SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________

FORM 10-K/A-Amendment No. 1

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

For the Fiscal Year Ended December 31, 2008

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 No. 000-49734

Florida Community Banks, Inc.

(Exact name of registrant as specified in its charter)

Florida	35-2164765
(State or other jurisdiction of Incorporation or organization)	(I.R.S. Employer Identification No.)
1400 North 15th Street, Immokalee, Florida	34142-2202
(Address of principal executive offices)	(Including zip code)

(239)  657-3171

(Issuer's Telephone Number, Including Area Code)

SECURITIES REGISTERED UNDER SECTION 12(b) OF THE ACT:

	Name of each exchange
Title of each class	on which registered
None	None

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

Common Stock, $0.01 Par Value

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes oNo x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes oNo x

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 xNo o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filero	Accelerated filero
Non-accelerated filero (Do not check if a smaller reporting company)	Smaller reporting companyx

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).   Yes oNo x

The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant, computed by reference to the closing price of such stock on June 30, 2008, was approximately $45,840,697.

The number of shares of the Registrant’s common stock, $0.01 par value, outstanding on April 10, 2009, was 7,918,217

Document Incorporated by Reference

This statement has not been reviewed or confirmed for accuracy or relevance by the Federal Deposit Insurance Corporation.

Certain information required for Part III of this report is incorporated herein by reference to the Proxy Statement for the 2009 Annual Meeting of the Company’s stockholders

FLORIDA COMMUNITY BANKS, INC.

2008 Form 10-K/A Annual Report

TABLE OF CONTENTS

Item Number in Form 10-K	Description	Page or Location
PART I
Item 1.	Business		3
Item 1A.	Risk Factors		9
Item 1B.	Unresolved Staff Comments		10
Item 2.	Properties		11
Item 3.	Legal Proceedings		11
Item 4.	Submission of Matters to a Vote of Security Holders		11
PART II
Item 5.	Market for the Registrant's Common Equity, Related  Shareholder Matters and Issuer Purchases of Equity Securities		11
Item 6.	Selected Financial Data		12
Item 7.	Management's Discussion and Analysis of Financial
	Condition and Results of Operations		13
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		13
Item 8.	Financial Statements and Supplementary Data		31
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		82
Item 9A.	Controls and Procedures		82
Item 9B.	Other Information		83
PART III
Item 10.	Directors, Executive Officers and Corporate Governance		83
Item 11.	Executive Compensation		83
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters		83
Item 13.	Certain Relationships and Related Transactions and Director Independence		83
Item 14.	Principal Accountant Fees and Services		83
PART IV
Item 15.	Exhibits and Financial Statements Schedules		83
Signatures			86
Certification of Periodic Financial Reports

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PART I

ITEM 1. BUSINESS

General

Florida Community Banks, Inc. ("FCBI") is a bank holding company, which owns all of the common stock of Florida Community Bank ("Bank" or "FCB") (in this report we refer to FCBI and the Bank collectively, as the "Company"), two special purpose business trust’s organized to issue Trust Preferred Securities and 50% of a partnership organized to build and lease an office building.  The special purpose business trusts are not consolidated in the financial statements that are included elsewhere herein.  FCBI is a Florida corporation registered with the Board of Governors of the Federal Reserve System as a bank holding company under the Bank Holding Company Act of 1956, as amended.  Through its subsidiary bank, FCBI is engaged in the commercial banking business in southwestern Florida with offices in Collier, Lee, Hendry and Charlotte counties. At December 31, 2008, FCBI had total assets of approximately $979 million, total deposits of approximately $845 million and stockholders' equity of approximately $45 million.

Florida Community Bank is a Florida-chartered commercial bank, which commenced operations in Everglades City, Florida on May 19, 1923, under the name "Bank of the Everglades."  The Bank changed its place of business from Everglades City, Florida to Immokalee, Florida in September 1962. FCB changed its name from Bank of the Everglades to "First Bank of Immokalee" in July 1967 and then to "Florida Community Bank" in July 1996 as part of its merger with Tri-County Bank of Lehigh Acres. The Bank is subject to regulation by the Florida Department of Financial Services ("Department") and the Federal Deposit Insurance Corporation ("FDIC"). The Bank's main office is located at 1400 North 15th Street, Immokalee, Florida and its telephone number is (239) 657-3171. In addition to the main banking office in Immokalee, the Bank currently operates full-service branches in the southwest Florida cities of Lehigh Acres, LaBelle, Naples (Golden Gate area), Port Charlotte, Punta Gorda, Cape Coral and Ft. Myers.

The Company employs approximately 180 persons and it believes that its relationship with these employees is good.

The Bank is engaged primarily in soliciting deposits from the general public and investing such deposits, together with other funds, in commercial loans, consumer loans, agricultural loans, and real estate loans.  To a lesser extent, the Bank invests its funds in securities issued or guaranteed by agencies of the United States Government and municipalities.

The Bank operates as a locally operated institution aimed at providing prompt, efficient and personalized service to individuals, small and medium-sized businesses, professionals and other local organizations.  The Bank's primary service area encompasses Charlotte, Lee, Collier, Glades and Hendry Counties (the "PSA").  The Bank's principal markets within the PSA are:

(i) commercial and small business lending and deposit services;

(ii) residential real estate mortgage and retail lending and deposit services; and

(iii) commercial and residential real estate development lending.

The principal sources of funds for the Bank's loans and other investments are demand, time, savings and other deposits, amortization and prepayment of loans, sales to other lenders or institutions of loans or participations in loans, principal payments or maturities of investment securities, and borrowings.  The principal sources of income for the Bank are interest and fees collected on loans, including fees received for servicing loans sold to other lenders or institutions, and to a lesser extent, interest and dividends collected on other investments.  The principal expenses of the Bank are interest paid on savings and other deposits, interest paid on other borrowings by the Bank, employee compensation, office expenses and other overhead and operational expenses.

The Bank offers several deposit accounts, including demand deposit accounts, negotiable order of withdrawal accounts ("NOW" accounts), money market accounts, savings accounts, certificates of deposit and various retirement accounts.  In addition, the Bank belongs to an electronic banking network so that its customers may use the automated teller machines (the "ATMs") of other financial institutions and operates drive-in teller services and 24-hour depository vaults.

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The Bank offers the following loan services:

(a) consumer loans, automobile loans, real estate equity lines of credit, education loans and real estate loans secured by single-family residences;

(b) commercial and business loans for small to medium-sized companies, including Small Business Administration and other government-guaranteed financing;

(c) individual and builder short-term residential construction financing;

(d) home improvement loans; and

(e) commercial and residential real estate development loans.

The Bank provides a full range of competitive banking services and emphasizes the manner in which the services are delivered.  Management focuses its efforts on filling the void created by the decreasing number of locally-owned community banks due to acquisitions by large regional holding companies, which it believes has negatively impacted the personal nature of the delivery, quality and availability of banking services available in the PSA and surrounding areas.

Primary Service Area

The PSA enjoys an abundant work force, attractive business climate and a good relationship between the private and public sectors.

In general, commercial real estate in the PSA consists of small shopping centers and office buildings. The type of residential real estate within the PSA varies, with a number of condominiums, townhouses, apartments and single-family housing developments dispersed throughout the PSA.

Competition

The business of banking is highly competitive.  The Bank competes with other banks, savings and loan associations and credit unions within the PSA. The Bank believes that its operation as a locally owned and controlled bank with a broad base of ownership in the PSA enhances its ability to compete with those non-local financial institutions now operating in its market, but no assurances can be given in this regard.

The Bank's competitive strategy with respect to the financial institutions described above consists of:

· reviewing and acting upon loan requests quickly with a locally-based loan committee,

· maintaining flexible but prudent lending policies,

· personalizing service by establishing long-term banking relationships with its customers; and

· maintaining an appropriate ratio of employees to customers to enhance the level of service.

Facilities

The Bank's main office in Immokalee, Florida was purchased in 1962. At December 31, 2008, the Bank operated eleven branch offices; the new Caloosa branch opened on State Road 80 (east Fort Myers) in November 2007. The Bank had intended to open three new branches in 2008; Ave Maria, Bonita Springs and North Port, but due to the down turn in the economy these plans were put on hold. The Lehigh Acres branch was acquired in 1996 as a result of the acquisition of Tri-County Bank of Lehigh Acres.  The Golden Gate branch operates in a facility leased in 1997, on a month-to-month basis, with adjustments made annually to the lease cost based on the Consumer Price Index.  The LaBelle branch was acquired as a result of the acquisition of Hendry County Bank by merger in 1998. The land for the Port Charlotte branch was purchased in 1998 and the branch opened in 1999 after construction was completed. The facility for the Ft. Myers branch is leased for 15 years (with renewal options after that period) and opened in 2000. The Bank owns the Punta Gorda branch and the underlying land is subject to a 99-year lease, which commenced in 2000. Land for a second Cape Coral branch was purchased in 2003 and the branch opened operations in January 2005. All of the branch facilities are in good condition.

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Regulatory Environment

The following is a brief summary of the regulatory environment in which FCBI and the Bank operate and is not designed to be a complete discussion of all statutes and regulations affecting such operations, including those statutes and regulations specifically mentioned herein. Changes in the laws and regulations applicable to FCBI and the Bank can affect the operating environment in substantial and unpredictable ways. FCBI cannot accurately predict whether legislation will ultimately be enacted, and if enacted, what the ultimate effect that legislation would have on FCBI or its subsidiaries’ financial condition or results of operations. While banking regulations are material to the operations of FCBI and the Bank, it should be noted that supervision, regulation and examination of FCBI and the Bank are intended primarily for the protection of depositors, not security holders.

FCBI is a registered bank holding company and a financial holding company subject to supervision and regulation by the Board of Governors of the Federal Reserve System (Federal Reserve). As such, it is subject to the Bank Holding Company Act (BHCA) and many of the Federal Reserve’s regulations promulgated thereunder. The Federal Reserve has broad enforcement powers over bank holding companies, including the power to impose substantial fines and civil money penalties.

The Bank is subject to comprehensive regulation, examination and supervision by the Florida Office of Financial Regulation (“OFR”) and the FDIC, and is subject to other laws and regulations applicable to banks. Such regulations include limitations on loans to a single borrower and to the Bank's directors, officers and employees; restrictions on the opening and closing of branch offices; the maintenance of required capital and liquidity ratios; the granting of credit under equal and fair conditions; disclosure of the costs and terms of such credit; and restrictions as to permissible investments. The Bank is examined periodically by both the OFR and the FDIC and submits periodic reports regarding its financial condition and other matters to each of them. Both the OFR and the FDIC have a broad range of powers to enforce regulations under their respective jurisdictions, and to take discretionary actions determined to be for the protection of the safety and soundness of the Bank, including the institution of cease and desist orders and the removal of directors and officers.

The Federal Reserve has adopted regulations which provide for minimum risk-based and leverage capital guidelines for bank holding companies. The minimum required ratio of total capital to risk-weighted assets (including certain off-balance sheet items, such as standby letters of credit) is 8%, of which 4% must consist of Tier I capital. The minimum required leverage capital ratio is 3% for bank holding companies that meet certain specified criteria, including that they have the highest regulatory rating. A minimum leverage ratio of 4% is required for bank holding companies not meeting these criteria. Generally, bank holding companies are expected to operate well above the minimum capital ratios. Higher capital ratios may be required for any bank holding company if warranted by its particular circumstances or risk profile. Failure to meet capital guidelines can subject a bank holding company to a variety of formal and informal enforcement remedies, including restrictions on its operations and activities.

Regarding depository institutions, the prompt corrective action provisions of the federal banking statutes establish five capital categories (“well capitalized”, “adequately capitalized”, “undercapitalized”, “significantly undercapitalized” and “critically undercapitalized”), and impose significant restrictions on the operations of an institution that is not at least adequately capitalized. To be considered “well capitalized,” an institution must maintain a ratio of total capital to risk weighted assets of at least 10% of which 6% must consist of Tier I capital as well as a Tier I leverage ratio of at least 5%. To be considered adequately capitalized, the institution must maintain those same capital ratios at levels equal to or exceeding 8%, 4% and 4%, respectively. Under certain circumstances, an institution may be downgraded to a category lower than that warranted by its capital levels and subjected to the supervisory restrictions applicable to institutions in the lower capital category. As of December 31, 2008, the Bank met two of the three ratios to be considered “adequately capitalized” under the regulatory framework for prompt corrective action; however, given the Bank’s higher risk profile, the Bank is considered to be undercapitalized at this time. See specific discussion of the Bank’s and FCBI’s capital adequacy as discussed under Current Regulatory Matters.

An undercapitalized depository institution is subject to restrictions in a number of areas, including capital distributions, payments of management fees and expansion. In addition, an undercapitalized depository institution is required to submit a capital restoration plan. A depository institution’s holding company must guarantee the capital plan up to an amount equal to the lesser of 5% of the depository institution’s assets at the time it becomes undercapitalized or the amount needed to restore the capital of the institution to the levels required for the institution to be classified as adequately capitalized at the time the institution fails to comply with the plan. A depository institution is treated as if it is significantly undercapitalized if it fails in any material respect to implement a capital restoration plan.

Significantly undercapitalized depository institutions may be subject to a number of additional significant requirements and restrictions, including requirements to sell sufficient voting stock to become adequately capitalized, to improve management, to restrict asset growth, to prohibit acceptance of correspondent bank deposits, to restrict senior executive compensation and to limit transactions with affiliates. Critically undercapitalized depository institutions are further subject to restrictions on paying principal or interest on subordinated debt, making investments, expanding, acquiring or selling assets, extending credit for highly-leveraged transactions, paying excessive compensation, amending their charters or bylaws and making any material changes in accounting methods. In general, a receiver or conservator must be appointed for a depository institution within 90 days after the institution is deemed to be critically undercapitalized.

Support of Subsidiary Bank

Under Federal Reserve policy, FCBI is expected to act as a source of financial strength to, and to commit resources to support, the Bank. This support may be required at times when, absent such Federal Reserve policy, FCBI might not otherwise be inclined to provide it. In the event of a bank holding company’s bankruptcy, any commitment by the bank holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment.

Current Regulatory Matters

Due to their current condition and results of operations, FCBI and the Bank are operating under heightened regulatory scrutiny and have been and will be taking steps which are expected to improve their asset quality. The Bank entered into a Cease and Desist Order Agreement (Order) with the OFR on October, 17, 2008 and FCBI entered into a written agreement (Agreement) with the Federal Reserve Bank of Atlanta on February 13, 2009.

The Order requires the Bank to: (i) recruit three new directors; (ii) review its management to determine if staffing changes or additions are required; (iii) modify its management succession plan; (iv) increase Board oversight and minute keeping; (v) obtain regulatory clearance for the appointment of executive officers; (vi) adopt and adhere to a capital plan for maintaining a Tier 1 Leverage Capital ratio of at least 8%, a Tier 1 Risk Based Capital ratio of at least 10% and a Total Risk Based Capital ratio of at least 12%; (vii) obtain regulator approval for the payment of dividends; (viii) charge off or collect all assets classified as “loss” by the OFR; (ix) establish a special assets committee to adopt a plan to reduce the Bank’s risk exposure to adversely classified assets; (x) refrain, except under certain circumstances, from making loans to borrowers who has had a loan charged off or adversely classified by the Bank; (xi) evaluate and reorganize the Bank’s special assets department and policies; (xii) address and cure deficiencies in loan administration, underwriting, loan policy and loan review; (xiii) review, monitor and reduce the Bank’s credit concentration risk; (xiv) review and modify its allowance for loan and lease losses methodology; (xv) develop a plan to increase earnings; (xvi) amend its 2008 business plan budget and develop a business plan and budget for 2009 and 2010 to reflect the Bank’s current condition and prospects; (xvii) not increase its amount of brokered deposits and develop a plan to reduce their level of use; (xviii) not borrow money other than deposits, Federal Funds purchased or Federal Home Loan Bank advances without regulatory approval; (xix) evaluate its interest rate risk modeling system: and (xx) establish a compliance committee of the Board and file periodic reports with the OFR and FDIC as to compliance with the Order.

The Agreement requires FCBI to: (i) not pay any dividends without the consent of the FRB; (ii) not accept any dividends or distributions from the Bank which would serve to reduce the Bank’s capital without the approval of the FRB; (iii) not make any payments on its subordinated debentures or trust preferred securities without the FRB’s consent; (iv) not incur or guarantee any debt without the FRB’s consent; (v) not purchase or redeem any Company stock; (vi) prepare and submit to the FRB a plan to provide sufficient capital to the Company and the Bank; (vii) ensure ongoing compliance by the Bank with FRB regulations related to transactions between the Bank and its affiliates; (viii) prepare and submit to the FRB procedures to ensure compliance with the FRB’s reporting requirements; (ix) obtain the FRB’s non-objection to the appointment of any new directors or senior executive officers; (x) limit indemnification and severance payments in accordance with applicable law; and (xi) submit monthly progress reports to the FRB.

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Capital Adequacy

As of December 31, 2008, the Bank’s and FCBI’s Capital ratio’s were below the minimum ratios set in the OFR’s Order.  The Bank’s Tier 1 Leverage Capital Ratio was 4.78%, the Tier 1 Risk Based Capital Ratio was 6.31% and the Total Risk Based Capital Ratio was 7.60%.  FCBI’s Tier 1 Leverage Capital Ratio was 3.45%, the Tier 1 Risk Based Capital Ratio was 4.55% and the Total Risk Based Capital Ratio was 7.83%. The Bank and FCBI face a serious risk of their capital ratios falling further, to the point where they may be considered “significantly under capitalized.”

In order to return the Bank’s capital ratios to the level prescribed by the Order, the Bank is looking at all of its options. Issuing more stock to raise capital is now critical, along with shrinking the Bank; doing both could return the capital ratios to where the Bank would be considered “well capitalized” again.  It must also be noted that failure to adequately address the regulatory concerns may result in further actions by the banking regulators, which could include appointment of a receiver or conservator of the Bank’s assets.

FDIC Insurance Assessments

The FDIC is an independent federal agency established originally to insure the deposits, up to prescribed statutory limits, of federally insured banks and to preserve the safety and soundness of the banking industry. The FDIC has adopted a risk-based assessment system for insured depository institutions that takes into account the risks attributable to different categories and concentrations of assets and liabilities.

The Bank’s deposit accounts are insured by the FDIC to the maximum extent permitted by law. The Bank pays deposit insurance premiums to the FDIC based on a risk-based assessment system established by the FDIC for all insured institutions. Institutions considered well-capitalized and financially sound pay the lowest premiums, while those institutions that are less than adequately capitalized and of substantial supervisory concern pay the highest premiums. During 2008, assessment rates for insured institutions ranged from 5 cents per $100 of assessable deposits for well-capitalized institutions with minor supervisory concerns to 43 cents per $100 of assessable deposits for undercapitalized institutions with substantial supervisory concerns. In 2009, assessment rates are expected to range between 12 and 50 cents per $100 of assessable deposits for the first quarter and 8 and 77.5 cents per $100 of assessable deposits for the remainder of the year. The large premium increase is due to the Emergency Economic Stabilization Act of 2008 and the Temporary Liquidity Guarantee Program, both of which increased the deposit insurance coverage available to Colonial’s depositors.

Emergency Economic Stabilization Act of 2008.     In October 2008, the Emergency Economic Stabilization Act of 2008 (EESA) was signed into law. The EESA temporarily revises the federal deposit insurance laws by increasing the basic deposit insurance coverage from $100,000 to $250,000 per depositor. This revision is currently effective through December 31, 2009.

Temporary Liquidity Guarantee Program.     In order to promote financial stability in the economy, the FDIC adopted the Temporary Liquidity Guarantee Program (TLGP) on October 13, 2008. Participation in the program is voluntary. However, once participation is elected, it can not be revoked. The Bank has chosen to participate in the Transaction Account Guarantee Program component of the TLGP. Under the Transaction Account Guarantee Program, the FDIC will fully insure funds held in noninterest-bearing transaction accounts. Noninterest-bearing transaction accounts are ones that do not accrue or pay interest and for which the institution does not require an advance notice of withdrawal. Also covered are interest on lawyers’ trust accounts (IOLTA) and negotiable order of withdrawal (NOW) accounts with interest rates lower than 50 basis points. These revisions are only effective through December 31, 2009.

Federal Deposit Insurance Reform Act of 2005.    In February 2006, the Federal Deposit Insurance Reform Act of 2005 and the Federal Deposit Insurance Reform Conforming Amendments Act of 2005 (collectively, the Reform Act) were signed into law. The Reform Act revised the laws concerning federal deposit insurance by making the following changes: (i) merging the Bank Insurance Fund and the Savings Association Insurance Fund into a new fund, the Deposit Insurance Fund (DIF), effective March 31, 2006; (ii) increasing the deposit insurance coverage for certain retirement accounts to $250,000 effective April 1, 2006; (iii) beginning in 2010, deposit insurance coverage on individual accounts may be indexed for inflation; (iv) the FDIC will have more discretion in managing deposit insurance assessments; and (v) eligible institutions will receive a one-time initial assessment credit.

The Reform Act authorized the FDIC to revise the risk-based assessment system. Accordingly, insurance premiums are based on a number of factors, including the risk of loss that insured institutions pose to the DIF. The Reform Act replaced the minimum reserve ratio of 1.25% with a range of between 1.15% and 1.50% for the DIF, depending on projected losses, economic changes and assessment rates at the end of each calendar year. In addition, the FDIC is no longer prohibited from charging banks in the lowest risk category when the reserve ratio premium is greater than 1.25%.

In November 2006, the FDIC adopted changes to its risk-based assessment system. Under the new system, the FDIC will evaluate an institution’s risk based on supervisory ratings for all insured institutions, financial ratios for most institutions and long-term debt issuer ratings for certain large institutions.

In addition to deposit insurance assessments, the FDIC is authorized to collect assessments against insured deposits to be paid to the Finance Corporation (FICO) to service FICO debt incurred during the 1980’s. The FICO assessment rate is adjusted quarterly. The average annual assessment rate in 2008 was 1.12 cents per $100 for insured deposits. For the first quarter of 2009, the FICO assessment rate for such deposits will be 1.14 cents per $100 of assessable deposits.

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FDIC Regulations

Dividend Restrictions.  In addition to dividend restrictions placed on the Bank by the FDIC based on the Bank's minimum capital requirements, the Florida Financial Institutions Code prohibits the declaration of dividends in certain circumstances.  Section 658.37 (Florida Statutes), prohibits the declaration of any dividend until a bank has charged off bad debts, depreciation and other worthless assets, and has made provision for reasonably-anticipated future losses on loans and other assets.  Such dividends are limited to the aggregate of the net profits of the dividend period, combined with a bank's retained net profits for the preceding two years.  A bank may declare a dividend from retained net profits that accrued prior to the preceding two years with the approval of the OFR.  However, a bank will be required, prior to the declaration of a dividend on its common stock, to carry 20% of its net profits for such preceding period to its surplus fund, until the surplus fund equals at least the amount of the bank's common and preferred stock then issued and outstanding.  In no event may a bank declare a dividend at any time in which its net income from the current year, combined with its retained net income from the preceding two years is a loss or which would cause the capital accounts of the bank to fall below the minimum amount required by law, regulation, order or any written agreement with the OFR or other state or federal regulatory agency.

Riegle-Neal Interstate Banking and Branching Efficiency Act.  The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 provides that as of June 1, 1997, adequately capitalized and managed banks will be able to engage in interstate branching by merging banks in different states, including Florida, which did not opt out of the application of this provision.  If a state did not opt out, banks will be required to comply with the host state's regulations with respect to branching across state lines.

Gramm-Leach-Bliley Act.  On November 12, 1999, President Clinton signed into law the Gramm-Leach-Bliley Act which reforms and modernizes certain areas of financial services regulation.  The law permits the creation of new financial services holding companies that can offer a full range of financial products under a regulatory structure based on the principle of functional regulation.  The legislation eliminates the legal barriers to affiliations among banks and securities firms, insurance companies, and other financial services companies.  The law also provides financial organizations with the opportunity to structure these new financial affiliations through a holding company structure or a financial subsidiary.  The new law reserves the role of the Federal Reserve Board as the supervisor for bank holding companies. At the same time, the law provides a system of functional regulation, which is designed to utilize the various existing federal and state regulatory bodies.

The law also includes a minimum federal standard of financial privacy.  Financial institutions are required to have written privacy policies that must be disclosed to customers.  The disclosure of a financial institution's privacy policy must take place at the time a customer relationship is established and not less than annually during the continuation of the relationship.  The act also provides for the functional regulation of bank securities activities.  The law repeals the exemption that banks were afforded from the definition of "broker," and replaces it with a set of limited exemptions that allow the continuation of some historical broker activities performed by banks.  In addition, the act amends the securities laws to include banks within the general definition of dealer. Regarding new bank products, the law provides a procedure for handling products sold by banks that have securities elements.

In the area of CRA activities, the law generally requires that financial institutions address the credit needs of low-to-moderate income individuals and neighborhoods in the communities in which they operate.  Bank regulators are required to take the CRA ratings of a bank or of the bank subsidiaries of a holding company into account when acting upon certain branch and bank merger and acquisition applications filed by the institution.  Under the law, financial holding companies and banks that desire to engage in new financial activities are required to have satisfactory or better CRA ratings when they commence the new activity.  Most of the provisions of the law took effect on March 11, 2000, with other provisions being phased in over a one to two year period thereafter.  It is anticipated that the effects of the law, while providing additional flexibility to bank holding companies and banks, may result in additional affiliations of different financial services providers, as well as increased competition, resulting in lower prices, more convenience, and greater financial products and services available to consumers.

