##### 



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 JUNE 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
incorporation or organization) |  | (I.R.S. Employer
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 June 30, 2003
|                             |  |                                
|Common Stock, $.01 par value |  | 1,182,151                      

Transitional Small Business Disclosure Format: Yes [  ] No [X]





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##### 



TARPON COAST BANCORP, INC.

INDEX

|                               |                                                             |                                                                            |    |    |   | 
|------------------------------ | ----------------------------------------------------------- | -------------------------------------------------------------------------- | -- | -- | - | 
|PART I  FINANCIAL INFORMATION |                                                             |                                                                            |    |   
|                               | Item 1. Condensed Consolidated Financial Statements         |                                                                            |    |    |  
|                               |                                                             | Balance Sheets as of June 30, 2003 and December 31, 2002                   |    |    | 1 | 
|                               |                                                             | Statements of Operations for the Three Months
Ended June 30, 2003 and 2002 |    |    | 2 | 
|                               |                                                             | Statements of Operations for the Six Months
Ended June 30, 2003 and 2002   |    |    | 3 | 
|                               |                                                             | Statements of Cash Flows for the Six Months
Ended June 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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##### 



PART I  FINANCIAL INFORMATION

TARPON COAST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

|                                     |                                                                                                               |                                           |            |               |             |                   |            |            |            | 
|------------------------------------ | ------------------------------------------------------------------------------------------------------------- | ----------------------------------------- | ---------- | ------------- | ----------- | ----------------- | ---------- | ---------- | ---------- | 
|                                     |                                                                                                               |                                           |            | June 30, 2003 |             | December 31, 2002
|                                     |                                                                                                               |                                           |            |               |             |                  
|ASSETS                               |                                                                                                               | (Unaudited)                               |            |               |             |                  
|Cash and due from banks              |                                                                                                               | $                                         | 6,003,415  |               |             | $                 | 6,203,266  |           
|Federal funds sold                   |                                                                                                               |                                           | 5,500,000  |               |             |                   | 1,850,000  |           
|                                     |                                                                                                               |                                           |            |               |             |                   |            |           
|                                     |                                                                                                               | Total cash and cash equivalents           |            |               | 11,503,415  |                   |            |            | 8,053,266  | 
|Securities available for sale        |                                                                                                               |                                           | 16,290,935 |               |             |                   | 13,687,549 |           
|Loans                                |                                                                                                               |                                           | 82,617,472 |               |             |                   | 72,019,751 |           
|Less allowance for loan losses       |                                                                                                               |                                           | (960,929   | )             |             |                   | (915,511   | )         
|                                     |                                                                                                               |                                           |            |               |             |                   |            |           
|Net loans                            |                                                                                                               |                                           | 81,656,543 |               |             |                   | 71,104,240 |           
|Premises and equipment, net          |                                                                                                               |                                           | 4,648,126  |               |             |                   | 4,823,847  |           
|Accrued interest & other assets      |                                                                                                               |                                           | 1,487,053  |               |             |                   | 1,094,947  |           
|                                     |                                                                                                               |                                           |            |               |             |                   |            |           
|                                     |                                                                                                               | Total assets                              |            | $             | 115,586,072 |                   |            | $          | 98,763,849 | 
|                                     |                                                                                                               |                                           |            |               |             |                   |            |           
|LIABILITIES AND SHAREHOLDERS EQUITY |                                                                                                               |                                           |            |               |             |                   |            |           
|Deposits:                            |                                                                                                               |                                           |            |               |             |                   |            |           
|                                     | Non-interest bearing                                                                                          |                                           | $          | 14,334,024    |             |                   | $          | 13,426,918 |           
|                                     | Interest bearing                                                                                              |                                           |            | 88,268,874    |             |                   |            | 74,997,231 |           
|                                     |                                                                                                               |                                           |            |               |             |                   |            |           
|                                     |                                                                                                               | Total deposits                            |            |               | 102,602,898 |                   |            |            | 88,424,149 | 
|Customer Repurchase Agreements       |                                                                                                               |                                           | 3,465,871  |               |             |                   | 808,780    |           
|Accrued interest & other liabilities |                                                                                                               |                                           | 185,731    |               |             |                   | 576,345    |           
|                                     |                                                                                                               |                                           |            |               |             |                   |            |           
|                                     |                                                                                                               | Total liabilities                         |            |               | 106,254,500 |                   |            |            | 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                                                                                                       |                                           |            | (1,709,698    | )           |                   |            | (2,142,209 | )         
|                                     | Unrealized gain (loss) on securities available for sale                                                       |                                           |            | 88,534        |             |                   |            | 144,048    |           
|                                     |                                                                                                               |                                           |            |               |             |                   |            |           
|                                     |                                                                                                               | Total shareholders equity                |            |               | 9,331,572   |                   |            |            | 8,954,575  | 
|                                     |                                                                                                               |                                           |            |               |             |                   |            |           
|                                     |                                                                                                               | Total liabilities and shareholdersequity |            | $             | 115,586,072 |                   |            | $          | 98,763,849 | 
|                                     |                                                                                                               |                                           |            |               |             |                   |            |           

