<PAGE>
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:
September 30, 1996 33-41045
SARASOTA BANCORPORATION, INC.
- --------------------------------------------------------------------------------
(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)
(941) 955-2626
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(Issuer's telephone number)
Not applicable
- --------------------------------------------------------------------------------
(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 November 7, 1996
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<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SARASOTA BANCORPORATION, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
September 30, 1996 and December 31, 1995
(UNAUDITED)
ASSETS September 30, 1996 December 31, 1995
- ------ ------------------ -----------------
(audited)
<S> <C> <C>
Cash and due from banks $ 1,740,967 $ 1,430,375
Federal funds sold 2,366,000 978,000
Securities held to maturity - -
Securities available for sale 10,255,464 10,638,023
Loans (net) 29,075,744 22,279,086
Accrued interest receivable 254,949 293,258
Foreclosed real estate 71,673 68,507
Property and equipment (net) 449,227 481,333
Deferred income taxes 150,819 112,858
Repossessions 6,850 -
Other assets 58,070 85,733
-------------------- ------------------
TOTAL ASSETS: $ 44,429,763 $ 36,367,173
==================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
LIABILITIES:
Deposits $ 38,500,878 $ 32,799,535
Repurchase agreements 2,134,818 -
Accrued interest payable 63,110 50,000
Other liabilities 143,899 105,479
-------------------- ------------------
TOTAL 40,842,705 32,955,014
LIABILITIES:
STOCKHOLDERS' EQUITY:
Preferred stock, $.10 par value, 1,000,000
shares authorized, none issued or outstanding - -
Common stock, $.01 Par Value, 10,000,000
shares authorized, 471,500 shares outstanding, 4,710,285 4,710,285
Additional paid-in capital (1,090,985) (1,365,542)
Accumulated deficit (36,857) 62,701
-------------------- ------------------
Net unrealized gain (loss) on available-for-sale
securities
TOTAL STOCKHOLDERS' EQUITY: 3,587,058 3,412,159
-------------------- ------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY: $ 44,429,763 $ 36,367,173
==================== ==================
</TABLE>
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<TABLE>
<CAPTION>
SARASOTA BANCORPORATION, INC.
SARASOTA, FLORIDA
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
INTEREST INCOME:
- ----------------
Interest on loans $ 661,722 $ 417,669 $1,751,034 $1,155,308
Fees on loans 30,430 13,811 71,448 41,065
Interest on federal funds sold 28,866 34,352 46,917 109,618
Interest on investment securities 158,924 186,755 479,302 513,588
---------- ---------- ---------- ----------
TOTAL INTEREST INCOME: 879,942 652,587 2,348,701 1,819,579
INTEREST EXPENSE:
- -----------------
Interest on deposits 378,704 322,961 1,007,848 865,867
Interest on borrowings 1,297 -- 17,483 28
Interest on repurchase agreements 22,546 3,786 46,241 3,786
---------- ---------- ---------- ----------
TOTAL INTEREST EXPENSE: 402,547 326,747 1,071,572 869,681
---------- ---------- ---------- ----------
NET INTEREST INCOME: 477,395 325,840 1,277,129 949,898
Provision for possible loan losses 21,200 10,000 79,150 31,000
---------- ---------- ---------- ----------
NET INTEREST INCOME AFTER
PROVISION FOR POSSIBLE LOAN 456,195 315,840 1,197,979 918,898
LOSSES:
OTHER OPERATING INCOME:
- -----------------------
Service fees on deposits 30,775 27,029 78,543 60,874
Other non Interest income 6,324 -- 30,555 --
Gain (loss) on sale of securities -- (19,809) 5,419 68,816
---------- ---------- ---------- ----------
NET OTHER OPERATING INCOME: 37,099 7,220 114,427 129,690
OPERATING EXPENSES:
- -------------------
Compensation 155,996 136,196 477,788 420,330
Occupancy 60,529 56,013 179,879 189,039
Equipment 17,385 16,657 40,613 56,553
Advertising 7,742 4,657 44,918 24,972
Professional fees 9,362 23,749 64,686 78,578
Insurance 657 68 5,027 30,963
Other 77,030 65,389 244,938 199,574
---------- ---------- ---------- ----------
TOTAL OTHER OPERATING EXPENSES: 328,701 302,729 1,037,849 1,000,009
---------- ---------- ---------- ----------
NET INCOME $ 164,593 $ 20,331 $ 274,557 $ 48,579
---------- ---------- ---------- ----------
INCOME PER SHARE 0.35 0.04 0.58 0.10
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</TABLE>
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<TABLE>
<CAPTION>
SARASOTA BANCORPORATION, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED)
Nine Months Ended
September 30,
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITY:
NET INCOME $ 274,557 $ 48,579
ADJUSTMENTS TO RECONCILE NET
CASH FLOWS FROM OPERATIONS:
Depreciation 37,866 42,101
Amortization of organizational costs 29,120 29,120
Provision for loan losses 79,150 31,000
(Gain) loss on sale of securities (5,419) --
(Increase) decrease in accrued interest receivables 38,309 (17,175)
(Increase) decrease in deferred income taxes (37,961) --
(Increase) decrease in repossessions (6,850) --
