<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:
March 31, 1997 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
(Address of principal executive offices)
(941) 955-2626
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(Issuer's telephone number)
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 May 9, 1997
Transitional Small Business Disclosure Format (Check One):
Yes No [X]
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
SARASOTA BANCORPORATION, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
March 31, 1997 and December 31, 1996
(UNAUDITED)
ASSETS March 31, 1997 December 31, 1996
- ------ -------------- -----------------
<S> <C> <C>
Cash and Due From Banks $ 2,309,009 2,467,658
Federal Funds Sold 3,640,000 3,718,000
Securities held to maturity -- --
Securities available for sale 12,504,010 11,212,512
Loans (Net) 32,284,829 30,994,843
Accrued interest receivable 282,307 313,185
Foreclosed real estate 71,673 71,673
Furniture and equipment,net 416,530 432,879
Deferred income taxes 236,200 220,288
Other assets 29,700 44,165
------------ ----------
TOTAL ASSETS: $ 51,774,258 49,475,203
============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Demand deposits $ 7,060,197 5,666,640
NOW and money market deposits 8,858,827 10,509,570
Savings deposits 781,925 952,080
Other time deposits 29,436,986 26,733,473
------------ ----------
Total deposits 46,137,935 43,861,763
------------ ----------
Repurchase agreements 1,424,782 1,487,823
Accrued interest payable 84,732 68,137
Other liabilities 101,101 130,802
------------ ----------
TOTAL LIABILITIES: 47,748,550 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 10,000,000 shares;
Outstanding 471,500 4,715 4,715
dditional Paid-In Capital 4,710,285 4,710,285
Accumulated Deficit (677,609) (815,415)
Net unrealized appreciation on available-for-sale securities (net) (11,683) 27,093
------------ ----------
TOTAL STOCKHOLDERS' EQUITY: 4,025,708 3,926,678
------------ ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY: $ 51,774,258 49,475,203
============ ==========
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SARASOTA BANCORPORATION, INC.
SARASOTA, FLORIDA
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
THREE MONTHS THREE MONTHS
ENDED ENDED
3/31/97 3/31/96
------------ ------------
<S> <C> <C>
INTEREST INCOME:
- ----------------
Interest and Fees on Loans $742,644 $542,341
Interest on Federal Funds Sold 35,390 3,011
Interest on Investment Securities 180,863 162,623
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TOTAL INTEREST INCOME: 958,897 707,975
INTEREST EXPENSE:
- -----------------
Interest on Deposits 443,525 296,506
Interest on Borrowings 139 14,137
Interest on Repurchase agreements 16,548 11,142
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TOTAL INTEREST EXPENSE: 460,212 321,785
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NET INTEREST INCOME: 498,685 386,190
Provision For Possible Loan Losses 48,500 7,250
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NET INTEREST INCOME (LOSS) AFTER
PROVISION FOR POSSIBLE LOAN LOSSES: 450,185 378,940
OTHER OPERATING INCOME:
- -----------------------
Service Charges on Deposit Accounts 32,550 24,951
Other Fees and Other Income 24,731 13,837
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NET OTHER OPERATING INCOME: 57,281 38,788
OPERATING EXPENSES:
- -------------------
Salaries and employee benefits 169,690 172,348
Occupancy 75,455 66,372
Data processing 12,880 23,789
Professional Fees 34,464 36,736
Other 74,171 77,943
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TOTAL OTHER OPERATING EXPENSES: 366,660 377,188
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INCOME BEFORE TAXES 140,806 40,540
PROVISION FOR TAXES 3,000 --
-------- -------
NET INCOME $137,806 40,540
======== ======
INCOME PER SHARE 0.29 0.09
======== ======
</TABLE>
REFER TO NOTES TO FINANCIAL STATEMENTS
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<PAGE>
<TABLE>
<CAPTION>
SARASOTA BANCORPORATION, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
THREE MONTHS THREE MONTHS
ENDED ENDED
3/31/97 3/31/96
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITY:
NET INCOME $ 137,806 40,540
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH FLOWS FROM OPERATIONS:
Depreciation 16,349 8,832
Amortization of Organizational Costs 9,707 9,707
Provision for Loan Losses 48,500 7,250
(Increase) Decrease in Accrued Interest Receivable 30,878 51,460