See accompanying notes to financial statements.

1



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##### 



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

|                                                    |                                   |   |                             |           |      |   |           |           | 
|--------------------------------------------------- | --------------------------------- | - | --------------------------- | --------- | ---- | - | --------- | --------- | 
|                                                    |                                   |   | Three months ended June 30,
|                                                    |                                   |   |                            
|                                                    |                                   |   | 2003                        |           | 2002
|                                                    |                                   |   |                             |           |     
|Interest income:                                    |                                   |   |                             |           |      |   |           |          
|                                                    | Interest and fees on loans        |   | $                           | 1,318,082 |      |   | $         | 1,157,640 | 
|                                                    | Interest on securities            |   |                             | 183,312   |      |   |           | 266,694   | 
|                                                    | Interest on federal funds sold    |   |                             | 10,796    |      |   |           | 29,758    | 
|                                                    |                                   |   |                             |           |      |   |           |          
|Total interest income                               |                                   |   | 1,512,190                   |           |      |   | 1,454,092 |          
|Interest expense:                                   |                                   |   |                             |           |      |   |           |          
|                                                    | Interest on deposits              |   |                             | 422,246   |      |   |           | 504,121   | 
|                                                    | Interest on repurchase agreements |   |                             | 5,055     |      |   |           | 4,962     | 
|                                                    |                                   |   |                             |           |      |   |           |          
|Total interest expense                              |                                   |   | 427,301                     |           |      |   | 509,083   |          
|                                                    |                                   |   |                             |           |      |   |           |          
|Net interest income                                 |                                   |   | 1,084,889                   |           |      |   | 945,009   |          
|Provision for loan losses                           |                                   |   | 120,000                     |           |      |   | 50,000    |          
|                                                    |                                   |   |                             |           |      |   |           |          
|Net interest income after
provision for loan losses |                                   |   | 964,889                     |           |      |   | 895,009   |          
|Non-interest income                                 |                                   |   | 489,047                     |           |      |   | 375,753   |          
|Non-interest expense:                               |                                   |   |                             |           |      |   |           |          
|                                                    | Salaries and benefits             |   |                             | 782,434   |      |   |           | 703,823   | 
|                                                    | Occupancy and equipment expense   |   |                             | 195,081   |      |   |           | 201,635   | 
|                                                    | Other expense                     |   |                             | 330,132   |      |   |           | 339,936   | 
|                                                    |                                   |   |                             |           |      |   |           |          
|Total non-interest expense                          |                                   |   | 1,307,647                   |           |      |   | 1,245,394 |          
|                                                    |                                   |   |                             |           |      |   |           |          
|Income before income taxes                          |                                   |   | 146,289                     |           |      |   | 25,368    |          
|Income (taxes) benefit                              |                                   |   | 118,000                     |           |      |   |          |          
|                                                    |                                   |   |                             |           |      |   |           |          
|Net income                                          |                                   |   | 264,289                     |           |      |   | 25,368    |          
|                                                    |                                   |   |                             |           |      |   |           |          
|Other comprehensive income (loss)                   |                                   |   | 63,844                      |           |      |   | 256,260   |          
|                                                    |                                   |   |                             |           |      |   |           |          
|Comprehensive income                                |                                   | $ | 328,133                     |           |      | $ | 281,628   |          
|                                                    |                                   |   |                             |           |      |   |           |          
|Basic and diluted income per share                  |                                   | $ | 0.22                        |           |      | $ | 0.02      |          
|                                                    |                                   |   |                             |           |      |   |           |          
|Weighted average shares outstanding:                |                                   |   |                             |           |      |   |           |          
|                                                    | Basic                             |   |                             | 1,182,151 |      |   |           | 1,182,151 | 
|                                                    |                                   |   |                             |           |      |   |           |          
|                                                    | Diluted                           |   |                             | 1,186,640 |      |   |           | 1,188,651 | 
|                                                    |                                   |   |                             |           |      |   |           |          

