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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 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.
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(Exact name of registrant as specified in its charter)
Delaware 63-0945419
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(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
Post Office Box 293, Huntsville, Alabama 35804
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(Address of principal executive offices) (Zip Code)
The registrant's telephone number including area code: (205)533-5548
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Securities registered pursuant to Section 12(b) of the Act: None.
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Securities registered pursuant to Section 12(g) of the Act. None.
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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 / /
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. /X/
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As of February 28, 1996, there were 703,122 shares of registrant's
Common Stock, $1.00 par value, outstanding. The aggregate market value of
the voting stock held by non-affiliates of the registrant was approximately
$5,870,543, based on the price at which such stock sold on February 14,
1996, assuming that all shares beneficially held by officers and members of
the registrant's Board of Directors are shares owned by "affiliates," a
status which each of the officers and directors individually disclaims.
DOCUMENTS INCORPORATED BY REFERENCE
Documents Form 10-K Reference
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Portions of the BancAlabama, Inc.,
1995 Annual Report to Shareholders Part II, Part IV
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PART I
ITEM 1. BUSINESS
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General
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BancAlabama, Inc. (the "Company") is a one-bank holding company with
headquarters in Huntsville, Alabama. The Company was formed as a Delaware
corporation on December 5, 1986, for the purpose of holding all the capital
stock of a proposed subsidiary, BankAlabama-Huntsville (the "Bank"). The
Federal Reserve Bank of Atlanta approved the Company's application to
become a bank holding company on June 14, 1987. The Company does not
engage in any significant activity other than holding the stock of the Bank
and operating a commercial banking business through the Bank. The Bank has
established BancAlabama Financial Services, Inc., an Alabama subsidiary for
sales of annuities, mutual funds, and insurance policies.
Bank Activities
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The Bank is a state banking corporation organized under the Alabama
Banking Code. The Superintendent of Banks of the State of Alabama (the
"Superintendent") gave final approval to the Bank's charter on April 1,
1988. The Federal Deposit Insurance Corporation ("FDIC") approved the
Bank's application for federal deposit insurance on March 19, 1987. The
Bank opened for business on April 4, 1988.
The Company expanded beyond its main offices in 1991 by opening
several branch locations and supermarket branches. All three branch
locations and three of the supermarket branches are located in Huntsville,
Alabama. A fourth supermarket branch, opened in July 1994, is located in
Madison, Alabama. Another supermarket branch, located in Decatur, Alabama,
was sold on August 1, 1994. A traditional branch was opened in the Big
Cove area near Huntsville, Alabama, on January 6, 1996.
In February of 1993, the Bank established BancAlabama Financial
Services, Inc. ("BFS"), a wholly-owned Alabama subsidiary corporation. The
subsidiary acts as an agent for sales of various types of annuities, mutual
funds and insurance policies. At year-end 1992, BFS received state
insurance, state banking and FDIC approval to market annuities and health,
long-term disability, and other types of insurance. During 1993, BFS
received a securities agency license in order to market mutual funds.
During 1995, BFS obtained licenses to provide discount brokerage services.
Neither BFS nor the Bank sells insurance or securities, but rather has
contracted with a licensed outside sales firm for this service.
Products and Services
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The Bank offers a broad range of commercial and consumer banking
services to businesses, individuals and state and municipal governments and
their agencies. Management's marketing approach places emphasis on serving
the needs and objectives of small-to-medium size businesses and middle-to-
upper income individuals. While the Bank's clients come primarily from
this segment of the market, the Bank offers banking services to the entire
community, and Management uses its best efforts to comply with the letter
and the spirit of the Community Reinvestment Act of 1977.
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The Bank's products include business and personal checking accounts,
money market accounts, savings accounts, certificates of deposit,
individual consumer loans, business loans, mortgages on commercial and
residential real estate, rental of safety deposit box facilities, travelers
checks, credit card privileges and letters of credit. The Bank also offers
general banking advice and consultation to the public, brokerage of credit
life and accident insurance to its customers, and other client convenience
and community-oriented services.
The Bank has developed relationships with correspondent banks to offer
additional services which may be requested by the Bank's clients. The Bank
does not offer trust services or international banking services. If the
Bank decides to offer trust services in the future, additional governmental
regulatory approval will be required.
Competition
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Commercial banking is a highly competitive industry and the Bank has
faced significant competition in its market area. There are currently
eight commercial banks and three major credit unions competing for banking
business in the Bank's market area. The Bank competes directly with each
of these financial institutions, as well as with other providers of
financial services, including other credit unions, savings and loan
associations, finance companies, insurance companies, mortgage companies,
and securities brokerage firms. Many of the entities with which the Bank
competes have a longer operating history and greater financial resources
than the Bank.
There is significant competition among bank holding companies in
Alabama. On July 1, 1987, the Alabama Regional Reciprocal Banking Act of
1986 became effective, permitting the acquisition of Alabama banks or bank
holding companies by banks or bank holding companies outside the State of
Alabama. Management anticipates that the intense competition for banking
business among bank holding companies in Alabama will continue if
additional regional bank holding companies enter Alabama through
acquisition of local bank holding companies and savings and loan
institutions. Such competition may also increase as a result of the
enactment of the Riegle-Neal Interstate Banking and Branching Efficient Act
of 1994, which permits adequately capitalized and managed bank holding
companies to acquire control of a bank in any state and permits banks to
merge with one another across state lines.
Employees
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The Company and the Bank have approximately 61 full-time employees and
14 part-time employees at December 31, 1995, 18 of whom are officers. All
of the employees are engaged in the operations of the Bank.
Supervision and Regulation
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THE COMPANY. The Company is a "bank holding company" under the Bank
Holding Company Act of 1956, as amended (the "BHC Act"), and is registered
with, and subject to supervision by, the Federal Reserve. As a bank holding
company, the Company is required to file an annual report and such
additional information as the Federal Reserve may require pursuant to the
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BHC Act. The Federal Reserve may also examine the Company and its
subsidiary.
The BHC Act requires prior Federal Reserve approval for, among other
things, the acquisition by a bank holding company of direct or indirect
ownership or control of more than five percent of the voting shares or
substantially all the assets of any bank, or for a merger or consolidation
of a bank holding company with another bank holding company.
With certain exceptions, the BHC Act prohibits a bank holding company
from acquiring direct or indirect ownership or control of more than five
percent of the voting shares of any company which is not a bank or bank
holding company and from engaging directly or indirectly in any activity
other than banking or managing or controlling banks or furnishing services
to or performing services for its authorized subsidiaries. A bank holding
company may, however, engage in or acquire an interest in a company that
engages in activities which the Federal Reserve has determined by order or
regulation to be so closely related to banking or managing or controlling
banks as to be properly incident thereto. The Company has no present plans
to engage in any activities other than managing and controlling the Bank.
