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, 1997 33-41045
SARASOTA BANCORPORATION, INC.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Florida 65-0235255
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two North Tamiami Trail, Suite 100, Sarasota, Florida 34236
-----------------------------------------------------------
(Address of principal executive offices)
(941) 955-2626
(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 August 8, 1997
Transitional Small Business Disclosure Format (Check One):
Yes No X
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<CAPTION>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SARASOTA BANCORPORATION, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
June 30, 1997 and December 31, 1996
(UNAUDITED)
June 30, December 31,
ASSETS 1997 1996
- ------ ---- ----
<S> <C> <C>
Cash and Due From Banks $ 2,209,491 $ 2,467,658
Federal Funds Sold 2,034,000 3,718,000
Securities Held to Maturity -- --
Securities Available for Sale 12,835,704 11,212,512
Loans (Net) 36,421,385 30,994,843
Accrued Interest Receivable 348,844 313,185
Foreclosed Real Estate 71,673 71,673
Furniture and Equipment, Net 406,356 432,879
Deferred Income Taxes 236,200 220,288
Other Assets 23,672 44,165
------------ ------------
TOTAL ASSETS: $ 54,587,325 $ 49,475,203
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Demand Deposits $ 11,002,140 $ 5,666,640
NOW and Money Market Accounts 6,840,903 10,509,570
Savings Accounts 789,176 952,080
Other Time Deposits 30,326,641 26,733,473
------------ ------------
Total Deposits 48,958,860 43,861,763
------------ ------------
Repurchase Agreements 1,183,970 1,487,823
Accrued Interest Payable 85,691 68,137
Other Liabilities 143,922 130,802
------------ ------------
TOTAL LIABILITIES: $ 50,372,443 $ 45,548,525
STOCKHOLDERS' EQUITY:
Preferred stock, $.10 Par Value. Authorized
1,000,000 shares; None issued or Outstanding -- --
Common stock, $.01 Par Value. Authorized
Additional Paid-In Capital 4,710,285 4,710,285
Treasury Stock (15,730) --
Accumulated Deficit (509,986) (815,415)
Net unrealized appreciation on Available
For Sale Securitites (Net) 25,598 27,093
------------ ------------
TOTAL STOCKHOLDERS' EQUITY: 4,214,882 3,926,678
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY: $ 54,587,325 $ 49,475,203
============ ============
1
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<TABLE>
<CAPTION>
SARASOTA BANCORPORATION, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 1997 and 1996 and
For the Six Months Ended June 30, 1997 and 1996
(UNAUDITED)
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
06/30/97 06/30/96 06/30/97 06/30/96
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and Fees on Loans $ 818,849 $ 587,989 $ 1,561,493 $ 1,130,330
Interest on Federal Funds Sold 60,554 15,040 95,944 18,051
Interest on Investment Securities 211,486 157,755 392,349 320,378
--------- ------- --------- ---------
TOTAL INTEREST INCOME: 1,090,889 760,784 2,049,786 1,468,759
INTEREST EXPENSE:
- -----------------
Interest on Deposits 513,546 332,638 957,071 629,144
Interest on Borrowings - 2,049 139 16,186
Interest on Repurchase Agreements 16,919 12,553 33,467 23,695
--------- ------- --------- ---------
TOTAL INTEREST EXPENSE: 530,465 347,240 990,677 669,025
--------- ------- --------- ---------
NET INTEREST INCOME: 560,424 413,544 1,059,109 799,734
Provision For Possible Loan Losses 72,300 50,700 120,800 57,950
--------- ------- --------- ---------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 488,124 362,844 938,309 741,784
OTHER OPERATING INCOME:
- -----------------------
Service Charges on Deposit Accounts 27,951 22,727 60,501 47,678
Other Fees and Other Income 21,506 15,813 46,237 29,650
--------- ------- --------- ---------
NET OTHER OPERATING INCOME: 49,457 38,540 106,738 77,328
OPERATING EXPENSES:
- -------------------
Salaries and Employee Benefits 162,995 149,444 332,685 321,792
Occupancy 74,376 76,967 149,831 143,339
Data Processing 27,354 25,550 40,234 49,339
Professional Fees 26,238 16,825 60,702 55,324
Other 75,995 63,174 150,166 139,354
--------- ------- --------- ---------
TOTAL OPERATING EXPENSES: 366,958 331,960 733,618 709,148
--------- ------- --------- ---------
INCOME BEFORE TAXES: 170,623 69,424 311,429 109,964
PROVISION FOR TAXES: 3,000 -- 6,000 --
--------- ------- --------- ---------
NET INCOME: $ 167,623 $ 69,424 $ 305,429 $ 109,964
========== ====== ======= =======
INCOME PER SHARE: $ 0.36 $ 0.15 $ 0.65 $ 0.23
========== ====== ======= =======
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2
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<TABLE>
<CAPTION>
SARASOTA BANCORPORATION, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1997 and 1996
(UNAUDITED)
SIX MONTHS SIX MONTHS
ENDED ENDED
06/30/97 06/30/96
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITY:
NET INCOME $ 305,429 $ 109,964
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH FLOWS FROM OPERATIONS:
Depreciation 28,399 22,874
Amortization of Organizational Costs 19,413 19,414
Provision for Loan Losses 120,800 57,950
(Increase) Decrease in Accrued Interest Receivable (35,659) 1,389
