<PAGE>
<PAGE>1
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 SEPTEMBER 30, 1995
OR
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
------------------------------
COMMISSION FILE NUMBER 33-14391
------------------------------
BANCALABAMA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of
incorporation or organization)
63-0945419
(I.R.S. Employer Identification No.)
P.O. BOX 293
HUNTSVILLE, ALABAMA
(Address of principal executive offices)
35804
(Zip Code)
(205)533-5548
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year
of registrant, if changed since last report)
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 / /
The number of shares outstanding of each of the issuer's classes of common
stock was 613,122 shares of common stock, par value $1.00, at September 30,
1995.
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<TABLE>
<CAPTION>
BANCALABAMA, INC., AND SUBSIDIARY
FORM 10-Q
INDEX
PAGE NUMBER
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 1995 and
December 31, 1994 3
Consolidated Statements of Operations for the Nine Months
Ended September 30, 1995 and 1994 5
Consolidated Statements of Operations for the Three
Months Ended September 30, 1995 and 1994 6
Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 1995 and 1994 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Items 15
Item 6. Exhibits and Reports on Form 8-K 15
</TABLE>
<PAGE>
<PAGE>3
<TABLE>
<CAPTION>
BANCALABAMA, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, 1995 December 31, 1994
------------------ -----------------
<S> <C> <C>
ASSETS
Cash and Due from Banks $ 4,568,408 $ 5,096,029
----------- -----------
Earning Assets
Federal Funds Sold $ 4,237,000 $ -
Securities Available-for-Sale, at market value, cost of
$17,784,590 and $9,087,706 in 1995 and 1994, respectively 17,649,858 8,410,358
Loans, net of unearned interest 56,960,489 47,211,802
Less: Allowance for loan losses (629,096) (505,125)
----------- -----------
Net Loans $56,331,393 $46,706,677
----------- -----------
Total Earning Assets $78,218,251 $55,117,035
Bank Premises and Equipment, net $ 3,585,542 $ 3,464,015
Accrued Interest Receivable 980,492 649,987
Other Real Estate and Other Loan Assets 208,072 81,805
Deferred Income Tax Benefit 45,500 207,000
Other Assets 1,143,357 694,663
----------- -----------
Total Assets $88,749,622 $65,310,534
=========== ===========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
<PAGE>4
<TABLE>
<CAPTION>
BANCALABAMA, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, 1995 December 31, 1994
------------------ -----------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits and Interest Bearing Liabilities
Demand deposits - regular $13,984,706 $ 9,973,389
Demand deposits - interest bearing 26,000,362 22,241,500
Savings deposits 2,542,893 2,514,937
Time deposits, $100,000 and over 11,537,185 3,482,370
Other time deposits 27,321,008 17,933,744
----------- -----------
Total Deposits $81,386,154 $56,145,940
Federal Funds Purchased - 2,980,000
Long-Term Debt 878,070 931,581
----------- -----------
Total Deposits and Interest Bearing Liabilities $82,264,224 $60,057,521
Accrued Expenses and Other Liabilities 552,777 267,765
----------- -----------
Total Liabilities $82,817,001 $60,325,286
------------ -----------
Stockholders' Equity
Preferred Stock, par value $1.00 per share, 500,000 authorized, $ - $ -
none issued and outstanding
Common Stock, par value $1.00 per share, 2,000,000 authorized 613,122 613,122
and 613,122 shares issued and outstanding
Additional Paid-in Capital 5,434,025 5,434,025
Unrealized Loss on Securities Available-for-Sale (134,732) (677,348)
Retained Earnings (Accumulated Deficit) 20,206 (384,551)
----------- ----------
Total Stockholders' Equity $ 5,932,621 $ 4,985,248
----------- -----------
Total Liabilities and Stockholders' Equity $88,749,622 $65,310,534
=========== ===========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
<PAGE>5
<TABLE>
<CAPTION>
BANCALABAMA, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 and 1994
(Unaudited)
1995 1994
---------- ----------
<S> <C> <C>
Revenue from Earning Assets
Interest income and fees earned on loans $4,390,913 $3,118,728
Interest earned on securities 581,127 426,018
Interest earned on federal funds sold 139,884 14,012
---------- ----------
Total Revenue from Earning Assets $5,111,924 $3,558,758
Interest Expense
Interest on deposits $2,173,297 $1,170,698
Interest on federal funds purchased 4,352 19,712
Interest on long-term debt 66,731 58,060
---------- ----------
Total Interest Expense $2,244,380 $1,248,470
---------- ----------
Net Interest Income $2,867,544 $2,310,288
Provision for Loan Losses 230,000 105,000
---------- ----------
Net Interest Income After Provision for Loan Losses $2,637,544 $2,205,288
Noninterest Revenue
Service charges, net of refunds $ 608,922 $ 605,114
Gain on sales of other real estate and other loan assets, net 38,148 3,958
Gain on sale of loans 29,372 6,945
(Loss) Gain on sales of securities, net (11,029) 6,707
Other noninterest revenue 47,651 34,164
Gain on disposition of bank branch 0 17,476
---------- ----------
Total Noninterest Revenue $ 713,064 $ 674,364
Noninterest Expense
Salaries and employee benefits $1,295,907 $1,261,972
Occupancy expenses 327,137 324,094
Other noninterest expenses 1,159,207 1,049,445
---------- ----------
Total Noninterest Expense $2,782,251 $2,635,511
---------- ----------
