Some of the statements in this report constitute forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934. These statements related to future events, other future financial performance or business strategies, and include statements containing terminology such as "may," "will," "should," "expects," "scheduled," "plans," "intends," "anticipates," "believes," "estimates," "potential," or "continue" or the negative of such terms or other comparable terminology. Actual events or results may differ materially from the results anticipated in these forward looking statements, due to a variety of factors, including, without limitation: the effects of future economic conditions; governmental monetary and fiscal policies, as well as legislative and regulatory changes; the risks of changes in interest rates and the level and composition of deposits, loan demand, and the values of loan collateral; and the effects of competition from other commercial banks, thrifts, consumer finance companies, and other financial institutions operating in our market area and elsewhere. All forward looking statements attributable to our Company are expressly qualified in their entirety by these cautionary statements. We disclaim any intent or obligation to update these forward looking statements, whether as a result of new information, future events or otherwise. There is no assurance that future results, levels of activity, performance or goals will be achieved.

Our discussion and analysis of earnings and related financial data are presented herein to assist investors in understanding the financial condition of our Company at December 31, 2008 and 2007, and the results of operations for the years ended December 31, 2008, 2007 and 2006. This discussion should be read in conjunction with the consolidated financial statements and related footnotes of our Company presented elsewhere herein. Historical per share data has been adjusted to reflect our May 2006 two for one stock split.

Executive Summary

Organizational structure

Our consolidated financial statements include the accounts of CenterState Banks of Florida, Inc. (the "Parent Company," "Company," "Corporate," "CenterState" or "CSFL"), and our four wholly owned subsidiary banks, and their wholly owned subsidiary, CenterState Shared Services, Inc. ("CSS"), formerly C.S. Processing, Inc.

Our four subsidiary banks operate through locations in nine counties throughout Central Florida, providing traditional deposit and lending products and services to its commercial and retail customers. CSS is a wholly owned subsidiary of our subsidiary banks, which provides item processing services, human resource services, credit analyst services and information technology services for these subsidiary banks. As of December 31, 2008 we operated through 37 banking locations. We plan to close three branches during 2009. One will close on March 31, 2009 and the other two will close on April 15, 2009. The three branches combined have total deposits of approximately $25 million, which will be transferred to three of our other existing branch offices. On January 30, 2009 we purchased approximately $180 million of the deposits of Ocala National Bank ("ONC") from the FDIC. ONC, which was closed by the FDIC on Friday, January 30, 2009, operated from four branch locations in Ocala, Florida. On Monday morning, February 2, 2009, all four branches opened as CenterState Bank branch offices. See "branching activities," below for additional discussion related to our branch activities. During the fourth quarter of 2008, we initiated a correspondent banking and bond sales division. The division is integrated with and part of our lead subsidiary bank, CSB, located in Winter Haven, Florida. See "correspondent banking division," below for additional discussion relating to this new business activity.

Through our subsidiary banks, we conduct commercial banking business consisting 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). Our 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 earned and paid on these balances. Net interest income is dependent upon the interest rate spread which is the difference between the average yield earned on our interest-earning assets and the average rate paid on our interest-bearing liabilities. The interest rate spread is impacted by interest rates, deposit flows, and loan demand. Additionally, and to a lesser extent, our profitability is affected by such factors as the level of non-interest income and expenses, the provision for credit losses, and the effective tax rate. Non-interest income consists primarily of service fees on deposit accounts and related services, and also includes commissions earned on bond sales, brokering single family home loans, sale of mutual funds, annuities and other non traditional and non insured investments. Non-interest expense consists of compensation, employee benefits, occupancy and equipment expenses, and other operating expenses.

