##### 



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, 2002

|      |  |                                                                                                                      
|----- |  | ---------------------------------------------------------------------------------------------------------------------
|[   ] |  | 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, 2002
|                             |  |                                
|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, 2002 and December 31, 2001                   |  | 1
|                                                                          
|Statements of Operations for the Three Months
Ended June 30, 2002 and 2001 |  | 2
|                                                                          
|Statements of Operations for the Six Months
Ended June 30, 2002 and 2001   |  | 3
|                                                                          
|Statements of Cash Flows for the Six Months
Ended June 30, 2002 and 2001   |  | 4
|                                                                          
|Notes to Financial Statements                                              |  | 5
|                                                                          
|Item 2. Managements Discussion and Analysis                               |  | 6
|                                                                          
|PART II  OTHER INFORMATION                                                |  |  
|                                                                          
|Item 4. Submission of Matters to a Vote of Security Holders                |  | 8
|                                                                          
|Item 6. Exhibits and Reports on Form 8-K                                   |  | 8
|                                                                          
|SIGNATURES                                                                 |  | 9





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##### 



PART I  FINANCIAL INFORMATION

TARPON COAST BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

|                                     |                                                                                                               |                                            |            |               |            |                   |            |            |            | 
|------------------------------------ | ------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ---------- | ------------- | ---------- | ----------------- | ---------- | ---------- | ---------- | 
|                                     |                                                                                                               |                                            |            | June 30, 2002 |            | December 31, 2001
|                                     |                                                                                                               |                                            |            |               |            |                  
|                                     |                                                                                                               |                                            |            | (Unaudited)   |            |                   |            |           
|ASSETS                               |                                                                                                               |                                            |            |               |            |                   |            |           
|Cash and due from banks              |                                                                                                               | $                                          | 4,663,815  |               |            | $                 | 5,666,844  |           
|Federal funds sold                   |                                                                                                               |                                            | 6,950,000  |               |            |                   | 10,150,000 |           
|                                     |                                                                                                               |                                            |            |               |            |                   |            |           
|                                     |                                                                                                               | Total cash and cash equivalents            |            |               | 11,613,815 |                   |            |            | 15,816,844 | 
|Securities available for sale        |                                                                                                               |                                            | 16,126,242 |               |            |                   | 18,655,222 |           
|Loans                                |                                                                                                               |                                            | 66,012,207 |               |            |                   | 55,667,184 |           
|Less allowance for loan losses       |                                                                                                               |                                            | (859,344   | )             |            |                   | (802,725   | )         
|                                     |                                                                                                               |                                            |            |               |            |                   |            |           
|Net loans                            |                                                                                                               |                                            | 65,152,863 |               |            |                   | 54,864,459 |           
|Premises and equipment, net          |                                                                                                               |                                            | 4,964,834  |               |            |                   | 5,093,499  |           
|Accrued interest & other assets      |                                                                                                               |                                            | 1,027,913  |               |            |                   | 944,161    |           
|                                     |                                                                                                               |                                            |            |               |            |                   |            |           
|                                     |                                                                                                               | Total assets                               |            | $             | 98,885,667 |                   |            | $          | 95,374,185 | 
|                                     |                                                                                                               |                                            |            |               |            |                   |            |           
|LIABILITIES AND SHAREHOLDERS EQUITY |                                                                                                               |                                            |            |               |            |                   |            |           
|Deposits:                            |                                                                                                               |                                            |            |               |            |                   |            |           
|                                     | Non-interest bearing                                                                                          |                                            | $          | 11,589,784    |            |                   | $          | 12,262,950 |           
|                                     | Interest bearing                                                                                              |                                            |            | 75,740,921    |            |                   |            | 72,554,294 |           
|                                     |                                                                                                               |                                            |            |               |            |                   |            |           
|                                     |                                                                                                               | Total deposits                             |            |               | 87,330,705 |                   |            |            | 84,817,244 | 
|Customer Repurchase Agreements       |                                                                                                               |                                            | 2,270,255  |               |            |                   | 1,653,728  |           
|Accrued interest & other liabilities |                                                                                                               |                                            | 611,205    |               |            |                   | 284,816    |           
|                                     |                                                                                                               |                                            |            |               |            |                   |            |           
|                                     |                                                                                                               | Total liabilities                          |            |               | 90,212,165 |                   |            |            | 86,755,788 | 
|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                                                                                                       |                                            |            | (2,396,732    | )          |                   |            | (2,405,150 | )         
|                                     | Unrealized loss on securities available for sale                                                              |                                            |            | 117,498       |            |                   |            | 70,811     |           
|                                     |                                                                                                               |                                            |            |               |            |                   |            |           
|                                     |                                                                                                               | Total shareholders equity                 |            |               | 8,673,502  |                   |            |            | 8,618,397  | 
|                                     |                                                                                                               |                                            |            |               |            |                   |            |           
|                                     |                                                                                                               | Total liabilities and shareholders equity |            | $             | 98,885,667 |                   |            | $          | 95,374,185 | 
|                                     |                                                                                                               |                                            |            |               |            |                   |            |           