Income before Provision for Income Taxes $ 568,357 $ 244,141
Provision for Income Taxes 163,600 4,200
---------- ----------
Net Income $ 404,757 $ 239,941
========== ==========
Earnings per share $.66 $.39
========== ==========
Weighted average shares outstanding 613,122 613,122
========== ==========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
<PAGE>6
<TABLE>
<CAPTION>
BANCALABAMA, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Unaudited)
1995 1994
---------- ----------
<S> <C> <C>
Revenue from Earning Assets
Interest income and fees earned on loans $1,593,591 $1,154,240
Interest earned on securities 231,896 144,197
Interest earned on federal funds sold 56,123 1,355
---------- ----------
Total Revenue from Earning Assets $1,881,610 $1,299,792
Interest Expense
Interest on deposits $ 848,039 $ 433,607
Interest on federal funds purchased 968 8,245
Interest on long-term debt 21,977 20,700
---------- ----------
Total Interest Expense $ 870,984 $ 462,552
---------- ----------
Net Interest Income $1,010,626 $ 837,240
Provision for Loan Losses 80,000 30,000
---------- ----------
Net Interest Income After Provision for Loan Losses $ 930,626 $ 807,240
Noninterest Revenue
Service charges, net of refunds $ 202,007 $ 212,430
Gain on sales of other real estate and other loan assets, net 4,452 1,904
Gain on sale of loans 11,974 0
Gain on sales of securities, net 0 1,700
Other noninterest revenue 14,667 13,147
Gain on disposition of bank branch 0 17,476
---------- ----------
Total Noninterest Revenue $ 233,100 $ 246,657
Noninterest Expense
Salaries and employee benefits $ 464,030 $ 411,190
Occupancy expenses 106,222 111,444
Other noninterest expenses 338,476 371,955
---------- ----------
Total Noninterest Expense $ 908,728 $ 894,589
---------- ----------
Income before Provision for Income Taxes $ 254,998 $ 159,308
Provision for Income Taxes 56,500 0
---------- ----------
Net Income $ 198,498 $ 159,308
========== ==========
Earnings per share $.32 $.26
========== ==========
Weighted average shares outstanding 613,122 613,122
========== ==========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
<PAGE>7
<TABLE>
<CAPTION>
BANCALABAMA, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Unaudited)
1995 1994
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 404,757 $ 239,941
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 227,869 224,424
Provision for loan losses 230,000 105,000
Gain on sales of other real estate and other assets, net (38,148) (2,765)
Gain on sales of loans (29,372) (6,945)
Loss (gain) on sale of securities, net 11,029 (6,707)
Gain on sale of bank branch 0 (17,476)
Decrease (increase) in assets:
Accrued interest receivable (330,505) 10,301
Deferred income tax benefit 161,500 0
Other assets (448,694) (83,076)
Increase in liabilities:
Accrued expenses and other liabilities 285,012 158,731
------------- ------------
Net cash provided by operating activities $ 473,448 $ 621,428
Cash flows from investing activities:
Proceeds from sale of securities $ 4,838,279 $ 6,576,939
Proceeds from maturity of securities 100,000 598,071
Proceeds from sales of loans 697,268 0
Proceeds from sales of other real estate and other loan assets, net 334,733 114,225
Proceeds from sale of fixed assets 0 98,083
Purchases of securities (13,646,192) (4,297,250)
Loans made to customers in excess of principal collected on loans (10,945,464) (6,556,126)
Payment for sale of bank branch 0 (494,940)
Purchases of bank premises and equipment (349,396) (28,034)
------------- -----------
Net cash used in investing activities $(18,970,772) $(3,989,032)
Cash flows from financing activities:
Net proceeds from certificates of deposit $ 17,442,079 $ 5,350,462
Increase (decrease) in demand deposits and savings accounts 7,798,135 (712,437)
Decrease in federal funds purchased (2,980,000) (1,090,000)
Increase in federal funds sold (4,237,000) 0
Principal payments on long-term debt (53,511) (63,724)
------------- ------------
Net cash provided by financing activities $ 17,969,703 $ 3,484,301
------------- ------------
Net Increase (Decrease) in Cash and Cash Equivalents $ (527,621) $116,697
Cash and Cash Equivalents - Beginning of Period 5,096,029 3,792,692
------------- ------------
Cash and Cash Equivalents - End of Period $ 4,568,408 $ 3,909,389
============= ============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
<PAGE>8
BANCALABAMA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of September 30, 1995
(Unaudited)
Note 1 - Summary of Significant Accounting Policies
In the opinion of Management, the accompanying unaudited consolidated
financial statements contain all adjustments necessary for the fair
presentation of the Company's financial position and results of operations.
Except for revisions to certain items as reflected in Note 3, the
accounting policies followed by the Company are set forth in Note 1 of the
Company's financial statements contained in the Annual Report to
stockholders for the year ended December 31, 1994, which should be read in
conjunction with these interim financial statements.
Certain prior period amounts have been reclassified to conform with the
September 30, 1995 presentation.
Note 2
The results of operations for the three months and nine months ended
September 30, 1995 and 1994 are not necessarily indicative of the results
to be expected for the full year or any other interim period.