We operate under a decentralized organizational structure. Each of our subsidiary banks is managed by its own bank president, who has the primary responsibility for the profitability and growth of the individual business unit. Each bank has its own charter, management team and board of directors, although most of the Company's board directors are also board members of one or more of our subsidiary banks, and our Chairman is either the chairman or at least a board member of all our subsidiary banks. Except for the largest and/or riskier lending facilities, which require approval of a senior committee comprised of each subsidiary bank president and our

CEO, each bank generally makes its own lending decisions. Although lending decisions are made at each bank, credit (loan) review is performed by Parent Company employees, who are independent of the loan origination process and of the individual banks. The Chief Loan Review officer, who also is the Company's Chief Internal Auditor, reports directly to the Company's Audit Committee, with a dotted line to our CEO. This system of checks and balances has worked well for us in the past, and is clearly being tested in this current economy and real estate market.

At December 31, 2008, our four subsidiary banks are operating an aggregate of 37 bank branch locations in nine Counties in central Florida as summarized in the table below:

                                        No. of
Subsidiary Banks                       locations                  Counties
CenterState Bank Central Florida,              7
N.A. ("Central")                                               Osceola, Orange
CenterState Bank, N.A. ("CSB/West")           13    Pasco, Hernando, Citrus, Sumter, Lake
CenterState Bank of Florida                   12
("CSB/Polk")                                                        Polk
Valrico State Bank ("VSB")                     5                Hillsborough

Branching activities

We opened three new branches in 2006 and three in 2007. We did not open any new branches during 2008 and have no plans to open any during 2009. During April of 2008, we sold one branch office building located in Orange County and simultaneously entered into an agreement to lease back the real estate for a period of one year with an option to renew the lease for an additional year. We are not going to renew the lease and will close the office on March 31, 2009. The deposit and loan accounts will be transferred to the nearest existing office. The branch has been operating since 1996 and currently has deposits of approximately $12 million.

We are also closing two additional small branches effective April 15, 2009. One branch operates from a leased facility in Hernando County since it opened in August 2007. Currently it has less than $3 million in deposits. The other branch opened in October 1998 in Sumter County and currently has approximately $10 million in total deposits. We own the Sumter County branch real estate and plan to offer it for sale. The deposit and loan accounts will be transferred to other existing branches.

After these three branches are closed, the Company's branch network will decrease from 37 to 34. The estimated annual cost savings is expected to approximate $500,000. We do not expect to open any new branches in 2009. However, on January 30, 2009, we purchased the deposits of Ocala National Bank ("ONC") from the FDIC for approximately $3,000,000, a premium of approximately 1.7%. Total deposits purchased approximated $180,000,000. ONC, which was closed by the FDIC on Friday, January 30, 2009, operated from four bank branch locations of which two were leased and two were owned. Pursuant to the transaction, we have the option to purchase the two owned locations, plus all the furniture and equipment, and assume the leases at fair value, to be determined by appraisal. ONC branches opened as our branches on Monday morning, February 2, 2009. If we decide to keep all four of these new branches, our branch network will be increased to 38 (after closing the three branches discussed above).

TARP

On November 21, 2008, as part of the Troubled Asset Relief Program ("TARP") Capital Purchase Program, we issued and sold to the U.S. Department of the Treasury (the "Treasury"), (a) 27,875 shares (the "Preferred Shares") of our Fixed Rate Cumulative Perpetual Preferred Stock, Series A, having a liquidation preference of $1,000 per share, and (b) a ten-year warrant (the "Warrant") to purchase up to 250,825 shares of our voting common stock, par value $0.01 per share ("Common Stock"), at an exercise price of $16.67 per share.

For a detailed description of this program, what we agreed to do and what we received, refer to our Form 8-K filed on November 24, 2008, as well as our Form S-3 filed on December 17, 2008 and our 424B2 Prospectus filed on January 2, 2009. In summary, we issued 5% Cumulative Perpetual Preferred Stock along with a Warrant to purchase up to 250,825 shares of our common stock at an exercise price of $16.67 to the U.S. Department of Treasury, in exchange for $27,875,000 cash, which we received on November 21, 2008. The 5% dividends are paid quarterly and after five years the rate increases to 9% and remains at that level into perpetuity. After the initial three years, we are permitted to redeem it at any time. In addition, we can redeem it during the initial three years under certain conditions. If we raise qualifying equity capital equal to $27,875,000 or more prior to December 31, 2009, half of the Warrant (125,412 shares) will be cancelled. We are restricted from increasing our cash dividend on common shares from its current level of $0.04 per quarter during the initial three years, there are certain restrictions with regard to our ability to repurchase our own common shares and lastly, there are certain restrictions which subject us to certain executive compensation limitations included in the Emergency Economic Stabilization Act of 2008 ("EESA").

