##### Table of Contents

---

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



---



FORM 10-QSB



---



(Mark One)

|x | Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------



For the quarterly period ended June 30, 2004



| ̈ | Transition report under Section 13 or 15(d) of the Exchange Act
|- | ---------------------------------------------------------------



For the transition period from  to



Commission file number 333-70231



---



SUNCOAST BANCORP, INC.

(Exact Name of Small Business Issuer as Specified in Its Charter)



---



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Florida                                                        |  | 65-0827141                          
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)



8592 Potter Park
Drive, Suite 200

Sarasota, Florida 34238

(Address of Principal Executive Offices)



(941) 923-0500

(Issuers Telephone Number, Including Area Code)





(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 12, 13 or 15(d) of the Exchange Act during the past 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, par value $.01 per share |  | 700,000 shares              
|(class)                                |  | Outstanding at July 22, 2004



Transitional Small Business Format
(Check One):    YES ̈NO  x



---



---

##### Table of Contents

SUNCOAST BANCORP, INC. AND SUBSIDIARY



INDEX



|                              |  |                                                                                               |  |                                                                                                                            |  |      |  | 
|----------------------------- |  | --------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------- |  | ---- |  | 
|                              |  | Page                                                                                         
|                              | 
|PART I.
FINANCIAL INFORMATION |  |                                                                                              
|                              |  |                                                                                              
|                              |  | Item 1.
Financial Statements                                                                  |  |                                                                                                                           
|                              |  |                                                                                               | 
|                              |  |                                                                                               |  | Condensed Consolidated Balance Sheets - At June 30, 2004 (unaudited) and At December 31, 2003                              |  | 2   
|                              |  |                                                                                               | 
|                              |  |                                                                                               |  | Condensed Consolidated Statements of Earnings - Three and Six Months Ended June 30, 2004 and 2003 (unaudited)              |  | 3   
|                              |  |                                                                                               | 
|                              |  |                                                                                               |  | Condensed Consolidated Statements of Changes in Stockholders Equity - Six Months Ended June 30, 2004 and 2003 (unaudited) |  | 4   
|                              |  |                                                                                               | 
|                              |  |                                                                                               |  | Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2004 and 2003 (unaudited)                      |  | 5   
|                              |  |                                                                                               | 
|                              |  |                                                                                               |  | Notes to Condensed Consolidated Financial Statements (unaudited)                                                           |  | 6-10
|                              |  |                                                                                               | 
|                              |  |                                                                                               |  | Review by Independent Registered Public Accounting Firm                                                                    |  | 11  
|                              |  |                                                                                               | 
|                              |  |                                                                                               |  | Report of Independent Registered Public Accounting Firm                                                                    |  | 12  
|                              |  |                                                                                              
|                              |  | Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 13-18                                                                                                                     
|                              |  |                                                                                              
|                              |  | Item 3.
Controls and Procedures                                                               |  | 19                                                                                                                        
|                              | 
|PART II.
OTHER INFORMATION    |  |                                                                                              
|                              |  |                                                                                              
|                              |  | Item 1.
Legal Proceedings                                                                     |  | 19                                                                                                                        
|                              |  |                                                                                              
|                              |  | Item 4.
Submission of Matters to a Vote of Security Holders                                   |  | 19                                                                                                                        
|                              |  |                                                                                              
|                              |  | Item 6.
Exhibits and Reports on Form 8-K                                                      |  | 20                                                                                                                        
|                              | 
|SIGNATURES                    |  | 21                                                                                           



1



---

##### Table of Contents

SUNCOAST BANCORP, INC. AND SUBSIDIARY



PART I. FINANCIAL INFORMATION



Item 1. Financial Statements



Condensed Consolidated Balance Sheets

($ in thousands, except per share amounts)



|                                                                                                                                                                                       |  |              |        |   |                  |        |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------ | - | ---------------- | ------ | -
|                                                                                                                                                                                       |  | June 30,2004 |        |   | December 31,2003 |       
|                                                                                                                                                                                       |  | (Unaudited)  |        |   |                  |       
|Assets                                                                                                                                                                                 |  |              |        |   |                  |        |  
|                                                                                                                                                                                       |  |             
|Cash and due from banks                                                                                                                                                                |  | $            | 4,225  |   |                  | 3,580  |  
|Interest-bearing deposits with banks                                                                                                                                                   |  |              | 518    |   |                  | 507    |  
|Federal funds sold                                                                                                                                                                     |  |              | 3,593  |   |                  | 6,326  |  
|                                                                                                                                                                                       |  |              |        |   |                  |        |  
|Total cash and cash equivalents                                                                                                                                                        |  |              | 8,336  |   |                  | 10,413 |  
|                                                                                                                                                                                       |  |             
|Securities available for sale                                                                                                                                                          |  |              | 9,921  |   |                  | 10,133 |  
|Loans, net of allowance for loan losses of $776 and $654                                                                                                                               |  |              | 71,016 |   |                  | 60,460 |  
|Premises and equipment, net                                                                                                                                                            |  |              | 414    |   |                  | 344    |  
|Federal Reserve Bank stock, at cost                                                                                                                                                    |  |              | 226    |   |                  | 219    |  
|Federal Home Loan Bank stock, at cost                                                                                                                                                  |  |              | 204    |   |                  | 151    |  
|Accrued interest receivable                                                                                                                                                            |  |              | 271    |   |                  | 250    |  
|Deferred tax assets                                                                                                                                                                    |  |              | 709    |   |                  | 673    |  
|Other assets                                                                                                                                                                           |  |              | 184    |   |                  | 123    |  
|                                                                                                                                                                                       |  |              |        |   |                  |        |  
|Total assets                                                                                                                                                                           |  | $            | 91,281 |   |                  | 82,766 |  
|                                                                                                                                                                                       |  |              |        |   |                  |        |  
|Liabilities and Stockholders Equity                                                                                                                                                   |  |              |        |   |                  |        |  
|                                                                                                                                                                                       |  |             
|Liabilities:                                                                                                                                                                           |  |              |        |   |                  |        |  
|Noninterest-bearing demand deposits                                                                                                                                                    |  |              | 7,006  |   |                  | 6,284  |  
|Savings and NOW deposits                                                                                                                                                               |  |              | 6,742  |   |                  | 5,680  |  
|Money-market deposits                                                                                                                                                                  |  |              | 32,122 |   |                  | 38,587 |  
|Time deposits                                                                                                                                                                          |  |              | 37,341 |   |                  | 24,126 |  
|                                                                                                                                                                                       |  |              |        |   |                  |        |  
|Total deposits                                                                                                                                                                         |  |              | 83,211 |   |                  | 74,677 |  
|                                                                                                                                                                                       |  |             
|Other borrowings                                                                                                                                                                       |  |              | 501    |   |                  | 501    |  
|Other liabilities                                                                                                                                                                      |  |              | 253    |   |                  | 136    |  
|                                                                                                                                                                                       |  |              |        |   |                  |        |  
|Total liabilities                                                                                                                                                                      |  |              | 83,965 |   |                  | 75,314 |  
|                                                                                                                                                                                       |  |              |        |   |                  |        |  
|Stockholders equity:                                                                                                                                                                  |  |              |        |   |                  |        |  
|Preferred stock, $.01 par value, 3,000,000 shares authorized, of which 300,000 designated as convertible preferred stock, $10 liquidation
value, 225,400 shares issued and outstanding |  |              | 2      |   |                  | 2      |  
|Common stock, $.01 par value 10,000,000 shares authorized, 700,000 shares issued and outstanding                                                                                       |  |              | 7      |   |                  | 7      |  
|Additional paid-in capital                                                                                                                                                             |  |              | 8,611  |   |                  | 8,611  |  
|Accumulated deficit                                                                                                                                                                    |  |              | (1,076 | ) |                  | (1,125 | )
|Accumulated other comprehensive income (loss)                                                                                                                                          |  |              | (228   | ) |                  | (43    | )
|                                                                                                                                                                                       |  |              |        |   |                  |        |  
|Total stockholders equity                                                                                                                                                             |  |              | 7,316  |   |                  | 7,452  |  
|                                                                                                                                                                                       |  |              |        |   |                  |        |  
|Total liabilities and stockholders equity                                                                                                                                             |  | $            | 91,281 |   |                  | 82,766 |  
|                                                                                                                                                                                       |  |              |        |   |                  |        |  



See Accompanying Notes to Condensed
Consolidated Financial Statements.