Note 3 - Loans and Allowances for Loan Losses
Effective January 1, 1995, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 114, "Accounting by Creditors for
Impairment of a Loan." SFAS No. 114 requires certain impaired loans be
measured at the present value of expected future cash flows discounted at
the loan's effective interest rate or, if more practical, at the loan's
observable market price or the fair value of the collateral if the loan is
collateral dependent. The effect of the discounting is considered as a
reserve which is a part of the allowance for loan losses. As a part of
implementing SFAS No. 114, Management identified and reviewed impaired
loans to determine if an additional reserve was required. Based upon the
Company's loan classification and grading program, no additional reserves
were required at the time of adoption of SFAS No. 114 or at September 30,
1995. Therefore, the implementation of SFAS No. 114 did not have an impact
on the Company's financial position or results of operations.
The total recorded investment in impaired loans at September 30, 1995 was
approximately $436,000, of which approximately $129,000 was on a
nonaccrual basis. At September 30, 1995 there was a related allowance for
loan losses for the impaired loans of approximately $94,000 included in the
total allowance for loan losses. A change in the allowance for loan losses
related to impaired loans is recorded under the bad debt expense method
whereby changes in the carrying value of impaired loans are considered as
an adjustment to the provision for loan losses. The average recorded
balance of impaired loans during the first nine months of 1995 was
approximately $564,000. The Company recognizes interest income on impaired
loans on an accrual basis, except for nonaccrual loans which are recognized
on a cash basis. For the nine months ended September 30, 1995, the Company
recognized interest income on impaired loans totalling approximately
<PAGE>
<PAGE>9
$31,400 and received interest payments totalling approximately $43,300 on
impaired loans. For the quarter ended September 30, 1995, the Company
recognized interest income on impaired loans totalling approximately
$4,200 and received interest payments totalling approximately $2,000 on
impaired loans.
A summary of the allowance for loan losses for the nine months ended
September 30, 1995 and 1994 follows:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Balance at beginning of year $505,125 $595,860
Provision for loan losses 230,000 105,000
Loans charged-off (137,393) (208,472)
Recoveries of loans previously
charged off 31,364 55,907
-------- --------
Balance at September 30 $629,096 $548,295
======== ========
</TABLE>
<PAGE>
<PAGE>10
BANCALABAMA, INC., AND SUBSIDIARY
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
RESULTS OF OPERATIONS
For the first nine months of 1995, the Company reported net income of
$404,757, or $.66 per share, compared to net income of $239,941, or $.39
per share, for the first nine months of 1994. For the quarter ended
September 30, 1995, the Company reported net income of $198,498, or $.32
per share, compared to net income of $159,308, or $.26 per share, for the
quarter ended September 30, 1994.
The increase in net income for the first nine months of 1995, as
compared to 1994, is primarily attributable to an increase in net interest
income. This improvement was partially offset by increases in non-interest
expense, the provision for income taxes, and the provision for loan losses.
Net interest income increased by 24.1%, to $2,867,544, for the first
nine months of 1995, from $2,310,288 for the first nine months of 1994.
The Bank's base lending rate has increased from 6.0% during the first
quarter of 1994 to a high during the current year of 9.0% during the first
and second quarters. In July, 1995, the Bank's base lending rate was
reduced to its current level of 8.75%.
Total deposits increased 45% during the first nine months of 1995. The
increase in deposits is primarily the result of Management's efforts to
attract additional deposits to the Bank through expanding relationships
with existing customers and establishing relationships with new customers.
Competitive rates were offered on interest bearing deposits, resulting in
the large increase in time deposits. The Bank also offered new and
innovative deposit products which attracted the attention of depositors and
contributed to the increase in deposits during the first nine months of
1995. This increase in deposits, as well as the overall increase in
interest rates since the beginning of 1994, has resulted in an increase in
interest expense as compared to the prior year.
The increase in deposits during the first nine months of 1995 has
resulted in greater liquidity, which has been used to fund an increase in
loans, as well as to purchase securities and increase federal funds sold.
The balance of the securities portfolio has increased approximately 110%
during the first nine months of 1995 as a result of these purchases and a
$542,616 reduction in the unrealized loss on securities available-for-sale.
The improved liquidity from the increase in deposits has also been used to
eliminate the balance of federal funds purchased during the first quarter
of 1995 and increase the amount of federal funds sold. The increase in
interest income from loans, securities and federal funds sold, coupled with
a reduction in interest expense on federal funds purchased, has contributed
to the increase in net interest income.
Overall, the increase in loans during the prior year, funded from the
increase in deposits, coupled with an increase in interest rates, has
resulted in an improved interest rate spread and increased net interest
income and margin.
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<PAGE>11
Net interest income for the third quarter of 1995 was $1,010,626
compared to $837,240 for the third quarter of 1994. This represents a
$173,386, or 20.7% increase. The changes in net interest income for the
third quarter are comparable to the changes in net interest income for the
first nine months from year-to-year, except for a more pronounced increase
in interest earned on securities and federal funds sold. This is due to
the significant increase in the balances of these interest bearing
assets during 1995.
Non-interest revenue increased 5.7% during the first nine months of
1995, compared to the first nine months of 1994, primarily due to net gains
on sales of other real estate and other loan assets. This increase
resulted substantially from the sale of one parcel of other real estate.