The BHC Act also prohibits a bank holding company and its subsidiaries
from engaging in certain tie-in arrangements in connection with any
extension of credit or the lease or sale of property or the furnishing of
services. In addition, certain limitations on the extension of credit and
other transactions by and between Federal Reserve member banks and other
affiliates (including any holding company of which such bank is a
subsidiary and any other subsidiary of such holding company) are imposed by
the Federal Reserve Act.
The Federal Reserve amended Regulation Y in 1992 to increase the
authorized activities of bank holding companies. These amendments permit
bank holding companies to engage in full service securities brokerage
services, certain financial advisory activities, higher residual value
leasing activities, and providing investment advice to customers regarding
the purchase and sale of shares of investment companies advised by a
holding company affiliate.
THE BANK. The Bank is a state bank organized under the Alabama
Banking Code, and its deposits are insured by the FDIC up to the maximum
amount permitted by law. The Bank is subject to regulation, supervision,
and regular examination by the Superintendent and the FDIC. Federal and
state banking laws and regulations regulate, among other things, the scope
of the Bank's business, its loans and investments, reserves against
deposits, interest rates payable on certain deposits, mergers and
acquisitions, borrowings, dividends, minimum capital requirements, and the
location of branch offices and certain facilities.
To encourage regulated financial institutions to help meet the credit
needs of their local community, including low and moderate income
neighborhoods, consistent with the safe and sound operations of such
financial institutions, the Community Reinvestment Act of 1977 and the
regulations of the Federal Reserve and FDIC implementing that Act provide
that the records of the regulated financial institutions will be assessed
by the appropriate regulatory authority and that such records will be taken
into account in connection with applications for establishment of domestic
branches, for merger or acquisition of assets and assumption of liabilities
of banks, and in the case of a bank holding company, for the acquisition of
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ownership or control of shares or assets of a bank or to merge with any
other bank holding company.
The Depository Institutions Deregulation and Monetary Control Act of
1980 ("DIDA") phased out the ceilings on the rate of interest that may be
paid on deposits by banks and savings and loan associations. DIDA imposes
reserve requirements on all transaction accounts (demand deposit accounts,
NOW accounts and savings accounts subject to automatic transfer) and non-
personal time deposits for all depository institutions, including banks,
regardless of whether these are members of the Federal Reserve System.
The Garn-St. Germain Depository Institutions Act of 1982 (the "Garn-
St. Germain Act") also affects the Bank's business and competitive
position. The Garn-St. Germain Act permits banks and savings and loan
associations to offer a money market deposit account without an interest
rate limit. The account is regulated as to minimum balance, the number of
monthly transfers and other matters.
The Financial Institutions, Reform, Recovery and Enforcement Act of
1989 ("FIRREA") was enacted in August of 1989. FIRREA permits bank holding
companies to acquire healthy and failed savings and loan institutions and
to make such acquisitions without interstate barriers. FIRREA also allows,
with certain exceptions, bank holding companies to merge such acquired
savings and loans into their existing commercial banks and subsidiaries.
Among the other major regulatory reforms contained in FIRREA, the Act
imposes stronger capital standards for savings and loan institutions and
stronger civil and criminal enforcement provisions. FIRREA also provides
that a FDIC insured depositary institution can be held liable for any loss
incurred by, or reasonably expected to be incurred by, the FDIC after
August 9, 1989, in connection with (a) the commonly controlled FDIC insured
depositary institution or (b) any assistance provided by the FDIC to a
commonly controlled FDIC insured depositary institution in danger of
default. The deposit insurance assessment rates for banks and savings and
loan institutions were substantially increased by FIRREA.
As a result of the Bank Insurance Fund "(BIF") reaching its target
level so the fund was recapitalized, the FDIC Board of Directors ("FDIC
Board") adopted lower assessment rates for most BIF members. This is
intended to achieve the fundamental goals of risk-based assessment rates,
which are to reflect the risk posed to the insurance fund by insured
institutions and to provide institutions with incentives to control risk-
taking. The FDIC Board's assessment rate schedule provides lower
assessment rates for all but the riskiest BIF-insured institutions upon the
recapitalization of the BIF. It was determined that the fund reached its
target level and was recapitalized during the second quarter of 1995. As a
result, the FDIC reduced the assessment range to .0% to .27% of the bank's
insured deposits (with a minimum of $2,000 annually). Refunds of over-
assessments were made in September 1995.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") was enacted in December of 1991. FDICIA revised the bank
regulatory insurance coverage and funding provisions of the Federal Deposit
Insurance Act and made revisions to several other banking statutes. FDICIA
requires the FDIC to develop and implement a system of risk-based premiums
for federal deposit insurance based upon the probability that the deposit
insurance fund will incur a loss with respect to an insured institution.
Insured depository institutions will be subject to additional audit and
reporting requirements, as well as to an annual on-site examination by
their primary federal regulatory agency. FDICIA requires the federal
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regulatory agencies to devise rules requiring depository institutions to
disclose the fair market value of their assets and to report off-balance
sheet items on their financial statements. Each federal banking agency is
required to establish standards relating to internal controls, internal
audit systems, credit underwriting, interest rate exposure, asset growth,
compensation, maximum ratios of classified assets to capital, and other
standards. Finally, FDICIA established bank ratings based upon minimum
capital adequacy requirements. Under the established formulas,
undercapitalized institutions will be subject to more stringent regulation
and supervision than well-capitalized or adequately capitalized
institutions.
In 1992, the FDIC amended its regulations limiting extensions of
credit by insured nonmember banks to their executive officers. It requires
that extensions of credit to the bank's executive officers be reported to
the bank's board of directors, that extensions to executive officers only
be made if the bank would be authorized to make the extensions to borrowers
other than its executive officers, that the terms of credit not be more
favorable than those afforded other borrowers, and that the extensions of
credit be due and payable on the bank's demand if the executive officer
becomes indebted to any other bank in an amount that could not be extended
to such officer by his or her own bank. In addition, loans to executive
officers for purposes other than education and home mortgages are limited
to the greater of 2.5% of the bank's capital and unimpaired surplus or
$25,000, but in no event may such extension of credit exceed $100,000.
Effective December 28, 1994, a bank may extend credit to an executive
officer of the bank exceeding the limits stated above provided the
extension of credit is secured by:
(1) A perfected security interest in bonds, notes, certificates
of indebtedness, or Treasury bills of the United States or in such other
obligations fully guaranteed for principal and interest by the United
States;
(2) Unconditional takeout commitments or guarantees of any
department, agency, bureau, board, commission, or establishment of the
United States or corporation wholly-owned directly or indirectly by the
United States; or
(3) A perfected security interest in a segregated deposit
account at the bank.
The FDIC approved a risk-based premium system effective January 1,
1993. The risk-based system assigns deposit insurance premiums based on
capital adequacy and supervisory evaluations. Institutions are placed into
one of three capital categories: well-capitalized, adequately capitalized,
and less than adequately capitalized. Within each of the three capital
groups, there are three subgroups based on the FDIC's judgment of the risk
posed by each institution. The premium paid by an institution varies based
on the capital adequacy and supervisory evaluation categories into which it
falls. The premium schedule is updated every six months.
