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 September 30, 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 September
30, 1997: 4,241,386
Page 1 of 21
SOUTH ALABAMA BANCORPORATION,INC AND SUBSIDIARIES
INDEX TO FORM 10 - Q
PART I. Financial Information Page Number
Consolidated Statements of Condition
September 30, 1997 and December 31, 1996 3
Consolidated Statements of Operations
Nine Months Ended September 30, 1997 and 1996 4
Consolidated Statements of Operations
Three Months Ended September 30, 1997 and 1996 5
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1997 and 1996 6
Notes to Consolidated Financial Statements
September 30, 1997 7-11
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 12-20
PART II. Other Information 21
. . PART I. FINANCIAL INFORMATION
<TABLE>
SOUTH ALABAMA BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION (Unaudited)
<CAPTION>
September 30, December 31,
1997 1996
(Unaudited)
(Dollars in thousands)
A S S E T S
<S> <C> <C>
Cash and Due from Banks $ 17,627 $ 20,230
Federal Funds Sold 9,626 9,683
Total Cash and Cash Equivalents 27,253 29,913
Interest Bearing Deposits 100 100
Securities Available for Sale (at Market) 101,935 100,912
Securities Held to Maturity
(Market value of $11,280 and $17,015,
respectively) 11,140 16,861
Loans 201,710 189,160
Less: Unearned Loan Income <124> <130>
Allowance for Loan Losses <2,609> <2,600>
Loans, Net 198,977 186,430
Premises and Equipment 6,850 7,151
Other Real Estate Owned,Net 15 15
Accrued Income Receivable 3,259 3,453
Intangible assets 4,034 4,160
Other Assets 752 1,082
Total $354,315 $350,077
L I A B I L I T I E S
Non-interest Bearing Demand Deposits $ 57,076 $ 58,196
Interest Bearing Demand Deposits 99,618 102,385
Savings Deposits 23,805 22,823
Large Denomination Time Deposits
(of $100 or more) 42,717 34,980
Time Deposits 78,077 76,903
Total Deposits 301,293 295,287
Short-Term Borrowing 5,892 5,162
Other Liabilities 2,532 2,540
Total Liabilities 309,717 302,989
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 4,241,386 42 42
Capital Surplus 33,198 33,092
Retained Earnings 10,674 13,701
Net Unrealized Gain (Loss) on Securities
Available for Sale 684 253
Total Shareholders' Equity 44,598 47,088
Total $354,315 $350,077
(See accompanying notes to consolidated financial statements.)
</TABLE>
3
<TABLE>
SOUTH ALABAMA BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)
<CAPTION>
Nine Months Ended September 30
1997 1996
(Dollars in thousands except
per share amounts)
Interest Revenue:
<S> <C> <C>
Loans $13,516 $10,491
Investments:Taxable 4,097 2,541
Non-Taxable 1,160 648
Other 404 358
Total Interest Revenue 19,177 14,038
Interest Expense:
Deposits 7,790 5,624
Other 187 139
Total Interest Expense 7,977 5,763
Net Interest Revenue 11,200 8,275
Provision for Loan Losses 144 167
Net Interest Revenue After Provision
for Loan Losses 11,056 8,108
Non-Interest Revenue:
Trust Department Income 868 821
Service Charges on Deposit Accounts 1,014 656
Securities Gains and Losses,net 24 105
Gain on Sale of Other Real Estate Owned 0 18
Other Income, Charges and Fees 299 257
Total Non-Interest Revenue 2,205 1,857
Non-Interest Expense:
Salaries 3,661 2,857
Pensions and Employee Benefits 893 746
Net Occupancy Expense 606 488
Furniture and Equipment Expense 697 590
Intangible Amortization 126 0
Other Expense 2,305 1,871
Total Non-Interest Expense 8,288 6,552
Income Before Income Taxes 4,973 3,413
Income Tax Expense 1,399 1,052
Net Income $3,574 $ 2,361
Earnings Per Common Share $ 0.84 $ .79
Average Shares Outstanding (000's) 4,230 3,002
(See accompanying notes to consolidated financial statements.)