2



---

##### Table of Contents

SUNCOAST BANCORP, INC. AND SUBSIDIARY



Condensed Consolidated Statements of Earnings

($ in thousands, except per share amounts)

(Unaudited)



|                                                    |  |                             |       |   |                           |     |   |      |       |   |      |       |  
|--------------------------------------------------- |  | --------------------------- | ----- | - | ------------------------- | --- | - | ---- | ----- | - | ---- | ----- | -
|                                                    |  | Three Months Ended June 30, |       |   | Six Months Ended June 30, |    
|                                                    |  | 2004                        |       |   | 2003                      |     |   | 2004 |       |   | 2003 |      
|Interest income:                                    |  |                             |       |   |                           |     |   |      |       |   |      |       |  
|Loans                                               |  | $                           | 1,000 |   |                           | 717 |   |      | 1,907 |   |      | 1,402 |  
|Securities                                          |  |                             | 88    |   |                           | 91  |   |      | 192   |   |      | 186   |  
|Other                                               |  |                             | 18    |   |                           | 14  |   |      | 30    |   |      | 29    |  
|                                                    |  |                             |       |   |                           |     |   |      |       |   |      |       |  
|Total interest income                               |  |                             | 1,106 |   |                           | 822 |   |      | 2,129 |   |      | 1,617 |  
|                                                    |  |                             |       |   |                           |     |   |      |       |   |      |       |  
|Interest expense:                                   |  |                             |       |   |                           |     |   |      |       |   |      |       |  
|Deposits                                            |  |                             | 403   |   |                           | 322 |   |      | 766   |   |      | 626   |  
|Other borrowings                                    |  |                             |      |   |                           | 1   |   |      | 1     |   |      | 3     |  
|                                                    |  |                             |       |   |                           |     |   |      |       |   |      |       |  
|Total interest expense                              |  |                             | 403   |   |                           | 323 |   |      | 767   |   |      | 629   |  
|                                                    |  |                             |       |   |                           |     |   |      |       |   |      |       |  
|Net interest income                                 |  |                             | 703   |   |                           | 499 |   |      | 1,362 |   |      | 988   |  
|                                                    |  |                             |       |  
|Provision for loan losses                           |  |                             | 81    |   |                           | 19  |   |      | 122   |   |      | 40    |  
|                                                    |  |                             |       |   |                           |     |   |      |       |   |      |       |  
|Net interest income after provision for loan losses |  |                             | 622   |   |                           | 480 |   |      | 1,240 |   |      | 948   |  
|                                                    |  |                             |       |   |                           |     |   |      |       |   |      |       |  
|Noninterest income:                                 |  |                             |       |   |                           |     |   |      |       |   |      |       |  
|Service charges on deposit accounts                 |  |                             | 11    |   |                           | 10  |   |      | 24    |   |      | 19    |  
|Other service charges and fees                      |  |                             | 15    |   |                           | 7   |   |      | 29    |   |      | 20    |  
|Loss on sale of securities available for sale       |  |                             |      |   |                           | (4  | ) |      |      |   |      | (1    | )
|Other                                               |  |                             | 1     |   |                           |    |   |      | 2     |   |      |      |  
|                                                    |  |                             |       |   |                           |     |   |      |       |   |      |       |  
|Total noninterest income                            |  |                             | 27    |   |                           | 13  |   |      | 55    |   |      | 38    |  
|                                                    |  |                             |       |   |                           |     |   |      |       |   |      |       |  
|Noninterest expense:                                |  |                             |       |   |                           |     |   |      |       |   |      |       |  
|Salaries and employee benefits                      |  |                             | 296   |   |                           | 246 |   |      | 612   |   |      | 513   |  
|Occupancy expense                                   |  |                             | 103   |   |                           | 83  |   |      | 197   |   |      | 165   |  
|Professional fees                                   |  |                             | 40    |   |                           | 27  |   |      | 89    |   |      | 82    |  
|Data processing                                     |  |                             | 38    |   |                           | 38  |   |      | 74    |   |      | 67    |  
|Stationery and supplies                             |  |                             | 20    |   |                           | 15  |   |      | 44    |   |      | 34    |  
|Other                                               |  |                             | 40    |   |                           | 56  |   |      | 77    |   |      | 107   |  
|                                                    |  |                             |       |   |                           |     |   |      |       |   |      |       |  
|Total noninterest expense                           |  |                             | 537   |   |                           | 465 |   |      | 1,093 |   |      | 968   |  
|                                                    |  |                             |       |   |                           |     |   |      |       |   |      |       |  
|Earnings before income taxes                        |  |                             | 112   |   |                           | 28  |   |      | 202   |   |      | 18    |  
|                                                    |  |                             |       |  
|Income taxes                                        |  |                             | 43    |   |                           | 11  |   |      | 77    |   |      | 7     |  
|                                                    |  |                             |       |   |                           |     |   |      |       |   |      |       |  
|Net earnings                                        |  |                             | 69    |   |                           | 17  |   |      | 125   |   |      | 11    |  
|                                                    |  |                             |       |  
|Preferred stock dividend                            |  |                             | (34   | ) |                           |    |   |      | (76   | ) |      |      |  
|                                                    |  |                             |       |   |                           |     |   |      |       |   |      |       |  
|Net earnings applicable to common stockholders      |  | $                           | 35    |   |                           | 17  |   |      | 49    |   |      | 11    |  
|                                                    |  |                             |       |   |                           |     |   |      |       |   |      |       |  
|Earnings per share, basic and diluted               |  | $                           | .05   |   |                           | .02 |   |      | .07   |   |      | .02   |  
|                                                    |  |                             |       |   |                           |     |   |      |       |   |      |       |  
|Dividends per share                                 |  | $                           |      |   |                           |    |   |      |      |   |      |      |  
|                                                    |  |                             |       |   |                           |     |   |      |       |   |      |       |  



See Accompanying Notes to Condensed
Consolidated Financial Statements.



3



---

##### Table of Contents

SUNCOAST BANCORP, INC. AND SUBSIDIARY



Condensed Consolidated Statements of Changes in Stockholders Equity



For the Six Months Ended June 30, 2004 and 2003

(In thousands)



