<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:
March 31, 2000 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)
(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 559,140
------------------------------------ --------------------------------
Class Outstanding at May 9, 2000
Transitional Small Business Disclosure Format (Check One):
Yes [ ] No [X]
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SARASOTA BANCORPORATION, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000 AND DECEMBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS MARCH 31, 2000 DECEMBER 31, 1999
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<S> <C> <C>
Cash and Due From Banks $ 2,191,025 3,499,503
Federal Funds Sold 4,935,000 535,000
Securities held to maturity -- --
Securities available for sale 20,524,782 17,659,424
Loans (Net) 73,606,926 71,234,573
Accrued interest receivable 610,999 560,533
Foreclosed real estate 53,673 57,273
Repossesed assets -- 423,583
Furniture and equipment,net 345,689 355,233
Deferred income taxes 636,843 582,286
Other assets 42,721 282,440
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TOTAL ASSETS: $102,947,658 95,189,848
============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Demand deposits $ 10,294,369 9,702,466
NOW an d money market deposits 28,891,950 28,613,750
Savings deposits 701,539 837,752
Other time deposits 52,709,090 46,616,740
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Total deposits 92,596,948 85,770,708
------------ ----------
Repurchase agreements 2,650,462 2,157,832
Income taxes payable -- 59,300
Accrued interrest payable 246,872 200,372
Other liabilities 335,206 159,407
------------ ----------
TOTAL LIABILITIES: 95,829,488 88,347,619
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 559,140 shares 5,591 5,591
Additional Paid-In Capital 5,588,927 5,588,927
Treasury stock, at cost (15,590) (18,839)
Retained earnings (deficit) 2,099,870 1,788,063
Net unrealized appreciation on available-for-sale securities (net) (560,628) (521,513)
------------ ----------
TOTAL STOCKHOLDERS' EQUITY: 7,118,170 6,842,229
------------ ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY: $102,947,658 95,189,848
============ ==========
</TABLE>
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SARASOTA BANCORPORATION, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
3/31/00 3/31/99
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<S> <C> <C>
INTEREST INCOME:
Interest and Fees on Loans $1,821,217 1,396,030
Interest on Federal Funds Sold 59,976 78,152
Interest on Investment Securities 297,779 267,585
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TOTAL INTEREST INCOME: 2,178,972 1,741,767
INTEREST EXPENSE:
Interest on Deposits 1,038,757 765,422
Interest on Borrowings 12,836 14,319
Interest on Repurchase agreements 31,001 35,624
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TOTAL INTEREST EXPENSE: 1,082,594 815,365
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NET INTEREST INCOME: 1,096,378 926,402
Provision For Possible Loan Losses 44,600 46,100
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NET INTEREST INCOME (LOSS) AFTER
PROVISION FOR POSSIBLE LOAN LOSSES: 1,051,778 880,302
OTHER OPERATING INCOME:
Service Charges on Deposit Accounts 51,152 41,317
Other Fees and Other Income 103,654 33,314
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NET OTHER OPERATING INCOME: 154,806 74,631
OPERATING EXPENSES:
Salaries and employee benefits 253,432 241,890
Occupancy 80,236 102,593
Loan costs 161,288 --
Data processing 50,194 21,661
Professional Fees 48,649 45,643
Other 102,877 197,215
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TOTAL OTHER OPERATING EXPENSES: 696,676 609,002
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INCOME BEFORE TAXES 509,908 345,931
PROVISION FOR TAXES 198,100 125,000
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NET INCOME (LOSS) $ 311,808 220,931
========== =========
INCOME (LOSS) PER SHARE $ 0.56 $ 0.40
========== =========
</TABLE>
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SARASOTA BANCORPORATION, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
3/31/00 3/31/99
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITY:
NET INCOME (LOSS) $ 311,808 220,931
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH FLOWS FROM OPERATIONS:
Depreciation 9,544 20,250
Provision for Loan Losses 44,600 46,100
Deferred tax (benefit) expense -- --
(Increase) Decrease in Accrued Interest Receivable (50,466) (30,838)
(Increase)Decreased in Foreclosed real estate 3,600 3,600
(Increase)Decrease in repossesed assets 423,583 --
(Increase)Decrease in deferred income taxes (54,557) --
(Increase)Decrease in other assets 239,719 1,536
(Decrease)Increase in income taxes payable (59,300) --
(Decrease)Increase in repurchase agreements 492,630 1,144,275
(Decrease)Increase in accrued interest payable and other liabilibities 222,299 (314,889)
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NET CASH USED IN OPERATING ACTIVITIES: 1,583,460 1,090,965
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CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of investment securities, Net (2,904,473) (346,187)