USA Patriot Act. On October 26, 2001, President Bush signed into law the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the "USA Patriot Act"), which is designed to deny terrorists and others the ability to obtain access to the United States financial system. Title III of the USA Patriot Act is the International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001. Among its provisions, the USA Patriot Act mandates or will require financial institutions to implement additional policies and procedures with respect to, or additional measures, including additional due diligence and recordkeeping, designed to address, any or all of the following matters, among others: money laundering; suspicious activities and currency transaction reporting; and currency crimes. The U.S. Department of the Treasury in consultation with the Federal Reserve Board and other federal financial institution regulators has promulgated rules and regulations implementing the USA Patriot Act which (i) prohibits U.S. correspondent accounts with foreign banks that have no physical presence in any jurisdiction; (ii) require financial institutions to maintain certain records for correspondent accounts of foreign banks; (iii) require financial institutions to produce certain records relating to anti-money laundering compliance upon request of the appropriate federal banking agency; (iv) require due diligence with respect to private banking and correspondent banking accounts; (v) facilitate information sharing between the government and financial institutions; and (vi) require financial institutions to have in place a money laundering program. In addition, an implementing regulation under the USA Patriot Act regarding verification of customer identification by financial institutions has been proposed, although such regulation has not yet been finalized. The Company has implemented, and will continue to implement, the provisions of the USA Patriot Act as such provisions become effective. The Company currently maintains and will continue to maintain policies and procedures to comply with the USA Patriot Act requirements. At this time, the Company does not expect that the USA Patriot Act will have a significant impact on the financial position of the Company.

Federal Reserve System.  FCBI is a bank holding company subject to the supervision and regulations of the Board of Governors of the Federal Reserve System ("Federal Reserve").  As such, the Company is required to file periodic reports and such other information as the Federal Reserve may deem necessary.  The Federal Reserve also conducts examinations of the Company.  The Federal Reserve maintains the position that the Company should serve as a source of financial and managerial strength for the Bank and may not conduct its operations in an unsound manner.

Corporate Governance. The Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley Act"), which became law on July 30, 2002, and added new legal requirements for public companies affecting corporate governance, accounting and corporate reporting.

The Sarbanes-Oxley Act provides for, among other things:

§ a prohibition on personal loans made or arranged by the issuer to its directors and executive officers (except for loans made by a bank subject to Regulation O);

§ independence requirements for audit committee members;

§ independence requirements for company auditors;

§ certification of financial statements on Forms 10-K and 10-Q, reports by the chief executive officer and chief financial officer;

§ the forfeiture by the chief executive officer and the chief financial officer of bonuses or other incentive-based compensation and profits from the sale of an issuer's securities by such officers in the twelve month period following the initial publication of any financial statements that later require restatement due to corporate misconduct;

§ disclosure of off-balance sheet transactions;

§ two-business day filing requirements for insiders filing Form 4s;

§ disclosure of a code of ethic for financial officers and filing a Form 8-K for a change in or waiver of such code;

§ the reporting of securities violations "up the ladder" by both in-house and outside attorneys;

§ restrictions on the use of non-GAAP financial measures in the press release and SEC filings;

§ the formation of  a public accounting oversight board; and

§ various increase criminal penalties for violations of securities laws.

7

Recent Regulatory Developments

Changes in the federal deposit insurance program were recommended during 2003 by the FDIC and in the federal budget. A deposit insurance reform bill that would, among other things, merge the BIF and the SAIF, increase the index deposit insurance coverage, give the FDIC flexibility in setting premium assessments, and replace a fixed deposit reserve ratio with a reserve range, was passed by the House of Representatives in April 2003, but no action on the subject was taken by the Senate during the remainder of the year. It is not possible to predict if deposit insurance reform legislation will be enacted, or if enacted, what its effect will be on our banking subsidiary.

Federal banking regulators continued their preparations for the expected issuance by the Basel Committee on Banking Supervision of final "Basel II" regulatory capital guidelines, would mandate changes for large banks in the way in which their risk-based capital requirements are calculated. The guidelines are widely believed likely to permit significant reductions in the levels of required capital for such banks. It is uncertain at the present time if our banking subsidiary or the Holding Company will be either required to or permitted to make changes in the regulatory capital structure in accordance with Basel II guidelines.

The foregoing is necessarily a general description of certain provisions of federal and state law and does not purport to be complete.  Proposals to change the laws and regulations governing the banking industry are frequently introduced in Congress, in the state legislatures and before the various bank regulatory agencies.  The likelihood and timing of any such changes and the impact such changes might have on the Company cannot be determined at this time.

Available Information

The Company presently maintains an internet website located at www.floridacommunitybank.net on which, among other things, the Company makes available, free of charge, select reports that it files with the Securities and Exchange Commission.

Also, paper copies of the Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form  8-K, and a copy of the Company Code of Ethics as adopted and filed with the Securities and Exchange Commission are available at no charge because all reports are currently not on the Company's website. Those who would like a paper copy should contact Guy W. Harris, Chief Financial Officer, Florida Community Banks, Inc., 1400 North 15th Street, Immokalee, Florida 34142. Currently periodic reports are filed with the Securities and Exchange Commission (including Form 10-Ks, Form 10-Qs, Proxy Statements, etc.). These periodic reports are filed electronically via EDGAR and they can be reviewed at the Securities and Exchange Commission's website: www.sec.gov.

8

ITEM 1A. RISK FACTORS

Industry Factors

The commercial banking business can be affected by general business, economic and market conditions. Our business and earnings are affected by conditions that include short-term and long-term interest rates, inflation, deflation, money supply, fluctuations in both debt and equity capital markets and the strength of the U.S. and local economy.  The local economy can be affected by weather conditions that include but are not limited to tropical storms, hurricanes and below freezing temperatures. For example, an economic downturn that suddenly decreased property values, caused an increase in unemployment, or other events that negatively impact household and/or corporate customers could decrease ability to pay interest or principal on loans or cause a decrease in the demand for the Company's products and services.

The fiscal and monetary policy of the Board of Governors of the Federal Reserve System can significantly affect the earnings of the Company. The Federal Reserve generally sets the cost of funds for lending and investing and the return we earn on loans and investments, which in turn has an impact on our net interest margin. The rate policy can also affect the value of financial instruments we hold such as debt securities.  The Federal Reserve policy is hard to predict and beyond the control of the Company.

The Company is subject to extensive governmental regulation. The regulations are designed for the protection of the depositors, federal deposit insurance funds, federal crimes prevention and the banking system as a whole. Federal and state law limits the Company's ability to declare and pay dividends. Also, failure to comply with laws, regulations or policies could result in sanctions by the regulatory agencies and damage to our reputation.  Changes to regulations, including changes in interpretation or implementation of statures, regulations or policies can have a substantial and unpredictable effect on the Company; refer to the discussions in Item 1 - Business and Note 12 - Regulatory Capital Matters.

Company Factor

There is no established trading market for the Company's stock, and there can be no assurance that a trading market will develop during the near future. See Item 5 - Market for the Registrants Common Equity And Related Shareholder Matters.

The Company continuously is adapting to changes to mitigate risks that challenge the success of the business. If the Company were unable to fully adjust to any specific risk, or make changes imposed by the risk environment, it could have an effect on financial performance.  The Company competes, and will continue to compete, with well established banks, credit unions, insurance companies and other financial institutions, some of which have greater resources and lending limits than the Company. Some of these competitors may also provide certain services that the Company does not provide.

If a significant number of loans are not repaid, it would have an adverse effect on our earnings and overall financial condition. Like all financial institutions, we maintain an allowance for loan losses to provide for losses inherent in the loan portfolio. The allowance for loan losses reflects our management’s best estimate of probable losses in the loan portfolio at the relevant balance sheet date. This evaluation is primarily based upon a review of our and the banking industry’s historical loan loss experience, known risks contained in the loan portfolio, composition and growth of the loan portfolio, and economic factors. However, the determination of an appropriate level of loan loss allowance is an inherently difficult process and is based on numerous assumptions. As a result, our allowance for loan losses may not be adequate to cover actual losses, and future provisions for loan losses may adversely affect our earnings.

A significant portion of our loan portfolio consists of mortgages secured by real estate located in the Charlotte/Hendry/Glades/Collier/Lee County markets. Real estate values and real estate markets are generally affected by, among other things, changes in national, regional or local economic conditions; fluctuations in interest rates and the availability of loans to potential purchasers; changes in the tax laws and other governmental statutes, regulations and policies; and acts of nature. If real estate prices continue to decline in any of these markets, the value of the real estate collateral securing our loans could be reduced. Such a reduction in the value of our collateral could increase the number of non-performing loans and adversely affect our financial performance.

9

Our success is largely dependent on the personal contacts of our officers and employees in our market areas. If we lose key employees, temporarily or permanently, our business could be hurt. We could be particularly hurt if our key employees went to work for our competitors. Our future success depends on the continued contributions of our existing senior management personnel, including our President and Chief Executive Officer Stephen L. Price and our market area Presidents.

Our directors, if acting together, will be able to significantly influence all matters requiring approval by our shareholders, including elections of directors and the approval of mergers or other business combination transactions. Our executive officers and directors own approximately 1,169000 shares, representing approximately 15% of the total number of shares outstanding. The interest of these shareholders may differ from the interests of our other shareholders, and these shareholders, acting together, will be able to influence all matters requiring approval by shareholders. As a result, these shareholders could approve or cause us to take actions of which you may disapprove or that may be contrary to your interests and those of other investors.

Our primary market areas are Charlotte/Hendry/Glades/Collier/Lee Counties, Florida. The banking business in these areas is extremely competitive, and the level of competition facing us following our expansion plans may increase further, which may limit our asset growth and profitability. Our subsidiary bank experiences competition in both lending and attracting funds from other banks, savings institutions, and non-bank financial institutions located within its market area, many of which are significantly larger institutions. Non-bank competitors competing for deposits and deposit type accounts include mortgage bankers and brokers, finance companies, credit unions, securities firms, money market funds, life insurance companies and the mutual funds industry. For loans, we encounter competition from other banks, savings associations, finance companies, mortgage bankers and brokers, insurance companies, small loan and credit card companies, credit unions, pension trusts and securities firms.

We have the power to issue common stock without shareholder approval, up to the number of authorized shares set forth in our Articles of Incorporation. Our board of directors may determine from time to time a need to obtain additional capital through the issuance of additional shares of common stock or other securities, subject to limitations imposed by the Federal Reserve Board. There can be no assurance that such shares can be issued at prices or on terms better than or equal to the terms obtained by our current shareholders. The issuance of any additional shares of common stock by us in the future may result in a reduction of the book value or market price, if any, of the then-outstanding common stock. Issuance of additional shares of common stock will reduce the proportionate ownership and voting power of our existing shareholders.

Pursuant to our Articles of Incorporation, we have the authority to issue additional series of preferred stock and to determine the designations, preferences, rights and qualifications or restrictions of those shares without any further vote or action of the shareholders. The rights of the holders of our common stock will be subject to, and may be materially adversely affected by, the rights of the holders of any preferred stock that may be issued by us in the future.

Our shares of common stock are not deposits, savings accounts or other obligations of the Company, our subsidiaries or any other depository institution, are not guaranteed by the Company or any other entity, and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

We may need to incur additional debt or equity financing in the near future to fund future growth and meet our capital needs. We cannot assure you that such financing will be available to us on acceptable terms or at all. If we are unable to obtain future financing, we may not have the resources available to fund our planned growth.

Additional risk factors could have a negative impact on the Company and its performance. Many of these factors are general economic and financial market conditions, competition, consolidation of the financial services industry, litigation, regulatory actions and operating conditions.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

10

ITEM 2. PROPERTIES

For the description of the property of the Company, see "ITEM I - BUSINESS - Facilities."

ITEM 3. LEGAL PROCEEDINGS

On October 17, 2008, Florida Community Banks, Inc.’s wholly-owned subsidiary, Florida Community Bank (“Bank”), the Florida Office of Financial Regulation (“OFR”) and the Federal Deposit Insurance Corporation (“FDIC”) entered into a Stipulation and Consent of Entry of Order to Cease and Desist, which incorporated by reference an Order to Cease and Desist for the Bank (“Order”).  A description of the Order is contained under ITEM 1. – Business – Regulatory Environment.

A copy of this Order was included in the September 30, 2008 form 10-Q as exhibit 10.9.

Management believes that it is addressing, or has addressed, all of the substantive items in, and is compliant with the Cease & Desist Order Agreement however, as of this filing the Bank was not in compliance with all of the items.  The Bank has recruited three new directors, but only one to date has been approved by the OFR; approval of the other two are still pending.  The Bank’s capital ratios have fallen below the minimums required by the Order; as of December 31, 2008 the Tier 1 Leverage Capital Ratio was 4.78%, the Tier 1 Risk Based Capital ratios was 6.31% and the Total Risk Based Capital Ratio was 7.60%.  As of March 31, 2009, the Capital ratios are projected to decrease further.  Management is reviewing and weighing all of its opinions for increasing capital and is actively trying to reduce the size of the Bank by selling non-performing assets, which will improve the capital ratios.  On February 13, 2009, FCBI entered into a written agreement with the Federal Reserve Bank of Atlanta (“Agreement”).  A description of the Agreement is contained under ITEM 1. – Business – Regulatory Environment and a copy of the Agreement is included as Exhibit 10.10 to this Form 10-K.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth quarter of 2008.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

There has been no established trading market for the Company's Common Stock, $0.01 par value (the "Common Stock"), which has been traded inactively in private transactions or Over the Counter (OTC) through brokers.

Management has reviewed the limited information available as to the ranges at which the Common Stock has been sold and is aware of trades that occurred during 2007 and 2008.  To the best of management's knowledge, the last private trade in December was executed at a price of $5.00 per share; the closing price at December 31, 2008 as listed on E*TRADE was $4.25 per share.  The per share price data regarding the Common Stock is provided for information purposes only and should not be viewed as indicative of the actual or market value of the Common Stock. The dividends paid on Common Stock (split-adjusted) during 2007 are disclosed.

	Estimated Price               Range Per Share				Dividends     Declared on Common Stock
	High		Low		(Per Share)
2008 :
First Quarter	$	24.00	$	18.00	$	0.000
Second Quarter		23.00		4.00		0.000
Third Quarter		7.00		4.85		0.000
Fourth Quarter		12.00		4.00		0.000

	Estimated Price               Range Per Share				Dividends   Declared on  Common Stock
	High		Low		(Per Share)
2007 (Split Adjusted):
First Quarter	$	29.58	$	27.71	$	0.000
Second Quarter		29.79		29.38		0.210
Third Quarter		30.00		29.79		0.000
Fourth Quarter		30.00		19.72		0.210

As of March 10, 2009, there were 7,918,217 shares of Common Stock outstanding held by approximately 1,200 shareholders of record.

The payment of future dividends will be at the sole discretion of the Company's board of directors and will depend on, among other things, future earnings, capital requirements, the general financial condition of the Company, and general business conditions.

Equity compensation plan

At their Annual Meeting, the Bank's shareholders adopted the 2002 Key Employee Stock Compensation Program ("Employee Program"), which was assumed by FCBI upon its acquisition of the Bank. Stock options granted under the Employee Program are generally granted with an exercise price equal to the fair market value of the Company's stock at the date of grant. Stock options generally vest over four years of continuous service and have a ten year contractual term. Certain options provide for accelerated vesting if there is a change of control (as defined in the plan), The following table reflects the number of shares to be issued upon the exercise of options granted under the Employee Program, the weighted-average exercise price of all such options, and the total number of shares of common stock reserved for the issuance upon the exercise of authorized, but not-yet-granted options, as of December 31, 2008.

Plan Category	Number of Securities to be Issued Upon the Exercise of Outstanding Options		Weighted-average Exercise Price of Outstanding Options		Number of Equity Securities Remaining Available for Future Issuance Under Equity Compensation Plan
Equity Compensation Plans
Approved by Shareholders		248,564	$	9.82		63,485
Equity Compensation Plans
Not Approved by Shareholders		—		0.00		—
Total		248,564	$	9.82		63,485

11

ITEM 6. SELECTED FINANCIAL DATA

The following table presents on a historical basis selected financial data and ratios for the Company. All averages are daily averages.

	Years Ended December 31,
	2008			2007			2006			2005			2004
	(Dollars in thousands except per share data)
Earnings Summary:
Interest income	$	47,235		$	77,417		$	85,575		$	57,788		$	39,550
Interest expense		33,171			38,390			34,365			17,385			9,200
Net interest income		14,064			39,027			51,210			40,403			30,350
Provision for loan losses		69,130			6,868			2,296			1,762			1,971
Net interest income (expense) after provision for loan losses		(55,066	)		32,159			48,914			38,641			28,379
Noninterest income		2,287			2,828			3,916			3,914			3,808
Noninterest expense		34,408			17,664			15,069			12,933			12,251
Income (loss) before income taxes		(87,187	)		17,323			37,761			29,622			19,936
Income tax expense (benefit)		(33,892	)		6,414			14,615			11,404			7,694
Net income (loss)		(53,295	)		10,909			23,146			18,218			12,242
Per Common Share Data:
(Retroactively adjusted for effects of stock dividends and stock splits)
Net income (loss) - basic	$	(6.73	)	$	1.38		$	2.93		$	2.31		$	1.57
Net income (loss) - diluted		(6.70	)		1.36			2.90			2.29			1.55
Cash dividends declared per common share		0.00			0.42			0.35			0.29			0.24
Selected Average Balances:
Total assets	$	974,376		$	982,935		$	1,003,937		$	791,418		$	588,771
Total loans		701,334			812,603			876,604			670,885			490,521
Securities		180,574			124,816			75,513			70,213			43,567
Earning assets		905,872			950,125			968,125			750,433			552,930
Deposits		793,750			790,483			831,112			640,504			483,135
Long-term borrowings		82,828			81,491			80,369			70,912			50,762
Shareholders' equity		89,437			98,387			80,113			62,280			48,365
Shares outstanding (split adjusted, in thousands)		7,918			7,909			7,890			7,885			7,804
Selected Period-End Balances:
Total assets	$	979,369		$	942,674		$	1,016,677		$	907,082		$	660,864
Total loans		624,635			761,431			869,608			791,609			552,509
Securities		206,730			141,410			106,704			66,242			74,265
Earning assets		866,060			907,043			977,911			863,042			627,722
Deposits		845,429			753,658			835,462			737,256			520,585
Long-term borrowings		80,929			85,929			85,929			70,334			70,310
Shareholders' equity		44,629			98,205			90,567			70,076			52,928
Shares outstanding (split adjusted, in thousands)		7,918			7,909			7,909			7,885			7,804
Selected Ratios:
Return on average equity		(59.59	)%		11.09	%		28.89	%		29.25	%		25.31	%
Return on average assets		(5.47	)		1.11			2.31			2.30			2.08
Net interest margin		1.59			4.15			5.30			5.39			5.50
Allowance for loan losses to loans		5.83			2.40			1.56			1.46			1.77
Net charge-offs to average loans		7.28			0.26			0.03			0.00			0.05
Average equity to average assets		9.18			10.01			7.98			7.87			8.21
Cash Dividends Declared	$	0		$	3,296		$	2,747		$	2,289		$	1,883

12

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The purpose of this discussion is to focus on significant changes in the financial condition and results of operations of the Company during the past three years. The discussion and analysis is intended to supplement and highlight information contained in the accompanying consolidated financial statements and the selected financial data presented elsewhere in this report.

ITEM 7A. QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Forward-Looking Statements

This report, including Management's Discussion and Analysis of Financial Condition and Results of Operations, and documents incorporated herein by reference, may contain certain statements relating to the future results of the Company based upon information currently available. These "forward-looking statements" (as defined in Section 21E of The Securities and Exchange Act of 1934) are typically identified by words such as "believes", "expects", "anticipates", "intends", "estimates", "projects", and similar expressions. These forward-looking statements are based upon assumptions the Company believes are reasonable and may relate to, among other things, the allowance for loan loss adequacy, simulation of changes in interest rates and litigation results. Such forward-looking statements are subject to risks and uncertainties some of which are discussed in more detail in Item 1A. Risk Factors, which could cause the Company's actual results to differ materially from those included in these statements. These risks and uncertainties include, but are not limited to, the following: (1) changes in political and economic conditions; (2) interest rate fluctuations; (3) competitive product and pricing pressures within the Company's markets; (4) equity and fixed income market fluctuations; (5) personal and corporate customers' bankruptcies; (6) inflation; (7) acquisitions and integration of acquired businesses; (8) technological changes; (9) changes in law; (10) changes in fiscal, monetary, regulatory and tax policies; (11) monetary fluctuations; (12) success in gaining regulatory approvals when required; and (13) other risks and uncertainties listed from time to time in the Company's SEC reports and announcements.

General

The Company, through its subsidiary bank, conducts a commercial banking business, which consists of attracting deposits from the general public and applying those funds to the origination of commercial, consumer and real estate loans (including commercial loans collateralized by real estate). The Company's profitability depends primarily on net interest income, which is the difference between interest income generated from interest-earning assets (i.e., loans and investments) less the interest expense incurred on interest-bearing liabilities (i.e., customer deposits and borrowed funds). Net interest income is affected by the relative amounts of interest-earning assets and interest-bearing liabilities, and the interest rate paid and earned on these balances. Net interest income is dependent upon the Company's interest rate spread, which is the difference between the average yield earned on its interest-earning assets and the average rate paid on its interest-bearing liabilities. When interest earning assets approximates or exceeds interest-bearing liabilities, any positive interest rate spread will generate interest income. The interest rate spread is impacted by interest rates, deposit flows and loan demand. Additionally, and to a lesser extent, the Company's profitability is affected by such factors as the level of non-interest income and expenses, the provision for loan losses and the effective tax rate. Non-interest income consists primarily of deposit account service charges and other customer service fees.  Non-interestexpenses consist of compensation and benefits, occupancy-related expenses, and other expenses.

Summary

Net loss for 2008 was $53,297,676, a 586% decrease from 2007 net income of $10,909,219. Net income for 2007 was $10,909,219, a 53% decrease from 2006 net income of $23,146,069.  Net income for 2006 was $23,146,069, a 27% increase over 2005 net income.  Diluted net income (loss) per common share for 2008 was $(6.70) compared to $1.36 in 2007 and $2.90 in 2006.

The decrease in net income from 2006 through 2008 was primarily attributable to the depressed real estate economy in Southwest Florida; non-performing assets increased 78.7% to $212.6 million resulting in $51.1 million in net loan charge-offs and $9.5 million OREO writedowns.  The decrease in net income from 2006 to 2007 was primarily due to the worsening real estate economy in 2007, which resulted in non-performing assets increasing 118% to $119 million; net loan charge-offs and OREO writedowns in 2007 were $2.1 million and $90 thousand, respectively.  The increase in net income from 2005 to 2006 was driven primarily by loan growth, with average loans increasing 30.7%.

Earning Assets

During 2008, earning assets averaged $906 million, a decrease of $44 million (4.6%) from 2007. During 2007, earning assets averaged $950 million, a decrease of $18 million (1.9%) over 2006. During 2006, earning assets averaged $968 million, an increase of $218 million (29.0%) over 2005.

The management of the Company considers many criteria in managing earning assets, including creditworthiness, diversification, maturity, and interest rate sensitivity. The following table sets forth the Company's interest-earning assets by category at December 31, in each of the last three years.

	December 31,
	2008		2007		2006
	(In thousands)
Interest-bearing deposits with banks	$	6,246	$	1,868	$	1,499
Securities		206,730		141,410		106,704
Federal funds sold		28,450		2,334		100
Loans:
Real estate (1)		572,706		710,951		822,540
Commercial and other		51,928		50,480		47,068
Total loans		624,634		761,431		869,608
Interest-earning assets	$	866,060	$	907,043	$	977,911

(1)  Real Estate loans included loans held-for-sale.

Loan Portfolio

Loan and deposit growth is emphasized in each market the Company operates. The Company has been successful in competing for loans against other larger institutions due primarily to a lending strategy that includes direct involvement by local management. Different customers require different solutions to their financial needs and appreciate local banking officers that understand the local environment and can provide for their business requirements.

Average loans decreased $111 million (13.7%) in 2008 compared to 2007. A significant portion of that decrease was due to foreclosures.  New loan volume was down as a result of the depressed real estate economy that started slowing down during the latter half of 2006 , recognizing the impending slow down management tightened its lending standards, which resulted in fewer loans being made.

Average loans decreased $64 million (7.3%) in 2007 compared to 2006. The decrease in loans was a result of the depressed real estate economy that started slowing down during the latter half of 2006. Recognizing the impending slow down management tightened its lending standards, which resulted in fewer loans being made.

Average loans increased $206 million (31%) in 2006 compared to 2005.  The increase in loans was a result of the growth of the bank and the ability to make larger loans as well as the tremendous growth in the real estate construction loan market. Loan growth was again funded primarily by the issuance of broker certificate of deposits, as well as by the growth in the bank’s core deposits, namely demand deposits, money market and savings.

13

 The following table sets forth the balances in certain categories of loans at December 31 for each of the five years ending December 31, 2008.

Loan Portfolio

	December 31,
	2008						2007						2006						2005						2004
	Amount			Percent of Total			Amount			Percent of Total			Amount			Percent of Total			Amount			Percent of Total			Amount			Percent of Total
	(Dollars in Thousands)
Commercial, financial and agricultural	$	44,290			7.08	%	$	42,718			5.60	%	$	41,575			4.77	%	$	37,309			4.69	%	$	51,378			9.26	%
Real estate -  construction		328,673			52.55			414,738			54.37			478,085			54.80			467,854			58.81			270,016			48.69
Real estate - mortgage		243,877			38.99			296,213			38.83			344,309			39.47			280,230			35.22			222,374			40.10
Consumer		6,534			1.04			6,112			0.80			6,275			0.72			7,502			0.94			8,086			1.46
Loans held-for-sale		156			0.02			—			0.00			146			0.02			300			0.04			576			0.10
Other		1,986			0.32			3,006			0.40			2,008			0.22			2,356			0.30			2,181			0.39
		625,516			100.00	%		762,787			100.00	%		872,398			100.00	%		795,551			100.00	%		554,611			100.00	%
Unearned income		(881	)					(1,356	)					(2,790	)					(3,942	)					(2,102	)
Allowance for loan  losses		(36,390	)					(18,309	)					(13,590	)					(11,523	)					(9,791	)
Net loans	$	588,245					$	743,122					$	856,018					$	780,086					$	542,718

The following table shows the maturity distribution of selected loan classifications at December 31, 2008, and an analysis of those loans maturing in over one year:

Selected Loan Maturity and Interest Rate Sensitivity

	Maturity								Rate Structure for Loans          Maturing Over One Year
	One            Year or             Less		Over One         Year        Through      Five Years		Over        Five         Years		Total		Predetermined      Interest     Rate		Floating     or      Adjustable      Rate
	(Amounts in thousands)
Commercial, financial  and agricultural	$	30,856	$	13,434	$	—	$	44,290	$	8,422	$	5,012
Real estate – construction		219,699		85,338		3,651		328,673		85,403		23,571
Total	$	250,555	$	118,757	$	3,651	$	372,963	$	93,825	$	28,583

For the purposes of this schedule, loans that have reached the fixed contractual floor rate are treated as having a pre-determined interest rate.

