CNB FLORIDA BANCSHARES INC, 10-Q, 2000-05-12

CNB FLORIDA BANCSHARES INC
10-Q, 2000-05-12
NATIONAL COMMERCIAL BANKS

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (no fee required) For the quarterly period ended
March 31, 2000

___ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (no fee required) For the transition period from
________ to ________

Commission File No. 0-25988

CNB Florida Bancshares, Inc.
-------------------------------------
(Exact Name of Registrant as Specified in Its Charter)

FLORIDA 59-2958616
- ------------------------------ --------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

Post Office Box 3239
201 North Marion Street
Lake City, Florida 32056
- --------------------------------- -----------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (904) 755-3240

Indicate by check mark whether the registrant (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 registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No___

The number of shares of the registrant's common stock outstanding as of April
30, 2000 was 6,116,300 shares, $0.01 par value per share.

<PAGE>

CNB FLORIDA BANCSHARES, INC.
FINANCIAL REPORT ON FORM 10-Q

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
(unaudited)

Consolidated Statement of Financial Condition . . . . . . . . . . . . 3
Consolidated Statement of Income. . . . . . . . . . . . . . . . . . . 4
Consolidated Statement of Cash Flows. . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements. . . . . . . . . . . . . . 6
Selected Financial Data. . . . . . . . . . . . . . . . . . . . . . . 7

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations

Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Results of Operations. . . . . . . . . . . . . . . . . . . . . . . . 8
Liquidity and Interest Rate Sensitivity. . . . . . . . . . . . . . . 12
Earning Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Funding Sources . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Capital Resources. . . . . . . . . . . . . . . . . . . . . . . . . . 19

Item 3. Quantitative and Qualitative Disclosure About Market Risk. .19

PART II - OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . .20

Item 2. Changes in Securities. . . . . . . . . . . . . . . . . . . .20

Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . . .20

Item 4. Submission of Matters to a Vote of Security Holders . . . . 20

Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . .20

Item 6. Exhibits and Reports on Form 8-K. . . . . .. . . . . . . . .20

<PAGE>

<TABLE>

PART I
FINANCIAL INFORMATION

CNB FLORIDA BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION

(Unaudited)
March 31, December 31,
2000 1999
------------ ---------
ASSETS (thousands)

<S> <C> <C>
Cash and cash equivalents:

Cash and due from banks $ 16,016 $ 17,235
Federal funds sold 5,150 -
Interest bearing deposits in other banks 309 285
--------- --------
Total cash and cash equivalents 21,475 17,520
Investment securities available for sale 33,429 35,111
Investment securities held to maturity 10,419 10,582
Loans:
Commercial, financial and agricultural 149,677 136,937
Real estate - mortgage 91,630 86,275
Real estate - construction 20,769 18,926
Installment and consumer 28,001 23,946
--------- --------
Total loans, net of unearned income 290,077 266,084
Less: Allowance for loan losses (2,936) (2,671)
--------- --------
Net loans 287,141 263,413

Premises and equipment, net 16,082 14,395
Other assets 4,937 5,055
--------- --------
TOTAL ASSETS $ 373,483 $ 346,076
========= ========

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES
Deposits:
Non-interest bearing demand $ 48,391 $ 42,110
Savings, NOW and Money Market 125,427 112,103
Time (under $100,000) 93,032 89,141
Time ($100,000 and over) 55,622 44,849
--------- --------
Total deposits 322,472 288,203

Securities sold under repurchase agreements 5,105 7,263
Federal funds purchased - 4,800
Other liabilities 2,600 2,735
--------- --------
Total liabilities 330,177 303,001
--------- --------

SHAREHOLDERS' EQUITY
Preferred stock; $.01 par value; 500,000 shares authorized;
no shares issued or outstanding - -
Common stock; $.01 par value, 10,000,000 shares authorized;
6,107,070 and 6,116,070 shares issued and outstanding
at March 31, 2000 and December 31, 1999, respectively 61 61
Additional paid-in capital 30,725 30,805
Retained earnings 13,010 12,746
Accumulated other comprehensive income, net of tax (490) (537)
--------- --------
Total shareholders' equity 43,306 43,075
--------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 373,483 $ 346,076
========= ========
</TABLE>

CNB FLORIDA BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)

Three Months Ended March 31,
2000 1999
------------ ----------
(thousands)
<S> <C> <C>
Interest Income
Interest and fees on loans $ 6,179 $ 4,398
Interest on investment securities held to maturity 148 47
Interest on investment securities available for sale 536 756
Interest on federal funds sold 76 255
Interest on interest bearing deposits 6 129
--------- ----------
Total interest income 6,945 5,585

Interest Expense
Interest on deposits 2,774 2,171
Interest on short-term borrowings 77 69
--------- ----------
Total interest expense 2,851 2,240
--------- ----------
Net interest income 4,094 3,345

Provision for Loan Losses 300 200
--------- ----------
Net interest income after provision for loan losses 3,794 3,145

Non-interest Income
Service charges 515 461
Other fees and charges 256 226
--------- ----------
Total non-interest income 771 687
--------- ----------

Non-interest Expense
Salaries and employee benefits 2,054 1,499
Occupancy and equipment expenses 500 410
Other operating expenses 1,143 775
--------- -----------
Total non-interest expense 3,697 2,684
--------- -----------

Income before income taxes 868 1,148
Provision for income taxes 298 400
--------- -----------

NET INCOME $ 570 $ 748
========= ===========

Earnings Per Share (Note 3):

Basic earnings per share $ 0.09 $ 0.13
========= ===========
Weighted average shares outstanding 6,107,357 5,648,450
========= ===========

