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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended Commission File Number:
March 31, 1996 33-41045
SARASOTA BANCORPORATION, INC.
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(Exact name of small business issuer as specified in its charter)
Florida 65-0235255
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two North Tamiami Trail, Suite 100, Sarasota, Florida 34236
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area: (941) 955-2626
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Not applicable
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(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the last 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
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State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Common Stock, $.01 Par Value 471,500
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Class Outstanding at May 1, 1996
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SARASOTA BANCORPORATION, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
March 31, 1996 and December 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS March 31, 1996 December 31, 1995
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<S> <C> <C>
Cash and Due From Banks $ 1,858,694 1,430,375
Federal Funds Sold 1,000 978,000
Securities held to maturity - -
Securities available for sale 11,080,828 10,638,023
Loans (Net) 23,096,563 22,279,086
Accrued interest receivable 241,798 293,258
Foreclosed real estate 71,673 68,507
Property and equipment (net) 476,515 481,333
Deferred income taxes 150,819 112,858
Other assets 72,773 85,733
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TOTAL ASSETS: $37,050,663 36,367,173
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LIABILITIES AND STOCKHOLDERS' EQUITY
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LIABILITIES:
Deposits $33,485,276 32,799,535
Accrued Interest Payable 44,768 50,000
Other Liabilities 126,333 105,479
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TOTAL LIABILITIES: 33,656,377 32,955,014
STOCKHOLDERS' EQUITY:
Preferred stock, $.10 Par Value. Authorized 1,000,000 shares;
None Issued or Outstanding - -
Common Stock, $.01 Par Value. Authorized 10,000,000 shares;
Outstanding 471,500 4,715 4,715
Additional Paid-In Capital 4,710,285 4,710,285
Accumulated Deficit (1,325,002) (1,365,542)
Net unrealized appreciation on available-for-sale securities (net) 4,288 62,701
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TOTAL STOCKHOLDERS' EQUITY: 3,394,286 3,412,159
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY: $37,050,663 36,367,173
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</TABLE>
REFER TO NOTES TO THE FINANCIAL STATEMENTS.
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SARASOTA BANCORPORATION, INC.
SARASOTA, FLORIDA
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
03/31/96 03/31/95
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<S> <C> <C>
INTEREST INCOME:
Interest and Fees on Loans $542,341 371,752
Interest on Federal Funds Sold 3,011 36,474
Interest on Investment Securities 162,623 139,376
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TOTAL INTEREST INCOME: 707,975 547,602
INTEREST EXPENSE:
Interest on Deposits 296,506 249,948
Interest on Borrowings 14,137 28
Interest on Repurchase agreements 11,142 -
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TOTAL INTEREST EXPENSE: 321,785 249,976
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NET INTEREST INCOME: 386,190 297,626
Provision For Possible Loan Losses 7,250 12,000
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NET INTEREST INCOME (LOSS) AFTER
PROVISION FOR POSSIBLE LOAN LOSSES: 378,940 285,626
OTHER OPERATING INCOME:
Service Charges on Deposit Accounts 24,951 14,466
Other Fees and Other Income 13,837 24,496
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NET OTHER OPERATING INCOME: 38,788 38,962
OPERATING EXPENSES:
Compensation 172,348 138,858
Occupancy 57,605 63,436
Equipment 8,407 19,173
Advertising 19,173 16,319
Professional Fees 38,499 22,181
Insurance 1,608 14,842
Other 79,548 52,607
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TOTAL OTHER OPERATING EXPENSES: 377,188 327,416
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NET INCOME (LOSS) $ 40,540 (2,828)
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INCOME (LOSS) PER SHARE 0.09 (0.01)
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</TABLE>
REFER TO NOTES TO FINANTCIAL STATEMENTS.