See accompanying notes to financial statements.

1



---



##### 



TARPON COAST BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


|                                                    |                                   |   |                             |           |      |   |           |           | 
|--------------------------------------------------- | --------------------------------- | - | --------------------------- | --------- | ---- | - | --------- | --------- | 
|                                                    |                                   |   | Three months ended June 30,
|                                                    |                                   |   |                            
|                                                    |                                   |   | 2002                        |           | 2001
|                                                    |                                   |   |                             |           |     
|Interest income:                                    |                                   |   |                             |           |      |   |           |          
|                                                    | Interest and fees on loans        |   | $                           | 1,157,640 |      |   | $         | 1,104,062 | 
|                                                    | Interest on securities            |   |                             | 266,694   |      |   |           | 161,948   | 
|                                                    | Interest on federal funds sold    |   |                             | 29,758    |      |   |           | 82,244    | 
|                                                    |                                   |   |                             |           |      |   |           |          
|Total interest income                               |                                   |   | 1,454,092                   |           |      |   | 1,348,254 |          
|Interest expense:                                   |                                   |   |                             |           |      |   |           |          
|                                                    | Interest on deposits              |   |                             | 504,121   |      |   |           | 605,818   | 
|                                                    | Interest on repurchase agreements |   |                             | 4,962     |      |   |           | 28,541    | 
|                                                    |                                   |   |                             |           |      |   |           |          
|Total interest expense                              |                                   |   | 509,083                     |           |      |   | 634,359   |          
|                                                    |                                   |   |                             |           |      |   |           |          
|Net interest income                                 |                                   |   | 945,009                     |           |      |   | 713,895   |          
|Provision for loan losses                           |                                   |   | 50,000                      |           |      |   | 63,000    |          
|                                                    |                                   |   |                             |           |      |   |           |          
|Net interest income after
provision for loan losses |                                   |   | 895,009                     |           |      |   | 650,895   |          
|Non-interest income                                 |                                   |   | 375,753                     |           |      |   | 203,067   |          
|Non-interest expense:                               |                                   |   |                             |           |      |   |           |          
|                                                    | Salaries and benefits             |   |                             | 703,823   |      |   |           | 479,323   | 
|                                                    | Occupancy and equipment expense   |   |                             | 201,635   |      |   |           | 133,339   | 
|                                                    | Other expense                     |   |                             | 339,936   |      |   |           | 230,890   | 
|                                                    |                                   |   |                             |           |      |   |           |          
|Total non-interest expense                          |                                   |   | 1,245,394                   |           |      |   | 843,552   |          
|                                                    |                                   |   |                             |           |      |   |           |          
|Net income                                          |                                   |   | 25,368                      |           |      |   | 10,410    |          
|                                                    |                                   |   |                             |           |      |   |           |          
|Other comprehensive income (loss)                   |                                   |   | 256,260                     |           |      |   | (5,134    | )        
|                                                    |                                   |   |                             |           |      |   |           |          
|Comprehensive income                                |                                   | $ | 281,628                     |           |      | $ | 5,276     |          
|                                                    |                                   |   |                             |           |      |   |           |          
|Basic and diluted net income per share              |                                   | $ | 0.02                        |           |      | $ | 0.01      |          
|                                                    |                                   |   |                             |           |      |   |           |          
|Average shares outstanding:                         |                                   |   |                             |           |      |   |           |          
|                                                    | Basic                             |   |                             | 1,182,151 |      |   |           | 1,182,151 | 
|                                                    |                                   |   |                             |           |      |   |           |          