</TABLE>
4
<TABLE>
SOUTH ALABAMA BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)
<CAPTION>
Three Months Ended September 30
1997 1996
(Dollars in thousands except
per share amounts)
Interest Revenue:
<S> <C> <C>
Loans $ 4,592 $ 3,645
Investments:Taxable 1,332 824
Non-Taxable 392 242
Other 137 80
Total Interest Revenue 6,453 4,791
Interest Expense:
Deposits 2,705 1,895
Other 63 58
Total Interest Expense 2,768 1,953
Net Interest Revenue 3,685 2,838
Provision for Loan Losses 38 36
Net Interest Revenue After Provision
for Loan Losses 3,647 2,802
Non-Interest Revenue:
Trust Department Income 308 273
Service Charges on Deposit Accounts 357 221
Securities Gains and Losses,net 22 2
Gain on Sale of Other Real Estate Owned 0 0
Other Income, Charges and Fees 110 87
Total Non-Interest Revenue 797 583
Non-Interest Expense:
Salaries 1,237 969
Pensions and Employee Benefits 294 248
Net Occupancy Expense 203 171
Furniture and Equipment Expense 242 203
Intangible Amortization 42 0
Other Expense 765 618
Total Non-Interest Expense 2,783 2,209
Income Before Income Taxes 1,661 1,176
Income Tax Expense 450 354
Net Income $1,211 $ 822
Earnings Per Common Share $ 0.29 $ .27
Average Shares Outstanding (000's) 4,233 3,002
(See accompanying notes to consolidated financial statements.)
</TABLE>
5
<TABLE>
SOUTH ALABAMA BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<CAPTION>
Nine Months Ended September 30,
1997 1996
(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net Income $ 3,574 $ 2,361
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 1,035 620
Provision for loan losses 144 167
Securities gains and losses,net <24> <105>
Gain on sale of other real estate owned 0 <18>
(Increase) decrease in:
Income receivable 194 <56>
Other assets 145 <420>
Increase (decrease) in other liabilities <8> 122
Net cash provided by operating activities 5,060 2,671
CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease in interest bearing
deposits 0 452
Net increase in loans <12,691> <21,523>
Purchase of premises and equipment <282> <1,446>
Net decrease in other real estate owned 0 326
Proceeds from sale of securities
available for sale 3,545 9,192
Proceeds from maturities of investments 19,808 8,033
Purchase of investments <18,341> <20,833>
Net cash used in investing activities <7,961> <25,799>
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits 6,006 4,118
Net increase (decrease) in short-
term borrowing 730 2,493
Proceeds rom issuance of stock 106 0
Dividends paid <6,601> <901>
Net cash used in financing activities 241 5,710
NET INCREASE <DECREASE> IN CASH
AND CASH EQUIVALENTS <2,660> <17,418>
Cash and cash equivalents at beginning
of period 29,913 32,404
Cash and cash equivalents at end of
period $27,253 $14,986
Supplemental disclosures of cash flow
information:
Interest paid in cash $ 8,010 $ 5,868
Income taxes paid in cash 1,160 1,200
(See accompanying notes to consolidated financial statements.)
</TABLE>
6
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.
7
NOTE C: The allowance for losses on loans for the nine month periods
ended September 30, 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 144 167
Losses charged off <210> <493>
Recoveries 75 85
Balance at end of period $ 2,609 $ 1,981
</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
8
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 Nine For the Nine
Months Ended Months Ended
September 30, September 30,
1997 1996
<S> <C> <C>
Basic earnings per share $0.84 $0.79
Diluted earnings per share $0.84 $0.78
</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,
9
the adoption of this statement did not have an impact of the
Company's financial condition or results of operations.
In June 1997, the FASB issued SFAS No. 130, "Reporting of
Comprehensive Income", which establishes standards for
reporting and display of comprehensive income and its
components (revenues, expenses, gains and losses) in a full
set of financial statements. This statement also requires
that all items that are required to be recognized under
accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the
same prominence as other financial statements. This statement
is effective for fiscal years beginning after December 15,
1997. Earlier application is permitted. Reclassification of
financial statements for earlier periods provided for
comparative purposes is required.
Also in June 1997, the FASB issued SFAS No. 131, "Disclosure
about Segments of an Enterprise and Related Information",
which establishes standards for the way that public business
enterprises report information about operating segments in
annual financial statements and requires that those
enterprises report selected information about operating
segments in interim financial reports to stockholders. This
statement also establishes standards for related disclosures
about products and services, geographic areas, and major
customers. This statement requires the reporting of financial
and descriptive information about an enterprise's reportable
operating segments. This statement is effective for financial
10
statements for periods beginning after December 15, 1997. In
the initial year of application, comparative information for
earlier years is to be restated.
