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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended March 31, 2004

OR

For the transition period from              to             

Commission file number: 001-31883

FIRST NATIONAL BANKSHARES OF FLORIDA, INC.

(Exact name of registrant as specified in its charter)

2150 Goodlette Road North, Naples, FL 34102

(Address of principal executive offices) (Zip Code)

(239) 262-7600

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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  ¨

Indicate by check mark whether the registrant is an accelerated filer as defined in Rule 12b-2 of the Exchange Act.    Yes  x    No  ¨

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

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FIRST NATIONAL BANKSHARES OF FLORIDA, INC. AND SUBSIDIARIES

FORM 10-Q

March 31, 2004

INDEX

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FIRST NATIONAL BANKSHARES OF FLORIDA, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

Dollars in thousands, except par values and share data

Unaudited

Note: The Balance Sheet at December 31, 2003 has been derived from the audited financial statements at that date.

See accompanying Notes to Consolidated Financial Statements

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FIRST NATIONAL BANKSHARES OF FLORIDA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

Dollars in thousands, except per share data

Unaudited

See accompanying Notes to Consolidated Financial Statements

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FIRST NATIONAL BANKSHARES OF FLORIDA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Dollars in thousands

Unaudited

See accompanying Notes to Consolidated Financial Statements

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First National Bankshares of Florida, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Summary of Significant Accounting Policies

Business:

First National Bankshares of Florida, Inc. (the “Company”) was incorporated under the laws of the state of Florida on August 12, 2003 as a wholly owned subsidiary of F.N.B. Corporation (“F.N.B.”). On January 1, 2004, the Company was spun-off from F.N.B. The Company is a diversified financial services company headquartered in Naples, Florida. The Company owns and operates First National Bank of Florida, (a community bank); Roger Bouchard Insurance, Inc. (an insurance agency); and First National Wealth Management Company (a national trust company). The Company has full-service offices located throughout southwest and central Florida.

The spin-off resulted in the division of certain existing corporate support functions between the two resulting entities. Corporate expenses included in the Company’s financial results for periods prior to the spin-off represent an allocation of F.N.B.’s corporate expense to the Company’s subsidiaries. This allocation is based on a specific review to identify costs incurred for the benefit of the subsidiaries of the Company and in management’s judgment results in a reasonable allocation of such costs. The Company was allocated $3.3 million of overhead costs related to shared administrative and support functions for the three months ended March 31, 2003.

The consolidated financial statements for periods prior to the effective date of the spin-off included herein may not necessarily be indicative of the results of operations, financial position and cash flows of the Company in the future or had it operated as a separate, independent company during the periods presented.

Basis of Presentation:

The consolidated financial statements include accounts of First National Bank of Florida, Roger Bouchard Insurance, Inc., and First National Wealth Management Company, all of which are wholly owned subsidiaries of the Company. All significant intercompany balances and transactions have been eliminated. The financial condition and results of operations of acquisitions accounted for as purchases are included in the Company’s financial statements from the date the acquisition was completed. (See the “Mergers and Acquisitions” section of this report).

Certain prior year amounts have been reclassified to conform with current year presentation. The reclassification had no impact on total assets, liabilities, stockholders’ equity, net income or cash flows.

Common Stock Dividend:

On April 19, 2004, the Company declared a 3 percent common stock dividend payable on July 15, 2004 to shareholders of record as of June 30, 2004. Per share amounts have been adjusted for the 3 percent stock dividend declared on April 19, 2004.

Use of Estimates:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

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Preferred Securities of Unconsolidated Subsidiary Trust:

On March 31, 2004, the Company acquired the common stock of First National Bankshares Statutory Trust II (“Issuer Trust”), an unconsolidated subsidiary trust. The Issuer Trust used the proceeds from the issuance of $25.0 million of its preferred securities to third-party investors and common stock to acquire a $25.8 million debenture issued by the Company. This debenture and certain capitalized costs associated with the issuance of the preferred stock comprise the Issuer Trust’s only assets and the interest payments from the debentures finance the distributions paid on the preferred securities. The Company recorded the debenture in “Long-term debt” and its equity interest in the business trust in “Securities available for sale” on the balance sheet. The debenture and preferred securities bear interest at a floating rate equal to the 3-month LIBOR plus 279 basis points.