Diluted earnings per share $ 0.09 $ 0.13
========= ===========
Diluted weighted average shares outstanding 6,168,143 5,710,424
========= ===========

</TABLE>

CNB FLORIDA BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)

Three Months Ended March 31,
2000 1999
------------ ------------
(thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 570 $ 748
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 273 229
Provision for loan loss 300 200
Investment securities amortization (accretion), net 10 (279)
Non-cash compensation 15 -
Changes in assets and liabilities:
Other assets 45 542
Other liabilities (135) 269
---------- -----------

Net cash provided by operating activities 1,078 1,709
---------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities available for sale - (20,391)
Purchases of investment securities held to maturity - (8,754)
Proceeds from maturities of securities available for sale 1,287 19,387
Proceeds from maturities of securities held to maturity 151 314
Proceeds from called securities available for sale 472 3,000
Net increase in loans (24,028) (13,383)
Purchases of premises and equipment, net (1,915) (1,615)
---------- -----------

Net cash used in investing activities (24,033) (21,442)
---------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in deposits 34,269 (2,214)
Securities sold under repurchase agreements (2,158) (5,762)
Federal funds purchased (4,800) -
Cash dividends paid (306) (243)
Issuance of common stock - 11,362
Repurchase of common stock (125) -
Exercise of options 30 6
---------- -----------

Net cash provided by financing activities 26,910 3,149
---------- -----------

Increase (decrease) in cash and cash equivalents 3,955 (16,584)

Cash and cash equivalents at beginning of period 17,520 48,887
---------- -----------

Cash and cash equivalents at end of period $ 21,475 $ 32,303
========== ==========

SUPPLEMENTAL DISCLOSURES:
Interest paid $ 2,608 $ 2,329
=========== ===========

Taxes paid $ 593 $ 64
=========== ===========
</TABLE>

<PAGE>

CNB FLORIDA BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2000
(Unaudited)

Note 1. Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-Q which do not require all information and
footnotes necessary for a complete presentation of financial position, results
of operations and cash flows in conformity with generally accepted accounting
principles. In the opinion of management, such financial statements reflect all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair statement of the results for the interim periods presented. Operating
results for the three months ended March 31, 2000 are not necessarily indicative
of the results that may be expected for the year ending December 31, 2000.
Management's discussion and analysis should be read in conjunction with the
consolidated financial statements.

Note 2. Consolidation

The consolidated financial statements include the accounts of CNB Florida
Bancshares, Inc. and its wholly owned subsidiary, CNB National Bank. All
significant intercompany accounts and transactions have been eliminated.

Note 3. Earnings Per Share

Basic earnings per share is calculated based on weighted average number of
shares of common stock during the period. Diluted earnings per share is
calculated based on the weighted average number of shares of common stock
outstanding and common stock equivalents, consisting of outstanding stock
options. Common stock equivalents are determined using the treasury method for
diluted shares outstanding. The difference between diluted and basic shares
outstanding is common stock equivalents from stock options and restricted stock
outstanding during the periods ended March 31, 2000 and 1999.

Note 4. Comprehensive Income

Comprehensive income is defined as the total of net income and all other changes
in equity. The following table details the Company's comprehensive income for
March 31, 2000 and 1999.

Three Months Ended March 31,
2000 1999
---- ----

Net Income $ 570 $ 748
Other Comprehensive Income (Loss), Net of Tax
Unrealized Gains (Losses) on Securities:
Unrealized Gains (Losses) on Securities
Arising During the Period 53 (267)
Less: Reclassification Adjustment 6 (176)
------- -------
Total Unrealized Gains (Losses), Net of Tax

Recognized in Other Comprehensive Income 47 (91)
------- -------
Comprehensive Income, Net of Tax $ 617 $ 657
======= =======

Note 5. Initial Public Offering

During February 1999, the Company sold 1,250,000 shares of common stock and
received proceeds from the issuance of approximately $11.4 million, net of
underwriting discount and expenses.

Note 6. Company Name Change

On May 19, 1999, the Company's shareholders approved a proposal to change the
name of CNB, Inc. to CNB Florida Bancshares, Inc. The change was effective June
30, 1999.

6
<PAGE>
<TABLE>

CNB FLORIDA BANCSHARES, INC. AND SUBSIDIARY

Selected Financial Data

March 31,
2000 1999
------------ --------
Dollars in thousands except per share information.
- -------------------------------------------------------------------------------------------------------------------

SUMMARY OF OPERATIONS:
<S> <C> <C>
Total interest income $ 6,945 $ 5,585
Total interest expense (2,851) (2,240)
----------- ----------
Net interest income 4,094 3,345
Provision for loan losses (300) (200)
----------- ----------
Net interest income after
provision for loan losses 3,794 3,145
Non-interest income 771 687
Non-interest expense (3,697) (2,684)
----------- ----------
Income before taxes 868 1,148
Income taxes (298) (400)
----------- ----------
Net income $ 570 $ 748
============ ==========

- -------------------------------------------------------------------------------------------------------------------

PER COMMON SHARE:
Basic earnings $ 0.09 $ 0.13
Diluted earnings 0.09 0.13
Book value 7.09 6.99
Dividends 0.05 0.05
Actual shares outstanding 6,107,070 6,107,970
Weighted average shares outstanding 6,107,357 5,648,450
Diluted weighted average shares outstanding 6,168,143 5,710,424

- -------------------------------------------------------------------------------------------------------------------