|                                                    | Diluted                           |   |                             | 1,188,651 |      |   |           | 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,
|                                                    |                                   |   |                          
|                                                    |                                   |   | 2002                      |           | 2001
|                                                    |                                   |   |                           |           |     
|Interest income:                                    |                                   |   |                           |           |      |   |           |          
|                                                    | Interest and fees on loans        |   | $                         | 2,252,775 |      |   | $         | 2,119,863 | 
|                                                    | Interest on securities            |   |                           | 551,170   |      |   |           | 333,586   | 
|                                                    | Interest on federal funds sold    |   |                           | 62,999    |      |   |           | 150,511   | 
|                                                    |                                   |   |                           |           |      |   |           |          
|Total interest income                               |                                   |   | 2,866,944                 |           |      |   | 2,603,960 |          
|Interest expense:                                   |                                   |   |                           |           |      |   |           |          
|                                                    | Interest on deposits              |   |                           | 1,046,229 |      |   |           | 1,192,344 | 
|                                                    | Interest on repurchase agreements |   |                           | 8,906     |      |   |           | 65,997    | 
|                                                    |                                   |   |                           |           |      |   |           |          
|Total interest expense                              |                                   |   | 1,055,135                 |           |      |   | 1,258,341 |          
|                                                    |                                   |   |                           |           |      |   |           |          
|Net interest income                                 |                                   |   | 1,811,809                 |           |      |   | 1,345,619 |          
|Provision for loan losses                           |                                   |   | 119,000                   |           |      |   | 132,000   |          
|                                                    |                                   |   |                           |           |      |   |           |          
|Net interest income after
provision for loan losses |                                   |   | 1,692,809                 |           |      |   | 1,213,619 |          
|Non-interest income                                 |                                   |   | 685,289                   |           |      |   | 357,966   |          
|Non-interest expense:                               |                                   |   |                           |           |      |   |           |          
|                                                    | Salaries and benefits             |   |                           | 1,326,825 |      |   |           | 903,591   | 
|                                                    | Occupancy and equipment expense   |   |                           | 393,265   |      |   |           | 263,723   | 
|                                                    | Other expense                     |   |                           | 649,590   |      |   |           | 435,667   | 
|                                                    |                                   |   |                           |           |      |   |           |          
|Total non-interest expense                          |                                   |   | 2,369,680                 |           |      |   | 1,602,981 |          
|                                                    |                                   |   |                           |           |      |   |           |          
|Net income (loss)                                   |                                   |   | 8,418                     |           |      |   | (31,396   | )        
|                                                    |                                   |   |                           |           |      |   |           |          
|Other comprehensive income                          |                                   |   | 46,687                    |           |      |   | 58,703    |          
|                                                    |                                   |   |                           |           |      |   |           |          
|Comprehensive income                                |                                   | $ | 55,105                    |           |      | $ | 27,307    |          
|                                                    |                                   |   |                           |           |      |   |           |          
|Basic and diluted net income (loss) per share       |                                   | $ | 0.01                      |           |      | $ | (0.03     | )        
|                                                    |                                   |   |                           |           |      |   |           |          
|Average shares outstanding:                         |                                   |   |                           |           |      |   |           |          
|                                                    | Basic                             |   |                           | 1,182,151 |      |   |           | 1,182,151 | 
|                                                    |                                   |   |                           |           |      |   |           |          
|                                                    | Diluted                           |   |                           | 1,188,651 |      |   |           | 1,182,151 | 
|                                                    |                                   |   |                           |           |      |   |           |          