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 nine months ended September 30, 1996
would have been as follows,(in thousands, except per share
data):
<TABLE>
<S> <C>
Net Interest Income $11,097
Net Income $ 3,303
Earnings per share $ 0.78
</TABLE>
11
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 September 30, 1997 and significant changes for the
three month periods ended September 30, 1997 and 1996, as well as
significant changes in the results of operations for the two nine month
periods ending September 30, 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 include, 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
12
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
the Company and the performance of stock and bond markets.
Financial Condition
Total assets at September 30, 1997 were $354.3 million, an increase
of $4.2 million, or 1.2 percent, from $350.1 million at December 31,
1996. The decrease in investment securities of $4.7 million, or 4.0
percent, and the increase in deposits of $6.0 million, or 2.0 percent,
was used in part to fund the increase in loans of $12.6 million, or 6.7
percent, and the payment of a $5.3 million special dividend of $1.25 per
share.
Time deposits, consisting of certificates of deposit, increased
$1.2 million or 1.5 percent. Large denomination time deposits increased
$7.7 million, or 22.1 percent. Approximately $2.0 million 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 $1.1 million, or 1.9 percent, while interest
bearing demand deposits decreased $2.8 million, or 2.7 percent, due to
seasonal fluctuation. Core deposits, defined as total deposits less
time deposits, decreased by $2.9 million. Short-term borrowing
increased $730 thousand, or 14.1 percent, from year-end 1996.
The Company's equity as a percent of total assets at September 30,
1997 was 12.6 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 13.3
percent, compared to 14.2 percent at year-end. The decrease in both
13
ratios is attributable to the special dividend of $5.3 million paid in
the second quarter of 1997.
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
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 $39.9 million at September 30,
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 $42.5 million at September 30, 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 16.98
percent and 18.09 percent, respectively, at September 30, 1997. Both
the December 1996 and the September 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 September 30, 1997 are shown below (dollars in thousands):
14
<TABLE>
<CAPTION>
September 30,
1997
Tier I capital--
<S> <C>
Tangible Common shareholders'
equity $39,880
Tier II capital--
Allowable portion of the allowance
for loan losses 2,609
Total capital (Tiers I and II) $42,489
Risk-weighted assets $234,854
Quarterly average assets 342,319
Risk-based capital ratios:
Tier I capital 16.98%
Total capital (Tiers I and II) 18.09%
</TABLE>
During the third quarter of 1997 the Company declared a regular
quarterly dividend of $0.11 per share, payable October 1, 1997, to
shareholders of record September 17, 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 $78.8 million at September 30, 1997. These assets
represented 22.3 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 nine month period ended September 30, 1997 was a
decrease of $2.7 million, due in part to the payment of the $5.3
million special dividend. 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
15
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
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.
16
<TABLE>
Summary of Non-Performing Assets
(Dollars in Thousands)
<CAPTION>
September 30, December 31,
1997 1996
<S> <C> <C>
Accruing loans 90 days or more past due $ 100 $ 190
Loans on non-accrual 409 1,098
Renegotiated loans 0 0
Total non-performing loans 509 1,288
Other real estate owned 15 15
Total non-performing assets $ 524 $1,303
Accruing Loans 90 days or more past due
as a percent of loans 0.05% 0.10%
Total non-performing loans as a
percent of loans 0.25% 0.68%
Total non-performing assets as a percent
of loans and other real estate owned 0.26% 0.69%
</TABLE>
Non-performing loans decreased by $779 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,
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
17
loan repayment terms.
Results of Operations
THE THIRD QUARTER
The Company recorded net income of $1.2 million, or $0.29 per share,
during the third quarter of 1997 compared to net income in the third
quarter of 1996 of $822 thousand, or $0.27 per share. The increase in
total interest revenue of $1.7 million, or 34.7 percent, and the
increase in interest expense of $815 thousand, or 41.7, percent were due
primarily to the Monroeville purchase. Management provided $38 thousand
for loan losses during the third quarter of 1997 compared to a $36
thousand provision for the third quarter of 1996. Net charge offs
during the first nine months of 1997 were $135 thousand compared to $408
thousand in the first nine months of 1996. The allowance for loan
losses at September 30, 1997 and December 31, 1996 as a percent of loans
was 1.29 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 nine months of 1997 and to the increase in
loans. The allowance for loan losses represented 5.13 times non-
performing loans at September 30, 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
considered adequate at September 30, 1997.