KEY RATIOS:
Return on average assets 0.63 % 0.98 %
Return on average shareholders' equity 5.31 7.84
Dividend payout 55.56 38.46
Efficiency ratio 75.99 66.57
Total risk-based capital ratio 15.96 21.71
Average shareholders' equity to
average assets 11.92 12.48
Tier 1 leverage 11.82 13.29

- -------------------------------------------------------------------------------------------------------------------

FINANCIAL CONDITION AT PERIOD-END:
Assets $ 373,483 $ 315,653
Loans 290,077 200,326
Deposits 322,472 262,895
Shareholders' equity 43,306 42,691

- -------------------------------------------------------------------------------------------------------------------

</TABLE>

<PAGE>

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

OVERVIEW

The following analysis reviews important factors affecting the
financial condition and results of operations of CNB Florida Bancshares, Inc.
for the three months ended March 31, 2000 and 1999. This financial information
should be read in conjunction with the unaudited consolidated financial
statements of CNB Florida Bancshares, Inc. ("the Company") and its wholly owned
subsidiary, CNB National Bank, ("the Bank") included in "Item 1. Financial
Statements" above and the audited consolidated financial statements included in
Form 10-K for the year ended December 31, 1999. The analysis contains
forward-looking statements with respect to financial and business matters, which
are subject to risks and uncertainties, that may change over a period of time.
These risks and uncertainties include but are not limited to change in interest
rates, variances in actual versus projected growth in assets, loan losses, the
ability to control expenses, costs of opening new branches and entering the
Jacksonville and Gainesville markets, competitive factors, general economic
conditions, changes in government regulation, the ability to attract and retain
qualified personnel and the ability to attract new deposits. Actual results
could be significantly different from the forward-looking statements contained
herein. The Company has no foreign operations; accordingly, there are no assets
or liabilities attributable to foreign operations.

On January 29, 1999, the Company's common stock began trading on the
NASDAQ National Market under the symbol "CNBB". The Company issued and sold
1,250,000 shares of common stock during its initial public offering at $10.25.
Proceeds from the offering net of underwriting discount and expenses totaled
$11.4 million. This increased capital is supporting the Company's growth into
the Jacksonville market and expansion in the Gainesville market.

RESULTS OF OPERATIONS

The Company's earnings for the three month period ended March 31, 2000
were $570,000 or $0.09 per diluted share. This compares to $748,000 or $0.13 per
diluted share for the same period in 1999. These first quarter results continue
to reflect execution of the Company's strategy to expand the CNB franchise into
new markets. Weighted average shares outstanding increased 8.1% from 5,648,450
in 1999 to 6,107,357 for the period ended March 31, 2000. This increase was due
to the Company's Initial Public Offering completed January 29,1999.

Net Interest Income

Net interest income is the single largest source of revenue for the
Bank and consists of interest and fee income generated by earning assets, less
interest expense paid on interest bearing liabilities. Net interest income was
$4.1 million for the first quarter of 2000, an increase of $749,000, or 22.4%,
from the first quarter of 1999. This increase was the result of growth in the
loan portfolio and the related increase in interest income from loans of $1.8
million, or 40.5%. Total average earning assets increased by $43.2 million, or
15.1% to $328.7 million in 2000, compared to $285.5 million in 1999.

Net interest margin increased to 5.01% from 4.75% reflecting the
increase in and mix of earning assets and the interest income attributable to
the growth in loan volume and interest and fees on loans. Total earning asset
yields increased to 8.50% in 2000 from 7.93%, while rates on interest-bearing
liabilities increased to 4.24% in 2000 from 3.90% in 1999. Interest expense
increased $611,000, or 27.3% in the first quarter of 2000 as compared to the
same period in 1999. This reflects the Company's increased reliance on new
deposits for liquidity in a rising rate environment when compared to the
utilization of existing liquidity for loan growth during 1999. The introduction
of the new product, Preferred NOW Checking, and the increased rates paid on

<PAGE>

Money Market accounts are the main attributable factors for the increase. The
new product and rate increases have enabled the Company to enter its new markets
and be competitive with other financial institutions. The increase in average
interest-bearing liabilities of $37.0 million , or 15.9%, also was a
contributing factor. Table 1: "Average Balances - Yields and Rates" provides the
Company's average volume of interest earning assets and interest bearing
liabilities for the first quarter of 2000 and 1999. Table 1a: "Analysis of
Changes in Interest Income and Expense" indicates that the change in interest
income was due mainly to volume increases in the loan portfolio.
<TABLE>

Table 1: Average Balances - Yields and Rates
(Unaudited)

March 31, 2000 March 31, 1999
------------------------------------- -----------------------------------
Interest Interest
Average Income or Average Average Income or Average
Balance Expense Rate Balance Expense Rate
--------- ----------- --------- --------- ---------- -------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Federal funds sold $ 5,449 $ 76 5.61% $ 22,163 $ 255 4.67%
Investment securities
available for sale 33,954 536 6.35 55,038 756 5.57
Investment securities
held to maturity 10,521 148 5.66 3,671 47 5.19
Loans (1) 278,512 6,179 8.92 193,593 4,398 9.21
Interest bearing deposits 294 6 8.20 11,055 129 4.73
---------- ---------- ---- ------- ----- -----

TOTAL EARNING ASSETS 328,730 6,945 8.50 285,520 5,585 7.93
All other assets 33,284 24,659
-------- -------

