<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
Commission file number 2-78572
UNITED BANCORPORATION OF ALABAMA, INC.
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 63-0833573
- - --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
P.O. Drawer 8, Atmore, Alabama 36504
- - --------------------------------------------------------------------------------
(Address of principal executive offices)
(334) 368-2525
- - --------------------------------------------------------------------------------
Registrant's telephone number, including area code:
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report(s), and (2) has been subject to
such filing requirements for the past 90 days. Yes x No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as March 31, 1995.
Class A Common Stock....516,385 Shares
Class B Common Stock.... -0- Shares
<PAGE> 2
UNITED BANCORPORATION OF ALABAMA, INC.
FORM 10-Q
For the Quarter Ended March 31, 1995
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE
- - ------------------------------ ----
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Earnings 4
Consolidated Statement's of Stockholders' Equity 5
Consolidated Statement of Cash Flows 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II - OTHER INFORMATION
- - ---------------------------
Item 6. (a) Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K 11
</TABLE>
2
<PAGE> 3
Item 1.
UNITED BANCORPORATION OF ALABAMA, INC.
AND SUBSIDIARY
Condensed Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 3
1995 1994
<S> <C> <C>
Assets
Cash and due from banks $ 5,656,761 6,796,587
Federal funds sold 2,850,000 5,975,000
------------ -----------
Cash and cash equivalents 8,506,761 12,771,587
Interest bearing deposits with other
financial institutions 105,048 105,432
Securities Available for sale (market value of $27,711,246 27,711,246 25,157,439
and $25,157,439, respectively)
Investment securities (market values of $27,582,013 28,751,809 30,444,228
and $28,462,295, respectively)
Loans 63,153,967 61,389,337
Less: Unearned income 1,086,723 1,043,761
Allowance for loan losses 1,297,442 1,251,549
------------ -----------
Net loans 60,769,802 59,094,027
Premises and equipment, net 1,652,948 1,698,946
Interest receivable and other assets 2,023,232 2,336,949
------------ -----------
Total assets 129,520,846 131,608,608
============ ===========
Liabilities and Stockholders' Equity
Deposits:
Non-interest bearing $ 18,476,330 19,263,719
Interest bearing 93,885,389 94,866,126
------------ -----------
Total deposits 112,361,719 114,129,845
Securities sold under agreements to repurchase 4,876,585 5,873,654
Other borrowed funds 280,226 306,609
Accrued expenses and other liabilities 658,086 627,831
------------ -----------
Total liabilities 118,176,616 120,937,939
Stockholders' equity:
Class A common stock. Authorized 975,000
shares of $.01 par value; 548,160
shares issued and outstanding. 5,482 5,482
Class B common stock of $.01 par value.
Authorized 250,000 shares;
-0- shares issued and outstanding. 0 0
Preferred stock of $.01 par value. Authorized
250,000 shares; -0- shares issued
and outstanding. 0 0
Surplus 3,476,518 3,476,518
Net unrealized loss on investments on
available for sale investments (284,330) (637,286)
Retained earnings 8,612,150 8,291,545
------------ -----------
11,809,820 11,136,259
Less 31,775 and 33,925 treasury shares, at cost 465,590 465,590
------------ -----------
Total stockholders' equity 11,344,230 10,670,669
Total liabilities and stockholders' equity $129,520,846 131,608,608
============ ===========
</TABLE>
-3-
<PAGE> 4
UNITED BANCORPORATION OF ALABAMA, INC.