The Federal Bank regulators adopted final "prompt corrective action"
rules, effective December 19, 1992. The final rules define the relative
capital measures for the categories of well-capitalized, adequately
capitalized, undercapitalized, and significantly undercapitalized, to be
the ratio of total capital to risk-weighted assets, the ratio of Tier 1
capital to risk-weighted (the leverage ratio) assets, and the ratio of Tier
1 capital to total average assets. The ratio of tangible equity to total
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assets is the sole relevant capital measure for defining the critically
undercapitalized category. Once the capital category of an institution has
been determined, the Federal Deposit Insurance Act applies two types of
supervisory actions: actions mandated by the statute and actions the
institution's regulator has discretion to take. The actions that may be
taken by the institution's regulator include, but are not limited to,
restricting the compensation paid to officers, increased monitoring of the
institution, restricting the growth of assets, as well as other supervisory
actions.
The Federal bank and thrift supervisory agencies adopted uniform rules
governing standards for real estate lending by banks and savings and loan
associations effective March 19, 1993. These rules implement Section 304
of the FDICIA. The regulations generally provide that each institution
must adopt and maintain written policies that establish appropriate limits
and standards for loans secured by liens on or interests in real estate, or
that are made for the purpose of financing improvements to real estate.
These policies must be consistent with safe and sound banking practices,
must be appropriate to the size of the institution and to the nature of its
operations, and must be reviewed at least annually by the institution's
board of directors. These lending policies must establish: (1) portfolio
diversification standards; (2) underwriting standards; (3) loan
administration procedures; and (4) documentation, approval and reporting
requirements. Each institution must monitor the real estate market in its
lending area to ensure that its policies continue to be appropriate, and
must maintain policies that reflect consideration of the Interagency
Guidelines for Real Estate Lending Policies, which were adopted in
conjunction with the regulations.
In December, 1993, the FDIC approved final rules implementing the
FDICIA restrictions on activities of insured state banks and their
majority-owned subsidiaries. These rules implement Section 24 of the
Federal Deposit Insurance Act, which generally prohibits state banks from
engaging "as principal" in any activity not permitted for a national bank.
A bank may, however, engage in an otherwise prohibited activity if it meets
its minimum capital requirements and the FDIC determines that the activity
does not present a significant risk to the deposit insurance fund. The new
regulation provides several exceptions to the general prohibition,
including guarantee activities, activities closely related to banking under
the BHC Act, securities activities conducted through a bank subsidiary, and
specified equity investments held by a majority owned subsidiary of the
bank. The FDIC clarified that, because the rule defines the term "as
principal" to exclude agency activities, a state bank can, without prior
FDIC consent, operate insurance agencies, securities brokerage firms, real
estate agencies, travel agencies, financial planning services, and certain
other agencies as long as those activities are authorized by state law.
In late 1994, the Riegle-Neal Interstate Banking and Branching
Efficient Act of 1994 and the Riegle Community Development and Regulatory
Improvement Act of 1994 ("CDBA") were enacted into law. The Interstate
Banking Act provides that one year after enactment, adequately capitalized
and managed bank holding companies may acquire control of a bank in any
state. Acquisitions are subject to provisions that cap at 10% the portion
of the nation's bank deposits a single organization may control. Statewide
deposit concentration is capped at 30%, unless the state waives this cap.
Beginning on June 1, 1997, or earlier if authorized by a state, banks may
merge with one another across statelines, subject to concentration, capital
and community reinvestment act requirements and regulatory approval.
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The CDBA creates a community development financial institutions fund
to promote the formation and expansion of limited purpose community
development financial institutions (CDFIs). The CDFIs are charged with
developing financial services, lending, and investment in distressed urban
and rural areas in order to promote community development in targeted
areas. Federal funds in the form of grants, equity infusions, loans or
deposits may be provided to certain institutions selected on the basis of
community need, community representation in the institution's management,
ability to leverage private funds, extent of targeting to low income
populations, and the strength of the institution's proposed strategic
revitalization plan. The CDBA also contains provisions designed to reduce
the regulatory, documentary and filing burdens previously imposed on bank
holding companies and banks.
There are presently pending before the United States Congress
legislative proposals concerning the banking industry. Bills may be
introduced in Congress or the Alabama State Legislature in the future
concerning the regulation of the banking industry, deposit insurance, and
the powers of financial institutions. The Company is unable to predict
whether such proposals will be adopted or the effect adopted legislation
would have on the business and financial condition of the Company or the
Bank.
Economy and Government Monetary Policy
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Banking is a business which depends on interest rate differentials.
In general, the differences between the interest paid by a bank on its
deposits and its other borrowings and the interest received by a bank on
its loans to customers and its securities constitute the major portion of
the bank's earnings. Thus, the earnings and growth of bank loans,
securities and deposits of the Bank as well as rates charged on loans or
paid on deposits are subject to the influence of economic conditions
generally, both domestic and foreign, and also to the monetary and fiscal
policies of the United States and its agencies, particularly the Federal
Reserve. The Federal Reserve regulates the supply of money through various
means, including open-market dealings in United States Government
securities, the discount at which members may borrow, the reserve
requirements on member bank deposits, and funds availability regulations.
In view of the changes in the national economy and money markets, as well
as in the monetary and fiscal policies of the United States and its
agencies, the nature and timing of changes and their effect on the interest
rates, level of deposits, and demands for loans of the Bank cannot be
predicted.
Selected Statistical Information
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The following tables set forth certain selected statistical
information concerning the business and operations of the Company for the
periods indicated. Average balances have been computed based upon daily
average balances, except for the holding company, when average balances
have been based on month-end balances.
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Distribution of Assets, Liabilities and Shareholders' Equity; Interest Rates
and Interest Differential
The following table sets forth the Company's average assets, liabilities and
shareholders' equity, interest income earned and interest expense paid, average
rates and the net interest margin for the years ended December 31, 1995, 1994,
and 1993.
