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:
September 30, 2000 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
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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
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Class Outstanding at November 6, 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
SEPTEMBER 30, 2000 AND DECEMBER 31, 1999
(UNAUDITED)
ASSETS September 30, 2000 December 31, 1999
-------------------------------------------------- --------------------- -----------------
<S> <C> <C>
Cash and Due From Banks $ 3,123,984 3,499,503
Federal Funds Sold 910,000 535,000
Securities held to maturity - -
Securities available for sale 18,159,275 17,659,424
Loans (Net) 85,479,680 71,234,573
Accrued interest receivable 718,411 560,533
Foreclosed real estate 243,627 57,273
Repossesed assets 154,707 423,583
Furniture and equipment,net 319,216 355,233
Deferred income taxes 511,809 582,286
Other assets 60,476 282,440
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TOTAL ASSETS: $ 109,681,185 95,189,848
============= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------------------
LIABILITIES:
Demand deposits $ 9,114,396 9,702,466
NOW and money market deposits 26,294,576 28,613,750
Savings deposits 688,503 837,752
Other time deposits 57,082,051 46,616,740
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Total deposits 93,179,526 85,770,708
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Repurchase agreements 5,156,419 2,157,832
Borrowed funds-FHLB 3,000,000
Income taxes payable 24,000 59,300
Accrued interrest payable 246,853 200,372
Other liabilities 261,203 159,407
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TOTAL LIABILITIES: 101,868,001 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 2,632,510 1,788,063
Net unrealized appreciation on available-for-sale securities (net) (401,512) (521,513)
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TOTAL STOCKHOLDERS' EQUITY: 7,813,184 6,842,229
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY: $ 109,681,185 95,189,848
============= ==========
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SARASOTA BANCORPORATION, INC.
SARASOTA, FLORIDA
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
9/30/00 9/30/99 9/30/00 9/30/99
---------------------- --------------------- -------------------- -----------------
INTEREST INCOME:
<S> <C> <C> <C> <C>
Interest and Fees on Loans $ 2,071,563 1,718,951 5,801,070 4,686,602
Interest on Federal Funds Sold 11,858 50,489 134,417 177,249
Interest on Investment Securities 313,816 272,722 945,576 832,218
---------- --------- --------- ---------
TOTAL INTEREST INCOME: 2,397,237 2,042,162 6,881,063 5,696,069
INTEREST EXPENSE:
Interest on Deposits 1,174,018 878,974 3,363,053 2,441,834
Interest on Borrowings 11,934 16,809 24,770 55,652
Interest on Repurchase agreements 58,817 39,078 137,482 120,730
---------- --------- --------- ---------
TOTAL INTEREST EXPENSE: 1,244,769 934,861 3,525,305 2,618,216
---------- --------- --------- ---------
NET INTEREST INCOME: 1,152,468 1,107,301 3,355,758 3,077,853
Provision For Possible Loan Losses 147,000 100,000 293,600 224,100
---------- --------- --------- ---------
NET INTEREST INCOME (LOSS) AFTER
PROVISION FOR POSSIBLE LOAN LOSSES: 1,005,468 1,007,301 3,062,158 2,853,753
OTHER OPERATING INCOME:
Service Charges on Deposit Accounts 70,982 67,235 185,006 164,195
Other Fees and Other Income 58,674 47,710 237,240 129,208
---------- --------- --------- ---------
NET OTHER OPERATING INCOME: 129,656 114,945 422,246 293,403
OPERATING EXPENSES:
Salaries and employee benefits 239,127 239,956 734,810 716,436
Occupancy 98,031 98,792 270,601 291,024
Loan costs 184,120 162,703 501,401 402,259
Data processing 39,081 43,955 141,652 113,361
Professional Fees 58,484 41,438 163,549 132,225
Other 100,543 98,385 326,668 280,283
---------- --------- --------- ---------
TOTAL OTHER OPERATING EXPENSES: 719,386 685,229 2,138,681 1,935,588
---------- --------- --------- ---------
INCOME BEFORE TAXES 415,738 437,017 1,345,723 1,211,568
PROVISION FOR TAXES 144,000 162,617 501,275 448,117
---------- --------- --------- ---------
NET INCOME (LOSS) $ 271,738 274,400 844,448 763,451
========== ========= ========= =========
INCOME (LOSS) PER SHARE $ 0.49 0.49 1.51 1.37
========== ========= ========= =========
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3