|                                                                                               |  |                 |   |              |   |                            |       |                     |        |   |                                               |      |   |                            |       |  
|---------------------------------------------------------------------------------------------- |  | --------------- | - | ------------ | - | -------------------------- | ----- | ------------------- | ------ | - | --------------------------------------------- | ---- | - | -------------------------- | ----- | -
|                                                                                               |  | Preferred Stock |   | Common Stock |   | Additional Paid-In Capital |       | Accumulated Deficit |        |   | Accumulated Other Comprehensive Income (Loss) |      |   | Total Stockholders Equity |      
|Balance at December 31, 2002                                                                   |  | $               |  |              | 7 |                            | 6,394 |                     | (1,224 | ) |                                               | 80   |   |                            | 5,257 |  
|                                                                                               |  |                 |   |              |   |                            |       |                     |        |   |                                               |      |   |                            |       |  
|Comprehensive income (loss):                                                                   |  |                 |   |              |   |                            |       |                     |        |   |                                               |      |   |                            |       |  
|Net earnings (unaudited)                                                                       |  |                 |  |              |  |                            |      |                     | 11     |   |                                               |     |   |                            | 11    |  
|                                                                                               |  |                 |   |              |   |                           
|Net change in unrealized gain on securities available for sale, net of taxes (unaudited)       |  |                 |  |              |  |                            |      |                     |       |   |                                               | 21   |   |                            | 21    |  
|                                                                                               |  |                 |   |              |   |                            |       |                     |        |   |                                               |      |   |                            |       |  
|Comprehensive income (unaudited)                                                               |  |                 |   |              |   |                            |       |                     |        |   |                                               |      |   |                            | 32    |  
|                                                                                               |  |                 |   |              |   |                           
|Sale of preferred stock (unaudited)                                                            |  |                 | 1 |              |  |                            | 1,122 |                     |       |   |                                               |     |   |                            | 1,123 |  
|                                                                                               |  |                 |   |              |   |                            |       |                     |        |   |                                               |      |   |                            |       |  
|Balance at June 30, 2003 (unaudited)                                                           |  | $               | 1 |              | 7 |                            | 7,516 |                     | (1,213 | ) |                                               | 101  |   |                            | 6,412 |  
|                                                                                               |  |                 |   |              |   |                            |       |                     |        |   |                                               |      |   |                            |       |  
|Balance at December 31, 2003                                                                   |  | $               | 2 |              | 7 |                            | 8,611 |                     | (1,125 | ) |                                               | (43  | ) |                            | 7,452 |  
|                                                                                               |  |                 |   |              |   |                            |       |                     |        |   |                                               |      |   |                            |       |  
|Comprehensive income (loss):                                                                   |  |                 |   |              |   |                            |       |                     |        |   |                                               |      |   |                            |       |  
|Net earnings (unaudited)                                                                       |  |                 |  |              |  |                            |      |                     | 125    |   |                                               |     |   |                            | 125   |  
|                                                                                               |  |                 |   |              |   |                           
|Net change in unrealized loss on securities available for sale, net of tax benefit (unaudited) |  |                 |  |              |  |                            |      |                     |       |   |                                               | (185 | ) |                            | (185  | )
|                                                                                               |  |                 |   |              |   |                            |       |                     |        |   |                                               |      |   |                            |       |  
|Comprehensive income (loss) (unaudited)                                                        |  |                 |   |              |   |                            |       |                     |        |   |                                               |      |   |                            | (60   | )
|                                                                                               |  |                 |   |              |   |                            |       |                     |        |   |                                               |      |   |                            |       |  
|Preferred stock dividend (unaudited)                                                           |  |                 |  |              |  |                            |      |                     | (76    | ) |                                               |     |   |                            | (76   | )
|                                                                                               |  |                 |   |              |   |                            |       |                     |        |   |                                               |      |   |                            |       |  
|Balance at June 30, 2004 (unaudited)                                                           |  | $               | 2 |              | 7 |                            | 8,611 |                     | (1,076 | ) |                                               | (228 | ) |                            | 7,316 |  
|                                                                                               |  |                 |   |              |   |                            |       |                     |        |   |                                               |      |   |                            |       |  



See Accompanying Notes to Condensed
Consolidated Financial Statements.



4



---

##### Table of Contents

SUNCOAST BANCORP, INC. AND SUBSIDIARY



Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



|                                                                                                                          |  |                           |         |   |      |        |  
|------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | ------- | - | ---- | ------ | -
|                                                                                                                          |  | Six Months Ended June 30, |        
|                                                                                                                          |  | 2004                      |         |   | 2003 |       
|Cash flows from operating activities:                                                                                     |  |                           |         |   |      |        |  
|Net earnings                                                                                                              |  | $                         | 125     |   |      | 11     |  
|Adjustments to reconcile net earnings to net cash provided by operating activities:                                       |  |                           |         |   |      |        |  
|Depreciation and amortization                                                                                             |  |                           | 74      |   |      | 59     |  
|Provision for loan losses                                                                                                 |  |                           | 122     |   |      | 40     |  
|Net amortization of loan fees, premiums and discounts                                                                     |  |                           | 11      |   |      | 21     |  
|Provision for deferred income taxes                                                                                       |  |                           | 77      |   |      | 7      |  
|Loss on sale of securities available for sale                                                                             |  |                           |        |   |      | 1      |  
|Writedown of foreclosed real estate                                                                                       |  |                           |        |   |      | 17     |  
|(Increase) decrease in accrued interest receivable                                                                        |  |                           | (21     | ) |      | 13     |  
|(Increase) decrease in other assets                                                                                       |  |                           | (61     | ) |      | 49     |  
|Increase in other liabilities                                                                                             |  |                           | 41      |   |      | 16     |  
|                                                                                                                          |  |                           |         |   |      |        |  
|Net cash provided by operating activities                                                                                 |  |                           | 368     |   |      | 234    |  
|                                                                                                                          |  |                           |         |   |      |        |  
|Cash flows from investing activities:                                                                                     |  |                           |         |   |      |        |  
|Purchase of securities available for sale                                                                                 |  |                           | (2,008  | ) |      | (9,070 | )
|Principal repayments of securities available for sale                                                                     |  |                           | 922     |   |      | 1,378  |  
|Proceeds from sale of securities available for sale                                                                       |  |                           | 1,000   |   |      | 4,644  |  
|Purchase of Federal Home Loan Bank stock                                                                                  |  |                           | (53     | ) |      | (67    | )
|Net increase in loans                                                                                                     |  |                           | (10,689 | ) |      | (5,117 | )
|Purchase of premises and equipment                                                                                        |  |                           | (144    | ) |      | (8     | )
|Purchase of Federal Reserve Bank stock                                                                                    |  |                           | (7      | ) |      |       |  
|                                                                                                                          |  |                           |         |   |      |        |  
|Net cash used in investing activities                                                                                     |  |                           | (10,979 | ) |      | (8,240 | )
|                                                                                                                          |  |                           |         |   |      |        |  
|Cash flows from financing activities:                                                                                     |  |                           |         |   |      |        |  
|Net increase in deposits                                                                                                  |  |                           | 8,534   |   |      | 6,228  |  
|Net increase in other borrowings                                                                                          |  |                           |        |   |      | 3      |  
|Proceeds from sale of preferred stock                                                                                     |  |                           |        |   |      | 1,123  |  
|                                                                                                                          |  |                           |         |   |      |        |  
|Net cash provided by financing activities                                                                                 |  |                           | 8,534   |   |      | 7,354  |  
|                                                                                                                          |  |                           |         |   |      |        |  
|Net decrease in cash and cash equivalents                                                                                 |  |                           | (2,077  | ) |      | (652   | )
|                                                                                                                          |  |                          
|Cash and cash equivalents at beginning of period                                                                          |  |                           | 10,413  |   |      | 9,983  |  
|                                                                                                                          |  |                           |         |   |      |        |  
|Cash and cash equivalents at end of period                                                                                |  | $                         | 8,336   |   |      | 9,331  |  
|                                                                                                                          |  |                           |         |   |      |        |  
|Supplemental disclosure of cash flow information:                                                                         |  |                           |         |   |      |        |  
|Cash paid during the period for:                                                                                          |  |                           |         |   |      |        |  
|Interest                                                                                                                  |  | $                         | 740     |   |      | 632    |  
|                                                                                                                          |  |                           |         |   |      |        |  
|Income taxes                                                                                                              |  | $                         |        |   |      |       |  
|                                                                                                                          |  |                           |         |   |      |        |  
|Noncash transactions:                                                                                                     |  |                           |         |   |      |        |  
|Transfer from foreclosed real estate to loans                                                                             |  | $                         |        |   |      | 136    |  
|                                                                                                                          |  |                           |         |   |      |        |  
|Accumulated other comprehensive income, net change in unrealized gain (loss) on securities available for sale, net of tax |  | $                         | (185    | ) |      | 21     |  
|                                                                                                                          |  |                           |         |   |      |        |  
|Preferred stock dividends payable                                                                                         |  | $                         | 76      |   |      |       |  
|                                                                                                                          |  |                           |         |   |      |        |  



See Accompanying Notes to Condensed
Consolidated Financial Statements.



5



---

##### Table of Contents

SUNCOAST BANCORP, INC. AND SUBSIDIARY



Notes to Condensed Consolidated Financial Statements (unaudited)



|(1) | Description of Business and Basis of Presentation
|--- | -------------------------------------------------



General. In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments (consisting
principally of normal recurring accruals) necessary to present fairly the financial position at June 30, 2004, the results of operations for the three- and six-month periods ended June 30, 2004 and 2003 and cash flows for the six month periods ended
June 30, 2004 and 2003. The results of operations for the three- and six- month periods ended June 30, 2004 are not necessarily indicative of the results to be expected for the year ending December 31, 2004.