<TABLE>
<CAPTION>
Year Ended December 31,
($ in thousands)
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1995 1994 1993
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Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate Balance Expense Rate
-------- ------- ------- -------- ------- ------ ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Interest Earning Assets
Federal Funds Sold $ 3,407 $ 199 5.84 % $ 705 $ 32 4.54 % $ 1,213 $ 37 3.05 %
Securities
Taxable 14,399 916 6.36 10,313 554 5.37 14,577 901 6.18
Tax Exempt (1) 12 1 8.33 12 1 8.33 12 1 8.33
Loans (2) 53,104 6,044 11.38 42,368 4,350 10.27 37,697 3,648 9.68
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Total Interest Earning
Assets 70,922 7,160 10.10 53,398 4,937 9.25 53,499 4,587 8.57
Cash and Due From Banks 4,375 3,946 4,630
Allowance for Loan (616)
Losses (602) (561)
Bank Premises and 3,635 3,765
Equipment, Net 3,581
Accrued Interest 534 642
Receivable 832
Other Assets 917 338 200
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Total Assets $80,025 $61,290 $62,120
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</TABLE>
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<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Liabilities and Shareholders'
Equity
Deposits
Interest Bearing Demand $25,652 $1,067 4.16 % $24,234 $ 773 3.19 % $28,557 $ 844 2.96 %
Savings 2,655 62 2.34 2,697 57 2.11 2,733 60 2.20
Other Time 32,330 1,995 6.17 16,979 844 4.97 14,886 839 5.64
Federal Funds Purchased 77 4 5.19 574 22 3.83 203 7 3.45
Debt 892 87 9.75 974 80 8.21 1,051 82 7.80
------- ------ ---- ------- ------ ---- ------- ------ ----
Total Interest Bearing
Liabilities 61,606 3,215 5.22 45,458 1,776 3.91 47,430 1,832 3.86
------ ---- ------ ---- ------ ----
Noninterest Bearing
Deposits 12,112 10,576 9,976
Accrued Expenses and Other
Liabilities 519 274 273
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Total Liabilities 74,237 56,308 57,679
Shareholders' Equity 5,788 4,982 4,441
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Total Liabilities and
Shareholders' Equity $80,025 $61,290 $62,120
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Interest Rate Spread 4.88 % 5.41 % 4.71 %
==== ==== ====
Net Interest Income/Margin $3,945 5.56 % $3,161 5.92 % $2,755 5.15 %
====== ==== ====== ==== ======= ====
</TABLE>
(1) Tax-exempt securities interest has not been computed on a tax equivalent
basis.
(2) Nonaccrual loans are included in the average loans presented above.
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The following table presents the changes in the Company's net interest income
as a result of changes in volume and rate from 1994 to 1995 and from 1993 to
1994.
<TABLE>
<CAPTION>
Changes from Changes from
1994 to 1995 (1) 1993 to 1994 (1)
--------------------------------- --------------------------------
Yield/ Yield/
Volume Rate Total Volume Rate Total
------ ------ ----- ------ ------ -----
($ in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest Income from
Interest Earning Assets:
Interest bearing deposits
at banks $ 123 $ 44 $ 167 ($ 15) $ 11 ($ 4)
Securities -
Taxable 219 143 362 (264) (83) (347)
Tax Exempt - - - - - -
Loans 1,112 542 1,654 454 285 739
------ ---- ------ ----- ---- ----
Total Interest Income from $1,454 $729 $2,183 ($8) $396 $388
Interest Earning Assets ------ ---- ------ ----- ---- ----
Interest Expense for
Interest Bearing Liabilities:
Deposits -
Interest Bearing Demand $ 45 $249 $ 294 ($128) $ 57 ($71)
Savings (1) 6 5 (1) (2) (3)
Other Time 763 388 1,151 118 (113) 5
Federal Funds Purchased (19) 1 (18) 13 2 15
Debt (7) 14 7 (6) 4 (2)
------- ---- ------ ------ ----- -----
Total Interest Expense for $ 781 $658 $1,439 ($4) $(52) ($56)
Interest Bearing Liabilities ------ ---- ------ ------ ----- -----
Change in Net Interest Margin $ 673 $ 71 $ 744 ($4) $488 $444
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</TABLE>
(1) This table show the change in net interest income for the comparative
periods based either on changes in average balances or changes in average rates
for interest earning assets and sources of funds on which interest is received
or paid.
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Securities
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The following table presents the amount of securities by type (see Note 1
to Consolidated Financial Statements - Securities):
<TABLE>
<CAPTION>
December 31,
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1995 1994
------------------------------ ----------------------------
Amount % Amount %
------ --- ------ ---
($ in thousands)
<S> <C> <C> <C> <C>
U.S. Treasury Securities $ - -% $ 869 10.33%
U.S. Government Agency and 20,840 98.15% 7,121 84.67%
Corporate Obligations
Obligations of States and 15 0.07% 13 0.16%
Political Subdivisions
Mortgage-backed Securities 378 1.78% 407 4.84%
------- ------- ------ -------
Total Securities $21,233 100.00% $8,410 100.00%
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</TABLE>
The following table presents securities by maturity and the weighted
average yields at December 31, 1995:
<TABLE>
<CAPTION>
Amount Yield
------ -----
($ in thousands)
<S> <C> <C>
U.S. Government Agency and Corporate Obligations $ 493 4.34%
One Year or Less 8,476 6.12%
One to Five Years 11,367 6.90%
Five to Ten Years 503 7.35%
After Ten Years --- -----
20,839 6.53%
------ -----
Obligations of States and Political Subdivisions
After Ten Years 15 7.70%
Mortgage-backed Securities
After Ten Years 378 6.71%
--- -----
Total Securities $21,232 6.54%
======= =====
</TABLE>
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Loans
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The following table sets forth the composition of the loan portfolio:
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
--------------------------------- ---------------------------------
($ in thousands) Amount % Amount %
---------------- ------ --- ------ ---
<S> <C> <C> <C> <C>
Commercial, Industrial and
Agricultural $13,895 22.97% $12,281 25.98%
Real Estate-
Construction 11,029 18.23% 8,093 17.12%
Mortgage 27,575 45.58% 20,737 43.86%
Consumer 6,658 11.01% 5,782 12.23%
Mortgage Loans Sold 1,101 1.82% 69 0.15%
Other 238 0.39% 318 0.67%
------- ------- ------- ------
Total Loans $60,496 100.00% $47,280 100.00%
======= ======= ======= =======
</TABLE>
The following table presents loans as of December 31, 1995, the maturities
of the loan portfolio, based upon contractual payment terms of the loans:
<TABLE>
<CAPTION>
Over One Over
One Year Through Five
($ in thousands) or Less Five Years Years Total
---------------- --------- ---------- ------- -----
<S> <C> <C> <C> <C>
Commercial, Industrial and
Agricultural $11,479 $ 2,416 $ - $13,895
Real Estate -
Construction 10,040 989 - 11,029
Mortgage 18,778 7,373 1,424 27,575
Consumer 2,443 4,159 56 6,658
Mortgage Loans Sold 1,101 - - 1,101
Other 75 163 - 238
------- ------- ------ -------
Total Loans $43,916 $15,100 $1,480 $60,496
======= ======= ====== =======
</TABLE>
<PAGE>
<PAGE>
For loans with maturities greater than one year, the following table
summarizes loans having pre-determined interest rates and loans having floating
or adjustable interest rates at December 31, 1995:
<TABLE>
<CAPTION>
Over One Over
Through Five
($ in thousands) Five Years Years
---------------- ---------- -----
<S> <C> <C>
Loans with Fixed Interest Rates $12,491 $ -
Loans with Floating or
Adjustable Interest Rates 246 852
------- ----
$12,737 $852
======= ====
</TABLE>
<PAGE>
<PAGE>
Allowance for Loan Losses
- -------------------------
The following table sets forth certain information with respect to the
allowance for loan losses for the years ended December 31, 1995 and 1994:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1995 1994
---- ----
($ in thousands)
<S> <C> <C>
Balance at Beginning of Year $ 505 $ 596
Charge-offs: (34) -
Real Estate (181) (163)
Commercial (111) (166)
Consumer ------- -------
Total Charge-offs (326) (329)
------- -------
Recoveries:
Real Estate - -
Commercial 8 19
Consumer 30 54
------- -------
Total Recoveries 38 73
------- -------
Net Charge-offs (288) (256)
Provision for Loan Losses 377 165
------- -------
Balance at end of Year $594 $505
======= =======
Loans, at End of Year $60,496 $47,212
======= =======
Ratio of Allowance for Loan Losses to Net Loans at End of Year 0.98% 1.07%
======= =======
Average Loans $53,104 $42,368
======= =======
Ratio of Net Charge-offs to Average Loans Outstanding During
the Year 0.54% 0.60%
======= =======
Ratio of Provision for Loan Losses to Net Charge-offs 130.90% 64.45%
======= =======
Ratio of Allowance for Loan Losses at End of Year to Net Charge-offs 206.25% 197.27%
======= =======
</TABLE>
<PAGE>
<PAGE>
Allowance for Loan Losses - Continued
- -------------------------------------
Although the Company does not usually allocate its allowance for loan
losses by type of loan, the following table represents Management's best
estimate of the allocation of allowance for loan losses at December 31, 1995
and 1994, by type of loan.