Other non-interest revenue, generated by the Bank's financial services
subsidiary, increased $13,487, or 39.5%, compared to the first nine months
of 1994. The Bank sold the guaranteed portion of three Small Business
Administration-guaranteed loans during 1995 resulting in a gain of $29,372
compared to one loan sale with a gain of $6,945 during the first nine
months of 1994. These improvements were offset by a net loss on securities
totalling $11,029 for the first nine months of 1995, compared to a net gain
of $6,707 for the first nine months of 1994. The net loss in 1995 was
substantially from the sale during the first quarter of one security
maturing in 1995. Sales proceeds were reinvested in a higher-yielding,
longer-term security. This reinvestment has resulted in the recovery of
this loss in approximately six months and a continuing higher yield from
the acquired security.
The decrease in non-interest revenue for the third quarter of 1995, from
the third quarter of 1994, is primarily the result of the reduction in the
gain on disposition of a Bank branch and reduced service charges. The gain
resulted from the August 1994 disposition of the Bank's Decatur branch.
There was no similar transaction during the third quarter of 1995.
However, as discussed above, the sale of the guaranteed portion of a Small
Business Administration loan resulted in a gain amounting to $11,974 during
the third quarter of 1995. There was no such gain during the third quarter
of 1994. Other non-interest revenue from the Bank's financial services
subsidiary increased 11.6% from the third quarter of 1994 to the third
quarter of 1995.
Non-interest expense increased 5.6% during the first nine months of
1995, compared to the first nine months of 1994. Other non-interest
expenses increased $109,762, or 10.5%, in the first nine months of 1995,
compared to the first nine months of 1994. This increase is partially a
result of Management's efforts to improve the performance of the Bank
through marketing efforts and the processing expenses related to the higher
volume of activity from the growth of the Bank. Additional expenses have
been incurred in connection with non-performing loans and deposits.
Salaries and employee benefits increased $33,935, or 2.7%, during the first
nine months of 1995, compared to the first nine months of 1994.
During the third quarter, the Bank received a refund of overpaid Federal
Deposit Insurance assessments as a result of the capitalization of the
deposit insurance fund. This refund resulted in a $33,479, or 9.0%,
decrease in other non-interest expenses during the third quarter of 1995,
as compared to the third quarter of 1994. Occupancy expenses decreased
during the third quarter of 1995 primarily due to changing the cleaning
services for the Bank's main office from contract service to employee.
This contributed to the increase in salaries and employee benefits during
the third quarter.
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<PAGE>12
The Company recorded a provision for income taxes of $163,600 for the
first nine months of 1995. The Company previously adopted Statement of
Financial Accounting Standards ("SFAS") No. 109. SFAS No. 109 allows for
the utilization of a net operating loss carryforward by the recording of
future benefits prior to the period they are realized. This resulted in
the Company recording income tax benefits and a related deferred income tax
receivable during the previous two years. As the Company's net operating
loss was utilized in these calculations, it was necessary to record a
provision for income taxes beginning in the first quarter of 1995.
FINANCIAL CONDITION
The total assets of the Company increased $23.4 million, or 35.9%,
during the first nine months of 1995, from $65.3 million at December 31,
1994, to $88.7 million at September 30, 1995. This increase was
attributable to earning assets which grew $23.1 million, or 41.9%, from
December 31, 1994 to September 30, 1995.
Gross loans increased $9.7 million, or 20.6%, since December 31, 1994.
Additional funds from the increase in deposits were used to purchase
securities, with the remainder being invested in federal funds sold. At
September 30, 1995, federal funds sold totalled to $4,237,000. The
securities portfolio increased $9.2 million during the first nine months of
1995, primarily through the purchase of additional securities. The
unrealized loss on securities available-for-sale decreased $542,616 during
the first nine months of 1995 to a balance of $134,732 at September 30,
1995.
The amortized cost and estimated market values of securities available-
for-sale as of September 30, 1995 were as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Market Value
----------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations of
U.S. Government corporations and agencies $17,390,498 $82,567 $(218,149) $17,254,916
Obligations of states and political
subdivisions 12,420 2,066 0 14,486
Mortgage-backed securities 381,672 0 (1,216) 380,456
----------- --------- ---------- -----------
$17,784,590 $84,633 $(219,365) $17,649,858
=========== ========= ========== ===========
</TABLE>
The overall amount of nonearning assets at September 30, 1995 increased
from the December 31, 1994 balance. Other real estate and other loan
assets increased $126,267 as a result of the transfer of one property from
a non-accrual loan, which the Bank obtained through foreclosure. The
balance of cash and due from banks decreased at September 30, 1995 as
compared to the December 31, 1994 amount. These balances will fluctuate
based upon the cash needs of the Bank which are directly related to the
deposit account activity of its customers.
<PAGE>
<PAGE>13
The total deposits increased by $25.2 million, or 45%, since December
31, 1994. This increase is largely the result of business development
efforts, a competitive interest rate structure and new products. The
balance of federal funds purchased of $2,980,000 at December 31, 1994,
was eliminated at September 30, 1995.