See accompanying notes to financial statements.

2



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##### 



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

|                                                    |                                   |   |                           |           |      |   |           |           | 
|--------------------------------------------------- | --------------------------------- | - | ------------------------- | --------- | ---- | - | --------- | --------- | 
|                                                    |                                   |   | Six months ended June 30,
|                                                    |                                   |   |                          
|                                                    |                                   |   | 2003                      |           | 2002
|                                                    |                                   |   |                           |           |     
|Interest income:                                    |                                   |   |                           |           |      |   |           |          
|                                                    | Interest and fees on loans        |   | $                         | 2,569,879 |      |   | $         | 2,252,775 | 
|                                                    | Interest on securities            |   |                           | 370,486   |      |   |           | 551,170   | 
|                                                    | Interest on federal funds sold    |   |                           | 17,954    |      |   |           | 62,999    | 
|                                                    |                                   |   |                           |           |      |   |           |          
|Total interest income                               |                                   |   | 2,958,319                 |           |      |   | 2,866,944 |          
|Interest expense:                                   |                                   |   |                           |           |      |   |           |          
|                                                    | Interest on deposits              |   |                           | 842,940   |      |   |           | 1,046,229 | 
|                                                    | Interest on repurchase agreements |   |                           | 8,311     |      |   |           | 8,906     | 
|                                                    |                                   |   |                           |           |      |   |           |          
|Total interest expense                              |                                   |   | 851,251                   |           |      |   | 1,055,135 |          
|                                                    |                                   |   |                           |           |      |   |           |          
|Net interest income                                 |                                   |   | 2,107,068                 |           |      |   | 1,811,809 |          
|Provision for loan losses                           |                                   |   | 169,000                   |           |      |   | 119,000   |          
|                                                    |                                   |   |                           |           |      |   |           |          
|Net interest income after
provision for loan losses |                                   |   | 1,938,068                 |           |      |   | 1,692,809 |          
|Non-interest income                                 |                                   |   | 927,716                   |           |      |   | 685,289   |          
|Non-interest expense:                               |                                   |   |                           |           |      |   |           |          
|                                                    | Salaries and benefits             |   |                           | 1,563,399 |      |   |           | 1,326,825 | 
|                                                    | Occupancy and equipment expense   |   |                           | 400,577   |      |   |           | 393,265   | 
|                                                    | Other expense                     |   |                           | 669,297   |      |   |           | 649,590   | 
|                                                    |                                   |   |                           |           |      |   |           |          
|Total non-interest expense                          |                                   |   | 2,633,273                 |           |      |   | 2,369,680 |          
|                                                    |                                   |   |                           |           |      |   |           |          
|Income before income taxes                          |                                   |   | 232,511                   |           |      |   | 8,418     |          
|Income (taxes) benefit                              |                                   |   | 200,000                   |           |      |   |          |          
|                                                    |                                   |   |                           |           |      |   |           |          
|Net income                                          |                                   |   | 432,511                   |           |      |   | 8,418     |          
|                                                    |                                   |   |                           |           |      |   |           |          
|Other comprehensive income (loss)                   |                                   |   | (55,514                   | )         |      |   | 46,687    |          
|                                                    |                                   |   |                           |           |      |   |           |          
|Comprehensive income                                |                                   | $ | 376,997                   |           |      | $ | 55,105    |          
|                                                    |                                   |   |                           |           |      |   |           |          
|Basic and diluted income per share                  |                                   | $ | 0.36                      |           |      | $ | 0.01      |          
|                                                    |                                   |   |                           |           |      |   |           |           | 
|Weighted average shares outstanding:                |                                   |   |                           |           |      |   |           |          
|                                                    | Basic                             |   |                           | 1,182,151 |      |   |           | 1,182,151 | 
|                                                    |                                   |   |                           |           |      |   |           |          
|                                                    | Diluted                           |   |                           | 1,186,640 |      |   |           | 1,188,651 | 
|                                                    |                                   |   |                           |           |      |   |           |          

See accompanying notes to financial statements.

