<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, 1997
--------------------
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, 1997.
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, 1997
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
STATEMENT OF CONDITION
(UNAUDITED)
<TABLE>
<CAPTION>
March December 31,
1997 1996
<S> <C> <C>
Assets
Cash and due from banks $ 7,577,641 8,139,453
Federal funds sold 6,030,000 650,000
------------- -------------
Cash and cash equivalents 13,607,641 8,789,453
Interest bearing deposits with other
financial institutions 102,132 102,548
Securities Available for sale 37,758,781 36,308,703
Investment securities (market values of $21,821,950 22,218,720 22,770,332
and $22,555,998 respectively)
Loans 76,582,210 75,183,615
Less: Unearned income 797,009 937,725
Allowance for loan losses 1,294,430 1,243,457
------------- -------------
Net loans 74,490,771 73,002,433
Premises and equipment, net 1,980,864 2,012,227
Interest receivable and other assets 2,152,033 2,292,713
------------- -------------
Total assets 152,310,942 145,278,409
============= =============
Liabilities and Stockholders' Equity
Deposits:
Non-interest bearing $ 20,503,244 19,973,202
Interest bearing 107,369,563 103,102,366
------------- -------------
Total deposits 127,872,807 123,075,568
Securities sold under agreements to repurchase 8,104,033 6,754,899
Other borrowed funds 1,008,729 668,307
Accrued expenses and other liabilities 1,765,427 1,516,586
------------- -------------
Total liabilities 138,750,996 132,015,360
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 (138,794) 26,283
Retained earnings 10,682,330 10,220,356
------------- -------------
14,025,536 13,728,639
Less 31,775 and 31,775 treasury shares, at cost 465,590 465,590
------------- -------------
Total stockholders' equity 13,559,946 13,263,049
------------- -------------
Total liabilities and stockholders' equity 152,310,942 145,278,409
============= =============
</TABLE>
3
<PAGE> 4
UNITED BANCORPORATION OF ALABAMA, INC.
AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31
1997 1996
<S> <C> <C>
Interest income:
Interest and fees on loans 1,887,734 1,651,828
Interest on investment securities Available for Sale:
Taxable 492,968 568,598
Nontaxable 57,557 51,260
Interest on investment securities Held to Maturity:
Taxable 255,068 263,938
Nontaxable 84,169 63,498
---------- ----------
Total investment income 889,762 947,294
Other interest income 103,336 89,296
---------- ----------
Total interest income 2,880,832 2,688,418
Interest expense:
Interest on deposits 1,174,524 1,141,117
Interest on other borrowed funds 100,835 74,842
---------- ----------
Total interest expense 1,275,359 1,215,959
Net interest income 1,605,473 1,472,459
Provision for loan losses 60,000 42,750
---------- ----------
Net interest income after
provision for loan losses 1,545,473 1,429,709
Noninterest income:
Service charge on deposits 243,582 233,155
Commission on credit life 12,851 12,900
Investment securities gains and losses, net (6,586) 0
Other 194,815 34,382
---------- ----------
Total noninterest income 444,662 280,437
Noninterest expense:
Salaries and benefits 718,915 600,578
Net occupancy expense 212,610 165,001
Other 395,996 417,143
---------- ----------
Total non-interest expense 1,327,521 1,182,722
Earnings before income tax expense 662,614 527,424
Income tax expense 200,640 144,589
---------- ----------
Net earnings 461,974 382,835
========== ==========
Net earnings per share $ 0.89 $ 0.74
Weighted average shares outstanding 516,385 516,385
========== ==========
</TABLE>
4
<PAGE> 5
UNITED BANCORPORATION OF ALABAMA, INC.