<TABLE>
<CAPTION>
December 31,
---------------------------------------------------------------
1995 1994
------------------------------ ------------------------------
Amount % Amount %
------ --- ------ ---
($ in thousands)
<S> <C> <C> <C> <C>
Commercial, Industrial and Agricultural $139 23.40% $131 25.94%
Real Estate -
Construction 110 18.52% 87 17.23%
Mortgage 276 46.46% 223 44.16%
Consumer 67 11.28% 62 12.28%
Other 2 0.34% 2 0.39%
---- ------- ---- -------
Total Loans $594 100.00% $505 100.00%
==== ======= ==== =======
</TABLE>
Non-accrual and Past Due Loans
- -----------------------------
The following table sets forth non-performing loans of the Company:
December 31,
------------------------------
1995 1994
---- ----
Amount Amount
------ ------
($ in thousands)
Non-accrual Loans $573 $298
Loans Past Due 90 Days or More 164 250
---- ----
$737 $548
==== ====
<PAGE>
<PAGE>
Deposits
- --------
The following table summarizes average balance and average rate
information for deposit accounts for the years ended December 31, 1995 and
1994:
<TABLE>
<CAPTION>
December 31,
-----------------------------------------------------
1995 1994
----------------------------- --------------------
Average Average Average Average
Balance Rate Balance Rate
------- ------- ------- -------
($ in thousands)
<S> <C> <C> <C> <C>
Deposits:
Noninterest Bearing Demand $12,112 - $10,576 -
Interest Bearing Demand 25,652 4.16% 24,234 3.19%
Savings 2,655 2.34% 2,697 2.11%
Other Time 32,330 6.17% 16,979 4.97%
------ ------
$72,749 $54,486
======= =======
</TABLE>
The following table summarizes maturity information for time deposits
greater than $100,000 at December 31, 1995:
<TABLE>
<CAPTION>
($ in thousands)
<S> <C>
Three months or less $ 5,837
Over Three Through Twelve Months 3,684
Over Twelve Months 2,217
-------
$11,738
=======
</TABLE>
ITEM 2. PROPERTIES
- -------------------
The Company owns land and a building (the "Main Office") located in
the downtown Huntsville commercial business district at the corner of
Clinton Avenue and Monroe Street. The Main Office contains approximately
16,000 square feet of space which is occupied by the Bank. The Main Office
has one drive-up automated teller machine. There are parking spaces
adjacent to the Main Office.
In addition to the Main Office, the Bank has four (4) branch
locations. The first branch located on Drake Avenue, in Huntsville, has
1,980 square feet and is leased by the Company pursuant to a fifteen (15)
year lease calling for monthly rental payments totalling $58,944 per year.
The second branch is located on Moores Mill Road just outside the
<PAGE>
<PAGE>
Huntsville city limits. This branch has 1,200 square feet and is owned by
the Company, subject to a $202,000 mortgage to First Tennessee Bank, N.A.
The third branch is located on University Drive in Huntsville, and has
3,180 square feet. The Company owns the branch, subject to a $655,000
mortgage from First Tennessee Bank, N.A. The fourth branch is located on
U.S. Highway 431, South, in Owens Cross Roads and has 2,396 square feet.
The Company owns the branch.
The Company also operates four supermarket branches as a sublicenser.
Three are located in Kroger stores in Huntsville, and the fourth is located
in a Kroger store in Madison, Alabama.
ITEM 3. LEGAL PROCEEDINGS
- --------------------------
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
- --------------------------------------------------------------
There is no established public trading market for the Company's Common
Stock. In January 1996, the Company's Common Stock was listed on the OTC
Bulletin Board.
As of February 28, 1996, the Company had approximately 327 holders of
record of the Common Stock.
The Company has paid no cash dividends since its inception. The
Company is largely dependent upon dividends from the Bank for funds to pay
dividends to the stockholders. The amount of dividends payable to the
Company by the Bank are limited by the need to maintain adequate capital in
the Bank. The Board of Directors of the Company presently intends to
retain all earnings of the Bank and Company to finance the growth of the
Bank. The Board of Directors does not intend to pay cash dividends in the
foreseeable future.
ITEM 6. SELECTED FINANCIAL DATA
- -------------------------------
The following table sets forth the selected financial data of the
Company for the five years ended December 31, 1995.
<PAGE>
<PAGE>
Selected Consolidated Financial Data
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(In Thousands, Except per Share Amounts)
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Interest Income $ 7,160 $ 4,937 $ 4,587 $ 5,282 $ 4,700
Interest Expense 3,215 1,776 1,832 2,628 2,868
------- ------- ------- ------- -------
Net Interest Income 3,945 3,161 2,755 2,654 1,832
Provision for Loan Losses 377 165 547 1,094 724
------- ------- ------- ------- -------
Net Interest Income After
Provision for Loan Losses 3,568 2,996 2,208 1,560 1,108
Noninterest Revenue 957 917 1,121 832 642
Noninterest Expense 3,603 3,537 3,252 3,102 2,140
Provision (Benefit) for
Income Taxes 383 (28) (175) 7 (40)
------- ------- ------- ------- ------
Net Income (Loss) $539 $404 $252 ($717) ($350)
======= ======= ======= ======= =======
Average Balance Sheet Data (1):
Total Assets $80,025 $61,290 $62,120 $67,550 $55,451
Total Earning Assets 70,922 53,398 53,499 58,206 47,217
Loans 53,104 42,368 37,697 40,663 34,716
Allowance for Loan Losses 602 561 616 625 404
Total Deposits 72,749 54,486 56,152 60,951 48,668
Debt 892 974 1,051 1,121 528
Shareholders' Equity 5,788 4,982 4,441 4,964 5,006
Per Common Share Data:
Net Income (Loss) $0.87 $0.66 $0.45 ($1.32) ($0.67)
Book Value at End of Period (2) 10.27 8.13 8.58 7.93 9.22
Ratios:
Net Income (Loss) to:
Average Total Assets (1) 0.67% 0.66% 0.41% (1.06%) (.63%)
Average Shareholders' Equity (1) 9.31% 8.11% 5.67% (14.44%) (6.99%)
Average Shareholders' Equity
to Average Assets 7.23% 8.13% 7.15% 7.35% 9.03%
</TABLE>
(1) For 1993 through 1995, average balances have been computed based upon
daily balances, except for the holding company, where average balances
have been based on month-end balances. For 1991 and 1992, averages are
month-end averages.