3



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##### 



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

|                                                    |                                                                                             |                                                               |             |                           |          |      |            |             |         |  
|--------------------------------------------------- | ------------------------------------------------------------------------------------------- | ------------------------------------------------------------- | ----------- | ------------------------- | -------- | ---- | ---------- | ----------- | ------- | -
|                                                    |                                                                                             |                                                               |             | Six months ended June 30,
|                                                    |                                                                                             |                                                               |             |                          
|                                                    |                                                                                             |                                                               |             | 2003                      |          | 2002
|                                                    |                                                                                             |                                                               |             |                           |          |     
|Cash flows from operating activities:               |                                                                                             |                                                               |             |                           |          |      |            |            
|                                                    | Net income                                                                                  |                                                               | $           | 432,511                   |          |      | $          | 8,418       |        
|                                                    | Adjustments to reconcile net income to net
cash provided by (used in) operating activities: |                                                               |             |                           |          |      |            |             |        
|                                                    |                                                                                             | Depreciation                                                  |             |                           | 194,156  |      |            |             | 199,168 |  
|                                                    |                                                                                             | Provision for loan losses                                     |             |                           | 169,000  |      |            |             | 119,000 |  
|                                                    |                                                                                             | Income tax credit                                             |             |                           | (200,000 | )    |            |             |        |  
|                                                    |                                                                                             | (Increase) Decrease in accrued interest
and other assets      |             |                           | (163,508 | )    |            |             | (57,889 | )
|                                                    |                                                                                             | Increase (Decrease) in accrued interest
and other liabilities |             |                           | (390,614 | )    |            |             | 326,389 |  
|                                                    |                                                                                             |                                                               |             |                           |          |      |            |            
|                                                    | Total adjustments                                                                           |                                                               |             | (390,966                  | )        |      |            | 586,668     |        
|                                                    |                                                                                             |                                                               |             |                           |          |      |            |            
|Net cash provided by (used in) operating activities |                                                                                             |                                                               | 41,545      |                           |          |      | 595,086    |            
|                                                    |                                                                                             |                                                               |             |                           |          |      |            |            
|Cash flows from investing activities:               |                                                                                             |                                                               |             |                           |          |      |            |            
|                                                    | Net increase in loans                                                                       |                                                               |             | (10,721,303               | )        |      |            | (10,407,404 | )      
|                                                    | Purchases of securities available for sale                                                  |                                                               |             | (9,876,273                | )        |      |            | (2,297,428  | )      
|                                                    | Maturities of securities available for sale                                                 |                                                               |             | 7,188,775                 |          |      |            | 4,847,232   |        
|                                                    | Purchases of premises and equipment                                                         |                                                               |             | (18,435                   | )        |      |            | (70,503     | )      
|                                                    |                                                                                             |                                                               |             |                           |          |      |            |            
|Net cash used in investing activities               |                                                                                             |                                                               | (13,427,236 | )                         |          |      | (7,928,103 | )          
|                                                    |                                                                                             |                                                               |             |                           |          |      |            |            
|Cash flows from financing activities:               |                                                                                             |                                                               |             |                           |          |      |            |            
|                                                    | Increase in deposits                                                                        |                                                               |             | 14,178,749                |          |      |            | 2,513,461   |        
|                                                    | Increase in customer repurchase agreements                                                  |                                                               |             | 2,657,091                 |          |      |            | 616,527     |        
|                                                    |                                                                                             |                                                               |             |                           |          |      |            |            
|Net cash provided by financing activities           |                                                                                             |                                                               | 16,835,840  |                           |          |      | 3,129,988  |            
|                                                    |                                                                                             |                                                               |             |                           |          |      |            |            
|Increase (Decrease) in cash and cash equivalents    |                                                                                             |                                                               | 3,450,149   |                           |          |      | (4,203,029 | )          
|Cash and cash equivalents, beginning of period      |                                                                                             |                                                               | 8,053,266   |                           |          |      | 15,816,844 |            
|                                                    |                                                                                             |                                                               |             |                           |          |      |            |            
|Cash and cash equivalents, end of period            |                                                                                             | $                                                             | 11,503,415  |                           |          |      | 11,613,815 |            
|                                                    |                                                                                             |                                                               |             |                           |          |      |            |            
|Supplemental disclosure of cash flow information:   |                                                                                             |                                                               |             |                           |          |      |            |            
|                                                    | Cash paid during the period for interest                                                    |                                                               | $           | 854,502                   |          |      | $          | 1,072,417   |        
|                                                    |                                                                                             |                                                               |             |                           |          |      |            |            
|                                                    | Unrealized increase (decrease) in fair value
on securities available for sale               |                                                               | $           | (84,110                   | )        |      | $          | 46,687      |        
|                                                    |                                                                                             |                                                               |             |                           |          |      |            |            