AND SUBSIDIARY
CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE PERIODS ENDED
(UNAUDITED)
<TABLE>
<CAPTION>
Unrealized
loss on
Shares Common Retained investments
stock Surplus earnings AFS
<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)
Effect of adoption of FASB Statement No. 115,
Accounting for Certain Investments in Debt and
and Equity Securities 491,437
Change in unrealized gain (loss) on investment
securities available for sale, net of change in
deferred tax (1,128,723)
Purchase of treasury stock
Stock dividend (1 to 15)
29,960 at $18 (539,280)
2,150 at $20 (43,000)
Cash paid in lieu of fractional shares (3,175)
----------- ----------- ----------- ----------- -----------
Balance December 31, 1994 548,160 5,482 3,476,518 8,291,545 (637,286)
Net earnings 1995 -- -- 1,230,362
Cash dividends declared ($.50 per share) -- -- --
Net Change in unrealized gain (losses) --
on investments available for sale 754,699
Cash dividends payable on partial shares (258,192)
----------- ----------- ----------- ----------- -----------
Balance December 31, 1995 548,160 5,482 3,476,518 9,263,715 117,413
Net earnings 1996 1,473,027
-- --
Cash dividends declared ($1.00 per share) -- -- (516,386)
Net Change in unrealized gain (losses)
on investments available for sale -- -- (91,130)
----------- ----------- ----------- ----------- -----------
Balance December 31, 1996 548,160 5,482 3,476,518 10,220,356 26,283
Net earnings three months ended March 1997 461,974
Net Change in unrealized gain (losses)
on investments available for sale (165,077)
----------- ----------- ----------- ----------- -----------
Balance March 31, 1997 548,160 5,482 3,476,518 10,682,330 (138,794)
=========== =========== =========== =========== ===========
<CAPTION>
Total
Treasury stockholders'
stock equity
<S> <C> <C>
Balance December 31, 1993 (508,590) 11,282,979
Net earnings 1994 824,549
Cash dividends declared ($.50 per share) (257,118)
Effect of adoption of FASB Statement No. 115,
Accounting for Certain Investments in Debt and
and Equity Securities 491,437
Change in unrealized gain (loss) on investment
securities available for sale, net of change in
deferred tax (1,128,723)
Purchase of treasury stock (539,280) (539,280)
Stock dividend (1 to 15)
29,960 at $18 539,280 --
2,150 at $20 43,000 --
Cash paid in lieu of fractional shares (3,175)
----------- -----------
Balance December 31, 1994 (465,590) 10,670,669
Net earnings 1995 -- 1,230,362
Cash dividends declared ($.50 per share) -- --
Net Change in unrealized gain (losses) --
on investments available for sale 754,699
Cash dividends payable on partial shares (258,192)
----------- -----------
Balance December 31, 1995 (465,590) 12,397,538
Net earnings 1996 1,473,027
-- --
Cash dividends declared ($1.00 per share) (516,386)
Net Change in unrealized gain (losses) --
on investments available for sale -- (91,130)
----------- -----------
Balance December 31, 1996 (465,590) 13,263,049
Net earnings three months ended March 1997 461,974
Net Change in unrealized gain (losses) --
on investments available for sale (165,077)
----------- -----------
Balance March 31, 1997 (465,590) 13,559,946
=========== ===========
</TABLE>
5
<PAGE> 6
UNITED BANCORPORATION OF ALABAMA, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIOD ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Operating Activities
Net Income $ 461,974 $ 382,835
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities
Provision for Loan Losses 60,000 42,750
Depreciation on Premises and Equipment 84,567 59,494
Amortization of Investment Securities 13,758 28,913
Amortization of Investment Securities Held for Sale 14,247 17,340
(Gain) Loss on Sale of Investment Securities -- --
(Gain) Loss on Sale of Investment Securities Held for Sale 6,586 --
(Gain) Loss on Sale of Other Real Estate -- 2,207
(Gain)Loss on Disposal of Premises and Equipment (171) (500)
Writedown of Other Real Estate -- --
(Increase) Decrease in Interest Receivable
and Other Assets 195,732 (604,118)
Increase (Decrease) in Deferred Income Taxes -- --
Increase (Decrease) in Accrued Expenses
and Other Liabilities 248,841 (204,289)
------------ ------------
Net Cash Provided (Used) by Operating Activities 1,085,533 (275,368)
------------ ------------
Investing Activities
Proceeds From Interest-bearing Deposits in
Other Financial Institutions 416 265
Purchases of Interest-bearing Deposits in
Other Financial Institutions -- --
Proceeds From Sales of Investment Securities -- --
Proceeds From Sales of Investment Securities Available for Sale 1,999,651 --
Proceeds From Maturities of Investment Securities 797,595 3,913,382
Proceeds From Maturities of Investment Securities Available for Sale 540,482 2,575,613
Purchases of Investment Securities (259,741) (6,640,621)
Purchases of Investment Securities Available for Sale (4,286,173) (4,584,715)
Net (Increase) Decrease in Loans (1,548,338) (1,913,553)
Purchases of Premises and Equipment (56,433) (17,018)
Proceeds From Sales of Premises and Equipment 3,400 500
Purchases of Other Real Estate 55,000 78,414
Proceeds From Sales of Other Real Estate -- 60,731
------------ ------------
Net Cash Provided (Used) by Investing Activities (2,754,141) (6,527,002)
------------ ------------
Financing Activities
Net Increase (Decrease) in Deposits, 4,797,239 4,087,243
Net Increase (Decrease) in securities sold under
agreement to repurchase 1,349,134 (2,754,966)
Cash Dividends -- --
Purchase of Treasury Stock -- --
Increase (Decrease) in Other Borrowed Funds 340,422 824,545
------------ ------------
Net Cash Provided (Used) by Financing Activities 6,486,795 2,156,822
------------ ------------
Increase (Decrease) in Cash and Cash Equivalents 4,818,188 (4,645,548)
Cash and Cash Equivalents at Beginning of Period 8,789,453 13,775,385
------------ ------------
Cash and Cash Equivalents at End of Period $ 13,607,641 $ 9,129,837
============ ============
</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, 1996.
