##### Table of Contents



U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-QSB

|     |  |                                                                             
|---- |  | ----------------------------------------------------------------------------
|[X]  |  | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
|     |  | 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003                      
|     |  |                                                                             
|[  ] |  | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES               
|     |  | EXCHANGE ACT OF 1934 FOR THE TRANSITION REPORT FROM   TO                    

Commission file number 0-23619

Tarpon Coast Bancorp, Inc.

---

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


|                                |  |                    
|------------------------------- |  | -------------------
|Florida                         |  | 65-0772718         
|                                |  |                    
|(State or other jurisdiction of |  | (I.R.S. Employer   
|incorporation or organization)  |  | Identification No.)

1490 Tamiami Trail
Port Charlotte, FL 33948

---

(Address of principal executive offices)


941-629-8111

---

(Issuers telephone number)


Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant, as 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.

|                                               |  |                                    |                 | 
|---------------------------------------------- |  | ---------------------------------- | --------------- | 
|Class                                          |  | Outstanding as of October 31, 2003
|                                               |  |                                   
|Common Stock, $.01 par value                   |  |                                    | 1,182,151       | 
|                                              
|Transitional Small Business Disclosure Format: |  |                                    | Yes [  ] No [X] | 





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TABLE OF CONTENTS



|                                               |                                                                                               |                                            |  |  |  |  |  | 
|---------------------------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------ |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION                
|                                               |                                                                                               | CONSOLIDATED BALANCE SHEETS               
|                                               |                                                                                               | CONSOLIDATED STATEMENTS OF OPERATIONS     
|                                               |                                                                                               | CONSOLIDATED STATEMENTS OF OPERATIONS     
|                                               |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                                               |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                               | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                               | Item 3. Controls and Procedures                                                              
|PART II  OTHER INFORMATION                   
|                                               | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                                               | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                                    
|EX-31.1 Section 302 Certification of CEO      
|EX-31.2 Section 302 Certification of President
|EX-31.3 Section 302 Certification of CFO      
|EX-32.1 Section 906 Certification of CEO      
|EX-32.2 Section 906 Certification of President
|EX-32.3 Section 906 Certification of CFO      



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##### Table of Contents



TARPON COAST BANCORP, INC.

INDEX

|                               |  |         |    |                                                                                 |  |   
|------------------------------ |  | ------- | -- | ------------------------------------------------------------------------------- |  | --
|PART I - FINANCIAL INFORMATION |  |        
|                               |  | Item 1. |    | Condensed Consolidated Financial Statements                                     |  |   
|                               |  |         |    | Balance Sheets as of September 30, 2003 and December 31, 2002                   |  | 1 
|                               |  |         |    | Statements of Operations for the Three Months
Ended September 30, 2003 and 2002 |  | 2 
|                               |  |         |    | Statements of Operations for the Nine Months
Ended September 30, 2003 and 2002  |  | 3 
|                               |  |         |    | Statements of Cash Flows for the Nine Months
Ended September 30, 2003 and 2002  |  | 4 
|                               |  |         |    | Notes to Financial Statements                                                   |  | 5 
|                               |  | Item 2. |    | Managements Discussion and Analysis                                            |  | 7 
|                               |  | Item 3. |    | Controls and Procedures                                                         |  | 9 
|PART II - OTHER INFORMATION    |  |        
|                               |  | Item 4. |    | Submission of Matters to a Vote of Security Holders                             |  | 10
|                               |  | Item 6. |    | Exhibits and Reports on Form 8-K                                                |  | 10
|SIGNATURES                     |  |         | 11
|EXHIBITS                       |  |         |   