(2) Based upon the number of shares outstanding at the end of the period.
Includes unrealized gain (loss) on securities available for sale
totalling $37 and ($677) at December 31, 1995 and 1994, respectively.
<PAGE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- ---------------------------------------------------------------------------
GENERAL
BancAlabama, Inc. (the "Company") is engaged in the banking business
through a wholly-owned subsidiary, BankAlabama-Huntsville (the "Bank").
The Bank commenced business on April 4, 1988. The Company currently has
eight branch locations in addition to its main office. In February 1993,
the Bank established BancAlabama Financial Services, Inc. ("BFS"), a
wholly-owned subsidiary of the Bank. BFS contracts with a licensed outside
sales firm to market annuities and mutual funds and to sell various
insurance policies. During 1995, BFS obtained licenses to provide discount
brokerage services.
RESULTS OF OPERATIONS
The Company reported net income of $539,378, or $.87 per share, for
1995 compared to net income of $403,500, or $.66 per share, for 1994, and
net income of $252,145, or $.45 per share, for 1993. The increase in net
income in 1995, as compared to 1994, is primarily attributable to an
increase in net interest income. This improvement was partially offset by
increases in the provision for loan losses, noninterest expense, and the
provision for income taxes. The increase in 1994, as compared to 1993, was
due to an increase in the net interest income and a reduction in the
provision for loan losses. These changes were offset by reduced
noninterest revenue and benefit for income taxes and higher noninterest
expenses. The income in 1993 was due primarily to a reduction in the
provision for loan losses, a benefit for income taxes, and increases in
noninterest income.
The following table sets forth, for the years indicated, the
percentage of interest income represented by certain items in the Company's
consolidated statements of operations.
1995 1994 1993
------------------------------------
Total Interest Income 100% 100% 100%
Total Interest Expense (45) (36) (40)
------------------------------------
Net Interest Income 55 64 60
Provision for Loan Losses (5) (3) (12)
Noninterest Income 13 17 24
Noninterest Expense (50) (71) (71)
------------------------------------
Income (Loss) before Income Taxes 13 7 1
Benefit (Provision) for Income Taxes (5) 1 4
-----------------------------------
Net Income (Loss) 8% 8% 5%
==== ==== ====
<PAGE>
<PAGE>
The following is an analysis of the financial performance of the
Company's operations during the three years ended December 31, 1995. The
first of the Bank's eight branches was opened in April of 1991, with the
six additional branches being opened by November 30, 1991. Four of these
branches opened in October and November, 1991. On July 25, 1994, the Bank
opened a supermarket branch in a newly-constructed Kroger store in Madison,
Alabama. On August 1, 1994, the Bank sold its supermarket branch in
Decatur, Alabama to an unrelated financial institution, which acquired the
Decatur branch's fixed assets, loans and deposits. On January 6, 1996, the
Bank opened its ninth location, a traditional branch, in the Big Cove area
near Huntsville, Alabama.
Net Interest Income and Margins
- -------------------------------
The Company's net interest income increased by $783,996, or 24.8%,
from 1994 to 1995, and the net interest margin decreased from 5.92% in 1994
to 5.56% in 1995.
During 1995, the interest and fees earned on the Bank's assets
increased due to an increase in the average balances of interest-earning
assets and an increase in the yield of these assets. The cost of interest-
bearing liabilities increased during 1995 due to an increase in the average
balance of interest-bearing liabilities and an increase in the interest
rates on interest-bearing liabilities.
Average interest-earning assets increased by $17,524,000 in 1995
compared to 1994, while average interest-bearing liabilities increased
$16,148,000 in 1995 compared to 1994. The average balance of loans
increased $10,736,000 from 1994, with securities and federal funds sold
increasing $4,086,000 and $2,702,000, respectively, from 1994 to 1995.
Interest-bearing deposits increased $16,727,000 from 1994 to 1995 and
noninterest bearing deposits increased $1,536,000. The increase in average
deposits during 1995 improved the Bank's liquidity and was used to fund the
increase in average interest-earning assets discussed above.
The 33.5% increase in average deposits from 1994 to 1995 was primarily
the result of management's effort 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 1995. This increase in deposits, as well as the overall
increase in interest rates since the beginning of 1994, has resulted in
increased interest expense as compared to the prior year.
Management continues to pursue loan and deposit growth, while focusing
on the loan and deposit quality of the Bank, by considering programs to
attract new customers and to obtain additional business from existing
customers.
The Company's net interest income increased by $405,643, or 14.7% from
1993 to 1994, and the net interest margin increased from 5.15% in 1993 to
5.92% in 1994.
The interest and fees earned on the Bank's interest-earning assets
increased during 1994, due to an increase in the yields in interest-earning
assets and an increase in the average balances of these assets. The cost
<PAGE>
<PAGE>
of interest-bearing liabilities declined during 1994 due to a decrease in
the average balance of deposits. This was partially offset by an increase
in the interest rates on interest-bearing liabilities.
Average interest-earning assets decreased by $101,000 in 1994 compared
to 1993, while average interest-bearing liabilities decreased $1,972,000 in
1994 compared to 1993. The yield on interest-earning assets increased 68
basis points, while the rate on interest-bearing liabilities increased 5
basis points. The average balance of loans increased $4,671,000 from 1993,
while the average balance of interest-bearing deposits declined $2,266,000
from 1993. The average balance of securities decreased $4,264,000 from
1993. During 1994, the Company reduced the balance of federal funds sold,
increased the balance of federal funds purchased and sold securities in an
effort to help fund the increase in loans.
The declines in the average balances of interest-bearing deposits and
securities as compared to 1993 are partially the result of the maturity of
other time deposits during the second quarter of 1993. These higher rate
instruments were offered in 1991 in conjunction with the opening of the
Company's new branches. Upon maturity, depositors withdrew these
balances. The withdrawals were funded through sales from the securities
portfolio. Balances during the first and second quarters of 1993 were
higher prior to these transactions. Management attempted to be
competitive with deposit products and rates which resulted in the
$2,093,000 increase in the average balance of other time deposits during
1994.
Noninterest Income
- ------------------
Noninterest income increased $40,904, or 4.5% from 1994 to 1995.
