<PAGE> 1
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:
June 30, 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
--------------------------------------
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
--------- ---------
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
---------------------------- -----------------------------
Class Outstanding at August 9, 1996
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SARASOTA BANCORPORATION, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
June 30, 1996 and December 31, 1995
<TABLE>
<CAPTION>
ASSETS JUNE 30, 1996 DECEMBER 31, 1995
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(UNAUDITED)
<S> <C> <C>
Cash and Due From Banks $ 828,337 1,430,375
Federal Funds Sold 1,401,000 978,000
Securities held to maturity 0 0
Securities available for sale 9,830,653 10,638,023
Loans (Net) 27,182,928 22,279,086
Accrued interest receivable 291,869 293,258
Foreclosed real estate 71,673 68,507
Property and equipment (net) 462,202 481,333
Deferred income taxes 150,819 112,858
Other assets 61,830 85,733
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TOTAL ASSETS: $40,281,311 36,367,173
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $35,603,617 32,799,535
Repurchase agreements 1,109,943 0
Accrued Interest Payable 48,459 50,000
Other Liabilities 126,158 105,479
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TOTAL LIABILITIES: 36,888,177 32,955,014
STOCKHOLDERS' EQUITY:
Preferred stock, $.10 Par Value. Authorized 1,000,000 shares;
None Issued or Outstanding 0 0
Common Stock, $.01 Par Value. Authorized 10,000,000 shares;
471,500 shares Issued and Outstanding
as of June 30, 1996 and December 31, 1995 4,715 4,715
Additional Paid-In Capital 4,710,285 4,710,285
Accumulated Deficit (1,255,578) (1,365,542)
Net unrealized appreciation on available-for-sale securities (net) (66,288) 62,701
----------- ----------
TOTAL STOCKHOLDERS' EQUITY: 3,393,134 3,412,159
----------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY: $40,281,311 36,367,173
=========== ==========
</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 JUNE 30, 1996 AND 1995 AND
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
06/30/96 06/30/95 06/30/96 06/30/95
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and Fees on Loans $587,989 393,141 1,130,330 764,893
Interest on Federal Funds Sold 15,040 38,792 18,051 75,266
Interest on Investment Securities 157,755 187,457 320,378 326,833
-------- ------- --------- ---------
TOTAL INTEREST INCOME: 760,784 619,390 1,468,759 1,166,992
INTEREST EXPENSE:
Interest on Deposits 332,638 292,958 629,144 542,906
Interest on Borrowings 2,049 0 16,186 28
Interest on Repurchase agreements 12,553 0 23,695 0
-------- ------- --------- ---------
TOTAL INTEREST EXPENSE: 347,240 292,958 669,025 542,934
-------- ------- --------- ---------
NET INTEREST INCOME: 413,544 326,432 799,734 624,058
Provision For Possible Loan Losses 50,700 9,000 57,950 21,000
-------- ------- --------- ---------
NET INTEREST INCOME (LOSS) AFTER
PROVISION FOR POSSIBLE LOAN LOSSES: 362,844 317,432 741,784 603,058
OTHER OPERATING INCOME:
Service Charges on Deposit Accounts 22,727 19,379 47,678 33,845
Other Fees and Other Income 15,813 64,129 29,650 88,625
-------- ------- --------- ---------
NET OTHER OPERATING INCOME: 38,540 83,508 77,328 122,470
OPERATING EXPENSES:
Compensation 149,444 145,276 321,792 284,134
Occupancy 61,745 69,590 119,350 133,026
Equipment 14,821 20,723 23,228 39,896
Advertising 18,003 3,996 37,176 20,315
Professional Fees 16,825 32,648 55,324 54,829
Insurance 2,762 16,053 4,370 30,895
Other 68,360 81,578 147,908 134,185
-------- ------- --------- ---------
TOTAL OTHER OPERATING EXPENSES: 331,960 369,864 709,148 697,280
-------- ------- --------- ---------
NET INCOME (LOSS) $ 69,424 31,076 109,964 28,248
======== ======= ========= =========
INCOME (LOSS) PER SHARE 0.15 0.07 0.23 0.06
======== ======= ========= =========
</TABLE>
REFER TO NOTES TO FINANCIAL STATEMENTS
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SARASOTA BANCORPORATION, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
AND FOR THE SIX MONTHS ENDED JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
06/30/96 06/30/95
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITY:
NET INCOME (LOSS) $ 109,964 28,248
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH FLOWS FROM OPERATIONS:
Depreciation 22,874 25,809
Amortization of Organizational Costs 19,414 19,413
Provision for Loan Losses 57,950 21,000
(Increase) Decrease in Accrued Interest Receivable 1,389 (55,841)
(Increase) Decrease in Foreclosed real estate (3,166) (5,738)
(Increase) Decrease in Deferred income taxes (37,961) 10,703
(Increase) Decrease in Other assets 23,903 0
(Decrease) Increase in Accrued interest payable (1,541) 0
Increase in Other Liabilities 20,679 (59,593)
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NET CASH USED IN OPERATING ACTIVITIES: 213,505 (15,999)