SunCoast Bancorp, Inc. (the Holding Company) owns 100% of the
outstanding common stock of SunCoast Bank (the Bank) (collectively the Company). The Holding Company was organized simultaneously with the Bank and its only business is the ownership and operation of the Bank. The Bank was
incorporated under the laws of the United States and received its charter from the Comptroller of the Currency. However, the Bank converted to a state (Florida) chartered commercial bank and became a member of the Federal Reserve System on January
1, 2003. The Banks deposits are insured by the Federal Deposit Insurance Corporation. The Bank provides a variety of community banking services to businesses and individuals through its two banking offices located in Sarasota County, Florida.



|(2) | Loan Impairment and Loan Losses
|--- | -------------------------------



No loans were identified as impaired at or during the three and six months ended June 30, 2004 and 2003. The activity in the allowance for loan losses is
as follows (in thousands):



|                               |  |                             |     |                           |     |      |     |      |    
|------------------------------ |  | --------------------------- | --- | ------------------------- | --- | ---- | --- | ---- | ---
|                               |  | Three Months Ended June 30, |     | Six Months Ended June 30,
|                               |  | 2004                        |     | 2003                      |     | 2004 |     | 2003
|Balance at beginning of period |  | $                           | 695 |                           | 539 |      | 654 |      | 518
|Provision charged to earnings  |  |                             | 81  |                           | 19  |      | 122 |      | 40 
|                               |  |                             |     |                           |     |      |     |      |    
|Balance at end of period       |  | $                           | 776 |                           | 558 |      | 776 |      | 558
|                               |  |                             |     |                           |     |      |     |      |    



There were no
nonaccrual loans or loans past due ninety days or more, but still accruing at June 30, 2004 and 2003.



(continued)



6



---

##### Table of Contents

SUNCOAST BANCORP, INC. AND SUBSIDIARY



Notes to Condensed Consolidated Financial Statements (unaudited), Continued



|(3) | Earnings Per Share
|--- | ------------------



Earnings per share (EPS) of common stock has been computed on the basis of the weighted-average number of shares of common stock outstanding.
In 2004, outstanding common stock options were considered dilutive securities for purposes of calculating diluted EPS which is computed using the treasury stock method. In 2003, because of losses stock options were antidilutive, there were 700,000
shares outstanding during the 2003 periods. The preferred stock is not considered dilutive. The following table presents the calculations of the weighted-average number of shares for diluted EPS (dollars in thousands, except share amounts):



|                                                                      |  |          |    |                          |         |                  |   |    
|--------------------------------------------------------------------- |  | -------- | -- | ------------------------ | ------- | ---------------- | - | ---
|                                                                      |  | Earnings |    | Weighted- Average Shares |         | Per Share Amount
|Three Months Ended June 30, 2004:                                     |  |          |    |                          |         |                  |   |    
|Basic EPS:                                                            |  |          |    |                          |         |                  |   |    
|Net earnings available to common stockholders                         |  | $        | 35 |                          | 700,000 |                  | $ | .05
|                                                                      |  |          |    |                          |         |                  |   |    
|Effect of dilutive securities-                                        |  |          |    |                          |         |                  |   |    
|Incremental shares from assumed conversion of options                 |  |          |   |                          | 9,305   |                  |   |    
|                                                                      |  |          |    |                          |         |                  |   |    
|Diluted EPS:                                                          |  |          |    |                          |         |                  |   |    
|Net earnings available to common stockholders and assumed conversions |  | $        | 35 |                          | 709,305 |                  | $ | .05
|                                                                      |  |          |    |                          |         |                  |   |    
|Six Months Ended June 30, 2004:                                       |  |          |    |                          |         |                  |   |    
|Basic EPS:                                                            |  |          |    |                          |         |                  |   |    
|Net earnings available to common stockholders                         |  | $        | 49 |                          | 700,000 |                  | $ | .07
|                                                                      |  |          |    |                          |         |                  |   |    
|Effect of dilutive securities-                                        |  |          |    |                          |         |                  |   |    
|Incremental shares from assumed conversion of options                 |  |          |   |                          | 7,352   |                  |   |    
|                                                                      |  |          |    |                          |         |                  |   |    
|Diluted EPS:                                                          |  |          |    |                          |         |                  |   |    
|Net earnings available to common stockholders and assumed conversions |  | $        | 49 |                          | 707,352 |                  | $ | .07
|                                                                      |  |          |    |                          |         |                  |   |    



For the three and six
months ended June 30, 2004 the following options were excluded from the calculation due to the average market price being higher than the exercise price:



| |  |                  |  |                |       |              |      |               |     
| |  | ---------------- |  | -------------- | ----- | ------------ | ---- | ------------- | ----
| |  | Number of Shares |  | Exercise Price |       | Year Granted |      | Year Expiring
| |  | 2,000            |  | $              | 12.50 |              | 2004 |               | 2014
| |  |                  |  |                |       |              |      |               |     



(continued)



7



---

##### Table of Contents

SUNCOAST BANCORP, INC. AND SUBSIDIARY



Notes to Condensed Consolidated Financial Statements (unaudited), Continued



|(4) | Stock Options
|--- | -------------



The Company has both an Employee and Director Stock Option Plan. Under the Employee Stock Option Plan, the exercise price of the stock options must at
least equal the fair market value of the common stock at the date of grant. Options granted under this plan are exercisable for 10 years from date of grant and vest in increments of 20% per year commencing one year from grant date. A total of 56,000
shares of common stock have been reserved under this Plan. At June 30, 2004, 28,000 shares have been granted under this plan.



Under the Director Stock Option Plan, the exercise price of the stock options is the fair market value of the common stock at the date of grant. The
options have a ten year term. These options vest in increments of 20% per year commencing one year from grant date. A total of 42,000 shares of common stock have been reserved under this Plan. At June 30, 2004, all stock options have been granted
under this plan ($ in thousands except per share information).



|                                 |  |                  |  |                                 |             |                                   |       |                        |    
|-------------------------------- |  | ---------------- |  | ------------------------------- | ----------- | --------------------------------- | ----- | ---------------------- | ---
|                                 |  | Number of Shares |  | Range of Per Share Option Price |             | Weighted- Average Per Share Price |       | Aggregate Option Price
|Outstanding at December 31, 2003 |  | 68,000           |  | $                               | 10.00       |                                   | 10.00 |                        | 680
|Options granted                  |  | 2,000            |  |                                 | 12.50       |                                   | 12.50 |                        | 25 
|                                 |  |                  |  |                                 |             |                                   |       |                        |    
|Outstanding at June 30, 2004     |  | 70,000           |  | $                               | 10.00-12.50 |                                   | 10.07 |                        | 705
|                                 |  |                  |  |                                 |             |                                   |       |                        |    



The Company accounts
for their stock option plans under the recognition and measurement principles of APB No. 25. No stock-based employee compensation cost is reflected in net earnings, as all options granted under these plans had an exercise price equal to the market
value of the underlying common stock on the date of grant. The following table illustrates the effect on net earnings and earnings per share if the Company had applied the fair value recognition provisions of Statement of Financial Accounting
Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation Transition and Disclosure (collectively SFAS No. 123) to stock-based employee
compensation (dollars in thousands, except per share information).



|                                                                                                                                       |  |                             |     |   |                           |     |   |      |     |   |      |     |  
|-------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------- | --- | - | ------------------------- | --- | - | ---- | --- | - | ---- | --- | -
|                                                                                                                                       |  | Three Months Ended June 30, |     |   | Six Months Ended June 30, |    
|                                                                                                                                       |  | 2004                        |     |   | 2003                      |     |   | 2004 |     |   | 2003 |    
|Net earnings applicable to common stockholders, as reported                                                                            |  | $                           | 35  |   |                           | 17  |   |      | 49  |   |      | 11  |  
|                                                                                                                                       |  |                             |     |  
|Deduct: Total stock-based employee compensation determined under the fair value based method for all awards, net of related tax
effect |  |                             | (2  | ) |                           | (4  | ) |      | (4  | ) |      | (8  | )
|                                                                                                                                       |  |                             |     |   |                           |     |   |      |     |   |      |     |  
|Proforma net earnings applicable to common stockholders                                                                                |  | $                           | 33  |   |                           | 13  |   |      | 45  |   |      | 3   |  
|                                                                                                                                       |  |                             |     |   |                           |     |   |      |     |   |      |     |  
|Earnings per share, basic and diluted                                                                                                  |  | $                           | .05 |   |                           | .02 |   |      | .07 |   |      | .02 |  
|                                                                                                                                       |  |                             |     |   |                           |     |   |      |     |   |      |     |  
|Proforma earnings per share, basic and diluted                                                                                         |  | $                           | .05 |   |                           | .02 |   |      | .06 |   |      |    |  
|                                                                                                                                       |  |                             |     |   |                           |     |   |      |     |   |      |     |  



