SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Certain statements in this quarterly Report on Form 10-Q may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, which statements generally can be identified by the use of forward-looking terminology, such as "may," "will," "expect," "estimate," "anticipate," "believe," "target," "plan," "project," or "continue" or the negatives thereof or other variations thereon or similar terminology, and are made on the basis of management's plans and current analyses of Bank of Florida Corporation, its business and the industry as a whole. These forward-looking statements are subject to risks and uncertainties, including, but not limited to, economic conditions, competition, interest rate sensitivity and exposure to regulatory and legislative changes. The above factors, in some cases, have affected, and in the future could affect Bank of Florida Corporation's financial performance and could cause actual results for fiscal 2009 and beyond to differ materially from those expressed or implied in such forward-looking statements. Bank of Florida Corporation does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.

OVERVIEW

Bank of Florida Corporation, incorporated in Florida in September 1998, is a $1.5 billion financial services company and a registered bank holding company. Our subsidiary banks are separately chartered independent community banks with local boards that provide full-service commercial banking in a private banking environment. Our Trust Company offers investment management, trust administration, estate planning, and financial planning services largely to the Banks' commercial borrowers and other high net worth individuals. The Company's overall focus is to develop a total financial services relationship with its client base, which is primarily businesses, professionals, and entrepreneurs with commercial real estate borrowing needs. The Banks also provide technology-based cash management and other depository services. The holding company structure provides flexibility for expansion of the Company's banking business, including possible acquisitions of other financial institutions, and support of banking-related services to its subsidiary banks.

Our corporate vision is to reach $2.0 billion in assets over the next two or three years, excluding acquisitions, and be recognized as a premier financial services company in our markets, while maintaining a well-controlled environment. Our primary strategy to achieve this vision is to focus on core deposit growth with current products and services, focus lending on commercial real estate properties in the $1 million to $10 million size range, and leverage our operating efficiencies.

The primary market areas of the Company continue to show growth in population, but at a nominal pace in comparison to the past ten years. Those markets include Collier and Lee Counties on the southwest coast of Florida (served by Bank of Florida-Southwest), Broward, Miami-Dade, and Palm Beach Counties on the southeast coast (served by Bank of Florida-Southeast), and Hillsborough and Pinellas Counties in the Tampa Bay area (served by Bank of Florida-Tampa Bay). The continued population growth and income demographics of the counties in which the Company operates support its plans to grow loans, deposits, and wealth management revenues with limited, highly selective, full-service locations. These counties together constitute nearly 50% of the deposit market share in the state of Florida.

CRITICAL ACCOUNTING POLICIES

The Company's consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. The financial information contained within these statements is, to a significant extent, based on approximate measures of the financial effects of transactions and events that have already occurred. Critical accounting policies are those that involve the most complex and subjective decisions and assessments, and have the greatest potential impact on the Company's stated results of operations. The notes to the consolidated financial statements include a summary of the significant accounting policies and methods used in the preparation of our consolidated financial statements. Management believes that, of our significant accounting policies, the following involve a higher degree of judgment and complexity. Our management has discussed these critical accounting assumptions and estimates with the Board of Directors' Audit Committee.

Allowance for Loan Losses:

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to operations. Loan losses are charged against the allowance when management believes the collectability of a loan balance is unlikely. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is comprised of: (1) a component for individual loan impairment, and (2) a measure of collective loan impairment. The allowance for loan losses is established and maintained at levels deemed adequate to cover losses inherent in the portfolio as of the balance sheet date. This estimate is based upon management's evaluation of the risks in the loan portfolio and changes in the nature and volume of loan activity. Estimates for loan losses are derived by analyzing historical loss experience, current trends in delinquencies and charge-offs, historical bank experience, changes in the size and composition of the loan portfolio, adverse situations that may affect the borrower's ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available.

A loan is considered impaired when, based on current information and events, 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. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Larger impaired credits that are measured for impairment have been defined to include loans classified as substandard and on nonaccrual or doubtful risk grades where the borrower relationship is greater than $150,000. For such loans that are considered impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan.

Loans that are not measured individually for impairment are measured collectively and include commercial real estate loans that are performing and large groups of smaller balance homogeneous loans evaluated based on historical loss experience adjusted for qualitative factors.

