Bank of Florida Corp.'s Strong Capital Level Continues to Positively Position Company for the Current Credit and Real Estate Cycle

Business Wire, July 21, 2008

NAPLES, Fla. -- Bank of Florida Corporation (Nasdaq:BOFL), a $1.4 billion asset multi-bank holding company based in Naples, Florida, today reported second quarter 2008 net income of $4,000 compared to $1.240 million for the same period last year. Earnings per diluted share for each period were $0.00 and $0.10, respectively. The Company earned $233,000 or $0.02 per diluted share in first quarter 2008, bringing year-to-date net income to $237,000, or $0.02 earnings per diluted share.

Michael L. McMullan, Bank of Florida Corporation's Chief Executive Officer, stated, "Pre-tax income for the second quarter, excluding provision for loan losses, was $1.6 million, compared to $1.1 million in the first quarter, an improvement that we believe is a good indication of our operating performance excluding credit costs. Net interest income actually increased over the first quarter, the first increase we've seen since the third quarter of last year, reflective of successfully managing down our cost of funds and the positive impact of our asset liability management strategies. Together these actions enabled our net interest margin to be held to only a four basis point decrease from the first quarter to 3.58%.

"Year-to-date pre-tax income, excluding provision for loan losses, was $2.7 million, relatively consistent with what we had anticipated in our plan. Included in the year-to-date results was $22.1 million of net interest income, which was only $264,000 lower than what we had originally planned this year, even with interest rates dropping 225 basis points. Also included in the year-to-date results was a $754,000 improvement in non-interest expense over what had been projected for the first six months of this year. Compared to the first quarter, net interest income improved $612,000 while non-interest expense improved $182,000, primarily driven by a continued focus in leveraging our operating platform.

"Nonperforming assets rose $6.0 million to $24.7 million or 1.75% of total assets, primarily caused by two loans totaling $4.3 million that were 60-89 days past due at March 31, 2008. Conversely, we moved $1.2 million in loans formerly nonperforming off our books as well as decreasing loans 30-89 days past due by $6.4 million. As a result, total past due and nonaccruing loans were slightly reduced in the past 90 days to $38.2 million or 3.20% of total loans outstanding. In addition, we increased our allowance for loan losses to $13.2 million or 1.11% of total loans outstanding, a ratio that exceeded the level at March 31, 2008 and one year earlier. Loan loss provision expense was $1.6 million, an increase of $898,000 over the first quarter 2008 provision, covering net charge-offs by 134%. Our Special Assets Team continues to aggressively manage the nonperforming loan portfolio along with any other loan that begins to show signs of deterioration. This strategy has served us well and is a key to our success in managing our overall delinquency levels.

"Loans grew $17 million during the quarter, representing an 8% annualized growth rate for the first six months of 2008. Increases over the past 90 days were centered in permanent commercial real estate loans, primarily industrial/warehouse and multi-family, and commercial and industrial loans, areas previously least affected by the current real estate downturn and areas in which we have had a primary focus. Loans for construction, land, and residential/commercial development decreased by nearly $57 million. Core deposits, which exclude certificates of deposit, were unchanged on average for the quarter, despite the beginning of the normal seasonal downturn and continued slow economic conditions.

"I am confident that our Company will successfully work through the impact of the current real estate downturn in Florida. We have an experienced management team, many of whom have dealt with downturns similar to this in their careers. We will continue to focus on enhancing and executing on our private banking, commercially-oriented business model that has served us well, keeping a keen eye on the current environment and adjusting accordingly. In addition, on a consolidated basis, the Company has approximately $29 million in capital above the minimum regulatory requirements to be considered `well-capitalized.' Our $160 million in total regulatory capital positions us positively to manage through the current credit cycle and to take advantage of the opportunities this market may present."

Discussion of specific performance factors for second quarter 2008, including additional detail regarding loan quality, follows below.

* Loans totaled $1.2 billion at June 30, 2008, increasing $17 million during the second quarter compared to a $30 million increase in the first quarter. Since year-end 2007, loans have grown at annualized rate of 8%, with increases in the Tampa Bay and Southeast Florida markets offsetting planned run-off of $3 million at Bank of Florida - Southwest due to the distressed Lee County market. The primary increases in outstandings during the second quarter occurred in permanent commercial real estate loans, which were up $50 million largely on loans for office buildings, industrial/warehouse properties, and multi-family units; commercial and industrial loans, which were up $11 million as the Company continues to expand in this borrower segment; and residential mortgages, including home equity loans, which were up $10 million based on conservative underwriting practices appropriate in the current economic environment. Construction loans on both residential and commercial properties were down by $48 million or 18% during the past 90 days while land and development loans were lower by $9 million. The owner-occupied portion of permanent commercial real estate loans and commercial and residential construction (included in the numbers above) is $269 million or 37% of the combined categories as of June 30, 2008, up $51 million or 24% from one year earlier. Over the past 12 months, the loan portfolio has increased $85 million or 7.7%. As of quarter end, 38% of the Company's loans will adjust within 90 days to a change in the prime rate or LIBOR, down from 49% one year earlier largely due to residential construction and land and development loan paydowns.