(continued)



8



---

##### Table of Contents

SUNCOAST BANCORP, INC. AND SUBSIDIARY



Notes to Condensed Consolidated Financial Statements (unaudited), Continued



|(4) | Stock Options, Continued
|--- | ------------------------



The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions, there
were no options granted during the three and six months ended June 30, 2003:





|                                                                           |  |                             |       |   |                           |       |  
|-------------------------------------------------------------------------- |  | --------------------------- | ----- | - | ------------------------- | ----- | -
|                                                                           |  | Three Months Ended June 30, |       |   | Six Months Ended June 30, |      
|                                                                           |  | 2004                        |       |   | 2004                      |      
|Weighted-average risk-free interest rate                                   |  |                             | 5.08  | % |                           | 5.08  | %
|Dividend yield                                                             |  |                             |      | % |                           |      | %
|Volatility                                                                 |  |                             | 31.00 | % |                           | 31.00 | %
|Expected life in years                                                     |  |                             | 10    |   |                           | 10    |  
|                                                                           |  |                            
|Weighted-average grant date fair value of options issued during the period |  | $                           | 6.63  |   |                           | 6.63  |  
|                                                                           |  |                             |       |   |                           |       |  



|(5) | Regulatory Capital
|--- | ------------------



The Bank is required to maintain certain minimum regulatory capital requirements. The following is a summary at June 30, 2004 of the regulatory capital
requirements and the Banks actual capital on a percentage basis:



|                                                |  |        |   |  |                                                    |  
|----------------------------------------------- |  | ------ | - |  | -------------------------------------------------- | -
|                                                |  | Actual |   |  | Regulatory Requirement for Well- Capitalized Banks |  
|Total capital to risk-weighted assets           |  | 9.90   | % |  | 10.00                                              | %
|Tier I capital to risk-weighted assets          |  | 8.93   | % |  | 6.00                                               | %
|Tier I capital to total assets - leverage ratio |  | 8.13   | % |  | 5.00                                               | %



At June 30, 2004,
management believes the Bank is adequately capitalized.



In
connection with its conversion to a state bank on January 1, 2003, the Bank agreed that until December 31, 2004, it will maintain a Tier 1 capital ratio of at least 8%. In addition, the Bank also agreed that it will raise a minimum of $500,000 of
Tier 1 capital no later than June 30, 2003, and an additional minimum of $1.0 million of Tier 1 capital no later than September 30, 2003. The Bank is in compliance with these requirements.



(continued)



9



---

##### Table of Contents

SUNCOAST BANCORP, INC. AND SUBSIDIARY



Notes to Condensed Consolidated Financial Statements (unaudited), Continued



|(6) | Preferred Stock
|--- | ---------------



In 2003, the Company sold 225,400 shares of cumulative convertible preferred stock for $2,219,000, net of issuance cost of approximately $35,000.
Preferred stock dividends are cumulative and will accrue from the original issue date whether or not declared by the Board of Directors. Cumulative accrued preferred stock dividends totaled $122,000 at June 30, 2004. The cumulative convertible
preferred stock is manditorily convertible into common stock at a conversion price of $8.50 per share (subject to antidilution adjustments) on the earlier of September 30, 2005 or a change of control of the Company, and will pay share cumulative
preferred stock dividends computed at 6% on September 30, 2004 and 2005.



10



---

##### Table of Contents

SUNCOAST BANCORP, INC. AND SUBSIDIARY



Review by Independent Registered Public Accounting Firm



Hacker, Johnson & Smith PA, the Companys independent registered public accounting firm, have made a limited review of the financial data as of June 30, 2004, and for the three- and six- month periods ended June 30, 2004 and 2003
presented in this document, in accordance with standards established by the Public Company Accounting Oversight Board.



Their report furnished pursuant to Article 10 of Regulation S-X is included herein.



11



---

##### Table of Contents

Report of Independent Registered Public Accounting Firm



SunCoast Bancorp, Inc.

Sarasota, Florida:



We have
reviewed the accompanying condensed consolidated balance sheet of SunCoast Bancorp, Inc. and Subsidiary (the Company) as of June 30, 2004, and the related condensed consolidated statements of earnings for the three- and six- month
periods ended June 30, 2004 and 2003, the related condensed consolidated statements of cash flows and stockholders equity for the six-month periods ended June 30, 2004 and 2003. These interim condensed financial statements are the
responsibility of the Companys management.



We conducted
our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons
responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.



Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to
above for them to be in conformity with U.S. generally accepted accounting principles.



We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board, the consolidated balance sheet of the Company as of December 31, 2003, and the related consolidated
statements of earnings, stockholders equity and cash flows for the year then ended (not presented herein); and in our report dated January 9, 2004 we expressed an unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2003, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.



|                              
|------------------------------
|/s/ Hacker, Johnson & Smith PA
|                              
|HACKER, JOHNSON & SMITH PA    
|Tampa, Florida                
|July 22, 2004                 



12



---

##### Table of Contents

SUNCOAST BANCORP, INC. AND SUBSIDIARY



Item 2. Managements Discussion and Analysis

of Financial Condition and Results of Operations



Comparison of June 30, 2004 and December 31, 2003



General



SunCoast Bancorp, Inc. (the Holding Company) owns 100% of the outstanding common stock of SunCoast Bank (the
Bank) (collectively the Company). The Holding Company was organized simultaneously with the Bank and its only business is the ownership and operation of the Bank. The Bank was incorporated under the laws of the United States
and received its charter from the Comptroller of the Currency. However, the Bank converted to a state (Florida) chartered commercial bank and became a member of the Federal Reserve System on January 1, 2003. The Banks deposits are insured by
the Federal Deposit Insurance Corporation. The Bank provides a variety of community banking services to businesses and individuals through its two banking offices located in Sarasota County, Florida.



Liquidity and Capital Resources



The Companys primary sources of cash during the six months ended June
30, 2004 were from net deposit inflows of $8.5 million, proceeds from the sale and repayment of securities available for sale of $1.9 million and net cash provided by operations of $368,000. Cash was used primarily to originate loans, net of
principal repayments, totaling $10.7 million and to purchase securities of $2.0 million.



Off-Balance-Sheet Arrangements and Aggregate Contractual Obligations



The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest-rate risk in excess of the amounts recognized in the condensed
consolidated balance sheet. The contract amounts of those instruments reflect the extent of the Companys involvement in particular classes of financial instruments.



The Companys exposure to credit loss in the event of nonperformance by the other party to the financial instrument for
commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments as it does for on-balance-sheet instruments.



Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments generally have fixed-expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being
drawn upon, the total committed amounts do not necessarily represent future cash requirements. The Company evaluates each customers credit worthiness on a case-by-case basis. The amount of collateral obtained, if it is deemed necessary by the
Company upon extension of credit, is based on managements credit evaluation of the counter party.



13



---

##### Table of Contents

SUNCOAST BANCORP, INC. AND SUBSIDIARY



Item 2. Managements Discussion and Analysis of Financial Condition

and Results of Operations, Continued



Off-Balance Sheet Arrangements and Aggregate Contractual Obligations, Continued



Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a
third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers.



A summary of the Companys financial instruments, which approximates fair value, with off-balance-sheet risk at June 30, 2004 follows (in thousands):



|                                       |  |                |       
|-------------------------------------- |  | -------------- | ------
|                                       |  | ContractAmount
|Commitments to extend credit           |  | $              | 1,439 
|                                       |  |                |       
|Unused line of credit and construction |  | $              | 15,461
|                                       |  |                |       
|Standby letters of credit              |  | $              | 296   
|                                       |  |                |       



Management believes
that the Company has adequate resources to fund all of its commitments and that substantially all its existing commitments will be funded within the next twelve months.



