CLEARWATER, Fla. April 16, 2008

Dear Shareholder,

During the first quarter of 2008, the Bank experienced significant asset growth due to a heavy inflow of time deposits.  Total deposits at quarter end were $210.2 million, a $29.2 million increase for the quarter and time deposits increased by $29.7 million during the period.  The deposit growth was used to fund loans and investments, repay borrowings and enhance liquidity.  Total assets at March 31, 2008 were $240.6 million, a $23.9 million increase for the quarter.

The Bank recorded a net loss for the quarter of $464,000 compared to earnings of $37,000 in the comparable year-ago period.  The net loss was attributed to three major components; a narrowing of the Bank’s net interest margin due to the rapid decrease in the Prime Rate, loans that became significantly delinquent and stopped accruing interest during the quarter and an increased provision against possible loan losses.

Due to the challenging economic conditions, some of the Bank’s borrowers are experiencing difficulties resulting in the Bank’s non-performing assets increasing to $14.7 million at quarter-end.  The Bank will aggressively pursue these to resolution.  Management remains committed to the overall strategy of growing assets, loans and deposits.

Sincerely,

Gregory A. Mohr
Chairman   

William W. Short
President
Chief Executive Officer