U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


þ		QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2005

		OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number

UNITED HERITAGE BANKSHARES OF FLORIDA, INC.

(Exact Name of Registrant as Specified in Its Charter)


Florida		04-3691059

(State or Other Jurisdiction		(I.R.S. Employer
of Incorporation or Organization)		Identification No.)

1411 Edgewater Drive, Suite 100, Orlando, Florida		32804

(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code (407) 712-6151

United Community Bankshares of Florida, Inc.

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report.

Check whether the Registrant (1) filed all reports required to be filed by Section 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 þ No o

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act): Yes o No þ

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


Common stock, par value $.01 per share		4,859,562 shares outstanding at August 1, 2005

UNITED HERITAGE BANKSHARES OF FLORIDA, INC.

INDEX


	Page
Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets (Unaudited) — at June 30, 2005 and at December 31, 2004		2

Condensed Consolidated Statements of Income (Unaudited) — Three and Six months ended June 30, 2005 and 2004		3

Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) — Six months ended June 30, 2005 and 2004		4

Condensed Consolidated Statements of Cash Flows (Unaudited) — Six months ended June 30, 2005 and 2004		5

Notes to Condensed Consolidated Financial Statements (Unaudited)		6-9

Item 2. Management’s Discussion and Analysis		10-16

Item 3. Quantitative and Qualitative Disclosures about Market Risk		17

Item 4. Controls and Procedures		17

Part II. OTHER INFORMATION

Item 1. Legal Proceedings		17

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		17

Item 3. Defaults upon Senior Securities		18

Item 4. Submission of Matters to a Vote of Security Holders		18

Item 5. Other Information		18

Item 6. Exhibits		19

SIGNATURES		20
Ex-31.1 Section 302 CEO Certification
Ex-31.2 Section 302 CFO Certification
Ex-32.1 Section 906 CEO Certification
Ex-32.2 Section 906 CFO Certification

UNITED HERITAGE BANKSHARES OF FLORIDA, INC.

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets (Unaudited)
($ in thousands, except per share amounts)


	At			At
	June 30,			December 31,
	2005			2004
Assets

Cash and due from banks	$	22,231		$	12,283
Interest-earning demand deposits in other banks		11,792			9,857
Federal funds sold		125,915			63,831


Total cash and cash equivalents		159,938			85,971

Securities available for sale		117,879			68,640
Securities held to maturity		3,534			—
Loans, net of allowance for loan losses of $3,744 and $3,077		292,825			241,214
Property and equipment, net		7,102			6,863
Net deferred tax asset		1,566			1,180
Goodwill		950			950
Core deposit intangible, net		233			267
Other assets		1,976			1,382


Total assets	$	586,003		$	406,467


Liabilities and Shareholders’ Equity

Liabilities:
Deposits:
Noninterest-bearing demand deposits	$	84,156		$	52,472
Savings, NOW and money-market deposits		221,337			166,751
Time deposits		219,284			146,419


Total deposits		524,777			365,642
Borrowings		4,340			6,009
Other liabilities		983			1,026


Total liabilities		530,100			372,677


Shareholders’ Equity:
Common stock, $.01 par value, 20 million shares authorized, 4,807,018 and 3,263,406 shares issued and outstanding		48			33
Additional paid-in capital		53,534			32,021
Retained earnings		2,985			2,003
Accumulated other comprehensive loss		(664	)		(267	)


Total shareholders’ equity		55,903			33,790


Total liabilities and shareholders’ equity	$	586,003		$	406,467

See accompanying Notes to Condensed Consolidated Financial Statements.

UNITED HERITAGE BANKSHARES OF FLORIDA, INC.

Condensed Consolidated Statements of Income (Unaudited)
($ in thousands, except per share amounts)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2005		2004		2005		2004
Interest income:
Loans	$	4,679	$	3,380	$	8,738	$	6,703
Securities		1,041		340		1,781		732
Other		777		178		1,285		287


Total interest income		6,497		3,898		11,804		7,722


Interest expense:
Deposits		2,710		1,396		4,784		2,712
Borrowings		31		5		43		8


Total interest expense		2,741		1,401		4,827		2,720


Net interest income		3,756		2,497		6,977		5,002

Provision for loan losses		491		226		677		386


Net interest income after provision for loan losses		3,265		2,271		6,300		4,616


Noninterest income:
Service charges and fees on deposit accounts		133		100		256		193
Other		72		22		106		56


Total noninterest income		205		122		362		249


Noninterest expense:
Salaries and employee benefits		1,448		839		2,659		1,631
Occupancy and equipment		535		281		1,002		638
Other		753		529		1,409		1,183


Total noninterest expense		2,736		1,649		5,070		3,452


Income before income taxes		734		744		1,592		1,413

Income taxes		278		277		610		547


Net income	$	456	$	467	$	982	$	866


Earnings per share:
Basic	$	.09	$	.15	$	.24	$	.27


Diluted	$	.09	$	.14	$	.23	$	.26


Dividends per share	$	—	$	—	$	—	$	—

See accompanying Notes to Condensed Consolidated Financial Statements.