See accompanying notes to financial statements.

4



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##### 



TARPON COAST BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED JUNE 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 six-month periods ended June 30, 2003 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2003.

5



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##### 



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
(loss) and net income (loss) per share would have been reflected as follows:

|                                                                                                                                           |  |                  |         |      |  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------- | ------- | ---- |  | - | ------- | -
|                                                                                                                                           |  | Six Months Ended
|                                                                                                                                           |  | June 30,        
|                                                                                                                                           |  |                 
|                                                                                                                                           |  | 2003             |         | 2002
|                                                                                                                                           |  |                  |         |     
|Net income as reported                                                                                                                     |  | $                | 432,511 |      |  | $ | 8,418   |  
|Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards
net of related tax effects |  | $                | 22,315  |      |  | $ | 21,854  |  
|                                                                                                                                           |  |                  |         |      |  |   |         |  
|Proforma net income (loss)                                                                                                                 |  | $                | 410,196 |      |  | $ | (13,436 | )
|                                                                                                                                           |  |                  |         |      |  |   |         |  
|Basic and diluted income per share as reported                                                                                             |  | $                | 0.36    |      |  | $ | 0.01    |  
|                                                                                                                                           |  |                  |         |      |  |   |         |  
|Basic and diluted proforma income (loss) per share                                                                                         |  | $                | 0.35    |      |  | $ | (0.01   | )
|                                                                                                                                           |  |                  |         |      |  |   |         |  

6



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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 June 30, 2003:

Financial Condition

At June 30, 2003, the Company had approximately $102.6 million in deposits and
$3.5 million in customer repurchase agreements as compared to $88.4 million and
$0.8 million, respectively, at December 31, 2002. Stockholders equity
comprised $9.3 million at June 30, 2003 and $8.9 million at December 31, 2002
reflecting net income for the period of $432,000 net of unrealized losses in
the Companys investment portfolio of $56,000.

To June 30, 2003, the Company used these funds to generate $82.6 million in
outstanding loans ($72 million at December 31, 2002). At June 30, 2003 the
Company also had approximately $18.7 million in unfunded loan commitments.
Non-performing loans totaled $990,000 and $811,000 at June 30, 2003 and
December 31, 2002, respectively. At June 30, 2003 it held approximately $16.3
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 June 30, 2003, less current
cash reserve requirements, was invested in overnight federal funds of $5.5
million ($1.8 million at December 31, 2002).

Results of Operations

For the three-month period ended June 30, 2003, the Company reported net income
of $264,289, compared to net income of $25,368 for the comparable period in
2002. Interest income for the three-month period was $1,512,190 in 2003 and
$1,454,092 in 2002 or a yield on average earning assets of 6.14% and 6.71%,
respectively. Net interest income was $1,084,889 in 2003 and $945,009 in 2002
(net interest margins of 4.40% and 4.36%, respectively) after deducting
interest expense of $427,301 in 2003 and $509,083 in 2002 or an average rate
paid on interest-bearing funds of 1.93% and 2.66%, respectively. Rate variances
between the comparable three-month periods of 2003 and 2002 contributed
approximately $11,000 to net interest income while corresponding volume
variances contributed approximately $129,000.