Purchase of furniture & equipment -- (5,102)
Purchase of Treasury Stock -- --
Increase in Loans, Net (2,416,954) (3,806,695)
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NET CASH USED IN INVESTING ACTIVITIES: (5,321,427) (4,157,984)
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CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock -- --
Proceeds from sale of treasury stock 3,249 --
Net Increase in Deposits 6,826,240 9,901,553
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NET CASH PROVIDED BY FINANCING ACTIVITIES: 6,829,489 9,901,553
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NET INCREASE (DECREASE) IN CASH: 3,091,522 6,834,534
CASH AS BEGINNING OF PERIOD: 4,034,503 5,266,115
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CASH AT END OF PERIOD: $ 7,126,025 12,100,649
=========== ===========
Supplemental Disclosure of Cash Flow Information -
Cash Paid During The Period For Interest: $ 1,082,594 815,365
=========== ===========
CASH PAID DURING THE PERIOD FOR INCOME TAXES: $ 257,400 125,000
=========== ===========
</TABLE>
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SARASOTA BANCORPORATION, INC
AND SUBSIDIARY
Notes to Financial Statements (Unaudited)
March 31, 2000
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-Q- SB. 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, 2000 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2000. 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, 1999.
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 organizer's 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, 2000, no Investment Securities
were carried as "Held to Maturity."
Available for Sale Securities. As of March 31, 2000, the market value
of "Available for Sale Securities" was $20,524,782.
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Earnings (Loss) Per Share. Earnings per share were $.56 for the quarter
ended March 31, 2000. The earnings per share for this quarter may not be
indicative of projected earnings (losses) for the year ending December 31, 2000.
Income Taxes. The Company will be subject to taxation whenever taxable
income is generated. As of March 31, 2000, the provision for income taxes was
$198,100.
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 three months ended March 31, 2000 were
$2,440. 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, were $31,285 for the three
months ended March 31, 2000. Another director provides accounting services for
the Company. Fees for these services for the quarter ended March 31, 2000 were
$923.
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<PAGE> 7
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
first quarter ended March 31, 2000.
RESULTS OF OPERATIONS
The Company's net income for the first quarter of 2000 was $311,808, a
41.1% increase compared to $220,931 for the same period in 1999. Earnings per
share increased to $0.56 in the first quarter of 2000 compared to $0.40 per
share for the same period in 1999. The increase in net income is primarily
attributable to a 30.5% increase in interest and fees on loans for the
three-month period ended March 31, 2000. Interest on investment securities
increased 11.3%, while interest on Federal Funds sold decreased 23.3% for the
three-month period ended March 31, 2000.
Net interest income after the provision for loan losses for the first
quarter of 2000 increased $171,476, or 19.5%, to $1,051,778 from a balance of
$880,302 for the first quarter of 1999. 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 4.68% for the first
quarter of 2000 compared to 4.15% for the first quarter of 1999. The net
interest margin for the three months ended March 31, 2000 was 4.53% on average
earning assets of $94,700,200. For the same period in 1999, the net interest
margin was 4.42% on average earning assets of $84,997,900. The increase in net
interest margin is reflective of growth in higher priced consumer loan accounts
and lower priced deposits.
Non-interest expense for the first quarter of 2000 increased $87,674,
or 14.4%, as compared to the first quarter of 1999. This increase is primarily
the result of increased data processing fees and loan servicing fees.
Non-interest income increased $80,175, or 107.4%, during the first
quarter ended March 31, 2000 as compared to the same period in 1999. The
increase in non-interest income is attributable in part to fees received from a
developer in connection with the Bank's agreement to temporarily close its drive
thru facility while a three story garage was built directly over the top of the
facility. Another attribution of the increase was associated with a new accounts
receivable loan service initiated by the Bank during the fourth quarter of 1999.
FINANCIAL CONDITION
For the three month period ended March 31, 2000, the Company
experienced continued asset, loan and deposit growth. Total assets increased
8.2% to $102,947,658 for the three month period ended March 31, 2000 from
$95,189,848 at December 31, 1999. This increase is primarily attributable to an
increase in loans of approximately $2.4 million, an increase in Federal Funds
Sold of approximately $4.4 million and an increase in Securities Available for
Sale of approximately 2.9 million during this period.