(Increase) Decrease in Foreclosed Real Estate -- (3,166)
(Increase) Decrease in Deferred Income Taxes (15,912) (37,961)
(Increase) Decrease in Other Assets 1,080 23,903
(Decrease) Increase in Repurchase Agreements (303,853) --
(Decrease) Increase in Accrued Interest Payable 17,554 (1,541)
(Decrease) Increase in Other Liabilities 13,120 20,679
---------- ----------
NET CASH USED IN OPERATING ACTIVITY: 150,371 213,505
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITY:
Purchase of Investment Securities, Net (1,624,687) 662,404
Purchase of Furniture & Equipment (1,876) (4,014)
Purchase of Other Real Estate -- (3,166)
Increase in Loans, Net (5,547,342) (4,961,792)
---------- ----------
NET CASH USED IN INVESTING ACTIVITY: (7,173,905) (4,306,568)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITY:
Net Increase in Deposits 5,097,097 2,804,082
Purchase of Treasury Stock (15,730) --
Net Increase in Repurchase Agreements -- 1,109,943
---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITY: 5,081,367 3,914,025
---------- ----------
NET INCREASE (DECREASE) IN CASH: (1,942,167) (179,038)
CASH AT BEGINNING OF PERIOD: 6,185,658 2,408,375
---------- ----------
CASH AT END OF PERIOD: $ 4,243,491 $2,229,337
========= =========
Supplemental Disclosure of Cash Flow Information
Cash Paid During The Period For Interest: $ 990,677 $ 669,025
=========== =======
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3
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SARASOTA BANCORPORATION, INC.
AND SUBSIDIARY
Notes to Financial Statements (Unaudited)
June 30, 1997
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, 1997 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1997. For further information, refer
to the financial statements and footnotes thereto included in Form 10- KSB for
the year ended December 31, 1996.
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 and 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 June 30, 1997 no Investment Securities are
carried as "Held to Maturity."
4
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Available for Sale Securities. As of June 30, 1997 the market value of
"Available for Sale Securities" is $12,835,704.
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, 1997, unamortized organizational cost
amounted to $7,027.
Profit Per Share. Profit per share was $.36 for the quarter ended June
30, 1997 and may not be indicative of projected earnings (losses) for the year
ending December 31, 1997.
Income Taxes. The Company will be subject to taxation whenever taxable
income is generated. As of June 30, 1997 the provision for taxes is $6,000.
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, 1997 was
$4,001. 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 billing, which includes costs passed through to other companies
providing services to the Company, was $22,019 for the six months ended June 30,
1997.
5
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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 as reflected in the Company's unaudited financial statements for
the second quarter ended June 30, 1997.
Results of Operations
The Company's net income for the second quarter of 1997 was $167,623, a
141.4% increase compared to $69,424 for the same period in 1996. Earnings per
share increased to $.36 in the second quarter of 1997 compared to $.15 per share
for the same period in 1996. Net income for the six months ended June 30, 1997
was $305,429 compared to $109,964 for the same period in 1996, an increase of
$195,465 or 177.8%. The increases in net income are primarily attributable to a
39.3% and a 38.1% increase in interest and fees on loans for the three and six
month periods ended June 30, 1997, respectively.
Net interest income after provision for loan losses for the second
quarter of 1997 increased $125,280 or 34.5% to $488,124 from a balance of
$362,844 for the second quarter of 1996. Net interest income after provision for
loan losses for the six months ended June 30, 1997 increased $196,525 or 26.5%
to $938,309 from a balance of $741,784 for the same period in 1996. 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 4.24% for the second quarter of 1997 compared to 3.95% for the
second quarter of 1996. The net interest margin for the six months and three
months ended June 30, 1997 was 4.16% and 4.18% on average earning assets of
$48,811,990 and $51,414,072, respectively for the periods stated. For these same
periods in 1996, the net interest margin was 4.38% and 4.38%, respectively, on
average earning assets of $36,313,125 and $37,349,328, respectively. The
decrease in net interest margin is reflective of growth in higher priced
interest bearing liability accounts.
Non-interest expense for the second quarter of 1997 increased $34,998
or 10.5% as compared to the second quarter of 1996. Non-interest expense
increased $24,470 or 3.5% for the six month period ended June 30, 1997 as
compared to the same period of 1996. This increase is primarily the result of
increased employee salaries and benefits, professional service fees and director
fees.