14

Securities Portfolio

The securities portfolio increased by $65.3 million or 46.0% from 2007 to 2008. The securities portfolio increased by $34.7 million or 32.5% from 2006 to 2007. The securities portfolio increased by $41 million or 62.3% from 2005 to 2006. The increase in securities in 2008 was done to increase the bank’s liquidity position; increases in 2007 and 2006 were done to make the portfolio less sensitive to falling interest rates, as well as to increase the bank’s liquidity position.

The Company maintains an investment strategy of seeking portfolio yields within acceptable risk levels, as well as providing liquidity through borrowings secured by that portfolio. On a daily basis, funds available for short-term investment are determined. Funds available for long-term investment are projected based upon anticipated loan and deposit growth, liquidity needs, pledging requirements, maturities of securities, and other factors. The Company holds two classifications of securities: "Held-to-Maturity" and "Other Investment Securities." Other Investment Securities are carried at cost at year-end 2008, 2007 and 2006. Held-to-Maturity securities are carried at amortized cost and represent the largest portion of the total securities portfolio. At December 31, 2008, 2007 and 2006 there were no material unrealized gains (losses) in the Other Investment Securities. At December 31, 2008, net unrealized gains in the Held-to-Maturity portfolio amounted to $3,685,360. At December 31, 2007 and 2006, net unrealized gains (losses) in the Held-to-Maturity portfolio amounted to $689,941 and ($1,133,080), respectively.

The following table presents the carrying amounts of the securities portfolio at December 31, in each of the last three years.

Securities Portfolio

	December 31,
	2008		2007		2006
	(In thousands)
Held-to-Maturity:
FHLB and FHLMC agency notes	$	19,486	$	18,491	$	12,531
State and Municipal securities		20,798		20,787		16,765
Mortgage-backed securities		159,341		96,532		71,813
Total Held-to-Maturity		199,625		135,810		101,109
Other Investment Securities		7,105		5,600		5,595
Total Securities	$	206,730	$	141,410	$	106,704

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15

The following table indicates the respective contractual maturities and weighted average y4ields of securities (dollars in thousands). Taxable equivalent adjustments, using a 30 percent tax rate, have been made in calculating yields on the tax-exempt obligations.

Security Portfolio Maturity Schedule

	Maturing
	Within One Year					After One But Within Five Years					After Five But Within Ten Years					After Ten Years
	Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield
	(Amounts in thousands, except percentages)
Securities Held-to-Maturity
FHLB and FHLMC agency notes	$	—		0.00	%	$	9,502		4.73	%	$	5,970		6.08	%	$	4,014		5.85	%
State and municipal securities		—		0.00			—		0.00			904		5.43			19,894		5.76
Mortgage-backed securities		—		0.00			—		0.00			30,784		4.99			128,557		5.16
Other Investment Securities
Other investment securities		—		0.00			—		0.00			—		0.00			7,105		3.18
Total Securities	$	—		0.00		$	9,502		4.73		$	37,658		5.17		$	159,570		5.16

There were no securities held by the Company of which the aggregate value at December 31, 2008, 2007 and 2006 exceeded ten percent of shareholders' equity at that date. (Securities, which are payable from, and secured by the same source of revenue or taxing authority, are considered to be securities of a single issuer. Securities of the U.S. Government and U.S. Government agencies and corporations are not included.)

Deposits and Borrowed Funds

Average deposits increased $3.3 million (0.41%) in 2008 compared to 2007.  Average deposits decreased $40.6 million (4.9%) in 2007 compared to 2006. Average deposits increased $191 million (29.8%) in 2006 compared to 2005. In 2008, the largest growth area was in retail certificate of deposits, which increased $162.2 million or 115.8% in total; brokered certificate of deposits increased $44.1 million or 14.3% in total; money market, non-interest and interest bearing demand deposits and savings decreased $113.5 million or 37.2% in total; this decline was primarily due to depositors seeking higher yields as rates fell during 2008. In 2007, the largest growth area was  in money markets, which grew on average $27.7 million or 16.1%, however deposits on a whole declined due to the slowing economy; brokered certificate of deposits were reduced by approximately $56 million in 2007. In 2006, the largest growth area was in super money markets, which increased $72 million or 79.7% in total; broker certificate of deposits increased $45.1 million or 14.1% and local area certificate of deposits increased $18.4 million or 22.2%; non-interest and interest bearing demand deposits and savings and regular money markets decreased $37.5 million in total.

The following table sets forth the Company's deposit structure at December 31 in each of the last three years.

	December 31,
	2008		2007                   2006
	(In thousands)
Noninterest-bearing deposits:
Individuals partnerships and corporations	$	51,334	$	59,415	$	96,885
U.S. Government and states and political subdivisions		7,473		7,213		8,127
Certified and official checks		1,667		6,007		4,469
Total noninterest bearing deposits		60,474		72,635		109,481
Interest-bearing deposits:
Interest - bearing demand accounts		22,386		25,749		40,624
Savings accounts		107,279		206,290		219,013
Certificates of deposit, less than $100,000		284,837		93,705		63,246
Certificates of deposit, more than $100,000		370,453		355,279		403,098
Total interest bearing deposits		784,955		681,023		725,981
Total deposits	$	845,429	$	753,658	$	835,462

16

The following table presents a breakdown by category of the average amount of deposits and the weighted average rate paid on deposits for the periods indicated:

	Years Ended December 31,
	2008					2007					2006
	Amount		Rate			Amount		Rate			Amount		Rate
	(Dollars in thousands)
Noninterest bearing deposits	$	64,233		0.00	%	$	86,371		0.00	%	$	122,354		0.00	%
Interest-bearing demand deposits		23,381		0.84			31,934		0.87			42,533		0.88
Savings deposits		165,772		2.64			223,356		4.52			201,919		4.23
Time deposits		540,364		4.55			448,822		5.12			464,306		4.48
Total deposits	$	793,750		3.67		$	790,483		4.22		$	831,112		3.58

At December 31, 2008, time deposits of $100,000 or greater aggregated approximately $370.5 million.  The following table indicates, as of December 31, 2008, the dollar amount of $100,000 or more time deposits by the time remaining until maturity (in thousands):

Maturities of Large Time Deposits

(In thousands)

Three months or less	$	68,720
Over three through six months		39,479
Over six through twelve months		64,220
Over twelve months		198,034
Total	$	370,453

At December 31, 2008, borrowed funds consisted of $80.9 million in long-term debt.  The Bank had $50,000,000 in secured lines to purchase federal funds, of which $50,000,000 was available at December 31, 2008. The Bank had a separate line with the Federal Reserve Bank of Atlanta, secured by loans, which $20,000,000 was available on an overnight basis.  At December 31, 2007, borrowed funds consisted of $85.9 million in long-term debt.  The Bank had $15,000,000 in unsecured lines to purchase federal funds and $50,000,000 in secured lines, of which $65,000,000 was available at December 31, 2007. The Bank had a separate line with the Federal Reserve Bank of Atlanta, secured by loans, which $9,000,000 was available, and the Company had a $5,000,000 line of credit with another financial institution that was available for borrowing purposes. At December 31, 2006, borrowed funds consisted of $694 thousand in short-term (overnight) borrowing and $85.9 million in long-term debt.

At December 31, 2008, the Bank had credit available of approximately $98 million with the Federal Home Loan Bank of Atlanta, of which $48 million was available and unused. The ability to utilize the remaining line is dependent on the amount of eligible collateral that is available to pledge to the Federal Home Loan Bank, which at December 31, 2008, was approximately $25 million. The line is secured by investment securities and residential real estate loans. At December 31, 2007, the Bank had credit available of approximately $140 million with the Federal Home Loan Bank of Atlanta, of which $85 million was available and unused. The ability to utilize the remaining line is dependent on the amount of eligible collateral that is available to pledge to the Federal Home Loan Bank, which at December 31, 2007, was approximately $25 million. The line is secured by investment securities and residential real estate loans at December 31, 2007. At December 31, 2006, the Bank had credit available of approximately $151 million with the Federal Home Loan Bank of Atlanta, of which $96 million was available and unused. The ability to utilize the remaining line is dependent on the amount of eligible collateral that is available to pledge to the Federal Home Loan Bank, which at December 31, 2006, was approximately $33 million. The line is secured by residential and commercial real estate loans and investment securities at December 31, 2006.

17

The following table sets forth the expected debt service for the next five years based on interest rates and repayment provisions as of December 31, 2008.

Maturities of Long-term Debt

(In thousands)

	Years Ended December 31,
	2009		2010		2011		2012		2013
Interest on indebtedness	$	2,792	$	2,548	$	2,466	$	2,139	$	1,676
Repayment of principal		—		5,000		5,000		20,000		—
	$	2,792	$	7,548	$	7,466	$	22,139	$	1,676

Capital Resources

Shareholders' equity decreased $53.6 million to $44.6 million as of December 31, 2008, increased $7.6 million to $98.2 million as of December 31, 2007, and increased $20.5 million to $90.6 million as of December 31, 2006. The decrease in shareholders' equity for 2008 was attributable to a net loss for the year; no dividends were declared. The increase in shareholders’ equity for 2007 and 2006 was attributable to net income, less dividends declared.

On June 21, 2002, FCBI Capital Trust I ("Trust I"), a Delaware statutory trust established by the Company, received $10,000,000 in proceeds in exchange for $10,000,000 principal amount of Trust I's floating rate cumulative trust preferred securities (the "preferred securities") in a trust preferred private placement. On May 12, 2006, FCBI Capital Trust II ("Trust II"), a Delaware statutory trust was established by the Company, received $20,000,000 in proceeds in exchange for $20,000,000 principal amount of Trust II’s floating rate cumulative trust preferred securities.  The proceeds of both the transactions were then used by the Trust’s to purchase an equal amount of floating-rate subordinated debentures (the "subordinated debentures") of the Company. The Company has fully and unconditionally guaranteed all obligations of the Trust’s on a subordinated basis with respect to the preferred securities.  The Company does not consolidate the FCBI Trust preferred securities and accounts for the debenture’s issues to the Trust’s as debt. Subject to certain limitations, the preferred securities qualify as Tier 1 capital.  The sole assets of the Trust’s are the subordinated debentures issued by the Company. Both the preferred securities of the Trust’s and the subordinated debentures of the Company each have approximately 30-year lives. However, both the Company and the Trust’s have a call option after five years, subject to regulatory capital requirements.

In December 2008, the Company elected to defer the interest payments on both trust preferred securities as allowed under the trust agreements. The deferral of interest is intended to conserve cash at the Parent Company until such time that the Bank becomes profitable again. Interest payments may be deferred up to 20 quarters; however, interest will still be accrued during the deferral period. It is estimated that this deferral will save approximately $2.7 million in payments over the next three years.

A strong capital position, which is vital to the continued profitability of the Company, also promotes depositor and investor confidence and provides a solid foundation for the future growth of the organization. The objective of management is to maintain a level of capitalization that is sufficient to take advantage of profitable growth opportunities while meeting regulatory requirements. This is achieved by improving profitability through effectively allocating resources to more profitable businesses, improving asset quality, strengthening service quality, and streamlining costs. The primary measures used by management to monitor the results of these efforts are the ratios of return on average assets, return on average common equity and average equity to average assets.

18

The table below summarizes these and other key ratios for the Company for each of the last three years.

Return on Equity and Assets

	December 31,
	2008			2007                      2006
Return on average assets		(5.47	)%		1.11	%	2.31	%
Return on average common equity		(59.59	)		11.09		28.89
Dividend payout ratio		0 .00			30.21		11.87
Average common shareholders' equity to average assets ratio		9.18			10.01		7.98

In addition, bank holding companies are required to maintain capital to support, on a risk-adjusted basis, certain off-balance sheet activities such as loan commitments. The Federal Reserve has adopted capital guidelines governing the activities of bank holding companies. These guidelines require the maintenance of an amount of capital based on risk-adjusted assets so that categories of assets with potentially higher credit risk will require more capital backing than assets with lower risk.

The capital guidelines classify capital into two tiers, referred to as Tier I and Tier II. Under risk-based capital requirements, Total Capital consists of Tier I Capital, which is generally common shareholders' equity less goodwill, and Tier II Capital, which is primarily a portion of the allowance for loan losses and certain qualifying debt instruments. In determining risk-based capital requirements, assets are assigned risk-weights of 0% to 100%, depending primarily on the regulatory assigned levels of credit risk associated with such assets. Off-balance sheet items are considered in the calculation of risk-adjusted assets through conversion factors established by the regulators. The framework for calculating risk-based capital requires banks and bank holding companies to meet the regulatory minimums of 4% Tier I and 8% total risk-based capital. In 1990 regulators added a leverage computation to the capital requirements, comparing Tier I Capital to total average assets less goodwill.  Banks have similar capital requirements.

The table below illustrates the Company's regulatory capital ratios under federal guidelines at December 31, 2008, 2007 and 2006:

Capital Adequacy Ratios

	Statutory			Years ended December 31,
	Minimum			2008			2007			2006
				(Amounts in thousands)
Tier I Capital				$	34,319		$	128,205		$	120,567
Tier II Capital					24,768			10,487			12,267
Total Qualifying Capital				$	59,087		$	138,692		$	132,834
Risk Adjusted Total Assets (including off-balance sheet exposures)				$	754,333		$	831,138		$	980,017
Adjusted quarterly average assets				$	1,021,230		$	958,338		$	1,023,119
Tier I Capital Ratio		4.00	%		7.83	%		15.43	%		12.30	%
Total Capital Ratio		8.00			4.55			16.69			13.55
Leverage Ratio		4.00			3.36			13.38			11.78

Information on the Bank capital ratios appears in Note 12 to the consolidated financial statements contained elsewhere herein.

On December 31, 2008, the Company and the Bank generally fell below the regulatory minimums to be qualified as adequately capitalized institutions under the regulations.

Liquidity Management

Liquidity is the ability of a company to convert assets into cash without significant loss and to raise funds by increasing liabilities. Liquidity management involves having the ability to meet the day-to-day cash flow requirements of its customers, whether they are depositors wishing to withdraw funds or borrowers requiring funds to meet their credit needs. Additionally the Parent Company requires cash for various operating needs including dividends to shareholders, the servicing of debt, and the payment of general corporate expenses. The primary source of liquidity for FCBI is dividends from the subsidiary bank. At December 31, 2008, the subsidiary bank was not capable of paying dividends to FCBI, per the agreement with the “OFR”, as it would further reduce the Bank’s capital levels. The Parent Company however has sufficient cash on hand to meet its obligations and operating needs for at least three years.

The primary function of asset/liability management is not only to assure adequate liquidity in order for the Bank to meet the needs of its customer base, but to maintain an appropriate balance between interest-sensitive assets and interest-sensitive liabilities so that the Bank can remain profitable in varying interest rate environments. Both assets and liabilities are considered sources of liquidity funding and both are, therefore, monitored on a daily basis.

The asset portion of the balance sheet provides liquidity primarily through loan repayments and maturities of or pledge of securities. Additional sources of liquidity are investments in federal funds sold and prepayments from the mortgage-backed securities in the securities portfolio.

The liability portion of the balance sheet provides liquidity through various interest bearing and non-interest-bearing deposit accounts. The Bank had $50,000,000 and $65,000,000 of federal funds available at December 31, 2008 and 2007, respectively and the Company had $5,000,000 of credit line available at December 31, 2007. The Bank also had available as a source of financing, a line of credit with the Federal Home Loan Bank of Atlanta of which $47,475,000 and $85,000,000 was available and unused at December 31, 2008 and 2007, respectively, subject to the availability of assets to pledge to secure such borrowings (approximately $25,000,000 for both years).  The Bank also as available a line of credit with the Federal Reserve Bank of Atlanta totaling $20,000,000 and $9,000,000 for December 31, 2008 and 2007 respectively, subject to the availability of assets (loans) to pledge to secure such borrowings.

Contractual Obligations

The Company has various contractual obligations that they must fund as part of their normal operations. The following table shows aggregate information about their contractual obligations, including interest, and the periods in which payments are due. The amounts and time periods are measured from December 31, 2008.

	Payments due by period (in thousands)
	Total		Less than        1 year		1-3 years		3-5 years		More than          5 years
Long-Term Debt	$	111,498	$	2,792	$	15,014	$	23,815	$	69,877
Operating Lease Obligations		14,181		1,096		2,222		2,263		8,600
Time Deposits		693,993		308,338		327,111		58,542		2
Total	$	819,672	$	312,226	$	344,347	$	84,620	$	78,479

Interest Rate Sensitivity Management

Interest rate sensitivity is a function of the re-pricing characteristics of the Company's portfolio of assets and liabilities. These re-pricing characteristics are the time frames within which the interest-bearing assets and liabilities are subject to change in interest rates either at replacement or maturity during the life of the instruments. Sensitivity is measured as the difference between the volume of assets and liabilities in the Company's current portfolio that is subject to re-pricing in future time periods. The differences are known as interest sensitivity gaps and are usually calculated separately for segments of time ranging from zero to thirty days, thirty-one to ninety days, ninety-one days to one year, one to five years, over five years and on a cumulative basis.

19

The following table shows interest sensitivity gaps for different intervals as of December 31, 2008.

Interest Rate Sensitivity Analysis

(In thousands)

		0-30		31-90			91-365			1-5		Over 5
	Days		Days			Days			Years			Years			Total
Interest-earning assets (1)
Loans	$	92,510	$	28,221		$	135,315		$	195,330		$	18,619		$	469,995
Securities and federal funds sold		35,902		—			—			21,450			177,828			235,180
Interest-bearing deposits in banks		6,246		—			—			—			—			6,246
		134,658		28,221			135,315			216,780			196,447			711,421
Interest-bearing liabilities (2)
Demand deposits (3)		7,462		7,462			7,462			—			—			22,386
Savings deposits (3)		35,760		35,760			35,759			—			—			107,279
Time deposits		39,034		52,700			210,314			353,240			2			655,290
Long-term borrowings		—		10,000			—			20,000			50,929			80,929
		82,256		105,922			253,535			373,240			50,931			865,884
Interest sensitivity gap	$	52,402	$	(77,701	)	$	(118,221	)	$	(156,460	)	$	145,516		$	(154,463	)
Cumulative interest sensitivity gap	$	52,402	$	(25,298	)	$	(143,519	)	$	(299,979	)	$	(154,463	)
Ratio of interest-earning assets to Interest-bearing liabilities		1.64		0.27			0.53			0.58			3.86
Cumulative ratio		1.64		0.87			0.68			0.63			0.82
Ratio of cumulative gap to total interest-earning assets		0.074		(0.036	)		(0.202	)		(0.422	)		(0.217	)

_________________________

(1) Excludes nonaccrual loans.  Securities maturities are based on projected re-payments at current interest rate levels.

(2) Excludes matured certificates, which have not been redeemed by the customer and on which no interest is accruing.

(3) Interests bearing demand and savings deposits are assumed to be subject to movement into other deposit instruments in equal amounts during the 0-30 day period, the 31-90 day period, and the 91-365 day period.

The above table indicates that in a increasing interest rate environment, the Company's earnings may be positively affected in the short-term (0-30 days) by the higher amount of interest earning assets compared to interest bearing-liabilities that will re-price higher, but negatively affected in the slightly longer-term, (31-365 days) due to interest-bearing liabilities re-pricing faster than earning assets.  As seen in the preceding table, for the first 30 days of re-pricing opportunity there is an excess of earning assets over interest-bearing liabilities of approximately $52 million, but by the 365th day the excess in interest-bearing liabilities over assets has increased to approximately $144 million.  However, if interest rates remain at or near the current levels during this time frame these liabilities will re-price lower and that will benefit or have a positive effect on the Bank’s net interest margin. Changes in the mix of earning assets or supporting liabilities can either increase or decrease the net interest margin without affecting interest rate sensitivity. In addition, the interest rate spread and the level of interest-bearing assets and liabilities may change, thus impacting net interest income. It should be noted that a matched interest-sensitive position by itself does not ensure maximum net interest income.

Management continually evaluates the condition of the economy, the pattern of market interest rates, and other economic data to determine the types of investments that should be made and at what maturities. Using this analysis, management from time to time assumes calculated interest sensitivity gap positions to maximize net interest income based upon anticipated movements in the general level of interest rates.

20

Results of Operations

Net Interest Income

Net interest income is the principal component of a financial institution's income stream and represents the spread between interest and fee income generated from earning assets and the interest expense paid on deposits and borrowings. The following discussion is on a fully taxable equivalent basis.

Net interest income decreased approximately $24.9 million (63.9%) to $14.1 million in 2008 compared to 2007. Net interest income decreased approximately $12.2 million (23.8%) to $39 million in 2007 compared to 2006. The decrease in 2008 and 2007 was primarily due to a decrease in average loans outstanding and an increase in non-performing loans; the increase’s in the preceding years (2006) was primarily due to increased volume in average loans outstanding during the periods.

Interest income was $47.2 million in 2008, which represented a decrease of $30.2 million (38.9%) over 2007. Interest income was $77.4 million in 2007, which represented a decrease of $8.2 million (9.5%) over 2006. Interest income was $85.6 million in 2006, which represented an increase of $27.8 million (48.0%) over 2005. The primary reason for the decrease in interest income in 2008  was the decrease in loans and rates during the year, combined with an increase in non-performing loans; average loans outstanding decreased approximately $111 million; a significant portion of the decrease was due to foreclosures; the prime rate decreased 400 basis points during the year (from 7.25% down to 3.25%) and non-performing loans averaged $113.5 million for the year, an increase of $61.3 million over 2007; approximately $5.9 million in interest income on non-performing loans was reversed in 2008.   The decrease in interest income in 2007 was the beginning of what was realized in 2008, the increase in non-performing loans. The increase in interest income in 2006 was due to  the tremendous loan growth that carried over from 2005 into the beginning of 2006; the average loan volume increased approximately $206 million compared to $180 million in 2005; also rates were significantly higher in 2006 than 2005.

Interest income on securities increased $2.8 million (47.4%) from 2007 to 2008. The increase was due to the purchase of approximately $85 million in securities throughout the year.  Interest income on securities increased $2.6 million (77.4%) from 2006 to 2007. This increase was also due to the purchase of approximately $90 million in securities ($44 million in 2007) over the course of 2007 and 2006. The increases to the security portfolio provided the Bank with additional liquidity in the form of pledging to secure our borrowing lines and with interest rate protection when rates declined as they did in 2008.

Interest income, other than loans and securities, decreased by $326 thousand in 2008, decreased by $108 thousand in 2007, and increased by $464 thousand in 2006. In 2008, the average amount invested in fed funds sold was approximately $21.5 million, an increased of approximately $10 million over 2007, but the fed funds rate declined by 400 basis point during the year, significantly reducing the interest earned. In 2007, the average amount invested in fed funds sold was approximately $11.4 million, a decrease of approximate $3.3 million over 2006. In 2006, the average amount invested in fed funds sold was approximately $14.7 million, an increase of approximately $7.7 million over 2005.

Total interest expense in 2008 decreased by $5.2 million or 13.6%. The decrease was primarily due to  lower rates, although lower volumes and a change in the deposit mix had an affect. Money market, now and savings balances averaged $66.1 million lower than in 2007, with yields that were approximately 190 basis points lower; certificate of deposits averaged $91.5 million higher than in 2007, with yields that were approximately 57 basis points lower. Total interest expense increased by $4 million (11.7%) in 2007 and by $17 million (97.7%) in 2006.  The increase in interest expense in 2007 was primarily due to the changes in rates compared to 2006.  The increase in interest expense in 2006 was caused by higher rates and a $199.5 million increase in average interest bearing liabilities. There was also significant change in the deposit mix with lower cost deposits (non-interest checking, now, savings and regular money market accounts) decreasing and the higher cost deposits (super money market and certificate of deposits) increasing.

The trend in net interest income is commonly evaluated by measuring the average yield on earning assets, the average cost of funds, and the net interest margin. The Company's average yield on earning assets (total interest income divided by average interest earning assets) decreased 35.9% in 2008 to 5.25% compared to 8.19% in 2007 and 8.85% in 2006.  The impact of the non-performing loans, combined with the decrease in prime rate during 2008 had a negative affect on the yield. Higher rates in 2006 (the prime rate increase 17 times from June 2004 through June 2006) and the increases in the loan and security volumes resulted in the year over year increase for 2006.  In line with the national interest rate markets, the Company's average cost of funds (total interest expense divided by average interest bearing liabilities) decreased to 4.06% in 2008, from 4.85% in 2007 and from 4.32% in 2006. The decrease in 2008 was due to lower rates and the change in deposit mix referred to above.

The Bank's net interest margin (net interest income divided by average interest earning assets) decreased in 2008 to 1.59% compared to 4.15% in 2007 and 5.30% in 2006. The decrease in 2008 was due to the significant increase in non-performing loans that occurred; the fact that the cost of funds decreased as well helped to minimized the decrease in the net interest margin. The decrease in 2007 was due to the increase in non-performing loans and the increase in the cost of funds. The decrease in 2006, compared to 2005, was caused primarily by the increase in the cost of funds.

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21

The tables that follow show, for the periods indicated the daily average balances outstanding for the major categories of interest-bearing assets and interest-bearing liabilities, and the average interest rate earned or paid thereon. Such yields are calculated by dividing income or expense by the average balance of the corresponding assets or liabilities. Also shown are the changes in income attributable to changes in volume and changes in rate.