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<TABLE>
SARASOTA BANCORPORATION, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
NINE MONTHS NINE MONTHS
ENDED ENDED
9/30/00 9/30/99
--------------------- ----------------------
CASH FLOWS FROM OPERATING ACTIVITY:
<S> <C> <C>
NET INCOME (LOSS) $ 844,448 763,451
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH FLOWS FROM OPERATIONS:
Depreciation and amortization 41,777 40,807
Provision for Loan Losses 293,600 224,100
Net accretion/amortization on securities - -
(Increase) Decrease in Accrued Interest Receivable (157,878) (74,881)
(Increase) Decrease in A/R-employee stock purchase - (24,077)
(Increase)Decreased in Foreclosed real estate (186,354) 10,800
(Increase)Decrease in repossesed assets 268,876 -
(Increase)Decrease in other assets 216,203 (11,437)
(Decrease)Increase in income taxes payable (35,300) -
(Decrease)Increase in accrued interest payable and other liabilities 148,277 (295,311)
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NET CASH USED IN OPERATING ACTIVITIES: 1,433,649 633,452
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CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of investment securities, Net (309,373) 371,826
Purchase of furniture & equipment - (32,079)
Increase in Loans, Net (14,538,707) (15,615,067)
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NET CASH USED IN INVESTING ACTIVITIES: (14,848,080) (15,275,320)
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CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from sale of treasury stock 6,507 27,848
Proceeds from FHLB borrowing 3,000,000 -
(Decrease) Increase in repurchase agreements 2,998,587 318,734
Net Increase in Deposits 7,408,818 16,211,256
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NET CASH PROVIDED BY FINANCING ACTIVITIES: 13,413,912 16,557,838
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NET INCREASE (DECREASE) IN CASH: (519) 1,915,970
CASH AS BEGINNING OF PERIOD: 4,034,503 5,266,115
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CASH AT END OF PERIOD: 4,033,984 7,182,085
=========== ==========
Supplemental Disclosure of Cash Flow Information -
Cash Paid During The Period For Interest: $ 3,478,824 2,589,715
=========== ==========
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4
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SARASOTA BANCORPORATION, INC.
AND SUBSIDIARY
Notes to Financial Statements (Unaudited)
September 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 nine-month
period ended September 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:
Investment Securities. As of September 30, 2000, no Investment
Securities were carried as "Held to Maturity."
5
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Available for Sale Securities. As of September 30, 2000, the market
value of "Available for Sale Securities" was $18,159,275.
Net Income Per Share. Net income per share was $ .49 for the quarter
ended September 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 September 30, 2000, the provision for taxes was
$501,275.
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 nine months ended September 30, 2000
was $18,396. 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 $52,354 for the nine months ended
September 30, 2000. Another director provides accounting services for the
Company. Fees for these services for the nine months ended September 30, 2000
were $5,534.
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 third quarter ended September 30, 2000.
6
<PAGE>
Results of Operations
The Company's net income for the third quarter of 2000 was $271,738, a
0.97% decrease as compared to $274,400 for the same period in 1999. Earnings per
share remained constant at $0.49 per share for the third quarter of 2000 as
compared to the same period in 1999. Net income for the nine months ended
September 30, 2000 was $844,448 compared to $763,451 for the same period in
1999, an increase of $80,997 or 10.61%. The decrease in net income for the third
quarter of 2000 is primarily attributable to a $47,000 or 47.00% increase in the
provision for loan losses as a result of the loan relationship discussed below
in "Financial Condition." The increase in net income for the nine months ended
September 30, 2000 was primarily attributable to a $1,114,468 or a 23.78%
increase in interest and fees on loans.
