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, 1998 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 536,861
- ------------------------------------ ------------------------------------
Class Outstanding at May 8, 1998
Transitional Small Business Disclosure Format (Check One):
Yes No X
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<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
SARASOTA BANCORPORATION, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 and December 31, 1997
(UNAUDITED)
ASSETS March 31, 1998 December 31,1997
- --------------------------------------- -------------- ----------------
Cash and Due From Banks $ 2,565,965 1,626,155
Federal Funds Sold 6,962,000 4,269,000
Securities held to maturity - -
Securities available for sale 11,723,863 13,181,407
Loans (net) 44,835,951 39,590,147
Accrued interest receivable 339,159 380,541
Foreclosed real estate 71,673 71,673
Furniture and equipment.net 415,888 428,133
Deferred income taxes 186,200 150,904
Other assets 29,720 222,570
----------- -----------
TOTAL ASSETS: $67,130,419 59,920,530
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Demand deposits $12,459,121 6,678,554
NOW and money market deposits 9,676,358 12,878,302
Savings deposits 860,432 798,833
Other time deposits 36,921,162 34,021,075
----------- -----------
Total deposits 59,917,073 54,376,764
Repurchase agreements 1,394,214 614,445
Accrued interest payable 116,069 110,288
Other liabilities 219,172 151,447
----------- -----------
TOTAL LIABILITIES: 61,646,528 55,252,944
----------- -----------
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 536,861 shares 5,369 4,715
Additional Paid-In Capital 5,363,241 4,710,285
Treasury stock, at cost (21,098) (21,098)
Accumulated Deficit 63,823 (86,415)
Net unrealized appreciation on
available-for-sale securities(net) 72,556 60,099
------------ ------------
TOTAL STOCKHOLDERS' EQUITY: 5,483,891 4,667,586
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY: $ 67,130,419 59,920,530
============ ==========
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, 1998 AND 1997
(UNAUDITED)
THREE MONTHS THREE MONTHS
ENDED ENDED
03/31/98 03/31/97
----------- -----------
INTEREST INCOME:
- ----------------
Interest and Fees on Loans 1,052,524 742,644
Interest on Federal Funds Sold 50,759 35,390
Interest on Investment Securities 190,930 180,863
--------- ---------
TOTAL INTEREST INCOME: 1,294,213 958,897
INTEREST EXPENSE:
Interest on Deposits 614,184 443,525
Interest on Borrowings - 139
Interest on Repurchase agreements 13,115 16,547
TOTAL INTEREST EXPENSE: 627,299 460,212
--------- ---------
NET INTEREST INCOME 666,914 498,685
Provision For Possible Loan Losses 13,700 48,500
NET INTEREST INCOME(LOSS) AFTER
PROVISION FOR POSSIBLE LOAN LOSSES: 653,214 450,185
OTHER OPERATING INCOME:
Service Charges on Deposit Accounts 25,936 32,550
Other Fees and Other Income 29,704 24,731
--------- ---------
NET OTHER OPERATING INCOME: 55,640 57,281
OPERATING EXPENSES:
Salaries and employee benefits 204,537 169,690
Occupancy 82,864 75,455
Data processing 36,981 12,880
Professional Fees 34,418 34,464
Other 108,316 74,171
--------- ---------
TOTAL OTHER OPERATING EXPENSES: 467,116 366,660
INCOME BEFORE TAXES 241,738 140,806
PROVISION FOR TAXES 91,500 3,000
--------- ---------
NET INCOME 150,238 137,806
INCOME PER SHARE 0.32 0.29
========= =========
REFER TO NOTES TO THE FINANCIAL STATEMENTS.
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<PAGE>
SARASOTA BANCORPORATION,INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
THREE MONTHS THREE MONTHS
ENDED ENDED
03/31/98 03/31/97
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITY:
NET INCOME $ 150,238 137,806
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH FLOWS FROM OPERATIONS:
Depreciation 12,245 16,349
Amortization of Organizational Costs - 9,707
Provision for Loan Losses 13,700 48,500
(Increase)Decrease in Accrued
Interest Receivable 41,382 30,878
(Increase)Decrease in Foreclosed real estate - -
(Increase)Decrease in Deferred income taxes (35,296) (15,912)
(Increase)Decrease in other assets 192,850 4,758
(Decrease)Increase in Repurchase agreements 779,769 (63,041)
(Decrease)Increase in Accrued Interest Payable 5,781 16,595
(Decrease)Increase in other liabilities 67,725 (29,701)
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES: 1,228,394 155,939
----------- -----------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of investment securities, Net 1,470,001 (1,330,274)
Purchase of furniture & equipment - -
Increase in Loans, Net (5,259,504) (1,338,486)
NET CASH USED IN INVESTING ACTIVITIES: (3,789,503) (2,668,760)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from directors stock warrants 653,610 -
Net Increase in Deposits 5,540,309 2,276,172
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES: 6,193,919 2,276,172
NET INCREASE (DECREASE) IN CASH: 3,632,810 (236,649)
CASH AS BEGINNING OF PERIOD: 5,895,155 6,185,658
----------- -----------
CASH AT END OF PERIOD: 9,527,965 5,949,009
----------- -----------
Supplemental Disclosure of Cash Flow
Information-
Cash Paid During The Period For Interest: $ 627,299 460,212
----------- -----------
REFER TO NOTES TO THE FINANCIAL STATEMENTS.