Average Balances, Interest Income/Expense and Yields/Rates

Taxable Equivalent Basis

	Years Ended December 31,
	2008								2007								2006
	Average      Balance			Interest      Income/       Expense		Average      Yields/     Rates			Average        Balance			Interest Income/      Expense		Average      Yields/     Rates			Average     Balance			Interest    Income/      Expense		Average     Yields/ Rates
	(Dollars in thousands)
Assets:
Earning assets:
Loans, net of unearned income (1)(2)	$	701,334		$	38,087		5.43	%	$	812,603		$	70,812		8.71	%	$	876,604		$	81,474		9.29	%
Securities:
Taxable		159,782			8,021		5.02			104,565			5,194		4.97			71,353			3,221		4.51
Tax-exempt (2)		20,792			1,129		5.43			20,251			1,164		5.75			4,160			237		5.70
Total securities		180,574			9,150		5.07			124,816			6.358		5.09			75,513			3,458		4.58
Interest-bearing deposits      in other banks		2,486			49		1.97			1,311			71		5.42			1,266			66		5.21
Federal funds sold		21,478			269		1.25			11,395			573		5.03			14,742			686		4.65
Total interest-earning   assets (2)		905,872			47,555		5.25			950,125			77,814		8.19			968,125			85,684		8.85
Non-interest earning assets:
Cash and due from banks		10,586								11,765								19,433
Accrued interest and other assets		81,169								34,783								30,502
Allowance for loan losses		(23,445	)							(13.738	)							(14,123	)
Total Assets	$	974,376							$	982,935							$	1,003,937
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Demand deposits	$	23,381			196		0.84	%	$	31,934			278		0.87	%	$	42,533			376		0.88	%
Savings deposits		165,772			4,374		2.64			223,356			10,104		4.52			201,919			8,548		4.23
Time deposits		540,364			24,599		4.55			448,822			22,999		5.12			464,306			20,817		4.48
Total deposits		729,517			29,169		4.00			704,112			33,381		4.74			708,758			29,741		4.20
Long-term borrowings		82,828			3,867		4.67			81,491			4,672		5.73			80,369			4,347		5.41
Short-term borrowings		4,123			135		3.27			6,201			336		5.42			5,518			277		5.02
Total interest-bearing   Liabilities		816,468			33,171		4.06			791,804			38,389		4.85			794,645			34,365		4.32
Non interest-bearing liabilities:
Demand deposits		64,233								86,371								122,354
Accrued interest and   other liabilities		4,238								6,373								6,825
Shareholders' equity		89,437								98,387								80,113
Total Liabilities and   Shareholders' Equity	$	974,376							$	982,935							$	1,003,937
Net Interest Income/Net Interest Spread					14,384		1.19	%					39,425		3.34	%					51,319		4.53	%
Net yield on earning assets							1.59	%							4.15	%							5.30	%
Taxable Equivalent adjustments (2):
Securities					293								350								71
Loans					27								48								38
Total taxable equivalent   Adjustment					320								398								109
Net interest income				$	14,064							$	39,027							$	51,210

_________________________

(1) Average loans include nonaccrual loans. All loans and deposits are domestic.

(2) Tax equivalent adjustments on securities and loans exempt from income taxes have been based on an assumed tax rate of 30 percent, and give effect to the disallowance for federal income tax purpose of interest expense related to certain tax-exempt earning assets.

22

The following tables set forth, for the years ended December 31, 2008, 2007 and 2006, a summary of the changes in interest income and interest expense resulting from changes in interest rates and in changes in the volume of earning assets and interest-bearing liabilities, segregated by category. The change due to volume is calculated by multiplying the change in volume by the prior year’s rate. The change due to rate is calculated by multiplying the change in rate by the prior year’s volume. The change attributable to both volume and rate is calculated by multiplying the change in volume by the change in rate. Figures are presented on a taxable equivalent basis.

Rate/Volume Variance Analysis

Taxable Equivalent Basis

	Average Volume						Change in Volume						Average Rate
	2008		2007		2006			2008-2007			2007-2006		2008			2007			2006
	(Dollars in thousands)
Earning assets:
Loans, net of unearned income (1)(2)	$	701,334	$	812,603	$	876,604	$	(111,269	)	$	(64,001	)		5.43	%		8.71	%		9.29	%
Securities
Taxable		159,782		104,565		71,353		55,217			33,212			5.02			4.97			4.51
Tax exempt (2)		20,792		20,251		4,160		541			16,091			5.43			5.75			5.70
Total Securities		180,574		124,816		75,513		55,758			49,303			5.07			5.09			4.58
Interest-bearing deposits  with other banks		2,486		1,311		1,266		1,175			45			1.97			5.42			5.21
Federal funds sold		21,478		11,395		14,742		10,083			(3,347	)		1.25			5.03			4.65
Total Earning Assets (2)	$	905,872	$	950,125	$	968,125	$	(44,253	)	$	(18,000	)		5.31			8.19			8.85
Interest-Bearing Liabilities
Deposits:
Demand deposits	$	23,381	$	31,934	$	42,533	$	(8,553	)	$	(10,599	)		0.84			0.87			0.88
Savings		165,772		223,356		201,919		(57,584	)		21,437			2.64			4.52			4.23
Time certificates		540,364		448,822		464,306		91,542			(15,484	)		4.55			5.12			4.48
Total Deposits		729,517		704,112		708,758		25,405			(4,646	)		4.00			4.74			4.20
Long-term borrowings		82,828		81,491		80,369		1,337			1,122			4.67			5.73			5.41
Other borrowings		4,123		6,201		5,518		(2,078	)		683			3.27			5.42			5.02
Total Interest-Bearing Liabilities	$	816,468	$	791,804	$	794,645	$	24,664		$	(2,841	)		4.06			4.85			4.32
Net interest income/net interest spread														1.19			3.34			4.53
Net yield on earning assets														1.59			4.15			5.30
Net cost of funds														3.66			4.04			3.55

													Variance Attributed to
	Interest             Income/Expense						Variance						2008									2007
	2008		2007		2006			2008-2007			2007-2006		Volume			Rate			Mix			Volume			Rate			Mix
	(Dollars in thousands)
Earning assets:
Loans, net of  unearned income	$	38,087	$	70,812	$	81,474	$	(32,725	)	$	(10,662	)	$	(9,695	)	$	(26,673	)	$	3,643		$	(5,948	)	$	(5,085	)	$	371
Securities:
Taxable		8,021		5,194		3,221		2,827			1,973			2,743			55			29			1,499			323			151
Tax exempt		1,129		1,164		237		(35	)		927			31			(65	)		(1	)		917			2			8
Total securities		9,150		6,358		3,458		2,792			2,900			2,774			(10	)		28			2,416			325			159
Interest-bearing deposits  with other banks		49		71		66		(22	)		5			64			(45	)		(41	)		2			3			-
Federal funds sold		269		573		686		(304	)		(113	)		507			(430	)		(381	)		(156	)		55			(12	)
Total earning assets		47,555		77,814		85,684		(30,259	)		(7,870	)		(6,350	)		(27,158	)		3,249			(3,686	)		(4,702	)		518
Interest-bearing liabilities:
Deposits:
Demand		196		278		376		(82	)		(98	)		(74	)		(10	)		2			(94	)		(6	)		2
Savings		4,374		10,104		8,548		(5,730	)		1,556			(2,605	)		(4,211	)		1,086			908			586			62
Time certificates		24,599		22,999		20,817		1,600			2,182			4,691			(2,567	)		(524	)		(694	)		2,975			(99	)
Total deposits		29,169		33,381		29,741		(4,212	)		3,640			2,012			(6,788	)		564			120			3,555			(35	)
Long-term borrowings		3,867		4,672		4,347		(805	)		325			77			(867	)		(15	)		61			261			3
Short-term borrowings		135		336		277		(201	)		59			(113	)		(133	)		45			34			22			3
Total interest-bearing liabilities		33,171		38,389		34,365		(5,218	)		4,024			1,976			(7,788	)		594			215			3,838			(29	)
Net interest income/net  interest spread	$	14,384	$	39,425	$	51,319	$	(25,041	)	$	(11,894	)	$	(8,326	)	$	(19,370	)	$	2,655		$	(3,901	)	$	(8,540	)	$	547

(1) Average loans include nonaccrual loans. All loans and deposits are domestic.

(2) Tax equivalent adjustments on securities and loans exempt from income taxes have been based on an assumed tax rate of 30 percent, and give effect to the disallowance for federal income tax purpose of interest expense related to certain tax-exempt earning assets.

23

Allowance for Loan Losses

Each of the Bank's loans is assigned to a lending officer responsible for the ongoing review and administration of that loan. Lending officers make the initial identification of loans, which present some difficulty in collection or where there is an indication that the probability of loss exists. Lending officers are responsible for the collection effort on a delinquent loan. Senior management is informed of the status of delinquent and problem loans on a monthly basis.  In addition to the lending officers, there is an independent loan review officer responsible for reviewing the credit ratings on loans and administering the loans.

Senior management makes recommendations monthly to the board of directors as to charge-offs. Senior management reviews the allowance for loan losses on a monthly basis. The Bank's policy is to discontinue interest accrual when payment of principal and interest is 90 days or more in arrears unless the value of the collateral exceeds the principal plus accrued interest.

The allowance for loan losses represents management's assessment of the risks associated with extending credit and its evaluation of the quality of the loan portfolio. Management analyzes the loan portfolio to determine the adequacy of the allowance for possible loan losses and the appropriate provisions required to maintain a level considered adequate to absorb anticipated loan losses. In assessing the adequacy of the allowance, management reviews the size, quality and risk of loans in the portfolio. Management also considers such factors as loan loss experience, the amount of past due and nonperforming loans, specific known risk, the status and amount of nonperforming assets, underlying collateral values securing loans, current and anticipated economic conditions and other factors which affect the allowance for potential credit losses.  Although recent historical loan losses have been minimal, a depressed real estate economy has resulted in a significant increase in non-performing loans during the year resulting in management charging off or writing down a portion of the principal on some loans and increasing the reserve in 2008. In 2007, management increased the reserve due to the slowing real estate economy. The increase in 2006 was as a result of an increase in loan volume and the trend in loans that were being downgraded during the latter half of the year.

While it is the Bank's policy to charge-off in the current period the loans in which a loss is considered probable, there are additional risks of future losses, which cannot be quantified precisely or attributed to particular loans or classes of loans. Because these risks include the future state of the economy, management's judgment as to the adequacy of the allowance is necessarily approximate and imprecise.

Management believes that $36,389,744 on December 31, 2008, $18,309,279 on December 31, 2007 and $13,590,000 on December 31, 2006, in the allowance for loan losses were adequate to absorb known risks in the portfolio. No assurance can be given, however, that adverse economic circumstances will not result in increased losses in the loan portfolio, and require greater provisions for possible loan losses in the future.

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24

The following table sets forth certain information with respect to the Bank's loans, net of unearned income, and the allowance for loan losses for the five years ended December 31, 2008.

Summary of Loan Loss Experience

	2008			2007			2006			2005			2004
	(Dollars in thousands)
Allowance for loan losses at beginning of year	$	18,309		$	13,590		$	11,523		$	9,791		$	8,067
Loans charged off:
Commercial, financial and agricultural		1,475			734			35			131			209
Real estate - mortgage		49,548			1,485			118			—			85
Consumer		193			122			111			50			161
Total loans charged off		51,216			2,341			264			181			455
Recoveries on loans previously charged off:
Commercial, financial and agricultural		123			9			6			24			143
Real estate - mortgage		28			139			—			2			30
Consumer		16			44			29			125			35
Total recoveries		167			192			35			151			208
Net loans charged off (recovered)		51,049			2,149			229			30			247
Provision for loan losses		69,130			6,868			2,296			1,762			1,971
Allowance for loan losses at end of period	$	36,390		$	18,309		$	13,590		$	11,523		$	9,791
Loans, net of unearned income, at end of period	$	624,635		$	761,431		$	869,608		$	791,609		$	552,509
Average loans, net of unearned income, outstanding for the period		701,334			812,603			876,604			670,885			490,521
Ratio of net charge-offs to net average loans		7.28	%		0.26	%		0.03	%		0.00	%		0.05	%

In evaluating the allowance, management also considers the historical loan loss experience of the Bank, the amount of past due and nonperforming loans, current and anticipated economic conditions, lender requirements and other appropriate information.

In 2008 management identified $165.5 million in loans as being impaired as a result of the provisions of Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan. While management believes that the vast majority of these loans have sufficient collateral, $43.1 million in principal write downs were necessary, and $21.2 million was specifically reserved for probable losses that were inherent in these loans.

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25

Management allocated the allowance for loan losses to specific loan categories as follows:

Allocation of Allowance for Loan Losses

	December 31,_
	2008					2007					2006					2005					2004
	Amount		Percent of Loans in Each Category to Total Loans			Amount		Percent of Loans in Each Category to Total Loans			Amount		Percent of Loans in Each Category to Total Loans			Amount		Percent of Loans in Each Category to Total Loans			Amount		Percent of Loans in Each Category to Total Loans
	(Dollars in Thousands)
Domestic loans:
Commercial, financial and agricultural	$	2,590		7.09	%	$	455		5.60	%	$	649		4.78	%	$	724		6.28	%	$	271		9.26	%
Real estate – mortgage and construction		33,419		91.86			17,783		93.60			12,842		94.50			10,757		93.36			9,512		88.89
Consumer		381		1.05			71		0.80			99		0.72			42		0.36			8		1.85
	$	36,390		100.00	%	$	18,309		100.00	%	$	13,590		100.00	%	$	11,523		100.00	%	$	9,791		100.00	%

Nonperforming Assets

Nonperforming assets include nonperforming loans and foreclosed real estate held-for-sale. Nonperforming loans include loans classified as nonaccrual or renegotiated. The Bank's policy is to place a loan on nonaccrual status when it is contractually past due 90 days or more as to payment of principal or interest unless the collateral value is greater than both the principal due and the accrued interest. At the time a loan is placed on nonaccrual status, interest previously accrued but not collected is reversed and charged against current earnings. Recognition of any interest while on nonaccrual is accounted for on the cash basis when actually received.

The Bank had nonperforming assets at December 31, 2008, 2007, 2006, 2005, and 2004 of approximately $212,623,000, $118,982,000, $54,582,000, $3,137,000, and $10,012,000, respectively. While the increase in non-performing assets can be attributed to the depressed real estate economy, management believes that the back log of cases going through bankruptcy court is partially to blame for the high number on the books at this time. Under normal circumstances, it usually takes a few months to go through bankruptcy proceedings, but today it’s taking anywhere from six months to a year or longer. So when we would normally have some loans going on and some coming off through the sale of OREO, we have them coming on and staying on for extended periods of time. Management believes that it is doing all that it can reasonably do in the current economy to reduce the level of non-performing assets that it is carrying and that it may take until 2010 before we see any significant reductions.

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26

The following table presents information concerning outstanding balances of nonperforming assets at December 31, 2008, 2007, 2006, 2005, and 2004.

Nonperforming Assets

	December 31,
	2008			2007	2006	2005	2004
	(Amounts in thousands, except ratios)
Nonaccruing loans	$155,521			$111,147	$37,445	$    194	$    247
Accruing loans 90 days or more past due	891			6,513	13,142	106	—
Restructured loans	4,206			257	1,592	634	7,562
Total nonperforming loans	160,618			117,917	52,179	934	7,809
Nonaccruing securities	—			—	—	—	—
Other real estate	52,005			1,065	2,403	2,203	2,203
Total		$212,623	$118,982		$  54,582	$3,137	$10,012
Ratios:
Loan loss allowance to total nonperforming assets		0.171	0.154		0.249	3.673	0.978
Total nonperforming loans to total loans (net of unearned interest)		0.257	0.155		0.060	0.001	0.014
Total nonperforming assets to total assets		0.217	0.126		0.054	0.003	0.015

Noninterest Income

Noninterest income consists of revenues generated from a broad range of financial services and activities including fee-based services and profits and commissions earned through credit life insurance sales and other activities. In addition, gains or losses realized from the sale of fixed assets or other real estate owned are included in noninterest income. Total noninterest income decreased by $541 thousand (19.1%) for the year ended December 31, 2008 compared to 2007. While service charges on deposits were $245 thousand or 18.4% higher, fees from secondary market loan sales were down $245 thousand or 63% and gains from the sale of other real estate were down $341 thousand or 84.2%.   Total noninterest income decreased by $1.1 million (27.8%) for the year ended December 31, 2007, compared to 2006.  Fees earned on the money service businesses were down $1.08 million in 2007 due to the closing of all the “high risk” accounts at the end of 2006; fees from secondary market loan sales decreased $362 thousand due to the slowing real estate economy; a $405 thousand gain was earned on the sale of other real estate property in 2007. Total noninterest income increased by $2 thousand (0.05%) for the year ended December 31, 2006, compared to 2005. While service charges on deposits increased $212 thousand (14.5%), fees from secondary market loan sales decreased $221 thousand (22.7%) due to the slowing real estate market in 2006. Fees related to the money service businesses increased $83 thousand (10.7%), but management closed all of the "high risk" accounts at the end of the year due to regulatory constraints and that income (approximately $860 thousand) did not occur in 2007.

27

The table below sets forth the Company's noninterest income for the periods indicated.

					2007/2008	2006/2007
	Years Ended December 31,				Percent	Percent
	2008	2007	2006		Change	Change
	(Dollars in thousands)
Service charges on deposits	$1,577	$ 1,332		$ 1,678	18.4%		(20.6)%
Secondary market fees	144	389		751	(63.0)		(48.2)
Exchange fees	38	75		861	(49.3)		(91.3)
Bookkeeping fees	65	82		151	(20.7)		(45.7)
Income/gains on other real estate	65	405		—	(84.1)		100.0
Safe deposit box rental	62	62		66	0.0		(6.1)
Other	336	483		409	(30.4)		16.6
	$2,287	$ 2,828		$ 3,916	(19.1)		(27.8)

Noninterest Expenses

From 2007 to 2008, noninterest expense increased $16.7 million (94.8%). Salaries and employee benefits in 2008 decreased $246 thousand (2.3%) from 2007 to a total of $10.5 million. The decrease was due to lower expenses related to year-end bonuses ($1,066,500) and the ESOP contribution ($445,000), which offset the increase in salary expenses ($1,088,970) and increases in insurance and payroll taxes ($241,000). The Board of Directors significantly reduced the bonuses paid and elected not to make a contribution to the Bank’s ESOP plan for 2008. The increase in salary expense was due to the increase in staff in 2007.

From 2006 to 2007, noninterest expense increased $2.6 million (17.2%). Salaries and employee benefits in 2007 increased $1.1 million (11.5%) from 2006 to a total of $10.7 million. Approximately 50% of the increase was due to additional staff positions that were added during the year; the impact in 2007 of the staff hired in 2006 was approximately 15% of the increase; the remaining 35% of the increase or approximately $385 thousand can be attributed to the normal increases from year to year for salaries, benefits and insurance costs.

From 2005 to 2006, noninterest expense increased $2.1 million (16.5%). Salaries and employee benefits in 2006 increased $1.8 million (22.4%) from 2005 to a total of $9.6 million. The increase was due a combination of factors, from the normal increases from year to year for salaries and benefits (approximately $934 thousand or 11%), the addition of several new officer positions and their related hiring costs (approximately $100 thousand), $356 thousand less in deferred loan origination costs and one time accrual of sick time of $309 thousand.

Occupancy and equipment expense increased $936 thousand (38.3%) from 2007 to 2008, increased $148 thousand (6.5%) from 2006 to 2007, and increased $88 thousand (4.0%) from 2005 to 2006.  During 2008 occupancy expense increased primarily due to the increase in the lease expenses related to the three offices (Ave Maria, Bonita and North Port) that have not been opened ($753,000); higher building and equipment/software maintenance expenses ($219,000) and higher depreciation expense ($143,000). The increases in 2007 and 2006 were related to higher equipment maintenance fees, higher depreciation and higher real estate taxes.

Expenses related to other real estate owned (approximately $12.5 million) increased by $12.4 million in 2008 compared to 2007. The 2008 expenses included writedowns of approximately $9.5 million, with the remaining amount going to pay legal fees, taxes, insurance and appraisal costs.  The 2007 expense of $162 thousand included approximately $90 thousand in writedowns.. In 2006 the expense was $0. Management believes that these expenses will increase in 2009 as more loans are foreclosed on.

Other than the expenses related to non-performing loans (approximately $3.1 million), which were significantly higher due to the increase in non-performing loans, and regulatory fees and assessments (approximately $1.5 million), other expenses were not significantly higher in 2008 compared to 2007 and 2006. Regulatory fees and assessments were significantly higher in 2008 as the FDIC increased the Bank’s risk ratio to reflect the Bank’s current financial position.  Professional fees were higher due to an increase in legal fees related to the stipulation agreement with the OFR (see Item 3. Legal Proceedings).  Increases in expenses related to telephone and software maintenance were due to system upgrades.  The other expenses were not significantly higher in 2008 compared to 2007 and 2006, with advertising, supplies, courier and correspondent bank fees actually decreasing. Included in non-performing loan expenses were legal fees, real estate taxes, appraisal and insurance costs.

The table below sets forth the Company's noninterest expenses for the periods indicated.

								2007/2008			2006/2007
	Years Ended December 31,						Percent			Percent
	2008		2007		2006		Change			Change
	(Dollars in thousands)
Salaries and employee benefits	$	10,466	$	10,712	$	9,608		(2.3	)%		11.5	%
Oreo expenses & writedowns…………..		12,530		162		—		7,634.6			100.0
Occupancy and equipment expense		3,378		2,442		2,294		38.3			6.5
Non-performing loan expenses		3,064		409		75		641.9			445.3
Regulatory fees and assessments		1,495		740		252		102.0			193.7
Professional fees		790		639		461		23.6			38.6
Advertising		412		481		381		(14.4	)		26.2
Telephone		359		317		251		13.3			26.3
Software maintenance		320		210		149		52.4.			40.9
ATM expense		203		207		178		(1.9	)		16.3
Supplies		177		188		181		(5.9	)		3.9
Director and committee fees		170		121		70		40.5			72.9
Postage		137		120		132		14.2			(9.1	)
Courier fees		124		142		180		(12.7	)		(21.1	)
Dues and subscriptions		89		89		83		0.0			7.2
Correspondent bank fees		54		90		142		(40.0	)		(36.6	)
Other		640		595		632		(7.6	)		19.8
Total	$	34,408	$	17,664	$	15,069		94.8	%		17.2	%

Income Taxes

The Company had an income tax benefit of $33.9 million for the year ended December 31, 2008, compared to expenses of $6.4 million for the year ended December 31, 2007 and $14.6 million for the year ended December 31, 2006.   The effective tax rate as a percentage of pretax income was 38.9% in 2008, 37.0% in 2007 and 38.7% in 2006. The statutory federal rate was 34 percent during 2008, 2007 and 2006. There is no current or pending tax legislation of which management is aware that if passed would have any material effect on the financial statements. For further information concerning the provision for income taxes, refer to Note 15, Income Taxes, of the "Notes to Consolidated Financial Statements."

Impact of Inflation and Changing Prices

A bank's asset and liability structure is substantially different from that of an industrial company in that virtually all assets and liabilities of a bank are monetary in nature. Management believes the impact of inflation on its financial results depends upon the Company's ability to react to changes in interest rates and by such reaction to reduce the inflationary impact on performance. Interest rates do not necessarily move in the same direction, or at the same magnitude, as the prices of other goods and services. As discussed previously, management seeks to manage the relationship between interest-sensitive assets and liabilities in order to protect against wide or sustained interest rate fluctuations, including those resulting from inflation.

28

Market Risk

Market risk is the risk arising from adverse changes in the fair value of financial instruments due to a change in interest rates, exchange rates and equity prices. The Company's primary risk is interest rate risk.

The primary objective of asset/liability management of the Company is to manage interest rate risk and achieve reasonable stability in net interest income throughout interest rate cycles. This is achieved by maintaining the proper balance of rate sensitive earning assets and rate sensitive liabilities. The relationship of rate sensitive earning assets to rate sensitive liabilities, is the principal factor in projecting the effect that fluctuating interest rates will have on future net interest income. Rate sensitive earning assets and interest-bearing liabilities are those that can be re-priced to current market rates within a relatively short time period. Management monitors the rate sensitivity of earning assets and interest-bearing liabilities over the entire life of these instruments, but places particular emphasis on the first year and through three years.

The Company uses additional tools to monitor and manage interest rate sensitivity. One of the primary tools is simulation analysis. Simulation analysis is the primary method of estimating earnings at risk and capital at risk under varying interest rate conditions. Simulation analysis is used to test the sensitivity of the Company's net interest income and shareholders' equity to both the level of interest rates and the slope of the yield curve. Simulation analysis accounts for the expected timing and magnitude of assets and liability cash flows, as well as the expected timing and magnitude of deposits that do not re-price on a contractual basis. In addition, simulation analysis includes adjustments for the lag between movements in market interest rates on loans and interest-bearing deposits. These adjustments are made to reflect more accurately possible future cash flows, re-pricing behavior, and ultimately net interest income. The estimated impact on the Company's net interest income before provision over a one-year time horizon is shown below. Such analysis assumes a sustained parallel shift in interest rates and the Company's estimate of how interest-bearing transaction accounts will re-price in each scenario. Actual results will differ from simulated results due to timing, magnitude and frequency of interest rate changes and changes in market conditions and management's strategies, among other factors.

The Company has not experienced a high level of volatility in net interest income due to changes in interest rates primarily because of the relatively short duration of its balance sheet. Management is very much aware of its asset sensitivity and the potential interest rate risk in a declining rate environment; however, they believe that there are mitigating factors, such as the loan rate floors that will help to mitigate this risk. By keeping both sides of the balance sheet short, management is reducing its interest rate risk and increasing its capability to react to changes in interest rates quicker and more effectively than if they were longer.