EXECUTIVE SUMMARY

Total assets were $1.5 billion at June 30, 2009, down $20.1 million or 1.3% from December 31, 2008, as a result of loan contraction, security sales and a decline in cash and due from banks. Loans declined $8.0 million or .6% during the first six months of this year and investments securities decreased $13.2 million or 11.1%, and cash and noninterest bearing deposits due from banks declined $8.1 million or 17.3% to $38.9 million. Total deposits increased $770 thousand to $1.2 billion. Total core deposits, which exclude wholesale brokered CDs, wholesale CDAR deposits, and CDs with balances in excess of $100, increased $19.6 million. Book value per share declined to $13.69, down $1.18 over the last six months.

The Company realized a second quarter net loss of $6.5 million, or ($0.51) per diluted share, versus $0.00 per diluted share during the same period in 2008. The net loss was primarily due to an $8.2 million increase in provision for loan losses in addition to a $1.6 million or 13.2% decrease in top-line revenue mostly attributable to the decline in interest rates. Top-line revenue is a non-GAAP measure which the Company defines as net interest income plus noninterest income, excluding net securities gains/losses. Net interest margin decreased 61 basis points from second quarter 2008 to 2.97%.

ANALYSIS OF FINANCIAL CONDITION

Investment securities and overnight investments

Total investment securities available for sale and overnight investments were $102.5 million at June 30, 2009, a decrease of $12.5 million or 10.9% over that held at December 31, 2008.

Securities available for sale totaled $102.5 million, a decrease of $12.2 million from the level held at December 31, 2008. The Company had $2.4 million and $3.3 million classified as held to maturity at June 30, 2009 and December 31, 2008, respectively. The Company does not currently engage in trading activities and, therefore, did not hold any securities classified as trading at June 30, 2009 or December 31, 2008. Additional details related to the securities portfolio can be found in Note 4-Securities.

Loans

Total gross loans, including loans held for sale, totaled $1.3 billion at June 30, 2009, down $8.0 million or 0.6% for the first six months of 2009. Construction loans, largely secured by commercial real estate, totaled $280.5 million (22.1% of total loans) at June 30, 2009, down $38.1 million since the end of last year. Commercial real estate loans, including multi-family dwellings, but excluding those in construction, increased by $31.3 million and also total 51.2% of total loans outstanding, while commercial and industrial loans declined $6.1 million to approximately 8.9% of total loans outstanding. One-to-four family residential loans, including loans held for sale, were $166.7 million (13.1% of total loans), up $3.5 million from year-end. Consumer lines of credit and installment and other loans increased by $1.1 million (4.7% of total loans).

Asset quality

The Banks' loan portfolios are subject to periodic reviews by our internal loan review department, our external loan review consultant and state and federal bank regulators. The Company's nonperforming loans (nonaccrual and 90+ days past due) totaled $141.0 million at June 30, 2009 or 11.12% of total loans outstanding, compared to $71.9 million at the end of 2008. Thirty-to-ninety day delinquent loans were $23.3 million or 1.84% of loans outstanding at June 30, 2009, an increase of $595 thousand in total loan delinquencies from December 31, 2008. There were $21.3 million in net charge-offs for the first six months of 2009, resulting in net charge-offs to average loans of 3.61%, an increase of 3.04% from the first six months of 2008. The increased level of nonperforming assets in 2009 is a result of a slowing economy and real estate market which is discussed further in Note 5-Loans.

Deposits

Total deposits rose $770 thousand or 0.07% during the first six months of 2009 to $1.2 billion. Core deposits, which exclude wholesale brokered CDs, wholesale CDAR deposits, and CDs with balances in excess of $100, increased $19.6 million or 2.8% in the past 90 days, with the growth in money market, NOW, and retail CDAR's accounts more than offsetting the decline in non interest bearing deposits. Non-core deposit accounts decreased $18.9 million or 4.2% in the first six months of 2009.

The annualized average rate paid on total interest bearing deposits during the first six months of 2009 was 2.83%, a decrease of 91 basis points compared to the first six months last year. This decrease resulted primarily from the lower interest rate environment under which we currently operate.

