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, 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
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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 August 9, 2000
Transitional Small Business Disclosure Format (Check One):
Yes No X
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-1-
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SARASOTA BANCORPORATION, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000 AND DECEMBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS June 30, 2000 December 31, 1999
--------------------------------------------------- --------------------- -----------------
<S> <C> <C>
Cash and Due From Banks $ 2,185,000 3,499,503
Federal Funds Sold 4,970,000 535,000
Securities held to maturity - -
Securities available for sale 18,392,961 17,659,424
Loans (Net) 80,846,396 71,234,573
Accrued interest receivable 635,358 560,533
Foreclosed real estate 246,697 57,273
Repossesed assets - 423,583
Furniture and equipment,net 332,453 355,233
Deferred income taxes 631,123 582,286
Other assets 38,389 282,440
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TOTAL ASSETS: $ 108,278,377 95,189,848
================== ====================
LIABILITIES AND STOCKHOLDERS' EQUITY
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LIABILITIES:
Demand deposits $ 9,872,997 9,702,466
NOW and money market deposits 31,885,138 28,613,750
Savings deposits 723,396 837,752
Other time deposits 54,799,203 46,616,740
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Total deposits 97,280,734 85,770,708
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Repurchase agreements 3,290,017 2,157,832
Income taxes payable - 59,300
Accrued interrest payable 231,647 200,372
Other liabilities 137,689 159,407
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TOTAL LIABILITIES: 100,940,087 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 (12,332) (18,839)
Retained earnings (deficit) 2,360,773 1,788,063
Net unrealized appreciation on (604,669) (521,513)
available-for-sale securities (net) ------------------- --------------------
TOTAL STOCKHOLDERS' EQUITY: 7,338,290 6,842,229
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY: $ 108,278,377 95,189,848
================== ====================
</TABLE>
REFER TO NOTES TO THE FINANCIAL STATEMENTS
2
<PAGE>
<TABLE>
SARASOTA BANCORPORATION, INC.
SARASOTA, FLORIDA
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND JUNE 30, 1999
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND JUNE 30, 1999
(UNAUDITED)
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
6/30/00 6/30/99 6/30/00 6/30/99
--------------------- ------------------- ---------------- --------------
INTEREST INCOME:
<S> <C> <C> <C> <C>
Interest and Fees on Loans ............. $ 1,908,290 1,571,621 3,729,507 2,967,651
Interest on Federal Funds Sold ......... 62,583 48,608 122,559 126,760
Interest on Investment Securities ...... 333,981 291,911 631,760 559,496
--------------------- ------------------- ---------------- -------------
TOTAL INTEREST INCOME: ............ 2,304,854 1,912,140 4,483,826 3,653,907
INTEREST EXPENSE:
Interest on Deposits ................... 1,150,278 797,438 2,189,035 1,562,860
Interest on Borrowings ................. -- 24,524 12,836 38,843
Interest on Repurchase agreements ...... 47,664 46,028 78,665 81,652
--------------------- ------------------- ---------------- -------------
TOTAL INTEREST EXPENSE: ........... 1,197,942 867,990 2,280,536 1,683,355
--------------------- ------------------- ---------------- -------------
NET INTEREST INCOME: .............. 1,106,912 1,044,150 2,203,290 1,970,552
Provision For Possible Loan Losses ..... 102,000 78,000 146,600 124,100
--------------------- ------------------- ---------------- -------------
NET INTEREST INCOME (LOSS) AFTER
PROVISION FOR POSSIBLE LOAN LOSSES: 1,004,912 966,150 2,056,690 1,846,452
OTHER OPERATING INCOME:
Service Charges on Deposit Accounts .... 62,872 55,643 114,024 96,960
Other Fees and Other Income ............ 74,912 48,184 178,566 81,498
--------------------- ------------------- ---------------- -------------
NET OTHER OPERATING INCOME: ....... 137,784 103,827 292,590 178,458
OPERATING EXPENSES:
Salaries and employee benefits ......... 242,251 234,590 495,683 476,480
Occupancy .............................. 92,334 89,639 172,570 192,232
Loan costs ............................. 155,993 129,172 317,281 239,556
Data processing ........................ 52,377 47,745 102,571 69,406
Professional Fees .......................... 56,416 45,144 105,065 90,787
Other ...................................... 123,248 95,067 226,125 181,898
--------------------- ------------------- ---------------- -------------
TOTAL OTHER OPERATING EXPENSES: ....... 722,619 641,357 1,419,295 1,250,359
--------------------- ------------------- ---------------- -------------
INCOME BEFORE TAXES ................... 420,077 428,620 929,985 774,551
PROVISION FOR TAXES ................... 159,175 160,500 357,275 285,500
--------------------- ------------------- ---------------- -------------
NET INCOME (LOSS) .....................$ 260,902 268,120 572,710 489,051
--------------------- ------------------- ---------------- -------------
INCOME (LOSS) PER SHARE .................... 0.47 0.48 1.02 0.87
--------------------- ------------------- ---------------- -------------