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##### Table of Contents






PART I  FINANCIAL INFORMATION

TARPON COAST BANCORP, INC. AND SUBSIDIARIES




CONSOLIDATED BALANCE SHEETS


|                                     |                                                                                                               |                                            |            |                    |             |                   |            |            |            | 
|------------------------------------ | ------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ---------- | ------------------ | ----------- | ----------------- | ---------- | ---------- | ---------- | 
|                                     |                                                                                                               |                                            |            | September 30, 2003 |             | December 31, 2002
|                                     |                                                                                                               |                                            |            |                    |             |                  
|                                     |                                                                                                               | (Unaudited)                                |            |                    |             |                  
|ASSETS                               |                                                                                                               |                                            |            |                    |             |                  
|Cash and due from banks              |                                                                                                               | $                                          | 8,472,730  |                    |             | $                 | 6,203,266  |           
|Federal funds sold                   |                                                                                                               |                                            | 4,925,000  |                    |             |                   | 1,850,000  |           
|                                     |                                                                                                               |                                            |            |                    |             |                   |            |           
|                                     |                                                                                                               | Total cash and cash equivalents            |            |                    | 13,397,730  |                   |            |            | 8,053,266  | 
|Securities available for sale        |                                                                                                               |                                            | 21,016,153 |                    |             |                   | 13,687,549 |           
|Loans                                |                                                                                                               |                                            | 83,486,226 |                    |             |                   | 72,019,751 |           
|Less allowance for loan losses       |                                                                                                               |                                            | (982,929   | )                  |             |                   | (915,511   | )         
|                                     |                                                                                                               |                                            |            |                    |             |                   |            |           
|Net loans                            |                                                                                                               |                                            | 82,503,297 |                    |             |                   | 71,104,240 |           
|Premises and equipment, net          |                                                                                                               |                                            | 4,570,272  |                    |             |                   | 4,823,847  |           
|Accrued interest & other assets      |                                                                                                               |                                            | 1,654,299  |                    |             |                   | 1,094,947  |           
|                                     |                                                                                                               |                                            |            |                    |             |                   |            |           
|                                     |                                                                                                               | Total assets                               |            | $                  | 123,141,751 |                   |            | $          | 98,763,849 | 
|                                     |                                                                                                               |                                            |            |                    |             |                   |            |           
|LIABILITIES AND SHAREHOLDERS EQUITY |                                                                                                               |                                            |            |                    |             |                   |            |           
|Deposits:                            |                                                                                                               |                                            |            |                    |             |                   |            |           
|                                     | Non-interest bearing                                                                                          |                                            | $          | 15,954,794         |             |                   | $          | 13,426,918 |           
|                                     | Interest bearing                                                                                              |                                            |            | 95,797,570         |             |                   |            | 74,997,231 |           
|                                     |                                                                                                               |                                            |            |                    |             |                   |            |           
|                                     |                                                                                                               | Total deposits                             |            |                    | 111,752,364 |                   |            |            | 88,424,149 | 
|Customer Repurchase Agreements       |                                                                                                               |                                            | 1,722,819  |                    |             |                   | 808,780    |           
|Accrued interest & other liabilities |                                                                                                               |                                            | 236,412    |                    |             |                   | 576,345    |           
|                                     |                                                                                                               |                                            |            |                    |             |                   |            |           
|                                     |                                                                                                               | Total liabilities                          |            |                    | 113,711,595 |                   |            |            | 89,809,274 | 
|Shareholders equity:                |                                                                                                               |                                            |            |                    |             |                   |            |           
|                                     | Common stock, par value $.01 per share,
10,000,000 shares authorized; 1,182,151 shares
issued and outstanding |                                            |            | 11,821             |             |                   |            | 11,821     |           
|                                     | Additional paid-in capital                                                                                    |                                            |            | 10,940,915         |             |                   |            | 10,940,915 |           
|                                     | Deficit                                                                                                       |                                            |            | (1,440,446         | )           |                   |            | (2,142,209 | )         
|                                     | Unrealized gain (loss) on securities available for sale                                                       |                                            |            | (82,134            | )           |                   |            | 144,048    |           
|                                     |                                                                                                               |                                            |            |                    |             |                   |            |           
|                                     |                                                                                                               | Total shareholders equity                 |            |                    | 9,430,156   |                   |            |            | 8,954,575  | 
|                                     |                                                                                                               |                                            |            |                    |             |                   |            |           
|                                     |                                                                                                               | Total liabilities and shareholders equity |            | $                  | 123,141,751 |                   |            | $          | 98,763,849 | 
|                                     |                                                                                                               |                                            |            |                    |             |                   |            |           

See accompanying notes to financial statements.