TOTAL ASSETS $ 362,014 $ 310,179
======= =======

LIABILITIES AND
SHAREHOLDERS' EQUITY:
NOW and money markets $ 103,595 $ 801 3.11% $ 76,616 $ 379 2.01%
Savings 17,461 60 1.38 17,012 63 1.50
Time deposits 143,051 1,913 5.38 133,026 1,729 5.27
Short term borrowings 5,694 72 5.09 6,531 69 4.28
Federal funds purchased 385 5 5.22 - - -
---------- ---------- ---- ------- ----- -----
TOTAL INTEREST BEARING
LIABILITIES 270,186 2,851 4.24 233,185 2,240 3.90
Demand deposits 45,354 37,026
Other liabilities 3,326 1,262
Shareholders' equity 43,148 38,706
-------- -------

TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 362,014 $ 310,179
======= =======

---- ----
INTEREST SPREAD (2) 4.26% 4.03%
==== ====
-------- -----
NET INTEREST INCOME $ 4,094 $ 3,345
======== =====

NET INTEREST MARGIN (3) 5.01% 4.75%
==== ====

<FN>
(1) Interest income on average loans includes loan fee recognition of $201,000
and $165,000 in 2000 and 1999, respectively.
(2) Represents the average rate earned minus average rate paid.
(3) Represents net interest income divided by total earning assets.
</FN>
</TABLE>

9
<PAGE>
<TABLE>

Table 1a: Analysis of Changes in Interest Income and Expense
(Unaudited)

NET CHANGE MARCH 31, NET CHANGE MARCH 31,
1999-2000 ATTRIBUTABLE TO: 1998-1999 ATTRIBUTABLE TO:
-------------------------- --------------------------
Net Net
Volume (1) Rate (2) Change Volume (1) Rate (2) Change
---------- -------- ------ ---------- -------- ------
(thousands)

<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME:
Federal funds sold $ (194) $ 15 $ (179) $ (11) $ (32) $ (43)
Investment securities available for sale (292) 72 (220) 1 (77) (76)
Investment securities held to maturity 88 13 101 (56) (1) (57)
Loans 1,945 (164) 1,781 782 (97) 685
Interest bearing deposits (127) 4 (123) 73 (23) 50
------ ------- ------- ------- ------ ------
Total 1,420 (60) 1,360 789 (230) 559
------ ------- ------- ------- ------ ------

INTEREST EXPENSE:
NOW and money markets 135 287 422 66 (102) (36)
Savings 2 (5) (3) 5 (18) (13)
Time deposits 131 53 184 126 (61) 65
Short term borrowings (11) 14 3 7 (12) (5)
Notes payable and debentures - 5 5 (7) - (7)
------ ------- ------- ------- -------- ------
Total 257 354 611 197 (193) 4
------ ------- ------- ------- -------- ------
Net interest income $ 1,163 $ (414) $ 749 $ 592 $ (37) $ 555
====== ======= ======= ======= ======== ======

<FN>
(1) The volume variance reflects the change in the average balance outstanding
multiplied by the actual average rate during the prior period.

(2) The rate variance reflects the change in the actual average rate multiplied
by the average balance outstanding during the prior period. Changes which are
not solely due to volume changes or solely due to rate changes have been
attributed to rate changes.
</FN>
</TABLE>

Non-Interest Income

Non-interest income for the quarter ended March 31, 2000 was $771,000,
an increase of $84,000 or 12.2% from the first quarter of 1999. Service charges
on deposit accounts increased $54,000 or 11.7% in March 2000, compared to the
same period in 1999. Service charge revenues are dependent on the number of
accounts, primarily transaction accounts and the level of activity subject to
service charges. The increase in service charges in the first quarter of 2000
compared with the first quarter of 1999 reflects the increased number of
transaction accounts along with a new fee schedule that went into effect on
March 1, 1999. Other fee income, which includes credit card fees, credit life
insurance income, safe deposit box fees, net gains and losses from sale of
securities and other miscellaneous fees, had an increase of $30,000 or 13.3% in
March 2000 compared to March 1999.

Non-Interest Expense

Non-interest expense increased in the first quarter of 2000 by 37.7% to
$3.7 million compared to $2.7 million for the first quarter of 1999. Salaries
expense increased $555,000 or 37.0%, over the first quarter of 1999 reflecting
the Company's continued execution of management's strategy to expand CNB into
the Jacksonville and Gainesville markets. Full-time equivalent employees
increased by 37 from the first quarter of 1999 to the first quarter of 2000.
This increase was mainly attributable to the Company's growth strategy,
including the opening and staffing of a temporary branch office in Jacksonville
on Beach Boulevard in June 1999.

<PAGE>

Occupancy expense, including premises, furniture and fixtures and
equipment increased $90,000, or 22.0% The most significant increases have
occurred in building leases and depreciation of data processing equipment.

Other operating expenses increased $368,000, or 47.5%, in 2000 compared
to 1999. The following table details the areas of significance in other
operating expenses.

Table 2: Other Operating Expenses

Three Months Ended March 31,
2000 1999
------------ ----------
(thousands)
Data processing $ 161 $ 144
Advertising and promotion 161 87
Postage and delivery 136 105
Telephone 134 78
Legal and professional 102 55
Supplies 90 75
Loan expenses 66 36
Administrative 64 29
Amortization of intangible assets 45 45
Regulatory fees 35 35
Other 149 86
------ ----
Total other operating expenses $1,143 $ 775
====== ====

Income Taxes

The Company's income tax expense in interim reporting periods is
determined by estimating the combined federal and state effective tax rate for
the year and applying rate to such interim pre-tax income. The Company's
estimated tax rate for 2000 is 34%.