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,
|                                                  |                                                                                      |                                                                               |            |                          
|                                                  |                                                                                      |                                                                               |            | 2002                      |           | 2001
|                                                  |                                                                                      |                                                                               |            |                           |           |     
|Cash flows from operating activities:             |                                                                                      |                                                                               |            |                           |           |      |            |           
|                                                  | Net income (loss)                                                                    |                                                                               | $          | 8,418                     |           |      | $          | (31,396    | )        
|                                                  | Adjustments to reconcile net Income (loss) to net
cash used in operating activities: |                                                                               |            |                           |           |      |            |            |          
|                                                  |                                                                                      | Depreciation                                                                  |            |                           | 199,168   |      |            |            | 146,104   | 
|                                                  |                                                                                      | Provision for loan losses                                                     |            |                           | 119,000   |      |            |            | 132,000   | 
|                                                  |                                                                                      | (Increase) Decrease in accrued interest
and other assets                      |            |                           | (57,889   | )    |            |            | 1,154     | 
|                                                  |                                                                                      | Increase (Decrease) in accrued interest
and other liabilities                 |            |                           | 326,389   |      |            |            | 324,909   | 
|                                                  |                                                                                      |                                                                               |            |                           |           |      |            |           
|                                                  | Total adjustments                                                                    |                                                                               |            | 586,668                   |           |      |            | 604,167    |          
|                                                  |                                                                                      |                                                                               |            |                           |           |      |            |           
|Net cash provided by operating activities         |                                                                                      |                                                                               | 595,086    |                           |           |      | 572,771    |           
|                                                  |                                                                                      |                                                                               |            |                           |           |      |            |           
|Cash flows from investing activities:             |                                                                                      |                                                                               |            |                           |           |      |            |           
|                                                  | Net increase in loans                                                                |                                                                               |            | (10,407,404               | )         |      |            | (8,667,700 | )        
|                                                  | Purchases of securities available for sale                                           |                                                                               |            | (2,297,428                | )         |      |            | (7,068,697 | )        
|                                                  | Maturities of securities available for sale                                          |                                                                               |            | 4,847,232                 |           |      |            | 6,722,305  |          
|                                                  | Purchases of premises and equipment                                                  |                                                                               |            | (70,503                   | )         |      |            | (643,647   | )        
|                                                  |                                                                                      |                                                                               |            |                           |           |      |            |           
|Net cash used in investing activities             |                                                                                      |                                                                               | (7,928,103 | )                         |           |      | (9,657,739 | )         
|Cash flows from financing activities:             |                                                                                      |                                                                               |            |                           |           |      |            |           
|                                                  | Increase in deposits                                                                 |                                                                               |            | 2,513,461                 |           |      |            | 17,175,747 |          
|                                                  | Decrease in customer repurchase agreements                                           |                                                                               |            | 616,527                   |           |      |            | (904,460   | )        
|                                                  |                                                                                      |                                                                               |            |                           |           |      |            |           
|Net cash provided by financing activities         |                                                                                      |                                                                               | 3,129,988  |                           |           |      | 16,271,287 |           
|                                                  |                                                                                      |                                                                               |            |                           |           |      |            |           
|Increase (Decrease) in cash and cash equivalents  |                                                                                      |                                                                               | (4,203,029 | )                         |           |      | 7,186,319  |           
|Cash and cash equivalents, beginning of period    |                                                                                      |                                                                               | 15,816,844 |                           |           |      | 4,878,265  |           
|                                                  |                                                                                      |                                                                               |            |                           |           |      |            |           
|Cash and cash equivalents, end of period          |                                                                                      | $                                                                             | 11,613,815 |                           |           | $    | 12,064,584 |           
|                                                  |                                                                                      |                                                                               |            |                           |           |      |            |           
|Supplemental disclosure of cash flow information: |                                                                                      |                                                                               |            |                           |           |      |            |           
|                                                  |                                                                                      | Cash paid during the period for interest                                      |            | $                         | 1,072,417 |      |            | $          | 1,240,451 | 
|                                                  |                                                                                      |                                                                               |            |                           |           |      |            |           
|                                                  |                                                                                      | Unrealized increase (decrease) in fair value
on securities available for sale |            | $                         | 46,687    |      |            | $          | 58,703    | 
|                                                  |                                                                                      |                                                                               |            |                           |           |      |            |           