UNITED HERITAGE BANKSHARES OF FLORIDA, INC.

Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)

Six Months Ended June 30, 2005 and 2004
($ in thousands)


										Accumulated
										Other
										Compre-
	Common Stock				Additional		Retained			hensive			Total
	Number of		Par		Paid-In		Earnings			Income			Shareholders’
	Shares		Value		Capital		(Deficit)			(Loss)			Equity
Balance at December 31, 2003		3,256,888	$	33	$	31,970	$	(38	)	$	(289	)	$	31,676


Comprehensive income:
Net income		—		—		—		866			—			866

Other comprehensive income-change in unrealized loss on securities available for sale, net of tax		—		—		—		—			(347	)		(347	)



Comprehensive income														519


Balance at June 30, 2004		3,256,888	$	33	$	31,970	$	828		$	(636	)	$	32,195


Balance at December 31, 2004		3,263,406	$	33	$	32,021	$	2,003		$	(267	)	$	33,790


Comprehensive income:
Net income		—		—		—		982			—			982

Other comprehensive loss-change in unrealized loss on securities available for sale, net of tax		—		—		—		—			(397	)		(397	)



Comprehensive income														585

Net proceeds from the sale of common stock under a private placement offering		1,537,222		15		21,463		—			—			21,478

Proceeds from stock options exercised		6,390		—		50		—			—			50


Balance at June 30, 2005		4,807,018	$	48	$	53,534	$	2,985		$	(664	)	$	55,903

See accompanying Notes to Condensed Consolidated Financial Statements.

UNITED HERITAGE BANKSHARES OF FLORIDA, INC.

Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)


	Six Months Ended
	June 30,
	2005			2004
Cash flows from operating activities:
Net income	$	982		$	866
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		677			386
Depreciation and amortization of property and equipment		335			288
Deferred income tax (benefit)		(146	)		(111	)
Net amortization of premiums and discounts on securities		350			362
Amortization of core deposit intangible		34			33
Net change in period-end balances of:
Other assets		(594	)		(80	)
Other liabilities		(43	)		(23	)


Net cash provided by operating activities		1,595			1,721


Cash flows from investing activities:
Purchase of securities available for sale		(61,408	)		(3,078	)
Principal collections, calls and maturities of securities available for sale		11,182			10,559
Purchase of securities held to maturity		(3,534	)		—
Net funding of loans		(52,288	)		(26,261	)
Purchase of premises and equipment		(574	)		(427	)


Net cash used in investing activities		(106,622	)		(19,207	)


Cash flows from financing activities:
Net increase in deposits		159,135			45,795
Net decrease in borrowings		(1,669	)		(2,742	)
Net proceeds from sale of common stock		21,528			—


Net cash provided by financing activities		178,994			43,053


Net increase in cash and cash equivalents		73,967			25,567

Cash and cash equivalents at beginning of period		85,971			60,629


Cash and cash equivalents at end of period	$	159,938		$	86,196


Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	4,743		$	2,671


Income taxes	$	995		$	839


Noncash transaction-
Accumulated other comprehensive income (loss), net change in unrealized loss on securities available for sale, net of tax	$	(397	)	$	(347	)

See accompanying Notes to Condensed Consolidated Financial Statements.

UNITED HERITAGE BANKSHARES OF FLORIDA, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. General and Basis of Presentation. United Heritage Bankshares of Florida, Inc. (the “Holding Company”) owns 100% of the common stock of United Heritage Bank (the “Bank”) (together, the “Company”), a full service, FDIC-insured commercial-banking institution. The Company provides a variety of financial services to individuals and commercial customers through its eleven banking offices located in Orange and Seminole Counties, Florida.

In the opinion of the management of the Company, the accompanying condensed consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position at June 30, 2005 and the results of operations for the three and six months ended June 30, 2005 and 2004 and cash flows for the six months ended June 30, 2005 and 2004. The results of operations for the three and six months ended June 30, 2005, are not necessarily indicative of results that may be expected for the year ending December 31, 2005.