(Increase) Decrease in Foreclosed real estate -- (3,166)
(Increase) Decrease in Deferred income taxes (15,912) (37,961)
(Increase) Decrease in other assets 4,758 3,254
(Decrease) Increase in Repurchase agreements (63,041) --
(Decrease) Increase in Accrued Interest Payable 16,595 (5,232)
(Decrease) Increase in other liabilities (29,701) 20,854
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NET CASH USED IN OPERATING ACTIVITIES: 155,939 95,538
---------- ----------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of investment securities, Net (1,330,274) (501,218)
Purchase of furniture & equipment -- (4,014)
Increase in Loans, Net (1,338,486) (824,728)
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NET CASH USED IN INVESTING ACTIVITIES: (2,668,760) (1,329,960)
---------- ----------
CASH FLOW FROM FINANCING ACTIVITIES:
Net Increase in Deposits 2,276,172 685,741
---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES: 2,276,172 685,741
---------- ----------
NET INCREASE (DECREASE) IN CASH: (236,649) (548,681)
CASH AS BEGINNING OF PERIOD: 6,185,658 2,408,375
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CASH AT END OF PERIOD: 5,949,009 1,859,694
========= =========
Supplemental Disclosure of Cash Flow Information -
Cash Paid During The Period For Interest: $ 460,212 321,785
=========== =======
</TABLE>
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<PAGE>
SARASOTA BANCORPORATION, INC.
AND SUBSIDIARY
Notes to Financial Statements (Unaudited)
March 31, 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 three month
period ended March 31, 1997 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1997. 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, 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; 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, 1997 no Investment Securities
are carried as "Held to Maturity".
Available for Sale Securities. As of March 31, 1997 the market value of
"Available for sale Securities" is $12,504,010.
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<PAGE>
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 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, 1997, unamortized organizational cost amounted to
$16,734.
Profit Per Share. Profit per share .29 for the quarter ended March 31,
1997 may not be indicative of projected earnings for the year ending December
31, 1997.
Income Taxes. The Company will be subject to taxation whenever taxable
income is generated. As of March 31, 1997, no income taxes have been accrued
because of net operating loss carry-overs.
Statement of Cash Flows. The presentation of the statement of cash
flows is condensed as permitted by the Securities and Exchange Commission (the
"SEC"). 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 services provided by this director during the three months ended
March 31, 1997 was $1,235. This amount includes sums paid by the Bank to such
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 $9,050 for the three months
ended March 31, 1997.
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<PAGE>
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 first quarter ended March 31, 1997.
Results of Operations
The Company's net income for the first quarter of 1997 was $137,806, a
239.9% increase compared to $40,540 for the same period in 1996. Earnings per
share increased to $0.29 in the first quarter of 1997 compared to $0.09 per
share for the same period in 1996. The increases in net income are primarily
attributable to a 36.9% increase in interest and fees on loans and a 30.6%
increase in interest on investment securities and fed funds sold.
Net interest income after the provision for loan losses for the first
quarter of 1997 increased $71,245 or 18.8% to $450,185 from a balance of
$378,940 for the first quarter of 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 as well
as an increase in investment securities with a corresponding increase in
interest income on securities. The cost of deposits averaged 4.17% during the
first quarter of 1997 compared to 3.92% for the first quarter of 1996. The net
interest margin was 4.13% as of March 31, 1997 on average earning assets of
$46,273,993. For the same period in 1996, the net interest margin was 4.37% on
average earning assets of $34,238,278. The decrease in net interest margin is
reflective of growth in higher priced interest bearing liability accounts.