NON-PERFORMING ASSETS
Non-performing assets include non-accrual loans, accruing loans
contractually past due 90 days or more, restructured loans, other real
estate and repossessed assets. Non-performing assets increased during the
first nine months of 1995 from a December 31, 1994 balance of $629,800 to a
September 30, 1995 balance of $866,100. This increase resulted from loans
which were past due at September 30, 1995. The Bank is working with the
borrowers to obtain payment or satisfactory renewals. Management cannot
determine the amount of loss, if any, that may be sustained as a result of
these credits. The increase in non-performing assets was offset by the
pay-off of a $200,000 non-accrual loan during the second quarter of 1995
which was classified as non-accrual at March 31, 1995. The following table
sets forth non-performing assets of the Company:
<TABLE>
<CAPTION>
($ in Thousands) September 30, 1995 June 30, 1995 March 31, 1995 December 31, 1994
------------------ ------------- -------------- -----------------
<S> <C> <C> <C> <C>
Accruing loans past due 90 days or $512,200 $368,100 $ 55,000 $250,000
more
Non-Accrual loans 145,800 176,200 362,000 298,000
Restructured loans -(1) -(1) -(1) -(1)
Other real estate and repossessed 208,100 309,200 196,300 81,800
assets
-------- -------- -------- --------
Total Non-Performing Assets $866,100 $853,500 $613,300 $629,800
======== ======== ======== ========
</TABLE>
- ---------------
(1) Excludes restructured loans which were renegotiated at market
interest rates.
As of September 30, 1995, the allowance for loan losses was $629,096, or
1.10% of total loans, compared to $602,364, or 1.12% of total loans, at
June 30, 1995, and $505,125, or 1.07% of total loans, at December 31, 1994.
In the first nine months of 1995, the Company made additional provisions to
the allowance for loan losses totalling $230,000, compared to a provision
of $105,000 for the first nine months of 1994. Charge-offs for the first
nine months of 1995 totalled $137,000, compared to charge-offs of $208,000
for the first nine months of 1994. Recoveries for the first nine months of
1995 totalled $31,000, compared to recoveries of $56,000 for the first nine
months of 1994.
<PAGE>
<PAGE>14
The Company provided $80,000 to the allowance for loan losses in the
third quarter of 1995, compared to a provision of $30,000 in the third
quarter of 1994. Charge-offs for the third quarter of 1995 totalled
$59,000, compared to charge-offs which totalled $74,000 for the third
quarter of 1994. Recoveries for the third quarter of 1995 totalled $6,000,
compared to recoveries of $12,000 for the third quarter of 1994.
Effective January 1, 1995, the Company adopted SFAS No. 114, "Accounting
by Creditors for Impairment of a Loan." SFAS No. 114 requires certain
impaired loans be measured at the present value of expected future cash
flows discounted at the loan's effective interest rate or, if more
practical, at the loan's observable market price or the fair value of the
collateral if the loan is collateral dependent. The effect of the
discounting is considered as a reserve which is a part of the allowance for
loan losses. As a part of implementing SFAS No. 114, Management identified
and reviewed impaired loans to determine if an additional reserve was
required. Based upon the Company's loan classification and grading
program, no additional reserves were required at the time of adoption of
SFAS No. 114 or at September 30, 1995. Therefore, the implementation of
SFAS No. 114 did not have an impact on the Company's financial position or
results of operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company continues to maintain adequate liquidity at September 30,
1995. The Company's capital at September 30, 1995, was $5,932,621, or
6.68% of total assets.
Bank holding companies are required to maintain certain levels of capital
that are a function of the level of risk of the Company's portfolio of
assets, including off-balance sheet exposures, in accordance with risk-
based capital guidelines approved by the Federal Reserve Board. The
following chart summarizes the applicable bank regulatory capital
requirements and the Bank's capital ratios at September 30, 1995:
<TABLE>
<CAPTION>
BANK REGULATORY MINIMUM REGULATORY BANKALABAMA AT
CAPITAL REQUIREMENTS REQUIREMENT SEPTEMBER 30, 1995
- -------------------- ------------------ ------------------
<S> <C> <C>
Tier 1 capital to risk-adjusted 4.00% 8.27%
assets
Total risk-based capital to risk- 8.00% 9.17%
adjusted assets
Tier 1 capital as a % of average 4.00% 6.97%
total assets
</TABLE>
The Bank's capital exceeds the minimum risk based guidelines adopted by
the Federal Reserve Board.
<PAGE>
<PAGE>15
BANCALABAMA, INC., AND SUBSIDIARY
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None.
Item 2. CHANGES IN SECURITIES
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
See Exhibit Index included herein on page 16.
(b) Reports on Form 8-K.
The Registrant did not file any Current Reports on Form
8-K during the quarter ended September 30, 1995.