The condensed consolidated financial statements include the accounts of the Holding Company and the Bank. All significant intercompany accounts and transactions have been eliminated in consolidation.

2. Loans. The components of loans are summarized as follows (in thousands):


	At			At
	June 30,			December 31,
	2005			2004
Real estate — mortgage	$	154,240		$	133,257
Construction and land development		81,247			60,675
Commercial, financial and agricultural		55,511			44,720
Installment and consumer lines		6,067			5,998


Total loans		297,065			244,650

Allowance for loan losses		(3,744	)		(3,077	)
Deferred loan fees, net		(496	)		(359	)


Loans, net	$	292,825		$	241,214

(continued)

UNITED HERITAGE BANKSHARES OF FLORIDA, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued

3. Loan Impairment and Loan Losses. An analysis of the change in the allowance for loan losses follows (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2005		2004		2005			2004
Beginning balance	$	3,253	$	2,621	$	3,077		$	2,526
Provision for loan losses		491		226		677			386
Net loan recoveries (charge-offs)		—		22		(10	)		(43	)


Balance at June 30	$	3,744	$	2,869	$	3,744		$	2,869

The following summarizes impaired loans (in thousands):


	At
	June 30,			December 31,
	2005			2004
Impaired loans with a valuation allowance	$	68		$	83
Impaired loans without a valuation allowance		—			—
Less: Valuation allowance on impaired loans		(4	)		(5	)


Total net impaired loans	$	64		$	78

The average net investment in impaired loans and interest income recognized and received on impaired loans was as follows (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2005		2004		2005		2004
Average net investment in impaired loans	$	52	$	367	$	56	$	358


Interest income recognized on impaired loans	$	1	$	1	$	1	$	2


Interest income received on impaired loans	$	1	$	1	$	1	$	2

Nonaccrual and accruing loans past due 90 days or more follows (in thousands):


	At
	June 30,		December 31,
	2005		2004
Nonaccrual loans	$	68	$	50
Accruing loans past due 90 days or more		—		44


Total	$	68	$	94

(continued)

UNITED HERITAGE BANKSHARES OF FLORIDA, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued

4. Earnings Per Share. Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by adding the dilutive effect of any unexercised stock options, using the treasury stock method to determine dilution.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2005		2004		2005		2004
Weighted-average common shares outstanding		4,804,982		3,256,888		4,157,954		3,256,888
Dilutive shares issuable under stock option plan		83,954		38,580		84,894		38,580


Weighted-average common shares on a diluted basis		4,888,936		3,295,468		4,242,848		3,295,468

5. Private Placement Offering. On March 2, 2005, the Company sold 1,537,222 shares of its common stock in a private placement transaction at $14.00 per share. The Company raised $21.5 million after deducting related offering costs.

6. Stock Option Plans. The Company has two stock option plans permitting the granting of stock options for up to 915,956 shares (after amendment in 2005) of the Company’s common stock to selected officers, employees and directors of the Company.

The following is a summary of stock option transactions during the six-month periods ended June 30, 2005 and 2004:


				Average
	Number of			Exercise
	Options			Price
Outstanding, December 31, 2003		335,992		$	10.62
Granted		151,412			12.00


Outstanding, June 30, 2004		487,404		$	11.05


Outstanding, December 31, 2004		546,716		$	11.41
Granted		225,374			14.00
Exercised		(6,390	)		7.82


Outstanding, June 30, 2005		765,700		$	12.20

(continued)

UNITED HERITAGE BANKSHARES OF FLORIDA, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued

6. Stock Option Plans, Continued. Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation Transition and Disclosure (collectively, “SFAS 123”) encourages all entities to adopt a fair value based method of accounting for employee stock compensation plans, whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. However, it also allows an entity to continue to measure compensation cost for those plans using the intrinsic value based method of accounting prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB No. 25), whereby compensation cost is the excess, if any, of the quoted market price of the stock at the grant date (or other measurement date) over the amount an employee must pay to acquire the stock. The Company accounts for its stock option plans under the recognition and measurement principles of APB No. 25. No stock-based employee compensation cost is reflected in net income as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and income per share if the Company had applied the fair value recognition provisions of SFAS 123 to stock-based employee compensation ($ in thousands, except per share data).