	Percentage Increase (Decrease) in Interest Income/Expense Given              Interest Rate Shifts
	Down 200 Basis Points			Up 200 Basis Points
For the Twelve Months after December 31, 2008
Projected change in:
Interest income		(8.00	)%		12.49	%
Interest expense		(9.57	)		12.30
Net interest income		(4.11	)		12.94

29

Recent Accounting Standards

In June 2007, the FASB finalized Issue No. 06-11, “Accounting for Income Tax Benefits of Dividends on Share-Based Payments Awards”.  The issue requires that a realized income tax benefit from dividends or dividend equivalents that are charged to retained earnings and are paid to employees for equity classified nonvested equity shares, nonvested equity share units, and outstanding equity share options should be recognized as an increase to additional paid-in capital.  The amount recognized in additional paid-in capital for the realized income tax benefit from dividends on these awards should be included in the pool of excess tax benefits available to absorb tax deficiencies on share-based payment awards (as described in paragraphs 62 and 63 of SFAS No. 123(R)).  This is effective for fiscal years beginning after December 15, 2007.  Adoption on January 1, 2008, as required, did not have a material effect on the Company’s financial condition, results of operations or liquidity.

On November 5, 2007, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin ("SAB") No. 109, “Written Loan Commitments Recorded at Fair Value Through Earnings.” SAB 109 expresses the views of the staff regarding written loan commitments that are accounted for at fair value through earnings under generally accepted accounting principles. To make the staff’s views consistent with current authoritative accounting guidance, the SAB revises and rescinds portions of SAB No. 105, “Application of Accounting Principles to Loan Commitments.” Specifically, the SAB revises the SEC staff’s views on incorporating expected net future cash flows related to loan servicing activities in the fair value measurement of a written loan commitment. The SAB retains the staff’s views on incorporating expected net future cash flows related to internally-developed intangible assets in the fair value measurement of a written loan commitment. The staff expects registrants to apply the views in Question 1 of SAB 109 on a prospective basis to derivative loan commitments issued or modified in fiscal quarters beginning after December 15, 2007. The Company’s adoption of SAB 109 did not have a material impact on its consolidated financial statements.

In December 2007, the FASB issued SFAS No. 160 “Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51.  This Statement establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. The guidance will become effective as of the beginning of a company’s fiscal year beginning after December 15, 2008. The Company does not expect the adoption of this statement to have a material effect on the consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141(R) “Business Combinations.” SFAS No. 141(R) establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. The Statement also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. The guidance will become effective as of the beginning of a company’s fiscal year beginning after December 15, 2008. The Company does not expect the adoption of this statement to have a material effect on the consolidated financial statements.

In March 2008, the FASB issued SFAS No 161, “Disclosures about Derivative Instruments and Hedging Activities – an amendment of FASB Statement No. 133”.  SFAS No. 161 requires enhanced disclosures about how and why an entity uses derivative instruments, how derivative instruments and related items are accounted for under SFAS No. 133 and how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows.  The new standard is effective for the Company on January 1, 2009, and adoption is not expected to have a material effect on the Company’s financial condition, results of operations or liquidity.

In May 2008, the FASB issued SFAS No 162. “The hierarchy of Generally Accepted Accounting Principles”.  The standard identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States of America.  The new standard became effective November 15, 2008, and adoption, as required, did not have a material impact on the Company’s consolidated financial condition or results of operations.

In January 2009, the FASB issued FSP EITF 99-20-1 which amends the impairment guidance in EITF Issue No. 99-20, “Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests that Continue to be Held by a Transferor in Securitized Financial Assets,” to achieve more consistent determination of whether an other-than-temporary impairment has occurred.  The FSP also retains and emphasizes the objective of an other-than-temporary impairment assessment and the related disclosure requirements in SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities”, and other related guidance.  The FSP is effective for interim and annual reporting periods ending after December 15, 2008, and was required to be applied prospectively.  Adoption, as required, did not have a material effect on the Company’s consolidated financial condition or results of operations.

 [The remainder of this page intentionally left blank]

30

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and supplementary data required by Regulation S-X and by Item 302 of Regulation S-K are set forth in the pages listed below.

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

CONSOLIDATED FINANCIAL STATEMENTS

INDEX

	Page
Management's Report on Internal Control Over Financial Reporting		32
Report of Independent Registered Public Accounting Firm		33
Consolidated Statements of Financial Condition as of December 31, 2008 and 2007		34
Consolidated Statements of Operations for the Years Ended December 31, 2008, 2007 and 2006		35
Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 2008, 2007 and 2006		36
Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006		37
Notes to Consolidated Financial Statements		39
Quarterly Results (Unaudited)		81

31

MANAGEMENT'S REPORT ON INTERNAL CONTROL

OVER FINANCIAL REPORTING

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. This internal control system was designed to provide reasonable assurance to management and the Board of Directors as to the reliability of the Company's financial reporting and the preparation and fair presentation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

All internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect misstatements in the Company's financial statements, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008. In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control - Integrated Framework.

Based on this assessment, management believes that, as of December 31, 2008, the Company’s internal control over financial reporting is effective based on those criteria.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

/s/  Stephen L. Price	/s/  Guy W. Harris
Stephen L. Price	Guy W. Harris
Principal Executive Officer, Chairman, President and Chief Executive Officer	Principal Financial Officer and Chief Financial Officer
April 15, 2009	April 15, 2009

32

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Florida Community Banks, Inc. and subsidiary:

We have audited the accompanying consolidated statement of financial condition of Florida Community Banks, Inc. and subsidiary (the "Company") as of December 31, 2008, and the related consolidated statements of income, shareholders' equity and comprehensive income, and cash flows for the year ended December 31, 2008. The Company's management is responsible for these consolidated financial statements.  Our responsibility is to express an opinion on these consolidated financial statements based on our audit.  The consolidated financial statements of the Company as of December 31, 2007 and 2006 were audited by other auditors whose report dated March 17, 2008, expressed an unqualified opinion, and are herein incorporated by reference in Exhibit 13.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.  The Company is not required to have, nor did we perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that were appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the 2008 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Florida Community Banks, Inc. and subsidiary as of December 31, 2008, and the consolidated results of their operations and their cash flows for the year ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America.

Birmingham, Alabama	/s/ Warren, Averett, Kimbrough & Marino, LLC
April 15, 2009
	Warren, Averett, Kimbrough & Marino , LLC

33

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31, 2008 AND 2007

	2008			2007
Assets
Cash and due from banks	$	11,169,731		$	10,526,924
Interest-bearing demand deposits with banks		6,245,791			1,868,391
Federal funds sold		28,450,000			2,334,000
Cash and Cash Equivalents		45,865,522			14,729,315
Securities held-to-maturity, fair value of $203,310,589 in 2008 and $136,499,998 in 2007		199,625,229			135,810,057
Other investments		7,987,869			6,815,840
Loans held-for-sale		156,231			—
Loans, net of unearned income		624,478,243			761,430,961
Allowance for loan losses		(36,389,744	)		(18,309,279	))
Net Loans		588,088,499			743,121,682
Premises and equipment, net		24,867,557			21,095,408
Accrued interest		3,511,261			4,585,201
Foreclosed real estate		52,005,241			1,065,289
Deferred taxes, net		25,657,711			13,671,041
Income taxes receivable……………………………………………….		29,123,997			218,872
Other assets		2,479,226			1,561,057
Total Assets	$	979,368,343		$	942,673,762
Liabilities and Shareholders’ Equity
Liabilities
Deposits
Noninterest-bearing	$	60,474,172		$	72,635,074
Interest-bearing		784,954,433			681,023,280
Total Deposits		845,428,605			753,658,354
Accrued interest		4,853,139			3,509,061
Deferred compensation		166,491			208,358
FHLB advances		50,000,000			55,000,000
Subordinated debentures		30,929,000			30,929,000
Other liabilities		3,362,046			1,163,952
Total Liabilities		934,739,281			844,468,725
Shareholders’ Equity
Preferred stock - par value $0.01 per share, 5,000,000 shares authorized, none issued and outstanding at December 31, 2008 and 2007		—			—
Common stock - par value $0.01 per share, 25,000,000 shares authorized, 7,918,217 shares issued and outstanding at December 31, 2008 and 7,909,261 shares issued and outstanding at December 31, 2007		79,182			79,093
Paid-in capital		18,529,677			18,456,882
Retained earnings		26,374,386			79,669,062
Accumulated other comprehensive income (loss)		(354,183	)		—
Total Shareholders’ Equity		44,629,062			98,205,037
Total Liabilities and Shareholders’ Equity	$	979,368,343		$	942,673,762

See notes to consolidated financial statements

34

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended December 31, 2008, 2007 and 2006

	2008			2007		2006
Interest Income
Interest and fees on loans	$	38,060,139		$	70,764,215	$	81,434,704
Interest and dividends on taxable securities		8,020,957			5,194,119		3,221,155
Interest on tax-exempt securities		835,703			814,007		166,262
Interest on federal funds sold		269,172			573,133		686,231
Interest on deposits in banks		48,740			70,790		66,177
Total Interest Income		47,234,711			77,416,264		85,574,529
Interest Expense
Interest on deposits		29,169,128			33,380,771		29,741,087
Interest on short-term borrowings		134,592			336,318		277,152
Interest on FHLB advances		2,144,654			2,313,438		2,492,831
Interest on subordinated debentures		1,721,689			2,359,063		1,853,679
Total Interest Expense		33,170,063			38,389,590		34,364,749
Net Interest Income		14,064,648			39,026,674		51,209,780
Provision for loan losses		69,130,400			6,867,600		2,296,270
Net Interest Income (Expense) After Provision  For Loan Losses		(55,065,752	)		32,159,074		48,913,510
Noninterest Income
Customer service fees		1,577,305			1,414,400		1,678,478
Secondary market loan fees		143,978			388,816		750,686
Other operating income		565,901			1,024,988		1,487,078
Total Noninterest Income		2,287,184			2,828,204		3,916,242
Noninterest Expenses
Salaries and employee benefits		10,466,029			10,712,122		9,608,072
Occupancy and equipment expense		3,378,355			2,442,141		2,293,985
Expenses, write-downs, and losses on  sale from other real estate owned		12,530,436			161,873		—
Investment security losses		—			7,816		—
Other operating expenses		8,033,085			4,340,416		3,167,277
Total Noninterest Expenses		34,407,905			17,664,368		15,069,334
Income (loss) before income taxes		(87,186,473	)		17,322,910		37,760,418
Income tax (benefit) expense		(33,891,797	)		6,413,691		14,614,349
Net Income (Loss)	$	(53,294,676	)	$	10,909,219	$	23,146,069
Earnings (Loss) Per Common Share
Basic	$	(6.73	)	$	1.38	$	2.93
Diluted		(6.70	)		1.36		2.90
Cash Dividends Declared Per Common Share		0.00			0.42		0.35
Weighted Average Shares Outstanding
Basic		7,918,144			7,909,261		7,890,427
Diluted		7,951,647			8,040,860		7,987,134

See notes to consolidated financial statements

35

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Years Ended December 31, 2008, 2007 and 2006

	Preferred Stock		Common             Shares		Stock   Par Value		Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance at December 31, 2005	$	—		7,909,261	$	79,093	$	18,340,650		$	51,656,039		$	—		$	70,075,782
Net income - 2006		—		—		—		—			23,146,069			—			23,146,069
Comprehensive income																	23,146,069
Stock-based compensation expense		—		—		—		92,035			—			—			92,035
Cash dividends – Common $0.35 per share		—		—		—		—			(2,746,572	)		—			(2,746,572	)
Balance at December 31, 2006		—		7,909,261		79,093		18,432,685			72,055,536			—			90,567,314
Net income – 2007		—		—		—		—			10,909,219			—			10,909,219
Comprehensive income																	10,909,219
Stock-based compensation expense		—		—		—		36,299			—			—			36,299
Cash paid in lieu of fractional shares								(12,102	)		—			—			(12,102	)
Cash dividends – Common $0.42 per share		—		—		—		—			(3,295,693	)		—			(3,295,693	)
Balance at December 31, 2007		—		7,909,261		79,093		18,456,882			79,669,062			—			98,205,037
Net loss – 2008		—		—		—		—			(53,294,676	)		—			(53,294,676	)
Unrealized losses on available-for-sale securities		—		—		—		—			—			(354,183	)		(354,183	)
Comprehensive (loss)																	(53,648,859	)
Exercise of stock options		—		8,956		89		53,911			—			—			54,000
Stock-based compensation expense		—		—		—		18,884			—			—			18,884
Balance at  December 31, 2008	$	—		7,918,217	$	79,182	$	18,529,677		$	26,374,386		$	(354,183	)	$	44,629,062

See notes to consolidated financial statements

36

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2008, 2007 and 2006

	2008			2007			2006
Operating Activities
Net income (loss)	$	(53,294,676	)	$	10,909,219		$	23,146,069
Adjustments to reconcile net income (loss) to net  cash provided (used) by operating activities:
Provision for loan losses		69,130,400			6,867,600			2,296,270
Depreciation, amortization, and accretion, net		1,028,208			1,024,050			1,093,979
Deferred tax benefit		(11,986,670	)		(7,245,573	)		(595,242	)
Loss on sale of securities		—			7,816			—
Gain on disposition of other real estate owned property		(64,821	)		(404,921	)		—
Writedown on other real estate owned property		9,529,259			90,310			—
(Gain) loss on disposition of  premises and equipment		—			(2,808	)		33,911
Compensation associated with the issuance of options		18,884			36,299			92,035
Decrease (increase) in accrued interest receivable		1,073,940			2,055,136			(1,699,096	)
Increase in accrued interest payable		1,344,078			741,222			368,559
(Increase) in income taxes receivable………………...		(28,905,125	)		190,384			(1,035,386	)
Other, net		1,488,730			543,251			(195,198	)
Net Cash Provided (Used) By Operating Activities		(10,637,793	)		14,811,985			23,505,901
Investing Activities
Purchases of investment securities held-to-maturity		(85,718,391	)		(43,971,875	)		(46,020,950	)
Proceeds from sales, maturities, calls and pay-downs of investment  securities held-to-maturity		21,962,055			9,190,410			5,770,415
Proceeds from other investments		—			48,000			—
Purchases of other investments, net		(1,504,636	)		(4,500	)		(1,750,075	)
Net decrease (increase) in loans to customers		21,170,984			104,927,592			(78,282,798	)
Purchase of premises and equipment		(5,089,062	)		(7,751,826	)		(1,738,733	)
Proceeds from disposition of premises and equipment		—			63,772			—
Proceeds from disposition of foreclosed real estate		4,128,799			2,608,456			—
Net Cash Provided (Used) By Investing Activities		(45,050,251	)		65,109,929			(122,022,141	)

(Continued on following page)

See notes to consolidated financial statements

37

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

Years Ended December 31, 2008, 2007 and 2006

	2008			2007			2006
Financing Activities
Net (decrease) increase in demand deposits, NOW  accounts and savings accounts	$	(114,535,477	)	$	(64,443,555	)	$	34,697,815
Net (decrease) increase in certificates of deposit		206,305,728			(17,359,591	)		63,507,929
Net (decrease) increase in short-term borrowings		—			(694,000	)		(24,294,000	)
Issuance of FHLB advances		—			10,000,000			5,000,000
Repayments of FHLB advances		(5,000,000	)		(10,000,000	)		(10,000,000	)
Increase (decrease) in other debt, net		—			—			(23,939	)
Issuance of subordinated debentures		—			—			20,619,000
Exercise of stock options		54,000			—			—
Costs associated with stock split-fractional share payout		—			(12,102	)		—
Cash dividends		—			(3,295,693	)		(2,746,572	)
Net Cash Provided (Used) By Financing Activities		86,824,251			(85,804,941	)		86,760,233
Net Increase (Decrease) in Cash and Cash Equivalents		31,136,207			(5,883,027	)		(11,756,007	)
Cash and Cash Equivalents  at Beginning of Year		14,729,315			20,612,342			32,368,349
Cash and Cash Equivalents  at End of Year	$	45,865,522		$	14,729,315		$	20,612,342

See notes to consolidated financial statements

38

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 1 - Summary of Significant Accounting Policies

Florida Community Banks, Inc. ("FCBI") (a Florida corporation) and its wholly owned subsidiary, Florida Community Bank (the "Bank") (a Florida corporation) collectively referred to herein as the "Company," is headquartered in Immokalee, Florida, with ten additional branch offices in Southwest Florida. The Company had plans to open three new branches in 2008; a branch in the new town of Ave Maria; a branch in Bonita Springs, in the Bonita Center; and, one in North Port in front of the new Home Depot. The Bank had plans on moving its executive offices to the building in Ave Maria when it opened. All these plans were put on hold by the downturn in the economy. The Bank provides a full range of banking services to individual and corporate customers in Charlotte, Collier, Glades, Hendry and Lee counties and the surrounding areas.  In addition, two limited liability companies (Concordia Cape Coral II, LLC and Van Loon Commons II, LLC) were formed as special purpose entities (“SPE’s”) and are wholly owned by the Bank.

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States and to general practice within the banking industry. The following summarizes the most significant of these policies.

Regulatory Oversight, Capital Adequacy, Liquidity and Management’s Plans

The consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future. Due to the Company’s 2008 financial results, the substantial uncertainty throughout the U.S. banking industry and other matters discussed below, the Company has assessed its ability to continue as a going concern.

Regulatory Oversight

As described in Note 12, Regulatory Capital Matters, the Bank and FCBI are currently operating under heightened regulatory scrutiny; the Bank has entered into a Cease and Desist Order Agreement (“Order”) with the OFR and FCBI has entered into a Written Agreement (“Agreement”) with the Federal Reserve Bank of Atlanta. Both the Order and the Agreement place certain requirements and restrictions on the Bank and FCBI including but not limited to:

The Bank:

• Adherance to a Capital Plan to maintain the Tier 1 Leverage Ratio and the Total Risk Based Capital Ratio of at least 8% and 12%, respectively, which are above current levels and the levels necessary to be categorized as “well capitalized” as defined by Prompt Corrective Action regulations.

• The ratio of certain “classified assets” to Tier 1 Risk Based Capital and Loan Loss Reserves must be reduced to prescribed levels by dates beginning February 28, 2009.

• Reduce the Bank’s credit concentration risk.

39

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 1 - Summary of Significant Accounting Policies - Continued

FCBI:

• FCBI’s resources will be used to support the Bank.

• No dividends may be paid on common stock without prior regulatory approval.

• Additional debt may not be incurred without prior regulatory approval.

Capital Adequacy

As of December 31, 2008, the Bank’s and FCBI’s Capital ratio’s were below the minimum ratios set in the OFR’s Order.  The Bank’s Tier 1 Leverage Capital Ratio was 4.78%, the Tier 1 Risk Based Capital Ratio was 6.31% and the Total Risk Based Capital Ratio was 7.60%.  FCBI’s Tier 1 Leverage Capital Ratio was 3.45%, the Tier 1 Risk Based Capital Ratio was 4.55% and the Total Risk Based Capital Ratio was 7.83%. The Bank and FCBI face a serious risk of their capital ratios falling further, to the point where they may be considered “Significantly Under Capitalized.”

In order to return the Bank’s capital ratios to the level prescribed by the Order, FCBI and the Bank are looking at numerous options. Issuing more stock to raise capital is now critical, along with shrinking the Bank; doing both could return the capital ratios to where the Bank would be considered “well capitalized” again.  It must also be noted that failure to adequately address the regulatory concerns may result in further actions by the banking regulators, which could include appointment of a receiver or conservator of the Bank’s assets.

Liquidity

Both the Bank and FCBI actively manage liquidity. FCBI does not have any debt maturing during 2009 or 2010. FCBI suspended its dividend to shareholders and Trust Preferred Securities interest payments until such time as the Company returns to profitability. At December 31, 2008, FCBI had approximately $1.05 million in cash at the parent company level to meet its future operating needs. See Note 24, Condensed Parent Company Information.

Cash and cash equivalents at the Bank at December 31, 2008 were approximately $45.9 million. The Bank does not have any long-term debt maturing in 2009. Liquidity at the Bank is dependent upon the deposit franchise which funds 85% of the Company’s assets. Despite some negative publicity about the Bank during the first quarter of 2009, the Bank’s deposits increased from December 31, 2008 to February 28, 2009. The Bank is de-leveraging its balance sheet to improve its capital ratios and has also been planning so that as assets are removed from the balance sheet, the highest cost funding declines in tandem particularly focusing on decreasing higher cost certificate of deposits. The Bank currently has enough collateral to secure its Fed Funds lines and to pledge for secured long-term debt borrowings. At December 31, 2008, the Bank had the capacity to borrow up to $95 million on a short-term basis which is subject to collateral pledging restrictions and availability. The FDIC’s temporary changes to increase the

40

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 1 - Summary of Significant Accounting Policies - Continued

amount of deposit insurance to $250,000 per deposit relationship and to provide unlimited deposit insurance for certain transaction accounts have contributed to improving the Bank’s deposit base. All banks that have elected to participate in the deposit component of the Temporary Liquidation Guarantee Program (“TLGP”) have the same FDIC insurance coverage. At December 31, 2008, the Bank had approximately $20 million of uncollateralized, uninsured deposits. The Bank also does not have a loan portfolio that could rapidly draw additional funds causing an elevated need for additional liquidity at the Bank. At December 31, 2008, the Bank had unfunded loan commitments of approximately $50 million. If a liquidity issue presents itself, deposit promotions would be expected to yield significant in-flows of cash.

Based on current and expected liquidity needs and sources, management expects the Bank and FCBI to be able to meet obligations at least through December 31, 2009.

As noted above, the Company is actively working toward transactions designed to meet the requirements of the Order and Agreement. Failure to meet these requirements could result in formal, heightened regulatory oversight and could eventually lead to the appointment of a receiver or conservator of the Bank’s assets. If unanticipated market factors emerge and/or the Company is unable to successfully execute its plans or the banking regulators take unexpected actions, it could have a material adverse effect on the Company’s business, results of operations and financial position.

Basis of Consolidation

The consolidated financial statements include the accounts of Florida Community Banks, Inc., and the Bank. All significant inter-company balances and transactions have been eliminated. Variable interest entities ("VIEs") are consolidated if the Company is exposed to the majority of the VIE's expected losses and/or residual returns (i.e., the Company is considered to be the primary beneficiary). Unconsolidated investments in VIEs in which the Company has significant influence over operating and financing decisions (usually defined as a voting or economic interest of 20% to 50%) are accounted for using the equity method. Unconsolidated investments in VIEs in which the Company has a voting or economic interest of less than 20% are generally carried at cost.

Significant Concentration of Credit Risk and Uncertainty

A significant portion of the Company's loan portfolio consists of mortgages secured by real estate located in the Charlotte, Hendry, Glades, Collier and Lee County markets. Real estate values and real estate markets have been generally affected by the attention given by various news media to the national sub-prime market decline. The Company does not engage in sub-prime lending, but the values securing the real estate loans have declined and valuations fluctuate on a regular basis. The result of the decline is an economic downturn for the area that has caused past due and non-accrual loans to be unusually high.  While management believes that it has established the allowance for loan losses in accordance with generally accepted accounting principles and has taken into account the current economic environment views and the views of banking regulators in recent interagency guidance, uncertainty exists about the valuation of collateral dependent loans. The uncertainty about the ability to determine a true fair market

41

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 1 - Summary of Significant Accounting Policies - Continued

value in volatile real estate markets causes concern about significant estimates. It is therefore unclear if it is:  (a) at least reasonably possible that the estimate will change in the near term due to one or more future

confirming events and (b) if the effect of the change would be material to the consolidated financial statements. This general economic downturn has increased the number of non-performing loans and without recovery could adversely affect the Company’s financial performance.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The determination of the adequacy of the allowance for loan losses is based on estimates that are particularly susceptible to significant changes in the economic environment and market conditions. In connection with the determination of the estimated losses on loans, management obtains independent appraisals for significant collateral.  While management uses available information to recognize losses on loans, further reductions in the carrying amounts of loans may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the estimated losses on loans. Such agencies may require the Bank to recognize additional losses based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the estimated losses on loans may change materially in the near term. However, the amount of the change that is reasonably possible cannot be estimated.

Securities

Securities are classified as either held-to-maturity, available-for-sale or trading.

Securities held-to-maturity are those securities for which management has the ability and intent to hold on a long-term basis or until maturity. These securities are carried at amortized cost, adjusted for amortization of premiums and accretion of discount, to the earlier of the maturity or call date.

Securities available-for-sale represent those securities intended to be held for an indefinite period of time, including securities that management intends to use as part of its asset/liability strategy, or that may be sold in response to changes in interest rates, changes in prepayment risk, the need to increase regulatory capital, or other similar factors. Securities available-for-sale are recorded at market value with unrealized gains and losses net of any tax effect, added or deducted directly from shareholders' equity.

Securities carried in trading accounts are carried at market value with unrealized gains and losses reflected in income.

42

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 1 - Summary of Significant Accounting Policies - Continued

Realized and unrealized gains and losses are based on the specific identification method.

Purchase premiums and discounts are recognized in interest income using a method which approximates the interest method over the terms of the securities. Declines in the fair value of individual held-to-maturity and available-for-sale securities below their cost that are other-than-temporary result in write-downs of the individual securities to their fair value. The related write-downs are included in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery of fair value.

The Company has no trading securities.

Other Investments

The Company has invested in selected equity instruments issued in the form of restricted stocks, common stock of special purpose trusts formed to issue trust preferred securities and non-controlling partnership interests. The restricted stocks and trust stocks are categorized as Other Investments-Securities and are accounted for under the cost method. These investments represent less than a 20% economic interest and have no readily ascertainable market value, however, management is not aware of any conditions that would require adjustments to the reflected carrying values. The investments categorized as Other Investments-Partnerships (Note 4) represent ownership interests by the Company in limited liability partnerships. The Company accounts for partnership interests using the cost method or equity method depending upon the Company's economic interest and ability to significantly influence operating and financing decisions. Management has determined that none of its partnership interests required consolidation as of December 31, 2008 and 2007.

Loans Held-for-Sale

Loans held-for-sale are carried at the lower of aggregate cost or market. The cost of loans held-for-sale is the note amount plus certain net origination costs less discounts collected. Gains and losses resulting from changes in the market value of the inventory are netted. Any net gain that results is deferred; any net loss that results is recognized when incurred. The aggregate cost of loans held-for-sale at December 31, 2008 and 2007, approximates their aggregate net realizable value. Gains or losses on the sale of loans held-for-sale are included in other income.