<PAGE>
<PAGE>16
EXHIBIT INDEX
-------------
Exhibit Description and Form 10-Q
Number Page or Method of Filing
3.1 Registrant's Certificate of Incorporation, as amended - A
3.2 Amendment to Registrant's Certificate of Incorporation - F
3.3 Amended and Restated Bylaws of Registrant - A
10.1 Registrant's 1989 Incentive Stock Option Plan - B*
10.2 Registrant's 1989 Nonstatutory Stock Option Plan - C*
10.3 Nonstatutory Stock Option Agreement dated January 22, 1990,
granting William R. Collins an option to purchase 20,000 shares of
the Registrant's Common Stock - C*
10.4 Incentive Stock Option Agreement dated January 22, 1990, granting
William R. Collins an option to purchase 40,000 shares of the
Registrant's Common Stock - C*
10.5 Incentive Stock Option Agreement dated January 22, 1990, granting
Jean D. Snead an option to purchase 10,000 shares of the
Registrant's Common Stock - C*
10.6 Incentive Stock Option Agreement dated September 14,1992, granting
Robert F. Harwell, Jr., an option to purchase 10,000 shares of the
Registrant's Common Stock - D*
10.7 Nonstatutory Stock Option Agreement dated December 16, 1993,
granting Michael J. Williams, an option to purchase an aggregate of
10,000 shares of the Registrant's Common Stock - E*
10.8 Addendum to Registrant's 1989 Incentive Stock Option Plan - F*
10.9 Amendment Number One to Registrant's 1989 Nonstatutory Stock Option
Plan - F*
10.10 Cancellation of Incentive Stock Option Agreement between Registrant
and William R. Collins cancelling the Incentive Stock Option
Agreement dated January 22, 1990 - F*
10.11 Cancellation of Incentive Stock Option Agreement between Registrant
and Jean D. Snead cancelling the Incentive Stock Option Agreement
dated January 22, 1990 - F*
10.12 Cancellation of Incentive Stock Option Agreement between Registrant
and Robert F. Harwell, Jr., cancelling the Incentive Stock Option
Agreement dated September 14, 1992 - F*
10.13 Nonstatutory Stock Option Agreement dated February 1, 1994,
granting William R. Collins an option to purchase 40,000 shares of
the Registrant's Common Stock - F*
<PAGE>
<PAGE>17
10.14 Nonstatutory Stock Option Agreement dated February 1, 1994,
granting Jean D. Snead an option to purchase 10,000 shares of the
Registrant's Common Stock - F*
10.15 Nonstatutory Stock Option Agreement dated February 1, 1994,
granting Robert F. Harwell, Jr., an option to purchase 10,000
shares of the Registrant's Common Stock - F*
10.16 Amendment No. 1 to the Nonstatutory Stock Option Agreement with
William R. Collins dated January 22, 1990, reducing the exercise
price of such option from $11.75 per share to $10.00 per share - F*
10.17 Nonstatutory Stock Option Agreement dated July 17, 1995, granting
Steven R. Townson an option to purchase 25,000 shares of
Registrant's Common Stock - page 19*
27.1 Financial Data Schedule - page 25
A Incorporated by reference to exhibits filed with the Registrant's
Registration Statement on Form S-1 under the Securities Act of
1933, File No. 33-14391.
B Incorporated by reference to exhibits filed with the Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1989, under the Securities Exchange Act of 1934.
C Incorporated by reference to exhibits filed with the Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1989, under the Securities Exchange Act of 1934.
D Incorporated by reference to exhibits filed with the Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1992, under the Securities Exchange Act of 1934.
E Incorporated by reference to exhibits filed with the Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1993, under the Securities Exchange Act of 1934.
F Incorporated by reference to exhibits filed with the Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1994, under the Securities Exchange Act of 1934.
* Denotes management contract or compensatory plan or arrangement
required to be filed as an exhibit to this report.
<PAGE>
<PAGE>18
BANCALABAMA, INC., AND SUBSIDIARY
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.
BANCALABAMA, INC.
DATE: November 13, 1995 By: William R. Collins
--------------------------------
William R. Collins
Chief Executive Officer
DATE: November 13, 1995 By: Michael J. Williams
--------------------------------
Michael J. Williams
Chief Financial Officer
<PAGE>
<PAGE>1
STATE OF ALABAMA
COUNTY OF MADISON
NONSTATUTORY STOCK OPTION AGREEMENT
THIS NONSTATUTORY STOCK OPTION AGREEMENT (hereinafter "Option" or
"Agreement"), is made as of this 17th day of July, 1995, between
BancAlabama, Inc., a Delaware one bank holding corporation having its
principal office in Huntsville, Alabama (the "Corporation"), and Steven R.
Townson (the "Participant"), WITNESSETH AS FOLLOWS:
R E C I T A L S
WHEREAS, the Corporation has adopted the 1989 Nonstatutory Stock
Option Plan (the "Plan"); and
WHEREAS, the Corporation considers it desirable and in the best
interests of the Corporation for certain employees to be given an
inducement to acquire a proprietary interest in the Corporation under this
Plan and for the Participant to be given an added incentive to advance the
interests of the Corporation; and
WHEREAS, the Board of Directors (hereinafter "Board") has determined
to grant to Steven R. Townson the Options described in this Agreement under
the terms provided in this Agreement pursuant to the Corporation's Plan;
and
WHEREAS, the Board and the Corporation intend that the stock options
granted under Section Two of this Agreement shall be Options as that term
is defined in the 1989 Nonstatutory Stock Option Plan.
NOW, THEREFORE, in consideration of the foregoing premises, it is
agreed as follows:
SECTION ONE
DEFINITIONS
Unless the context clearly indicates otherwise, for purposes of this
Agreement, all terms used herein have the respective meanings set forth in
the 1989 Nonstatutory Stock Option Plan.
SECTION TWO
GRANT
(a) The Corporation hereby irrevocably grants to the Participant, in
the manner and subject to the conditions hereinafter provided, the right,
privilege, and option (hereinafter the "Option") to purchase all or any
part of an aggregate of twenty-five thousand (25,000) shares of the $1.00
par value Common Stock of the Corporation on the terms and conditions
herein set forth. This option is granted pursuant to the provisions of the
1989 Nonstatutory Stock Option Plan.
(b) The Option Price of such shares shall be TEN DOLLARS ($10.00)
per share.
<PAGE>
<PAGE>2
SECTION THREE
TIME OF EXERCISE OF STOCK OPTION
(a) The Stock Options granted pursuant to Section Two may be
exercised by the Participant any time on or after the date hereof until
termination of the option as set forth in Section Four hereof.