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2005			2004			2005			2004
Weighted-average grant-date fair value per option of stock options issued during the period	$	4.98		$	4.42		$	4.97		$	4.42


Net income, as reported	$	456		$	467		$	982		$	866
Deduct: Total stock-based employee compensation determined under the fair value based method for all awards, net of related tax effect		(281	)		(150	)		(313	)		(300	)


Proforma net income	$	175		$	317		$	669		$	566


Basic income per share, as reported	$	.09		$	.15		$	.24		$	.27


Proforma basic income per share	$	.04		$	.10		$	.16		$	.18


Diluted income per share, as reported	$	.09		$	.14		$	.23		$	.26


Proforma diluted income per share	$	.04		$	.09		$	.16		$	.17

In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123 (revised 2004), “Share-Based Payment.” This Statement requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments, which includes stock options and warrants, based on the grant-date fair value of the award. That cost will be recognized over the period during which an employee is required to provide service in exchange for the award. Public entities will adopt this Statement using a modified version of prospective application. Under this application, this Statement will apply to new awards and to awards modified, repurchased, or cancelled after the required effective date and to awards not yet vested that exist as of the effective date. This Statement is effective as of the beginning of the first interim or annual reporting period that begins after December 15, 2005. Management has not yet determined what effect this Statement will have on the Company’s future consolidated financial statements.

7. Reclassifications. Certain amounts in the 2004 condensed consolidated financial statements have been reclassified to conform to the 2005 presentation.

UNITED HERITAGE BANKSHARES OF FLORIDA, INC.

Management’s Discussion and Analysis

Capital Resources and Commitments

The Company’s principal sources of funds are those generated by the Bank, including net increases in deposits and borrowings, principal and interest payments on loans, and proceeds from maturities of investment securities.

The Company uses its capital resources principally to fund existing and continuing loan commitments and to purchase investment securities. Off-balance sheet commitments to extend credit represent legally binding agreements to lend to customers with fixed expiration dates or other termination clauses. Since many commitments are expected to expire without being funded, committed amounts do not necessarily represent future cash requirements.

The following summarizes the Company’s contractual obligations, including certain on-balance sheet and off-balance sheet obligations, at June 30, 2005 (in thousands):


Contractual Obligations	Amount
Time deposit maturities	$	219,284
Borrowings		4,340
Operating leases		8,936
Loan commitments and unused lines of credit		76,552
Standby letters of credit		2,685
Undisbursed construction loans in process		36,513


Total	$	348,310

Management believes that the Company has adequate resources to fund all its commitments, that substantially all of its existing commitments will be funded within 12 months and, if so desired, that the Company can adjust the rates and terms on time deposits and other deposit accounts to retain or obtain new deposits in a changing interest rate environment.

Regulatory Capital Requirements

The Company (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory — and possibly additional discretionary — actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

UNITED HERITAGE BANKSHARES OF FLORIDA, INC.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and percentages of total and Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. If such minimum amounts and percentages are met, the Company and the Bank are considered “adequately capitalized”. If the actual amounts exceed the requirements of “adequately capitalized”, and meet even more stringent minimum standards, they are considered “well capitalized”. Management believes as of June 30, 2005, the Company and the Bank meet all capital adequacy requirements to which they are subject.

The table below shows the total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios of the Company and the Bank at June 30, 2005 and December 31, 2004, and the minimum required amounts and percentages ($ in thousands).


											Minimum
											To Be Well
											Capitalized Under
						Minimum Capital					Prompt Corrective
	Actual					Requirement					Action Provisions
	Amount		%			Amount		%			Amount		%
*As of June 30, 2005:*
Total capital to Risk- Weighted assets:
Consolidatd	$	59,128		15.89	%	$	29,777		8.00	%	$	37,222		10.00	%
Bank	$	58,589		15.68	%	$	29,897		8.00	%	$	37,371		10.00	%
Tier I Capital to Risk- Weighted Assets:
Consolidated	$	55,384		14.88	%	$	14,889		4.00	%	$	22,333		6.00	%
Bank	$	54,845		14.68	%	$	14,949		4.00	%	$	22,423		6.00	%
Tier I Capital to Average Assets:
Consolidatd	$	55,384		10.49	%	$	21,128		4.00	%	$	26,410		5.00	%
Bank	$	54,845		10.38	%	$	21,126		4.00	%	$	26,408		5.00	%

*As of December 31, 2004:*
Total capital to Risk- Weighted assets:
Consolidatd	$	34,746		12.00	%	$	23,159		8.00	%	$	28,949		10.00	%
Bank	$	34,393		11.83	%	$	23,258		8.00	%	$	29,072		10.00	%
Tier I Capital to Risk- Weighted Assets:
Consolidatd	$	31,669		10.94	%	$	11,580		4.00	%	$	17,369		6.00	%
Bank	$	31,316		10.77	%	$	11,629		4.00	%	$	17,443		6.00	%
Tier I Capital to Average Assets:
Consolidatd	$	31,669		8.12	%	$	15,592		4.00	%	$	19,490		5.00	%
Bank	$	31,316		8.04	%	$	15,586		4.00	%	$	19,482		5.00	%

UNITED HERITAGE BANKSHARES OF FLORIDA, INC.