The following rates are presented for the dates and periods indicated:



|                                                                                                |  |                                |   |  |                              |   |  |                                |  
|----------------------------------------------------------------------------------------------- |  | ------------------------------ | - |  | ---------------------------- | - |  | ------------------------------ | -
|                                                                                                |  | Six Months Ended June 30, 2004 |   |  | Year Ended December 31, 2003 |   |  | Six Months Ended June 30, 2003 |  
|Average equity as a percentage of average assets                                                |  | 8.78                           | % |  | 8.98                         | % |  | 9.35                           | %
|Equity to total assets at end of period                                                         |  | 8.02                           | % |  | 9.00                         | % |  | 9.37                           | %
|Return on average assets (1)                                                                    |  | 0.29                           | % |  | 0.22                         | % |  | 0.04                           | %
|Return on average equity (1)                                                                    |  | 3.33                           | % |  | 2.43                         | % |  | 0.38                           | %
|Noninterest expenses to average assets (1)                                                      |  | 2.55                           | % |  | 2.87                         | % |  | 3.10                           | %
|Nonperforming loans and foreclosed real estate as a percentage of total assets at end of period |  | N/A                            |   |  | N/A                          |   |  | N/A                            |  

---

|(1) | Annualized for the six months ended June 30.
|--- | --------------------------------------------



(continued)



14



---

##### Table of Contents

SUNCOAST BANCORP, INC. AND SUBSIDIARY



Results of Operations



The following table sets forth, for the periods indicated, information regarding (i) the total dollar amount of interest and dividend income of the
Company from interest-earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average cost; (iii) net interest income; (iv) interest-rate spread; and (v) net
interest margin.



|                                                                                 |  |                             |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |     |  |      |  
|-------------------------------------------------------------------------------- |  | --------------------------- | ------ | ---------------------- | ---- | ------------------- |  | ---- | --------------- |  | ---------------------- | ------ | ------------------- | - | --- |  | ---- | -
|                                                                                 |  | Three Months Ended June 30, |       
|                                                                                 |  | 2004                        |        |                        | 2003 |                    
|                                                                                 |  | Average Balance             |        | Interest and Dividends |      | Average Yield/ Rate |  |      | Average Balance |  | Interest and Dividends |        | Average Yield/ Rate |  
|                                                                                 |  |                             |        | (Dollars in thousands) |      |                     | 
|Interest-earning assets:                                                         |  |                             |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |     |  |      |  
|Loans                                                                            |  | $                           | 68,714 |                        |      | 1,000               |  | 5.84 | %               |  | $                      | 45,272 |                     |   | 717 |  | 6.34 | %
|Securities                                                                       |  |                             | 10,539 |                        |      | 88                  |  | 3.35 |                 |  |                        | 9,665  |                     |   | 91  |  | 3.77 |  
|Other interest-earning assets (1)                                                |  |                             | 4,119  |                        |      | 18                  |  | 1.76 |                 |  |                        | 5,627  |                     |   | 14  |  | 1.00 |  
|                                                                                 |  |                             |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |     |  |      |  
|Total interest-earning assets                                                    |  |                             | 83,372 |                        |      | 1,106               |  | 5.32 |                 |  |                        | 60,564 |                     |   | 822 |  | 5.43 |  
|                                                                                 |  |                             |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |     |  |      |  
|Noninterest-earning assets                                                       |  |                             | 5,509  |                        |      |                     |  |      |                 |  |                        | 4,623  |                     |   |     |  |      |  
|                                                                                 |  |                             |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |     |  |      |  
|Total assets                                                                     |  | $                           | 88,881 |                        |      |                     |  |      |                 |  | $                      | 65,187 |                     |   |     |  |      |  
|                                                                                 |  |                             |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |     |  |      |  
|Interest-bearing liabilities:                                                    |  |                             |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |     |  |      |  
|Savings, NOW, money-market deposit accounts                                      |  |                             | 39,644 |                        |      | 153                 |  | 1.55 |                 |  |                        | 35,198 |                     |   | 153 |  | 1.74 |  
|Time deposits                                                                    |  |                             | 33,817 |                        |      | 250                 |  | 2.97 |                 |  |                        | 18,635 |                     |   | 169 |  | 3.63 |  
|                                                                                 |  |                             |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |     |  |      |  
|Total interest-bearing deposits                                                  |  |                             | 73,461 |                        |      | 403                 |  | 2.20 |                 |  |                        | 53,833 |                     |   | 322 |  | 2.39 |  
|                                                                                 |  |                             |        |                        |      |                    
|Other interest-bearing liabilities (2)                                           |  |                             | 596    |                        |      |                    |  |     |                 |  |                        | 1,028  |                     |   | 1   |  | 0.39 |  
|                                                                                 |  |                             |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |     |  |      |  
|Total interest-bearing liabilities                                               |  |                             | 74,057 |                        |      | 403                 |  | 2.19 |                 |  |                        | 54,861 |                     |   | 323 |  | 2.36 |  
|                                                                                 |  |                             |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |     |  |      |  
|Noninterest-bearing liabilities                                                  |  |                             | 7,270  |                        |      |                     |  |      |                 |  |                        | 4,509  |                     |   |     |  |      |  
|Stockholders equity                                                             |  |                             | 7,554  |                        |      |                     |  |      |                 |  |                        | 5,817  |                     |   |     |  |      |  
|                                                                                 |  |                             |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |     |  |      |  
|Total liabilities and stockholders equity                                       |  | $                           | 88,881 |                        |      |                     |  |      |                 |  | $                      | 65,187 |                     |   |     |  |      |  
|                                                                                 |  |                             |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |     |  |      |  
|Net interest income                                                              |  |                             |        |                        | $    | 703                 |  |      |                 |  |                        |        |                     | $ | 499 |  |      |  
|                                                                                 |  |                             |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |     |  |      |  
|Interest-rate spread (3)                                                         |  |                             |        |                        |      |                     |  | 3.13 | %               |  |                        |        |                     |   |     |  | 3.07 | %
|                                                                                 |  |                             |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |     |  |      |  
|Net interest margin (4)                                                          |  |                             |        |                        |      |                     |  | 3.39 | %               |  |                        |        |                     |   |     |  | 3.30 | %
|                                                                                 |  |                             |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |     |  |      |  
|Ratio of average interest-earning assets to average interest-bearing liabilities |  |                             | 1.13   |                        |      |                     |  |      |                 |  |                        | 1.10   |                     |   |     |  |      |  
|                                                                                 |  |                             |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |     |  |      |  

---

|(1) | Includes Federal Home Loan Bank stock, Federal Reserve Bank stock, federal funds sold and interest-bearing deposits.
|--- | --------------------------------------------------------------------------------------------------------------------

|(2) | Includes securities sold under agreements to repurchase.
|--- | --------------------------------------------------------

|(3) | Interest-rate spread represents the difference between the average yield on interest-earning assets and the average rate of interest-bearing liabilities.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Net interest margin is net interest income divided by average interest-earning assets.
|--- | --------------------------------------------------------------------------------------



15



---

##### Table of Contents

SUNCOAST BANCORP, INC. AND SUBSIDIARY



The following table sets forth, for the periods indicated, information regarding (i) the total dollar amount of interest and dividend income
of the Company from interest-earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average cost; (iii) net interest income; (iv) interest-rate spread; and
(v) net interest margin.