Non-interest expense for the first quarter of 1997 decreased $10,528 or
2.79% as compared to the first quarter of 1996. This decrease is primarily the
result of a refund of unused accrued funds to data processing fees. Data
processing fees were expended each month of 1996 in order for the Bank to
purchase a "Voice Response," or telephone banking system. The Bank elected not
to purchase the system during the first quarter of 1997 and reimbursed the
expense account in the amount of $10,600.
Non-interest income increased $18,493 or 47.68% during the first
quarter ended March 31, 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 earned on certain
office space located in the Bank's principal office facility that is subleased
by the Company.
Financial Condition
For the three month period ended March 31, 1997, the Company
experienced continued asset, loan and deposit growth. Total assets have
increased 4.65% to $51,774,258 for the three month period ended March 31, 1997
from $49,475,203 at December 31, 1996. This increase is primarily attributable
to an increase in loans of approximately $1.3 million and an increase in
securities available for sale of approximately $1.3 million during this period.
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<PAGE>
The allowance for loan loss provision for the first quarter of 1997 was
$48,500 compared to $7,250 in the first quarter of 1996. The reserve balance for
loan losses as of March 31, 1997 was $360,611 as compared to $313,939 at
December 31, 1996. At March 31, 1997, the allowance for loan losses represented
1.11% 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 first quarter of 1997, charged-off loans totaled $3,628
with recoveries of $3,100, or a net of less than .01% of total loans
outstanding. The ratio of non-performing loans (including loans 90 days or more
past due) to total outstanding loans was $11,000 or .03% of total outstanding
loans as of March 31, 1997 compared to $95,000 or .41% of total outstanding
loans as of the same period in 1996. At year ended December 31, 1996,
non-performing loans were $7,000 or .02% of total loans outstanding. The
increase in non-performing loans as compared to year ended December 31, 1996, is
primarily attributable to one consumer line of credit past due in excess of 90
days.
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 March 31, 1997 was 11.78%, its total risk-based capital ratio was
12.85%, and its leverage ratio was 7.66%, 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 69.97% at March 31, 1997, cash and due from banks of $2,309,009
and federal funds sold of $3,640,000, 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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<PAGE>
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
(for SEC use only)
(b) Reports on Form 8-K. No reports on Form 8-K were filed during
the quarter ended March 31, 1997.
-8-
<PAGE>
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 9, 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)
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<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------- --------
27 Financial Data Schedule
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the Sarasota
BanCorporation, Inc. unaudited consolidated financial statements for the period
ended March 31, 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 2,309,009
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 3,640,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 12,504,010
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 32,646,740
<ALLOWANCE> (361,911)
<TOTAL-ASSETS> 51,774,258
<DEPOSITS> 46,137,935
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,610,615
<LONG-TERM> 0
0
0
<COMMON> 4,715
<OTHER-SE> 4,020,933
<TOTAL-LIABILITIES-AND-EQUITY> 51,774,258
<INTEREST-LOAN> 742,644
<INTEREST-INVEST> 180,863
<INTEREST-OTHER> 35,390
<INTEREST-TOTAL> 958,897
<INTEREST-DEPOSIT> 443,525
<INTEREST-EXPENSE> 460,212
<INTEREST-INCOME-NET> 498,685
<LOAN-LOSSES> 48,500
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 366,660
<INCOME-PRETAX> 140,806
<INCOME-PRE-EXTRAORDINARY> 140,806
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 137,806
<EPS-PRIMARY> .29
<EPS-DILUTED> .29
<YIELD-ACTUAL> 8.31
<LOANS-NON> 8,262
<LOANS-PAST> 3,214
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 152,003
<ALLOWANCE-OPEN> 313,939
<CHARGE-OFFS> 3,628
<RECOVERIES> 3,100
<ALLOWANCE-CLOSE> 360,611
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