The Company has entered into agreements which, taken collectively, fully and unconditionally guarantee the preferred securities of the Issuer Trust subject to the terms of the guarantee.

FASB Interpretation No. 46, “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51,” raised questions about whether trust preferred securities issued by unconsolidated subsidiary trusts could be treated as Tier 1 capital. On July 2, 2003, the Federal Reserve Board issued a letter stating that trust preferred securities will continue to be included in Tier 1 capital until notice is given to the contrary. As such, the debenture issued to the Issuer Trust currently qualifies as Tier 1 capital under present Federal Reserve Board guidelines.

New Accounting Standards:

In March 2004, the Securities and Exchange Commission (“SEC”) issued SAB 105, “Application of Accounting Principles to Loan Commitments,” which provides registrants the SEC’s view on recording the fair value of loan commitments. Under SAB 105, the fair value of loan commitments that are required to follow derivative accounting under Statement of Financial Accounting Standard (“FAS”) No. 133, “Accounting for Derivative Instruments and Hedging Activities,” should not consider the expected future cash flows related to the associated servicing of the future loan. The staff believes that incorporating expected future cash flows related to the associated servicing of the loan essentially results in the immediate recognition of a servicing asset, which is only appropriate once the servicing asset has been contractually separated from the underlying loan by sale or by securitization of the loan with servicing retained. The provisions of SAB 105 must be applied to loan commitments accounted for as derivatives that are entered into after March 31, 2004. The staff will not object to the application of existing accounting practices to loan commitments accounted for as derivatives that are entered into on or before March 31, 2004, with appropriate disclosures. The Company does not anticipate this new accounting standard to have a material impact on its financial condition or results of operations.

In December 2003, the Financial Accounting Standards Board (“FASB”) issued a revision to FAS 132, “Employers’ Disclosures about Pensions and Other Post-Retirement Benefits”. The revision retains the disclosures required by the original standard and requires additional disclosures about the assets, obligations, cash flows and net periodic benefit costs of defined benefit pension and post-retirement plans. In addition, the revised standard requires interim period disclosures of the components of net periodic benefit costs. The required disclosures of the revised standard are provided in the “Retirement Plan” footnote.

In December 2003, the AICPA issued Statement of Position (“SOP”) 03-3 “Accounting for Certain Loans and Debt Securities Acquired in a Transfer.” SOP 03-3 prohibits the carryover of an allowance for loan losses on certain loans acquired in a purchase business combination. Increases in expected cash flows to be collected from the contractual cash flows will be recognized as an adjustment of the loan’s yield over its remaining life, while decreases in expected cash flows will be recognized as an

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impairment. This accounting guidance will be effective for loans acquired in fiscal years beginning after December 15, 2004. The Company does not anticipate this new accounting standard to have a material impact on its financial condition or results of operations.

Mergers and Acquisitions:

On March 22, 2004, the Company announced the signing of a merger agreement pusuatn to which the Company will acquire all Southern Community Bancorp (“Southern”), a bank holding company located in Orlando, Florida. Southern is the holding company for Southern Community Bank of Central Florida, Southern Community Bank of Southwest Florida and Southern Community Bank of South Florida. As of March 31, 2004, Southern had $1.0 billion in total assets and $898.9 million in total deposits with 18 offices in central and south Florida. Under the terms of the merger agreement, the Company will exchange 1.62 shares of its common stock for each share of Southern common stock in a tax-free merger. The exchange ratio is subject to reduction if the average closing price of the Company’s common stock exceeds $20.00 per share over a specified period prior to the merger. The exchange ratio is also subject to adjustment should the Company change the number of its outstanding shares as a result of a stock split, stock dividend, recapitalization or reclassification prior to the transaction closing. In order to mitigate the dilutive impact of Southern’s stock options, the Company plans to repurchase approximately 1.1 million of its common shares in the open market. The common share repurchase will be funded through the $25.0 million in trust preferred securities issued on March 31, 2004.