Correspondent banking division

Through our lead subsidiary bank in Winter Haven, Florida, we initiated a correspondent banking and bond sales division during the fourth quarter of 2008. This new business line was created by way of a management lift-out. We hired substantially all the employees of the Royal Bank of Canada's ("RBC") bond sales division, who were previously employees of Alabama National Bank ("ALAB") prior to RBC's acquisition of ALAB. The division operates out of a newly leased facility in Birmingham, Alabama. The business lines are primarily divided into three inter-related revenue generating activities. The first, and largest, revenue generator is commissions earned on fixed income security sales. The second category includes: (1) correspondent bank deposits (i.e. federal funds purchased); (2) correspondent bank checking accounts; and (3) loans to correspondent banks. The third, and smallest revenue generating category, includes fees from safe-keeping activities, bond accounting for correspondents, and asset/liability consulting related activities. The customer base includes small to medium size financial institutions primarily located in Florida, Georgia and Alabama, but will also include several other southeastern States. During the fourth quarter of 2008, we earned gross commission revenue on bond sales of $1,412,000. At December 31, 2008, we had $88,976,000 in deposits of correspondent banks (federal funds purchased).

Critical Accounting Policies

Our accounting policies are integral to understanding the results reported. Accounting policies are described in detail in Note 1 of the notes to the consolidated financial statements. The critical accounting policies require management's judgment to ascertain the valuation of assets, liabilities, commitments and contingencies. We have established policies and control procedures that are intended to ensure valuation methods are well controlled and applied consistently from period to period. In addition, the policies and procedures are intended to ensure that the process for changing methodologies occurs in an appropriate manner. The following is a brief description of our current accounting policies involving significant management valuation judgments.

Allowance for Loan Losses

The allowance for loan losses represents our estimate of probable incurred losses inherent in the existing loan portfolio. The allowance for loan losses is increased by the provision for loan losses charged to expense and reduced by loans charged off, net of recoveries. The allowance for loan losses is determined based on our assessment of several factors: reviews and evaluation of individual loans, changes in the nature and volume of the loan portfolio, current economic conditions and the related impact on specific borrowers and industry concentrations, historical loan loss experiences and the level of classified and nonperforming loans.

Changes in the financial condition of individual borrowers, in economic conditions, in historical loss experience and in the condition of the various markets in which collateral may be sold may all affect the required level of the allowance for loan losses and the associated provision for loan losses.

A standardized loan grading system is utilized at each of our subsidiary banks. The grading system is integral to our risk assessment function related to lending. Loan officers of each bank assign a loan grade to their newly originated loans in accordance with the standard loan grades. Throughout the lending relationship, the loan officer is responsible for periodic reviews, and if warranted he/she will downgrade or upgrade a particular loan based on specific events and/or analyses. We use a loan grading system of 1 through 7. Grade 1 is "excellent" and grade 7 is "doubtful." Loans graded 5 or higher are placed on a watch list each month end and reported to that particular bank's board of directors. The Company's loan review officer, who is independent of the lending function and is not an employee of any subsidiary bank, periodically reviews each bank's loan portfolio and lending relationships. He may disagree with a particular bank's grade on a particular loan and subsequently downgrade or upgrade such loan(s) based on his risk analysis. As such, our lending process is decentralized, but our credit review process is centralized.

Beginning in late 2007, the Company's CEO initiated a new program referred to as "centercourt," whereby all of our bank presidents and their chief lending officers are gathered together in one room along with our CEO, CFO, COO and Chief Loan Review officer. Each bank president and his chief lending officer present their prepared written report on the status of their bank's loan portfolio. Past due, non accrual, impaired, potentially impaired, and loans in process of foreclosure, as well as OREO issues are presented and discussed. These meetings are generally held once per quarter. The objectives include early and quick identification and resolutions of potential loan losses, as well as sharing information and ideas between banks. The process also contributes to each bank's allowance for loan loss analysis assumptions and preparation.