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, 1997,
and 1996, 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, 1997, was $461,974,
an increase of $79,139, or 20.67%, as compared to $382,835 for the same period
in 1996. An increase in net interest margin was offset a smaller increase in
non-interest expense to account for the majority of this increase.
Total interest income increased $192,414, or 7.16% to $2,880,832 in 1997, from
$2,688,418 in 1996. Average interest earning assets were $140,031,259 for the
first quarter of 1997 as compared to $133,316,848 for the same period in 1996,
an increase of $6,714,411 or 5.04%. The average rate earned in 1997 was 8.34%
as compared to 8.29% in 1996, reflecting the stable interest rates during 1997.
Thus, the increase in total interest income in 1997 is attributed to the
increase in volume of earning assets. The net interest margin increased to
4.65% for the first quarter of 1997 as compared to 4.54% for the same period in
1996. This increase reflects a stable cost of funds as interest rates on loans
has risen slightly.
Total interest expense increased by $59,400, or 4.89%, in 1997 to $1,275,359
from $1,215,959 in 1996. Average interest bearing liabilities increased to
$113,960,449 in 1997 from $104,871,181 in 1996, an increase of $9,089,268, or
8.67%. The average rate paid during the first quarter of 1997 was 4.54% as
compared to 4.66% for the same period in 1996. The increase in interest expense
is attributed to the increase in interest bearing liabilities and not the rate
paid.
The provision for loan losses increased to $60,000 for the first three months
of 1997 as compared to $42,750 for the same period in 1996. Net charged-off
loans for the first quarter of 1997 were $9,028, as compared to $59,155 net
charge-offs in 1996.
The allowance for possible loan losses represents 1.69% of gross loans at March
31, 1997, as compared to 1.65% at year- end 1996. Loans on which the accrual
of interest had been discontinued or reduced amounted to $251,884 at March 31,
1997, as compared to $339,016 at December 31, 1996.
8
<PAGE> 9
Total non-interest income increased to $444,662 for the first quarter of 1997,
as compared to $280,437 for the same period of 1996, an increase of $164,225,
or 58.56%. Service charges on deposits increased $10,427, or 4.47%, to
$243,582 in 1997 from $233,155 in 1996. Commissions on credit life decreased
to $12,851 in 1997 from $12,900 in 1996. Other income increased during the
first quarter of 1997 to $194,815 from $34,382 in 1996. Losses on the sale of
securities equal $6,586 as the Corporation sold shorter maturing, low yielding
bonds to purchase longer term higher yield bonds. The Corporation also
received an insurance payment of $121,000 to reimburse for past legal expenses.
Total non-interest expense increased $144,799, or 12.24%, to $1,327,521 during
the first quarter of 1997, as compared to $1,182,722 for the same period in
1996. Salaries and benefits increased to $718,915 in 1997 from $600,578 in
1996, an increase of $118,337 or 19.70%. The Corporation has added one new
branch and an one new division since March of 1996, therefore causing the
increase in salaries and benefits. Occupancy expense increased $47,609, or
28.85%, to $212,610 in 1997 from $165,001 in 1996. Other expense decreased to
$395,996 during the first quarter of 1997 from $417,143 for the same period in
1996, a decrease of $21,147, or 5.07%. Legal fees for the first quarter of
1997 were $15,226, as compared to $33,423 for the same period in 1996.
Earnings before taxes for the first quarter of 1997 increased $135,190, or
25.63%, to $662,614 from $527,424 for the same period of 1996. Income tax
expense increased to $200,640 in 1997 from $144,589 in 1996, an increase of
$56,051, or 38.76%.