Loans

Loans are stated at unpaid principal balances, less the allowance for loan losses, unearned discounts and net deferred loan fees.

Unearned discounts on installment loans are recognized as income over the term of the loans using a method that approximates the interest method.

Loan origination and commitment fees, as well as certain direct origination costs, are deferred and amortized as a yield adjustment over the lives of the related loans using the interest method or the straight-line method.

Allowance for Loan Losses

The allowance for loan losses is established through charges to earnings in the form of a provision for loan losses. Increases and decreases in the allowance due to changes in the measurement of the impaired loans are considered in the provision for loan losses. Loans continue to be classified as impaired unless they are brought fully current and the collection of scheduled interest and principal is considered probable. When a loan or portion of a loan is determined to be uncollectible, the portion deemed uncollectible is charged against the allowance and subsequent recoveries, if any, are credited to the allowance.

The allowance consists of specific and general components. The specific component relates to loans that are classified as doubtful, substandard or special mention. For such loans that are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value) of the impaired loan is lower than the carrying value of that loan. The general component covers non-classified loans and is based on historical loss experience adjusted for qualitative factors.

A loan is considered impaired, based on current information and events, if it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Uncollateralized loans are measured for impairment based on the present value of expected future cash flows discounted at the historical effective interest rate, while all collateral-dependent loans are measured for impairment based on the fair value of the collateral. All other loans are categorized in homogeneous groups and are evaluated collectively; reserves are established based on their historical loss experience, which are adjusted for qualitative environmental factors.

Management's periodic evaluation of the adequacy of the allowance is based on the Company's past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrowers' ability to repay, estimated value of any underlying collateral and an analysis of current economic conditions. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available. While management believes that it has established the allowance in accordance with generally accepted accounting principles and has taken into account the views of banking regulators and the current economic environment, there can be no assurance that in the future the Company's regulators or its economic environment will not require further increases in the allowance.

43

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 1 - Summary of Significant Accounting Policies - Continued

Income Recognition on Impaired and Nonaccrual Loans

Loans, including impaired loans, are generally classified as nonaccrual if they are past due as to maturity or payment of principal or interest for a period of more than 90 days, unless such loans are well collateralized and in the process of collection. If a loan or a portion of a loan is classified as doubtful or is partially charged off, the loan is generally classified as nonaccrual. Loans that are on a current payment status or past due less than 90 days may also be classified as nonaccrual if repayment in full of principal and/or interest is in doubt.

Loans may be returned to accrual status when all principal and interest amounts contractually due are reasonably assured of repayment within an acceptable period of time, and there is a sustained period of repayment performance by the borrower, in accordance with the contractual terms of interest and principal.

While a loan is classified as nonaccrual and the future collectability of the recorded loan balance is doubtful, collections of interest and principal are generally applied as a reduction to principal outstanding, except in the case of loans with scheduled amortizations where the payment is generally applied to the oldest payment due. When the future collectability of the recorded loan balance is expected, interest income may be recognized on a cash basis. In the case where a nonaccrual loan has been partially charged off, recognition of interest on a cash basis is limited to that which would have been recognized on the recorded loan balance at the contractual interest rate. Receipts in excess of that amount are recorded as recoveries to the allowance for loan losses until prior charge-offs have been fully recovered.

Premises and Equipment

Land is carried at cost. Other premises and equipment are stated at cost less accumulated depreciation. Expenditures for additions and major improvements that significantly extend the useful lives of the assets are capitalized. Expenditures for repairs and maintenance are charged to expense as incurred. The carrying values of assets traded in are used to adjust the carrying values of the new assets acquired by trade. Assets that are disposed of are removed from the accounts and the resulting gains or losses are recorded in operations.

Depreciation is provided generally by accelerated and straight-line methods based on the estimated useful lives of the respective assets.

Foreclosed Real Estate

Foreclosed real estate includes both formally foreclosed property and in-substance foreclosed property. In-substance foreclosed properties are those properties for which the Bank has taken physical possession, regardless of whether formal foreclosure proceedings have taken place.

44

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 1 - Summary of Significant Accounting Policies - Continued

At the time of foreclosure, foreclosed real estate is recorded at the lower of the carrying amount or fair value less cost to sell, which becomes the property's new basis. Any write-downs based on the asset's fair value at date of acquisition are charged to the allowance for loan losses. After foreclosure, these assets are carried at the lower of their new cost basis or fair value less cost to sell. Costs incurred in maintaining foreclosed real estate and subsequent adjustments to the carrying amount of the property are included in income (loss) on foreclosed real estate. Costs incurred to complete, repair/renovate or make the property whole are to be capitalized.

Retirement Plan

The Company has a Profit-Sharing Plan covering all eligible employees, allowing employee elective contributions under Internal Revenue Code section 401k. The Company also adopted an Employee Stock Ownership Plan ("ESOP"), which also allows elective employee contributions.  Employer contributions to the plans are included in salaries and employee benefits expense. Profit-Sharing and ESOP contributions are determined by the board of directors. The Company also has deferred compensation plans with certain executive officers and directors.

On December 31, 2006, the Company adopted the recognition provision of Statement of Financial Accounting Standards ("SFAS") No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of SFAS Nos. 87, 88, 106 and 132(R). SFAS No. 158 requires an employer to recognize the funded status of a defined benefit postretirement plan as an asset or liability in its statement of financial condition and to recognize changes in that funded status in the year in which the changes occur in accumulated other comprehensive income. At December 31, 2007, the Company had a defined benefit postretirement plan, which is discussed further in Note 16, that met the recognition criteria of SFAS No. 158. Accordingly, at December 31, 2008, the Company determined the plans are non-qualified and unfunded and have been recorded as a liability of the Company at the present value of the future benefit obligation.

Advertising Costs

The Company's policy is to expense advertising costs as incurred. Advertising expense for the years ended December 31, 2008, 2007 and 2006 amounted to approximately $412,000, $481,000, and $381,000, respectively.

45

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 1 - Summary of Significant Accounting Policies - Continued

Income Taxes

Income taxes are provided for the tax effects of the transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the basis of the allowance for loan losses, accumulated depreciation and accrued employee benefits for financial and income tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets and liabilities are reflected at income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.

The Company adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Taxes” (“FIN 48”), as of January 1, 2007.  A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur.  The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination.  For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

Stock-Based Compensation

On January1, 2006, the Company adopted SFAS No. 123(R), Share-Based Payment, which requires all stock-based payments to employees to be recognized in the income statement based on their fair values, the same method employed by the Company since January 1, 2003. The Company adopted SFAS No. 123(R) using the modified prospective transition method. The modified prospective transition method does not require the restatement of prior periods to reflect the fair value method of expensing stock-based compensation. SFAS No. 123(R) does require a cumulative effect adjustment of previously recognized compensation expense in order to estimate forfeitures for awards outstanding on the adoption date. The cumulative effect adjustment was immaterial.

The Company uses the Black-Scholes option pricing model for all grant date estimations of fair value as the Company believes that its stock options have characteristics for which the Black-Scholes model provides an acceptable measure of fair value. The expected term of an option represents the period of time that the Company expects the options granted to be outstanding. The Company bases this estimate on a number of factors including vesting period, historical data, expected volatility and blackout periods. The expected volatility used in the option pricing calculation is estimated considering historical volatility. The Company believes that historical volatility is a good predictor of the expected volatility. The expected dividend yield represents the expected dividend rate that will be paid out on the underlying shares during the expected term of the option, taking into account any expected dividend increases. The Company's options do not permit option holders to receive dividends and therefore the expected dividend yield was factored into the calculation. The risk-free rate is assumed to be a short-term treasury rate on the date of grant, such as a U.S. Treasury zero-coupon issue with a term equal to the expected term of the option.

46

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 1 - Summary of Significant Accounting Policies - Continued

Stock option expense was computed with the following weighted average assumptions as of the grant dates:

	Years Ended December 31,
	2008			2007		2006
Assumptions:
Average risk free interest rate		2.07	%		—		—
Average expected volatility		15.00	%		—		—
Expected dividend yield		0.00	%		—		—
Expected life	9.0 years				—		—

The Company estimates forfeitures at the date of grant based upon historical forfeitures and management's estimate of future forfeitures. Prior to the adoption of SFAS No. 123(R), forfeitures were recognized as they occurred.

Earnings (Loss) Per Common Share

Basic earnings (loss) per common share are computed by dividing earnings available to stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share reflect per share amounts that would have resulted if dilutive potential common stock had been converted to common stock, as prescribed by SFAS No. 128, Earnings per Share. The following reconciles the weighted average number of shares outstanding:

	2008		2007		2006
Weighted average of common  shares outstanding		7,918,144		7,909,261		7,890,427
Effect of dilutive options		33,503		131,599		96,707
Weighted average of common shares  outstanding effected for dilution		7,951,647		8,040,860		7,987,134

In October 2007 and October 2006, the Company issued 1.2-for-1.0 stock splits. All per share amounts included in these consolidated financial statements have been retroactively adjusted to reflect the effects of the 1.2-for-1.0 stock splits.

47

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 1 - Summary of Significant Accounting Policies - Continued

Comprehensive Income

Comprehensive income is generally defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. Comprehensive income is the total of net income (loss) and all other non-owner changes in equity. Items that are to be recognized under accounting standards as components of comprehensive income are displayed in statements of shareholders' equity.

In the calculation of comprehensive income, certain reclassification adjustments are made to avoid double counting items that are displayed as part of net income (loss) for a period that also had been displayed as part of other comprehensive income (loss) in that period or earlier periods. The Company has no such material items to be reclassified at December 31, 2008, 2007 and 2006.

Statements of Cash Flows

The Company includes cash, due from banks and certain cash equivalents in preparing the consolidated statements of cash flows. The following is supplemental disclosure to the consolidated statements of cash flows for the three years ended December 31, 2008.

	Years Ended December 31,
	2008		2007		2006
Cash paid during the year for interest	$	31,825,985	$	37,648,368	$	33,996,190
Cash paid during the year for income taxes, net		7,000,000		13,468,880		16,244,978
Non-cash Disclosures:
Loans transferred to foreclosed  real estate during the year		79,638,829		955,599		200,000

Net increase in unrealized losses on available-for-sale securities 354,183 — —

48

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 1 - Summary of Significant Accounting Policies - Continued

Off-Balance Sheet Financial Instruments

In the ordinary course of business the Company has entered into off-balance sheet financial instruments consisting of commitments to extend credit, commercial letters of credit and standby letters of credit. Such financial instruments are recorded in the financial statements when funded.

The Bank has available as a source of financing a line of credit with the Federal Home Loan Bank of Atlanta ("FHLB") that is limited to 10% of assets (approximately $97,745,000 at December 31, 2008), of which approximately $47,745,000 was available and unused. The ability to utilize the remaining line is dependent on the amount of eligible collateral that is available to pledge to the FHLB. At December 31, 2008, the amount pledged and available was approximately $25,000,000.  In addition, as a part of the borrowing agreement, the Bank is required to purchase FHLB stock (see Note 4).

The Bank also has available as a source of short-term financing the purchase of approximately $50,000,000 of federal funds from other commercial banks and commercial lines of credit. At December 31, 2008, the total amount available for short-term financing was approximately $50,000,000. All the lines are secured by investment securities and are dependent upon the availability of securities to pledge against any advances.

The Bank also has available as a source of short-term financing, a line of credit with the Federal Reserve Bank of Atlanta, which is secured by commercial loans. At December 31, 2008, the total amount available for short-term financing was $20,000,000.  During the first quarter of 2009, the line was reduced to $9.7 million due to changes in lendable collateral values that the Federal Reserve made for all banks,

Segment Information

All of the Company's offices offer similar products and services, are located in the same geographic region and serve the same customer segments of the market. As a result, management considers all units as one operating segment and therefore feels that the basic consolidated financial statements and related notes provide details related to segment reporting.

Reclassifications

Certain amounts in 2007 and 2006 have been reclassified to conform with the 2008 presentation.  These reclassifications had no effect on the financial position, results of operations or cash flows of the Company as previously presented.

49

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 1 - Summary of Significant Accounting Policies - Continued

Fair Value Measurements

The Company adopted the provisions of SFAS No. 157, Fair Value Measurements, effective January 1, 2008, on a prospective basis.  SFAS No. 157 defines fair value for financial reporting purposes as the price that would be received to sell an asset or paid to transfer a liability in an orderly market transaction between market participants at the measurement date (reporting date).  Under the statement, fair value is based on an exit price in the principal market or most advantageous market in which the reporting entity could transact.  SFAS No. 157 does not require new fair value measurements but does apply under other accounting pronouncements where fair value is required or permitted.

For each asset and liability required to be reported at fair value, management has identified the unit of account and valuation premise to be applied for purposes of measuring fair value.  The unit of account is the level at which an asset or liability is aggregated or disaggregated for purposes of applying SFAS No. 157.  The valuation premise is a concept that determines whether an asset is measured on a stand-alone basis or in combination with other assets.  For purposes of applying the provisions of SFAS No. 157, the Company measures its assets and liabilities on a stand-alone basis then aggregates assets and liabilities with similar characteristics for disclosure purposes.

SFAS No. 157 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the observable inputs be used when available.  Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company.  Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in

the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs as follows:

Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.  Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

Level 2 - Valuations based on observable inputs, including quoted prices (other than Level 1) in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, such as interest rates, yield curves, volatilities and default rates, and inputs that are derived principally from or corroborated by observable market data.

Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

50

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 1 - Summary of Significant Accounting Policies - Continued

If the determination of fair value measurement for a particular asset or liability is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.  Management’s assessment of the significance of a particular input to the fair value measurement requires judgment and considers factors specific to the asset or liability measured.

Financial Instruments Not Measured at Fair Value

Some of the Company’s financial instruments are not measured at fair value on a recurring basis but, nevertheless, are recorded at amounts that approximate fair value due to their liquid or short-term nature.  Such financial assets and financial liabilities include:  cash and cash equivalents, accounts receivable, accounts payable and other short-term borrowings, and certain deposits.

Recently Issued Accounting Standards

In June 2007, the FASB finalized Issue No. 06-11, “Accounting for Income Tax Benefits of Dividends on Share-Based Payments Awards”.  The issue requires that a realized income tax benefit from dividends or dividend equivalents that are charged to retained earnings and are paid to employees for equity classified nonvested equity shares, nonvested equity share units, and outstanding equity share options should be recognized as an increase to additional paid-in capital.  The amount recognized in additional paid-in capital for the realized income tax benefit from dividends on these awards should be included in the pool of excess tax benefits available to absorb tax deficiencies on share-based payment awards (as described in paragraphs 62 and 63 of SFAS No. 123(R)).  This is effective for fiscal years beginning after December 15, 2007.  Adoption on January 1, 2008, as required, did not have a material effect on the Company’s financial condition, results of operations or liquidity.

On November 5, 2007, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin ("SAB") No. 109, “Written Loan Commitments Recorded at Fair Value Through Earnings.” SAB 109 expresses the views of the staff regarding written loan commitments that are accounted for at fair value through earnings under generally accepted accounting principles. To make the staff’s views consistent with current authoritative accounting guidance, the SAB revises and rescinds portions of SAB No. 105, “Application of Accounting Principles to Loan Commitments.” Specifically, the SAB revises the SEC staff’s views on incorporating expected net future cash flows related to loan servicing activities in the fair value measurement of a written loan commitment. The SAB retains the staff’s views on incorporating expected net future cash flows related to internally-developed intangible assets in the fair value measurement of a written loan commitment. The staff expects registrants to apply the views in Question 1 of SAB 109 on a prospective basis to derivative loan commitments issued or modified in fiscal quarters beginning after December 15, 2007. The Company’s adoption of SAB 109 did not have a material impact on its consolidated financial statements.

51

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 1 - Summary of Significant Accounting Policies - Continued

In December 2007, the FASB issued SFAS No. 160 “Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51.  This Statement establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. The guidance will become effective as of the beginning of a company’s fiscal year beginning after December 15, 2008. The Company does not expect the adoption of this statement to have a material effect on the consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141(R) “Business Combinations.” SFAS No. 141(R) establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. The Statement also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. The guidance will become effective as of the beginning of a company’s fiscal year beginning after December 15, 2008. The Company does not expect the adoption of this statement to have a material effect on the consolidated financial statements.

In March 2008, the FASB issued SFAS No 161, “Disclosures about Derivative Instruments and Hedging Activities – an amendment of FASB Statement No. 133”.  SFAS No. 161 requires enhanced disclosures about how and why an entity uses derivative instruments, how derivative instruments and related items are accounted for under SFAS No. 133 and how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows.  The new standard is effective for the Company on January 1, 2009, and adoption is not expected to have a material effect on the Company’s financial condition, results of operations or liquidity.

In May 2008, the FASB issued SFAS No 162. “The hierarchy of Generally Accepted Accounting Principles”.  The standard identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States of America.  The new standard became effective November 15, 2008, and adoption, as required, did not have a material impact on the Company’s consolidated financial condition or results of operations.

In January 2009, the FASB issued FSP EITF 99-20-1 which amends the impairment guidance in EITF Issue No. 99-20, “Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests that Continue to be Held by a Transferor in Securitized Financial Assets,” to achieve more consistent determination of whether an other-than-temporary impairment has occurred.  The FSP also retains and emphasizes the objective of an other-than-temporary impairment assessment and the related disclosure requirements in SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities”, and other related guidance.  The FSP is effective for interim and annual reporting periods ending after December 15, 2008, and was required to be applied prospectively.  Adoption, as required, did not have a material effect on the Company’s consolidated financial condition or results of operations.

52

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 2 - Restrictions on Cash and Due from Bank Accounts

The Bank is required by regulatory authorities to maintain average reserve balances either in vault cash or on deposit with the Federal Reserve Bank. The average amount of those reserves required at December 31, 2008 and 2007, were approximately $85,000 and $311,000, respectively.

Note 3 - Securities

The carrying amounts of securities held-to-maturity as shown in the consolidated statements of financial condition and their approximate fair values at December 31, 2008 and 2007 were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities Held-to-Maturity
December 31, 2008:
FHLB and FHLMC agency notes	$	19,486,401	$	546,204	$	—	$	20,032,605
Municipal securities		20,797,848		10,965		725,515		20,083,298
Mortgage-backed securities		159,340,980		4,025,482		171,776		163,194,686
	$	199,625,229	$	4,582,651	$	897,291	$	203,310,589
December 31, 2007:
FHLB and FHLMC agency notes	$	18,491,643	$	570,623	$	9,166	$	19,053,100
Municipal securities		20,786,520		63,186		88,627		20,761,079
Mortgage-backed securities		96,531,894		663,977		510,052		96,685,819
	$	135,810,057	$	1,297,786	$	607,845	$	136,499,998

53

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 3 - Securities - Continued

The following table shows our investments' gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2008 and 2007.

	Less Than 12 Months				12 Months or More                                         Total
Description of Securities	Fair Value		Unrealized Losses		Fair               Unrealized Value                    Losses				Fair                            Unrealized      Value                               Losses
December 31, 2008:
Municipal securities	$	16,818,776	$	662,332	$	813,565	$	63,183	$	17,632,341	$	725,515
Mortgage-backed securities		12,771,403		171,776		—		—		12,771,403		171,776
	$	29,590,179	$	834,108	$	813,565	$	63,183	$	30,403,744	$	897,291
December 31, 2007:
FHLB and FHLMC  agency notes	$	—	$	—	$	1,990,200	$	9,166	$	1,990,200	$	9,166
Municipal securities		9,280,680		58,860		3,406,613		29,767		12,687,293		88,627
Mortgage-backed securities		4,090,572		5,487		47,845,717		504,565		51,963,289		510,052
	$	13,371,252	$	64,347	$	53,242,530	$	543,498	$	66,613,782	$	607,845

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and the ability of the Bank to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

Municipal Securities - At December 31, 2008, the Company had 34 municipal securities with unrealized losses.  The unrealized losses on these securities were caused by an overall decline in the economy and reflected aggregate depreciation from amortized cost of 3.49 percent.  The contractual cash flows of these investments are guaranteed by various state and local government agencies.  Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the Company's investment.  Because the decline in market value is attributable tochanges in the overall economy and not credit quality, and because the Company has the ability and intent to hold these investments until maturity, the Company does not consider these investments to be other-than-temporarily impaired at December 31, 2008.

54

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 3 - Securities - Continued

Mortgage-Backed Securities - At December 31, 2008, the Company had 8 mortgage-backed securities with unrealized losses.  The unrealized losses were a result of a declining economy and reflected an aggregate depreciation of 0.11 percent from amortized cost.  The contractual cash flows of these investments are guaranteed by either the U.S. Government and its agencies or U.S.  Government sponsored enterprises.  Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the Company's investment.  Because the decline in market value is attributable tochanges in the overall economy and not credit quality, and because the Company has the ability and intent to hold these investments until maturity, the Company does not consider these investments to be other-than-temporarily impaired at December 31, 2008.

The contractual maturities of securities held-to-maturity at December 31, 2008, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized		Fair
	Cost		Value
Due in one year or less	$	—	$	—
Due after one year through five years		9,501,704		9,614,215
Due after five years through ten years		37,658,437		38,930,080
Due after ten years		152,465,088		154,766,294
	$	199,625,229	$	203,310,589

Mortgage-backed securities have been included in the maturity table based upon the guaranteed payoff date of each security.

There was a $7,816 net loss on the sale of eleven “odd lot” (small) mortgage-backed securities at the end of 2007, which were sold and replaced with one mortgage-backed security that could be used for pledging. There were no gross realized gains and losses from the sale of securities for the years ended December 31 2008 and 2006.

Dispositions through calls, maturities and pay-downs resulted in no material net gains or losses during 2008, 2007 and 2006.

Investment securities pledged to secure public funds on deposit, FHLB advances and for other purposes as required by law amounted to approximately $192,225,000 and $119,124,000 at December 31, 2008 and 2007, respectively.

55

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 4 - Other Investments

The carrying amounts of other investments as shown in the consolidated statements of financial condition at December 31, 2008 and 2007 were as follows:

	2008		2007
Other investments-securities	$	7,104,601	$	5,599,965
Other investments-partnerships		883,268		1,215,875
	$	7,987,869	$	6,815,840

Other Investments-Securities - The aggregate carrying value of the Company's cost-method investments totaled $7,104,601 at December 31, 2008 and $5,599,965 at December 31, 2007. As of December 31, 2008, the Company estimates that the fair values were lower than the carrying costs and evaluated them for impairment in accordance with paragraphs 14 and 15 of SFAS No. 107. The Company concluded that the impairments were temporary and no adjustments were needed.  Included in this amount are restricted investments in the Federal Home Loan Bank of Atlanta, Silverton Financial Services, Inc. (with a year-end internally calculated  value of $1,180,479, representing a 39% decline in value), and the Independent Bankers of Florida. The investments in FCBI Capital Trust I and Capital Trust II represent the Company's capitalization of special purpose trusts created to issue preferred securities. These investments represent 100 percent of the common stock issued by the trust’s, however, in accordance with the provisions of FIN 46(R), these subsidiaries have not been consolidated into these consolidated financial statements since the Company is not considered the primary beneficiary (see Note 10).

Other Investments-Partnerships - The investment in Capital Security Investments, LLC, represents a 20% investment in a limited liability company with four other financial institutions for the purpose of buying trust preferred securities. This investment was also evaluated for impairment, as the fair value of the trust preferred securities were lower than their carrying cost. The Company concluded that the impairment was temporary due exclusively to the underlying temporary impairment of securities held by the partnership.  and wrote down the $354,183 investment through other comprehensive income in the equity section of the statements of financial condition. The equity method is used to account for this partnership interest. The $883,268 investment in AMD-FCB, LLP, represents capital contributions made to-date, for a 50% partnership interest with Ave Maria Development, LLP to purchase land and construct an office building in the town of Ave Maria. The Bank has leased a total of 16,809 square feet, or approximately one-half of the building that will include a branch, executive and administrative offices (see Note 20). The Company is planning on moving their corporate headquarters to the Ave Maria building. Although the Company owns a 50% interest in the partnership, management has determined that the Company is not the primary beneficiary under the rules of FIN 46(R) and therefore the equity method will be applied to this investment, with the original investment recorded at cost and adjusted periodically to recognize the Company’s share of earnings or losses. Intercompany profits and losses will be eliminated by reducing the investment balance and income from the Company’s share of the unrealized intercompany profits and losses. The Company has also guaranteed 50% of the construction loan to fund completion of the project (see Note 17). The Company evaluated the partnership interest for impairment and concluded that there was no impairment.

56

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 5 - Loans

The Company grants loans to customers primarily in Charlotte, Collier, Glades, Hendry and Lee Counties of Southwest Florida.

The major classifications of loans as of December 31, 2008 and 2007 are as follows:

	2008			2007
Commercial, financial, and agricultural	$	44,290,030		$	42,718,370
Real estate - construction		328,673,278			414,737,975
Real estate - mortgage		243,876,855			296,213,418
Consumer		6,533,643			6,111,974
Other		1,985,873			3,006,024
Total		625,359,679			762,787,761
Unearned income		(881,436	)		(1,356,800	)
Allowance for loan losses		(36,389,744	)		(18,309,279	)
Net loans	$	588,088,499		$	743,121,682

In addition to the major categories listed above, at December 31, 2008, the Company had a significant concentration in unimproved commercial land loans totaling approximately $96 million, of which $82.5 million is currently on nonaccrual.

Deposit overdrafts reclassified as loans and included in the other loan category amounted to $156,455 and $220,718, at December 31, 2008 and 2007, respectively.

Information about impaired loans as of and for the years ended December 31 is as follows:

	2008		2007
Impaired loans with a specific valuation allowance	$	114,697,079	$	36,431,688
Impaired loans without a specific valuation allowance		50,792,628		76,730,076
Total impaired loans	$	165,489,707	$	113,161,764
Related allowance on impaired loans	$	21,226,107	$	8,635,084
Total nonaccrual loans		155,520,915		111,146,557
Total loans past due 90 days or more and still accruing		890,781		6,513,000

	2008		2007		2006
Average monthly balance of impaired loans (based on month-end balances)	$	131,958,981	$	52,233,405	$	7,597,033
Interest income recognized on impaired loans		1,751,131		5,118,250		1,676,649
Interest income recognized on the cash basis on impaired loans		1,751,131		5,118,250		1,676,649

For the years ended December 31, 2008, 2007 and 2006, the difference between gross interest income that would have been recorded in such period if the nonaccruing loans had been current in accordance with their original terms and the amount of interest income on those loans that was included in such period's net income was approximately $5,914,577, $6,888,666 and $2,491,750, respectively.