The following table shows selected ratios for the periods ended or at the dates indicated:


	Six Months						Six Months
	Ended			Year Ended			Ended
	June 30,			December 31,			June 30,
	2005			2004			2004
Average equity as a percentage of average assets		9.57	%		8.81	%		9.15	%

Total equity to total assets at end of period		9.54	%		8.31	%		8.75	%

Return on average assets (1)		.40	%		.56	%		.51	%

Return on average equity (1)		4.20	%		6.38	%		5.53	%

Noninterest expense to average assets (1)		2.07	%		2.02	%		2.01	%

Nonperforming loans and foreclosed assets to total assets at end of period		.01	%		.02	%		.10	%


(1)		Annualized for the six months ended June 30, 2005 and 2004.


	Six						Six
	Months Ended			Year Ended			Month Ended
	June 30,			December 31,			June 30,
	2005			2004			2004
Loans		6.71	%		6.46	%		6.50	%
Investment securities		3.54	%		3.01	%		2.83	%
Other interest-earning assets		2.66	%		1.28	%		.91	%
All interest-earning assets		5.16	%		4.92	%		4.80	%
Savings, NOW and money-market deposits		2.00	%		1.61	%		1.52	%
Time deposits		3.21	%		2.75	%		2.72	%
All interest-bearing liabilities		2.60	%		2.11	%		2.06	%
Interest-rate spread		2.56	%		2.81	%		2.74	%

Changes in Financial Condition

During 2005, the Company continued its expansion in the Central Florida market place. The Company raised approximately $21.5 million in new capital and hired several key executives to help with this expansion. An additional banking office opened during the second quarter of 2005. This expansion has caused significant growth in the Company’s balance sheet. Total assets increased $179.5 million or 44.2%, from $406.5 million at December 31, 2004 to $586.0 million at June 30, 2005, primarily as a result of a $51.6 million increase in net loans, a $52.8 million increase in securities and an increase in cash and cash equivalents of $74.0 million. Deposits increased $159.1 million from $365.6 million at December 31, 2004 to $524.8 million at June 30, 2005. The $22.1 million net increase in stockholders’ equity during the six months ended June 30, 2005 resulted primarily from net proceeds of $21.5 million from the sale of common stock under a private placement offering and net income of $982,000, partially offset by a decrease in accumulated other comprehensive income (loss) of $397,000.

UNITED HERITAGE BANKSHARES OF FLORIDA, INC.

Results of Operations

The following table sets forth, for the periods indicated, information regarding (i) the total dollar amount of interest and dividend income of the Company from interest-earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average costs; (iii) net interest/dividend income; (iv) interest-rate spread; and (v) net interest margin. Yields and costs were derived by dividing annualized income or expense by the average balance of assets or liabilities, respectively, for the periods shown. The average balance of loans includes loans on which the Company has discontinued accruing interest. The yields and costs include certain fees which are considered to constitute adjustments to yields.


	Three Months Ended June 30,
	2005							2004
			Interest		Average					Interest		Average
	Average		and		Yield/			Average		and		Yield/
	Balance		Dividends		Cost			Balance		Dividends		Cost
	($ in thousands)
Interest-earning assets:
Loans	$	273,119	$	4,679		6.85	%	$	213,328	$	3,380		6.34	%
Securities		115,131		1,041		3.62	%		49,325		340		2.76	%
Other (1)		108,404		777		2.87	%		77,041		178		.92	%


Total interest-earning assets		496,654		6,497		5.23	%		339,694		3,898		4.59	%


Noninterest-earning assets		34,131							20,232


Total assets	$	530,785						$	359,926


Interest-bearing liabilities:
Savings, NOW and money-market accounts		197,398		1,059		2.15	%		150,810		572		1.52	%
Time deposits		197,671		1,651		3.34	%		122,551		824		2.69	%
Other borrowings(2)		4,913		31		2.52	%		3,509		5		.57	%


Total interest-bearing liabilities		399,982		2,741		2.74	%		276,870		1,401		2.02	%


Noninterest-bearing deposits		73,149							49,387
Noninterest-bearing liabilities		2,300							2,164
Stockholders’ equity		55,354							31,505


Total liabilities and stockholders’ equity	$	530,785						$	359,926


Net interest income			$	3,756						$	2,497


Interest-rate spread (3)						2.49	%						2.57	%


Net interest margin (4)						3.03	%						2.94	%


Ratio of interest-earning assets to interest-bearing liabilities		1.24							1.23


(1)		Includes interest-earning demand deposits, federal funds sold and Federal Home Loan Bank stock.