AND SUBSIDIARY
Condensed Consolidated Statements of Earnings
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
1995 1994
<S> <C> <C>
Interest income:
Interest and fees on loans $1,594,851 1,220,906
---------- ----------
Interest on investment securities Available for Sale:
Taxable 440,214 342,877
Nontaxable 23,724 81,229
Interest on investment securities Held to Maturity:
Taxable 380,492 525,080
Nontaxable 62,738 15,758
---------- ----------
Total investment income 907,168 964,944
Other interest income 76,707 47,865
---------- ----------
Total interest income 2,578,726 2,233,715
Interest expense:
Interest on deposits 951,754 778,429
Interest on other borrowed funds 86,551 32,594
---------- ----------
Total interest expense 1,038,305 811,023
Net interest income 1,540,421 1,422,692
Provision for loan losses 51,000 90,000
---------- ----------
Net interest income after
provision for loan losses 1,489,421 1,332,692
Non-interest income:
Service charge on deposits 217,387 218,556
Commission on credit life 28,707 29,438
Investment securities gains and losses, net 0 0
Other 27,384 98,000
---------- ----------
Total noninterest income 273,478 345,994
Non-interest expense:
Salaries and benefits 618,261 586,892
Net occupancy expense 163,045 176,667
Other 488,576 441,520
---------- ----------
Total non-interest expense 1,269,882 1,205,079
Earnings before income tax expense 493,017 473,607
Income tax expense 172,412 168,855
---------- ----------
Net earnings $ 320,605 304,752
========== ==========
Net earnings per share $ 0.62 0.63
Weighted average shares outstanding 516,385 484,275
========== ==========
</TABLE>
-4-
<PAGE> 5
UNITED BANCORPORATION OF ALABAMA, INC.
AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Net Net
Unrealized Unrealized
loss on loss on Total
Common Retained investments investments Treasury stockholders'
stock Surplus earnings mutual funds AFS stock equity
<S> <C> <C> <C> <C> <C> <C> <C>
Balance December 31, 1992 $ 5,482 3,476,518 7,196,939 (91,093) (508,590) 10,079,256
Net earnings 1993 - - 1,369,748 - - 1,369,748
Cash dividends declared ($.50 per share) - - (257,118) - - (257,118)
Unrealized loss on investments in mutual 0
funds and other stocks - - - 91,093 - 91,093
Purchase of treasury stock - 0
Balance December 31, 1993 5,482 3,476,518 8,309,569 - (508,590) 11,282,979
Net earnings 1994 - - 824,549 - - 824,549
Cash dividends declared ($.50 per share) - - (257,118) - - (257,118)
Unrealized loss on investments in mutual 0
funds - - - - - 0
Net Change in unrealized gain (losses) (637,286) (637,286)
on investments available for sale
Purchase treasury stock (539,280) (539,280)
Stock Dividend (1 to 15): 0
29,960 at $18 (539,280) 539,280 0
2,150 at $20 (43,000) 43,000 0
Cash dividends payable on partial shares (3,175) (3,175)
Balance December 31, 1994 $ 5,482 3,476,518 8,291,545 - (637,286) (465,590) 10,670,669
Net earnings three months ended
March 31, 1995 - - 320,605 - - 320,605
Cash dividends declared - - - 0
Net Change in unrealized gain (losses) 0
on investments available for sale _ - - - 352,956 - 352,956
--------- ---------- ---------- --------- --------- --------- -----------
Balance March 31, 1995 $ 5,482 3,476,518 8,612,150 0 (284,330) (465,590) 11,344,230
</TABLE>
-5-
<PAGE> 6
<TABLE>
<S> <C> <C>
United Bank
Statement of Cash Flows (Unaudited)
Three Months Ended March 31, 1995 and 1994
Operating Activities
Net Income $ 320,605 $ 304,752
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities
Provision for Loan Losses 51,000 90,000
Depreciation on Premises and Equipment 50,516 79,595
Amortization of Investment Securities 15,612 10,810
Amortization of Investment Securities Held for Sale 16,874 14,832
(Gain) Loss on Sale of Investment Securities 0 0
(Gain) Loss on Sale of Investment Securities Held for Sale 0 0
(Gain) Loss on Sale of Other Real Estate 0 0
(Gain)Loss on Disposal of Premises and Equipment 0 (3,325)
Writedown of Other Real Estate 0 0
(Increase) Decrease in Interest Receivable
and Other Assets 78,414 (109,120)
Increase (Decrease) in Deferred Income Taxes 0 0
Increase (Decrease) in Accrued Expenses
and Other Liabilities 30,255 (103,747)
------------- -----------