(b) The Stock Options shall be exercised by the Participant giving
written notice directed to the Corporation at its principal place of
business, accompanied by a check or other appropriate form of payment in an
amount equal to the per share purchase price described in Section Two
hereof, multiplied by the number of shares of Common Stock which
Participant desires to purchase hereunder; provided, however, that the
minimum number of shares in the Option that may be exercised is one hundred
(100). Upon receipt of such written notice and a check (or other
appropriate form of payment) in the proper amount, the Corporation shall
make immediate delivery of stock certificates representing the shares of
Common Stock which Participant desires to purchase hereunder.
SECTION FOUR
TERMINATION
Any Option granted pursuant to this Agreement, or portion thereof, to
the extent that it has not been previously exercised, shall terminate upon
the earliest to occur of:
(a) the expiration of the option period, such period to begin on the
date hereof, and to end on the tenth anniversary of the date hereof;
(b) the expiration of one year after the Participant ceases to be an
employee of the Corporation due to the Permanent and Total Disability of
the Participant;
(c) the expiration of three months after the Participant ceases to
be an employee of the Corporation due to the death of the Participant;
(d) the expiration of three months after the date on which
Participant ceases to be continuously employed by the Corporation for any
reason other than Disability or death.
SECTION FIVE
ACCELERATION OF OPTIONS
(a) Notwithstanding anything herein to the contrary, in the event of
the occurrence of any transaction described in Section Five (b) immediately
below, all Options granted herein shall become exercisable immediately
prior to or concurrently with the transaction so described in Section Five
(b), to the extent such Options have not previously been exercised.
(b) Transactions which shall give rise to the acceleration of the
exercisability of Options under Section Five (a) immediately above include
the following:
(i) any dissolution or liquidation of the Corporation;
(ii) any merger, consolidation, or other combination involving
the Corporation whether or not the Corporation is the surviving
corporation;
<PAGE>
<PAGE>3
(iii) any agreement or agreements with any individual entity
or entities acting in concert approved by the Corporation to elect a
majority of the directors of the Corporation, or both, to sell (A) all or
substantially all of the assets of the Corporation, or (B) a sufficient
number of shares of voting stock of the Corporation to elect a majority of
the Board of Directors (including without limitation tendering shares of
stock pursuant to a tender offer);
(iv) the termination of the Participant's employment without
cause.
SECTION SIX
TRANSFER
This Option may not be transferred except by will or the laws of
descent and distribution. Further, the Option may be exercised only by the
Participant during his lifetime. More particularly, but without limiting
the generality of the foregoing, this Option may not be assigned,
transferred (except as noted herein), pledged or hypothecated in any way
(whether by operation of law or otherwise), and shall not be subject to
execution, attachment, or similar process. Any attempted assignment,
transfer, pledge, hypothecation, or other disposition of the Option
contrary to the provisions hereof, and the levy of any attachment or
similar process on the Option, shall be null and void and without effect.
SECTION SEVEN
ADJUSTMENTS
(a) In the event of (i) any dividend payable in shares of common
stock of the Corporation; (ii) any recapitalization, reclassification,
split up or consolidation of, or other change in the common stock of the
Corporation; or (iii) any exchange of the outstanding shares of common
stock of the Corporation, in connection with a merger, consolidation or
other reorganization of or involving BancAlabama, Inc., or a sale by
BancAlabama, Inc., of all or a substantial portion of its assets, for a
different number or class of shares of stock or other securities of
BancAlabama, Inc., or for shares of stock or other securities of any other
corporation; then the Board shall, in such manner as it shall deem in its
sole discretion, appropriately adjust the number and class of shares or
other securities which shall be subject to this Option. In no event shall
this provision be interpreted or used to devalue options granted under this
Plan. Any such adjustment made by the Board shall be final, conclusive and
binding upon all persons, including, without limitation, the Corporation,
the shareholders and directors of the Corporation and any persons having
any interest in such Stock Option.
(b) Except as provided in Section Seven (a) immediately above,
issuance by the Corporation of shares of stock of any class or securities
convertible into shares of any class shall not affect this Option.
<PAGE>
<PAGE>4
SECTION EIGHT
INVESTMENT REPRESENTATION
To the extent reasonably necessary to assure compliance with all
applicable securities laws, upon demand by the Board for such a
representation, the Participant (or his Beneficiary) shall deliver to the
Board at the time of any exercise of an option or portion thereof or
settlement of stock appreciation rights or dividend equivalents a written
representation that the shares to be acquired upon such exercise are to be
acquired for investment and not for resale or with a view to the
distribution thereof. Upon such demand, delivery of such representation
prior to the delivery of any shares issued upon exercise of an option and
prior to the expiration of the option period shall be a condition precedent
to the right of the Participant or such other person to purchase any
shares.
SECTION NINE
DEATH OF PARTICIPANT
Subject to Section Four hereof and the limitations provided in the
1989 Nonstatutory Stock Option Plan, in the event of the Participant's
death, the Option may be exercised by the legal representative of the
estate of the Participant or by the person or persons to whom the
Participant's rights under the Option shall pass by will or the laws of
descent and distribution.