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<PAGE> 8
The allowance for loan loss provision for the first quarter of 2000 was
$44,600 compared to $46,100 in the first quarter of 1999. The reserve balance
for loan losses as of March 31, 2000 was $820,100 as compared to $773,500 at
December 31, 1999. At March 31, 2000, the allowance for loan losses represented
1.10% 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 2000, there was one charged-off loan in
the amount of $1,000 and recoveries totaled $3,000, or a net of 0.003% of total
loans outstanding. The ratio of non-performing loans (including loans 90 days or
more past due) to total outstanding loans was .69% of total loans outstanding as
of March 31 2000 compared to 0.44% of total loans outstanding as of the same
period in 1999. At December 31, 1999, non-performing loans were $361,000, or
.50%, of loans outstanding. The non-performing loans are primarily consumer
loans and all of the non-performing loans are fully secured. There were no other
loans past due in excess of 90 days as of March 31, 2000.
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 capital), 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 March 31, 2000 was 10.02%, its total risk-based capital ratio was
11.09%, and its leverage ratio was 7.72%.
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 79.43% at March 31, 2000, cash and due from banks of $2,191,025
and federal funds sold of $4,935,000, 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.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The Company may, from time to time, make written or oral
forward-looking statements, including statements contained in the Company's
filings with the Securities and Exchange Commission (the "Commission") and its
reports to stockholders. Such forward-looking statements are made based on
management's belief as well as assumptions made by, and information currently
available to, management pursuant to "safe harbor" provisions of the Private
Securities Litigation Reform Act of
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<PAGE> 9
1995. The Company's actual results may differ materially from the results
anticipated in these forward- looking statements due to a variety of factors,
including governmental monetary and fiscal policies, deposit levels, loan
demand, loan collateral values, securities portfolio values and interest rate
risk management; the effects of competition in the banking business from other
commercial banks, savings and loan associations, mortgage banking firms,
consumer finance companies, credit unions, securities brokerage firms, insurance
companies, money market mutual funds and other financial institutions operating
in the Company's market area and elsewhere, including institutions operating
through the Internet; changes in acquisitions; failure of assumptions underlying
the establishment of reserves for loan losses, including the value of collateral
underlying delinquent loans and other factors. The Company cautions that such
factors are not exclusive. The Company does not undertake to update any
forward-looking statements that may be made form time to time by, or on behalf
of, the Company.
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<PAGE> 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibit is filed with this report:
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
27.1 Financial Data Schedule (for SEC use only)
</TABLE>
(b) Reports on Form 8-K. No reports on Form 8-K were filed during
the quarter ended March 31, 2000.
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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.
<TABLE>
<S> <C>
SARASOTA BANCORPORATION, INC
Dated: May 9, 2000 By: /s/ Christine L. Jennings
---------------------------------------------------------
Christine L. Jennings
President and Chief Executive Officer (Principal
Executive Officer)
Dated: May 9, 2000 By: /s/ Susan K. Flynn
---------------------------------------------------------
Susan K. Flynn
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
</TABLE>
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
27.1 Financial Data Schedule
</TABLE>
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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, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 2,191,025
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 4,935,000
<TRADING-ASSETS> 1,689,925
<INVESTMENTS-HELD-FOR-SALE> 20,524,782
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 74,426,980
<ALLOWANCE> (820,054)
<TOTAL-ASSETS> 102,947,658
<DEPOSITS> 92,596,948
<SHORT-TERM> 0
<LIABILITIES-OTHER> 3,232,540
<LONG-TERM> 0
0
0
<COMMON> 5,591
<OTHER-SE> 7,112,579
<TOTAL-LIABILITIES-AND-EQUITY> 102,947,658
<INTEREST-LOAN> 1,821,217
<INTEREST-INVEST> 297,779
<INTEREST-OTHER> 59,976
<INTEREST-TOTAL> 2,178,972
<INTEREST-DEPOSIT> 1,038,757
<INTEREST-EXPENSE> 1,082,594
<INTEREST-INCOME-NET> 1,096,378
<LOAN-LOSSES> 44,600
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 696,676
<INCOME-PRETAX> 509,908
<INCOME-PRE-EXTRAORDINARY> 509,908
<EXTRAORDINARY> 198,100
<CHANGES> 0
<NET-INCOME> 311,808
<EPS-BASIC> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 0.20
<LOANS-NON> 506,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 393,930
<ALLOWANCE-OPEN> 773,525
<CHARGE-OFFS> (1,031)
<RECOVERIES> 2,960
<ALLOWANCE-CLOSE> 820,054
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