Borrowings

While client deposits remain our primary source of funding for asset growth, management uses other borrowings as a funding source for loan growth, regulatory capital needs, and as a tool to manage the Company's interest rate risk. At June 30, 2009 borrowings totaled $175.2 million, a decrease of $13.3 million compared to December 31, 2008. Total borrowings at June 30, 2009, consisted of $21.3 million of repurchase agreements, $19.4 million of other borrowings, $16.0 million of subordinated debt and $118.5 million of FHLB Advances compared to $20.0 million of repurchase agreements, $16.0 million of subordinated debt and $152.5 million of FHLB advances, respectively, at the end of 2008. Other borrowings and FHLB advances include $4.4 million that mature daily. The maturities of all borrowings range from September 2009 through July 2017.

During June 2009, the company secured funding of $15.0 million at a rate of 0.25%, $4.4 million at a rate of 0.50%, and $1.3 million at a rate of 2.00% through the Federal Reserve's Term Auction facility, the Federal Reserve Discount Window and Customer repurchase agreements. Note 9-Other Borrowings provides additional information regarding the Company's outstanding other borrowings.

Stockholders' equity

Total stockholders' equity was $180.8 million at June 30, 2009, a $9.2 million decrease since December 31, 2008. Book value per share was $13.69 at June 30 while the tangible book value per share was $8.70. The Company's Tier 1 leverage ratio decreased 63 basis points to 7.23% at June 30, 2009 from 7.86% at December 31, 2008 and is still well above the minimum for bank holding companies of 4.0%.

ANALYSIS OF RESULTS OF OPERATIONS

Second Quarter 2009 Compared to Second Quarter 2008

Consolidated net loss for the second quarter of 2009 totaled $6.5 million, a decrease in net earnings of $6.5 million compared to second quarter 2008. Top-line revenue (a non-GAAP measure which the Company defines as net interest income plus noninterest income, excluding net securities gains/losses) declined $1.6 million or 13.2%, primarily driven by the decline in interest rates.

The $1.6 million decrease in top-line revenue against a $1.9 million or 18.0% increase in noninterest expense resulted in an efficiency ratio for the quarter of 118.1%. The increase in noninterest expense relates to regulatory assessments, repossession expenses, other losses, occupancy costs, and data processing. The provision for loan losses increased $8.2 million compared to the same period last year due to additional provisions for loan downgrades.

Net interest income

Net interest income in the second quarter totaled $9.4 million, down 1.9 million or 16.9% less than the second quarter of 2008, the result of a 175 basis point reduction in rates over the twelve month period. The spread between the yield on earning assets and cost of interest-bearing liabilities declined 22 basis points when comparing second quarter 2009 versus second quarter 2008. The yield on earning assets decreased 93 basis points over the same period last year to 5.69%, with continued pressures from a declining rate environment as interest bearing liabilities re-priced during the quarter resulted in a 71 basis point decrease in the cost of funds to 2.80%. Interest income was negatively impacted by approximately $731 thousand in second quarter 2009 due to interest that was reversed on loans that migrated to nonaccrual status.

Noninterest income

Noninterest income was $2.7 million in the second quarter, a $1.6 million increase over the second quarter 2008. Gain on sale of assets increased $1.7 million compared to the second quarter of the prior year primarily as a result of sales of securities ($1.3 million), foreclosed property sales ($184,000), fixed asset dispositions ($135,000) and lower secondary market income ($9,000). Second quarter 2009 trust fees were $574,000 compared to $679,000 for the second quarter of the prior year due to the decline in market values and the shift from equities into cash and bonds, producing lower income streams. Over the past twelve months, assets under advice have increased $154.8 million or 32.5% to $630.7 million at June 30th. Service charges and other fee income increased $69,000 over the second quarter of 2008 as a result of greater service charge income.

Noninterest expense

Noninterest expense totaled $12.7 million for the second quarter of 2009 compared to $10.8 million for the comparable quarter last year. Approximately $787,000 of the increase is explained by an increase in regulatory assessments primarily related to the FDIC's special assessment. Other increases occurred in repossession expenses ($395,000) reflecting an increase in foreclosed properties, other losses ($329,000) primarily due to the writeoff of Silverton Bank stock, occupancy and equipment ($181,000), data processing ($168,000), salaries and benefits ($133,000) and professional fees ($117,000).

