SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter ended March 31, 1997. Commission file #0-15423
SOUTH ALABAMA BANCORPORATION,INC.
(Exact name of registrant as specified in its charter)
Alabama 63-0909434
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification Number)
100 St. Joseph Street, Mobile, Alabama 36602
(Address of principal executive offices) (Zip Code)
(334) 431-7800
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 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 reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X . No .
Shares of common stock ($0.01 Par) outstanding at March 31,
1997: 4,227,136
Page 1 of 17
SOUTH ALABAMA BANCORPORATION,INC AND SUBSIDIARIES
INDEX TO FORM 10 - Q
PART I. Financial Information Page Number
Consolidated Statements of Condition
March 31, 1997 and December 31, 1996 3
Consolidated Statements of Operations
Three Months Ended March 31, 1997 and 1996 4
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1997 and 1996 5
Notes to Consolidated Financial Statements
March 31, 1997 6-9
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10-16
PART II. Other Information 17
. . PART I. FINANCIAL INFORMATION
<TABLE>
SOUTH ALABAMA BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION (Unaudited)
<CAPTION>
March 31, December 31,
1997 1996
(Unaudited)
(Dollars in thousands)
A S S E T S
<S> <C> <C>
Cash and Due from Banks $ 16,885 $ 20,230
Federal Funds Sold 11,892 9,683
Total Cash and Cash Equivalents 28,777 29,913
Interest Bearing Deposits 100 100
Securities Available for Sale (at Market) 100,188 100,912
Securities Held to Maturity 15,578 16,861
(Market value of $15,657 and $17,015,
respectively)
Loans 191,220 189,160
Less: Unearned Loan Income <124> <130>
Allowance for Loan Losses <2,580> <2,600>
Loans, Net 188,516 186,430
Premises and Equipment 7,040 7,151
Other Real Estate Owned,Net 15 15
Accrued Income Receivable 3,221 3,453
Deferred Tax Asset 227 70
Intangible assets 4,118 4,160
Other Assets 937 1,012
Total $348,717 $350,077
L I A B I L I T I E S
Non-interest Bearing Demand Deposits $ 55,703 $ 58,196
Interest Bearing Demand Deposits 100,611 102,385
Savings Deposits 23,380 22,823
Large Denomination Time Deposits
(of $100 or more) 38,358 34,980
Time Deposits 75,763 76,903
Total Deposits 293,815 295,287
Short-Term Borrowing 4,895 5,162
Other Liabilities 2,613 2,540
Total Liabilities 301,323 302,989
S H A R E H O L D E R S' E Q U I T Y
Common Stock
Par Value $0.01
Shares Authorized 5,500,000
Shares Outstanding 4,227,136 42 42
Capital Surplus 33,092 33,092
Retained Earnings 14,449 13,701
Net Unrealized Gain (Loss) on Securities
Available for Sale (189) 253
Total Shareholders' Equity 47,394 47,088
Total $348,717 $350,077
(See accompanying notes to consolidated financial statements.)
</TABLE>
3
<TABLE>
SOUTH ALABAMA BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)
<CAPTION>
Three Months Ended March 31
1997 1996
(Dollars in thousands except
per share amounts)
Interest Revenue:
<S> <C> <C>
Loans $ 4,415 $ 3,389
Investments:Taxable 1,405 857
Non-Taxable 378 192
Other 105 192
Total Interest Revenue 6,303 4,630
Interest Expense:
Deposits 2,476 1,905
Other 65 42
Total Interest Expense 2,541 1,947
Net Interest Revenue 3,762 2,683
Provision for Loan Losses 61 101
Net Interest Revenue After Provision
for Loan Losses 3,701 2,582
Non-Interest Revenue:
Trust Department Income 280 274
Service Charges on Deposit Accounts 316 210
Securities Gains and Losses,net 9 111
Other Income, Charges and Fees 91 75
Total Non-Interest Revenue 696 670
Non-Interest Expense:
Salaries 1,199 915
Pensions and Employee Benefits 311 247
Net Occupancy Expense 206 155
Furniture and Equipment Expense 222 190
Intangible Amortization 42
Other Expense 763 648
Total Non-Interest Expense 2,743 2,155
Income Before Income Taxes 1,654 1,097
Income Tax Expense 483 343
Net Income $1,171 $ 754
Earnings Per Common Share $ 0.28 $ .25
Average Shares Outstanding (000's) 4,227 3,001
(See accompanying notes to consolidated financial statements.)