Net Cash Provided (Used) by Operating Activities 563,276 283,797
------------- -----------
Investing Activities
Proceeds From Interest-bearing Deposits in
Other Financial Institutions 384 383
Purchases of Interest-bearing Deposits in
Other Financial Institutions 0 0
Proceeds From Sales of Investment Securities 0 0
Proceeds From Sales of Investment Securities
Available for Sale 0 0
Proceeds From Maturities of Investment Securities 1,676,807 4,399,270
Proceeds From Maturities of Investment Securities
Available for Sale 293,409 2,530,916
Purchases of Investment Securities 0 (9,479,792)
Purchases of Investment Securities Available for Sale (2,275,831) (995,000)
Net (Increase) Decrease in Loans (1,726,775) (1,267,428)
Purchases of Premises and Equipment (4,518) (41,531)
Proceeds From Sales of Premises and Equipment 0 3,325
Purchases of Other Real Estate 0 (26,656)
Proceeds From Sales of Other Real Estate 0 30,000
------------- -----------
Net Cash Provided (Used) by Investing Activities (2,036,524) (4,846,513)
------------- -----------
Financing Activities
Net Increase (Decrease) in Deposits, (1,768,126) 3,017,398
Net Increase in securities sold under
agreemnet to repurchase (997,069) (1,748,179)
Cash Dividends 0 0
Purchase of Treasury Stock 0 0
Increase (Decrease) in Other Borrowed Funds (26,383) (451,871)
------------- -----------
Net Cash Provided (Used) by Financing Activities (2,791,578) 817,348
------------- -----------
Increase (Decrease) in Cash and Cash Equivalents (4,264,826) (3,745,368)
Cash and Cash Equivalents at Beginning of Period 12,771,587 10,335,046
------------- -----------
Cash and Cash Equivalents at End of Period $ 8,506,761 $ 6,589,678
============= ===========
</TABLE>
6
<PAGE> 7
UNITED BANCORPORATION OF ALABAMA, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
NOTE 1 - General
The consolidated financial statements in this report have not been audited. In
the opinion of management, all adjustments necessary to present fairly the
financial position and the results of operations for the interim periods have
been made. All such adjustments are of a normal recurring nature. The results
of operations are not necessarily indicative of the results of operations for
the full year or any other interim periods. For further information, refer to
the consolidated financial statements and footnotes included in the Company's
annual report on Form 10-K for the year ended December 31, 1994.
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of Operations
The following financial review is presented to provide an analysis of the
results of operations of United Bancorporation of Alabama, Inc. (the
"Corporation"), and its subsidiary for the three months ended March 31, 1995,
and 1994, compared. This review should be used in conjunction with the
consolidated financial statements included in the Form 10-Q.
Net income after taxes for the three months ended March 31, 1995, was $320,605,
an increase of $15,853, or 5.20%, as compared to $304,752 for the same period
in 1994. An increase in net interest margin was offset the decrease in other
income to account for most of this increase.
Total interest income increased $345,011, or 15.45% to $2,578,726 in 1995, from
$2,233,715 in 1994. Average interest earning assets were $123,861,457 for the
first quarter of 1995 as compared to $118,625,875 for the same period in 1994,
an increase of $5,235,582 or 4.41% The average rate earned in 1995 was 8.44%
as compared to 7.70% in 1994, reflecting rising interest rates during 1995.
Thus, the increase in total interest income in 1995 is attributed to a
combination of rising interest rates and an increase in the volume of average
interest earning assets. The net interest margin increased to 5.03% for the
first quarter of 1995 as compared to 4.92% for the same period in 1994.
Total interest expense increased by $227,282, or 28.02%, in 1995 to $1,038,305
from $811,023 in 1994. Average interest bearing liabilities increased to
$101,525,942 in 1995 from $98,749,281 in 1994, an increase of $2,776,661, or
2.81%. The average rate paid during the first quarter of 1995 was 4.17% as
compared to 3.33% for the same period in 1994.