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CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of investment securities, Net 662,404 (4,496,853)
Increase in Loans, Net (4,961,792) (1,444,954)
Purchase of other real estate (3,166) 0
Purchase of Property and Equipment (4,014) (250)
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NET CASH USED IN INVESTING ACTIVITIES: (4,306,568) (5,942,057)
---------- ----------
CASH FLOW FROM FINANCING ACTIVITIES:
Net increase in Deposits 2,804,082 7,354,629
Net increase in Repurchase Agreements 1,109,943 0
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NET CASH PROVIDED BY FINANCING ACTIVITIES: 3,914,025 7,354,629
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NET INCREASE (DECREASE) IN CASH: (179,038) 1,396,573
CASH AT BEGINNING OF PERIOD: 2,408,375 3,605,607
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CASH AT END OF PERIOD: 2,229,337 5,002,180
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION -
CASH PAID DURING THE PERIOD FOR INTEREST: $ 669,025 542,934
========== ==========
</TABLE>
REFER TO NOTES TO THE FINANCIAL STATEMENTS
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SARASOTA BANCORPORATION, INC.
AND SUBSIDIARY
Notes to Financial Statements (Unaudited)
June 30, 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 six
month period ended June 30, 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.
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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 June 30, 1996 no Investment Securities
are carried as "Held to Maturity".
Available for Sale Securities. As of June 30, 1996 the market value
of "Available for sale Securities" is $9,896,940.
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 June 30, 1996, unamortized
organizational cost amounted to $45,853.
Profit (Loss) Per Share. Profit per share of $.15 and $.23 for the
three month and six month periods ended June 30, 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 June 30, 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 six months ended June 30,
1996 was $9,575. This amount includes sums paid by the Bank to this
director's law firm as well as sums paid by bank customers and cost advances.
Another director 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 $38,440 for
the six months ended June 30, 1996. Another director provides accounting
services for the Company. There were fees incurred for this service of $800
for the six months ended June 30, 1996. Another director has sold some
insurance to the bank in the amount of $838 for the six months ended June 30,
1996.
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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
three month and six month periods ended June 30, 1996.
RESULTS OF OPERATIONS
The Company's net income for the second quarter of 1996 was $69,424, a
123.4% increase compared to $31,076 for the same period in 1995. Earnings per
share increased to $.15 in the second quarter of 1996 compared to $.07 per
share for the same period in 1995. Net income for the six months ended June
30, 1996 was $109,964 compared to $28,248 for the same period in 1995, an
increase of $81,716 or 289.3%. The increases in net income are primarily
attributable to a 49.6% and a 47.8% increase in interest and fees on loans for
the three month and six month periods ended June 30, 1996, respectively.
Net interest income after provision for loan losses for the second
quarter of 1996 increased $45,412 or 14.3% to $362,844 from a balance of
$317,432 for the second quarter of 1995. Net interest income after provision
for loan losses for the six months ended June 30, 1996 increased $138,726 or
23.0% to $741,784 from a balance of $603,058 for the same period in 1995. The
increases in net interest income resulted primarily from an increase in loan
volume and a corresponding increase in interest and fees on loans. The cost of
deposits averaged 3.95% for the second quarter of 1996 compared to 3.87% for
the second quarter of 1995. The net interest margin for six months and three
months ended June 30, 1996 was 4.38% on average earning assets of $36,313,125
and $37,349,328, respectively, for the periods stated. For these same periods
in 1995, the net interest margin was 4.07% and 4.08% respectively on average
earning assets of $30,326,929 and $31,602,803. This increase in net interest
margin is reflective of growth in earning assets and repricing of floating rate
assets quicker than repricing of interest bearing liability accounts.
Non-interest expense for the second quarter of 1996 decreased $37,904
or 10.25% as compared to the second quarter of 1995. This decrease is
primarily the result of lower professional service fees and decreased insurance
and equipment expenses.
Non-interest income decreased $44,968 or 53.9% during the second
quarter ended June 30, 1996 as compared to the same period in 1995.