</TABLE>
4
<TABLE>
SOUTH ALABAMA BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<CAPTION>
Three Months Ended March 31,
1997 1996
(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net Income $ 1,171 $ 754
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 370 215
Provision for loan losses 61 101
Securities gains and losses,net <9> <111>
(Increase) decrease in:
Deferred tax asset 82 77
Income receivable 232 125
Other assets 75 <164>
Increase (decrease) in other liabilities 73 213
Net cash provided by operating activities 2,055 1,210
CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease in interest bearing
deposits 0 252
Net increase in loans <2,147> <626>
Purchase of premises and equipment <87> <952>
Net decrease in other real estate owned 0 0
Proceeds from sale of securities
available for sale 9 3,581
Proceeds from maturities of investments 4,680 2,161
Purchase of investments <3,484> <9,571>
Net cash used in investing activities <1,029> <5,155>
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits <1,472> <3,273>
Net increase (decrease) in short-
term borrowing <267> <1,125>
Dividends paid <423> <300>
Net cash used in financing activities <2,162> <4,698>
NET INCREASE <DECREASE> IN CASH
AND CASH EQUIVALENTS <1,136> <8,643>
Cash and cash equivalents at beginning
of period 29,913 32,404
Cash and cash equivalents at end of
period $28,777 $23,761
Supplemental disclosures of cash flow
information:
Interest paid in cash $ 2,622 $ 1,936
Income taxes paid in cash 175 60
(See accompanying notes to consolidated financial statements.)
5
</TABLE>
SOUTH ALABAMA BANCORPORATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE A: The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted
accounting principles for interim financial information and
with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. The
information furnished reflects all adjustments, consisting of
normal and recurring accruals, which in the opinion of
management are necessary for a fair presentation of the
results of the interim periods. Results for interim periods
may not necessarily be indicative of results to be expected
for the year.
For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's
report on Form 10-K for the year ended December 31, 1996.
NOTE B: Per share data is computed on the basis of the weighted
average number of shares of common stock outstanding during
the period. The dilutive effect of stock options is not
material.
6
NOTE C: The allowance for losses on loans for the three month periods
ended March 31, 1997 and 1996 are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
1997 1996
Allowance for loan losses:
<S> <C> <C>
Balance at beginning of period $ 2,600 $ 2,222
Provision charged to
operating expense 61 101
Losses charged off <103> <424>
Recoveries 22 26
Balance at end of period $ 2,580 $ 1,925
</TABLE>
NOTE D: In February 1997, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards
(SFAS) No. 128, "Earnings per Share." This statement
establishes standards for computing and presenting earnings
per share (EPS) and applies to entities with publicly held
common stock or potential common stock. This Statement
simplifies the standards for computing earnings per share
previously found in APB Opinion No. 15, "Earnings per Share,"
and makes them comparable to international EPS standards. It
replaces the presentation of primary EPS with a presentation
of basic EPS and requires dual presentation of basic and
diluted EPS on the face of the income statement for all
entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic
EPS computation to the numerator and denominator of the
diluted EPS computation.
This statement is effective for financial statements issued
for periods ending after December 15, 1997, including interim
7
periods; earlier application is not permitted. This Statement
requires restatement of all prior-period EPS data presented.
The Company will adopt the Statement at fiscal year-end 1997.
Assuming the adoption of SFAS No. 128 had been consummated at
January 1, 1996, the earnings per share amounts, on a pro
forma basis would have been as follows:
<TABLE>
<CAPTION>
For the Three For the Three
Months Ending Months Ending
March 31, 1997 March 31, 1996
<S> <C> <C>
Basic earnings per share $0.28 $0.25
Diluted earnings per share $0.28 $0.25
</TABLE>
NOTE E: In June 1996, the FASB issued SFAS No. 125, "Accounting for
Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities." SFAS No. 125 provides
accounting and regulatory standards for transfers and
servicing of financial assets and extinguishments of
liabilities based on consistent application of a financial-
components approach that focuses on control. Under that
approach, after a transfer of financial assets, an entity
recognizes the financial and servicing assets it controls and
the liabilities it has incurred, derecognizes financial assets
when control has been surrendered, and derecognizes
liabilities when extinguished.
This statement is effective for transfers and servicing of
financial assets and extinguishments of liabilities occurring
after December 31, 1996, and is to be applied prospectively.
