<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, 1996
------------------
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, 1996.
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, 1996
INDEX
<TABLE>
<S> <C>
PART I - FINANCIAL INFORMATION PAGE
- ------------------------------ ----
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
UNITED BANCORPORATION OF ALABAMA, INC.
AND SUBSIDIARY
Condensed Consolidated Balance Sheets
(Unaudited)
Item 1.
<TABLE>
<CAPTION>
March 31 December 31,
1996 1995
----------- -----------
<S> <C> <C>
Assets
Cash and due from banks $5,229,837 6,225,385
Federal funds sold 3,900,000 7,550,000
----------- -----------
Cash and cash equivalents 9,129,837 13,775,385
Interest bearing deposits with other
financial institutions 103,632 103,897
Securities Available for sale (market value of $40,111,815 40,111,815 38,413,968
and $38,413,968, respectively)
Investment securities (market values of $24,273,945 24,498,314 21,799,988
and $21,758,613, respectively)
Loans 66,861,725 65,061,452
Less: Unearned income 1,060,741 1,114,870
Allowance for loan losses 1,327,231 1,343,636
----------- -----------
Net loans 64,473,753 62,602,946
Premises and equipment, net 1,624,659 1,667,135
Interest receivable and other assets 2,683,234 2,102,902
----------- -----------
Total assets 142,625,244 140,466,221
=========== ===========
Liabilities and Stockholders' Equity
Deposits:
Non-interest bearing $20,668,555 20,117,028
Interest bearing 101,161,560 97,625,844
----------- -----------
Total deposits 121,830,115 117,742,872
Securities sold under agreements to repurchase 5,935,890 8,690,856
Other borrowed funds 997,061 172,516
Accrued expenses and other liabilities 1,258,150 1,462,439
----------- -----------
Total liabilities 130,021,216 128,068,683
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 (58,935) 117,413
Retained earnings 9,646,553 9,263,715
----------- -----------
13,069,618 12,863,128
Less 31,775 and 33,925 treasury shares, at cost 465,590 465,590
----------- -----------
Total stockholders' equity 12,604,028 12,397,538
----------- -----------
Total liabilities and stockholders' equity 142,625,244 140,466,221
=========== ===========
</TABLE>
3
<PAGE> 4
UNITED BANCORPORATION OF ALABAMA, INC.
AND SUBSIDIARY
Condensed Consolidated Statements of Earnings
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
--------------------------
1996 1995
--------- ---------
<S> <C> <C>
Interest income:
Interest and fees on loans 1,651,828 1,594,851
Interest on investment securities Available for Sale:
Taxable 568,598 440,214
Nontaxable 51,260 23,724
Interest on investment securities Held to Maturity:
Taxable 263,938 380,492
Nontaxable 63,498 62,738
--------- ---------
Total investment income 947,294 907,168
Other interest income 89,296 76,707
--------- ---------
Total interest income 2,688,418 2,578,726
Interest expense:
Interest on deposits 1,141,117 951,754
Interest on other borrowed funds 74,842 86,551
--------- ---------
Total interest expense 1,215,959 1,038,305
Net interest income 1,472,459 1,540,421
Provision for loan losses 42,750 51,000
--------- ---------
Net interest income after
provision for loan losses 1,429,709 1,489,421
Noninterest income:
Service charge on deposits 233,155 217,387
Commission on credit life 12,900 28,707
Investment securities gains and losses, net 0 0
Other 34,382 27,384
--------- ---------
Total noninterest income 280,437 273,478
Noninterest expense:
Salaries and benefits 600,578 618,261
Net occupancy expense 165,001 163,045
Other 417,143 488,576
--------- ---------
Total non-interest expense 1,182,722 1,269,882
Earnings before income tax expense 527,424 493,017
Income tax expense 144,589 172,412
--------- ---------
Net earnings 382,835 320,605
========= =========
Net earnings per share .74 .62
Weighted average shares outstanding 516,385 516,385
========= =========
</TABLE>
4
<PAGE> 5
UNITED BANCORPORATION OF ALABAMA, INC.