|                                                                                 |  |                           |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |       |  |      |  
|-------------------------------------------------------------------------------- |  | ------------------------- | ------ | ---------------------- | ---- | ------------------- |  | ---- | --------------- |  | ---------------------- | ------ | ------------------- | - | ----- |  | ---- | -
|                                                                                 |  | Six Months Ended June 30, |       
|                                                                                 |  | 2004                      |        |                        | 2003 |                    
|                                                                                 |  | Average Balance           |        | Interest and Dividends |      | Average Yield/ Rate |  |      | Average Balance |  | Interest and Dividends |        | Average Yield/ Rate |  
|                                                                                 |  |                           |        | (Dollars in thousands) |      |                     | 
|Interest-earning assets:                                                         |  |                           |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |       |  |      |  
|Loans                                                                            |  | $                         | 65,128 |                        |      | 1,907               |  | 5.87 | %               |  | $                      | 43,613 |                     |   | 1,402 |  | 6.43 | %
|Securities                                                                       |  |                           | 10,458 |                        |      | 192                 |  | 3.68 |                 |  |                        | 8,835  |                     |   | 186   |  | 4.21 |  
|Other interest-earning assets (1)                                                |  |                           | 4,921  |                        |      | 30                  |  | 1.22 |                 |  |                        | 5,420  |                     |   | 29    |  | 1.07 |  
|                                                                                 |  |                           |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |       |  |      |  
|Total interest-earning assets                                                    |  |                           | 80,507 |                        |      | 2,129               |  | 5.30 |                 |  |                        | 57,868 |                     |   | 1,617 |  | 5.59 |  
|                                                                                 |  |                           |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |       |  |      |  
|Noninterest-earning assets                                                       |  |                           | 5,162  |                        |      |                     |  |      |                 |  |                        | 4,515  |                     |   |       |  |      |  
|                                                                                 |  |                           |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |       |  |      |  
|Total assets                                                                     |  | $                         | 85,669 |                        |      |                     |  |      |                 |  | $                      | 62,383 |                     |   |       |  |      |  
|                                                                                 |  |                           |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |       |  |      |  
|Interest-bearing liabilities:                                                    |  |                           |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |       |  |      |  
|Savings, NOW, money-market deposit accounts                                      |  |                           | 40,534 |                        |      | 312                 |  | 1.54 |                 |  |                        | 33,527 |                     |   | 296   |  | 1.77 |  
|Time deposits                                                                    |  |                           | 30,263 |                        |      | 454                 |  | 3.01 |                 |  |                        | 17,856 |                     |   | 330   |  | 3.70 |  
|                                                                                 |  |                           |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |       |  |      |  
|Total interest-bearing deposits                                                  |  |                           | 70,797 |                        |      | 766                 |  | 2.17 |                 |  |                        | 51,383 |                     |   | 626   |  | 2.44 |  
|Other interest-bearing liabilities (2)                                           |  |                           | 556    |                        |      | 1                   |  | .36  |                 |  |                        | 1,028  |                     |   | 3     |  | 0.58 |  
|                                                                                 |  |                           |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |       |  |      |  
|Total interest-bearing liabilities                                               |  |                           | 71,353 |                        |      | 767                 |  | 2.16 |                 |  |                        | 52,411 |                     |   | 629   |  | 2.40 |  
|                                                                                 |  |                           |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |       |  |      |  
|Noninterest-bearing liabilities                                                  |  |                           | 6,792  |                        |      |                     |  |      |                 |  |                        | 4,137  |                     |   |       |  |      |  
|Stockholders equity                                                             |  |                           | 7,524  |                        |      |                     |  |      |                 |  |                        | 5,835  |                     |   |       |  |      |  
|                                                                                 |  |                           |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |       |  |      |  
|Total liabilities and stockholders equity                                       |  | $                         | 85,669 |                        |      |                     |  |      |                 |  | $                      | 62,383 |                     |   |       |  |      |  
|                                                                                 |  |                           |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |       |  |      |  
|Net interest income                                                              |  |                           |        |                        | $    | 1,362               |  |      |                 |  |                        |        |                     | $ | 988   |  |      |  
|                                                                                 |  |                           |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |       |  |      |  
|Interest-rate spread (3)                                                         |  |                           |        |                        |      |                     |  | 3.14 | %               |  |                        |        |                     |   |       |  | 3.19 | %
|                                                                                 |  |                           |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |       |  |      |  
|Net interest margin (4)                                                          |  |                           |        |                        |      |                     |  | 3.40 | %               |  |                        |        |                     |   |       |  | 3.41 | %
|                                                                                 |  |                           |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |       |  |      |  
|Ratio of average interest-earning assets to average interest-bearing liabilities |  |                           | 1.13   |                        |      |                     |  |      |                 |  |                        | 1.10   |                     |   |       |  |      |  
|                                                                                 |  |                           |        |                        |      |                     |  |      |                 |  |                        |        |                     |   |       |  |      |  

---

|(1) | Includes Federal Home Loan Bank stock, Federal Reserve Bank stock, federal funds sold and interest-bearing deposits.
|--- | --------------------------------------------------------------------------------------------------------------------

|(2) | Includes securities sold under agreements to repurchase.
|--- | --------------------------------------------------------

|(3) | Interest-rate spread represents the difference between the average yield on interest-earning assets and the average rate of interest-bearing liabilities.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Net interest margin is net interest income divided by average interest-earning assets.
|--- | --------------------------------------------------------------------------------------



16



---

##### Table of Contents

SUNCOAST BANCORP, INC. AND SUBSIDIARY



Comparison of the Three-Month Periods Ended June 30, 2004 and 2003



General. Net earnings applicable to common shareholders for the
three months ended June 30, 2004 was $36,000 or $.05 basic and diluted earnings per share compared to net earnings of $17,000 or $.02 basic and diluted earnings per share for the three months ended June 30, 2003. The increase in the Companys
net earnings was primarily due to an increase in net interest income, partially offset by an increase in noninterest expenses.



Interest Income and Expense. Interest income increased by $284,000 from $822,000 for the three months ended June 30, 2003 to $1,106,000 for
the three months ended June 30, 2004. Interest income on loans increased $283,000 primarily due to an increase in the average loan portfolio balance from $45.3 million for the three months ended June 30, 2003 to $68.7 million for the comparable
period in 2004 which was partially offset by a decrease in the weighted-average yield from 6.34% in 2003 to 5.84% in 2004. Interest on securities decreased $3,000 primarily due to a decrease in the weighted average yield from 3.77% in 2003 to 3.35%
in 2004, which was partially offset by an increase in the average securities balance to $10.5 million in 2004 from $9.7 million in 2003.



Interest expense on interest-bearing deposits increased to $403,000 for the three months ended June 30, 2004 compared to $322,000 for the three months
ended June 30, 2003. Interest expense on interest-bearing deposits increased due to an increase in the average balance from $53.8 million in 2003 to $73.5 million in 2004 partially offset by a decrease in the weighted rate paid from 2.39% in 2003 to
2.20% in 2004.



Provision for Loan Losses. The
provision for loan losses is charged to earnings to bring the total allowance to a level deemed appropriate by management and is based upon historical experience, the volume and type of lending conducted by the Company, industry standards, the
amount of nonperforming loans, general economic conditions, particularly as they relate to the Companys market areas, and other factors related to the collectibility of the Companys loan portfolio. The provision for loan losses was
$81,000 for the three months ended June 30, 2004 compared to $19,000 for the comparable period in 2003. Management believes the balance in the allowance for loan losses of $776,000 at June 30, 2004 is adequate.



Noninterest Income.Noninterest income increased $14,000
during the three month period ended June 30, 2004 compared to the same period in 2003.



Noninterest Expenses. Noninterest expenses increased $72,000 during the three-month period ended June 30, 2004 compared to the same period in 2003. Noninterest expense increased primarily due to an
increase in salaries and employee benefits.



Income
Taxes. The income taxes for the three months ended June 30, 2004 was $43,000 (an effective rate of 38.4%) compared to income taxes of $11,000 (an effective rate of 39.3%) for the comparable 2003 period.



17



---

##### Table of Contents

SUNCOAST BANCORP, INC. AND SUBSIDIARY



Comparison of the Six-Month Periods Ended June 30, 2004 and 2003



General. Net earnings applicable to common shareholders for the
six months ended June 30, 2004 was $50,000 or $.07 basic and diluted earnings per share compared to a net earnings of $11,000 or $.02 basic and diluted earnings per share for the six months ended June 30, 2003. The increase in the Companys net
earnings was primarily due to an increase in net interest income, partially offset by an increase in noninterest expenses.