Earlier or retroactive application is not permitted. The
Company adopted the provisions of the Standard on January 1,
1997. Based on the Company's current operating activities,
8
the adoption of this statement did not have an impact of the
Company's financial condition of results of operations.
NOTE F: On October 31, 1996, the Company acquired First Monco
Bancshares, Inc. ("FMB") and its wholly-owned subsidiary, the
Monroe County Bank. This transaction was accounted for under
the purchase method of accounting and, accordingly, the 1997
consolidated statement of income includes the Monroe County
Bank's operations.
The Company issued approximately 1.2 million shares of its
common stock for all the outstanding common shares of FMB.
The purchase price of the outstanding common shares of FMB
totaled approximately $16.6 million, which exceeded the fair
value on the net tangible assets acquired by approximately
$4.2 million.
Assuming the acquisition of FMB had been consummated at
January 1, 1996, the consolidated results of operations on a
pro forma basis for the quarter ended March 31, 1996 would
have been as follows,(in thousand, except per share data):
<TABLE>
<S> <C>
Net Interest Income $3,524
Net Income $1,056
Earnings per share $ 0.25
</TABLE>
9
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Presented below is an analysis of the consolidated financial
condition and results of operations of South Alabama Bancorporation,
Inc. (the "Company") and its wholly owned subsidiaries, The Bank of
Mobile, First National Bank, Brewton, and the Monroe County Bank. This
analysis focuses upon significant changes in financial condition between
December 31, 1996 and March 31, 1997 and significant changes for the two
three month periods ended March 31, 1997 and 1996
On October 31, 1996, First Monco Bancshares, Inc., a Monroeville,
Alabama, bank holding company, was merged into the Company. The merger
between First Monco Bancshares, Inc. and the Company has been accounted
for as a purchase (the "Monroeville purchase").
This report on Form 10-Q contains certain forward looking
statements with respect to financial condition, liquidity, non-
performing assets and results of operations, including the Notes to
Consolidated Financial Statements and statements in the following
discussion. The Company cautions readers that forward looking
statements are subject to risks and uncertainties that could cause
actual results to differ materially from those indicated in the forward
looking statements. Factors that may cause actual results to differ
materially from those contemplated included, among others, the stability
of interest rates, the rate of growth of the economy in the Company's
market area, the success of the Company's marketing efforts, the ability
to expand into new segments of the market area, competition, changes in
technology, the strength of the consumer and commercial credit sectors,
levels of consumer confidence, the impact of regulation applicable to
10
the Company and the performance of stock and bond markets.
Financial Condition
Total assets at March 31, 1997 were $348.7 million, a decrease of
$1.4 million or 0.4 percent from $350.1 million at December 31, 1996.
The decrease in investment securities of $2.0 million, or 1.7 percent,
was used in part to fund the increase in loans of $2.1 million, or 1.1
percent.
Time deposits, consisting of certificates of deposit, decreased
$1.1 million or 1.5 percent. Large denomination time deposits increased
$3.4 million, or 9.7 percent. Approximately half of the increase in
large denomination time deposits is attributable to one governmental
agency. The Company does not actively seek large denomination time
deposits as a source of funding. Non-interest bearing demand deposits
decreased $2.5 million, or 4.3 percent, while interest bearing demand
deposits decreased $1.8 million, or 1.7 percent. Core deposits, defined
as total deposits less time deposits, decreased by $3.7 million. Short-
term borrowing decreased $267 thousand, or 5.2 percent, from year-end
1996. The decrease occurred primarily in securities sold under
agreements to repurchase.
The Company's equity as a percent of total assets at March 31, 1997
was 13.6 percent, compared to 13.5 percent at December 31, 1996. The
primary capital ratio (defined as the sum of common and preferred stock,
capital surplus, retained earnings, allowance for loan losses and
contingency and capital reserves divided by total assets) was 14.3
percent, compared to 14.2 percent at year-end.
The Company and its subsidiary banks are required by the various
depository institutions regulatory agencies to maintain certain capital-
to-asset ratios. Risk-based capital guidelines consider risk factors
associated with various components of assets, both on and off the
11
Statement of Condition. Under these guidelines, capital is measured in
two tiers. These capital tiers are used in conjunction with "risk-
weighted" assets in determining "risk-weighted" capital ratios. The
Company's Tier I capital, which is shareholders' equity less goodwill
and unrealized gains and losses on available for sale securities, was
$42.7 million at December 31, 1996 and $43.5 million at March 31, 1997.
