

NOTE 2: Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the

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information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. These statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003. In the opinion of management, all adjustments, consisting primarily of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods have been made. The results of operations of the three and nine-months ended September 30, 2004 are not necessarily indicative of the results expected for the full year.

NOTE 3: Common stock outstanding and earnings per share data

Basic earnings per share is based on the weighted average number of common shares outstanding during the periods. Diluted earnings per share includes the weighted average number of common shares outstanding during the periods and the further dilution from stock options using the treasury method. The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for the periods presented (dollars are in thousands, except per share data).

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NOTE 4: Comprehensive income

Under Statement of Financial Accounting Standards No. 130, “Reporting Comprehensive Income,” certain transactions and other economic events that bypass the income statement must be displayed as other comprehensive income. The Company’s comprehensive income consists of net earnings and unrealized gains and losses on securities available-for-sale, net of deferred income taxes.

The table below sets forth the Company’s comprehensive income for the periods indicated below (in thousands of dollars).

NOTE 5: Compensation programs

Substantially all of the Company’s employees are covered under the Company’s employee benefit plan. The expenses of providing these benefit plans are charged to income in the period the expenses are incurred. In addition, certain directors and key employees are covered under the Company’s stock option plans.

The Company applies Accounting Principle Board Opinion No. 25 and related interpretations in accounting for its stock option plans. Accordingly, no compensation cost has been recognized for its stock option plans. Had compensation cost for the Company’s stock-based compensation plan been determined consistent with Statement of Financial Accounting Standards (“SFAS”) No. 123, the Company’s net income would have been reduced to the pro forma amounts indicated below (amounts are in thousands of dollars except for per share data):

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NOTE 6: Effect of new pronouncements

In December 2003, the FASB issued FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities (“VIEs”), which addresses how a business enterprise should evaluate whether it has a controlling financial interest in an entity through means other than voting rights and accordingly should consolidate the entity. FIN 46R replaces FASB Interpretation No. 46, Consolidation of Variable Interest Entities, which was issued in January 2003. The Company adopted FIN 46R as of December 31, 2003.

The Company evaluated the impact of applying FIN 46R to existing VIEs in which it has variable interests and determined that CenterState Bank of Florida Statutory Trust I (“the Trust”) should be deconsolidated from the Company. At December 31, 2003, the Company de-recognized $10 million in trust preferred securities issued during the 3^rd Quarter and recognized $10 million in corporate debentures that the Trust had purchased from the Company.

The Federal Reserve has issued regulations which allow for the inclusion of a portion of these instruments as Tier 1 capital and the balance as Tier 2 capital (in accordance with the Federal Reserve’s guidelines) regardless of the FIN 46 interpretation, although such a determination could potentially be changed at a later date.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. This Statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. This Statement is effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. The adoption of this Statement did not have a material effect on the financial statements of the Company.

FASB Statement No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, was issued in May 2003. This Statement establishes standards for the classification and measurement of certain financial instruments with characteristics of both liabilities and equity. The Statement also includes required disclosures for financial instruments within its scope. For the Company, the Statement was effective for instruments entered into or modified after May 31, 2003 and otherwise was effective as of January 1, 2004. The adoption of this Statement did not have a material effect on the financial statements of the Company.

In March 2004, the SEC issued SAB No. 105, Application of Accounting Principles to Loan Commitments. This staff accounting bulletin summarizes the views of the staff regarding the application of generally accepted accounting principles to loan commitments accounted for as derivative instruments. In particular, this bulletin clarifies whether the entity can consider the expected future cash flows related to the associated servicing of the loan and adds additional disclosures to the annual financial statements. The adoption of this bulletin did not have a material effect on the financial statements of the Company.

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ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Rights offering

On April 30, 2004, the Company commenced a rights offering for the sale of up to 675,627 shares of its common stock to shareholders of Record on April 27, 2004, at a price of $18.99 per share. The shareholder rights offer terminated on June 14, 2004. The offer was fully subscribed. Total capital raised, net of expenses, was approximately $12.7 million.

Sale of branches

The Company sold its two Lake County (Florida) branches during February 2004, which included approximately $21 million of loans, $24 million of deposits and all of the related fixed assets (book value of approximately $1.6 million) (the “Branch Sale”). The Company recognized a gain on sale, during the first quarter of 2004, of approximately $1,844,000 ($1,150,000, net of income taxes of $694,000).