REFER TO NOTES TO THE FINANCIAL STATEMENTS
</TABLE>
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<PAGE>
SARASOTA BANCORPORATION, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
6/30/00 6/30/99
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CASH FLOWS FROM OPERATING ACTIVITY:
<S> <C> <C>
NET INCOME (LOSS) .......................................................... $ 572,710 489,051
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH FLOWS FROM OPERATIONS:
Depreciation ............................................................... 22,781 31,602
Provision for Loan Losses .................................................. 146,600 124,100
Net accretion/amortization on securities ................................... -- --
Deferred tax (benefit) expense ............................................. (48,837) --
(Increase) Decrease in Accrued Interest Receivable ......................... (74,825) (53,163)
(Increase) Decrease in A/R-employee stock purchase ......................... -- --
(Increase)Decreased in Foreclosed real estate .............................. (189,424) 7,200
(Increase)Decrease in repossesed assets .................................... 423,583 --
(Increase)Decrease in other assets ......................................... 244,050 1,446
(Decrease)Increase in repurchase agreements ................................ 1,132,185 1,547,050
(Decrease)Increase in income taxes payable ................................. (59,300) --
(Decrease)Increase in accrued interest payable and other liabilities ....... 9,557 (233,943)
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NET CASH USED IN OPERATING ACTIVITIES: ................................ 2,179,080 1,913,343
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CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of investment securities, Net ..................................... (816,693) (631,602)
Purchase of furniture & equipment .......................................... -- (14,625)
Increase in Loans, Net ..................................................... (9,758,423) (11,985,550)
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NET CASH USED IN INVESTING ACTIVITIES: ..................................... (10,575,116) (12,631,777)
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CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from sale of treasury stock ....................................... 6,507 --
Net Increase in Deposits ................................................... 11,510,026 11,124,731
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NET CASH PROVIDED BY FINANCING ACTIVITIES: ................................. 11,516,533 11,124,731
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NET INCREASE (DECREASE) IN CASH: ........................................... 3,120,497 406,297
CASH AS BEGINNING OF PERIOD: ............................................... 4,034,503 5,266,115
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CASH AT END OF PERIOD: ..................................................... 7,155,000 5,672,412
============ ============
Supplemental Disclosure of Cash Flow Information -
Cash Paid During The Period For Interest: .............................. $ 2,280,536 1,683,355
============ ============
REFER TO NOTES TO THE FINANCIAL STATEMENTS
</TABLE>
4
<PAGE>
SARASOTA BANCORPORATION, INC.
AND SUBSIDIARY
Notes to Financial Statements (Unaudited)
June 30, 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- 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, 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 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 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:
5
<PAGE>
Investment Securities. As of June 30, 2000, no Investment Securities were
carried as "Held to Maturity."
Available for Sale Securities. As of June 30, 2000, the market value of
"Available for Sale Securities" was $18,392,961.
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, 2000, there were no unamortized
organizational costs.
Earnings Per Share. Earnings per share was $ .47 for the quarter ended
June 30, 2000 and 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 June 30, 2000, the provision for taxes is $357,275.
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, 2000 was
$9,504. 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 $45,527 for the six months ended June 30,
2000. Another director provides accounting services for the Company. Fees for
these services for the six months ended June 30, 2000 were $923.
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, 2000.
Results of Operations
The Company's net income for the second quarter of 2000 was $260,900, a
2.69% decrease compared to $268,100 for the same period in 1999. Earnings per
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<PAGE>
share decreased to $0.47 in the second quarter of 2000 compared to $0.48 per
share for the same period in 1999. Net income for the six months ended June 30,
2000 was $572,700 compared to $489,100 for the same period in 1999, an increase
of $83,600 or 17.09%. The decrease in net income for the second quarter of 2000
is primarily attributable to a $24,000 or 30.77% increase in the provision for
loan losses. The increase in net income for the six months ended June 30, 2000
was primarily attributable to a $761,900 or a 25.67% increase in interest and
fees on loans.