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TARPON COAST BANCORP, INC. AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)


|                                                    |                                   |   |                                  |           |      |   |           |           | 
|--------------------------------------------------- | --------------------------------- | - | -------------------------------- | --------- | ---- | - | --------- | --------- | 
|                                                    |                                   |   | Three months ended September 30,
|                                                    |                                   |   |                                 
|                                                    |                                   |   | 2003                             |           | 2002
|                                                    |                                   |   |                                  |           |     
|Interest income:                                    |                                   |   |                                  |           |      |   |           |          
|                                                    | Interest and fees on loans        |   | $                                | 1,320,871 |      |   | $         | 1,226,294 | 
|                                                    | Interest on securities            |   |                                  | 192,098   |      |   |           | 232,640   | 
|                                                    | Interest on federal funds sold    |   |                                  | 13,754    |      |   |           | 30,457    | 
|                                                    |                                   |   |                                  |           |      |   |           |          
|Total interest income                               |                                   |   | 1,526,723                        |           |      |   | 1,489,391 |          
|Interest expense:                                   |                                   |   |                                  |           |      |   |           |          
|                                                    | Interest on deposits              |   |                                  | 399,223   |      |   |           | 499,726   | 
|                                                    | Interest on repurchase agreements |   |                                  | 5,131     |      |   |           | 4,506     | 
|                                                    |                                   |   |                                  |           |      |   |           |          
|Total interest expense                              |                                   |   | 404,354                          |           |      |   | 504,232   |          
|                                                    |                                   |   |                                  |           |      |   |           |          
|Net interest income                                 |                                   |   | 1,122,369                        |           |      |   | 985,159   |          
|Provision for loan losses                           |                                   |   | 22,000                           |           |      |   | 43,200    |          
|                                                    |                                   |   |                                  |           |      |   |           |          
|Net interest income after
provision for loan losses |                                   |   | 1,100,369                        |           |      |   | 941,959   |          
|Non-interest income                                 |                                   |   | 418,458                          |           |      |   | 371,248   |          
|Non-interest expense:                               |                                   |   |                                  |           |      |   |           |          
|                                                    | Salaries and benefits             |   |                                  | 767,777   |      |   |           | 726,670   | 
|                                                    | Occupancy and equipment expense   |   |                                  | 200,195   |      |   |           | 211,900   | 
|                                                    | Other expense                     |   |                                  | 346,604   |      |   |           | 358,138   | 
|                                                    |                                   |   |                                  |           |      |   |           |          
|Total non-interest expense                          |                                   |   | 1,314,576                        |           |      |   | 1,296,708 |          
|                                                    |                                   |   |                                  |           |      |   |           |          
|Income before income taxes                          |                                   |   | 204,251                          |           |      |   | 16,499    |          
|Income (taxes) benefit                              |                                   |   | 65,000                           |           |      |   |          |          
|                                                    |                                   |   |                                  |           |      |   |           |          
|Net income                                          |                                   |   | 269,251                          |           |      |   | 16,499    |          
|                                                    |                                   |   |                                  |           |      |   |           |          
|Other comprehensive income (loss)                   |                                   |   | (170,668                         | )         |      |   | 48,030    |          
|                                                    |                                   |   |                                  |           |      |   |           |          
|Comprehensive income                                |                                   | $ | 98,583                           |           |      | $ | 64,529    |          
|                                                    |                                   |   |                                  |           |      |   |           |          
|Earnings per share:                                 |                                   |   |                                  |           |      |   |           |          
|                                                    | Basic                             |   | $                                | 0.23      |      |   | $         | 0.01      | 
|                                                    |                                   |   |                                  |           |      |   |           |          
|                                                    | Diluted                           |   | $                                | 0.22      |      |   | $         | 0.01      | 
|                                                    |                                   |   |                                  |           |      |   |           |          
|Weighted average shares outstanding:                |                                   |   |                                  |           |      |   |           |          
|                                                    | Basic                             |   |                                  | 1,182,151 |      |   |           | 1,182,151 | 
|                                                    |                                   |   |                                  |           |      |   |           |          
|                                                    | Diluted                           |   |                                  | 1,199,322 |      |   |           | 1,182,955 | 
|                                                    |                                   |   |                                  |           |      |   |           |          

See accompanying notes to financial statements.