Gains on sales of other real estate and other loan assets, net of losses,
increased $21,069, due to the sale of one property during the first quarter
of 1995. Other noninterest revenue from BFS increased $21,838, or 52.2%
from 1994 to 1995. These improvements were partially offset by the
reduction in the gain on disposition of the bank branch. The gain resulted
from the August 1994 disposition of the Bank's Decatur branch. There was
no such gain during 1995.
In 1994, noninterest income decreased by $242,613, or 21.7%, from
1993. Net gains on the sales of securities decreased by $260,531, or
97.5%, in 1994. The Company recorded a gain on the disposition of the
Decatur bank branch totalling $17,476. Income from service charges, net of
refunds, and other noninterest revenue were comparable to 1993.
Noninterest Expense
- -------------------
Noninterest expense increased $66,622, or 1.9% from 1994 to 1995.
Salaries and employee benefits increased by $102,946, or 6.4%, in 1995,
primarily as a result of additional employees. Occupancy expenses
decreased $44,463, primarily the result of free rents provided in
connection with the supermarket branches. As a result of the
capitalization of the deposit insurance fund, Federal Deposit Insurance
Corporation assessments were both refunded and reduced during 1995. This
resulted in a $63,918, or 42.9% decrease in FDIC insurance premiums
expense. Other noninterest expenses increased $68,057, or 5.0% from 1994
to 1995, primarily due to the increase in loan and deposit accounts and
activity. Loan processing expenses increased approximately $35,000 due to
<PAGE>
<PAGE>
the increase in loans and costs incurred in a home equity line promotion.
Supplies and correspondence processing fees increased approximately $44,000
due to the increased volume of account transactions. These increases were
partially offset by a decrease in telephone expenses.
In 1994, noninterest expense increased by $284,814, or 8.8%, compared
to 1993. Salaries and employee benefits increased $87,816, or 5.8%, in
1994. Occupancy expenses increased $16,462, or 3.9%, compared to 1993.
Other noninterest expense increased $245,483, or 22.2%, due primarily to
higher data processing costs and related equipment depreciation, due to a
change in the Bank's data processing system implemented in July 1993.
These increases were offset by the absence of data processing system
conversion expenses and a lower Federal Deposit Insurance Corporation
assessment.
In December 1990, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("Statement" or "SFAS")
No. 106 "Employers' Accounting for Postretirement Benefits Other Than
Pensions," which is effective for fiscal years beginning after December 15,
1992. This Statement focuses principally on postretirement health care
benefits. The Company does not offer postretirement benefits to either
current or former employees. Therefore, this Statement did not have an
impact on the Company's financial position or results of operations.
Provision for Income Taxes
- --------------------------
The provision (benefit) for income taxes was $382,600 in 1995,
compared to ($27,800) in 1994 and ($175,000) in 1993. The Company adopted
SFAS No. 109 "Accounting for Income Taxes" in 1993. Deferred tax
liabilities recognized for taxable temporary differences totalled $160,000
at December 31, 1995. Deferred tax assets recognized for deductible
temporary differences and loss carryforwards totalled $8,000 and $207,000
at December 31, 1995 and 1994, respectively. No valuation allowance was
considered necessary. These deferred tax assets were recorded through
benefits for income taxes of $32,000 and $175,000 during 1994 and 1993,
respectively.
The Bank had available at December 31, 1994, unused operating loss
carryforwards of approximately $890,000, which were applied against federal
taxable income during 1995.
ASSET QUALITY
Securities Available for Sale
- -----------------------------
The Bank maintains a portfolio of securities comprised primarily of
U.S. government agency issues. The portfolio is designed to enhance
liquidity while providing acceptable rates of return. To this end, the
Bank invests in high grade investment quality securities with acceptable
yields and varied maturities.
Effective January 1, 1994, the Company adopted SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities." SFAS
No. 115 requires, among other things, that investments in all debt
securities and equity securities with readily determinable market values be
classified as held-to-maturity, available-for-sale or trading securities.
<PAGE>
<PAGE>
Based on those categories, certain unrealized gains and losses are included
in earnings or reported as a component of stockholders' equity.
At January 1, 1994, all securities were classified as available-for-
sale. The effect of adopting SFAS No. 115 resulted in an unrealized gain
on securities available-for-sale of $107,340. An unrealized loss on
securities available-for-sale of $677,348 was recorded at December 31,
1994. The change in the net unrealized gain (loss) on securities
available-for-sale during 1994 was a loss of $784,688. At December 31,
1995, an unrealized gain on securities available-for-sale of $62,248 was
recorded. The change in the net unrealized gain (loss) on securities
available-for-sale during 1995 was a gain of $739,596.
Securities averaged $14,411,000 during 1995, an increase of
$4,086,000, or 39.6%, from 1994 to 1995. This increase resulted from the
improved liquidity of the Bank achieved from the increase in average
deposits discussed in "Net Interest Income and Margins" above. The
increase in the balance of the securities portfolio, coupled with the
decrease in interest rates during the last half of 1995, increased the
market value of the portfolio resulting in a net unrealized gain on
available-for-sale securities at December 31, 1995.
Securities averaged $10,325,000 during 1994, a decrease of $4,264,000,
or 29.3%, from 1993. The decrease resulted primarily from the sale of
securities to fund loan demand and the need to sell securities during the
second quarter of 1993 to fund the decrease in other time deposits
discussed in "Net Interest Income and Margins" above. The effect of
adopting SFAS No. 115 and the resulting unrealized loss on securities which
was recorded during 1994 also resulted in a decrease in the average balance
of securities during 1994. As interest rates increased, the market value
of the available-for-sale portfolio declined.
Loans
- ------
The Bank offers commercial lending services, including lines of
credit, revolving credit, term loans, real estate loans and other forms of
secured financing. The Bank also offers installment and other personal
loans, home improvement loans, automobile loans, boat loans, and other
consumer financing and mortgage loans. Average loans increased by
$10,736,000, or 25.3%, from 1994 to 1995. Loan demand was strong and loan
growth was steady throughout 1995.
The Bank's loan policy addresses the type of loans the Bank offers and
the trade area of the prospective customers. Under that policy, the loans
are graded at the time they are made by the loan officer, then the loans
are reviewed by other officers to determine if the grade is proper. This
determines the allocation of reserve, if any, in comparison to risk. The
Bank allocates a portion of the allowance for loan losses on a monthly
basis, as determined by the grading program covering the risks there may
be for the Bank. See "Provision for Loan Losses/Allowance for Loan Losses"
below.
The Bank's strategy in the lending program is to make use of its
expanded branch network to develop more consumer loans. The loan mix
should reflect an increase in consumer loans as more emphasis is placed by
the Bank on this type of banking. The benefits of a split
consumer/commercial loan mix include higher yielding loans and a more
diversified credit risk.
<PAGE>
<PAGE>
The risks involved in the real estate portion of the portfolio are
mainly in the speculative construction and development area.