Non-interest income also decreased $45,142 or 36.9% for the six month period
ended June 30, 1996 as compared to the same period in 1995. These decreases
are attributable to lower fees and other income which include decreases in
small business association fees as well as lower rental income.
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<PAGE> 8
FINANCIAL CONDITION
For the six month period ended June 30, 1996, the Company experienced
continued asset, loan and deposit growth. Total assets have increased 10.76%
to $40,281,311 for the six month period ended June 30, 1996 from $36,367,173 at
December 31, 1995. This increase is primarily attributable to an increase in
loans of approximately $4.9 million during this period. Securities available
for sale decreased during the six months ended June 30, 1996 by $807,370 in
order to accommodate the increase in loan demand experienced during the six
month period ended June 30, 1996.
The allowance for loan losses for the second quarter of 1996 was
$50,700 compared to $9,000 in the second quarter of 1995. The allowance for
loan losses as of June 30, 1996 was $276,480 compared to $225,950 at December
31, 1995. At June 30, 1996 and December 31, 1995, the allowance for loan
losses represented 1.01 % of 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 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 six months of 1996, charged-off loans totaled
$11,472 with recoveries of $4,351, or .04% of total loans outstanding. The
ratio of non-performing loans (including loans 90 days or more past due) to
total outstanding loans was .01% as of June 30, 1996 compared to .81% as of
June 30, 1995. At year ended December 31, 1995 non-performing loans were .20%
of loans outstanding. This decrease in non-performing loans is primarily
attributable to pay-offs and one charge-off of such loans.
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. 3% 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 June 30,
1996 was 12.57%, its total risk-based capital ratio was 13.60% and its leverage
ratio was 8.33%.
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 76.34% as of June 30, 1996, cash and due from banks of
$828,337 and federal funds sold of $1,401,000, the
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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 4. Submission of Matters to a Vote of Security Holders.
The 1996 Annual Meeting of Stockholders of the Company was
held on April 16, 1996. At the meeting the following persons were elected as
directors to serve for a term of three years and until their successors are
elected and qualified: James W. Demler, M.D., Edward S. Levi and A. Dean Pratt.
The results of voting with respect to the election of directors were
as follows:
<TABLE>
<CAPTION>
Votes Votes Votes
For Against Withheld
------- ------- --------
<S> <C> <C> <C>
James W. Demler, M.D. 272,120 0 0
Edward S. Levi 272,120 0 0
A. Dean Pratt 272,120 0 0
</TABLE>
The following individuals continued to serve as directors of the
Company following the 1996 Annual Meeting of Stockholders: Susan M. Baker,
Kenneth H. Barr, Timothy J. Clarke, Christine L. Jennings, Sam D. Norton,
Michael R. Pender, Jr., Stanford H. Ross and Gilbert J. Wellman
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
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 June 30, 1996.
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<PAGE> 10
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: August 12, 1996 By: /s/ Christine L. Jennings
----------------------------------------------
Christine L. Jennings
President (Principal Executive Officer)
By: /s/ Susan K. Flynn
----------------------------------------------
Susan K. Flynn
Vice President and Chief Financial Officer
(Principal Financial Officer)
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<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SARASOTA
BANCORPORATION, INC.'S UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE
PERIOD ENDED JUNE 30,1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 828,337
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 1,401,000
<TRADING-ASSETS> 1,038,393
<INVESTMENTS-HELD-FOR-SALE> 9,830,653
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 27,459,408
<ALLOWANCE> (276,480)
<TOTAL-ASSETS> 40,281,311
<DEPOSITS> 35,603,617
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,284,560
<LONG-TERM> 0
0
0
<COMMON> 4,715
<OTHER-SE> 3,388,419
<TOTAL-LIABILITIES-AND-EQUITY> 40,281,311
<INTEREST-LOAN> 1,130,330
<INTEREST-INVEST> 320,378
<INTEREST-OTHER> 18,051
<INTEREST-TOTAL> 1,468,759
<INTEREST-DEPOSIT> 629,144
<INTEREST-EXPENSE> 669,025
<INTEREST-INCOME-NET> 799,734
<LOAN-LOSSES> 57,950
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 709,148
<INCOME-PRETAX> 109,964
<INCOME-PRE-EXTRAORDINARY> 109,964
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 109,964
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 8.32
<LOANS-NON> 3,552
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 131,168
<ALLOWANCE-OPEN> 225,950
<CHARGE-OFFS> 11,472
<RECOVERIES> 4,051
<ALLOWANCE-CLOSE> 276,480
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