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<PAGE>
SARASOTA BANCORPORATION, INC.
AND SUBSIDIARY
Notes to Financial Statements (Unaudited)
March 31, 1998
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, 1998 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1998. 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, 1997.
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, 1998 no Investment Securities were carried as "Held to
Maturity".
Available for Sale Securities.
------------------------------
As of March 31, 1998 the market value of "Available for sale
Securities" was $11,723,863.
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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, 1998, there were no unamortized
organizational costs.
Profit (Loss) Per Share.
--------------------------
Profit per share was $.32 for the quarter ended March 31, 1998 and may
not be indicative of projected earnings (losses) for the year ending
December 31, 1998.
Income Taxes.
-------------
The Company will be subject to taxation whenever taxable income is
generated. As of March 31, 1998, the provision for income taxes was
$91,500.
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, 1998 were $6,368. 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 include costs passed through to other
companies providing services to the Company, was $23,782 for the three months
ended March 31, 1998. Another director provides accounting services for the
Company. For the three months ended March 31, 1998, fees for these services
amounted to $600.
-6-
<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, 1998.
Results of Operations
The Company's net income for the first quarter of 1998 was $150,238, a
9.0% increase compared to $137,806 for the same period in 1997. Earnings per
share increased to $0.32 in the first quarter of 1998 compared to $0.29 per
share for the same period in 1997. The increase in net income is primarily
attributable to a 41.7% increase in interest and fees on loans for the
three-month period ended March 31, 1998. Interest on investment securities and
on Federal Funds Sold also showed increases of 5.6% and 43.4%, respectively, for
the three-month period ended March 31, 1998.
Net interest income after the provision for loan losses for the first
quarter of 1998 increased $168,229 or 33.7% to $666,914 from a balance of
$498,685 for the first quarter of 1997. The increase 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 4.42% during the
first quarter of 1998 compared to 4.17% for the first quarter of 1997. The net
interest margin for the three months ended March 31, 1998 was 4.26% on average
earning assets of $60,873,900. For the same period in 1997, the net interest
margin was 4.13% on average earning assets of $46,984,000. The increase in net
interest margin is reflective of growth in higher priced consumer loan accounts.
Non-interest expense for the first quarter of 1998 increased $100,456
or 27.4% as compared to the first quarter of 1997. This increase is primarily
the result of increased employee salaries and benefits, data processing fees and
loan servicing fees.
Non-interest income decreased $1,641 or 2.9% during the first quarter
ended March 31, 1998 as compared to the same period in 1997. The decrease in
non-interest income is attributable to a decrease in Other Real Estate Owned
rental income.
Financial Condition
For the three month period ended March 31, 1998, the Company
experienced continued asset, loan and deposit growth. Total assets increased
12.0% to $67,130,419 for the three month period ended March 31, 1998 from
$59,920,530 at December 31, 1997. This increase is primarily attributable to an
increase in loans of approximately $5.0 million and an increase in Federal Funds
Sold of approximately $2.7 million during this period.
The allowance for loan loss provision for the first quarter of 1998 was
$13,700 compared to $48,500 in the first quarter of 1997. The reserve balance
for loan losses as of March 31, 1998 was $507,300 as compared to $482,400 at
December 31, 1997. At March 31, 1998, the allowance for loan losses represented
1.12% of total loans outstanding. Management considers
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<PAGE>
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 1998, there were no charged-off loans and
recoveries totaled $11,200, or a net of (.02)% of total loans outstanding. The
ratio of non-performing loans (including loans 90 days or more past due) to
total outstanding loans was $9,401 or .02% of total outstanding loans as of
March 31, 1998 compared to $11,000 or .03% of total outstanding loans as of the
same period in 1997. At year ended December 31, 1997, non-performing loans were
$11,800 or .02% of total loans outstanding. There were no other loans past due
in excess of 90 days as of March 31, 1998.
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, 1998 was 10.25%, its total risk-based capital ratio was
11.34%, and its leverage ratio was 7.63%, 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 72.32% at March 31, 1998, cash and due from banks of $2,565,965
and federal funds sold of $6,962,000, 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
----------- -----------
27.1 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, 1998.
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<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 12, 1998 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
- ----------- -----------
27.1 Financial Data Schedule
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<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, 1998 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-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 2,565,965
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 6,962,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 11,723,863
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 45,343,237
<ALLOWANCE> (507,286)
<TOTAL-ASSETS> 67,130,419
<DEPOSITS> 59,917,073
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,729,455
<LONG-TERM> 0
0
0
<COMMON> 5,369
<OTHER-SE> 5,478,522
<TOTAL-LIABILITIES-AND-EQUITY> 67,130,419
<INTEREST-LOAN> 1,052,524
<INTEREST-INVEST> 190,930
<INTEREST-OTHER> 50,759
<INTEREST-TOTAL> 1,294,213
<INTEREST-DEPOSIT> 614,184
<INTEREST-EXPENSE> 627,299
<INTEREST-INCOME-NET> 666,914
<LOAN-LOSSES> 13,700
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 467,116
<INCOME-PRETAX> 241,738
<INCOME-PRE-EXTRAORDINARY> 241,738
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 150,288
<EPS-PRIMARY> .32
<EPS-DILUTED> .32
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