The provision for loan losses decreased to $51,000 for the first three months
of 1995 as compared to $90,000 for the same period in 1994. Net charged-off
loans for the first quarter of 1995 were $5,107, as compared to $54,471 net
charge-offs in 1994.
The allowance for possible loan losses represents 2.05% of gross loans at March
31, 1995, as compared to 2.42% at year-end 1994, excluding bankers acceptances
and commercial paper. Loans on which the accrual of interest had been
discontinued or reduced amounted to $185,066 at March 31, 1995, as compared to
$162,844 at December 31, 1994.
8
<PAGE> 9
Total noninterest income decreased to $273,478 for the first quarter of 1995,
as compared to $345,994 for the same period of 1994, a decrease of $72,516, or
21.00%. Service charges on deposits decreased $1,169, or .53%, to $217,387 in
1995 from $218,556 in 1994. Commissions on credit life decreased to $28,707 in
1995 from $29,438 in 1994. Other income decreased during the first quarter of
1995 to $27,384 from $98,000 in 1994. The Corporation has yet to receive a
dividend from Risk Associated in 1995; in 1994 the dividend was $58,000.
Total noninterest expense increased $64,773, or 5.37% , to $1,269,882 during
the first quarter of 1995, as compared to $1,205,079 for the same period in
1994. Salaries and benefits increased to $618,261 in 1995 from $586,892 in
1994, an increase of $31,369 or 5.34%. Occupancy expense decreased $13,622, or
7.71%, to $163,045 in 1995 from $176,667 in 1994. Other expense increased to
$488,576 during the first quarter of 1995 from $441,520 for the same period in
1994, an increase of $47,056, or 10.66%. Legal fees for the first quarter of
1995 were $39,160, as compared to $117,409 for the same period in 1994. FDIC
premiums paid on deposits increased $2,717, or 3.97%, to $71,160 in 1994, as
compared to $68,443 for the same period in 1994.
Earnings before taxes for the first quarter of 1995 increased $19,410, or
4.10%, to $493,067 from $473,607 for the same period of 1994. Income tax
expense increased to $172,412 in 1995 from $168,855 in 1994, an increase of
$3,557, or 2.10%.
Financial Condition and Liquidity
Total assets on March 31, 1995, were $129,520,846, as compared to $131,608,608
on December 31, 1994, a decrease of $2,087,762, or 1.59%. Average total assets
for the first quarter of 1995 were $131,648,833 as compared to $128,016,474 for
the same period in 1994. Net loans increased to $60,769,802 at March 31, 1995,
from $59,094,027 at year end 1994, an increase of $1,675,775, or 2.84%. The
loan to deposit ratio (net loans) on March 31, 1995, excluding bankers
acceptances and commercial paper, was 54.08%, as compared to 51.78% on December
31, 1994. Most of this growth was real estate mortgage loans.
Fed Funds Sold decreased to $2,850,000 on March 31, 1995, as compared to
$5,975,000 on December 31, 1994, a decrease of $3,125,000. The investment
securities available for sale increased to $27,711,246 in the first quarter of
1995 from $25,157,439 at December 31, 1994. The investment securities held to
maturity decreased to $28,751,809 at March 31, 1995 from $30,444,228 at
December 31, 1994.
Non-performing Assets: The following table sets forth the Corporation's
non-performing assets at March 31, 1995 and December 31, 1994. Under the
Corporation's nonaccrual policy, a loan is placed on nonaccrual status when
collectibility of principal and interest is in doubt or when principal and
interest is 90 days or more past due.
