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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-QSB

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934





|For Quarterly Period Ended |  | Commission File
Number:
|-------------------------- |  | -----------------------
|June 30, 2003              |  | 33-41045               



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SARASOTA BANCORPORATION, INC.

(Exact name of small business issuer as specified in its charter)



|Florida                                                        |  | 65-0235255                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



Two North Tamiami
Trail, Suite 100, Sarasota, Florida 34236

(Address of principal executive offices)



(941) 955-2626

(Issuers telephone number)



Not applicable

(Former name, former address and former fiscal year, if changed since last report)



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Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the last 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



|Yes    þ |  | No ̈
|-------- |  | ---



State the number of shares outstanding
of each of the issuers classes of common equity, as of the latest practicable date:



|Common Stock, $.01 Par Value |  | 589,000 shares              
|---------------------------- |  | ----------------------------
|Class                        |  | Outstanding at July 24, 2003



Transitional Small Business Disclosure
Format (Check One):



|Yes ̈No    þ |  | 
|----------- |  | 



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PART I. FINANCIAL INFORMATION



|Item 1. |  | FINANCIAL STATEMENTS
|------- |  | --------------------



SARASOTA BANCORPORATION, INC.

AND SUBSIDIARY



CONSOLIDATED BALANCE SHEETS

June 30, 2003 and December 31, 2002

(UNAUDITED)



|ASSETS                                                                                   |  | June 30, 2003 |             |   | December 31, 2002 |            
|---------------------------------------------------------------------------------------- |  | ------------- | ----------- | - | ----------------- | -----------
|Cash and due from banks                                                                  |  | $             | 3,597,840   |   |                   | 5,246,757  
|Federal funds sold                                                                       |  |               | 7,136,996   |   |                   | 1,925,598  
|                                                                                         |  |               |             |   |                   |            
|Total cash and cash equivalents                                                          |  |               | 10,734,836  |   |                   | 7,172,355  
|Interest-bearing deposit in bank                                                         |  |               | 200,000     |   |                   | 200,000    
|Securities available for sale                                                            |  |               | 25,334,685  |   |                   | 32,398,024 
|Federal Home Loan Bank stock, at cost                                                    |  |               | 700,000     |   |                   | 354,800    
|Loans (Net)                                                                              |  |               | 129,939,617 |   |                   | 111,167,571
|Accrued interest receivable                                                              |  |               | 651,226     |   |                   | 588,892    
|Servicing rights                                                                         |  |               |            |   |                   | 106,015    
|Furniture and equipment, net                                                             |  |               | 323,990     |   |                   | 341,465    
|Deferred income taxes                                                                    |  |               | 300,072     |   |                   | 217,098    
|Other assets                                                                             |  |               | 84,548      |   |                   | 32,371     
|                                                                                         |  |               |             |   |                   |            
|TOTAL ASSETS:                                                                            |  | $             | 168,268,974 |   |                   | 152,578,591
|                                                                                         |  |               |             |   |                   |            
|                                                                                         |  |              
|LIABILITIES AND STOCKHOLDERS EQUITY                                                     |  |               |             |   |                   |            
|                                                                                         |  |              
|LIABILITIES:                                                                             |  |               |             |   |                   |            
|Noninterest-bearing demand deposits                                                      |  | $             | 14,067,626  |   |                   | 16,794,404 
|Interest-bearing demand deposits                                                         |  |               | 33,294,427  |   |                   | 25,978,639 
|Savings deposits                                                                         |  |               | 1,117,167   |   |                   | 1,096,045  
|Other time deposits                                                                      |  |               | 87,316,877  |   |                   | 83,362,318 
|                                                                                         |  |               |             |   |                   |            
|Total deposits                                                                           |  |               | 135,796,097 |   |                   | 127,231,406
|FHLB advances                                                                            |  |               | 14,000,000  |   |                   | 7,000,000  
|Repurchase agreements                                                                    |  |               | 5,301,443   |   |                   | 6,181,937  
|Income taxes payable                                                                     |  |               | 20,000      |   |                   |           
|Accrued interest payable                                                                 |  |               | 202,667     |   |                   | 114,823    
|Other liabilities                                                                        |  |               | 204,435     |   |                   | 198,719    
|                                                                                         |  |               |             |   |                   |            
|TOTAL LIABILITIES:                                                                       |  |               | 155,524,642 |   |                   | 140,726,885
|                                                                                         |  |               |             |   |                   |            
|                                                                                         |  |              
|COMMITMENTS AND CONTINGENCIES                                                            |  |               |            |   |                   |           
|                                                                                         |  |              
|STOCKHOLDERS EQUITY:                                                                    |  |               |             |   |                   |            
|Preferred stock, $.10 Par Value. Authorized 1,000,000 shares; None Issued or Outstanding |  |               |            |   |                   |           
|Common Stock, $.01 Par Value. Authorized 10,000,000 shares; Outstanding 589,000 shares   |  |               | 5,890       |   |                   | 5,890      
|Additional paid-in capital                                                               |  |               | 6,150,463   |   |                   | 6,150,463  
|Treasury stock, at cost                                                                  |  |               | (416        | ) |                   | (5,012     
|Retained earnings                                                                        |  |               | 6,270,964   |   |                   | 5,241,653  
|Accumulated other comprehensive income (loss)                                            |  |               | 317,431     |   |                   | 458,712    
|                                                                                         |  |               |             |   |                   |            
|TOTAL STOCKHOLDERS EQUITY:                                                              |  |               | 12,744,332  |   |                   | 11,851,706 
|                                                                                         |  |               |             |   |                   |            
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY:                                              |  | $             | 168,268,974 |   |                   | 152,578,591
|                                                                                         |  |               |             |   |                   |            