We maintain an allowance for loan losses that we believe is adequate to absorb probable losses inherent in our loan portfolio. The allowance consists of two components. The first component consists of amounts specifically reserved ("specific allowance") for specific loans identified as impaired, as defined by Statement of Financial Accounting Standard No. 114 ("SFAS 114"). Impaired loans are those loans that management has estimated will not repay as agreed upon. Each of these loans is required to have a written analysis supporting the amount of specific reserve allocated to the particular loan, if any. That is to say, a loan may be impaired (i.e. not expected to repay as agreed), but may be sufficiently collateralized such that we expect to recover all principle and interest eventually, and therefore no specific reserve is warranted.

The second component, which we refer to as Statement of Financial Accounting Standard No. 5 ("SFAS 5) loans, is a general reserve ("general allowance") on all of the Company's loans other than those identified as impaired. We group these loans into categories with similar characteristics and then apply a loss factor to each group which is derived from our historical loss factor for that category adjusted for current internal and external environmental factors, as well as for certain loan grading factors. The aggregate of these two components results in our total allowance for loan losses.

Goodwill and Intangible Assets

Goodwill represents the excess of cost over fair value of assets of business acquired. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but instead tested for impairment at least annually. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values, or in the case of core deposit intangibles, zero. We acquired CenterState Bank of Florida, in Winter Haven, Florida, on December 31, 2002, CenterState Bank Mid Florida on March 31, 2006 and Valrico State Bank on April 2, 2007. Consequently, we were required to record the assets acquired, including identified intangible assets, and liabilities assumed at their fair value, which involves estimates based on third party valuations, such as appraisals, internal valuations based on discounted cash flow analyses or other valuation techniques. The determination of the useful lives of intangible assets is subjective, as is the appropriate amortization period for such intangible assets. In addition, purchase acquisitions typically result in recording goodwill, which is subject to ongoing periodic impairment tests based on the fair value of the reporting unit compared to its carrying amount, including goodwill. As of November 30, 2008, the required annual impairment test of goodwill was performed and no impairment existed

as of the valuation date. If for any future period we determine that there has been impairment in the carrying value of our goodwill balances, we will record a charge to our earnings, which could have a material adverse effect on our net income. Goodwill and intangible assets are described further in Note 7 of the notes to the consolidated financial statements.

COMPARISON OF RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2008 AND
DECEMBER 31, 2007.

Net Income

Our net income for the year ended December 31, 2008 was $3,421,000 or $0.26 per share (basic) and $0.26 per share (diluted), compared to $7,799,000 or $0.64 per share (basic) and $0.63 per share (diluted) for the year ended December 31, 2007.

The primary reasons for the decrease in 2008 net income compared to 2007, was the increase in our loan loss provision ($6,520,000 versus $2,792,000), which was a reflection of the continued deterioration of the real estate market in Florida specifically and the overall economy in general, and secondly, the decrease in our net interest income ($40,285,000 versus $42,348,000), which was caused by compression in our net interest margin ("NIM"). These and other factors contributing to the decrease in our 2008 net income compared to 2007 are discussed below.

Net Interest Income/Margin

Net interest income consists of interest income generated by earning assets, less interest expense.

Net interest income decreased $2,063,000 or 5% to $40,285,000 during the year ended December 31, 2008 compared to $42,348,000 for the same period in 2007. The decrease was the result of a $7,091,000 decrease in interest income less a $5,028,000 decrease in interest expense.

Interest earning assets averaged $1,108,180,000 during the year ended December 31, 2008 as compared to $1,068,591,000 for 2007, an increase of $39,589,000, or 4%. The yield on average interest earning assets decreased 89 basis points ("bps") to 6.14% (89bps to 6.20% tax equivalent basis) during the year ended December 31, 2008, compared to 7.03% (7.09% tax equivalent basis) for 2007. The combined net effects of the $39,589,000 increase in average interest earning assets and the 89bps decrease in yield on average interest earning assets resulted in the $7,091,000 ($6,968,000 tax equivalent basis) decrease in interest income between the two years.