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, 2002


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, 2002 are not necessarily
indicative of the results that may be expected for the year ended December 31,
2002.

5



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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, 2002:

Financial Condition

At June 30, 2002, the Company had approximately $87.3 million in deposits and
$2.3 million in customer repurchase agreements as compared to $84.8 million and
$1.7 million, respectively, at December 31, 2001. Stockholders equity comprised
$8.7 million at June 30, 2002 and $8.6 million at December 31, 2001.

At June 30, 2002, the Company used these funds to generate $65.1 million in net
loans ($54.8 million at December 31, 2001) and approximately $16.2 million in
unfunded loan commitments. At June 30, 2002 it also held approximately $16.1
million ($18.6 million at December 31, 2001) in investment securities. At June
30, 2002, the Company had $5.0 million ($5.1 million at December 31, 2001) in
premises and equipment. The Companys remaining liquidity at June 30, 2002, less
current cash reserve requirements was invested in overnight federal funds of
$6.9 million ($10.1 million at December 31, 2001).

Results of Operations

For the three-month period ended June 30, 2002, the Company reported net income
of $25,368, compared to net income of $10,410 for the comparable period in 2001.
Interest income for the three-month period was $1,454,092 in 2002 and $1,348,254
in 2001 or a yield on average earning assets of 6.71% and 7.95%, respectively.
Net interest income was $945,009 in 2002 and $713,895 in 2001 (net interest
margins of 4.36% and 4.21%, respectively) after deducting interest expense of
$509,083 in 2002 and $634,359 in 2001 or an average rate paid on
interest-bearing funds of 2.66% and 4.42%, respectively. Rate variances between
the comparable three-month periods of 2002 and 2001 contributed approximately
$36,000 to net interest income while corresponding volume variances contributed
approximately $195,000.

For the six-month period ended June 30, 2002, the Company reported net income of
$8,418, compared to a net loss of $31,396 for the comparable period in 2001.
Interest income for the six-month period was $2,866,944 in 2002 and $2,603,960
in 2001 or a yield on average earning assets of 6.68% and 8.06%, respectively.
Net interest income was $1,811,809 in 2002 and $1,345,619 in 2001 (net interest
margins of 4.22% and 4.16%, respectively) after deducting interest expense of
$1,055,135 in 2002 and $1,258,341 in 2001 or an average rate paid on
interest-bearing funds of 2.77% and 4.65%, respectively. Rate variances between
the comparable six-month periods of 2002 and 2001 contributed approximately
$25,000 to net interest income while corresponding volume variances contributed
approximately $441,000.

6



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##### 



The declines in yields earned on interest-earning assets and paid on
interest-bearing funds were primarily driven by the aggressive rate
cutting posture maintained by the Federal Reserve since this time last year. 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.