Provision and Allowance for Loan Losses

The real estate markets in the U.S. have deteriorated at an accelerated pace over recent quarters, resulting in increased credit losses for many financial institutions. Many banks, including Bank of Florida, have taken steps to increase reserve levels in response to these changing market conditions. Negative trends in general economic conditions, as measured by items such as unemployment rate, home sales and inventory, consumer price index and bankruptcy filings in the national and local economies, also caused increases in reserve factors used to determine the losses inherent within the loan portfolio. The second quarter provision for loan losses was $9.8 million, an increase of $8.2 million (516%) from second quarter 2008. At June 30, 2009, the loan loss allowance was 1.96% of total loans or 17.58% of the nonperforming loans. There were $9.5 million in net chargeoffs in the second quarter of 2009, resulting in net chargeoffs to average loans of 3.29%. The primary factor impacting the amount of these charge-offs is the continued decline in property values across the Florida markets.

There were $141.0 million in nonperforming loans at June 30, 2009 compared to $24.3 million at June 30, 2008. The increase was primarily caused by the downturn in the residential real estate market which negatively impacted the liquidity of a number of borrowers. Loans thirty to eighty-nine days delinquent increased to $23.3 million at June 30, 2009 from $13.9 million at June 30, 2008.

Six-months Ended June 30, 2009 Compared to Six-months Ended June 30, 2008

Consolidated net loss for the first half of 2009 totaled $10.8 million, a decrease in net earnings of $11.1 million or 4687.8% than the same time last year. Top-line revenue decreased $2.9 million or 11.9%, primarily driven by $3.1 million less net interest income, the result of the decline in interest rates.

The $2.9 million decrease in top-line revenue against a $2.0 million or 9.3% increase in noninterest expense resulted in an efficiency ratio of 110.3% for the first half of the year. The majority of the expense increase relates to regulatory assessments, repossession expenses, other losses, occupancy, insurance and professional fees. The provision for loan losses increased $14.2 million or 624% compared to the same period last year due to additional provisions for loan downgrades.

Net interest income

Net interest income for the first half of 2009 totaled $19.0 million, down $3.1 million or 13.8% less than the first six months of 2008, primarily due to the reduction in interest rates year over year. The spread between the yield on interest earning assets and cost of interest-bearing liabilities declined 26 basis points when comparing the six months ended June 30, 2009 to six months ended June 30, 2008. Yield on interest earning assets decreased 110 basis points to 5.72% while cost of funds decreased 84 basis to 2.92% due to the continued pressures from a declining rate environment. Interest income was negatively impacted by approximately $1.8 million in the first six months of 2009 due to interest that was reversed on loans that migrated to nonaccrual status.

Noninterest income

Noninterest income was $3.8 million in the first six months of 2009, a $1.5 million or 63.5% increase over the comparable period of 2008. Gain on sale of assets increased $1.6 million as a result of sales of securities ($1.3 million), foreclosed property sales ($180,000), fixed asset dispositions ($159,000) and lower secondary market income ($61,000). Trust fees declined $190,000 compared to the first six months of 2008 due to the decline in market values and investors' shift from equities into cash and bonds which produce lower revenue streams. Assets under advice increased $154.8 million to $630.7 million at June 30th. Service charges and other fee income increased $48,000 over the first six months of 2008 as a result of greater service charge income.

Noninterest expense

Noninterest expense totaled $23.7 million for the first six months of 2009, an increase of 9.3% or $2.0 million compared to the same period of 2008. Approximately $864,000 of the increase is explained by regulatory assessments driven by the FDIC special assessment. Other increases occurred in the areas of repossession expenses ($626,000) related to the increase in foreclosed property, other losses ($341,000) primarily related to the writeoff of Silverton Bank stock, occupancy ($230,000) related to building lease expenses, and data processing ($182,000).

Provision and Allowance for Loan Losses

The provision for loan losses for the first six months of 2009 was $16.5 million, up $14.2 million (624.0%) from the same period last year. This increase was necessitated primarily by an increased level of net charge-offs due to the continued weakness in real estate values. There were $21.3 million in net charge-offs during the first six months of 2009, resulting in a ratio of net charge-offs to average loans of 3.61% compared to 0.57% net charge-offs for the first half of 2008. The primary factor impacting the amount of these charge-offs is the continued decline in property values across the Florida markets.

