Dear Shareholders, Customers,
Employees and Friends:

2008 was a year in which the media was constantly filled with news of shaky financial markets, troubled banks and a recessionary economy.

With all of the news of an economic “crisis”, it’s easy to lose sight of the fact that despite these economic challenges, well managed companies such as First State Bank of the Florida Keys continued to grow and prosper.

The reason First State Bank has continued to prosper since 1955 is through a unique combination of long-term planning, managed growth, prudent business practices and a conservative local lending philosophy.

These proven principles, when combined with a knowledgeable local Board of Directors, a team of experienced professionals and a dedicated commitment to the Florida Keys community, have ensured that First State Bank continues to succeed.

First State Bank Remains Strong!

Entering our 20th consecutive year of positive growth, we are proud to report that First State Bank remains a financially sound institution. Safe, secure and well capitalized, we have a long-term strategy and conservative business model that will allow us to prevail in the Keys market despite the current economic challenges.

We enhanced our new business and customer relationship development programs, launched competitive new products, adjusted resources to maximize efficiencies and strengthened our team of professionals while continuing to invest in our community.

Our strategic planning, local focus, and the high energy of our team of experienced professionals were the driving force behind our remarkable success which included growing capital by 11.3% while building reserves and liquidity.

2008 Results & Accomplishments:

• 20 consecutive years of positive earnings

• Considered “Well Capitalized & Managed” by Regulators

• Capital grew by 11.3%

• Increased reserves by 36.1%

• Twice the required liquidity

• 38.5% of assets are in cash or liquid investments

• No sub-prime loan exposure or investments

• Ranked #1 in deposit market share for Monroe County

• Ranked #1 local lender in Monroe County

• Grew local loans to $485 million

Locals Helping Locals!

While other banks have restricted their lending practices, First State Bank grew loans in 2008 to $485 million. We continued to fund local projects and business ventures while helping to put people into homes.

Thanks to the prudent lending practices of our Board and Management team during the real estate boom, First State Bank chose not to be involved with any sub-prime loans or investments. For customers who find themselves at risk, we are proactively reaching out to help them find the best solution to see them through these challenging times.

Reinvesting In Our Communities!

First State Bank continues investing in the community with projects like our new Big Pine Office and the remodeling of our Summerland and Key West Winn-Dixie Offices. These projects represent long-term investments in our Bank while stimulating the Keys economy with jobs for local companies.

Community Dedication!

Our local Board and team of professionals feel it is our civic responsibility to give back to the community where we live. In 2008 alone, First State Bank contributed more than $268,000 in cash, volunteers and in-kind donations to local charities, community events and non-profits throughout the Keys.

Inner Strength!

The First State Bank team members are the driving force behind our success and represent our greatest asset. It’s their experience, dedication and commitment to excellence that ensures our continued growth.

Our 48 dedicated officers represent over 515 years of experience at First State Bank and 1,016 years of professional expertise in banking, financial services or related services.

In 2008, 18 professionals earned promotions, including the following seven officers:

• Donald Lanman, Senior Vice President, Marketing Director

• Daisy Naseiro, Senior Vice President, Retail Operations Administrator

• Lori Bailey, Vice President, Commercial & Residential Loan Officer

• William Estenoz, Vice President, Portfolio Analyst/Systems Administrator, CRA Officer

• Maria Garcia, Vice President, Branch Manager - Main

• Lucy Cruz, Assistant Vice President, Compliance Officer

• Jacqueline Luhta, Retail Business Analyst, Training Officer

To enhance our competitive edge, we also expanded our team of experienced officers:

• David Dunbar, Vice President, Asset & Liability Officer

First State Bank is Prepared for 2009 & Beyond!

As we face the challenges of the current economic environment, First State Bank of the Florida Keys will continue building on its long history of success by adhering to proven conservative and prudent business disciplines.

We have strengthened our team of financial professionals while strategically realigning Bank resources to manage our growth.

While our competitors are distracted, we will expand our market share and enhance our dominant position as the only locally owned and operated Keys-wide bank in Monroe County that’s both well managed and well capitalized.

First State Bank of the Florida Keys is prepared to meet the economic challenges of 2009 and beyond with flexibility, adaptability and consistency.

Our long-term vision, prudent business philosophy, conservative local lending practices and a carefully planned approach of controlled growth will keep the Bank safe, sound and secure now and for years to come.

First State Bank of the Florida Keys will be here, as we have been since 1955, supporting the changing financial needs of our residents and the communities where we live and work.

  Click here to view our 2008 Statement of Condition