Tier II capital, which is Tier I plus the allowable portion of the
allowance for loan losses, was $45.3 million at December 31, 1996 and
$46.0 million at March 31, 1997. The ratios, expressed as a percent of
total risk-weighted assets for Tier I and Tier II, were 19.31 percent
and 20.48 percent, respectively, at December 31, 1996, and 19.49 percent
and 20.65 percent, respectively, at March 31, 1997. Both the December
1996 and the March 1997 ratios exceed the minimum ratios of four percent
and eight percent for Tier I and Tier II, respectively.
The components of the Company's risk-based capital calculations
for March 31, 1997 are shown below (dollars in thousands):
<TABLE>
<CAPTION>
March 31,
1997
Tier I capital--
<S> <C>
Tangible Common shareholders'
equity $43,465
Tier II capital--
Allowable portion of the allowance
for loan losses 2,580
Total capital (Tiers I and II) $46,045
Risk-weighted assets $222,981
Quarterly average assets 339,977
Risk-based capital ratios:
Tier I capital 19.49%
Total capital (Tiers I and II) 20.65%
</TABLE>
The Company declared a regular quarterly dividend of $0.10 per
share, payable April 1, 1997, to shareholders of record March 31, 1997.
12
In addition, the Company declared a special dividend of $1.25 per share
to shareholders of record April 7, 1997, payable May 1, 1997.
Liquidity
Liquidity management involves the ability to meet the day-to-day
cash flow requirements of customers, primarily depositors' withdrawals
and borrowers' requirements for funds. This is achieved by carefully
monitoring the amount of liquid assets available to meet these needs.
Liquid assets (cash and cash items, deposits with other banks, federal
funds sold and securities available for sale excluding pledged
securities) totaled $83.4 million at March 31, 1997. These assets
represented 23.9 percent of total assets at quarter end as compared to
24.3 percent at December 31, 1996. The net change in cash and cash
equivalents for the three month period ended March 31, 1997 was a
decrease of $1.1 million. Cash includes currency on hand and demand
deposits with other financial institutions. Cash equivalents are defined
as short-term and highly liquid investments, which are readily
convertible to known amounts of cash and so near maturity that there is
no significant risk of changes in value because of changes in interest
rates. The Company has federal fund lines of credit, Federal Reserve
discount window operations and Federal Home Loan Bank lines of credit
available.
Management is not aware of any trends, events or uncertainties that
will have or that are reasonably likely to have a material effect on the
liquidity, capital resources or operations of the Company. Management
is not aware of any current recommendations by regulatory authorities
which, if they were implemented, would have such an effect.
Non-Performing Assets
Non-performing assets include accruing loans 90 days or more past
due, loans on non-accrual, renegotiated loans and other real estate
13
owned. Commercial, business and installment loans are classified as
non-accrual by Management upon the earlier of: (i) a determination that
collection of interest is doubtful, or (ii) the time at which such loans
become 90 days past due, unless collateral or other circumstances
reasonably assure full collection of principal and interest.
<TABLE>
Summary of Non-Performing Assets
(Dollars in Thousands)
<CAPTION>
March 31, December 31,
1997 1996
<S> <C> <C>
Accruing loans 90 days or more past due $ 275 $ 190
Loans on non-accrual 642 1,098
Renegotiated loans 0 0
Total non-performing loans 917 1,288
Other real estate owned 15 15
Total non-performing assets $ 932 $1,303
Accruing Loans 90 days or more past due
as a percent of loans 0.14% 0.10%
Total non-performing loans as a
percent of loans 0.48% 0.68%
Total non-performing assets as a percent
of loans and other real estate owned 0.49% 0.69%
</TABLE>
Non-performing loans decreased by $371 thousand from year-end 1996.
This decrease consists primarily of principal payments of certain loans
on non-accrual.
The amount of impaired loans determined under SFAS No. 114 and 118
were not material. These credits were considered in determining the
adequacy of the allowance for loan losses and, while current, are
regularly monitored for changes within a particular industry or general
economic trends which could cause the borrowers severe financial
difficulties.
Any loans classified for regulatory purposes as loss, doubtful,
14
substandard or special mention, and not included above as non-performing
assets, do not (i) represent or result from trends or uncertainties
which management reasonably expects will materially impact future
operating results, or (ii) represent material credits about which
management is aware of any information which causes management to have
serious doubts as to the ability of such borrower to comply with the
loan repayment terms.