There were $141.0 million in nonperforming loans at June 30, 2009 compared to $24.3 million at June 30, 2008. The increase was primarily caused by the downturn in the residential real estate market which negatively impacted the liquidity of a number of borrowers. Loans thirty to eighty-nine days delinquent increased to $23.3 million at June 30, 2009 from $13.9 million at June 30, 2008.

ALLOWANCE FOR LOAN LOSSES

The Board of Directors of each Bank is responsible for overseeing the establishment of an appropriate level of the Allowance for Loan and Lease Losses in compliance with Generally Accepted Accounting Principals. An evaluation of the level of allowance for loan losses is performed on a recurring basis, and at least quarterly.

Homogenous Loan Pools

In April 2009, the Banks established general reserve allocations as a percentage
of loans for homogeneous pools of loans where each category demonstrates similar
risk characteristics. The reserve metrics will be monitored and adjusted for
adequacy on a quarterly basis.



                                          2008                2009                  2009                  2009
FAS 5 Homogeneous Loan Pool             All Banks         BOF-Southwest         BOF-Southeast         BOF-Tampa Bay
Residential Land & Construction              1.30 %                3.65 %                1.65 %                1.40 %
Land & Construction                          1.30 %                2.20 %                1.90 %                1.45 %
Home Equity Loans (Lines on 1-4
Family)                                      1.00 %                2.10 %                1.65 %                0.80 %
1-4 Family Non Revolving                     0.70 %                1.10 %                1.45 %                0.75 %
Multifamily                                  0.70 %                0.65 %                0.55 %                0.55 %
Commercial Real Estate Owner
Occupied                                     0.75 %                0.75 %                0.80 %                0.60 %
Commercial Real Estate Non-Owner
Occupied                                     0.80 %                0.95 %                0.95 %                0.75 %
Commercial Non Real Estate Secured           1.00 %                2.00 %                0.90 %                0.85 %
Consumer and Other Loans                     1.50 %                1.70 %                1.05 %                0.80 %

The Banks have derived loss rates for each loan category to determine the appropriate level of funding for each loan segment. The analysis includes the Banks' actual loan losses and delinquencies over a three-year period, adjusted for the Banks' best estimates of the impact of economic trends, changes in key personnel, loan policy changes, delinquency history, and other qualitative factors. In reviewing the trends in delinquencies and impaired loans, as well as the level of, and trends in, charge-offs and recoveries, the Banks are of the opinion that the current loan loss rates are appropriate and warranted.

Economic Outlook

The Banks also consider the impact of national and local economic trends and conditions. Each Bank's primary market territory continues to show growth in population, but at a nominal pace in comparison to the past ten years. Florida's unemployment rate, while normally below the national average, is now close to the national average. The residential and condominium market continues to show signs of deterioration, as home sales have declined in both frequency and median price. In addition, commercial activity in the Banks' primary market areas have shown signs of weakening as vacancy percentages have begun to increase while many new projects continue to be brought on line.

According to Econ South's 4th Quarter 2008 "The Southeastern Economy in 2009," declining energy prices in the fall of 2008 offered workers and employers some relief in the form of lower travel and input costs. Because of the uncertain economic outlook, many businesses are hesitant to hire or make new investments. Seasonal hiring is expected to be soft this winter. The surge in initial and continuing unemployment claims late in 2008 is a sign that the jobless will continue to have difficulty finding work in 2009.

Although the labor markets felt a pinch from this year's financial crisis, the full impact on employment is likely yet to come. Moody's Economy.com forecasts that employment in Southeastern states will continue to decline through part of 2009. Recovery in the labor market will be a key to the region's economic outlook in 2009. Even as credit markets ease and confidence is restored, jobs must be restored for consumer spending and economic growth to improve. As unemployment continues to trend upward, the confidence level of the average Floridian has declined over the past three years.

In 2008, following two years of weak growth, employment in the Southeast declined for the first time in five years as a result of troubled financial markets and a weak economy. Collectively, the Southeastern states lost more than 235,000 net jobs in 2008 through the third quarter, according to data from the U.S. Department of Labor. The rate of job loss is currently the same as that experienced during the 2001 recession.

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