(2)		Includes securities sold under agreements to repurchase and federal funds purchased lines of credit.

(3)		Interest-rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

(4)		Net interest margin is annualized net interest income divided by average interest-earning assets.

UNITED HERITAGE BANKSHARES OF FLORIDA, INC.


	Six Months Ended June 30,
	2005							2004
			Interest		Average					Interest		Average
	Average		and		Yield/			Average		and		Yield/
	Balance		Dividends		Cost			Balance		Dividends		Cost
	($ in thousands)
Interest-earning assets:
Loans	$	260,284	$	8,738		6.71	%	$	207,456	$	6,703		6.50	%
Securities		100,641		1,781		3.54	%		52,022		732		2.83	%
Other (1)		96,672		1,285		2.66	%		63,731		287		.91	%


Total interest-earning assets		457,597		11,804		5.16	%		323,209		7,722		4.80	%


Noninterest-earning assets		31,294							20,954


Total assets	$	488,891						$	344,163


Interest-bearing liabilities:
Savings, NOW and money-market accounts		186,556		1,870		2.00	%		138,997		1,049		1.52	%
Time deposits		181,419		2,914		3.21	%		122,878		1,663		2.72	%
Other borrowings (2)		3,626		43		2.37	%		3,189		8		.50	%


Total interest-bearing liabilities		371,601		4,827		2.60	%		265,064		2,720		2.06	%


Noninterest-bearing deposits		69,208							45,594
Noninterest-bearing liabilities		1,274							2,024
Stockholders’ equity		46,809							31,481


Total liabilities and stockholders’ equity	$	488,891						$	344,163



Net interest income			$	6,977						$	5,002


Interest-rate spread (3)						2.56	%						2.74	%


Net interest margin (4)						3.05	%						3.11	%


Ratio of interest-earning assets to interest-bearing liabilities		1.23							1.22


(1)		Includes interest-earning demand deposits, federal funds sold and Federal Home Loan Bank stock.

(2)		Includes securities sold under agreements to repurchase and federal funds purchased lines of credit.

(3)		Interest-rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

(4)		Net interest margin is annualized net interest income divided by average interest-earning assets.

UNITED HERITAGE BANKSHARES OF FLORIDA, INC.

Comparison of the Three-Month Periods Ended June 30, 2005 and 2004

General Operating Results. Net income for the three-month period ended June 30, 2005 was $456,000, or $.09 per basic and diluted share, compared to $467,000, or $.15 per basic and $.14 per diluted share, for the comparable period in 2004. The slight decrease in net income resulted primarily from increases in noninterest expense and the provision for loan losses, mostly offset by an increase in net interest income. These increases have resulted from the Company’s continued expansion in Central Florida discussed earlier. The costs of new branches and related staffing and equipment have caused net earnings to decline slightly. While earnings remain relatively constant, earnings per share was impacted by additional capital raised as mentioned on page 12.

Interest Income. Interest income increased $2.6 million or 66.7% to $6.5 million for the three-month period ended June 30, 2005, compared to the three-month period ended June 30, 2004. The increase was due to an increase in the average balance of interest-earning assets from $339.7 million for the three months ended June 30, 2004 to $496.7 million for the three months ended June 30, 2005 and an increase in the weighted-average yield from 4.59% during the 2004 period to 5.23% during the 2005 period.

Interest Expense. Interest expense increased $1.3 million or 95.6%, from $1.4 million for the three-month period ended June 30, 2004 to $2.7 million for the three-month period ended June 30, 2005. The increase was primarily due to an increase in the average cost of interest-bearing liabilities from 2.02% for the three months ended June 30, 2004 to 2.74% for the comparable 2005 period and an increase of $123.1 million or 44.5% in average interest-bearing liabilities outstanding. Average interest-bearing deposits increased from $273.4 million outstanding during the three months ended June 30, 2004 to $395.1 million outstanding during the comparable period for 2005. Average borrowings increased from $3.5 million during the three months ended June 30, 2004 to $4.9 million for the comparable 2005 period.