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TARPON COAST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

|                                                    |                                   |   |                                 |           |      |   |           |           | 
|--------------------------------------------------- | --------------------------------- | - | ------------------------------- | --------- | ---- | - | --------- | --------- | 
|                                                    |                                   |   | Nine months ended September 30,
|                                                    |                                   |   |                                
|                                                    |                                   |   | 2003                            |           | 2002
|                                                    |                                   |   |                                 |           |     
|Interest income:                                    |                                   |   |                                 |           |      |   |           |          
|                                                    | Interest and fees on loans        |   | $                               | 3,890,750 |      |   | $         | 3,479,069 | 
|                                                    | Interest on securities            |   |                                 | 562,584   |      |   |           | 783,810   | 
|                                                    | Interest on federal funds sold    |   |                                 | 31,708    |      |   |           | 93,456    | 
|                                                    |                                   |   |                                 |           |      |   |           |          
|Total interest income                               |                                   |   | 4,485,042                       |           |      |   | 4,356,335 |          
|Interest expense:                                   |                                   |   |                                 |           |      |   |           |          
|                                                    | Interest on deposits              |   |                                 | 1,242,163 |      |   |           | 1,545,955 | 
|                                                    | Interest on repurchase agreements |   |                                 | 13,442    |      |   |           | 13,412    | 
|                                                    |                                   |   |                                 |           |      |   |           |          
|Total interest expense                              |                                   |   | 1,255,605                       |           |      |   | 1,559,367 |          
|                                                    |                                   |   |                                 |           |      |   |           |          
|Net interest income                                 |                                   |   | 3,229,437                       |           |      |   | 2,796,968 |          
|Provision for loan losses                           |                                   |   | 191,000                         |           |      |   | 162,200   |          
|                                                    |                                   |   |                                 |           |      |   |           |          
|Net interest income after
provision for loan losses |                                   |   | 3,038,437                       |           |      |   | 2,634,768 |          
|Non-interest income                                 |                                   |   | 1,346,174                       |           |      |   | 1,056,537 |          
|Non-interest expense:                               |                                   |   |                                 |           |      |   |           |          
|                                                    | Salaries and benefits             |   |                                 | 2,331,176 |      |   |           | 2,053,495 | 
|                                                    | Occupancy and equipment expense   |   |                                 | 600,772   |      |   |           | 605,165   | 
|                                                    | Other expense                     |   |                                 | 1,015,901 |      |   |           | 1,007,728 | 
|                                                    |                                   |   |                                 |           |      |   |           |          
|Total non-interest expense                          |                                   |   | 3,947,849                       |           |      |   | 3,666,388 |          
|                                                    |                                   |   |                                 |           |      |   |           |          
|Income before income taxes                          |                                   |   | 436,762                         |           |      |   | 24,917    |          
|Income (taxes) benefit                              |                                   |   | 265,000                         |           |      |   |          |          
|                                                    |                                   |   |                                 |           |      |   |           |          
|Net income                                          |                                   |   | 701,762                         |           |      |   | 24,917    |          
|                                                    |                                   |   |                                 |           |      |   |           |          
|Other comprehensive income (loss)                   |                                   |   | (226,182                        | )         |      |   | 94,717    |          
|                                                    |                                   |   |                                 |           |      |   |           |          
|Comprehensive income                                |                                   | $ | 475,580                         |           |      | $ | 119,634   |          
|                                                    |                                   |   |                                 |           |      |   |           |          
|Earnings per share:                                 |                                   |   |                                 |           |      |   |           |          
|                                                    | Basic                             |   | $                               | 0.59      |      |   | $         | 0.02      | 
|                                                    |                                   |   |                                 |           |      |   |           |          
|                                                    | Diluted                           |   | $                               | 0.59      |      |   | $         | 0.02      | 
|                                                    |                                   |   |                                 |           |      |   |           |          
|Weighted average shares outstanding:                |                                   |   |                                 |           |      |   |           |          
|                                                    | Basic                             |   |                                 | 1,182,151 |      |   |           | 1,182,151 | 
|                                                    |                                   |   |                                 |           |      |   |           |          
|                                                    | Diluted                           |   |                                 | 1,199,322 |      |   |           | 1,182,955 | 
|                                                    |                                   |   |                                 |           |      |   |           |          

See accompanying notes to financial statements.