Results of Operations
THE FIRST QUARTER
The Company recorded net income of $1.2 million, or $0.28 per share,
during the first quarter of 1997 compared to net income in the first
quarter of 1996 of $754 thousand, or $0.25 per share. The increase in
total interest revenue of $1.7 million or 36.1 percent and the increase
in interest expense of $594 thousand or 30.5 percent were due primarily
to the Monroeville purchase. Management provided $61 thousand for loan
losses during the first quarter months of 1997 compared to a $101
thousand provision for the first quarter of 1996. Net charge offs
during the first three months of 1997 were $81 thousand compared to $398
thousand in the first three months of 1996. The allowance for loan
losses at March 31, 1997 and December 31, 1996 as a percent of loans was
1.35 percent and 1.37 percent respectively. The decrease in the
allowance for loan losses as a percentage of loans was due primarily to
net charge offs in the first three months of 1996 and to the increase in
loans. The allowance for loan losses represented 2.81 times non-
performing loans at March 31, 1997 and 2.02 times non-performing loans
at December 31, 1996. Management reviews the adequacy of the allowance
for loan losses on a continuous basis by assessing the quality of the
loan portfolio, including non-performing loans, and adjusting the
allowance when appropriate. The allowance for loan losses was
15
considered adequate at March 31, 1997.
Non-interest revenue was $696 thousand for the first quarter of
1997, compared to $670 thousand for the same period in 1996, a increase
of 3.9 percent. Excluding the Monroeville purchase, non-interest
revenue decreased $99 thousand or 14.8 percent due primarily to the
decrease in securities gains of $102 thousand.
Salary and employee benefit expense increased $348 thousand or 29.9
percent, caused by an increase in full time equivalent employees from
153 at March 31, 1996 to 195 at March 31, 1997 and by merit increases.
The Monroeville purchase accounted for an increase of 36 full time
equivalent employees and for $277 thousand of the increase in salary and
employee benefits. Net occupancy expense increased $51 thousand when
compared to the same period in 1996, while furniture and equipment
expense increased $32 thousand. Both increases are due primarily to the
Monroeville purchase.
Other expenses include data processing fees for the trust
departments, FDIC insurance, insurance costs, accounting and legal fees,
stationery and supplies, credit card service fees, loan collection fees
and advertising. Other non-interest expense in first quarter 1997
increased by $115 thousand or 17.7 percent.
Income tax expense was $483 thousand for the first quarter of 1997,
compared to $343 thousand for the same period in 1996. The increase in
income tax expense in 1997 compared to 1996 resulted primarily from an
increase in taxable income.
16
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(3) Articles of Incorporation and By-Laws.
.1 Articles of Merger of South Alabama Bancorporation,
Inc. (a Delaware corporation) With and Into SAB Newco,
Inc. (an Alabama corporation) dated December 20, 1996
is filed as Exhibit (3).1 hereto.
(b) Reports on Form 8-K
There were no reports filed of Form 8-K for the three month period
ended March 31, 1997.
Pursuant to the requirement of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
SOUTH ALABAMA BANCORPORATION
05/14/97 /s/W. Bibb Lamar, Jr.
Date W. Bibb Lamar, Jr.
President
05/14/97 /s/F. Michael Johnson
Date F. Michael Johnson
Chief Financial Officer
17
17
Exhibit (3).1
ARTICLES OF MERGER
OF
SOUTH ALABAMA BANCORPORATION, INC.
(a Delaware corporation)
WITH AND INTO
SAB NEWCO, INC.
(an Alabama corporation)
These Articles of Merger are made this 20th day of December, 1996, by SAB
NEWCO, INC., an Alabama corporation ("Newco"), with respect to its merger with
SOUTH ALABAMA BANCORPORATION, INC., a Delaware corporation ("SAB"), with Newco
to be the surviving corporation.
ARTICLE ONE
The Plan of Merger is attached hereto as Exhibit A and made a part hereof
by this reference.