9
<PAGE> 10
<TABLE>
<CAPTION>
March December
Description 1994 1993
(Dollars in Thousands)
<S> <C> <C> <C>
(A) Loans accounted for on a $185 $163
nonaccrual basis
(B) Loans which are contractually
past due ninety days or more as
to interest or principal payments
(excluding balances included in
(A) above). 14 35
(C) Loans, the term of which have
been renegotiated to provide a
reduction or deferral of interest
or principal because of a
deterioration in the financial
position of the borrower. 0 0
(D) Other non-performing assets 75 75
</TABLE>
Total deposits decreased $1,768,126, or 1.55%, to $112,361,719 on March 31,
1995, from $114,129,845 at year end. Noninterest bearing deposits decreased to
$18,476,330 at quarter end from 1994's year end total of $19,263,719, a
reduction of $787,389, or 4.08%. Interest bearing deposits decreased $980,737,
or 1.03%, to a $93,885,389 on March 31, 1995, from $94,866,126 at December 31,
1994. Average total deposits for the first quarter of 1995 were $113,493,988,
as compared to $110,509,077 for the same period in 1994.
The Corporation relies primarily on internally generated capital growth to
maintain capital adequacy. Total stockholders' equity on March 31, 1995, was
$11,344,230, an increase of $673,561, or 6.31%, from $10,670,669 at year end
1994.
Primary capital to total assets at March 31, 1995, was 8.76%, as compared to
8.11% at year end 1994. Total capital and allowances for loan losses to total
assets at March 31, 1995 was 9.76%, as compared to 9.05% at December 31, 1994.
The Corporation's bank subsidiary, United Bank, had risk based capital of
$12,643,000, or 17.75%, at March 31, 1994, as compared to $12,290,000, or
15.54% at year end 1994. United Bank had excess risk based capital of 9.75% at
March 31, 1995, and 7.54% at December 31, 1994, based upon the minimum
requirement of 8.00%. Based on management's projection, internally generated
capital should be sufficient to satisfy capital requirements in the foreseeable
future.
10
<PAGE> 11
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(A) Exhibit 27 Financial Data Schedule
(B) During the three months ended March 31, 1995, the Corporation
did not file a Form 8-K Current Report with the Securities and
Exchange Commission.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED BANCORPORATION OF ALABAMA, INC.
Date: May 10, 1995 /s/ Robert R. Jones, III
------------ ---------------------------------------
Robert R. Jones, III
President
(Principal Financial Officers)
11
<PAGE> 12
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibits Description
-------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S INTERIM FINANCIAL STATEMENTS FOR FISCAL YEAR ENDED 3-31-95 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 5,656,761
<INT-BEARING-DEPOSITS> 105,048
<FED-FUNDS-SOLD> 2,850,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 27,711,246
<INVESTMENTS-CARRYING> 28,751,809
<INVESTMENTS-MARKET> 27,582,013
<LOANS> 63,153,967
<ALLOWANCE> 1,297,442
<TOTAL-ASSETS> 129,520,846
<DEPOSITS> 112,361,719
<SHORT-TERM> 280,226
<LIABILITIES-OTHER> 658,086
<LONG-TERM> 0
<COMMON> 5,482
0
0
<OTHER-SE> 11,338,748
<TOTAL-LIABILITIES-AND-EQUITY> 129,520,846
<INTEREST-LOAN> 1,594,851
<INTEREST-INVEST> 907,168
<INTEREST-OTHER> 76,707
<INTEREST-TOTAL> 2,578,726
<INTEREST-DEPOSIT> 951,754
<INTEREST-EXPENSE> 86,551
<INTEREST-INCOME-NET> 1,540,421
<LOAN-LOSSES> 51,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,269,882
<INCOME-PRETAX> 493,017
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 320,605
<EPS-PRIMARY> .62
<EPS-DILUTED> .62
<YIELD-ACTUAL> 8.44
<LOANS-NON> 185,066
<LOANS-PAST> 14,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0<F1>
<ALLOWANCE-OPEN> 1,251,549
<CHARGE-OFFS> 5,107<F2>
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1,297,442
<ALLOWANCE-DOMESTIC> 1,297,442
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>Information not contained in financial statements.
<F2>Charge offs net of recoveries.
</FN>
</TABLE>