<PAGE>

LIQUIDITY AND INTEREST RATE SENSITIVITY

Liquidity management addresses CNB's ability to meet deposit
withdrawals either on demand or at contractual maturity, to repay borrowings and
to make new loans and investments as they arise. Management measures the
Company's liquidity position by giving consideration to both on- and off-balance
sheet sources of and demands for funds on a daily and weekly basis. In addition
to core deposit growth, sources of funds available to meet liquidity demands
include cash received through ordinary business activities such as the
collection of interest and fees, federal funds sold, loan and investment
maturities and lines of credit for the purchase of federal funds by the Company
from its principal correspondent banks. Average liquid assets (cash and amounts
due from banks, interest bearing deposits in other banks, federal funds sold and
investment securities available for sale) totaled $54.5 million and represented
17.6% of average total deposits during the first quarter of 2000, compared to
$99.4 million and 37.7% for 1999. Average loans were 90.0% and 73.4% of average
deposits for the three month period ended March 31, 2000 and 1999, respectively.

The Company has available lines of credit with other financial
institutions totaling $15.0 million. The Company is also a member of the Federal
Home Loan Bank and as such has access to both long and short term funds.

The asset mix of the balance sheet is evaluated continually in terms of
several variables: yield, credit quality, appropriate funding sources and
liquidity. Management of the liability mix of the balance sheet focuses on
expanding the various funding sources.

The Company's gap and liquidity positions are reviewed on a regular
basis by management to determine whether or not changes in policies and
procedures are necessary to achieve financial goals. Included in the review is
an internal analysis of the possible impact on net interest income due to market
changes and interest rates.

Table 3 , "Rate Sensitivity Analysis" presents rate sensitive assets
and liabilities by maturity, separating fixed and variable interest rates. The
estimated fair value of each instrument category is also shown in the table.
While these fair values are based on management's judgment of the most
appropriate factors, there is no assurance that, were the Company to have
disposed of such instruments on March 31, 2000, the estimated fair values would
necessarily have been achieved at that date, since market values may differ
depending on various circumstances.

Sources of liquidity include cash and cash equivalents, net of federal
requirements to maintain reserves against deposit liabilities; investment
securities eligible for pledging to secure borrowings from dealers and customers
pursuant to securities sold under repurchase agreements; loan repayments; loan
sales; deposits and certain interest rate- sensitive deposits; and borrowings
under overnight federal fund lines available from correspondent banks. In
addition to interest rate-sensitive deposits, the Company's primary demand for
liquidity is anticipated fundings under credit commitments to customers.

<PAGE>
<TABLE>
Table 3: Rate Sensitivity Analysis
March 31, 2000

<S> <C> <C> <C> <C> <C> <C>
(dollars in thousands) Fair
1 Year 2 Years 3 Years 4 Years 5 Years Beyond TOTAL Value
------ ------- ------- ------- ------- ------ ----- -----
INTEREST-EARNING ASSETS:

Loans
Fixed rate loans $ 16,398 $ 11,720 $ 14,384 $ 23,336 $ 32,468 $ 60,064 $ 158,370 $ 155,976
Average interest rate 8.35% 9.14% 9.01% 8.68% 8.43% 8.27% 8.50%

Variable rate loans 30,539 15,489 11,087 5,234 5,681 63,677 131,707 131,707
Average interest rate 9.34% 9.57% 8.74% 9.52% 9.52% 8.71% 9.03%

Investment securities (1)
Fixed rate investments 5,278 5,591 90 20,000 237 9,914 41,110 40,190
Average interest rate 6.00% 6.50% 4.10% 6.03% 4.52% 5.69% 6.00%

Variable rate investments - - - - - 1,665 1,665 1,660
Average interest rate 6.41% 6.41%

Federal funds sold 5,150 - - - - - 5,150 5,150
Average interest rate 5.71% 5.71%

Other earning assets (2) 2,164 - - - - - 2,164 2,210
Average interest rate 6.32% 6.32%
------- ------- ------- ------- ------- -------- ------- --------

Total interest-earning
assets $ 59,529 $ 32,800 $ 25,561 $ 48,570 $ 38,386 $ 135,320 $ 340,166 $ 336,893
Average interest rate 8.35% 8.89% 8.88% 7.68% 8.57% 8.27% 8.34%
======= ======= ======= ======= ======= ======= ======= ========

INTEREST-BEARING LIABILITIES:

NOW $ 16,904 $ - $ - $ - $ - $ 52,395 $ 69,299 $ 69,299
Average interest rate 4.71% 1.44% 2.24%

Money market 36,376 - - - - 2,154 38,530 38,530
Average interest rate 4.68% 2.78% 4.57%

Savings - - - - - 17,598 17,598 17,598
Average interest rate 1.39% 1.39%

CD's $100,000 and over 48,734 5,318 1,461 109 - - 55,622 55,706
Average interest rate 5.79% 5.97% 5.93% 4.84% 5.81%

CD's under $100,000 77,668 11,929 2,405 817 213 - 93,032 93,155
Average interest rate 5.29% 5.66% 5.42% 5.34% 5.57% 5.34%

Securities sold under
repurchase agreements 5,105 - - - - - 5,105 5,105
Average interest rate 5.33% 5.33%
------- ------- ------- ------- ------- -------- --------- -------

Total interest-bearing
liabilities $ 184,787 $ 17,247 $ 3,866 $ 926 $ 213 $ 72,147 $ 279,186 $ 279,393
Average interest rate 5.25% 5.76% 5.61% 5.28% 5.57% 1.47% 4.31%
======= ======= ======= ======= ======= ======= ======= =======

<FN>
(1) Securities available for sale are shown at their amortized cost, excluding
market value adjustment for unrealized gains of $782,000.
(2) Represents interest bearing deposits with Banks, Federal Reserve Bank Stock,
Federal Home Loan Bank Stock and other marketable equity securities.
</FN>
</TABLE>
13

<PAGE>

Core deposits, which represent all deposits other than time
deposits in excess of $100,000, were 82.8% of total deposits in the first
quarter of 2000 and 84.4% for the period ended December 31, 1999. The Bank
closely monitors its reliance on time deposits in excess of $100,000, which are
generally considered less stable and less reliable than core deposits. Table 4,
below, sets forth the amounts of time deposits with balances of $100,000 or more
that mature within indicated periods. The Bank does not nor has it ever
solicited brokered deposits.