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SARASOTA BANCORPORATION, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
03/31/96 03/31/95
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITY:
NET INCOME (LOSS) $ 40,540 (2,828)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH FLOWS FROM OPERATIONS:
Depreciation 8,832 12,536
Amortization of Organizational Costs 9,707 9,707
Provision for Loan Losses 7,250 12,000
(Increase) Decrease in Accrued Interest Receivable 51,460 65,945
(Increase) Decrease in Foreclosed real estate (3,166) -
(Increase) Decrease in Deferred income taxes (37,961) -
(Increase) Decrease in other assets 3,254 (19,806)
(Decrease) Increase in Accrued Interest Payable (5,232) 9,670
Increase in Other Liabilities 20,854 (65,991)
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NET CASH USED IN OPERATING ACTIVITIES: 95,538 21,233
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CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of investment securities, Net (501,218) (3,458,468)
Purchase of furniture & equipment (4,014) -
Increase in Loans, Net (824,728) 305,788
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NET CASH USED IN INVESTING ACTIVITIES: (1,329,960) (3,152,680)
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CASH FLOW FROM FINANCING ACTIVITIES:
Net Increase in Deposits 685,741 4,380,364
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NET CASH PROVIDED BY FINANCING ACTIVITIES: 685,741 4,380,364
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NET INCREASE (DECREASE) IN CASH: (548,681) 1,248,917
CASH AS BEGINNING OF PERIOD: 2,408,375 3,605,607
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CASH AT END OF PERIOD: 1,858,694 4,854,524
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Supplemental Disclosure of Cash Flow Information -
Cash Paid During The Period For Interest: $ 321,785 240,306
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</TABLE>
REFER TO NOTES TO THE FINANCIAL STATEMENTS
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SARASOTA BANCORPORATION, INC.
AND SUBSIDIARY
Notes to Financial Statements (Unaudited)
March 31, 1996
NOTE 1 - BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles for Interim Financial Statements
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 three
month period ended March 31, 1996 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1996. For further
information, refer to the financial statements and footnotes thereto included
in Form 10-KSB for the year ended December 31, 1995.
NOTE 2 - SUMMARY OF ORGANIZATION
Sarasota BanCorporation, Inc. Sarasota, Florida (the "Company"), was
incorporated under the laws of the State of Florida on December 28, 1990, for
the purpose of becoming a bank holding company with respect to a proposed de
novo bank, Sarasota Bank (the "Bank") Sarasota, Florida. Prior to formation of
the Company, The Company's organizers formed a partnership to commence
organizing a Bank holding company. The partnership was subsequently merged
into the Company as of December 30, 1990. As a result, each organizers'
capital account in the partnership was exchanged for common stock of the
Company and all assets of the partnership were contributed as capital to the
Company in consideration of the issuance of its common stock to the organizers.
On September 15, 1992, the organizers received approval from the Office of the
Comptroller of the State of Florida for the organization of a new state banking
association; an approval was also received on May 29, 1992 from the Federal
Reserve Board to form a one-bank holding company. On September 15, 1992, the
company acquired 100% of the Bank's capital stock by injecting $4.25 million
into the Bank's capital accounts.
NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of the Company conform to generally
accepted accounting principles and to general practices in the banking
industry. The following summarizes the more significant of these policies:
Investment Securities. As of March 31, 1996 no Investment Securities are
carried as "Held to Maturity".
Available for Sale Securities: As of March 31, 1996 the market value of
"Available for sale Securities" is $11,080,828.
Organizational Costs. In accordance with FASB Statement No. 7, the
Company and the subsidiary Bank capitalized all direct costs that were incurred
in the expectation that they would generate future revenues and otherwise
benefit periods after the subsidiary Bank opened for business. These
capitalized costs, or organizational costs, are amortized over a sixty-month
period using the straight line method. As of March 31, 1996, unamortized
organizational cost amounted to $55,560.
3
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Profit (Loss) Per Share. Profit per share .09 for the quarter ended March
31, 1996 may not be indicative of projected earnings (losses) for the year
ending December 31, 1996.
Income Taxes. The Company will be subject to taxation whenever taxable
income is generated. As of March 31, 1996, no income taxes have been accrued
because of net operating loss carryovers.
Statement of Cash Flows. The presentation of the statement of cash flows
is condensed as permitted by the Securities and Exchange Commission. The
classification of cash flows is consistent with the requirements of FASB
Statement No. 95.
NOTE 4 - RELATED PARTIES
One of the Company's directors serves as legal counsel for the Company.
Gross fees for these services during the three months ended March 31, 1996 was
$7440. This amount includes sums paid by the Bank to this firm as well as
sums paid by bank customers and cost advances. Another director of the Company
provides advertising, printing and other miscellaneous services to the Company.
The gross billings, which includes costs passed through to other companies
providing services to the Company, was $17,071 for the three months ended
March 31, 1996. Another director provides accounting services for the Company.
The fees incurred for these accounting services were $300 for the three months
ended March 31, 1996. One of the Company's directors has also sold some
insurance to the bank in the amount of $838 for the three months ended March
31, 1996.
4
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion addresses the factors that have affected Sarasota
BanCorporation, Inc.'s (the "Company") financial condition and results of
operations reflected in the Company's unaudited financial statements for the
first quarter ended March 31, 1996.
RESULTS OF OPERATIONS
The Company experienced a net gain for the three months ended March 31,
1996 of $40,540, compared to a net loss of $2,828 for the same period in 1995.