The Company has no commitments to lend additional funds to the borrowers of nonaccrual loans.

Net unamortized deferred loan fees and origination costs included in unearned income amounted to $881,436 and $1,356,800 as of December 31, 2008 and 2007, respectively.

Commercial and residential real estate loans pledged to secure FHLB advances and letters of credit amounted to approximately $20,000,000 and $20,500,000 at December 31, 2008 and 2007, respectively (see Note 10). Commercial real estate loans pledged to secure the Federal Reserve Bank line of credit amounted to approximately $20,259,000 and $12,200,000 at December 31, 2008 and 2007, respectively.

57

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 6 - Allowance for Loan Losses

Changes in the allowance for loan losses for the years ended December 31, 2008, 2007 and 2006 were as follows:

	2008			2007			2006
Balance at beginning of year	$	18,309,279		$	13,590,000		$	11,522,910
Charge-offs		(51,215,611	)		(2,340,470	)		(264,326	)
Recoveries		165,676			192,149			35,146
Net (charge-offs) recoveries		(51,049,935	)		(2,148,321	)		(229,180	)
Provision for loan losses		69,130,400			6,867,600			2,296,270
Balance at end of year	$	36,389,744		$	18,309,279		$	13,590,000

Note 7 - Premises and Equipment

Premises and equipment as of December 31, 2008 and 2007 is as follows:

	2008			2007
Land	$	6,940,840		$	4,993,070
Land improvements		1,038,013			895,508
Building		14,462,303			13,983,175
Furniture and equipment		5,729,713			5,378,314
Automobiles		628,927			605,010
Construction-in-progress		4,766,469			2,857,300
		33,566,265			28,712,377
Accumulated depreciation		(8,698,708	)		(7,616,969	)
Premises and equipment, net	$	24,867,557		$	21,095,408

The provision for depreciation charged to occupancy and equipment expense for the years ended December 31, 2008, 2007 and 2006 was $1,086,954, $951,351, and $919,381, respectively.

58

 FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 8 - Foreclosed Real Estate

At December 31, 2008 and 2007, the Company had foreclosed assets totaling $52,005,241 and $1,065,289, respectively.  Seven (7) properties make up approximately 92% of the December 31, 2008 balance.  Two of the aforementioned properties are the two SPE’s noted in Note 1.

Note 9 - Deposits

The aggregate amounts of time deposits of $100,000 or more, including certificates of deposit of $100,000 or more at December 31, 2008 and 2007 were $370,452,562 and $355,279,633, respectively. Time deposits of less than $100,000 totaled $284,837,438 and $93,704,639 at December 31, 2008 and 2007, respectively.

The maturities of time certificates of deposit and other time deposits issued by the Bank at December 31, 2008, are as follows:

Year Ending December 31,
2009		$	302,053,155
2010			212,093,963
2011			91,571,923
2012			38,580,432
	2013…………………………………………………………………..		10,989,051
2014			1,476
		$	655,290,000

59

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 10 - Long-term Debt

Long-term debt consists of the following at December 31:

	2008                                              2007
Long-term FHLB advances, with varying maturities from March 2010 through December 2014, with interest rates at variable base or fixed rates between 1.53% to 6.18%, secured by real estate mortgage loans and pledged securities	$	50,000,000	$	55,000,000
2002 Long-term subordinated debentures; interest rate prime plus 0.5%,  30-year life with a call option of 5 years, subject to regulatory approval		10,310,000		10,310,000
2006 Long-term subordinated debentures; interest rate at three month LIBOR plus 1.55%, 30-year life with a call option of 5 years, subject to regulatory approval		20,619,000		20,619,000
	$	80,929,000	$	85,929,000

In June 2002, the Company formed a wholly-owned Delaware statutory business trust, FCBI Capital Trust I, which issued $10,000,000 of guaranteed preferred securities representing undivided beneficial interests in the assets of the trust ("Trust Preferred Securities"). In May 2006, the Company formed another wholly-owned Delaware statutory business trust, FCBI Capital Trust II, which issued $20,000,000 of guaranteed preferred securities. The common securities of both trusts are owned by the Company. The proceeds from the issuance of the Trust Preferred Securities ($30,000,000) and common securities ($929,000) were used by the trust to purchase $30,929,000 of junior subordinated deferrable interest debentures of the Company. The debentures, which bear interest at Prime rate plus 0.5% and three month LIBOR plus 1.55%

respectively, represent the sole asset of the trusts. The Company has fully and unconditionally guaranteed all obligations of the Trusts on a subordinated basis with respect to the Trust Preferred Securities. In accordance with the provisions of FIN 46(R), the Company accounts for the Trust Preferred Securities as a long-term debt liability to the Trust in the amount of $30,929,000. Subject to certain limitations, the Trust Preferred Securities qualify as Tier 1 capital.

The Company has entered into an agreement, which fully and unconditionally guarantees payment of accrued and unpaid distributions required to be paid on the Trust Preferred Securities, with respect to any Trust Preferred Securities called for redemption. In December 2008, the Company elected to defer the interest payments as allowed under the agreement to conserve cash. Payments maybe deferred for up to 20 quarters, but the interest will continue to be accrued every month.

60

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 10 - Long-term Debt - Continued

The Trust Preferred Securities mature in September 2032 and July 2036, and may be called by the Company at any time after June 2007 and July 2011 respectively.

Maturities of long-term debt following December 31, 2008, are as follows:

Year Ending December 31,
2009	$	—
2010		5,000,000
2011		5,000,000
2012		20,000,000
2013		—
Thereafter		50,929,000
	$	80,929,000

Note 11 - Shareholders' Equity

At December 31, 2008 and 2007, shareholders' equity of the Company consisted of the following:

Preferred stock: 5,000,000 shares authorized with a par value of $0.01 per share, nonvoting.

Common stock: 25,000,000 shares authorized with a par value of $0.01 per share. Voting rights equal to one vote per share.

Paid-in capital: Represents the funds received in excess of par value upon the issuance of stock, net of issuance costs, the effect of issuance of stock options and the related effects of the stock dividends and stock splits.

Retained earnings: Represents the accumulated net earnings of the Company as reduced by dividends paid to shareholders and the effect of stock dividends issued in previous periods.

Accumulated other comprehensive income (loss): Represents the change in equity during each period from the effects of unrealized holding gains and losses on securities available-for-sale, net of tax.

Stock splits:  In October 2006, the Company issued a 1.2 for 1.0 common stock split resulting in an increase in the number of outstanding shares by 1,098,246. In October 2007, the Company issued a 1.2 for 1.0 common stock split resulting in an increase in the number of outstanding shares by 1,317,874.  All per share amounts included in these consolidated financial statements have been adjusted to give retroactive effect to the stock splits.

61

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 12 - Regulatory Capital Matters

The Company and the Bank are subject to various regulatory capital requirements administered by the state and federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators, which if undertaken, could have a direct material effect on the Company's consolidated financial statements. Under regulatory capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and its subsidiary bank must meet specific capital guidelines involving quantitative measures of the Company's and its subsidiary bank's assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank's capital amounts and classification under the prompt corrective guidelines are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.  Prompt corrective action provisions are not applicable to bank holding companies.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of Total capital and Tier 1 capital to risk-weighted assets (as defined in the regulations), and Tier 1 capital to adjusted total assets (Tier 1 "leverage")(as defined). As of December 31, 2008, that the Company and the Bank failed to meet all capital adequacy requirements to which they are subject.

As of December 31, 2008, the most recent notification from the applicable regulatory agencies categorized the Bank as undercapitalized under the regulatory framework for prompt corrective action. To become well capitalized again, the Bank will have to maintain minimum Total capital, Tier 1 capital, and Tier 1 leverage ratios as disclosed in the table below. There are no changes in conditions or events since the most recent notification that management believes have changed the Bank's prompt corrective action category.

On October 17, 2008, Florida Community Banks, Inc.’s wholly-owned subsidiary, Florida Community Bank (“Bank”), the Florida Office of Financial Regulation (“OFR”) and the Federal Deposit Insurance Corporation (“FDIC”) entered into a Stipulation and Consent of Entry of Order to Cease and Desist, which incorporated by reference an Order to Cease and Desist for the Bank (“Order”).

The Order requires the Bank to: (i) recruit three new directors; (ii) review its management to determine if staffing changes or additions are required; (iii) modify its management succession plan; (iv) increase Board oversight and minute keeping; (v) obtain regulatory clearance for the appointment of executive officers; (vi) adopt and adhere to a capital plan for maintaining a Tier 1 Leverage Capital ratio of at least 8%, a Tier 1 Risk Based Capital ratio of at least 10% and a Total Risk Based Capital ratio of at least 12%; (vii) obtain regulator approval for the payment of dividends; (viii) charge off or collect all assets classified as “loss” by the OFR; (ix) establish a special assets committee to adopt a plan to reduce the Bank’s risk exposure to adversely classified assets; (x) refrain, except under certain circumstances, from making loans to borrowers who has had a loan charged off or adversely classified by the Bank; (xi) evaluate and reorganize the Bank’s special assets department and policies; (xii) address and cure deficiencies in loan administration, underwriting, loan policy and loan review; (xiii) review, monitor and reduce the Bank’s credit concentration risk; (xiv) review and modify its allowance for loan and lease

62

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 12 - Regulatory Capital Matters - Continued

losses methodology; (xv) develop a plan to increase earnings; (xvi) amend its 2008 business plan budget and develop a business plan and budget for 2009 and 2010 to reflect the Bank’s current condition and prospects; (xvii) not increase its amount of brokered deposits and develop a plan to reduce their level of use; (xviii) not borrow money other than deposits, Federal Funds purchased or Federal Home Loan Bank advances without regulatory approval; (xix) evaluate its interest rate risk modeling system: and (xx) establish a compliance committee of the Board and file periodic reports with the OFR and FDIC as to compliance with the Order.  A copy of this Order was included in the September 30, 2008 form 10-Q as Exhibit 10.9.

Management believes that it is addressing, or has addressed, all of the substantive items in, and is compliant with the Cease and Desist Order Agreement however, as of this filing the Bank was not in compliance with all of the items.  The Bank has recruited three new directors, but only one to date has been approved by the OFR; approval of the other two are still pending.  The Bank’s capital ratios have fallen below the minimums required by the Order; as of December 31, 2008 the Tier 1 Leverage Capital Ratio was 4.78%, the Tier 1 Risk Based Capital ratio was 6.31% and the Total Risk Based Capital Ratio was 7.60%.  As of March 31, 2009, the Capital ratios are projected to decrease further.  Management is reviewing and weighing all of its opinions for increasing capital and is actively trying to reduce the size of the Bank by selling non-performing assets, which will improve the capital ratios.

The Company's and the Bank's actual capital amounts and ratios are also presented in the table.

	Actual					For Capital                  Adequacy Purposes					To Be Well                Capitalized Under                Prompt Corrective                    Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
As of December 31, 2008:
Total Capital Consolidated	$	59,087		7.83	%	$	60,347		8.00	%		N/A		N/A
Florida Community Bank		57,275		7.60			60,292		8.00		$	75,365		10.00	%
Tier 1 Capital Consolidated		34,319		4.55			30,173		4.00			N/A		N/A
Florida Community Bank		47,521		6.31			30,146		4.00			45,219		6.00
Tier 1 Leverage Consolidated		34,319		3.45			40,849		4.00			N/A		N/A
Florida Community Bank		47,521		4.78			39,740		4.00			49,674		5.00

63

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 12 - Regulatory Capital Matters - Continued

Actual		For Capital                   Adequacy Purposes		To Be Well             Capitalized Under            Prompt Corrective                 Action Provisions
Amount	Ratio	Amount	Ratio	Amount	Ratio
(Dollars in thousands)

As of December 31, 2007:
Total Capital Consolidated	$138,692	16.69%	$66,491	8.00%	N/A	N/A
Florida Community Bank	128,841	15.64	65,894	8.00	$82,368	10.00%
Tier 1 Capital Consolidated	128,205	15.43	33,246	4.00	N/A	N/A
Florida Community Bank	118,448	14.38	32,947	4.00	49,421	6.00
Tier 1 Leverage Consolidated	128,205	13.38	38,334	4.00	N/A	N/A
Florida Community Bank	118,448	12.50	37,907	4.00	47,383	5.00

Note 13 - Stock Option Plans

The Company has adopted the 2002 Key Employee Stock Compensation Program ("Employee Program"). The Employee Program provides for the granting of stock options generally with an exercise price equal to the fair market value of the Company's stock at the date of grant. The stock options generally vest over four years of continuous service and have a ten year contractual term. Certain options provide for accelerated vesting if there is a change of control (as defined in the plan). The following table reflects the number of shares to be issued upon the exercise of options granted under the Employee Program, the weighted-average exercise price of all such options, and the total number of shares of common stock reserved for the issuance upon the exercise of authorized, but not-yet-granted options, as of December 31, 2008.

Plan Category	Number of Shares to be Issued Upon the Exercise of Outstanding Options		Weighted-average Exercise Price of Outstanding Options		Number of Shares Remaining Available For Future Issuance Under Equity Compensation Plan
Equity Compensation Plans Approved by Shareholders		248,564	$	9.82		63,485
Equity Compensation Plans Not Approved by Shareholders		—		0.00		—
		248,564	$	9.82		63,485

64

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 13 - Stock Option Plans - Continued

Options to purchase Florida Community Banks, Inc. stock have been granted to directors, officers and employees under the Employee Program. Under the Employee Program, options may be granted to purchase up to a maximum of 388,591 common shares, as adjusted for all subsequent stock dividends and splits.

The stock options expire 10 years after the date of grant and are issued at an option price no less than the market price of the Company's stock on the date of grant. Options granted are generally exercisable at 40% after one year and in annual 20% increments thereafter.

The following table summarizes the Company's stock option activity since December 31, 2007:

	Options		Weighted       Average         Exercise       Price
Outstanding as of December 31, 2007		232,522	$	10.19
Granted		25,000		5.00
Exercised		8,956		6.03
Cancelled/Forfeited		2		6.03
Outstanding as of December 31, 2008		248,564		9.82
Fully vested and exercisable as of December 31, 2008		218,092		10.17

The following tables provide additional information about the Company's stock options:

	2008		2007                                   2006
Weighted average grant date fair value of options granted	$	1.31	$	—	$	—
Total intrinsic value of options exercised		—		—		—
Total fair value of options vested		85,829		518,854		844,484

A summary of the status of the Company’s nonvested options as of December 31, 2008, and changes during the year ended December 31, 2008, is presented below:

	Nonvested Options		Weighted Average Fair Value
Nonvested options as of December 31, 2007		25,667	$	3.00
Granted		25,000		1.31
Vested		20,195		2.20
Cancelled, forfeited or expired		—		0.00
Nonvested options as of December 31, 2008		30,472		2.14

65

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 13 - Stock Option Plans - Continued

	As of December 31, 2008
	Total Options      Outstanding		Options Fully Vested and Expected      to Vest		Options Fully Vested and Exercisable
Number		248,564		248,564		218,092
Weighted average exercise price	$	9.82	$	9.82	$	10.17
Aggregate intrinsic value (in thousands)		—		—		—
Weighted average remaining contractual life (in years)		5.03		5.03		4.42

Total compensation cost for stock based compensation recognized under the fair value method for the years ended December 31, 2008, 2007 and 2006 was $18,884, $36,299, and $92,035, respectively, with related tax benefits of $3,480, $7,529, and $18,609, respectively.

As of December 31, 2008, there was $82,362 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the plans. This cost is expected to be recognized over a weighted-average period of approximately 2.0 years. Intrinsic value represents the difference between the closing stock price of the Company's common stock and the exercise price of the underlying stock options. Aggregate intrinsic value in a previous table represents the value that would have been received by option holders if they had exercised all stock options at December 31, 2008. The total intrinsic value of options exercised during the year ended December 31, 2008, was $116,607.

Note 14 - Other Operating Expenses

Other operating expenses that exceed one percent of the aggregate of total interest income and other income for the years ended December 31, 2008, 2007 and 2006 are as follows (in thousands):

2008			2007                                   2006
Non-performing loan expenses	$	3,064	$	409	$	149
Examination and assessment		1,495		740		252
Professional fees		790		639		461

66

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 15 - Income Taxes

Federal and state income taxes receivable as of December 31, 2008 and 2007 included in other assets, respectively, were as follows:

	2008		2007
Current:
Federal	$	28,087,572	$	182,446
State		1,036,425		36,426

A valuation allowance related to the net deferred tax asset is required when it is considered more likely than not that all or part of the benefit related to such assets will not be realized.  Based on the Company’s earnings history, management has determined that no valuation allowance is required at December 31, 2008 and 2007.  The components of the deferred income tax asset included in other assets as of December 31, 2008 and 2007 are as follows:

	2008			2007
Deferred tax asset:
Federal	$	19,196,141		$	12,003,921
State		6,792,789			2,000,886
Total deferred income tax asset		25,988,930			14,004,807
Deferred tax liability:
Federal		(283,902	)		(286,085	)
State		(47,317	)		(47,681	)
Total deferred income tax liability		(331,219	)		(333,766	)
Net deferred tax asset	$	25,657,711		$	13,671,041

The tax effects of each type of income and expense item that gave rise to deferred taxes are:

	2008			2007
Allowance for loan losses	$	14,010,061		$	7,049,072
Nonaccrual loan interest income		4,068,340			6,140,905
Net operating loss carryforward		3,593,432			—
Write-down of other real estate owned		3,703,534			34,769
Deferred loan fees		339,352			521,899
Accrued sick time		150,512			137,223
Depreciation		(331,219	)		(333,766	)
Other		123,699			120,939
Net deferred tax asset	$	25,657,711		$	13,671,041

The Company and its subsidiary are subject to U.S. federal income tax, as well as income tax of the State of Florida.  There were no unrecognized tax benefits at December 31, 2008 and the Company does not expect the total of unrecognized tax benefits to significantly increase in the next twelve months.

67

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 15 - Income Taxes - Continued

The components of income tax expense for the years ended December 31, 2008, 2007 and 2006 were as follows:

2008				2007                 2006
Current
Federal	$	(21,907,673	)	$	11,665,883		$	13,044,737
State		—			1,993,381			2,164,855
Deferred
Federal		(7,192,220	)		(6,210,437	)		(510,062	)
State		(4,791,903	)		(1,035,136	)		(85,181	)
	$	(33,891,796	)	$	6,413,691		$	14,614,349

There were no material tax effects of securities transactions for the years ended December 31, 2008, 2007 and 2006.

The principal reasons for the difference in the effective tax rate and the federal statutory rate are as follows for the years ended December 31, 2008, 2007 and 2006.

	2008					2007					2006
Federal income tax at statutory rates	$	(30,515,266	)	35.0	%	$	6,063,019		35.0	%	$	13,216,146		35.0	%
Add (deduct):
Tax-exempt income		(318,942	)	0.4			(271,382	)	(1.6	)		(86,403	)	(0.2	)
State income tax, net of federal tax benefit		(3,114,972	)	3.6			620,110		3.6			1,351,788		3.6
Other		57,384		(0.1	)		1,944		—			132,818		0.3
	$	33,891,796		38.9	%	$	6,413,691		37.0	%	$	14,614,349		38.7	%

Note 16 - Benefit Plans

During the years ended December 31, 2008, 2007 and 2006, the Company had two qualified employee benefit plans: 1) a Profit Sharing Plan and 2) an ESOP. The plans cover substantially all employees, subject to similar eligibility requirements. The Company’s annual contribution to the Profit Sharing Plan is discretionary as determined by the Board of Directors. For the years ended December 31, 2008, 2007 and 2006, the Company’s contributions charged to operations for the Profit Sharing Plan amounted to $547,977, $546,918, and $526,813, respectively.  The Company’s annual contribution to the ESOP is discretionary as determined by the Board of Directors.  The Company’s contribution to the ESOP for 2008, 2007 and 2006 was $116,475, $561,243 and $533,895, respectively.

68

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 16 - Benefit Plans - Continued

The Company also has a Director's Benefit Plan (the "Benefit Plan") covering certain directors. This plan was obtained resulting from a business combination that occurred in 1998.

The Benefit Plan provides for the payment of scheduled benefits to the participants or their beneficiaries at age 65 or their normal retirement date, whichever occurs later. If the participant dies prior to receiving 180 monthly payments, the participant's beneficiary shall receive any remaining monthly payments. Payment of benefits under the Benefit Plan requires that the participant fulfill certain conditions related to age and length of service. The Company is accruing the present value of the future benefits to be paid under the Benefit Plan over the term of each participant's service period.

The Company has determined that the following disclosures are relevant to the Benefit Plan, however, the plan is non-qualified and unfunded and has been recorded as a liability of the Company at the present value of the future benefit obligation. Payments to retired directors are funded through operations.

Net pension cost for the Director's Benefit Plan for 2008, 2007 and 2006 included the following components:

	2008		2007			2006
Service cost (benefit)	$	—	$	(3,212	)	$	(315	)
Interest cost		16,615		20,205			23,488
Net periodic pension cost	$	16,615	$	16,993		$	23,173

The following table sets forth the accumulated benefit obligation of the Director's Benefit Plan recognized in the Company's statements of financial condition at December 31, 2008 and 2007.

	2008		2007
Present value of benefit obligation:
Vested	$	166,491	$	208,358
Non-vested		—		—
Accumulated benefit obligation/pension liability	$	166,491	$	208,358

The weighted average discount rate used in determining present value of the projected benefit obligation for the Director's Benefit Plan was nine percent.

The aggregate benefit cost expected-to-be accrued for the year ending December 31, 2009, is $-0-.

The measurement date for the plan is December 31 of each year. There are no plan assets on which to compute long-term rates of return.

Expected benefit payments for the Director’s Benefit Plan following December 31, 2008, are as follows:

Year Ending December 31,
2009	$58,482
2010	39,351
2011	21,750
2012	21,750
2013	21,750
2014 – 2016	47,125
Total expected benefit payments	$210,208

Note 17 - Commitments and Contingencies

In the normal course of business, the Company offers a variety of financial products to its customers to aid them in meeting their requirements for liquidity, credit enhancement and interest rate protection. Generally accepted accounting principles recognize these transactions as contingent liabilities and, accordingly, they are not reflected in the accompanying consolidated financial statements.

Loan commitments are made to accommodate the financial needs of the Company's customers. Standby letters of credit commit the Company to make payments on behalf of customers when certain specified future events occur. Historically, most loan commitments and standby letters of credit expire unused.  The Company's exposure to credit loss in the event of nonperformance by the counter-party to the financial instrument for loan commitments and standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same underwriting standards in making commitments and conditional obligations as it does for on-balance sheet instruments. The amount of collateral obtained is based on management's credit evaluation of the customer. Collateral held varies, but may include accounts receivable, inventory, property, plant, and equipment, and income-producing commercial properties. The estimated value of the collateral held to secure standby letters of credit at December 31, 2008, was approximately $9,857,000. The Company records a liability for the estimated fair value of standby letters of credit based on the fees charged for these arrangements. At December 31, 2008 and 2007 these recorded liabilities amounted to $29,308 and $94,557, respectively.

69

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 17 - Commitments and Contingencies - Continued

The approximate total amounts of loan commitments and standby letters of credit are summarized as follows at December 31:

	Contract or            Notional Amount
	2008		2007
Loan commitments	$	48,190,000	$	105,465,000
Standby letters of credit		1,471,000		1,879,000
Total unfunded commitments	$	49,661,000	$	107,344,000

The Company, as part of its retail mortgage loan production activities, routinely enters into short-term commitments to originate fixed rate loans. Most of the loans will be sold to third-party correspondent banks upon closing. For those loans, the Company enters into individual forward sale commitments at the same time the commitment to originate is finalized. While the forward sales commitments function as an economic hedge and effectively eliminate the Company's financial risk of rate changes during the rate lock period, both the commitment to originate mortgage loans that will be sold and the commitment to sell the mortgage loans are derivatives, the fair values of which are essentially equal and offsetting. The fair values are calculated based on changes in market interest rates after the commitment date. The notional amounts of these mortgage loan origination commitments and the related forward sales commitments were immaterial at December 31, 2008 and 2007. The unrealized gains/losses of the origination and sales commitments were not material at December 31, 2008 and 2007.

The Company invested in a partnership, AMD-FCB, LLP (the "Partnership"), formed to build and lease an office building in which the Bank is leasing space.  In early 2007, the Partnership entered into a construction agreement with a third-party bank. The Company and the other 50% partner have each guaranteed 50% of a construction loan totaling approximately $6,600,000; the amount outstanding at December 31, 2008 was $5,232,201. In addition, the Bank has entered into a 15 year lease agreement with the Partnership to lease 16,809 square feet of the building, approximately one-half. For 2009 the lease payments are projected to be approximately $536,000, with annual increases based on the Consumer Price Index ("CPI") (see Note 20).

The Bank also entered into lease agreements with North Port Gateway, LLC to lease office space for a branch in North Port, Florida,  and with Center of Bonita Springs, Inc. to lease office space for a branch in Bonita Springs, Florida. For 2009 the lease payments are projected to be approximately $195,000 and $146,000, respectively, with annual increases based on the CPI.

70

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 18 - Concentrations of Credit

Most of the Company's loans, commitments, and commercial and standby letters of credit have been granted to customers in the Company's market area. Many such customers are depositors of the Company.  A substantial portion of the Company’s customers ability to honor their contracts is dependent on the business economy in those areas.  Ninety-two percent (92%) of the Company’s loan portfolio is concentrated in real estate (Note 5).  A substantial portion of the foreclosed real estate is located in these same markets.  Accordingly, the ultimate collectability of the loan portfolio and the recovery of the carrying amount of foreclosed real estate are susceptible to changes in market conditions in the Company’s primary market areas.  The other significant concentrations of credit by type of loan are set forth in Note 5. The distribution of commitments to extend credit related primarily to unused real estate draw lines. Commercial and standby letters of credit were granted primarily to commercial borrowers.