Table 4: Maturity of Time Deposits of $100,000 or More
March 31, 2000
(dollars in thousands)
Amount
------
Three months or less $ 17,951
Three through six months 12,870
Six through twelve months 17,913
Over twelve months 6,888
--------
Total $ 55,622
=======

EARNING ASSETS

Loans

During the first quarter of 2000, average loans were $278.5 million and
were 90.0% of average deposits, compared to $193.6 million and 73.4% for 1999.
Total loans have increased by $24.0 million, or 9.0%, since December 31, 1999.
Loan growth has occurred in all of the portfolios, with the most significant
increase in Commercial, financial and agricultural loans. Average loans as a
percent of average earning assets increased to 84.7% for the first quarter of
2000, compared to 67.8% for the first quarter of 1999. The following table
compares the composition of the Company's loan portfolio as of March 31, 2000,
to December 31, 1999.

Table 5: Loan Portfolio Composition

March 31, December 31,
Types of Loans 2000 1999
-------------- ------------
(thousands)
Commercial, financial and agricultural $ 149,677 $ 136,937
Real estate - mortgage 91,630 86,275
Real estate - construction 20,769 18,926
Installment and consumer lines 28,001 23,946
-------- --------

Total loans, net of unearned discount 290,077 266,084
Less: allowance for loan losses (2,936) (2,671)
-------- --------

Net loans $ 287,141 $ 263,413
======== ========

The following table sets forth the maturity distribution for selected
components of the Company's loan portfolio on March 31, 2000. Demand loans and
overdrafts are reported as due in one year or less, and loan maturity is based
upon scheduled principal payments.

<PAGE>

<TABLE>

Table 6: Maturity Schedule of Selected Loans
March 31, 2000

0-12 1-5 Over 5
Months Years Years Total
-------- --------- ---------- ----------
(thousands)

<S> <C> <C> <C> <C>
Commercial, financial and agricultural $ 16,386 $ 79,083 $ 54,208 $ 149,677
Real estate - construction 20,769 - - 20,769
All other loans 9,782 40,316 69,533 119,631
------- ------- ------- -------

Total $ 46,937 $ 119,399 $ 123,741 $ 290,077
======= ======= ======== =======

Fixed interest rate $ 16,398 $ 81,908 $ 60,064 $ 158,370
Variable interest rate $ 30,539 $ 37,491 $ 63,677 $ 131,707
</TABLE>

Loan Quality

The allowance for loan losses represents a reserve for potential
losses in the loan portfolio. On an ongoing basis, management attempts to
maintain the allowance for loan losses at levels sufficient to provide for
losses inherent in the loan portfolio. The allowance for loan losses is
established through a provision charged to expense. Loans are charged against
the allowance when it is recognized that collection of the principal is
unlikely. The allowance for loan losses on March 31, 2000, was 1.01% of total
loans, compared to 1.00% one year earlier. Table 7: "Allocation of Allowance for
Loan Losses", set forth below, indicates the specific reserves allocated by loan
type.
<TABLE>

Table 7: Allocation of Allowance for Loan Losses

March 31, December 31,
2000 1999
--------------------------- -------------------------
Percent of Percent of
Loans in Each Loans in Each
Category to Category to
Amount Total Loans Amount Total Loans
--------- ------------- ------- -------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Commercial, financial
and agricultural $ 1,900 52% $ 1,670 52%
Real estate - mortgage 288 31% 220 32%
Real estate- construction 15 7% 12 7%
Consumer 733 10% 769 9%
Unallocated - - - -
----- ---- ------ ----
Total $ 2,936 100% $ 2,671 100%
===== ==== ====== ====

</TABLE>

Total Non-Performing Assets increased by $225,000 or 27.1% to $1.1
million on March 31, 2000, compared to $831,000 on December 31, 1999.
Non-performing assets as a percentage of total assets increased to 0.28% on
March 31, 2000 from 0.24% on December 31, 1999. Non-accrual loans have increased
$63,000 since December 31, 1999. An increase in past due loans 90 days or more
of $178,000 from December 31, 1999 also contributed to the increase in total
Non-Performing Assets. Other real estate owned and repossessions decreased by
$16,000 or 15.7% to $86,000 as compared to year end 1999.

<PAGE>

Table 8: Non-Performing Assets

March 31, December 31,
2000 1999
---------- -----------
(dollars in thousands)
Non-accrual loans $ 612 $ 549
Past due loans 90 days or
more and still accruing 358 180
Other real estate owned
and repossessions 86 102
------ ------
Total non-performing assets $ 1,056 $ 831
====== ======

Percent of Total Assets 0.28% 0.24%

The determination of the reserve level rests upon management's judgment
about factors affecting loan quality and assumptions about the economy.
Management considers the period-end allowance appropriate and adequate to cover
possible losses in the loan portfolio; however, management's judgment is based
upon a number of assumptions about future events, which are believed to be
reasonable, but which may or may not prove to be valid. Thus, there can be no
assurance that charge-offs in future periods will not exceed the allowance for
loan losses or that additional increases in the allowance for loan losses will
not be required. Table 9: "Activity in Allowance for Loan Losses", below,
indicates activity in the allowance for loan losses for the first three month
period of 2000 as compared to 1999.