AND SUBSIDIARY
Consolidated Statements of Stockholder's Equity
(Unaudited)
<TABLE>
<CAPTION>
Net
Unrealized
loss on
Common Retained investments
Shares stock Surplus earnings mutual funds
-------- ------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1993 548,160 5,482 3,476,518 8,309,569 -
Net earnings 1994 - - 824,549 -
Cash dividends declared ($.50 per share) - - (257,118) -
Unrealized loss on investments in mutual
funds - - - -
Net Change in unrealized gain (losses)
on investments available for sale
Purchase treasury stock
Stock Dividend (1 to 15):
29,960 at $18 (539,280)
2,150 at $20 (43,000)
Cash dividends payable on partial shares (3,175)
--------- -------- ---------- ---------- ------
Balance December 31, 1994 548,160 5,482 3,476,518 8,291,545 -
Net earnings 1995 1,230,362
- - -
Cash dividends declared ($.50 per share) - - (258,192)
Net Change in unrealized gain (losses)
on investments available for sale _ - - -
--------- -------- ---------- ---------- ------
Balance December 31, 1995 548,160 5,482 3,476,518 9,263,715 -
Net earnings three months ended March 1996 382,835
Cash dividends declared ($.50 per share)
Net Change in unrealized gain (losses)
on investments available for sale (176,345)
--------- -------- ---------- ---------- ------
Balance March 31, 1996 548,160 5,482 3,476,518 9,470,205 0
========= ======== ========== ========== ======
<CAPTION>
Net
Unrealized
loss on Total
investments Treasury stockholders'
AFS stock equity
----------- --------- -----------
<S> <C> <C> <C>
Balance December 31, 1993 (508,590) 11,282,979
Net earnings 1994 - 824,549
Cash dividends declared ($.50 per share) - (257,118)
Unrealized loss on investments in mutual -
funds - -
Net Change in unrealized gain (losses) 491,437 491,437
on investments available for sale (1,128,723) (1,128,723)
Purchase treasury stock (539,280) (539,280)
Stock Dividend (1 to 15): -
29,960 at $18 539,280 -
2,150 at $20 43,000 -
Cash dividends payable on partial shares (3,175)
---------- --------- ------------
Balance December 31, 1994 (637,286) (465,590) 10,670,669
Net earnings 1995 1,230,362
- 0
Cash dividends declared ($.50 per share) (258,192)
Net Change in unrealized gain (losses) 0
on investments available for sale 754,699 - 754,699
---------- --------- ------------
Balance December 31, 1995 117,413 (465,590) 12,397,538
Net earnings three months ended March 1996 382,835
0
Cash dividends declared ($.50 per share) 0
Net Change in unrealized gain (losses) 0
on investments available for sale (176,345)
---------- --------- ------------
Balance March 31, 1996 117,413 (465,590) 12,604,028
========== ========= ============
</TABLE>
5
<PAGE> 6
UNITED BANCORPORATION OF ALABAMA, INC.
AND SUBSIDIARY
Consolidated Statements of Cashflows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
-----------------------------
1996 1995
---------- ----------
<S> <C> <C>
Operating Activities
Net Income 382,835 320,605
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities
Provision for Loan Losses 42,750 51,000
Depreciation on Premises and Equipment 59,494 50,516
Amortization of Investment Securities 28,913 15,612
Amortization of Investment Securities Held for Sale 17,340 16,874
(Gain) Loss on Sale of Investment Securities - -
(Gain) Loss on Sale of Investment Securities Held for Sale -
(Gain) Loss on Sale of Other Real Estate 2,207 -
(Gain)Loss on Disposal of Premises and Equipment (500) -
Writedown of Other Real Estate - -
(Increase) Decrease in Interest Receivable
and Other Assets (604,118) 78,414
Increase (Decrease) in Deferred Income Taxes - -
Increase (Decrease) in Accrued Expenses
and Other Liabilities (204,289) 30,255
---------- ----------
Net Cash Provided (Used) by Operating Activities (275,368) 563,276
Investing Activities
Proceeds From Interest-bearing Deposits in
Other Financial Institutions 265 384
Purchases of Interest-bearing Deposits in
Other Financial Institutions - -
Proceeds From Sales of Investment Securities - -
Proceeds From Sales of Investment Securities Available for Sale -
Proceeds From Maturities of Investment Securities 3,913,382 1,676,807
Proceeds From Maturities of Investment Securities Available for Sale 2,575,613 293,409
Purchases of Investment Securities (6,640,621) -
Purchases of Investment Securities Available for Sale (4,584,715) (2,275,831)
Net (Increase) Decrease in Loans (1,913,553) (1,726,775)
Purchases of Premises and Equipment (17,018) (4,518)
Proceeds From Sales of Premises and Equipment 500 -
Purchases of Other Real Estate 78,414 -
Proceeds From Sales of Other Real Estate 60,731 -
---------- ----------
Net Cash Provided (Used) by Investing Activities (6,527,002) (2,036,524)
---------- ----------
Financing Activities
Net Increase (Decrease) in Deposits, 4,087,243 (1,768,126)
Net Increase in securities sold under
agreement to repurchase (2,754,966) (997,069)
Cash Dividends - -
Purchase of Treasury Stock - -
Increase (Decrease) in Other Borrowed Funds 824,545 (26,383)
---------- ----------
Net Cash Provided (Used) by Financing Activities 2,156,822 (2,791,578)
---------- ----------
Increase (Decrease) in Cash and Cash Equivalents (4,645,548) (4,264,826)
Cash and Cash Equivalents at Beginning of Period 13,775,385 12,771,587
---------- ----------
Cash and Cash Equivalents at End of Period 9,129,837 8,506,761
========== ==========
</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, 1995.