Interest bearing liabilities averaged $923,591,000 during the year ended December 31, 2008 as compared to $854,251,000 for 2007, an increase of $69,340,000, or 8%. The cost of average interest bearing liabilities decreased 83bps to 3.01% during the year ended December 31, 2008, compared to 3.84% for 2007. The combined net effects of the $69,340,000 increase in average interest bearing liabilities and the 83bps decrease in cost of average interest bearing liabilities resulted in the $5,028,000 decrease in interest expense between the two years.

See the tables "Average Balances-Yields & Rates," and "Analysis Of Changes In Interest Income And Expenses" below.

                        Average Balances-Yields & Rates

                           (Dollars are in thousands)



                                                              Years Ended December 31,
                                                 2008                                         2007
                                  Average         Interest      Average        Average         Interest      Average
                                  Balance         Inc / Exp      Rate          Balance         Inc / Exp      Rate
ASSETS:
Loans (1) (2) (7)               $   856,260      $    57,519       6.72 %    $   791,886      $    61,971       7.83 %
Securities available for
sale-taxable                        154,270            7,822       5.07 %        191,674            9,388       4.90 %
Securities available for
sale-tax exempt (7)                  38,070            2,060       5.41 %         35,933            1,824       5.08 %
Federal funds sold and other         59,580            1,345       2.26 %         49,098            2,531       5.15 %

TOTAL INTEREST EARNING
ASSETS                          $ 1,108,180      $    68,746       6.20 %    $ 1,068,591      $    75,714       7.09 %

Allowance for loan losses           (11,750 )                                     (9,114 )
All other assets                    141,575                                      129,791

TOTAL ASSETS                    $ 1,238,005                                  $ 1,189,268

LIABILITIES & STOCKHOLDERS'
EQUITY
Deposits:
Now                             $   141,756      $       953       0.67 %    $   125,468      $     1,375       1.10 %
Money market                        112,957            2,298       2.03 %        114,457            3,314       2.90 %
Savings                              67,215              733       1.09 %         53,195              431       0.81 %
Time deposits                       501,193           20,952       4.18 %        482,162           23,570       4.89 %
Repurchase agreements                30,818              459       1.49 %         58,329            2,582       4.43 %
Other borrowed funds (3)             57,152            1,584       2.77 %          8,765              532       6.07 %
Corporate debenture (4)              12,500              818       6.54 %         11,875            1,021       8.60 %

TOTAL INTEREST BEARING
LIABILITIES                     $   923,591      $    27,797       3.01 %    $   854,251      $    32,825       3.84 %

Demand deposits                     152,231                                      187,751
Other liabilities                     7,662                                        8,841
Total stockholders' equity          154,521                                      138,425
TOTAL LIABILITIES AND

STOCKHOLDERS' EQUITY            $ 1,238,005                                  $ 1,189,268

NET INTEREST SPREAD (tax
equivalent basis) (5)                                              3.19 %                                       3.25 %

NET INTEREST INCOME (tax
equivalent basis)                                $    40,949                                  $    42,889

NET INTEREST MARGIN (tax
equivalent basis) (6)                                              3.70 %                                       4.01 %

(1) Loan balances are net of deferred origination fees and costs.

(2) Interest income on average loans includes loan fee recognition of $336 and $523 for the years ended December 31, 2008 and 2007, respectively.

(4) Includes net amortization of origination costs and amortization of purchase accounting adjustment of ($1) and $16 during year ended December 31, 2008 and 2007, respectively.

(5) Represents the average rate earned on interest earning assets minus the average rate paid on interest bearing liabilities.

(6) Represents net interest income divided by total earning assets.

(7) Interest income and rates include the effects of a tax equivalent adjustment using applicable statutory tax rates to adjust tax exempt investment income . . .