SECTION TEN
NOTICE OF EXERCISE; ISSUANCE OF CERTIFICATES
Subject to the terms and conditions of this Agreement, the Option may
be exercised by written notice to the Corporation, at its principal office
in Huntsville, Alabama, directed to the attention of the Secretary of the
Board of Directors. Such notice shall state the following: (a) the
election to exercise the Option; (b) the number of shares in respect of
which the Option is being exercised; (c) a representation and agreement by
the person or persons so exercising the Option that such shares are being
purchased for investment and not with a view to the distribution or resale
thereof in the form of an Investment Letter which is attached hereto and
incorporated herein by reference; and (d) the signatures of the person or
persons so exercising the Option. Such notice shall be accompanied by a
certified or bank cashier's check payable to the order of the Corporation
for the full purchase price of the shares in respect of which the Option is
being exercised. The certificate or certificates representing the shares
shall be issued and delivered by the Corporation as soon as practicable
after receipt of the notice and payment. Such certificate or certificates
shall be registered in the name of the person or persons so exercising the
Option or, if the Option shall be exercised by the Participant, and if the
Participant shall so request in the notice exercising the Option, shall be
registered in the name of the Participant and another person jointly, with
right of survivorship, and shall be delivered to or on the written order of
the person or persons exercising such number and kind of shares and the
price per share subject to outstanding options.
<PAGE>
<PAGE>5
SECTION ELEVEN
GENERAL PROVISIONS
(a) BINDING EFFECT AND ASSIGNMENT. This Option shall be binding
upon and shall inure to the benefit of the heirs, personal representatives,
assignees, transferees and successors of the parties hereto.
Notwithstanding the foregoing, and subject to Section Nine hereof, this
Agreement shall not be assigned or transferred by the Participant without
first obtaining the prior written consent of the Corporation.
(b) GOVERNING LAW. This Option shall be construed in accordance
with and shall be governed by the laws of the State of Delaware.
(c) NOTICES. Any notice or other communication required or
permitted to be made or given hereunder shall be sufficiently made or given
if sent by certified mail addressed to the Participant at his address as
set forth in the regular books and records of the Corporation and if to the
Corporation, addressed to it at its principal offices.
IN WITNESS WHEREOF, the Corporation has caused this Option to be
executed in its name and behalf by its undersigned officer, duly authorized
hereunto, and Participant has hereunto set his hand, both in duplicate, on
this 17 day of July, 1995.
BANCALABAMA, INC.
a Delaware corporation
By W. R. Collins
______________________________
Its Chief Executive Officer
ATTEST: Jean D. Snead
____________________
Its Secretary
Steven R. Townson
________________________________
Steven R. Townson
"PARTICIPANT"
STATE OF ALABAMA
COUNTY OF MADISON
I, the undersigned, a Notary Public, in and for said County, in said
State, hereby certify that William R. Collins, whose name as Chief
Executive Officer of BancAlabama, Inc., a Delaware corporation, is signed
to the foregoing instrument, and who is known to me, acknowledged before me
on this date that being informed of the contents of the instrument, he, as
such officer and with full authority, executed the same voluntarily for and
as the act of said Corporation.
GIVEN under my hand and official seal this 17 day of July, 1995.
Mary M. Wolfe
____________________________________
NOTARY PUBLIC
<PAGE>
<PAGE>6
STATE OF ALABAMA
COUNTY OF MADISON
I, the undersigned, a Notary Public, in and for said County, in said
State, hereby certify that Steven R. Townson, whose name is signed to the
foregoing instrument, and who is known to me, acknowledged before me on
this date that being informed of the contents of the instrument, he
executed the same voluntarily on the day the same bears date.
GIVEN under my hand and official seal this 17 day of July, 1995.
Mary M. Wolfe
_____________________________________
NOTARY PUBLIC
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This Schedule contains summary financial information extracted from the
Form 10-Q for the quarterly period ended September 30, 1995 and interim
financial statements, and is qualified in its entirety by reference to
such financial information.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 4,568,408
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 4,237,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 17,784,590
<INVESTMENTS-MARKET> 17,649,858
<LOANS> 56,960,489
<ALLOWANCE> 629,096
<TOTAL-ASSETS> 88,749,622
<DEPOSITS> 81,386,154
<SHORT-TERM> 0
<LIABILITIES-OTHER> 552,777
<LONG-TERM> 878,070
<COMMON> 613,122
0
0
<OTHER-SE> 5,319,499
<TOTAL-LIABILITIES-AND-EQUITY> 88,749,622
<INTEREST-LOAN> 4,390,913
<INTEREST-INVEST> 581,127
<INTEREST-OTHER> 139,884
<INTEREST-TOTAL> 5,111,924
<INTEREST-DEPOSIT> 2,173,297
<INTEREST-EXPENSE> 2,244,380
<INTEREST-INCOME-NET> 2,867,544
<LOAN-LOSSES> 230,000
<SECURITIES-GAINS> (11,029)
<EXPENSE-OTHER> 2,782,251
<INCOME-PRETAX> 568,357
<INCOME-PRE-EXTRAORDINARY> 568,357
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 404,757
<EPS-PRIMARY> .66
<EPS-DILUTED> .66
<YIELD-ACTUAL> 5.66
<LOANS-NON> 145,800
<LOANS-PAST> 215,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 132,100
<ALLOWANCE-OPEN> 505,125
<CHARGE-OFFS> 137,393
<RECOVERIES> 31,364
<ALLOWANCE-CLOSE> 629,096
<ALLOWANCE-DOMESTIC> 629,096
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