ARTICLE TWO
Each corporation has authorized only one class of stock with shares
outstanding that are entitled to vote on this merger; and, as to each
corporation, the number of shares outstanding and the class thereof are as
follows:
<TABLE>
<CAPTION>
TOTAL NUMBER
OF SHARES
NAME OF CORPORATION OUTSTANDING CLASS
<S> <C> <C>
SAB 4,227,136 Common
Newco 100 Common
</TABLE>
ARTICLE THREE
As to each corporation, the number of shares voted for and against the
Plan of Merger, respectively, are as follows:
<TABLE>
<CAPTION>
TOTAL
SHARES
TOTAL SHARES VOTED
NAME OF CORPORATION VOTED FOR AGAINST
<S> <C> <C>
SAB 3,331,614 0
NEWCO 100 0
</TABLE>
ARTICLE FOUR
The merger was duly approved by the respective shareholders of each of the
undersigned corporations entitled to vote on this merger.
ARTICLE FIVE
The Articles of Incorporation of Newco, the only Alabama corporation a
party to this merger, are filed in Mobile County, Alabama.
ARTICLE SIX
The merger shall be effective at midnight on December 31, 1996.
IN WITNESS WHEREOF, the undersigned corporation has caused these Articles
of Merger to be executed in its name by its duly authorized officer on this
20th day of December, 1996.
SAB NEWCO, INC., an Alabama corporation
By: /s/W. Bibb Lamar, Jr.
W. BIBB LAMAR, JR.
As its President
ATTEST:
/s/F. Michael Johnson
F. MICHAEL JOHNSON
Secretary
This instrument was prepared by:
Brooks P. Milling, Esq.
Hand Arendall, L.L.C.
3000 First National Bank Building
Mobile, Alabama 36602
Exhibit A
PLAN OF MERGER
OF
SOUTH ALABAMA BANCORPORATION, INC.
(a Delaware corporation)
WITH AND INTO
SAB NEWCO, INC.
(an Alabama corporation)
ITEM ONE
This Plan of Merger shall be effective at midnight on December 31, 1996.
Upon the effectiveness hereof, South Alabama Bancorporation, Inc., a Delaware
corporation ("SAB"), shall merge with and into SAB Newco, Inc., an Alabama
corporation ("Newco"), which is a wholly owned subsidiary of SAB. Newco, the
surviving corporation, shall continue to exist under, and be governed by, the
laws of the State of Alabama.
ITEM TWO
The Articles of Incorporation of Newco, as amended hereby, shall continue
to be the Articles of Incorporation of the surviving corporation.
ITEM THREE
The manner and basis of converting shares of SAB into shares of Newco are
as follows:
(a) Each share of common stock of SAB ($.01 par value) shall, upon the
effective date of the merger, without further action, be converted into one
(1) share of common stock of Newco ($.01 par value).
(b) Each outstanding certificate representing a share or shares of SAB
common stock will, upon and after the effective date of the merger, and without
any action on the part of the holder, represent the same number of shares of
Newco common stock (i.e., a certificate representing one share of SAB common
stock will represent one share of Newco common stock).
ITEM FOUR
The officers of the surviving corporation, upon proper adoption and
approval of this Plan of Merger and the filing and recording of the
certificates and articles of merger required by law to be made, filed and
recorded, shall take any and all other steps which they may deem necessary or
appropriate, if any, to effectuate the acquisition by the surviving
corporation of the assets of every character and description now owned by the
merging corporation.
ITEM FIVE
The current bylaws of Newco shall continue as the bylaws of the surviving
corporation until amended or repealed as provided by law.
ITEM SIX
The present directors and officers of SAB shall, upon the effective date
of the merger, become the directors and officers of the surviving corporation
until their successors shall have been elected and qualified as provided in
the bylaws of the surviving corporation.
ITEM SEVEN
The Articles of Incorporation of Newco shall be amended as follows:
Article One shall be amended to read:
"The name of the corporation shall be South Alabama
Bancorporation, Inc."
ITEM EIGHT
Newco shall be subject to service of process in Delaware in any
proceeding for enforcement of any obligation of SAB, as well as for any
obligation of Newco, arising from the merger, and Newco irrevocably appoints
the Secretary of State of the State of Delaware as its agent to accept service
of process in any such suit or other proceeding related thereto, with any
process so served to be sent to Newco at:
South Alabama Bancorporation, Inc.
Attention: F. Michael Johnson
100 St. Joseph Street
Mobile, AL 36602
ITEM NINE
The 100 shares of its own stock which Newco shall own after the merger
shall be cancelled and converted to the status of authorized but unissued
shares.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-Q and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
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0
0
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</TABLE>