REFER
TO NOTES TO THE FINANCIAL STATEMENTS.





2



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SARASOTA BANCORPORATION, INC.

SARASOTA, FLORIDA



CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE MONTHS ENDED JUNE 30, 2003 AND JUNE 30, 2002 AND

FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND JUNE 30, 2002

(UNAUDITED)



|                                                    |  | THREEMONTHS ENDED 6/30/2003 |           | THREEMONTHS ENDED 6/30/2002 |   | SIX MONTHS 6/30/2003 |  | SIX MONTHS 6/30/2002 | 
|--------------------------------------------------- |  | --------------------------- | --------- | --------------------------- | - | -------------------- |  | -------------------- | 
|INTEREST INCOME:                                    |  |                             |           |                             |   |                      |  |                      | 
|Loans receivable and fees on loans                  |  | $                           | 2,221,226 |                             | $ | 2,056,088            |  | 4,346,572            | 
|Investment securities                               |  |                             | 200,976   |                             |   | 373,527              |  | 496,533              | 
|Federal funds sold                                  |  |                             | 23,704    |                             |   | 14,031               |  | 41,942               | 
|                                                    |  |                             |           |                             |   |                      |  |                      | 
|TOTAL INTEREST INCOME:                              |  |                             | 2,445,906 |                             |   | 2,443,646            |  | 4,885,047            | 
|                                                    |  |                             |           |                             |   |                      |  |                      | 
|                                                    |  |                             |           |                            
|INTEREST EXPENSE:                                   |  |                             |           |                             |   |                      |  |                      | 
|Deposits                                            |  |                             | 764,631   |                             |   | 840,476              |  | 1,529,160            | 
|Other                                               |  |                             | 94,552    |                             |   | 75,060               |  | 188,804              | 
|                                                    |  |                             |           |                             |   |                      |  |                      | 
|TOTAL INTEREST EXPENSE:                             |  |                             | 859,183   |                             |   | 915,536              |  | 1,717,964            | 
|                                                    |  |                             |           |                             |   |                      |  |                      | 
|NET INTEREST INCOME:                                |  |                             | 1,586,723 |                             |   | 1,528,110            |  | 3,167,083            | 
|Provision for loan losses                           |  |                             | 187,000   |                             |   | 133,800              |  | 290,100              | 
|                                                    |  |                             |           |                             |   |                      |  |                      | 
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |  |                             | 1,399,723 |                             |   | 1,394,310            |  | 2,876,983            | 
|                                                    |  |                             |           |                            
|Noninterest income:                                 |  |                             |           |                             |   |                      |  |                      | 
|Service charges on deposit accounts                 |  |                             | 45,053    |                             |   | 52,364               |  | 91,434               | 
|Gain on sale of securities                          |  |                             | 194,470   |                             |   |                     |  | 194,470              | 
|Net gain on sale of repossessed assets              |  |                             |          |                             |   | 320                  |  |                     | 
|Other income                                        |  |                             | 44,433    |                             |   | 62,395               |  | 87,421               | 
|                                                    |  |                             |           |                             |   |                      |  |                      | 
|Total noninterest income                            |  |                             | 283,956   |                             |   | 115,079              |  | 373,325              | 
|                                                    |  |                             |           |                             |   |                      |  |                      | 
|                                                    |  |                             |           |                            
|Noninterest expenses:                               |  |                             |           |                             |   |                      |  |                      | 
|Salaries and employee benefits                      |  |                             | 352,169   |                             |   | 322,322              |  | 703,717              | 
|Occupancy                                           |  |                             | 117,349   |                             |   | 110,011              |  | 232,747              | 
|Data processing                                     |  |                             | 61,734    |                             |   | 51,777               |  | 128,194              | 
|Professional fees                                   |  |                             | 38,351    |                             |   | 69,760               |  | 89,386               | 
|Other                                               |  |                             | 184,759   |                             |   | 208,632              |  | 386,825              | 
|                                                    |  |                             |           |                             |   |                      |  |                      | 
|Total noninterest expenses                          |  |                             | 754,362   |                             |   | 762,502              |  | 1,540,869            | 
|                                                    |  |                             |           |                             |   |                      |  |                      | 
|INCOME BEFORE TAXES                                 |  |                             | 929,317   |                             |   | 746,887              |  | 1,709,439            | 
|PROVISION FOR TAXES                                 |  |                             | 313,640   |                             |   | 284,350              |  | 621,240              | 
|                                                    |  |                             |           |                             |   |                      |  |                      | 
|NET INCOME                                          |  | $                           | 615,677   |                             |   | 462,537              |  | 1,088,199            | 
|                                                    |  |                             |           |                             |   |                      |  |                      | 
|NET INCOME PER SHARE OF COMMON STOCK                |  | $                           | 1.05      |                             | $ | 0.83                 |  | 1.85                 | 
|                                                    |  |                             |           |                             |   |                      |  |                      | 