The net gain for the first quarter of 1996 is primarily attributable to
increased interest and fees on loans.
Net interest income for the first quarter of 1996 increased $88,564 or
29.8% from a balance of $297,626 for the first quarter of 1995. This increase
in net interest income resulted from increased loan volume and investment
income. The cost of deposits averaged 3.92% during the first quarter of 1996.
Net interest margin was 4.37% as of March 31, 1996, compared to 4.09% at March
31, 1995.
Non-interest expense for the first quarter of 1996 increased $49,772 or
15.2% as compared to the first quarter of 1995. This increase was related to
compensation and professional service expenses.
FINANCIAL CONDITION
Total assets have increased 1.88% to $37,050,663 at March 31, 1996 from
$36,367,173 at December 31, 1995. This increase is primarily attributable to
an increase in loans of approximately $800,000 during the first quarter of
1996.
The allowance for loan losses at March 31, 1996 was $235,585 as compared
to $225,950 at December 31, 1995. At March 31, 1996, the allowance for loan
losses represented 1.01% of total loans outstanding. Management considers the
allowance to be adequate based upon evaluations of specific loans and the
weighting of various loan categories as suggested by the Bank's internal loan
rating system. The provision for possible loan losses for the first quarter of
1996 was $7,250 compared to $12,000 at March 31, 1995. The provision for loan
losses is based upon management's continuing analysis and evaluation of various
factors, including current economic conditions, the size of the loan portfolio,
past loan loss experience, underlying collateral value, the Bank's internal
rating system and other factors deemed relevant by management.
Through the first quarter of 1996, charged-off loans totalled zero with
recoveries of $2,384. Total non-performing loans (including loans 90 days or
more past due) as of March 31, 1996 was $234,255.
CAPITAL ADEQUACY
Federal banking regulators have established certain capital adequacy
standards required to be maintained by banks and bank holding companies. These
regulations establish minimums of risk-based capital of 4% for core capital
(tier 1), 8% for total risk-based capital, and at least 3% for the leverage
ratio. Three percent is the minimum leverage ratio for the most highly rated
banks. All other banks are required to meet a minimum of at least 100 or 200
basis points above the 3% level. The Company's tier 1 risk-based capital ratio
at March 30, 1996 was 14.59%, its total risk-based capital ratio was 15.64%,
and its leverage ratio was 8.83%.
5
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LIQUIDITY
The Company views liquidity as the ability to provide for the credit needs
of the market and to provide funds for deposit withdrawals. With a loan to
deposit ratio of 70.96% at March 31, 1996, cash and due from banks of
$1,858,694 and federal funds sold of $1,000, the Company does not anticipate
any events which would require liquidity beyond that which is available through
deposit growth or its investment portfolio. The Company actively manages the
levels, types, and maturities of earning assets in relation to the sources
available to fund current and future needs to ensure adequate funding will be
available at all times. There are no known trends or any known commitments or
uncertainties that will result in the Company's liquidity increasing or
decreasing in any material way.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. No exhibits are required to be filed with this report.
Exhibit 27 - Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K. No reports on Form 8-K were filed
during the quarter ended March 31, 1996.
6
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SARASOTA BANCORPORATION, INC.
Dated: May 14, 1996 By: /s/ Christine L. Jennings
-------------------------------------------
Christine L. Jennings
President
(Principal Executive and Financial Officer)
7
<TABLE> <S> <C>
<ARTICLE> 9
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 1,858,694
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 1,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 11,080,828
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 23,332,148
<ALLOWANCE> (235,585)
<TOTAL-ASSETS> 37,050,663
<DEPOSITS> 33,485,276
<SHORT-TERM> 0
<LIABILITIES-OTHER> 171,101
<LONG-TERM> 0
0
0
<COMMON> 4,715
<OTHER-SE> 3,389,571
<TOTAL-LIABILITIES-AND-EQUITY> 37,050,663
<INTEREST-LOAN> 542,341
<INTEREST-INVEST> 162,623
<INTEREST-OTHER> 3,011
<INTEREST-TOTAL> 707,975
<INTEREST-DEPOSIT> 296,506
<INTEREST-EXPENSE> 321,785
<INTEREST-INCOME-NET> 386,190
<LOAN-LOSSES> 7,250
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 377,188
<INCOME-PRETAX> 40,540
<INCOME-PRE-EXTRAORDINARY> 40,540
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 40,540
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 8.29
<LOANS-NON> 95,406
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 40,500
<ALLOWANCE-OPEN> 225,950
<CHARGE-OFFS> 0
<RECOVERIES> 2,384
<ALLOWANCE-CLOSE> 235,585
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