Non-interest income increased $10,917 or 28.3% during the second
quarter ended June 30, 1997 as compared to the same period in 1996. Non-interest
income also increased $29,410 or 38.0% for the six month period ended June 30,
1997 as compared to the same period in 1996. The increase in non-interest income
is attributable to increased overdraft service fees on depository accounts as
well as increased rental income from the Bank's tenant.
Financial Condition
For the six month period ended June 30, 1997, the Company experienced
continued asset, loan and deposit growth. Total assets increased 10.33% to
$54,587,325 for the six month period ended June 30, 1997 from $49,475,203 at
December 31, 1996. This increase is primarily attributable to an increase in
loans of approximately $5.4 million and an increase in securities available for
sale of approximately $1.6 million during this period. Federal Funds sold
decreased during the six months ended June 30, 1997 by $1.7 million in order to
accommodate the increase in securities and the loan demand experienced during
the period.
6
<PAGE>
The allowance for loan loss provision for the second quarter of 1997
was $72,300 compared to $50,700 in the second quarter of 1996. The reserve
balance for loan losses as of June 30, 1997 was $412,977 as compared to $313,939
at December 31, 1996. At June 30, 1997, the allowance for loan losses
represented 1.12% 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 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 second quarter of 1997, charged-off loans totalled $26,412
with recoveries of $4,650, or a net of .05% of total loans outstanding. The
ratio of non-performing loans (including loans 90 days or more past due) to
total outstanding loans was $59,000 or .16% as of June 30, 1997 compared to .81%
as of the same period in 1996. As of the year ended December 31, 1996,
non-performing loans were $7,000 or .02% of loans outstanding. The increase in
non-performing loans as compared to year ended December 31, 1996 is primarily
attributable to several consumer loans past due from 30 to 90 days. There were
no loans past due in excess of 90 days as of June 30, 1997.
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 June 30, 1997 was 11.30%, its total risk-based capital ratio was 12.43%, and
its leverage ratio was 7.77%.
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 74.29% at June 30, 1997, cash and due from banks of $2,209,491
and federal funds sold of $2,034,000, 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.
7
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The 1997 Annual Meeting of Shareholders of the Company was held on
April 5, 1997. 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: Susan M. Baker, Kenneth H. Barr, Stanford H. Ross, and Gilbert J.
Wellman.
The results of voting with respect to the election of directors were as
follows:
Votes Votes
FOR WITHHELD
--- --------
Susan M. Baker 293,145 27,800
Kenneth H. Barr 320,145 800
Stanford H. Ross 320,145 800
Gilbert J. Wellman 320,145 800
The following persons did not stand for reelection to the Board at the
1997 Annual Meeting of Shareholders as their term of office continued after the
Annual Meeting: Timothy J. Clarke, James W. Demler, M.D., Christine L. Jennings,
Edward S. Levi, A. Dean Pratt, Sam D. Norton and Michael R. Prender, Jr.
Also at the 1997 Annual Meeting of Shareholders, the shareholders voted
to extend the expiration date of certain outstanding warrants previously issued
to twelve (12) organizers of the Company from September 15, 1997 to September
15, 2002. The results of the voting were 311,369 votes for, 7,076 votes against,
2,500 votes abstaining, and 150,555 broker non-votes.
No other matters were presented or voted for at the Annual Meeting.
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 (for SEC use only)
(b) Reports on Form 8-K. No reports on Form 8-K were filed during
the quarter ended June 30, 1997.
8
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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: August 8, 1997 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 and
Accounting Officer)
9
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<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contians summary financial information extracted from the Sarasota
BanCorporation, Inc. unaudited consolidated financial statements for the period
ended June 30, 1997 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000875707
<NAME> SARASOTA BANCORPORATION,INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 2,209,491
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 2,034,000
<TRADING-ASSETS> 1,086,745
<INVESTMENTS-HELD-FOR-SALE> 12,835,704
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 36,834,362
<ALLOWANCE> (412,977)
<TOTAL-ASSETS> 54,587,325
<DEPOSITS> 48,958,860
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,413,583
<LONG-TERM> 0
0
0
<COMMON> 4,715
<OTHER-SE> 4,210,167
<TOTAL-LIABILITIES-AND-EQUITY> 54,587,325
<INTEREST-LOAN> 1,561,493
<INTEREST-INVEST> 392,349
<INTEREST-OTHER> 95,944
<INTEREST-TOTAL> 2,049,786
<INTEREST-DEPOSIT> 957,071
<INTEREST-EXPENSE> 990,677
<INTEREST-INCOME-NET> 1,059,109
<LOAN-LOSSES> 120,800
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 733,618
<INCOME-PRETAX> 311,429
<INCOME-PRE-EXTRAORDINARY> 311,429
<EXTRAORDINARY> (6,000)
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<NET-INCOME> 305,429
<EPS-PRIMARY> .65
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</TABLE>