REFER
TO NOTES TO THE FINANCIAL STATEMENTS.



3



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SARASOTA BANCORPORATION, INC.

AND SUBSIDIARY



CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002

(UNAUDITED)



|                                                                          |  | SIX MONTHS ENDED 6/30/2003 |             |   | SIX MONTHS ENDED 6/30/2002 |  
|------------------------------------------------------------------------- |  | -------------------------- | ----------- | - | -------------------------- | -
|CASH FLOWS FROM OPERATING ACTIVITY:                                       |  |                            |             |   |                            |  
|                                                                          |  |                           
|NET INCOME                                                                |  | $                          | 1,088,199   |   |                            | $
|ADJUSTMENTS TO RECONCILE NET INCOME TO NET NETCASH FLOWS FROM OPERATIONS: |  |                            |             |   |                            |  
|Depreciation and amortization                                             |  |                            | 31,464      |   |                            |  
|Amortization of servicing rights                                          |  |                            | 106,015     |   |                            |  
|Provision for Loan Losses                                                 |  |                            | 290,100     |   |                            |  
|Net change in                                                            |  |                            |             |   |                            |  
|Accrued Interest Receivable                                               |  |                            | (62,334     | ) |                            |  
|Repossessed assets                                                        |  |                            |            |   |                            |  
|Other assets                                                              |  |                            | (52,177     | ) |                            |  
|Income taxes payable                                                      |  |                            | 20,000      |   |                            |  
|Accrued Interest payable and other liabilities                            |  |                            | 93,560      |   |                            |  
|                                                                          |  |                            |             |   |                            |  
|NET CASH PROVIDED BY OPERATING ACTIVITIES:                                |  |                            | 1,514,827   |   |                            |  
|                                                                          |  |                            |             |   |                            |  
|                                                                          |  |                           
|CASH FLOW FROM INVESTING ACTIVITIES:                                      |  |                            |             |   |                            |  
|Proceeds (purchase) of investment securities, net                         |  |                            | 6,839,084   |   |                            |  
|Purchase of FHLB stock                                                    |  |                            | (345,200    | ) |                            |  
|Proceeds from maturity of interest-bearing deposit in bank                |  |                            |            |   |                            |  
|Net increase in loans                                                     |  |                            | (19,062,146 | ) |                            |  
|Purchase of furniture and equipment                                       |  |                            | (13,989     | ) |                            |  
|                                                                          |  |                            |             |   |                            |  
|NET CASH USED IN INVESTING ACTIVITIES:                                    |  |                            | (12,582,251 | ) |                            |  
|                                                                          |  |                            |             |   |                            |  
|                                                                          |  |                           
|CASH FLOW FROM FINANCING ACTIVITIES:                                      |  |                            |             |   |                            |  
|Net increase in deposits                                                  |  |                            | 8,564,691   |   |                            |  
|Net (decrease) increase in repurchase agreements                          |  |                            | (880,494    | ) |                            |  
|Net increase in FHLB advances                                             |  |                            | 7,000,000   |   |                            |  
|Dividends paid                                                            |  |                            | (58,888     | ) |                            |  
|Proceeds from sale of common stock                                        |  |                            |            |   |                            |  
|Purchase of treasury stock                                                |  |                            |            |   |                            |  
|Proceeds from sale of treasury stock                                      |  |                            | 4,596       |   |                            |  
|                                                                          |  |                            |             |   |                            |  
|NET CASH PROVIDED BY FINANCING ACTIVITIES:                                |  |                            | 14,629,905  |   |                            |  
|                                                                          |  |                            |             |   |                            |  
|NET CHANGE IN CASH AND CASH EQUIVALENTS                                   |  |                            | 3,562,481   |   |                            |  
|CASH AND CASH EQUIVALENTS BEGINNING OF YEAR                               |  |                            | 7,172,355   |   |                            |  
|                                                                          |  |                            |             |   |                            |  
|CASH AND CASH EQUIVALENTS END OF YEAR                                     |  | $                          | 10,734,836  |   |                            |  
|                                                                          |  |                            |             |   |                            |  
|Supplemental Disclosure of Cash Flow Information                         |  |                            |             |   |                            |  
|Interest paid                                                             |  | $                          | 1,630,120   |   |                            | $
|                                                                          |  |                            |             |   |                            |  
|Income taxes paid                                                         |  | $                          | 601,240     |   |                            | $
|                                                                          |  |                            |             |   |                            |  