Non-interest revenue was $797 thousand for the third quarter of
1997, compared to $583 thousand for the same period in 1996, an increase
of 36.7 percent. Excluding the Monroeville purchase, non-interest
revenue increased $62 thousand, or 10.6 percent, due primarily to the
increase in trust department income of $35 thousand, or 12.8 percent.
18
Salary and employee benefit expense increased $314 thousand, or
25.8 percent, caused by an increase in full time equivalent employees
from 156 at September 30, 1996 to 195 at September 30, 1997 and by merit
increases. The Monroeville purchase accounted for an increase of 36
full time equivalent employees and for $287 thousand of the increase in
salary and employee benefits. Net occupancy expense increased $32
thousand when compared to the same period in 1996, while furniture and
equipment expense increased $39 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 third quarter 1997
increased by $147 thousand, or 23.8 percent, due primarily to the
Monroeville purchase.
Income tax expense was $450 thousand for the third quarter of 1997,
compared to $354 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. The increase in taxable income was due
primarily to the Monroeville purchase.
THE NINE MONTHS
The Company recorded net income of $3.6 million, or $0.84 per share
during the first nine months of 1997 compared to net income in the first
nine months of 1996 of $2.4 million, or $0.79 per share. Total interest
revenue increased by $5.1 million, or 36.6 percent, due to increased
volume in loans and investment securities and to the Monroeville
purchase. Interest expense increased $2.2 million, or 38.4 percent, due
primarily to the Monroeville purchase. Management provided $144
thousand for loan losses during the first nine months of 1997 compared
19
to $167 thousand for the first nine months of 1996.
Non-interest revenue was $2.2 million for the first nine months of
1997, compared to $1.9 million for the same period in 1996, an increase
of 18.7 percent. Excluding securities gains and losses and the gain on
sale of other real estate owned, non-interest revenue increased by $447
thousand, of which $417 thousand is attributable to the Monroeville
purchase.
Non-interest expense in the nine month period was $8.3 million in
1997, an increase of $1.7 million from 1996. Excluding the Monroeville
purchase, non-interest expense increased by $28 thousand. Salary and
employee benefits increased $951 thousand, or 26.4 percent, a
combination of merit increases and an increase in full time equivalent
employees due to the Monroeville purchase. Other expense increased by
$434 thousand due primarily to the Monroeville purchase.
Income tax expense was $1.4 million for the first nine months of
1997, compared to $1.1 million for the same period in 1996. The
increase in income tax expense in 1997 compared to 1996 resulted
primarily from higher levels of taxable income. The increase in taxable
income was due primarily to the Monroeville purchase.
20
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(b) Reports on Form 8-K
There were no reports filed of Form 8-K for the three month period
ended September 30, 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
11/14/1997 /s/W. Bibb Lamar, Jr.
Date W. Bibb Lamar, Jr.
President
11/14/1997 /s/F. Michael Johnson
Date F. Michael Johnson
Chief Financial Officer
21
<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>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1997
<CASH> 17,627
<INT-BEARING-DEPOSITS> 100
<FED-FUNDS-SOLD> 9,626
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 101,935
<INVESTMENTS-CARRYING> 11,140
<INVESTMENTS-MARKET> 11,280
<LOANS> 201,586
<ALLOWANCE> (2,609)
<TOTAL-ASSETS> 354,315
<DEPOSITS> 301,293
<SHORT-TERM> 5,892
<LIABILITIES-OTHER> 2,532
<LONG-TERM> 0
0
0
<COMMON> 43,914
<OTHER-SE> 684
<TOTAL-LIABILITIES-AND-EQUITY> 354,315
<INTEREST-LOAN> 13,516
<INTEREST-INVEST> 5,257
<INTEREST-OTHER> 404
<INTEREST-TOTAL> 19,177
<INTEREST-DEPOSIT> 7,790
<INTEREST-EXPENSE> 7,977
<INTEREST-INCOME-NET> 11,200
<LOAN-LOSSES> 144
<SECURITIES-GAINS> 24
<EXPENSE-OTHER> 8,288
<INCOME-PRETAX> 4,973
<INCOME-PRE-EXTRAORDINARY> 3,574
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,574
<EPS-PRIMARY> .84
<EPS-DILUTED> .84
<YIELD-ACTUAL> 4.73
<LOANS-NON> 409
<LOANS-PAST> 100
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,755
<ALLOWANCE-OPEN> 2,600
<CHARGE-OFFS> 210
<RECOVERIES> 75
<ALLOWANCE-CLOSE> 2,609
<ALLOWANCE-DOMESTIC> 2,111
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 498
</TABLE>