The Company maintains its cash accounts at various commercial banks in the United States. The balances in commercial banks are insured by the FDIC. Total uninsured balances held at commercial banks amounted to $5,996,185 and $4,490,871 at December 31, 2008 and 2007, respectively.  Federal funds sold represent short-term investments with designated banks that are not guaranteed.

Note 19 - Restrictions on Subsidiary Dividends, Advances and Loans

The Bank is subject to the dividend restrictions set forth by the State Banking Department (Florida). Under such restrictions, the Bank may not, without the prior approval of the State Banking Department, declare dividends in excess of the sum of the current year's earnings plus the retained earnings from the prior two years. For the year ending December 31, 2009, the Bank has been restricted from declaring and paying any dividends due to regulatory concerns. The Company has also been restricted from declaring and paying any dividends in 2009.

Note 20 - Leases

The Company leased facilities under non-cancelable operating leases during 2008, 2007 and 2006. The leases provide for renewal options and generally require the Company to pay maintenance, insurance and property taxes. For the years ended December 31, 2008, 2007 and 2006, rental expense for such leases was $949,289, $197,348 and $187,181, respectively. The Company leases land and premises for one of its locations from a director of the Company (see Note 22).

The Bank entered into three long-term operating leases for branch and office space in Ave Maria, Bonita Springs and North Port. The minimum lease payments under these leases for 2009 are projected to be approximately $536,000 or $8,852,000 over the remaining course of the fifteen year lease term for Ava Maria, $146,000 annually or $1,530,000 over the remaining course of the ten year lease term for Bonita Springs and $195,000 annually or $1,844,000 over the remaining course of the ten year lease term for North Port; all of the leases are subject to annual rate increases based on the CPI. The leases may be

71

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 20 – Leases - Continued

extended by two five-year extension periods.  These leases have been included in the future minimum lease payments following.

Future minimum lease payments under non-cancelable operating leases at December 31, 2008, including the Ave Maria, Bonita Springs and North Port leases are as follows:

Year Ending December 31,
2009	$1,095,789
2010	1,111,667
2011	1,110,168
2012	1,113,725
2013	1,148,936
Thereafter	8,950,492
Total minimum lease payments	$14,530,777

Note 21 - Litigation

While the Company is party to various legal proceedings arising from the ordinary course of business, management believes after consultation with legal counsel that there are no proceedings threatened or pending against the Company that will, individually or in the aggregate, have a material adverse effect on the business or financial condition of the Company.

Note 22 - Related Party Transactions

Loans: Certain directors, executive officers and principal shareholders, including their immediate families and associates were loan customers of the Company during 2008 and 2007. Such loans are made in the ordinary course of business at normal credit terms, including interest rates and collateral, and do not represent more than a normal risk of collection. A summary of activity and amounts outstanding are as follows:

	2008			2007
Balance at Beginning of Year	$	4,396,525		$	4,554,238
New loans		1,553,597			1,290,355
Repayments		(2,022,210	)		(1,448,068	)
Change in related parties		(2,050,527	)		—
Balance at End of Year	$	1,877,385		$	4,396,525

72

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 22 - Related Party Transactions - Continued

Deposits: Deposits held from related parties were $7,743,239 and $9,038,314 at December 31, 2008 and 2007, respectively.

Other: The Company leases the land and premises of the Cypress Lake branch from a director. The lease was initiated in 2001 for a term of 15 years at an arms length fair rental. Noncancelable lease payments for the years ending December 31, 2009 through 2013 are $183,336, $187,919, $192,617, $197,433 and $202,369, respectively. The agreement provides for annual increases of 2.5 percent.

The Company, through the normal course of business, sells loan participations to certain directors and parties related to directors. The transactions are at arms length and do not have terms that are significantly different from other participations sold by the Company. The balance of participations sold to these parties at December 31, 2008 and 2007 was $4,857,810 and $4,584,969.

The Company invested as a 50% partner in a partnership, AMD-FCB, LLP, that is leasing branch and office space to the Bank, for a term of 15 years at an arms length fair rental. The lease payments are projected to be $536,000 per year, subject to annual increases based on the CPI (see Notes 4 and 20).

Note 23 - Subsequent Events

As of the issue date of this report, the Bank is currently in the midst of an examination by the Federal Deposit Insurance Corporation (“FDIC”).  Since the examination is still ongoing, the results of the exam have either not been determined or not been communicated to the Bank management.

Note 24 - Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

Cash and Short-Term Investments:For cash and short-term instruments, the carrying amount is a reasonable estimate of fair value.

Securities:For securities held-to-maturity, fair values are based on quoted market prices or dealer quotes.

Other Investments: For other investments, fair value is estimated to be approximately the carrying amount.

Loans Held-for-Sale: For these short-term instruments, the carrying amount is a reasonable estimate of fair value.

73

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 24 - Fair Value of Financial Instruments - Continued

Loans: For certain homogeneous categories of loans, such as some residential mortgage, credit card receivables and other consumer loans, fair value is estimated using the quoted market prices for securities backed by similar loans, adjusted for differences in loan characteristics. The fair value of other types of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

Accrued Interest Receivable:The carrying amount of accrued interest receivable approximates its fair value.

Deposits: The fair value of demand deposits, savings accounts and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities.

Short-Term Borrowings: The carrying amounts of short-term borrowings approximate their fair values.

Accrued Interest Payable:The carrying amount of accrued interest payable approximates its fair value.

Long-Term Debt: Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate fair value of existing debt.

Commitments to Extend Credit, Standby Letters of Credit, and Financial Guarantees Written: The fair value of commitments, letters of credit, and financial guarantees is estimated to be approximately the fees charged for these arrangements.

74

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 24 - Fair Value of Financial Instruments - Continued

The estimated fair values of the Company's financial instruments as of December 31, 2008 and 2007 are as follows:

	2008				2007
	Carrying        Amount		Fair      Value		Carrying      Amount		Fair      Value
	(in thousands)				(in thousands)
Financial Assets
Cash and short-term investments	$	45,866	$	45,866	$	14,729	$	14,729
Securities		199,625		203,311		135,810		136,500
Other investments		7,988		7,988		6,816		6,816
Loans held-for-sale		156		156		—		—
Loans		624,478		628,562		761,431		762,783
Accrued interest receivable		3,511		3,511		4,585		4,585
Financial Liabilities
Deposits	$	845,429	$	863,237	$	753,658	$	757,853
Accrued interest payable		4,853		4,853		3,509		3,509
Long-term debt		80,929		85,513		85,929		87,088
Financial Instruments
Commitments to extend credit	$	48,190	$	482	$	105,465	$	1,055
Standby letters of credit		1,471		15		1,879		20

The Company’s assets and liabilities recorded at fair value have been categorized based upon a fair value hierarchy in accordance with SFAS No. 157.  See Note 1 for a discussion of the Company’s policies regarding this hierarchy.

75

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 24 - Fair Value of Financial Instruments - Continued

Items Measured at Fair Value on a Recurring Basis

The Company does not have any assets and liabilities that require measurement at fair value on a recurring basis as of December 31, 2008:

Items Measured at Fair Value on a Nonrecurring Basis

The following fair value hierarchy table presents information about the Company’s assets and liabilities measured at fair value on a nonrecurring basis as of December 31, 2008:

			Fair Value Measurement at Report Date Using
ASSETS	Fair Value		Quoted Prices in Active Markets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
Loans held for sale	$	156,231	$	—	$	156,231	$	—
Impaired loans		165,489,707		—		—		165,489,707
Foreclosed real estate		52,005,241		—		—		52,005,241
Total Assets	$	217,651,179	$	—	$	156,231	$	217,494,948

The valuation techniques used to measure fair value for the items in the table above are as follows;

Loans held-for-sale – Loans held for sale for which the fair value option has not been elected are carried at the lower of cost or fair value.  When possible, the fair value of loans held for sale is based on what secondary markets are currently offering for portfolios with similar characteristics.  Such loans are generally classified in Level 2 of the fair value hierarchy given the level of activity in the market and the frequency of available quotes.

Impaired Loans – Nonrecurring fair value adjustments to loans reflect full or partial write-downs that are based on the loan’s observable market price or current appraised value of the collateral in accordance with SFAS No. 114, Accounting by Creditors for Impairment of a Loan.  Loans subjected to nonrecurring fair value adjustments based on the current appraised value of the collateral may be classified as Level 2 or Level 3 depending on the type of asset and the inputs to the valuation.  When appraisals are used to determine impairment and these appraisals require significant adjustments to market-based valuation inputs or apply an income approach based on unobservable cash flows to measure fair value, the related loans subjected to nonrecurring fair value adjustments are typically classified as Level 3 due to the fact that Level 3 inputs are significant to the fair value measurement.

76

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 24 - Fair Value of Financial Instruments - Continued

Foreclosed Real Estate – Foreclosed assets are adjusted to fair value upon transfer of the loans to foreclosed real estate.  Subsequently, foreclosed real estate is carried at the lower of carrying value or fair value.  Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral.  When the fair value of the collateral is based on an observable market price, the Company records the foreclosed real estate as nonrecurring Level 2.  When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the foreclosed real estate as nonrecurring Level 3.

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77

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 25 - Condensed Parent Company Information

Statements of Financial Condition

	2008		2007
Assets
Cash and due from banks	$	1,051,798	$	639,727
Other investments – securities		929,000		929,000
Other investments – partnerships		883,268		1,215,875
Loans		—		8,500,000
Allowance for loan losses		—		(139,600	)
Net Loans		—		8,360,400
Investment in subsidiaries (equity method) - eliminated upon consolidation		73,088,535		118,447,600
Other assets		60,926		133,615
Total Assets	$	76,013,527	$	129,726,217
Liabilities and Shareholders' Equity
Liabilities
Subordinated debentures	$	30,929,000	$	30,929,000
Other liabilities		455,465		592,180
Total Liabilities		31,384,465		31,521,180
Total Shareholders' Equity		44,629,062		98,205,037
Total Liabilities and Shareholders' Equity	$	76,013,527	$	129,726,217

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78

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 25 - Condensed Parent Company Information - Continued

Statements of Operations

	2008			2007
Income
Dividends from subsidiaries - eliminated upon consolidation	$	250,000		$	3,904,686
Interest on loans		311,986			715,651
Investment interest and other operating income		220,084			176,311
Total Income		782,070			4,796,648
Expenses
Interest		1,722,137			2,327,974
Salaries and employee benefits		75,959			70,799
Provision for loan losses		(139,600	)		49,600
Other operating expenses		126,638			262,386
Total Expenses		1,785,134			2,710,759
Income (loss) before income taxes and equity in undistributed earnings (loss) of subsidiary		(1,003,064	)		2,085,889
Income tax benefit		486,336			701,600
Income (loss) before equity in undistributed earnings (loss) of subsidiary		(516,728	)		2,787,489
Equity in undistributed earnings (loss) of subsidiary		(52,777,948	)		8,121,730
Net Income (Loss)	$	(53,294,676	)	$	10,909,219

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79

FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 25 - Condensed Parent Company Information - Continued

Statements of Cash Flows

	2008			2007
Operating Activities
Net income (loss)	$	(53,294,676	)	$	10,909,219
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Provision for loan losses		(139,600	)		49,600
Deferred tax benefit		(21,607	)		(53,746	)
Equity in undistributed income (loss) of subsidiary		52,777,948			(8,121,730	)
(Decrease) increase in accrued interest receivable		51,603			(2,980	)
(Increase) decrease in income tax receivable…………………...		(213,104	)		26,902
Increase (decrease) in accrued interest payable		128,671			(2,349	)
Other, net		(31,164	)		3,027
Net Cash (Used) Provided By Operating Activities		(741,929	)		2,807,943
Investing Activities
Investment in subsidiary bank		(7,400,000	)		—
Net (increase) decrease in loans		8,500,000			(2,500,000	)
Proceeds from other investments		—			48,000
Net Cash Provided (Used) By Investing Activities		1,100,000			(2,452,000	)
Financing Activities
Issuance of common stock……………………………………....		54,000			—
Costs associated with the issuance of stock split		—			(12,102	)
Cash dividends		—			(3,295,693	)
Net Cash Provided (Used) By Financing Activities		54,000			(3,307,795	)
Net Increase (Decrease) In Cash and Cash Equivalents		412,071			(2,951,852	)
Cash and Cash Equivalents at Beginning of Year		639,727			3,591,579
Cash and Cash Equivalents at End of Year	$	1,051,798		$	639,727
Cash Paid During the Year For:
Interest	$	1,593,466		$	2,330,323
Taxes		7,000,000			13,468,880

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FLORIDA COMMUNITY BANKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2008, 2007 and 2006

Note 26 - Quarterly Results of Operations (Unaudited)

Selected quarterly results of operations for the four quarters ended December 31 are as follows:

	First         Quarter		Second        Quarter			Third         Quarter			Fourth           Quarter			Total
	(In Thousands)
2008:
Total interest income	$	14,281	$	12,686		$	12,515		$	7,753		$	47,235
Total interest expense		8,403		7,582			8,222			8,963			33,170
Provision for loan losses		906		9,606			29,290			29,328			69,130
Net interest income (expense) after provision for loan losses		4,972		(4,502	)		(24,997	)		(30,538	)		(55,065	)
Other noninterest income		596		612			506			572			2,286
Other noninterest expense		5,211		5,942			6,505			16,750			34,408
Income tax expense		62		(3,859	)		(12,023	)		(18,072	)		(33,892	)
Net income (loss)		295		(5,973	)		(18,973	)		(28,644	)		(53,295	)
Per common share
Basic earnings		0.04		(0.75	)		(2.40	)		(3.62	)		(6.73	)
Diluted earnings		0.04		(0.75	)		(2.40	)		(3.59	)		(6.70	)
2007:
Total interest income	$	20,695	$	20,307		$	19,613		$	16,802		$	77,417
Total interest expense		9,643		9,602			9,866			9,279			38,390
Provision for loan losses		299		—			550			6,019			6,868
Net interest income after provision for loan losses		10,753		10,705			9,197			1,504			32,159
Other noninterest income		627		1,011			579			611			2,828
Other noninterest expense		3,887		4,453			4,497			4,827			17,664
Income tax expense		2,826		2,733			1,983			(1,128	)		6,414
Net income (loss)		4,667		4,530			3,296			(1,584	)		10,909
Per common share
Basic earnings		0.59		0.57			0.42			(0.20	)		1.38
Diluted earnings		0.58		0.56			0.41			(0.19	)		1.36
2006:
Total interest income	$	18,899	$	21,919		$	22,882		$	21,874		$	85,574
Total interest expense		6,973		8,516			9,224			9,652			34,365
Provision for loan losses		980		2,410			1,225			(2,319	)		2,296
Net interest income after provision for loan losses		10,946		10,993			12,433			14,541			48,913
Other noninterest income		959		1,139			962			856			3,916
Other noninterest expense		3,462		3,741			3,762			4,104			15,069
Income tax expense		3,249		3,231			3,699			4,435			14,614
Net income		5,194		5,160			5,934			6,858			23,146
Per common share
Basic earnings		0.66		0.65			0.75			0.87			2.93
Diluted earnings		0.65		0.64			0.74			0.87			2.90

81

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Management of the Company, with the participation and under the supervision of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this annual report. Based on this evaluation the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective as of the end of the period covered by this annual report to provide reasonable assurance that material information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms. A controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls are met, and no evaluation of controls can provide absolute assurance that all controls and instances of fraud, if any, within a company have been detected.

Management's Report On Internal Control Over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. This internal control system was designed to provide reasonable assurance to management and the Board of Directors as to the reliability of the Company's financial reporting and the preparation and fair presentation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

All internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect misstatements in the Company's financial statements, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008. In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control - Integrated Framework.

Based on this assessment, management believes that, as of December 31, 2008, the Company’s internal control over financial reporting is effective based on those criteria.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

Changes In Internal Control Over Financial Reporting

There was no change in the Company’s internal control over financial reporting that occurred during the Company’s most recently completed fiscal quarter that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

82

ITEM 9B. OTHER INFORMATION

The Company did not fail to file any Form 8-K to disclose any information required to be disclosed therein during the fourth quarter of 2008.

 On February 13, 2009, the Company entered into a Written Agreement with the Federal Reserve Bank of Atlanta (together with the Board of Governors of the Federal Reserve System, the “FRB”). Pursuant to this Agreement, the Company has agreed to: (i) not pay any dividends without the consent of the FRB; (ii) not accept any dividends or distributions from the Bank which would serve to reduce the Bank’s capital without the approval of the FRB; (iii) not make any payments on its subordinated  debentures or trust preferred securities without the FRB’s consent; (iv) not incur or guarantee any debt without the FRB’s consent; (v) not purchase or redeem any Company stock; (vi) prepare and submit to  the FRB a plan to provide sufficient capital to the Company and the Bank; (vii) ensure ongoing compliance by the Bank with FRB regulations related to transactions between the Bank and its affiliates; (viii) prepare and submit to the FRB procedures to ensure compliance with the FRB’s reporting requirements; (ix) obtain the FRB’s non-objection to the appointment of any new directors or senior executive officers; (x) limit indemnification and severance payments in accordance with applicable law; and (xi) submit monthly progress reports to the FRB.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information appearing under the headings "ELECTION OF DIRECTORS," "BOARD OF DIRECTORS" and "COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934" on pages 3 to 8 and 16 in the Proxy Statement (the "2009 Proxy Statement") relating to the annual meeting of shareholders of the Company, scheduled to be held on April 24, 2009, is incorporated herein by reference. On March 3, 2003, the Company adopted a Code of Ethic applicable to its Chief Financial Officer and its Chief Executive Officer.

ITEM 11. EXECUTIVE COMPENSATION

The information appearing under the headings "EXECUTIVE COMPENSATION" and "EMPLOYEE BENEFITS" on pages 8 to 14 of the 2009 Proxy Statement is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS

The information appearing under the heading "ELECTION OF DIRECTORS" on pages 3 to 5 of the 2009 Proxy Statement and from Item 5 above is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

The information appearing under the heading "TRANSACTIONS WITH RELATED PERSONS, PROMOTORS AND CERTAIN CONTROL PERSONS" on pages 14 to 15 of the 2009 Proxy Statement is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees The aggregate fees billed for professional services by Schauer Taylor in connection with the audit of the annual financial statements and the reviews of the financial statements included in the Company's quarterly filings with the Securities and Exchange Commission for the fiscal years ended December 31, 2008 and 2007, were $72,700 and $128,535, respectively.The aggregate fees billed for professional services by Warren, Averett, Kimbrough & Marino in connection with the audit of the annual financial statements and the review of the financial statements included in the Company’s quarterly filings with the Securities and Exchange Commission for the fiscal year ended December 31, 2008 were $124,330.

Audit-Related Fees:  In 2008 and 2007, Schauer Taylor also billed the Company $58,006 and $67,933, respectively, for fees reasonably related to the performance of its audit and reviews of financial statements. Such fees included travel and miscellaneous related fees.  In 2008, Warren, Averett, Kimbrough & Marino also billed the Company $26,878, for fees reasonably related to the performance of its audit and reviews of financial statements. Such fees included travel and miscellaneous related fees.

Tax Fees: In 2008 and 2007, Schauer Taylor also billed the Company $15,625 and $17,700, respectively, for tax compliance and advice, including the preparation of the Company's corporate tax returns.  In 2008, Warren, Averett, Kimbrough & Marino billed the Company $1,020, for tax compliance and advice, including the preparation of the Company's corporate tax returns.

Profit Sharing and Employee Stock Ownership Plans: In 2008 and 2007, Schauer Taylor also billed the Company $0 and $40,000, respectively, for audit and tax work related to these plans.  In 2008, Warren, Averett, Kimbrough & Marino also billed the Company $40,000, for audit and tax work related to these plans.

In all instances, Schauer Taylor's and Warren, Averett, Kimbrough & Marino’s performance of those services was pre-approved by the Company's Audit Committee.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES

(a) 1. Financial Statements.

The following consolidated financial statements are located in Item 8 of this Report:

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Financial Condition as of December 31, 2008 and 2007

Consolidated Statements of Operations for the Years Ended December 31, 2008, 2007 and 2006

Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2008, 2007 and 2006

Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006

Notes to Consolidated Financial Statements

Quarterly Results (Unaudited)

2. Financial Statement Schedules.

Schedules to the consolidated financial statements are omitted, as the required information is not applicable.

3. Exhibits.

The following exhibits are filed or incorporated by reference as part of this Report:

Exhibit No.		Exhibit	Page
	3.1	Articles of Incorporation of FCBI (included as Exhibit 3.1 to FCBI's Registration Statement on Form 8-A filed with the SEC on April 15, 2002 and incorporated herein by reference).
	3.2	By-laws of FCBI (included as Exhibit 3.2 to FCBI's Registration Statement on Form 8-A filed with the SEC on April 15, 2002 and incorporated herein by reference).
	4.1	Subordinated Promissory Note, dated December 24, 2001, between Florida Community Bank and Independent Bankers Bank of Florida (included as Exhibit 4.1 to the Bank's Form 10-KSB for the year ended December 31, 2001, and incorporated herein by reference).
	4.2	Specimen Common Stock Certificate of FCBI (included as Exhibit 4.1 to FCBI's Registration Statement on Form 8-A filed with the SEC on April 15, 2002 and incorporated herein by reference).

83

Exhibit No.		Exhibit	Page
	10.2	Amended and Restated Trust Agreement among Florida Community Banks, Inc. as depositor, Wilmington Trust Company as property trustee, Wilmington Trust Company, as Delaware trustee, and Stephen L. Price, and Thomas V. Ogletree as administrators, dated as of June 21, 2002 (included as Exhibit 10.3 to the Company's Form 10-Q for the quarter ended June 30, 2002, and incorporated herein by reference).

10.3	Guarantee Agreement between Florida Community Banks, Inc. as guarantor, and Wilmington Trust Company as guarantee trustee, dated as of June 21, 2002 (included as Exhibit 10.4 to the Company's Form 10-Q for the quarter ended June 30, 2002, and incorporated herein by reference).
10.4	Junior Subordinated Indenture between Florida Community Banks, Inc. (as Company) and Wilmington Trust Company (as trustee), dated as of June 21, 2002 (included as Exhibit 10.5 to the Company's Form 10-Q for the quarter ended June 30, 2002, and incorporated herein by reference).
10.5	Employee Stock Ownership Plan (included as Exhibit 10.5 to the Company's Form S-8 filed May 6, 2004, and incorporated herein by reference ).
10.6	Amended and Restated Declaration of Trust, dated as of May 12, 2006, by and among the Company, as Depositor, Wells Fargo Bank, National Association, as Institutional Trustee and Delaware Trustee, and the Administrators named therein (included as Exhibit 10.3 to the Company's Form 8-K filed with the SEC on May 12, 2006, and incorporated herein by reference).
10.7	Guarantee Agreement, dated as of May 12, 2006, by and between the Company, as Guarantor, and Wells Fargo Bank, National Association, as Guarantee Trustee (included as Exhibit 10.2 to the Company's Form 8-K filed with the SEC on May 12, 2006, and incorporated herein by reference).
10.8	Indenture, dated as of May 12, 2006, by and between the Company and Wells Fargo Bank, National Association, as Trustee (included as Exhibit 10.1 to the Company's Form 8-K filed with the SEC on May 12, 2006, and incorporated herein by reference).
10.9	Stipulation and Consent of Entry of Order to Cease and Desist. Dated October 17, 2008 (included as Exhibit 10.9 to the Company’s Form 8-K filed with the SEC on November 4, 2008, and incorporated herein by reference).
10.10	Written Agreement with the Federal Reserve Bank of Atlanta Dated February 13, 2009.
11	Statement re: computation of per share earnings	100
12	Statement re: computation of ratios	101
13	Annual Report to Security Holders	102
14	Code of Ethics (included as Exhibit 99.1 to the Company's Form 8-K filed on March 3, 2003, and incorporated herein by reference.)
16	Letter re: change in certifying accountant (included as Exhibit 16.1 to the Company's Form 8-K filed with the SEC on July 1, 2009, and incorporated herein by reference).
21	Subsidiaries of the Registrant	104
23.1	Consent of Schauer Taylor, P.C.	105
24	Power of Attorney	109

84

Exhibit No.		Exhibit	Page
	31.1	Chief Executive Officer - Certification of principal executive officer pursuant to the Exchange Act Rule 13(a) – 14(a) or 15(d) – 14(a).		106
	31.2	Chief Financial Officer - Certification of principal financial officer pursuant to the Exchange Act Rule 13(a) – 14(a) or 15(d) – 14(a).		107
	32.1	Chief Executive Officer - Certification pursuant to 18 U.S.C.Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002		108
	32.2	Chief Financial Officer - Certification pursuant to 18 U.S.C.Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002		108

*   The referenced exhibit is a compensatory contract, plan or arrangement.

85

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

			FLORIDA COMMUNITY BANKS, INC.
Date:	April 15, 2009	By:	/s/ Stephen L. Price
			Stephen L. Price
			Principal Executive Officer, Chairman, President and Chief Executive Officer
Date:	April 15, 2009	By:	/s/ Guy W. Harris
			Guy W. Harris
			Principal Financial Officer and Chief Financial Officer

86

EXHIBIT INDEX

The following exhibits are filed as part of this report (in addition to those exhibits listed in Item 15 which are filed as a part of this report and incorporated by reference):

Exhibit Number		Description of Exhibit
	10.10	Written Agreement with Federal Reserve Bank of Atlanta
	11	Statement re: Computation of Per Share Earnings
	12	Statement re: Computation of Ratios
	13	Annual Report to Security Holders
	21	Subsidiaries of the Registrant
	23.1	Consent of Schauer Taylor, P.C.
	31.1	Certification of President and Chief Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
	31.2	Certification of Chief Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
	32.1	Certification of President and Chief Executive Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
	32.2	Certification of Chief Financial Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

87