Net interest income after provision for loan losses for the third
quarter of 2000 decreased $1,833, or 0.18%, to $1,005,468 from a balance of
$1,007,301 for the third quarter of 1999. Net interest income after provision
for loan losses for the nine months ended September 30, 2000 increased $208,405,
or 7.30%, to $3,062,158 from a balance of $2,853,753 for the same period in
1999. The increase in net interest income for the nine-month period ended
September 30, 2000 resulted primarily from an increase in loan volume and a
corresponding increase in interest and fees on loans. The cost of deposits
averaged 4.85% for the third quarter of 2000 compared to 4.23% for the third
quarter of 1999. The net interest margin for the nine months ended September 30,
2000 was 4.28% on average earning assets of $101,863,000 for the period stated.
For the same period in 1999, the net interest margin was 4.65%, on average
earning assets of $87,800,000. The decrease in net interest margin is reflective
of growth in higher priced interest bearing liability accounts.
Non-interest expense for the third quarter of 2000 increased $34,157,
or 4.98%, as compared to the third quarter of 1999. Non-interest expense
increased $203,093, or 10.49%, for the nine-month period ended September 30,
2000 as compared to the same period in 1999. This increase is primarily the
result of increased loan costs, data processing fees and professional service
fees.
Non-interest income increased $14,711, or 12.79%, during the third
quarter ended September 30, 2000 as compared to the same period in 1999.
Non-interest income also increased $128,843, or 43.91%, for the nine-month
period ended September 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 servicing program now offered by the Bank.
Financial Condition
For the nine-month period ended September 30, 2000, the Company
experienced continued asset, loan and deposit growth. Total assets increased
15.22% to $109,681,185 for the nine-month period ended September 30, 2000 from
$95,189,848 at December 31, 1999. This increase is primarily attributable to an
increase in loans of approximately $14,245,000 and an increase in securities
available for sale of approximately $500,000 during this period.
7
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The allowance for loan loss provision for the third quarter of 2000 was
$147,000 compared to $100,000 in the third quarter of 1999. The reserve balance
for loan losses as of September 30, 2000 was $893,331 as compared to $764,874 at
December 31, 1999. At September 30, 2000, the allowance for loan losses
represented 1.03% 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 third quarter of 2000, charged-off loans totaled $181,683
with recoveries of $7,889, or a net of 0.20% of total gross loans outstanding.
The ratio of non-performing loans (including loans 90 days or more past due) to
total outstanding loans was $431,000, or 0.50%, as of September 30, 2000
compared to 0.29% as of the same period in 1999. At year ended 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
non-performing loans past due in excess of 90 days as of September 30, 2000. The
Bank has entered into a workout agreement with one of its borrowers in an effort
to assist the borrower in restructuring certain financial-related operations of
the borrower's business. The outstanding balances of this relationship were
approximately $1,400,000 as of September 30,2000, which includes a Business
Manager account balance of $647,000. As of November 6, 2000, the outstanding
balances of this relationship were approximatley $1.1 million. The anticipated
workout period for this relationship is three years. The increase in the
provision for loan losses discussed above is primarily attributable to this loan
relationship.
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 September 30, 2000 was 9.63%, its total risk-based capital ratio was 10.68%,
and its leverage ratio was 7.70%.
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 91.74% at September 30, 2000, cash and due from banks of
$3,123,984 and federal funds sold of $910,000, 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.
8
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
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(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 September 30, 2000.
<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: November 6th, 2000 By: /s/ Christine L. Jennings
--------------------------------
Christine L. Jennings
President (Principal
Executive Officer)
By: /s/ Susan K. Flynn
--------------------------------
Susan K. Flynn
Senior Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
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EXHIBIT INDEX
Exhibit No. Description
27 Financial Data Schedule