REFER
TO NOTES TO THE FINANCIAL STATEMENTS.



4



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SARASOTA BANCORPORATION, INC.

AND SUBSIDIARY



Notes to Financial Statements (Unaudited)

June 30, 2003



Note 1Basis of Presentation



The accompanying financial statements have been prepared in accordance with
accounting principles generally accepted in the United States for Interim Financial Statements and with the instructions to Form 10-QSB. Accordingly, they do not include all the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the six month period
ended June 30, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003. For further information, refer to the financial statements and footnotes thereto included in the Companys Form 10-KSB
for the year ended December 31, 2002.



Note 2Summary of Organization



Sarasota BanCorporation, Inc., Sarasota, Florida (the
Company), was incorporated under the laws of the State of Florida on December 28, 1990, for the purpose of becoming a bank holding company with respect to a proposed de novo bank, Sarasota Bank (the Bank), Sarasota,
Florida. Prior to formation of the Company, the Companys organizers formed a partnership to commence organizing a bank holding company. The partnership was subsequently merged into the Company as of December 30, 1990. As a result, each
organizers capital account in the partnership was exchanged for common stock of the Company and all assets of the partnership were contributed as capital to the Company in consideration of the issuance of its common stock to the organizers. On
September 15, 1992, the organizers received approval from the Office of the Comptroller of the State of Florida for the organization of a new state banking association; an approval was also received on May 29, 1992 from the Federal Reserve Board to
form a one-bank holding company. On September 15, 1992, the Company acquired 100% of the Banks capital stock by injecting $4.25 million into the Banks capital accounts.



Note 3Significant Accounting Policies



The accounting and reporting policies of the Company conform to generally accepted accounting principles and to general practices in the banking
industry. The following summarizes the more significant of these policies:



Investment Securities.  As of June 30, 2003, no Investment Securities were carried as Held to Maturity.



Available for Sale Securities.  As of June 30, 2003, the market value of Available for Sale
Securities was $25,334,685.



Earnings Per
Share.  Earnings per share were $1.05 for the quarter ended June 30, 2003. The earnings per share for this quarter may not be indicative of projected earnings (losses) for the year ending December 31, 2003.



5



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Income Taxes.  The Company will be subject to taxation whenever taxable income is
generated. As of June 30, 2003, the provision for income taxes was $621,240.