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TARPON COAST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

|                                                  |                                                                                             |                                                               |             |                                 |          |      |             |             |         |  
|------------------------------------------------- | ------------------------------------------------------------------------------------------- | ------------------------------------------------------------- | ----------- | ------------------------------- | -------- | ---- | ----------- | ----------- | ------- | -
|                                                  |                                                                                             |                                                               |             | Nine months ended September 30,
|                                                  |                                                                                             |                                                               |             |                                
|                                                  |                                                                                             |                                                               |             | 2003                            |          | 2002
|                                                  |                                                                                             |                                                               |             |                                 |          |     
|Cash flows from operating activities:             |                                                                                             |                                                               |             |                                 |          |      |             |            
|                                                  | Net income                                                                                  |                                                               | $           | 701,762                         |          |      | $           | 24,917      |        
|                                                  | Adjustments to reconcile net income to net
cash provided by (used in) operating activities: |                                                               |             |                                 |          |      |             |             |        
|                                                  |                                                                                             | Depreciation                                                  |             |                                 | 285,195  |      |             |             | 302,281 |  
|                                                  |                                                                                             | Provision for loan losses                                     |             |                                 | 191,000  |      |             |             | 162,200 |  
|                                                  |                                                                                             | Income tax credit                                             |             |                                 | (265,000 | )    |             |             |        |  
|                                                  |                                                                                             | (Increase) Decrease in accrued interest
and other assets      |             |                                 | (159,935 | )    |             |             | (34,017 | )
|                                                  |                                                                                             | Increase (Decrease) in accrued interest
and other liabilities |             |                                 | (339,933 | )    |             |             | 504,310 |  
|                                                  |                                                                                             |                                                               |             |                                 |          |      |             |            
|                                                  | Total adjustments                                                                           |                                                               |             | (288,673                        | )        |      |             | 934,774     |        
|                                                  |                                                                                             |                                                               |             |                                 |          |      |             |            
|Net cash provided by operating activities         |                                                                                             |                                                               | 413,089     |                                 |          |      | 959,691     |            
|                                                  |                                                                                             |                                                               |             |                                 |          |      |             |            
|Cash flows from investing activities:             |                                                                                             |                                                               |             |                                 |          |      |             |            
|                                                  | Net increase in loans                                                                       |                                                               |             | (11,590,057                     | )        |      |             | (13,807,839 | )      
|                                                  | Purchases of securities available for sale                                                  |                                                               |             | (16,834,357                     | )        |      |             | (3,314,928  | )      
|                                                  | Maturities of securities available for sale                                                 |                                                               |             | 9,145,155                       |          |      |             | 7,218,877   |        
|                                                  | Purchases of premises and equipment                                                         |                                                               |             | (31,620                         | )        |      |             | (125,522    | )      
|                                                  |                                                                                             |                                                               |             |                                 |          |      |             |            
|Net cash used in investing activities             |                                                                                             |                                                               | (19,310,879 | )                               |          |      | (10,029,412 | )          
|                                                  |                                                                                             |                                                               |             |                                 |          |      |             |            
|Cash flows from financing activities:             |                                                                                             |                                                               |             |                                 |          |      |             |            
|                                                  | Increase in deposits                                                                        |                                                               |             | 23,328,215                      |          |      |             | 5,596,429   |        
|                                                  | Increase in customer repurchase agreements                                                  |                                                               |             | 914,039                         |          |      |             | 70,720      |        
|                                                  |                                                                                             |                                                               |             |                                 |          |      |             |            
|Net cash provided by financing activities         |                                                                                             |                                                               | 24,242,254  |                                 |          |      | 5,667,149   |            
|                                                  |                                                                                             |                                                               |             |                                 |          |      |             |            
|Increase (Decrease) in cash and cash equivalents  |                                                                                             |                                                               | 5,344,464   |                                 |          |      | (3,402,572  | )          
|Cash and cash equivalents, beginning of period    |                                                                                             |                                                               | 8,053,266   |                                 |          |      | 15,816,844  |            
|                                                  |                                                                                             |                                                               |             |                                 |          |      |             |            
|Cash and cash equivalents, end of period          |                                                                                             | $                                                             | 13,397,730  |                                 |          |      | 12,414,272  |            
|                                                  |                                                                                             |                                                               |             |                                 |          |      |             |            
|Supplemental disclosure of cash flow information: |                                                                                             |                                                               |             |                                 |          |      |             |            
|                                                  | Cash paid during the period for interest                                                    |                                                               | $           | 1,260,183                       |          |      | $           | 1,576,694   |        
|                                                  |                                                                                             |                                                               |             |                                 |          |      |             |            
|                                                  | Unrealized increase (decrease) in fair value
on securities available for sale               |                                                               | $           | (360,599                        | )        |      | $           | 143,510     |        
|                                                  |                                                                                             |                                                               |             |                                 |          |      |             |            

See accompanying notes to financial statements.