Financial Condition and Liquidity
Total assets on March 31, 1997, were $152,310,942, as compared to $145,278,409
on December 31, 1996, an increase of $7,032,533, or 4.84%. Average total
assets for the first quarter of 1997 were $149,294,764 as compared to
$141,316,280 for the same period in 1996. Net loans increased to $74,490,771
at March 31, 1997, from $73,002,433 at year end 1996, an increase of
$1,488,338, or 2.04%. The loan to deposit ratio (net loans) on March 31, 1997
was 58.25%, as compared to 59.32% on December 31, 1996. This slight decrease
is the result of deposits growing faster than loans.
Fed Funds Sold increased to $6,030,000 on March 31, 1997, as compared to
$650,000 on December 31, 1996, an increase of $5,380,000. The investment
securities available for sale increased to $37,758,781 in the first quarter of
1997 from $36,308,703 at December 31, 1996. The investment securities held to
maturity decreased to $22,218,720 at March 31, 1997 from $22,770,322 at
December 31, 1996.
Non-performing Assets: The following table sets forth the Corporation's
non-performing assets at March 31, 1997 and December 31, 1996. 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 1997 1996
(Dollars in Thousands)
<S> <C> <C> <C>
(A) Loans accounted for on a $252 $339
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). 21 14
(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. 17 54
(D) Other non-performing assets 135 147
</TABLE>
Total deposits increased $4,797,239, or 3.90%, to $127,872,807 on March 31,
1997, from $123,075,568 at year end. Non- interest bearing deposits increased
to $20,503,244 at quarter end from 1996's year end total of $19,973,202, an
increase of $530,042, or 2.65%. Interest bearing deposits increased
$4,267,197, or 4.14%, to a $107,369,563 on March 31, 1997, from $103,102,366 at
December 31, 1996. Average total deposits for the first quarter of 1997 were
$126,004,478, as compared to $121,011,224 for the same period in 1996.
The Corporation relies primarily on internally generated capital growth to
maintain capital adequacy. Total stockholders' equity on March 31, 1997, was
$13,559,946, an increase of $296,897, or 2.24%, from $13,263,049 at year end
1996.
Primary capital to total assets at March 31, 1997, was 8.90%, as compared to
9.13% at year end 1996. Total capital and allowances for loan losses to total
assets at March 31, 1997 was 9.75%, as compared to 9.98% at December 31, 1996.
The Corporation's bank subsidiary, United Bank, had risk based capital of
$14,467,000, or 16.85%, at March 31, 1997, as compared to $13,980,000, or
16.63% at year end 1996. United Bank had excess risk based capital of 8.85% at
March 31, 1997, and 8.63% at December 31, 1996, 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, 1997, 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, 1997 /s/ Robert R. Jones, III
------------ ---------------------------------------
Robert R. Jones, III
President
11
<PAGE> 12
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER 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 PERIOD ENDED MARCH 31, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 7,577,641
<INT-BEARING-DEPOSITS> 102,132
<FED-FUNDS-SOLD> 6,030,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 37,758,781
<INVESTMENTS-CARRYING> 22,218,720
<INVESTMENTS-MARKET> 21,821,950
<LOANS> 76,582,210
<ALLOWANCE> 1,294,430
<TOTAL-ASSETS> 152,310,942
<DEPOSITS> 127,872,807
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,765,427
<LONG-TERM> 0
0
0
<COMMON> 5,482
<OTHER-SE> 13,554,464
<TOTAL-LIABILITIES-AND-EQUITY> 152,310,942
<INTEREST-LOAN> 1,887,734
<INTEREST-INVEST> 889,762
<INTEREST-OTHER> 103,336
<INTEREST-TOTAL> 2,880,832
<INTEREST-DEPOSIT> 1,174,524
<INTEREST-EXPENSE> 100,835
<INTEREST-INCOME-NET> 1,605,473
<LOAN-LOSSES> 60,000
<SECURITIES-GAINS> (6,586)
<EXPENSE-OTHER> 1,327,521
<INCOME-PRETAX> 662,614
<INCOME-PRE-EXTRAORDINARY> 662,614
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 461,974
<EPS-PRIMARY> .89
<EPS-DILUTED> .89
<YIELD-ACTUAL> 8.34
<LOANS-NON> 251,884
<LOANS-PAST> 21,000
<LOANS-TROUBLED> 17,000
<LOANS-PROBLEM> 0<F1>
<ALLOWANCE-OPEN> 1,243,457
<CHARGE-OFFS> 19,368
<RECOVERIES> 10,340
<ALLOWANCE-CLOSE> 1,294,430
<ALLOWANCE-DOMESTIC> 1,294,430
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>INFORMATION NOT CONTAINED IN FINANCIAL STATEMENTS.
</FN>
</TABLE>