Statement of Cash Flows.  The presentation of the statement of cash flows is condensed as permitted by the Securities and Exchange Commission. The classification of cash flows is consistent with the
requirements of FASB Statement No. 95.



Note 4Related Parties



One of the Companys directors serves as legal
counsel for the Company. Gross fees for these services during the six months ended June 30, 2003 were $23,741. Another director provides advertising, printing and other miscellaneous services to the Company. The gross billings, which include costs
passed through to other companies providing services to the Company, were $18,025 for the six months ended June 30, 2003. Another director provides accounting services for the Company. Fees for these services for the six months ended June 30, 2003
were $1,025.



Note 5Stock-Based Compensation



Options granted to employees are accounted for using the intrinsic value
method under APB Opinion No. 25, Accounting for Stock Issued to Employees, for which no compensation cost has been recognized. The pro forma after tax effect of compensation cost attributable to the options was immaterial to the
operating results for the quarters ending June 30, 2003 and June 30, 2002.



6



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|Item 2. |  | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- |  | -------------------------------------------------------------------------------------



The following discussion addresses the factors that have affected Sarasota BanCorporation, Inc.s (the
Company) financial condition and results of operations reflected in the Companys unaudited financial statements for the three and six months ended June 30, 2003.



Results of Operations



The Companys net income for the second quarter of 2003 was $615,700, a 33.12% increase compared to $462,500 for the same period in 2002. The
Companys net income for the six-month period ended June 30, 2003 was $1,088,200, a 39.35% increase compared to the same period in 2002. Earnings per share were $1.05 and $1.85 for the three- and six-month periods ended June 30, 2003,
respectively, compared to $0.83 and $1.40 for the comparable periods in 2002. The increase in net income and earnings per share is primarily attributable to an increase in interest and fees earned on loans, a decrease in interest expense and an
increase in the net gains associated with the sale of an investment security during the three- and six-month periods ended June 30, 2003.



Interest on investment securities decreased 46.18% and 27.59% to $201,000 and $496,500, respectively for the three- and six-month periods ended June 30,
2003. Interest on Federal Funds sold increased 69.29% to $23,700 for the three-month period and decreased 6.26% to $41,900 for the six-month periods ended June 30, 2003. The decrease in interest on investment securities and Federal Funds sold is
primarily attributable to a continued decrease in the interest rate environment. Interest and fees on loans increased $165,100, or 8.03%, and $339,700, or 8.48%, to $2,221,200 and $4,346,600, respectively for three- and six-month periods ended June
30, 2003.



Net interest income after the provision for loan
losses for the second quarter of 2003 increased $5,400, or 0.39%, to $1,399,700 from $1,394,300 for the second quarter of 2002. Net interest income after the provision for loan losses for the six months ended June 30, 2003 increased $288,800, or
11.16%, to $2,877,000 from $2,588,200 for the same period in 2002. The increase in net interest income resulted primarily from a increase in interest and fees earned on loans. The cost of deposits averaged 2.24% and 2.29%, respectively, for the
three- and six-month periods ended June 30, 2003 compared to 2.90% and 3.05% for the same periods of 2002. The net interest margin for the three months and six months ended June 30, 2003 was 3.75% and 3.83% on average earning assets of $164,956,200
and $161,350,400. For the same periods in 2002, the net interest margin was 4.44% and 4.31% on average earning assets of $134,305,800 and $130,389,200, respectively. The decrease in net interest margin reflects a rapid decrease in the interest
income related to investment securities. This decrease is due to the acceleration of premium payments on mortgage-backed securities associated with the high volume of mortgage refinancings currently being experienced in the economy.



Non-interest expense for the second quarter of 2003 decreased $8,100, or
1.06%, to $754,400, as compared to the second quarter of 2002. Non-interest expense for the six-month period ended June 30, 2003 increased $44,200, or 2.95%, to $1,540,900 as compared to the same period in 2002. The increase in non-interest expense
is primarily the result of an increase in costs associated with employee salaries and benefits.



7



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Non-interest income increased $168,900, or 146.74%, during the second quarter ended June 30, 2003 as
compared to the same period in 2002, to $284,000. For the six-month period ended June 30, 2003, non-interest income increased $178,100, or 91.24% to $373,300 compared to $195,200 for the same period in 2002. The increase in non-interest income for
the three- and six-month periods ended June 30, 2003 is primarily attributable to an increase in the net gains associated with the sale of an investment security.