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TARPON COAST BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003

NOTE A - ORGANIZATION AND BASIS OF PRESENTATION

Organization:

Tarpon Coast Bancorp, Inc. (the Company) was incorporated under the laws
of the state of Florida on August 7, 1997. Effective June 1, 1998, the
Companys new wholly owned subsidiary, Tarpon Coast National Bank (the Bank)
received federal regulatory approval to commence its banking operations.
Contemporaneously, the Company became a registered bank holding company under
the Bank Holding Company Act of 1956, as amended. Also effective June 1, 1998,
the Bank received approval from the Federal Deposit Insurance Corporation (the
FDIC) for deposit insurance. In 2000, the Company formed Tarpon Coast
Financial Services, Inc. as a wholly owned subsidiary of the Bank for the
purpose of selling insurance and investment products.

Basis of Presentation:

The accompanying unaudited consolidated financial statements include the
accounts of the Company and its subsidiaries. All inter-company accounts and
transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with instructions to Form 10-QSB.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary have been made for the fair presentation of the
Companys consolidated financial position and results of operations. Operating
results for the three-month and nine-month periods ended September 30, 2003 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 2003.

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NOTE B  STOCK-BASED COMPENSATION:

Effective December 15, 2002, the bank adopted Statement of Financial Accounting
Standards No. 148 Accounting for Stock-Based Compensation - Transition and
Disclosure (SFAS No. 148). This statement amends FASB statement No. 123,
Accounting for Stock-Based Compensation. It provides alternative methods of
transition for an entity that voluntarily changes to the fair value based
method of accounting for stock-based employee compensation. It also amends the
disclosure provision of FASB statement No. 123 to require prominent disclosure
about the effects on reported net income of an entitys accounting policy
decisions with respect to stock-based employee compensation. Had compensation
cost for the Companys stock option plan been determined under SFAS 123, based
on the fair market value at the grant dates, the Companys proforma net income
and net income per share would have been reflected as follows:

|                                                                                                                                           |  |                   |         |      |  |   |        | 
|------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------- | ------- | ---- |  | - | ------ | 
|                                                                                                                                           |  | Nine Months Ended
|                                                                                                                                           |  | September 30,    
|                                                                                                                                           |  |                  
|                                                                                                                                           |  | 2003              |         | 2002
|                                                                                                                                           |  |                   |         |     
|Net income as reported                                                                                                                     |  | $                 | 701,762 |      |  | $ | 24,917 | 
|Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards
net of related tax effects |  | $                 | 2,892   |      |  | $ | 4,613  | 
|                                                                                                                                           |  |                   |         |      |  |   |        | 
|Proforma net income (loss)                                                                                                                 |  | $                 | 698,870 |      |  | $ | 20,304 | 
|                                                                                                                                           |  |                   |         |      |  |   |        | 
|Basic and diluted income per
share as reported                                                                                             |  | $                 | 0.59    |      |  | $ | 0.02   | 
|                                                                                                                                           |  |                   |         |      |  |   |        | 
|Basic and diluted proforma income
(loss) per share                                                                                         |  | $                 | 0.59    |      |  | $ | 0.02   | 
|                                                                                                                                           |  |                   |         |      |  |   |        | 

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

General

The following is a discussion of the Companys financial condition and results
of operations for the period ended September 30, 2003:

Financial Condition

At September 30, 2003, the Company had approximately $111.7 million in deposits
and $1.7 million in customer repurchase agreements as compared to $88.4 million
and $0.8 million, respectively, at December 31, 2002. Stockholders equity
comprised $9.4 million at September 30, 2003 and $9.0 million at December 31,
2002, the change comprising net income for the period of $702,000 net of
unrealized losses in the Companys investment portfolio of $226,000.

To September 30, 2003, the Company used these funds to generate $83.5 million
in outstanding loans ($72 million at December 31, 2002). At September 30, 2003
the Company also had approximately $24.8 million in unfunded loan commitments.
Non-performing loans totaled $1,112,000 and $811,000 at September 30, 2003 and
December 31, 2002, respectively. Non-performing loans at September 30, 2003
were comprised of one owner-occupied commercial loan relationship for $687,000
that is currently in bankruptcy proceedings and three residential loans
aggregating $425,000, all secured by real estate and improvements.
Subsequent to September 30, 2003, the obligations relating to the
commercial relationship of $687,000 and one of the residential loans
for $199,000 were satisfied, reducing non-performing loans to a total
of $226,000.  In connection with the satisfaction of these
obligations, $7,000 was charged to the allowance for loan losses.