(Increase) decrease in other assets 8,446 (9,033)
(Decrease) increase in accrued interest payable 13,110 10,823
(Decrease) Increase in other liabilities 38,420 (56,491)
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NET CASH USED IN OPERATING ACTIVITIES: 468,748 78,924
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CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of investment securities, net 278,417 (2,510,991)
Increase in loans, net (6,875,808) (3,819,677)
Purchase of other real estate (3,166) (68,506)
Purchase of property and equipment (5,760) (77,581)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES: (6,606,317) (6,476,755)
----------- -----------
CASH FLOW FROM FINANCING ACTIVITIES:
Net increase in deposits 5,701,343 7,927,182
Net increase in repurchase agreements 2,134,818 --
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES: 7,836,161 7,927,182
----------- -----------
NET INCREASE (DECREASE) IN CASH: 1,698,592 1,529,351
CASH AT BEGINNING OF PERIOD: 2,408,375 3,605,607
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CASH AT END OF PERIOD: 4,106,967 5,134,958
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Supplemental disclosure of cash flow information -
cash paid during the period for interest: $ 1,071,572 $ 869,681
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</TABLE>
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SARASOTA BANCORPORATION, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements (Unaudited)
September 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 nine month
period ended September 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
the Company's Form 10-KSB for the year ended December 31, 1995.
Note 2 - Summary of Organization
Sarasota Bancorporation, Inc. (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") located in Sarasota, Florida. Prior to the formation
of the Company, the Company's organizers formed a partnership to facilitate the
organization of the 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 May 29, 1992 the
organizers received approval from the Federal Reserve Board to form a one-bank
holding company and 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. On September 15, 1992, in consideration of $4.25
million, the Company acquired 100% of the Bank's capital stock.
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 September 30, 1996 no Investment
-----------------------
Securities are carried as "Held to maturity."
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Available for Sale Securities. As of September 30, 1996 the market
-------------------------------
value of "Available for sale securities" is $10,255,464.
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 September 30, 1996, unamortized organizational
costs amounted to $36,147.
Profit Per Share. Profit per share of $.58 for the quarter ended
------------------
September 30, 1996 may not be indicative of projected earnings for the year
ending December 31, 1996.
Income Taxes. The Company will be subject to taxation whenever taxable
------------
income is generated. As of September 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. During the nine months ended September 30, 1996, the gross fees paid
for this director's legal services totaled $10,874. This amount includes sums
paid by the Bank and its customers to the director's law firm as well as certain
cost advances made to the law firm. A second director of the Company provides
advertising, printing and other miscellaneous services to the Company. During
the nine months ended September 30, 1996, the gross billings paid to this
director, which includes costs passed through to other companies providing
services to the Company, totaled $42,357. A third director of the Company
provides accounting services for the Company. During the nine months ended
September 30, 1996, the Company paid a total of $1,200 for these accounting
services. A fourth director of the Company has sold insurance to the bank,
receiving fees totaling $838 for the nine months ended September 30, 1996 for
such services.
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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 the
financial condition and results of operations of Sarasota Bancorporation, Inc.
(the "Company") as reflected in the Company's unaudited consolidated financial
statements for the three month and nine month periods ended September 30, 1996.
Results of Operations and Financial Condition
The Company's net income for the third quarter of 1996 was $164,593, a
709.6% increase compared to $20,331 for the same period in 1995. Earnings per
share increased to $.35 in the third quarter of 1996 compared to $.04 per share
for the same period in 1995. Net income for the nine months ended September 30,
1996 was $274,557 compared to $48,579 for the same period in 1995, an increase
of $225,978 or 465.2%. The increases in net income are primarily attributable to
a 58.4% and a 51.6% increase in interest and fees on loans for the three and
nine month periods ended September 30, 1996, respectively.