COMPARISON OF BALANCE SHEETS AT SEPTEMBER 30, 2004 AND DECEMBER 31, 2003

Overview

Total assets of the Company were $707.8 million as of September 30, 2004, compared to $608.9 million at December 31, 2003, an increase of $98.9 million or 16%. This increase, net of the sale of branches discussed above, was primarily the result of the Company’s internally generated loan growth funded by an increase in deposits.

Federal funds sold and money market

Federal funds sold and money market was $60.1 million at September 30, 2004 (approximately 8.5% of total assets) as compared to $46.2 million at December 31, 2003 (approximately 7.6% of total assets). Management uses its available-for-sale securities portfolio, as well as its federal funds sold and money market accounts for liquidity management and for investment yields. These accounts, as a group, will fluctuate as a function of loans and deposits outstanding. The loan to deposit ratio decreased from 76.9% at December 31, 2003, to 69.7% at September 30, 2004, which is consistent with an increase in federal funds sold and money market, and investment securities outstanding as of September 30, 2004 compared to December 31, 2003.

Investment securities

Securities available-for-sale, consisting primarily of U.S. Treasury and government agency securities, were $161.9 million at September 30, 2004 (approximately 23% of total assets) compared to $95.4 million at December 31, 2003 (approximately 16% of total assets). These securities have been recorded at fair value. The Company classifies its securities as “available-for-sale” to provide for greater flexibility to respond to changes in interest rates. Management uses its available-for-sale securities portfolio, as well as its federal funds sold and money market accounts for liquidity management and for investment yields. These accounts, as a group, will fluctuate as a function of loans and deposits outstanding. The loan to deposit ratio decreased from 76.9% at December 31, 2003, to 69.7% at September 30, 2004, which is consistent with an increase in federal funds sold and money market, and investment securities outstanding as of September 30, 2004 compared to December 31, 2003.

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Loans

Total gross loans were $429.8 million at September 30, 2004, compared to $414.4 million at December 31, 2003, an increase of $15.4 million or 3.7%. During the same period, real estate loans increased by $4.2 million or 1.3%, commercial loans increased by $2.0 million or 3.4%, and all other loans including consumer loans increased by $9.1 million or 23%. Total loans net of unearned fees and allowance for loan losses were $423.8 million at September 30, 2004, compared to $409.0 million at December 31, 2003, an increase of $14.8 million or 3.6%. As discussed earlier, the Company sold two branches on February 20, 2004, which included loans with a net book value of approximately $21.3 million.

The following table sets forth information concerning the loan portfolio by collateral types as of the dates indicated (dollars are in thousands).

Credit quality and allowance for loan losses

The Company’s allowance for loan losses represents management’s estimate of an amount adequate to provide for potential losses within the existing loan portfolio. Loans are charged against the allowance when management believes collection of the principal is unlikely. The allowance consists of amounts established for specific loans and is also based on historical loan loss experience, the volume and type of lending conducted by the Company, the amount of nonperforming loans, general economic conditions, particularly as they relate to the Company’s market areas, and other factors related to the collectibility of the Company’s loan portfolio. The specific reserve element is the result of a regular analysis of all loans and commitments based on credit rating classifications and other factors. At September 30, 2004, the allowance for loan losses was $5.5 million or 1.29% of total loans outstanding, compared to $4.9 million or 1.17%, at December 31, 2003.

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The following table sets forth information concerning the activity in the allowance for loan losses during the periods indicated (in thousands of dollars).

Nonperforming assets

Nonperforming assets include (1) non-accrual loans; (2) accruing loans that are 90 days or more delinquent that are deemed by management to be adequately secured and in the process of collection; (3) OREO (i.e. real estate acquired through foreclosure or deed in lieu of foreclosure); and (4) other repossessed assets (not real estate). All delinquent loans are reviewed on a regular basis and are placed on non-accrual status when, in the opinion of management, the possibility of collecting additional interest is deemed insufficient to warrant further accrual. As a matter of policy, interest is not accrued on loans past due 90 days or more unless the loan is both well secured and in the process of collection. When a loan is placed on non-accrual status, interest accruals cease and uncollected accrued interest is reversed and charged against current income. Additional interest income on such loans is recognized only when received.

The following table sets forth information regarding the components of nonperforming assets at the dates indicated (in thousands of dollars).

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Management is continually analyzing its loan portfolio in an effort to recognize and resolve its problem assets as quickly and efficiently as possible. As of September 30, 2004, management believes that its allowance for loan losses was adequate. However, management recognizes that many factors can adversely impact various segments of its market. Accordingly, there is no assurance that losses in excess of such reserves will not be incurred.

