Refer to notes to the consolidated financial statements.

Refer to notes to the consolidated financial statements.

Refer to notes to the consolidated financial statements.

Refer to notes to the consolidated financial statements.

Refer to notes to the consolidated financial statements.

Note 1 - Basis of Presentation

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six-month period ended June 30, 2000 are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. These statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in Form 10-KSB for the year ended December 31, 1999.

Note 2 - Summary of Organization

Manasota Group, Inc. ("Manasota") was incorporated on May 27, 1998 for the purpose of becoming a bank holding company with respect to a proposed de novo bank, Horizon Bank (the "Bank") to be located in Bradenton, Florida. Manasota was later renamed Horizon Bancorporation, Inc., Bradenton, Florida (the "Company"). Accordingly, all financial transaction undertaken by Manasota are reflected in the Company's financial statements as of June 30, 2000 and all other prior periods. In a public offering of its shares conducted during 1999, the Company raised approximately $6.0 million, net of selling expenses, by selling 1,146,077 shares of its common stock. The Company invested $5.3 million in its sole subsidiary, Horizon Bank, Bradenton, Florida (the "Bank") and kept the remaining funds for working capital and future corporate purposes. Banking operation commenced on October 25, 1999 when the Bank opened for business.

The Company is authorized to issue up to 25.0 million shares of its $.01 par value per share common stock. Each share is entitled to one vote and shareholders have no preemptive or conversion rights. As of June 30, 2000 and December 31, 1999, there were 1,146,077 shares of the Company's common stock issued and outstanding. Additionally, the Company has authorized the issuance of up to 1.0 million shares of its $.01 par value per share preferred stock. The Company's Board of Directors may,

In March, 1998, the American Institute of Certified Public Accountants issued Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use. SOP 98-1 provides guidance for capitalizing and expensing the costs of computer software developed or obtained for internal use. SOP 98-1 is effective for financial statements for fiscal years beginning after December 15, 1998. The adoption of SOP 98-1 did not have a material impact on the accompanying consolidated financial statements.

SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" was issued in June, 1998 and is effective for all calendar-year entities beginning in January, 2000. This Statement applies to all entities and requires that all derivatives be recognized as assets or liabilities in the balance sheet, at fair values. Gains and losses of derivative instruments not designated as hedges will be recognized in the income statement. Since the Company does not invest in derivative instruments, the adoption of SFAS No. 133 does not have a material impact on the financial statements.

SFAS No. 134, "Accounting for Mortgage-Backed Securities Retained after the Securitization of Mortgage Loans Held for Sale

by a Mortgage Banking Enterprise" amends prior accounting standards, primarily SFAS 65, with respect to the classification of retained interests, such as mortgage-backed securities, following a securitization of mortgage loans held for sale. This statement became effective in the first quarter of 1999. Since the Company does not securitize mortgage loans, no financial statement impact has resulted from adopting this statement.

Total assets increased by $9.3 million to $16.1 million during the six-month period ended June 30, 2000. More specifically, cash and cash equivalents increased by $.5 million to $1.9 million, securities increased by $1.8 million to $2.5 million, loans increased by $6.5 million to $10.3 million, and fixed assets increased by $.5 million to $1.3 million.

Liquidity is the Company's ability to meet all deposit withdrawals immediately, while also providing for the credit needs of customers. The June 30, 2000 financial statements evidence a satisfactory liquidity position as total cash and cash equivalents amounted to $1.9 million, representing 12.0% of total assets. Investment securities, which amounted to $2.5 million or 15.3% of total assets, provide a secondary source of liquidity because they can be converted into cash in a timely manner. The Bank is a member of the Federal Reserve System and maintains relationships with several correspondent banks and, thus, could obtain funds from these banks on short notice. The Company's management closely monitors and maintains appropriate levels of interest earning assets and interest bearing liabilities, so that maturities of assets can provide adequate funds to meet customer withdrawals and loan demand. The Company knows of no trends, demands, commitments, events or uncertainties that will result in or are reasonably likely to result in its liquidity increasing or decreasing in any material way. The Bank maintains an adequate level of capitalization as measured by the following capital ratios and the respective minimum capital requirements by the Bank's primary regulators.

With respect to the leverage ratio, the regulators expect a minimum of 5.0% to 6.0% ratio for banks that are not rated CAMELS 1. The Bank's leverage ratio of 37.4% is well above the required minimum.

Recall that principal operations commenced on October 25, 1999 and that from that point on the Bank was fully staffed and expenses were significantly higher than those incurred prior to commencement of principal operations. The Registrant therefore believes that comparing pre-opening to post opening periods could be misleading and thus should be avoided. Below is a brief discussion concerning the Company's operational results for the three-month and six-month periods ended June 30, 2000.

For the three-month period ended June 30, 2000, net (loss) amounted to $(186,362), or $(.16) per share. Interest income amounted to $287,283 while interest expense amounted to $113,817, thus resulting in a net interest income of $173,466. Other income, primarily from fees and charges on deposit accounts, amounted to $7,133 while operating expenses amounted to $291,961. In addition, the Bank expensed $75,000 to increase the reserve for loan losses.

For the six-month period ended June 30, 2000, net (loss) amounted to $(411,869), or $(.36) per share. Below is a brief explanation detailing the above results:

a. Net interest income, which represents the difference between interest received on interest earning assets and interest paid on interest bearing liabilities, amounted to $304,268.

The net interest yield, defined as net interest income divided by average interest earning assets, amounted to 5.89%. The Company's yield on earning assets amounted to 8.82%, and the cost of funds amounted to 5.56%, resulting in an interest margin of 3.26%. Below is pertinent information concerning the yield on earning assets and the cost of funds for the six-month period ended June 30, 2000.

(Dollars in '000s)

b. For the six-month period ended June 30, 2000, non-interest income amounted to $9,168, or .08% of average assets. Because the Bank is new and in need of deposits, its strategy is to attract deposits by charging little for services. In effect, it passes on the savings to its customers rather than pay for an expensive marketing campaign to increase deposits.

c. For the six-month period ended June 30, 2000, non interest expense amounted to $575,305, or 4.87% of average assets. While non-interest expense as a percent of average assets is high, it is expected to decline as economies of scale are attained. Also, as the Bank grows, fixed costs as a percent of total assets will decline.

During the six-month period ended June 30, 2000, the allowance for loan losses has grown by $150,000 to $250,000. The allowance for loan losses as a percentage of gross loans decreased from 2.54% at December 31, 1999 to 2.37% at June 30, 2000. Management considers the allowance for loan losses to be adequate and sufficient to absorb possible future losses; however, there can be no assurance that charge-offs in future periods will not exceed the allowance for loan losses or that additional provisions to the allowance will not be required.

The Company is not aware of any current recommendation by the regulatory authorities which, if it was to be implemented, would have a material effect on the Company's liquidity, capital resources, or results of operations.