Net interest income after provision for loan losses for the third
quarter of 1996 increased $140,355 or 44.4% to $456,195 from a balance of
$315,840 for the third quarter of 1995. Net interest income after provision for
loan losses for the nine months ended September 30, 1996 increased $279,081 or
30.4% to $1,197,979 from a balance of $918,898 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 4.01% for the third quarter of 1996 compared to 3.99% for the
third quarter of 1995. The net interest margin for the nine months and three
months ended September 30, 1996 was 4.49% and 4.13% on average earning assets of
$36,822,861 and $40,579,068, respectively for the periods stated. For these same
periods in 1995, the net interest margin was 4.00% and 3.87% respectively on
average earning assets of $30,372,960 and $32,268,157. 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 third quarter of 1996 increased $25,972
or 8.6% as compared to the third quarter of 1995. This increase is primarily the
result of increased compensation expenses and increased advertising and
marketing expenses.
Non-interest income increased $29,879 or 413.8% during the third
quarter ended September 30, 1996 as compared to the same period in 1995.
Non-interest income decreased $15,263 or 11.8% for the nine month period ended
September 30, 1996 as compared to the same period in 1995. The decreases in
non-interest income during the nine months ended September 30, 1996 are
attributable to lower fees and other income which include decreases in small
business association fees as well as lower rental income earned on certain
office space located in the Bank's principal office facility that, until July
12, 1996, was subleased by the Company.
For the nine month period ended September 30, 1996, the Company
experienced continued asset, loan and deposit growth. Total assets have
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increased 22.17% to $44,429,763 at September 30, 1996 from $36,367,173 at
December 31, 1995. This increase is primarily attributable to an increase in
loans of approximately $6.8 million during this nine month period. Securities
available for sale decreased by $382,559 to $10,255,464 at September 30, 1996
from $10,638,023 at December 31, 1995 in order to accommodate the increased loan
demand experienced during the nine month period ended September 30, 1996.
The allowance for loan losses for the third quarter of 1996 was
$21,200 compared to $10,000 in the third quarter of 1995. The allowance for loan
losses as of September 30, 1996 was $294,640 as compared to $225,950 at December
31, 1995. At September 30, 1996, the allowance for loan losses represented 1.00%
of total loans outstanding. Management considers this allowance to be adequate
based upon evaluations of specific loans and the weighting of various loan
categories in accordance with 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 nine months of 1996, charged-off loans totaled
$22,263 with recoveries of $11,801, or .08% of total loans outstanding. The
ratio of non-performing loans (including loans 90 days or more past due) to
total outstanding loans was 2.28% as of September 30, 1996 compared to .38% as
of September 30, 1995. At year ended December 31, 1995, non-performing loans
were .20% of loans outstanding. The increase in non-performing loans is
primarily attributable to three commercial real estate loans which are 30 to 40
days past due.
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 4.0% for core capital
(tier 1 capital), 8.0% for total risk-based capital, and at least 3.0% 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 3.0% level. The Company's tier 1 risk-based capital
ratio at September 30, 1996 was 11.95%, its total risk-based capital ratio was
12.95%, and its leverage ratio was 7.95%, well above the required minimums.
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 75.41% as of September 30, 1996, cash and due from banks of
$1,740,967 and federal funds sold of $2,366,000, 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.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) The following exhibit is filed with this report:
Exhibit No. Description
----------- -----------
27 Financial Data Schedule
(b) Reports on Form 8-K. No reports on Form 8-K were filed during
the quarter ended September 30, 1996.
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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: November 5, 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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EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------- --------
27 Financial Data Schedule 12
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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 September 30, 1996 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 1,740,967
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 2,366,000
<TRADING-ASSETS> 991,588
<INVESTMENTS-HELD-FOR-SALE> 10,255,464
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 29,370,383
<ALLOWANCE> (294,639)
<TOTAL-ASSETS> 44,429,763
<DEPOSITS> 38,500,878
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,341,827
<LONG-TERM> 0
0
0
<COMMON> 4,715
<OTHER-SE> 3,582,343
<TOTAL-LIABILITIES-AND-EQUITY> 44,429,763
<INTEREST-LOAN> 1,822,482
<INTEREST-INVEST> 479,302
<INTEREST-OTHER> 46,917
<INTEREST-TOTAL> 2,348,701
<INTEREST-DEPOSIT> 1,007,848
<INTEREST-EXPENSE> 1,071,572
<INTEREST-INCOME-NET> 1,277,129
<LOAN-LOSSES> 79,150
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,037,849
<INCOME-PRETAX> 274,557
<INCOME-PRE-EXTRAORDINARY> 274,557
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 274,557
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 8.51
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 131,411
<ALLOWANCE-OPEN> 225,950
<CHARGE-OFFS> 22,263
<RECOVERIES> 11,801
<ALLOWANCE-CLOSE> 294,640
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