Bank premises and equipment

Bank premises and equipment was $25.8 million at September 30, 2004 compared to $22.9 million at December 31, 2003, an increase of $2.9 million or 12.7%. The increase was the net result of purchases aggregating $5.6 million (includes the purchase of land and construction costs of several new branches), less depreciation of $1.1 million and the sale of land, buildings, furniture and equipment relating to the February 20, 2004 Branch sale of approximately $1.6 million.

Deposits

Total deposits were $615.7 million at September 30, 2004, compared to $538.2 million at December 31, 2003, an increase of $77.5 million or 14.4%. During the nine month period ended September 30, 2004, demand deposits increased by $26.0 million (22.0%), NOW deposits increased by $11.5 million (15.1%), savings and money market accounts increased by $42.1 million (33.5%), and time deposits decreased by $2.1 million (1.0%). As discussed before, the Branch Sale included approximately $24.0 million of deposits.

Repurchase agreements

The Company’s subsidiary banks enter into borrowing arrangements with their retail business customer by agreements to repurchase (“repurchase agreements”) under which the banks pledge investment securities owned and under their control as collateral against the one-day borrowing arrangement. These short-term borrowings totaled $22.9 million at September 30, 2004 compared to $17.5 million at December 31, 2003, resulting in an increase of $5.4 million, or 31%.

Corporate debenture

The Company formed CenterState Banks of Florida Statutory Trust I (the “Trust”) for the purpose of issuing trust preferred securities. On September 22, 2003, the Company issued a floating rate corporate debenture in the amount of $10 million. The Trust used the proceeds from the issuance of a trust preferred security to acquire the corporate debenture of the Company. The trust preferred security essentially mirrors the corporate debenture, carrying a cumulative preferred dividend at a variable rate equal to the interest rate on the corporate debenture (three month LIBOR plus 305 basis points). The initial rate in effect at the time of issuance was 4.19% and is subject to change quarterly (currently 4.64%). The corporate debenture and the trust preferred security each have 30-year lives. The trust preferred security and the corporate debenture are callable by the Company or the Trust, at their respective option after five years, and sooner in specific events, subject to prior approval by the Federal Reserve, if then required. Related loan origination costs of $188,000 were capitalized and are being amortized to interest expense over a five year period. The Company has treated the trust preferred security as Tier 1 capital up to the maximum amount allowed under the Federal Reserve guidelines, and the remainder as Tier 2 capital for federal regulatory purposes.

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Stockholders’ equity

Shareholders’ equity at September 30, 2004, was $57.2 million, or 8.1% of total assets, compared to $42.0 million, or 6.9% of total assets at December 31, 2003. The increase in stockholders’ equity was due to the issuance of 675,627 of the Company’s common shares pursuant to the Company’s shareholder rights offering ($12.7 million), year-to-date net income ($3.4 million), and employee stock options exercised ($0.2 million), less a net decrease in the market value of securities available for sale, net of deferred taxes ($0.4 million), and dividends paid ($0.7 million).

The Company paid dividends of $0.06 per share during 2004 on March 31, June 30, and September 30, to shareholders of record as of the close of business on March 15, June 15, and September 15, respectively.

The federal bank regulatory agencies have established risk-based capital requirements for banks. These guidelines are intended to provide an additional measure of a bank’s capital adequacy by assigning weighted levels of risk to asset categories. Banks are also required to systematically maintain capital against such “off- balance sheet” activities as loans sold with recourse, loan commitments, guarantees and standby letters of credit. These guidelines are intended to strengthen the quality of capital by increasing the emphasis on common equity and restricting the amount of loan loss reserves and other forms of equity such as preferred stock that may be included in capital. As of September 30, 2004, each of the Company’s four subsidiary banks exceeded the minimum capital levels to be considered “Well Capitalized” under the terms of the guidelines.

Selected consolidated capital ratios at September 30, 2004 and December 31, 2003 are presented in the table below.

COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTH PERIODS ENDED SEPTEMBER 30, 2004 AND 2003

Overview

Net income for the three months ended September 30, 2004 was $829,000 or $0.20 per share basic and diluted, compared to $667,000 or $0.20 per share basic and $0.19 per share diluted for the same period in 2003.

The return on average equity (“ROE”) and the return on average assets (“ROA”), calculated on an annualized basis, for the three month period ended September 30, 2004 was 5.82% and 0.48%, respectively, as compared to 6.47% and 0.48%, respectively, for the same period in 2003.