At September 30, 2003 the Company held approximately $21.0 million ($13.7
million at December 31, 2002) in investment securities and carried $4.6 million
($4.8 million at December 31, 2002) in premises and equipment. The Companys
remaining liquidity at September 30, 2003, less current cash reserve
requirements, was invested in overnight federal funds of $4.9 million ($1.8
million at December 31, 2002).

Results of Operations

For the three-month period ended September 30, 2003, the Company reported net
income of $269,251, compared to net income of $16,499 for the comparable period
in 2002. Interest income for the three-month period was $1,526,723 in 2003 and
$1,489,391 in 2002 or a yield on average earning assets of 5.77% and 6.69%,
respectively. Net interest income was $1,122,369 in 2003 and $985,159 in 2002
(net interest margins of 4.24% and 4.42%, respectively) after deducting
interest expense of $404,354 in 2003 and $504,232 in 2002 or an average rate
paid on interest-bearing funds of 1.69% and 2.52%, respectively. Rate variances
between the comparable three-month periods of 2003 and 2002
reduced net interest income approximately $48,000 while corresponding volume
variances contributed approximately $185,000.

For the nine-month period ended September 30, 2003, the Company reported net
income of $701,762, compared to net income of $24,917 for the comparable period
in 2002. Interest income for the nine-month period was $4,485,042 in 2003 and
$4,356,335 in 2002 or a yield on average earning assets of 6.10% and 6.71%,
respectively. Net interest income was $3,229,437 in 2003 and $2,796,968 in 2002
(net interest

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margins of 4.39% and 4.31%, respectively) after deducting
interest expense of $1,255,605 in 2003 and $1,559,367 in 2002 or an average
rate paid on interest-bearing funds of 1.91% and 2.65%, respectively. Rate
variances between the comparable nine-month periods of 2003 and 2002
contributed approximately $59,000 to net interest income while corresponding
volume variances contributed approximately $373,000.

The declines in yields earned on interest-earning assets and paid on
interest-bearing funds are reflective of the continuing low rate environment
driven by the aggressive rate cutting posture maintained by the Federal Reserve
since 2001 and into 2003. For the nine month period ended September 30, 2003,
the net interest margin experienced modest improvement over the corresponding
period of a year ago as the Bank generated larger savings from decreasing rates
paid on interest-bearing funds than income given up from declining yields on
interest-earning assets. The inverse relationship occurred for the three month
period ended September 30, 2003 as interest earned yields began to compress at
a greater pace than interest paid rates between the comparable quarters.
Management anticipates that margins may continue to compress as this condition
is expected to continue until such time as the rate environment changes.

The provision for loan losses of $22,000 and $191,000 for the three-month and
nine-month periods ended September 30, 2003, respectively, has been based on
the Banks loss experience together with its assessment of the potential
impacts of current economic conditions on the credit quality of the portfolio,
including the analysis of potential problem credits for impairment,
supplemented with peer industry loss data of comparably sized and positioned
commercial banks.

Non-interest income is comprised principally of service charges on deposit
accounts, fees on residential lending secondary market activities and fees and
commissions from the sale of insurance and investment products. Non-interest
income aggregated $418,458 and $371,248 for the three-month periods ended
September 30, 2003 and 2002, respectively, and $1,346,174 and $1,056,537 for
the comparable nine-month periods. Amounts for the three-month periods ended
September 30, 2003 and 2002 include commission and fee income from the sales of
insurance and investment products aggregating $127,000 and $130,000,
respectively, and $417,000 and $382,000 for the comparable nine-month periods.
Residential lending secondary market activities generated fee income of
$194,000 and $624,000 for the three and nine-month periods ending September 30,
2003 compared with $154,000 and $411,000 for the corresponding periods in 2002.
An active refinancing market has aided fee income from residential secondary
market activities over the last two years the demand for which is expected to
decline as rates rise and the potential market for refinancing becomes
saturated. This condition is not anticipated to have a material adverse impact,
as most expenses
associated with this activity are incremental and direct in nature. The balance
of the increase in non-interest income is generally consistent with the
increase in the volume of deposit activity.