Table 9: Activity in Allowance for Loan Losses

March 31,
2000 1999
-------- -------
(dollars in thousands)
Allowance for loan loss balance applicable to:

Balance at beginning of quarter $ 2,671 $ 1,875
Loans charged-off:
Commercial, financial and agricultural 15 73
Real estate, mortgage - -
Consumer 107 74
-------- --------
Total loans charged-off (122) (147)
Recoveries on loans previously charged-off:
Commercial, financial and agricultural 23 67
Real estate, mortgage - -
Consumer 64 8
-------- ---------
Total loan recoveries 87 75
-------- ---------
Net loans charged-off (35) (72)
-------- ---------

Provision for loan losses charged to expense 300 200
------- --------
Ending balance $ 2,936 $ 2,003
====== ======

Total loans outstanding $ 290,077 $ 200,326
Average loans outstanding $ 278,512 $ 193,593

Allowance for loan losses to loans outstanding 1.01% 1.00%
Net charge-offs to average loans outstanding,
annualized 0.05% 0.15%

<PAGE>

<TABLE>
Table 10: Maturity Distribution of Investment Securities (1)
March 31, 2000

(dollars in thousands) Held to Maturity Available for Sale
- -------------------------------------------------------------------------------------------------------------------
Amortized Estimated Amortized Estimated
Cost Market Value Cost Market Value
---------- ------------- ------------ ----------------
<S> <C> <C> <C> <C>
U.S. Treasury:
One year or less $ - $ - $ 3,497 $ 3,498
Over one through five years - - 5,488 5,486
---------- ----------- --------- --------
Total U.S. Treasury - - 8,985 8,984

U.S. Government Agencies
and Corporations:
Over one through five years - - 20,000 19,184
Over five through ten years 8,710 8,700 - -
---------- ----------- --------- --------
Total U.S. Government Agencies 8,710 8,700 20,000 19,184
and Corporations

Obligations of State and Political
Subdivisions:
One year or less - - 85 85
Over one through five years - - 417 411
Over ten years - - 608 612
---------- ----------- --------- --------
Total Obligations of State and - - 1,110 1,108
Political Subdivisions

Mortgage-Backed Securities (2):
One year or less 1,696 1,609 - -
Over one through five years 13 13 - -
Over five through ten years - - 763 759
Over ten years - - 1,498 1,493
---------- ----------- --------- --------
Total Mortgage-Backed Securities 1,709 1,622 2,261 2,252

Other Securities:
Over ten years (3) - - 1,855 1,901
---------- ----------- --------- --------
Total Other Securities - - 1,855 1,901
---------- ----------- --------- --------
Total Securities $ 10,419 $ 10,322 $ 34,211 $ 33,429
========== =========== ========= ========

<FN>
(1) All securities, excluding Obligations of State and Political Subdivisions,
are taxable.
(2) Represents investments in mortgage-backed securities which are subject to
early repayment.
(3) Represents investment in Federal Reserve Bank and Federal Home Loan Bank
stock and other marketable equity securities.
</FN>
</TABLE>

Table 11: Weighted Average Yield by Range of Maturities

March 31, 2000 December 31,1999 March 31, 1999
-------------- ---------------- --------------
One Year or Less 6.00% 5.81% 5.44%
Over One through Five Years 6.11% 6.15% 6.07%
Over Five through Ten Years 5.76% 5.78% 5.68%
Over Ten Years (1) 5.96% 5.65% 5.62%

(1) Represents adjustable rate mortgage-backed securities which are
repriceable within one year.

<PAGE>

Investment Portfolio

When the Company's liquidity position exceeds expected loan demand,
other investments are considered by management as a secondary earnings
alternative. Typically, management remains short-term (under 5 years) in its
decision to invest in certain securities and always strives to ensure a portion
of its investment portfolio to be maturing in the next quarter. As these
investments mature, they will be used to meet cash needs or will be reinvested
to maintain a desired liquidity position. Most of the investment portfolio is
designated as available for sale to provide the Company flexibility, and in case
an immediate need for liquidity arises. The composition of the portfolio offers
management full flexibility in managing its liquidity position and interest rate
sensitivity, without adversely impacting its regulatory capital levels. The
Federal Reserve Bank and the Federal Home Loan Bank also require equity
investments to be maintained by the Bank as a member of their services. The
investment securities available for sale are carried at fair market value and
had an unrealized loss, net of taxes, of approximately $490,000 on March 31,
2000 as compared to an unrealized loss , net of taxes, of $537,000 on December
31, 1999. Unrealized gains or losses are recorded as adjustments to
shareholders' equity but are not included in the Company's net income; however,
they are included in comprehensive income.

Tables 10 and 11 set forth the maturity distribution and the weighted
average yields of the Company's investment portfolio by those securities held to
maturity and available for sale.

Other Earning Assets

Temporary investment needs are created in the day-to-day liquidity
movement of the Bank and are satisfied by selling excess funds overnight (Fed
Funds Sold) to larger, well capitalized banking institutions. If these funds
become excessive, management determines what portion, if any, of the liquidity
may be rolled into longer term investments as securities.

FUNDING SOURCES

Deposits

The Bank does not rely on purchased or brokered deposits as a source of
funds. Instead, competing for deposits within its market area serves as the
Bank's fundamental tool in providing a source of funds to be invested primarily
in loans. The following table sets forth certain deposit categories for the
periods ended March 31, 2000 and December 31, 1999.