The merger, which is scheduled to close in the third quarter of 2004, is subject to shareholder and regulatory approvals.

On July 1, 2003, Roger Bouchard Insurance, Inc. completed its acquisition of Lupfer-Frakes, Inc. (Lupfer), an independent insurance agency located in central Florida. Roger Bouchard Insurance, Inc. paid $10.2 million in exchange for all of the outstanding common stock of Lupfer. The transaction, which was accounted for as a purchase, resulted in the recognition of $8.5 million in goodwill and $1.3 million in customer and renewal lists. The value assigned to the customer and renewal lists will be amortized over a ten-year period. Lupfer’s results of operations have been reflected in the Company’s results beginning in the third quarter of 2003.

On March 31, 2003, F.N.B. completed its acquisition of Charter Banking Corp. (Charter), a bank holding company headquartered in Tampa, Florida, with assets having a fair value of $795.6 million. As a result, Charter became a wholly-owned subsidiary of F.N.B. The acquisition of Charter allowed F.N.B. to access the Hillsborough County market and to expand its presence in the Pinellas County market. Charter’s only subsidiary was Southern Exchange Bank (“SEB”). In exchange for all of the outstanding common stock of Charter, F.N.B. paid $150.2 million. The transaction, which was accounted for as a purchase, resulted in the recognition of approximately $103.2 million in nondeductible goodwill and $1.1 million in core deposit intangibles. The core deposit intangibles will be amortized over a ten-year period. The fair market value assigned to loans, investments, fixed assets, deposits and long-term debt was $169.8 million, $461.5 million, $40.8 million, $481.5 million and $154.5 million, respectively. The fair market value of interest-earning assets and interest-bearing liabilities was based on either quoted market values or discounting future cash flows using market rates as of March 31, 2003. These purchase adjustments, which were recorded by SEB, will be amortized or accreted in future periods over the estimated lives of the interest-earning assets and interest-bearing liabilities. Current third party independent appraisals were used to value the land and buildings included in fixed assets. Merger-related costs totaling $1.2 million were incurred in connection with this acquisition, which was related to employment obligations. Charter was merged into F.N.B. Corporation on August 22, 2003.

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SEB’s results of operations have been reflected in the Company’s results since the acquisition date of March 31, 2003. SEB was merged into First National Bank of Florida on October 10, 2003 as part of an internal reorganization.

The Company regularly evaluates the potential acquisition of, and holds discussions with, various acquisition candidates and as a general rule the Company publicly announces such acquisitions only after a definitive merger agreement has been reached.

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Securities

The amortized cost and fair value of securities are as follows (in thousands):

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At March 31, 2004 and December 31, 2003, securities with a carrying value of $184.4 million, and $161.9 million, respectively, were pledged to secure public deposits, trust deposits and for other purposes as required by law. Securities with a carrying value of $332.4 million, and $270.6 million at March 31, 2004 and December 31, 2003, respectively, were pledged as collateral for short-term borrowings.

The age of gross unrealized losses and fair value of available for sale securities by investment category as of March 31, 2004 were as follows:

The Company does not believe unrealized losses, individually or in the aggregate, as of March 31, 2004 represent an other-than-temporary impairment. The unrealized losses are primarily a result of changes in interest rates and will not prohibit the Company from receiving its contractual interest and principal payments. The Company has the ability and intent to hold these securities for a period necessary to recover the amortized cost.

Loans

Following is a summary of loans (in thousands):

The loan portfolio consists principally of loans to individuals and small- and medium-sized businesses within the Company’s primary market area of southwest and central Florida.

As of March 31, 2004 and December 31, 2003, no concentrations of loans exceeding 10% of total loans existed which were not disclosed as a separate category of loans.

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Non-Performing Assets

Following is a summary of non-performing assets (in thousands):

Loans past due 90 days or more, on which interest accruals continue, were $1.3 million, and $163,000, at March 31, 2004 and December 31, 2003, respectively.