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, 1996,
and 1995, 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, 1996, was $382,835,
an increase of $62,230, or 19.4%, as compared to $320,605 for the same period
in 1995. A decrease in net interest margin was offset by the decrease in other
expense to account for the majority of this increase.
Total interest income increased $109,692, or 4.25% to $2,688,418 in 1996, from
$2,578,726 in 1995. Average interest earning assets were $133,316,848 for the
first quarter of 1996 as compared to $123,861,457 for the same period in 1995,
an increase of $9,455,391 or 7.63% The average rate earned in 1996 was 8.29%
as compared to 8.44% in 1995, reflecting the declining interest rates during
1996. Thus, the increase in total interest income in 1996 is attributed to the
increase in volume of earning assets. The net interest margin decreased to
4.54% for the first quarter of 1996 as compared to 5.03% for the same period in
1995. This decrease reflects the flattening of the yield curve as long term
rates remained stabled, but short term rates have begun to rise.
Total interest expense increased by $177,654, or 17.11%, in 1996 to $1,215,959
from $1,038,305 in 1995. Average interest bearing liabilities increased to
$104,871,181 in 1996 from $101,525,942 in 1995, an increase of $3,345,239, or
3.29%. The average rate paid during the first quarter of 1996 was 4.66% as
compared to 4.17% for the same period in 1995.
The provision for loan losses decreased to $42,750 for the first three months
of 1996 as compared to $51,000 for the same period in 1995. Net charged-off
loans for the first quarter of 1996 were $59,155, as compared to $5,107 net
charge-offs in 1995.
The allowance for possible loan losses represents 1.99% of gross loans at March
31, 1996, as compared to 2.06% at year- end 1995. Loans on which the accrual
of interest had been discontinued or reduced amounted to $415,323 at March 31,
1996, as compared to $333,002 at December 31, 1995.
8
<PAGE> 9
Total noninterest income increased to $280,437 for the first quarter of 1996,
as compared to $273,478 for the same period of 1995, an increase of $6,959, or
2.54%. Service charges on deposits increased $15,768, or 7.25%, to $233,155 in
1996 from $217,387 in 1995. Commissions on credit life decreased to $12,900 in
1996 from $28,707 in 1995. Other income increased during the first quarter of
1996 to $34,382 from $27,384 in 1995.
Total noninterest expense decreased $87,160, or 6.86%, to $1,182,722 during the
first quarter of 1996, as compared to $1,269,882 for the same period in 1995.
Salaries and benefits decreased to $600,578 in 1996 from $618,261 in 1995, a
decrease of $17,683 or 2.86%. The Corporation has gone to paying employees 26
times a year as opposed to 24, and paying employees based on actual hours
worked. Occupancy expense increased $1,956, or 1.19%, to $165,001 in 1996 from
$163,045 in 1995. Other expense decreased to $417,143 during the first quarter
of 1996 from $488,576 for the same period in 1995, a decrease of $71,433, or
14.62%. Legal fees for the first quarter of 1996 were $33,424, as compared to
$39,160 for the same period in 1995. FDIC premiums paid on deposits decreased
$70,160, or 98.59%, to $1,000 in 1996, as compared to $71,160 for the same
period in 1995.
Earnings before taxes for the first quarter of 1996 increased $34,407, or
6.98%, to $527,424 from $493,017 for the same period of 1995. Income tax
expense decreased to $144,589 in 1996 from $172,412 in 1995, a decrease of
$27,823, or 16.14%.
Financial Condition and Liquidity
Total assets on March 31, 1996, were $142,625,244, as compared to $140,466,221
on December 31, 1995, an increase of $2,159,023, or 1.54%. Average total
assets for the first quarter of 1996 were $141,316,280 as compared to
$131,648,833 for the same period in 1995. Net loans increased to $64,473,753
at March 31, 1996, from $62,602,946 at year end 1995, an increase of
$1,870,807, or 2.99%. The loan to deposit ratio (net loans) on March 31, 1996
was 52.92%, as compared to 53.17% on December 31, 1995.