Net interest income after provision for loan losses for the second
quarter of 2000 increased $38,800, or 4.02%, to $1,004,900 from a balance of
$966,100 for the second quarter of 1999. Net interest income after provision for
loan losses for the six months ended June 30, 2000 increased $210,200, or
11.38%, to $2,056,700 from a balance of $1,846,500 for the same period in 1999.
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 4.77% for the second quarter of 2000 compared to 4.18% for the
second quarter of 1999. The net interest margin for the six months and three
months ended June 30, 2000 was 4.30% and 4.16% on average earning assets of
$98,889,700 and $102,293,400, respectively, for the periods stated. For these
same periods in 1999, the net interest margin was 4.58% and 4.73%, respectively,
on average earning assets of $83,451,300 and $85,544,900, 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 2000 increased $81,300,
or 12.68%, as compared to the second quarter of 1999. Non-interest expense
increased $168,900, or 13.51%, for the six-month period ended June 30, 2000 as
compared to the same period of 1999. This increase is primarily the result of
increased loan costs, data processing fees and professional service fees.
Non-interest income increased $34,000, or 32.76 %, during the second
quarter ended June 30, 2000 as compared to the same period in 1999. Non-interest
income also increased $114,100, or 63.95%, for the six-month period ended June
30, 2000 as compared to the same period in 1999. The increase in non-interest
income is attributable to increased service fees on depository accounts as well
as increased income from "Business Manager", an accounts receivable program now
offered by the Bank.
Financial Condition
For the six month period ended June 30, 2000, the Company experienced
continued asset, loan and deposit growth. Total assets increased 13.75% to
$108,278,400 for the six month period ended June 30, 2000 from $95,189,800 at
December 31, 1999. This increase is primarily attributable to an increase in
loans of approximately $9.6 million and an increase in securities available for
sale of approximately $730,000 during this period. Federal Funds sold increased
during the six months ended June 30, 2000 by $4.4 million as a result of deposit
growth experienced during the period.
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The allowance for loan loss provision for the second quarter of 2000
was $102,000 compared to $78,000 in the second quarter of 1999. The reserve
balance for loan losses as of June 30, 2000 was $888,100 as compared to $773,500
at December 31, 1999. At June 30, 2000, the allowance for loan losses
represented 1.09% 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 2000, charged-off loans totaled $37,000
with recoveries of $5,000, or a net of 0.04% of total loans outstanding. The
ratio of non-performing loans (including loans 90 days or more past due) to
total outstanding loans was $555,900, or 0.68%, as of June 30, 2000 compared to
0.37% as of the same period in 1999. As of December 31, 1999, non-performing
loans were $291,500, or 0.44%, of loans outstanding. The increase in
non-performing loans as compared to December 31, 1999 is primarily attributable
to consumer loans past due from 30 to 90 days. There were no performing loans
past due in excess of 90 days as of June 30, 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), 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, 2000 was 9.41%, its total risk-based capital ratio was 10.46%, and
its leverage ratio was 7.98%.
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 83.08% at June 30, 2000, cash and due from banks of $2,185,000
and federal funds sold of $4,970,000, 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 4. Submission of Matters to a Vote of Security Holders.
The 2000 Annual Meeting of Shareholders of the Company was held on
April 18, 2000. At the meeting the following persons were elected as Class II
directors to serve for a term of three years and until their successors are
elected and qualified: Susan M. Baker, Kenneth H. Barr and Gilbert J. Wellman.
The results of voting with respect to the election of the Class II
directors were as follows:
Votes Votes
FOR WITHHELD
----- --------
Susan M. Baker 416,302 0
Kenneth H. Barr 416,302 0
Gilbert J. Wellman 416,302 0
The following persons did not stand for reelection to the Board at the
2000 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, Sam D. Norton, Michael R. Pender, Jr., and A. Dean Pratt.
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
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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, 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.
SARASOTA BANCORPORATION, INC
Dated: August 10, 2000 By: /s/ Christine L. Jennings
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Christine L. Jennings
President (Principal Executive Officer)
By: /s/ Susan K. Flynn
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Susan K. Flynn
Senior Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
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