Provision for Loan Losses. The provision for loan losses is charged to income to increase the total loan loss allowance to a level deemed appropriate by management. The provision is based upon the volume and type of lending conducted by the Company, the Company’s charge-off experience, industry standards, the amount of nonperforming loans, general economic conditions, particularly as they relate to the Company’s market area, and other factors related to the collectibility of the Company’s loan portfolio. The Company recorded provisions for loan losses for the three-month periods ended June 30, 2005 and 2004 of $491,000 and $226,000, respectively. Management believes that the allowance for loan losses, which was $3.7 million or 1.26% of gross loans at June 30, 2005 is adequate.

Noninterest Income. Noninterest income increased $83,000 or 68.0% from $122,000 during the 2004 period to $205,000 during the 2005 period. The increase was primarily due to a $40,000 increase in service charges and fees on deposit accounts and residential mortgage fees.

Noninterest Expense. Noninterest expense increased by $1.1 million or 65.9% from $1.6 million for the three-month period ended June 30, 2004 to $2.7 million for the three-month period ended June 30, 2005. The increase was primarily due to increases of $609,000 in salaries and employee benefits and $254,000 in occupancy and equipment expense all related to the overall growth of the Company.

Income Taxes. Income taxes were $278,000 for the three-month period ended June 30, 2005 (an effective tax rate of 37.9%) and $277,000 (an effective tax rate of 37.2%) for the corresponding period in 2004. The effective rate includes the state income tax rate of 5.5%.

UNITED HERITAGE BANKSHARES OF FLORIDA, INC.

Comparison of the Six-Month Periods Ended June 30, 2005 and 2004

General Operating Results. Net income for the six-month period ended June 30, 2005 was $982,000, or $.24 per basic and $.23 per diluted share, compared to $866,000, or $.27 per basic and $.26 per diluted share, for the comparable period in 2004. The increase in net income resulted primarily from an increase in net interest income, partially offset by an increase in noninterest expense.

Interest Income. Interest income increased $4.1 million or 52.9% to $11.8 million for the six-month period ended June 30, 2005, when compared to the six-month period ended June 30, 2004. The increase was due to an increase in the average balance of interest-earning assets from $323.2 million for the six months ended June 30, 2004 to $457.6 million for the six months ended June 30, 2005 and an increase in the weighted-average yield from 4.80% during the 2004 period to 5.16% during the 2005 period.

Interest Expense. Interest expense increased $2.1 million or 77.5%, from $2.7 million for the six-month period ended June 30, 2004 to $4.8 million for the six-month period ended June 30, 2005. The increase was primarily due to an increase in the average cost of interest-bearing liabilities from 2.06% for the six months ended June 30, 2004 to 2.60% for the comparable 2005 period and an increase of $106.5 million or 40.2% in average interest-bearing liabilities outstanding. Average interest-bearing deposits increased from $261.9 million outstanding during the six months ended June 30, 2004 to $368.0 million outstanding during the comparable period for 2005. Average borrowings increased from $3.2 million during the six months ended June 30, 2004 to $3.6 million for the comparable 2005 period.

Provision for Loan Losses. The provision for loan losses is charged to income to increase the total loan loss allowance to a level deemed appropriate by management. The provision is based upon the volume and type of lending conducted by the Company, the Company’s charge-off experience, industry standards, the amount of nonperforming loans, general economic conditions, particularly as they relate to the Company’s market area, and other factors related to the collectibility of the Company’s loan portfolio. The Company recorded provisions for loan losses for the six-month periods ended June 30, 2005 and 2004 of $677,000 and $386,000, respectively. Net loans charged off for the six-month periods ended June 30, 2005 and 2004 were $9,000 and $43,000, respectively. Management believes that the allowance for loan losses, which was $3.7 million or 1.26% of gross loans at June 30, 2005 is adequate.

Noninterest Income. Noninterest income increased $113,000 or 45.4% from $249,000 during the 2004 period to $362,000 during the 2005 period. The increase was primarily due to a $63,000 increase in service charges and fees on deposit accounts and residential mortgage fees.

Noninterest Expense. Noninterest expense increased by $1.6 million or 46.9% from $3.5 million for the six-month period ended June 30, 2004 to $5.1 million for the six-month period ended June 30, 2005. The increase was primarily due to increases of $1.0 million in salaries and employee benefits and $364,000 in occupancy and equipment expense all related to the overall growth of the Company.