For the six-month period ended June 30, 2003, the Company reported net income
of $432,511, compared to net income of $8,418 for the comparable period in
2002. Interest income for the six-month period was $2,958,319 in 2003 and
$2,866,944 in 2002 or a yield on average earning assets of 6.29% and 6.68%,
respectively. Net interest income was $2,107,068 in 2003 and $1,811,809 in 2002
(net interest margins of 4.48% and 4.22%, respectively) after deducting
interest expense of $851,251 in 2003 and $1,055,135 in 2002 or an average rate
paid on interest-bearing funds of 2.01% and 2.77%, respectively. Rate variances
between the comparable six-month periods of 2003 and 2002 contributed
approximately $119,000

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to net interest income while corresponding volume
variances contributed approximately $176,000.

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. Net interest margins experienced modest improvements
over the corresponding periods of a year ago as the Bank generated larger gains
in rates paid on interest-bearing funds than those given up on interest-earning
assets.

As the Bank has limited historical loan loss experience, the provision for loan
losses of $120,000 and $169,000 for the three-month and six-month periods ended
June 30, 2003, respectively, has been based principally on peer industry data
of comparably sized and positioned commercial banks, adjusted to reflect
managements assessment of the potential impacts of current economic conditions
on the credit quality of the portfolio.

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 investment products. Non-interest income
aggregated $489,047 and $375,753 for the three-month periods ended June 30,
2003 and 2002, respectively, and $927,716 and $685,289 for the comparable
six-month periods. Amounts for the three-month periods ended June 30, 2003 and
2002 include commission and fee income from the sales of insurance and
investment products aggregating $152,000 and $141,000, respectively, and
$290,000 and $252,000 for the comparable six-month periods. Residential lending
secondary market activities generated fee income of $228,000 and $430,000 for
the three and six-month periods ending June 30, 2003 compared with $144,000 and
$257,000 for the corresponding periods in 2002. 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 $1,307,647
and $1,245,394 comprised principally of salaries and benefits ($782,434 in 2003
and $703,823 in 2002) and occupancy costs ($195,081 in 2003 and $201,635 in
2002). For the comparable six-month periods ended June 30, 2003 and 2002,
non-interest expenses were $2,633,273 and $2,369,680, respectively, comprised
principally of salaries and benefits ($1,563,399 in 2003 and $1,326,825 in
2002) and occupancy costs ($400,577 in 2003 and $393,265 in 2002). At June 30,
2003, the Company had 54 employees compared to 49 employees a year earlier.

Net income for the three and six-month periods ended June 30, 2003 was also
favorably impacted by the recognition of $118,000 and $200,000, 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

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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

On April 28, 2003, the Company held its annual meeting of shareholders
during which James R. Baker, Billie A. Barger and Todd H. Katz, Vice Chairman
and President of the Company, were re-elected to the Companys Board of
Directors to serve three-year terms. In each case, 1,077,558 or 91.1% of all
shares entitled to vote were cast in favor of the measure with 68,620 shares or
5.8% dissenting. In addition to Messrs. Baker, Barger and Katz, the following
individuals serve as continuing directors until their respective terms expire:
Lewis S. Albert, Chairman and Chief Executive Officer, Mark O. Asperilla, James
C. Brown, Gerald P. Flagel, Gina D. Hahn and Larry A. Tenbusch. There were no
other matters submitted to a vote of security holders during the second quarter
of 2003.

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                                                                          
|-- |  | ---------------------------------------------------------------------------------------------
|  
|   |  | The Company did not file a Current Report on Form 8-K during the quarter
ended June 30, 2003.

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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: August 5, 2003 |  | /s/ George E. Cline, IIIGeorge E. Cline, III
Chief Financial Officer
|                    
|                     |  |                                                                     
|                    
|Date: August 5, 2003 |  | /s/ Todd H. KatzTodd H. Katz
President                              
|                    
|                     |  |                                                                     
|                    
|Date: August 5, 2003 |  | /s/ Lewis S. AlbertLewis S. Albert
Chief Executive Officer          

11