Fed Funds Sold decreased to $3,900,000 on March 31, 1996, as compared to
$7,550,000 on December 31, 1995, a decrease of $3,650,000. The investment
securities available for sale increased to $40,111,815 in the first quarter of
1996 from $38,413,968 at December 31, 1995. The investment securities held to
maturity increased to $24,498,314 at March 31, 1996 from $21,799,988 at
December 31, 1995. The Corporation invested excess funds in investments to
increase yields on earning assets.
Non-performing Assets: The following table sets forth the Corporation's
non-performing assets at March 31, 1996 and December 31, 1995. 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 1996 1995
----- --------
(Dollars in Thousands)
<S> <C> <C> <C>
(A) Loans accounted for on a $415 $333
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). 20 30
(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. 23 13
(D) Other non-performing assets 43 107
</TABLE>
Total deposits increased $4,087,243, or 3.47%, to $121,830,115 on March 31,
1996, from $117,742,872 at year end. Noninterest bearing deposits increased to
$20,668,555 at quarter end from 1995's year end total of $20,117,028, an
increase of $551,527, or 2.74%. Interest bearing deposits increased
$3,535,716, or 3.62%, to a $101,161,560 on March 31, 1996, from $97,625,844 at
December 31, 1995. Average total deposits for the first quarter of 1996 were
$121,011,224, as compared to $113,493,988 for the same period in 1995.
The Corporation relies primarily on internally generated capital growth to
maintain capital adequacy. Total stockholders' equity on March 31, 1996, was
$12,604,028, an increase of $206,490, or 1.67%, from $12,397,538 at year end
1995.
Primary capital to total assets at March 31, 1996, was 8.84%, as compared to
8.83% at year end 1995. Total capital and allowances for loan losses to total
assets at March 31, 1996 was 9.77%, as compared to 9.78% at December 31, 1995.
The Corporation's bank subsidiary, United Bank, had risk based capital of
$13,617,000, or 17.16%, at March 31, 1995, as compared to $13,297,000, or
15.66% at year end 1995. United Bank had excess risk based capital of 9.16% at
March 31, 1996, and 7.66% at December 31, 1995, 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, 1996, 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 13, 1996 /s/ Robert R. Jones, III
------------ ------------------------------------
Robert R. Jones, III
President
(Principal Financial Officers)
11
<PAGE> 12
EXHIBIT INDEX
Exhibit
Number Description
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S INTERIM FINANCIAL STATEMENTS FOR FISCAL PERIOD ENDED 3-31-96 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 5,229,837
<INT-BEARING-DEPOSITS> 103,632
<FED-FUNDS-SOLD> 3,900,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 40,111,815
<INVESTMENTS-CARRYING> 24,498,314
<INVESTMENTS-MARKET> 0
<LOANS> 66,861,725
<ALLOWANCE> 1,327,231
<TOTAL-ASSETS> 142,625,244
<DEPOSITS> 121,830,115
<SHORT-TERM> 997,061
<LIABILITIES-OTHER> 1,258,150
<LONG-TERM> 0
<COMMON> 5,482
0
0
<OTHER-SE> 12,598,546
<TOTAL-LIABILITIES-AND-EQUITY> 142,625,244
<INTEREST-LOAN> 1,651,828
<INTEREST-INVEST> 947,294
<INTEREST-OTHER> 89,296
<INTEREST-TOTAL> 2,688,418
<INTEREST-DEPOSIT> 1,141,117
<INTEREST-EXPENSE> 74,842
<INTEREST-INCOME-NET> 1,472,459
<LOAN-LOSSES> 42,750
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,182,722
<INCOME-PRETAX> 527,424
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 382,835
<EPS-PRIMARY> .74
<EPS-DILUTED> .74
<YIELD-ACTUAL> 8.29
<LOANS-NON> 415,323
<LOANS-PAST> 20,000
<LOANS-TROUBLED> 23,000
<LOANS-PROBLEM> 0<F1>
<ALLOWANCE-OPEN> 1,343,636
<CHARGE-OFFS> 93,379
<RECOVERIES> 34,225
<ALLOWANCE-CLOSE> 1,327,231
<ALLOWANCE-DOMESTIC> 1,327,231
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>Information not contained in financial statements.
</FN>
</TABLE>