Financial Condition



For the six-month period ended June 30, 2003, the Company experienced continued asset, loan and deposit growth. Total assets increased 10.28% to
$168,269,000 at June 30, 2003 from $152,578,900 at December 31, 2002. This increase is primarily attributable to loan growth.



The allowance for loan loss provision for the second quarter of 2003 was $187,000 compared to $133,800 in the second quarter of 2002. The reserve balance
for loan losses as of June 30, 2003 was $1,820,600 as compared to $1,648,300 at December 31, 2002. At June 30, 2003, the allowance for loan losses represented 1.38% of total loans outstanding compared to 1.46% at December 31, 2002. Management
considers the allowance to be adequate based upon evaluations of specific loans and the weighting of various loan categories as suggested by the Banks internal loan rating system. The provision for loan losses is based upon managements
continuing analysis and evaluation of various factors, including current economic conditions, the size of the loan portfolio, past loan loss experience, underlying collateral value, the Banks internal rating system and other factors deemed
relevant by management.



Through the second quarter of 2003,
there were 28 charged-off loans in the aggregate amount of $140,700 and total recoveries of $23,000, or a net of 0.09% of total loans outstanding. The ratio of non-performing loans (including loans 90 days or more past due) to total outstanding
loans was $983,700, or 0.75% of total loans outstanding as of June 30, 2003, compared to 0.14% of total loans outstanding as of June 30, 2002. At December 31, 2002, non-performing loans were $1,077,677, or 0.95%, of total loans outstanding. The
non-performing loans outstanding at June 30, 2003 consist primarily of one commercial customer with several non-performing loans. The debt to this customer has been restructured and payments have been made in accordance with the restructure
agreement. There were no loans classified as performing that are past due in excess of 90 days as of June 30, 2003.



Capital Adequacy



Federal banking regulators have established certain capital adequacy standards required to be maintained by banks and bank holding companies. These
regulations establish minimums of risk-based capital of 4% for core capital (Tier 1 capital), 8% for total risk-based capital, and at least 3% for the leverage ratio. Three percent is the minimum leverage ratio for the most highly rated banks. All
other banks are required to meet a minimum of at least 100 or 200 basis points above the 3% level. The Companys Tier 1 risk-based capital ratio at June 30, 2003 was 9.57%, its total risk-based capital ratio was 10.82%, and its leverage ratio
was 7.48%.



Liquidity



The Company views liquidity as the ability to provide for the credit needs
of the market and to provide funds for deposit withdrawals. With a loan to deposit ratio of 95.64% at June 30, 2003,



8



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cash and due from banks of $3,597,800 and federal funds sold of $7,137,000, the Company does not anticipate any events which would require liquidity beyond
that which is available through deposit growth or its investment portfolio. The Company actively manages the levels, types, and maturities of earning assets in relation to the sources available to fund current and future needs to ensure adequate
funding will be available at all times. There are no known trends or any known commitments or uncertainties that will result in the Companys liquidity increasing or decreasing in any material way.



Recent Developments



On June 25, 2003, the Company signed a definitive Agreement and Plan of Merger (the Merger Agreement) which
provides for the acquisition of the Company by The Colonial BancGroup, Inc., a Delaware corporation (Colonial) through the merger of the Company with and into Colonial. The Board of Directors of the Company approved the Merger Agreement
and the transactions contemplated thereby.



As a result of the
merger, each issued and outstanding share of common stock of the Company will be exchanged for:



| |  |  | 4.6664 shares (the Exchange Ratio) of Colonial common stock (with any fractional shares to be exchanged for cash), provided that the Market Value of Colonials
common stock on the effective date of the merger is $13.31 per share;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | if the Market Value is less than $13.31 per share, then, in addition to the shares of Colonial common stock received, each shareholder will also receive a cash payment equal to the
difference between the Market Value and $13.31, multiplied by the Exchange Ratio; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | if the Market Value exceeds $13.31 per share, then each share of the Companys common stock will be converted into a number of shares of Colonial common stock which equals
$62.11 divided by the Market Value.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



For purposes
of the Merger Agreement, Market Value equals the average closing price of Colonial common stock over the ten trading day period ending five business days prior to the date of closing.



Consummation of the merger is subject to various conditions, including approval of the Merger Agreement and the merger by
shareholders of the Company, as required under Florida law, receipt of customary banking regulatory approvals and satisfaction of certain other conditions.