Because the Bank is still maturing and continues to develop its own historical
loan loss experience, the provision for loan losses of $50,000 and $119,000 for
the three-month and six-month periods ended June 30, 2002, 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 and commissions from the sale of investment products and fees on
residential lending secondary market activities. Non-interest income aggregated
$375,753 and $203,067 for the three-month periods ended June 30, 2002 and 2001,
respectively, and $685,289 and $357,966 for the comparable six-month periods.
Amounts for the three-month periods ended June 30, 2002 and 2001 include
commission and fee income from the sales of insurance and investment products
aggregating $141,000 and $91,000, respectively, and $252,000 and $140,000 for
the comparable six-month periods. The Bank expanded its residential lending
secondary market activities in the forth quarter of 2000, which generated fee
income of $144,000 and $257,000 for the three and six-month periods ending June
30, 2002 compared with $50,000 and $91,000 for the corresponding periods in
2001. 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 $1,245,394 and
$843,552, comprised principally of salaries and benefits ($703,823 in 2002 and
$479,323 in 2001) and occupancy costs ($201,635 in 2002 and $133,339 in 2001).
For the comparable six-month periods ended June 30, 2002 and 2001, non-interest
expenses were $2,369,680 and $1,602,981, respectively, comprised principally of
salaries and benefits ($1,326,825 in 2002 and $903,591 in 2001) and occupancy
costs ($393,265 in 2002 and $263,723 in 2001). At June 30, 2002, the Company had
49 employees compared to 38 employees a year earlier. During 2002 the Company
occupied three full-service banking facilities and a residential lending office
while in 2001 it operated only from two full-service banking facilities.

The expansion in facilities and personnel is in accordance with the Companys
growth and expansion initiative, which is designed to fully leverage the
Companys capital position and attain critical mass. Incremental net expenses
associated with this expansion during the three and six-month periods ended June
30, 2002 aggregated $54,000 and $172,000, respectively. Additional incremental
net expenses associated with the Companys expansion activities may adversely
impact earnings until such time as the Bank can generate volumes of loans and
deposits, and other fee generating services, sufficient to cover these
additional expenses.

7



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##### 



PART II  OTHER INFORMATION

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

On April 22, 2002, the Company held its annual meeting of shareholders
during which Lewis S. Albert, Chairman and Chief Executive Officer of the
Company, Mark O. Asperilla and Gerald P. Flagel were re-elected to the Companys
Board of Directors to serve three-year terms. 1,048,359 or 88.7% of shares
entitled to vote were cast in favor of the measure for Messrs. Albert and
Asperilla with 90,263 or 7.6% dissenting, while 1,043,359 (88.2%) were cast in
favor for Mr. Flagel with 95,236 (8.1%) dissenting. In addition to Messrs.
Albert, Asperilla and Flagel, the following individuals serve as continuing
directors until their respective terms expire: James R. Baker, Billie A. Barger,
James C. Brown, Gina D. Hahn, Todd H. Katz, Vice Chairman and President, and
Larry A. Tenbusch. There were no other matters submitted to a vote of security
holders during the second quarter of 2002.

Item 6. Exhibits and Reports on Form 8-K

1. Exhibits

None.

2. Reports on Form 8-K

The Company did not file a Current Report on Form 8-K during the
quarter ended June 30, 2002.

8



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##### 



CERTIFICATION

Each of the undersigned hereby certify, to such officer's knowledge, that
this report fully complies with the requirements of Section 13(a) or 15 (d) of the
Securities Exchange Act of 1934 and that the information contained in the report
fairly presents, in all material respects, the financial condition and results of
operations of the Company.

|                     |  |                                             
|-------------------- |  | --------------------------------------------
|Date: August 5, 2002 |  | /s/ George E. Cline, III                    
|                     |  |                                             
|                     |  | George E. Cline, III
Chief Financial Officer
|                    
|                    
|Date: August 5, 2002 |  | /s/ Lewis S. Albert                         
|                     |  |                                             
|                     |  | Lewis S. Albert
Chief Executive Officer     

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, 2002 |  | /s/ George E. Cline, III                    
|                     |  |                                             
|                     |  | George E. Cline, III
Chief Financial Officer
|                    
|                    
|Date: August 5, 2002 |  | /s/ Lewis S. Albert                         
|                     |  |                                             
|                     |  | Lewis S. Albert
Chief Executive Officer     

9