Non-interest expenses for the comparable three-month periods were $1,314,576
and $1,296,708 comprised principally of salaries and benefits ($767,777 in 2003
and $726,670 in 2002) and occupancy costs ($200,195 in 2003 and $211,900 in
2002). For the comparable nine-month periods ended September 30, 2003 and 2002,
non-interest expenses were

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$3,947,849 and $3,666,388, respectively, comprised
principally of salaries and benefits ($2,331,176 in 2003 and $2,053,495 in
2002) and occupancy costs ($600,772 in 2003 and $605,165 in 2002). At both
September 30, 2003 and 2002, the Company had 54 employees, three full-service
banking offices, a residential mortgage center and an operations center.

Net income for the three and nine-month periods ended September 30, 2003 was
also favorably impacted by the recognition of $65,000 and $265,000,
respectively, in deferred tax benefits reflecting the Companys potential for
the realization of net operating loss carry-forward benefits in future periods.

The expansion in facilities and personnel is in accordance with the Companys
strategic growth and expansion initiative that is designed to fully leverage
the Companys capital position and attain critical mass. Additional incremental
expenditures associated with the Companys expansion activities may have the
effect of limiting the Companys profitability until such time as the Bank can
generate volumes of loans and deposits, and other fee generating services,
sufficient to cover these additional costs.




Item 3. Controls and Procedures



| | a. |  | Evaluation of Disclosure Controls and Procedures. The Companys
management is responsible for establishing and maintaining controls and
procedures designed to ensure that information required to be disclosed
in the reports that the Company files or submits under the Securities
and 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 managements
evaluation of the effectiveness of those disclosure controls and
procedures, as of the end of the period covered by this report, the
Chief Executive Officer, President, and Chief Financial Officer of the
Company have concluded that the Companys disclosure controls and
procedures were adequate for such purposes.
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | Changes in Internal Controls. The Company made no changes in its
internal control over financial reporting that occurred during the
period covered by this report that has materially affected, or is
reasonably likely to materially affect, its internal control over
financial reporting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

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PART II - OTHER INFORMATION




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



| |  | None.
| |  | -----




Item 6. Exhibits and Reports on Form 8-K



|1. |  | Exhibits                                                                                                                                                                  
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | 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                                                                                           
|  
|   |  | 31.3    Certification pursuant to Section 302 of the Sarbanes-Oxley
act of 2002                                                                                           
|  
|   |  | 32.1    Certification pursuant to 18 U.S.C. Section 1350, as added by
section 906 of the Sarbanes-Oxley Act of 2002                                                       
|  
|   |  | 32.2    Certification pursuant to 18 U.S.C. Section 1350, as added by
section 906 of the Sarbanes-Oxley Act of 2002                                                       
|  
|   |  | 32.3    Certification pursuant to 18 U.S.C. Section 1350, as added by
section 906 of the Sarbanes-Oxley Act of 2002                                                       
|  
|2. |  | Reports on Form 8-K                                                                                                                                                       
|  
|   |  | Form 8-K Current Report dated July 18, 2003 announcing Results of
Operations and Financial Condition for the Three and Six Month periods
ended June 30, 2003.             
|  
|   |  | Form 8-K Current Report dated August 19, 2003 announcing the resignation
of Hill, Barth and King LLC as the Companys certifying Accountants.                             
|  
|   |  | Form 8-K Current Report dated August 21, 2003 announcing the appointment
of Crowe Chizek and Company LLC as the Companys Certifying Accountants
for the 2003 fiscal year.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereto duly
authorized.

|                          |  |                           
|------------------------- |  | --------------------------
|Date:   November 10, 2003 |  | /s/   George E. Cline, III
|                          |  |                           
|                          |  | George E. Cline, III      
|                          |  | Chief Financial Officer   
|                          |  |                           
|Date:   November 10, 2003 |  | /s/   Todd H. Katz        
|                          |  |                           
|                          |  | Todd H. Katz              
|                          |  | President                 
|                          |  |                           
|Date:   November 10, 2003 |  | /s/   Lewis S. Albert     
|                          |  |                           
|                          |  | Lewis S. Albert           
|                          |  | Chief Executive Officer   

11