Cautionary Note Regarding Forward-Looking Statements



The Company may, from time to time, make written or oral forward-looking statements, including statements contained in the Companys filings with the
Securities and Exchange Commission and its reports to stockholders. Such forward-looking statements are made based on managements belief as well as assumptions made by, and information currently available to, management pursuant to safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. The Companys actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including
governmental monetary and fiscal



9



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policies, deposit levels, loan demand, loan collateral values, securities portfolio values and interest rate risk management; the effects of competition in
the banking business from other commercial banks, savings and loan associations, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market mutual funds and other financial
institutions operating in the Companys market area and elsewhere, including institutions operating through the Internet; changes in acquisitions; failure of assumptions underlying the establishment of reserves for loan losses, including the
value of collateral underlying delinquent loans and other factors. The Company cautions that such factors are not exclusive. The Company does not undertake to update any forward-looking statements that may be made from time to time by, or on behalf
of, the Company.



|Item 3. |  | Controls and Procedures
|------- |  | -----------------------



Within the 90 days prior to the filing date of this report, the Company carried out an evaluation, under the supervision and with the participation of the
Companys management, including the Companys Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Companys disclosure controls and procedures pursuant to Exchange Act Rule
15d-15. Based upon that evaluation, the Companys Chief Executive Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures are effective in timely alerting them to material information relating to
the Company and its subsidiary required to be included in the Companys Securities and Exchange Commissions filings. Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to
be disclosed in Company reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms.



There have been no significant changes in the Companys internal
controls or in other factors that could significantly affect internal controls subsequent to the date management carried out this evaluation.





10



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PART II. OTHER INFORMATION



|Item 4. |  | Submission of Matters to a Vote of Security Holders
|------- |  | ---------------------------------------------------



The 2003 Annual Meeting of Shareholders of the Company was held on April 16, 2003. At the meeting the following persons were elected as Class II directors
to serve for a term of three years and until their successors are elected and qualified: Susan M. Baker, Kenneth H. Barr and Gilbert J. Wellman.



The results of voting with respect to the election of the Class I directors were as follows:



|                   |  | Votes FOR |  | Votes WITHHELD
|------------------ |  | --------- |  | --------------
|Susan M. Baker     |  | 460,573   |  | 100           
|Kenneth H. Barr    |  | 460,573   |  | 100           
|Gilbert J. Wellman |  | 460,573   |  | 100           



The following persons
did not stand for reelection to the Board at the 2003 Annual Meeting of Shareholders as their term of office continued after the Annual Meeting: James W. Demler, M.D., Edward S. Levi, A. Dean Pratt, Timothy J. Clarke, Christine L. Jennings, Sam D.
Norton and Michael R. Pender, Jr.



No other matters were
presented or voted for at the Annual Meeting.



|Item 5. |  | Other Information
|------- |  | -----------------



On April 16, 2003, the Board of Directors of the Company declared a $0.10 cash dividend on each share of the Companys outstanding common
stock. The record date for determining shareholders entitled to the cash dividend was May 1, 2003 and the cash dividend was paid on May 15, 2003.



|Item 6. |  | Exhibits and Reports on Form 8-K
|------- |  | --------------------------------



|(a)      The following exhibit is filed with this report.                                                                                                                                   
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                            
|Exhibit 2.1                                                                                                                                                                                 
|                                                                                                                                                                                            
|Exhibit 31.1                                                                                                                                                                                
|                                                                                                                                                                                            
|Exhibit 31.2                                                                                                                                                                                
|                                                                                                                                                                                            
|Exhibit 32                                                                                                                                                                                  
|                                                                                                                                                                                            
|(b)      Reports on Form 8-K. The Company filed a report on Form 8-K on June 27, 2003 regarding its execution of
a definitive Agreement and Plan of Merger with The Colonial BancGroup, Inc.





11



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SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



|                        |  | SARASOTA BANCORPORATION, INC
|----------------------- |  | ----------------------------
|                        |  |                             
|Dated:    July 25, 2003 |  | By:                         
|                        |  |                             
|Dated:    July 25, 2003 |  | By:                         



12



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EXHIBIT INDEX



|Exhibit No. |  | Description                                                            
|----------- |  | -----------------------------------------------------------------------
|            | 
|31.1        |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|            | 
|31.2        |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|            | 
|32          |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002