Table 12: Total Deposits

March 31, December 31,
2000 1999
----------- ------------
(thousands)
Non-interest bearing:
Demand checking $ 48,391 $ 42,110
Interest bearing:
NOW checking 69,299 61,977
Money market checking 38,530 33,589
Savings 17,598 16,537
Certificates of deposit 148,654 133,990
-------- --------

Total deposits $ 322,472 $ 288,203
======== ========

<PAGE>

CAPITAL RESOURCES

The Comptroller regulates risk based capital guidelines for national
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 hold 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 loss reserves and other forms of equity such as
preferred stock that may be included in capital.

Under the terms of the guidelines, banks must meet minimum capital
adequacy based upon both total assets and risk adjusted assets. All banks are
required to maintain a minimum ratio of total capital to risk- weighted assets
of 8% and a minimum ratio of Tier 1 capital to risk-weighted assets of 4%. Tier
1 Capital includes common shareholders' equity and qualifying preferred stock,
less goodwill and other adjustments. Tier 2 Capital consists of preferred stock
not qualifying as Tier 1 Capital, mandatory convertible debt, limited amounts of
subordinated debt, other qualifying term debt and the allowance for credit
losses up to 1.25% or risk-weighted assets. Total Capital consists of Tier 1
Capital and Tier 2 Capital. The regulatory agencies have also established an
additional capital adequacy guideline referred to as the Tier 1 leverage ratio
that measures the ratio of Tier 1 capital to average quarterly assets. Adherence
to these guidelines has not had an adverse impact on the Company or the Bank.
Selected capital ratios at March 31, 2000 compared to 1999 are as follows:
<TABLE>

Table 13: Capital Ratios

March 31, Well Capitalized Regulatory
2000 1999 Requirements Minimums
------------ ------------ ---------------- ----------
Risk Based Capital Ratios:
<S> <C> <C> <C> <C> <C>
Tier 1 Capital Ratio 14.9% 20.7% 6.0% 4.0%

Total Capital to
Risk-Weighted Assets 16.0% 21.7% 10.0% 8.0%

Tier 1 Leverage Ratio 11.8% 13.3% 5.0% 4.0%
</TABLE>

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

On January 28, 1997, the Securities and Exchange Commission adopted
amendments to Regulation S-K, Regulation S-X, and various forms (Securities Act
Release No. 7386) to clarify and expand existing requirements for disclosures
about derivatives and market risks inherent in derivatives and other financial
instruments. No derivative financial instruments are held by the Company, but
other financial instruments, which include investments, loans and deposit
liabilities are included in the Company's balance sheet. The release requires
quantitative and qualitative disclosures about market risk. See section titled
"Liquidity and Interest Rate Sensitivity" for further discussion on the
Company's management of interest rate risk.

Financial instruments that have market risk are included in Table 3:
"Rate Sensitivity Analysis". These instruments are shown by maturity, separated
by fixed and variable interest rates. The estimated fair value of each
instrument category is also shown in the table. While these estimates of fair
value are based on management's judgement of the most appropriate factors, there
is no assurance that, were the Company to have disposed of such instruments at
March 31, 2000, the estimated fair values would necessarily have been achieved
at that date, since market values may differ depending on various circumstances.
The estimated fair values at March 31, 2000 would not necessarily be considered
to apply at subsequent dates.

<PAGE>

PART II
OTHER INFORMATION

Item 1. Legal Proceedings - There are no material pending legal
proceedings to which the Company or any of its subsidiaries is
a party or of which any of their property is the subject.

Item 2. Changes in Securities -

(a) Not applicable.

(b) Not applicable.

Item 3. Defaults Upon Senior Securities - Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders - There
were no matters submitted to a vote of security holders during
the three months ended March 31, 2000.

Item 5. Other Information - Not applicable.

Item 6. Exhibits and Reports on Form 8-K -

(a) Exhibits:

27 - Financial Data Schedule

(b) Reports on Form 8-K:

None

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

CNB Florida Bancshares, Inc.
(Registrant)

By: /s/ G. Thomas Frankland
-------------------------------
G. Thomas Frankland
Executive Vice President
and Chief Financial Officer

Date: May 5, 2000

<ARTICLE> 9
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 16,016
<INT-BEARING-DEPOSITS> 309
<FED-FUNDS-SOLD> 5,150
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 33,429
<INVESTMENTS-CARRYING> 10,419
<INVESTMENTS-MARKET> 10,322
<LOANS> 290,077
<ALLOWANCE> 2,936
<TOTAL-ASSETS> 373,483
<DEPOSITS> 322,472
<SHORT-TERM> 5,105
<LIABILITIES-OTHER> 2,600
<LONG-TERM> 0
0
0
<COMMON> 61
<OTHER-SE> 43,245
<TOTAL-LIABILITIES-AND-EQUITY> 373,483
<INTEREST-LOAN> 6,179
<INTEREST-INVEST> 684
<INTEREST-OTHER> 82
<INTEREST-TOTAL> 6,945
<INTEREST-DEPOSIT> 2,774
<INTEREST-EXPENSE> 2,851
<INTEREST-INCOME-NET> 4,094
<LOAN-LOSSES> 300
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,697
<INCOME-PRETAX> 868
<INCOME-PRE-EXTRAORDINARY> 570
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 570
<EPS-BASIC> .09
<EPS-DILUTED> .09
<YIELD-ACTUAL> 5.01
<LOANS-NON> 612
<LOANS-PAST> 358
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,671
<CHARGE-OFFS> 122
<RECOVERIES> 87
<ALLOWANCE-CLOSE> 2,936
<ALLOWANCE-DOMESTIC> 2,936
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0

</TABLE>