Allowance for Loan Losses

Following is an analysis of changes in the allowance for loan losses (in thousands):

Deposits

Following is a summary of deposits (in thousands):

Time deposits of $100,000 or more were $493.5 million and $415.8 million at March 31, 2004 and December 31, 2003, respectively.

Short-Term Borrowings

Following is a summary of short-term borrowings (in thousands):

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Long-Term Debt

Following is a summary of long-term debt (in thousands):

First National Bank of Florida has available credit with the Federal Home Loan Bank of $596.5 million, of which $256.7 million was advanced as of March 31, 2004. These advances are secured by certain residential real estate loans and Federal Home Loan Bank stock.

Commitments, Credit Risk and Contingencies

The Company has commitments to extend credit and standby letters of credit which involve certain elements of credit risk in excess of the amount stated in the consolidated balance sheet. The Company’s exposure to credit loss in the event of non-performance by the customer is represented by the contractual amount of those instruments. Consistent credit policies are used by the Company for both on- and off-balance sheet items.

Following is a summary of off-balance sheet credit risk information (in thousands):

At March 31, 2004, funding of approximately 79% of the commitments to extend credit is dependent on the financial condition of the customer. The Company has the ability to withdraw such commitments at its discretion. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Based on management’s credit evaluation of the customer, collateral may be deemed necessary. Collateral requirements vary and may include accounts receivable, inventory, property, plant and equipment and income-producing commercial properties.

Standby letters of credit are conditional commitments issued by the Company which may require payment at a future date. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers.

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Earnings Per Share

Basic earnings per share are calculated by dividing net income by the weighted average number of shares of common stock outstanding.

Diluted earnings per common share are calculated by dividing net income by the weighted average number of shares of common stock outstanding, assuming the exercise of stock options and warrants. Such adjustments to the weighted average number of shares of common stock are made only when such adjustments dilute earnings per share.

On the date of the spin-off, F.N.B. stock options held by employees of the Company were converted into stock options of the Company. Since the stock options were converted after year end, it is not possible to estimate the dilutive impact to the Company for periods prior to the distribution. The conversion of the stock options provided the employees with a benefit similar to that provided by the F.N.B. options. Therefore, the dilutive effect of the stock options on the Company’s prior period’s weighted average shares outstanding is assumed by applying the one-for-one distribution ratio of the spin-off to the dilutive effect of such stock options of F.N.B. In addition, F.N.B. had convertible preferred stock outstanding during the three months ended March 31, 2003. F.N.B. redeemed its preferred stock in exchange for F.N.B. common stock during the second quarter of 2003. As such, the dilutive effect of F.N.B.’s preferred stock on the Company’s prior period’s weighted average shares outstanding is assumed by applying the exchange ratio to the dilutive effect of such securities of F.N.B.

The following tables set forth the computation of basic and diluted earnings per share (dollars in thousands, except share data):

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Cash Flow Information

Following is a summary of supplemental cash flow information (in thousands):

Stock-Based Compensation

Effective on the date of the spin-off, all outstanding F.N.B. options held by the Company’s employees were converted into options to purchase the Company’s common stock. No compensation expense was recognized as a result of the conversion. The following table shows pro-forma net income and earnings per share assuming stock options had been expensed based on the fair value of the options along with significant assumptions used in the Black-Scholes option pricing model for the three months ended March 31, 2004 (dollars in thousands, except per share data).

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Retirement Plan

The plan expense for the non-qualified benefit plan included the following components (in thousands):

Comprehensive Income

The components of comprehensive income, net of related tax, are as follows (in thousands):

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Business Segments

The Company operates in three reportable segments: a community bank, an insurance agency and a wealth management company. The Company’s community bank offers services traditionally offered by full-service commercial banks, including commercial and individual demand and time deposit accounts and commercial, mortgage and individual installment loans. The Company’s wealth management subsidiary offers trust services as well as various alternative investment products, including mutual funds and annuities. The Company’s insurance agency is a full-service insurance agency offering all lines of commercial and personal insurance through major carriers. Other items shown represent the parent company and eliminations which are necessary for purposes of reconciling to the consolidated amounts. The following tables provide financial information for these segments (in thousands):