Interest Income and Expense. Interest income increased by $512,000, from $1,617,000 for the six months ended June 30, 2003 to $2,129,000 for
the six months ended June 30, 2004. Interest income on loans increased $505,000 primarily due to an increase in the average loan portfolio balance from $43.6 million for the six months ended June 30, 2003 to $65.1 million for the comparable period
in 2004 which was partially offset by a decrease in the weighted-average yield from 6.43% in 2003 to 5.87% in 2004. Interest on securities increased $6,000 primarily due to an increase in the average securities balance to $10.5 million in 2004 from
$8.8 million in 2003, which was partially offset by a decrease in the weighted average yield from 4.21% in 2003 to 3.68% in 2004.



Interest expense on interest-bearing deposits increased to $766,000 for the six months ended June 30, 2004 compared to $626,000 for the six months ended
June 30, 2003. Interest expense on interest-bearing deposits increased due to an increase in the average balance from $51.4 million in 2003 to $70.8 million in 2004 partially offset by a decrease in the weighted rate paid from 2.44% in 2003 to 2.17%
in 2004.



Provision for Loan Losses. The
provision for loan losses is charged to earnings to bring the total allowance to a level deemed appropriate by management and is based upon historical experience, the volume and type of lending conducted by the Company, industry standards, the
amount of nonperforming loans, general economic conditions, particularly as they relate to the Companys market areas, and other factors related to the collectibility of the Companys loan portfolio. The provision for loan losses was
$122,000 for the six months ended June 30, 2004 compared to $40,000 for the comparable period in 2003. Management believes the balance in the allowance for loan losses of $776,000 at June 30, 2004 is adequate.



Noninterest Income.Noninterest income increased $17,000
during the six month period ended June 30, 2004 compared to the same period in 2003.



Noninterest Expenses. Noninterest expenses increased $125,000 during the six-month period ended June 30, 2004 compared to the same period in 2003. Noninterest expense increased primarily due to an
increase in salaries and employee benefits.



Income
Taxes. Income taxes for the six months ended June 30, 2004 was $77,000 (an effective rate of 38.1%) compared to income taxes of $7,000 (an effective rate of 38.9%) for the comparable 2003 period.



18



---

##### Table of Contents

SUNCOAST BANCORP, INC. AND SUBSIDIARY



Item 3. Controls and Procedures



|a. | Evaluation of disclosure controls and procedures. The Company maintains controls and procedures designed to ensure that information required to be disclosed in the reports
that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Based upon their
evaluation of those controls and procedures performed within 90 days of the filing date of this report, the Chief Executive and Chief Financial officers of the Company concluded that the Companys disclosure controls and procedures were
adequate.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|b. | Changes in internal controls. The Company made no significant changes in its internal controls or in other factors that could significantly affect these controls subsequent
to the date of the evaluation of those controls by the Chief Executive and Chief Financial officers.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



PART II. OTHER INFORMATION



Item 1. Legal Proceedings



There are no material
pending legal proceeding to which SunCoast Bancorp, Inc., or its subsidiary is a party or to which any of their property is subject.



Item 2. Submission of Matters to a Vote of Security Holders



The Annual Meeting of Shareholders (the Annual Meeting) of SunCoast Bancorp, Inc., was held on May 11, 2004, to consider the election of eight directors. Shareholders elected eight directors with terms
expiring at the Annual Meeting in 2005. The shareholders also voted upon the amendment of Officer and Employee Stock Option Plan.



At the Annual Meeting, 543,810 shares were present in person or by proxy. Listed below are the directors that were elected at the Annual Meeting, there terms and a
summary of the votes cast for each nominee:



|                        |  |               |  |         |  |         |  |        
|----------------------- |  | ------------- |  | ------- |  | ------- |  | -------
|                        |  | Term Expiring |  | For     |  | Against |  | Abstain
|Larry Berberich         |  | 2005          |  | 543,810 |  |        |  |       
|Henry E. Black, M.D.    |  | 2005          |  | 543,810 |  |        |  |       
|H.R. Foxworthy          |  | 2005          |  | 543,810 |  |        |  |       
|William P. Gnerre       |  | 2005          |  | 543,810 |  |        |  |       
|James C. Rutledge       |  | 2005          |  | 543,810 |  |        |  |       
|John T. Stafford        |  | 2005          |  | 543,810 |  |        |  |       
|Dr. Stanley A. Williams |  | 2005          |  | 543,810 |  |        |  |       
|Roy A. Yahraus          |  | 2005          |  | 543,810 |  |        |  |       



The shareholder vote on one other
matter considered at the meeting was as follows-



|                                                        |  |         |  |         |  |        
|------------------------------------------------------- |  | ------- |  | ------- |  | -------
|                                                        |  | For     |  | Against |  | Abstain
|Amendment of the Officer and Employee Stock Option Plan |  | 519,850 |  | 22,950  |  | 1,010  



19



---

##### Table of Contents

SUNCOAST BANCORP, INC. AND SUBSIDIARY



PART II. OTHER INFORMATION, CONTINUED



Item 6. Exhibits and Reports on Form 8-K



|(a) | Exhibits
|--- | --------



|            |  |                                                                                                                                                                                                                      
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description of Exhibit                                                                                                                                                                                               
|3.1         |  | Restated Articles of Incorporation of SunCoast Bancorp, Inc. (Incorporated by reference to Exhibit 3.1 to SunCoasts Registration Statement No. 333-70231 (the Registration
Statement).                            
|            | 
|3.2         |  | Bylaws of SunCoast Bancorp, Inc. (Incorporated by reference to Exhibit 3.2 to the Registration Statement).                                                                                                           
|            | 
|3.3         |  | Articles of Amendment of the Restated Articles of Incorporation of SunCoast Bancorp, Inc. filed with the Florida Secretary of State on June 23, 2003.                                                                
|            | 
|4.1         |  | Specimen Stock certificate of SunCoast Bancorp, Inc. (Incorporated by reference to Exhibit 4.2 to the Registration Statement).                                                                                       
|            | 
|10.1        |  | Form of Employment Agreement entered into between the Bank and William F. Gnerre (Incorporated by reference to Exhibit 10.2 to the Registration Statement)*                                                          
|            | 
|10.2        |  | SunCoast Bancorp, Inc. Director Stock Option Plan (Incorporated by reference to Exhibit 10.3 to the Registration Statement)*                                                                                         
|            | 
|10.3        |  | SunCoast Bancorp, Inc. Employee Stock Option Plan (Incorporated by reference to Exhibit 10.4 to the Registration Statement)*                                                                                         
|            | 
|10.4        |  | Lease Agreement dated August 28, 1998 between SunCoast Bancorp, Inc. and Palmer Medical Center Ltd. (Incorporated by reference to Exhibit 10.5 to the Form 10-KSB filed for the fiscal year
ended December 31, 1999).
|            | 
|10.5        |  | Amendment No. 1 to SunCoast Bancorp, Inc. Officers and Employees Stock Option Plan                                                                                                                                 
|            | 
|31.1        |  | Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act                                                                                                                 
|            | 
|31.2        |  | Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act                                                                                                                 
|            | 
|32.1        |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002                                                                        
|            | 
|32.2        |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002                                                                        

---

|* | Represents a management contract or compensatory plan or announcement required to be filed as an exhibit.
|- | ---------------------------------------------------------------------------------------------------------



|(b) | Reports on Form 8-K.There were no reports on Form 8-K filed during the three months ended June 30, 2004.
|--- | --------------------------------------------------------------------------------------------------------



20



---

##### Table of Contents

SUNCOAST BANCORP, INC. AND SUBSIDIARY



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.



|                       |  |                        |  |                                                               
|---------------------- |  | ---------------------- |  | --------------------------------------------------------------
|                       |  | SUNCOAST BANCORP, INC.
|                       |  | (Issuer)              
|                       |  |                       
|Date: August 12 , 2004 |  | By:                    |  | /s/ John T. Stafford                                          
|                       |  |                        |  | John T. Stafford, President and Chief Executive Officer       
|                       |  |                       
|Date: August 12 , 2004 |  | By:                    |  | /s/ John S. Wilks                                             
|                       |  |                        |  | John S. Wilks, Chief Financial Officer                        
|                       |  |                        |  | (Principal Financial Officer and Principal Accounting Officer)



21