Income Taxes. Income taxes were $610,000 for the six-month period ended June 30, 2005 (an effective tax rate of 38.3%) and $547,000 (an effective tax rate of 38.7%) for the corresponding period in 2004. The effective rate includes the state income tax rate of 5.5%.

UNITED HERITAGE BANKSHARES OF FLORIDA, INC.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk of loss from adverse changes in market prices and rates. The Company’s market risk arises primarily from interest-rate risk inherent in its lending, investment and deposit taking activities. The Company has little or no risk related to trading accounts, commodities or foreign exchange.

Management actively monitors and manages its interest rate risk exposure. The primary objective in managing interest-rate risk is to limit, within established guidelines, the adverse impact of changes in interest rates on the Company’s net interest income and capital, while adjusting the Company’s asset-liability structure to obtain the maximum yield-cost spread on that structure. Management relies primarily on its asset-liability structure to control interest rate risk. However, a sudden and substantial increase in interest rates could adversely impact the Company’s earnings, to the extent that the interest rates borne by assets and liabilities do not change at the same speed, to the same extent, or on the same basis. There has been no significant change in the Company’s market risk exposure since December 31, 2004 and March 31, 2005.

Item 4. Controls and Procedures

	a.		Evaluation of disclosure controls and procedures. The Company maintains controls and procedures designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Based upon their evaluation of those controls and procedures performed within 90 days of the filing date of this report, the Chief Executive and Chief Financial officers of the Company concluded that the Company’s disclosure controls and procedures were adequate.

	b.		Changes in internal controls. The Company made no significant changes in its internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation of those controls by the Chief Executive and Chief Financial officers.

UNITED HERITAGE BANKSHARES OF FLORIDA, INC.

Part II — OTHER INFORMATION

Item 1. Legal Proceedings

There are no material pending legal proceeding to which United Heritage Bankshares of Florida, Inc. or any of its subsidiaries is a party or to which any of their property is subject.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities

Not applicable.

Item 3. Defaults upon Senior Securities

Not applicable

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

Not applicable

Item 5. Other Information

Not applicable

UNITED HERITAGE BANKSHARES OF FLORIDA, INC.

Item 6. Exhibits

(a) The following exhibits are filed as part of this report.


3.1	—	Articles of Incorporation of United Community Bankshares of Florida, Inc. **

3.2	—	Bylaws of United Community Bankshares of Florida, Inc. ****

4.1	—	Specimen Stock Certificate of United Community Bankshares of Florida, Inc. **

10.1	—	Employment Agreement, dated as of March 15, 2004, between United Heritage Bank and David G. Powers ***

10.2	—	United Community Bankshares of Florida, Inc. Directors’ Stock Option Plan *

10.3	—	United Community Bankshares of Florida, Inc.’s Officers’ and Employees’ Stock Option Plan *

10.4	—	Employment Agreement, dated as of March 15, 2004, between United Heritage Bank and Shirley L. Tyler ***

10.5	—	Amendment to United Community Bankshares of Florida, Inc. Directors’ Stock Option Plan *****

10.6	—	Amendment to United Community Bankshares of Florida, Inc. Officers’ and Employees’ Stock Option Plan *****

14.1	—	Code of Ethics *

31.1	—	Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act

31.2	—	Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act

32.1	—	Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	—	Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


*		Incorporated by reference to the corresponding exhibit number in the Company’s Form 10-KSB filed for the year ended December 31, 2003.

**		Incorporated by reference to the corresponding exhibit number in the Company’s Form 10-QSB filed for the quarter ended March 31, 2003.

***		Incorporated by reference to the corresponding exhibit number in the Company’s Form 10-QSB filed for the quarter ended March 31, 2004.

****		Incorporated by reference to the corresponding exhibit number in the Company’s Form 10-QSB filed for the quarter ended June 30, 2004.

*****		Incorporated by reference to the corresponding exhibit number in the Company’s Form 10-Q filed for the quarter ended March 31, 2005.

UNITED HERITAGE BANKSHARES OF FLORIDA, INC.

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 hereunto duly authorized.

Date: August 5, 2005


		United Heritage Bankshares of Florida, Inc.

		By:		/s/ David G. Powers

		Name:		David G. Powers, President and
				Chief Executive Officer

		By:		/s/ Shirley L. Tyler

		Name:		Shirley L. Tyler, Executive Vice
				President and Treasurer

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UNITED HERITAGE BANKSHARES OF FLORIDA INC 10-Q