Residential real estate should be, for the most part, of an amortizing nature
with proper loan-to-values and less subject to market fluctuations than
commercial real estate. The Bank adopted a real estate policy in March of
1993 which tightened acceptable loan-to-value ratios for different types of
real estate credit, outlined underwriting criteria for construction and
permanent real estate loans and emphasized the support of income/cash flow,
and more clearly defined documentation requirements.
Provision for Loan Losses/Allowance for Loan Losses
- ---------------------------------------------------
Management establishes an allowance for loan losses based upon a
monthly review of the loan portfolio. The provision for loan losses
represents Management's determination as to the amount necessary to be
provided to the allowance for loan losses to bring it to a level which is
considered adequate in relation to the risk of future losses inherent in
the loan portfolio. While it is the Company's policy to charge off in the
current period those loans in which a loss is considered probable, there
also exists the risk of future losses which cannot be quantified precisely
or attributed to particular loans or classes of loans. Because this risk
is continually changing in response to factors beyond the control of the
Company, such as the state of the economy, Management's judgment as to the
adequacy of the provision is necessarily approximate and imprecise.
In assessing adequacy, Management relies predominantly on its ongoing
review of the loan portfolio, which is undertaken both to ascertain whether
there are probable losses which must be charged off and to assess the risk
characteristics of the portfolio in the aggregate. This review takes into
consideration the judgments of the responsible lending officers and senior
management, and also those of bank regulatory agencies that review the loan
portfolio as part of the regular bank examination process. See
"Supervision and Regulation" above. In evaluating the allowance for loan
losses, Management also considers the Company's loan loss experience, the
amount of past due and non-performing loans, current economic conditions,
and other appropriate information.
In 1995, the Company provided $377,000 to the allowance for loan
losses, compared to $165,000 and $547,141 in 1994 and 1993, respectively.
The allowance for loan losses at December 31, 1995 was $594,095, or
.98% of gross loans, compared to $505,125, or 1.07% of gross loans at
December 31, 1994. Management believes that the allowance for loan losses
at December 31, 1995, is adequate to absorb known risks in the portfolio
based upon the Company's expectations. No assurance can be given, however,
that increased loan value, adverse economic conditions or other
circumstances will not result in increased losses in the Company's loan
portfolio.
Effective January 1, 1995, the Company adopted SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan." SFAS No. 114 requires
that certain impaired loans be measured at the present value of expected
future cash flows discounted at the loan's original effective interest rate
or at the loan's observable market price, or the fair value of the
collateral if the loan is collateral dependent. The effect of discounting
is considered as a reserve which is a part of the allowance for loan
losses. Prior to the adoption of SFAS No. 114, impaired loans were
<PAGE>
<PAGE>
measured based on expected, undiscounted future cash flows, or the fair
value of the collateral if the loan was collateral dependent.
The implementation of SFAS No. 114 did not have an impact on the
Company's financial position or results of operations. At December 31,
1995, the total recorded investment in impaired loans was approximately
$750,000, of which approximately $565,000 was on a nonaccrual basis. At
December 31, 1995, there was a related allowance for loan losses for the
impaired loans of approximately $159,000 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 1995 was approximately $595,000. The Company
recognizes interest income on impaired loans on an accrual basis, except
for nonaccrual loans which are recognized on a cash basis. For 1995, the
Company recognized interest income on impaired loans totalling
approximately $36,000 and received interest payments totalling
approximately $52,400 on impaired loans.
Non-Performing Assets
- ---------------------
Non-performing assets include non-accrual loans, accruing loans
contractually past due 90 days or more, and other real estate. In addition
to amounts disclosed as non-performing assets at December 31, 1995,
performing loans having an aggregate balance at that date of approximately
$989,000 were classified as substandard by regulatory examiners as of the
most recent examination.
It is the policy of the Company to discontinue the accrual of interest
on a loan when Management believes, after considering economic and business
conditions and collection efforts, that the borrower's financial condition
is such that the collection of interest is doubtful. All accrued interest
on the nonaccrual loans has been reversed. The amount of interest income
that would have been recorded during 1995 and 1994 if nonaccrual loans had
been current in accordance with their original terms was approximately
$45,700 and $41,300, respectively. No interest income is recorded on
nonaccrual loans.
The Company's policy regarding other real estate and other loan assets
provides that losses be assessed and charged to allowance for loan losses
at the time the Bank takes possession of the asset and places it in other
real estate and other loan assets. Other real estate is recorded at the
lower of the loan balance or estimated fair value, less any disposal costs.
Any gain or loss upon disposal is recorded as gain or loss on the sale of
other real estate and other loan assets. Other real estate and other loan
assets increased by $112,195, or 137.1%, in 1995 to $194,000.
DEPOSITS
The principal sources of funds for the Bank's loans and securities
portfolio are demand, time, savings and other deposits. The Bank offers a
variety of deposit products, including checking and NOW accounts, savings
and time accounts, certificates of deposit and money market accounts.
Although in some instances time deposits greater than $100,000 may be more
sensitive to changes in interest rates, substantially all of the Bank's
deposits are derived from within its primary service area. The Bank does
not have any brokered deposits.
<PAGE>
<PAGE>
Deposits averaged $72,749,000 during 1995, an increase of $18,263,000
or 33.5%, from 1994. This increase is primarily the result of increases in
other time and noninterest bearing deposits. Other time deposits increased
as a result of Management's efforts to provide new and innovative deposit
products and competitive interest rates to customers. The overall increase
in deposits also resulted from increased business development efforts to
initiate and increase business with new and existing customers.
LIQUIDITY
Liquidity is an essential factor in the financial condition of the
Company and affects the Company's ability to meet the borrowing needs and
deposit withdrawal requirements of its customers. Management seeks to
maintain adequate liquidity to meet conditions that might reasonably be
expected to occur.
Liquidity also requires asset/liability management in order to
maximize net yields without compromising the Bank's ability to meet
day-to-day cash flow requirements. The Company's asset/liability
management program recognizes the need to avoid wide swings in net interest
margins that may result from fluctuating interest rates and mismatches in
the asset and liability maturities.
Interest Rate Sensitivity
- -------------------------
A factor in determining the effect that fluctuating interest rates
will have on net interest income is the relationship of rate sensitive
earning assets to rate sensitive interest-bearing liabilities. Rate
sensitive earning assets and interest-bearing liabilities are those which
can be repriced to current market rates within a relatively short time
period. Although there is no way of knowing with any degree of certainty
what interest rates will do, the Bank seeks to position itself to adjust
quickly to whatever the economy might bring.
The table below shows the Company's rate sensitive position at
December 31, 1995, as measured by gap analysis (the difference between the
earning asset and interest-bearing liability amounts eligible to be
repriced to current market rates in subsequent periods). The December 31,
1995 table shows that the Company has a negative gap in the first three
months, which indicates that the liabilities will reprice faster than
assets. The interest rate sensitivity analysis includes substantially all
interest-bearing demand deposits and savings deposits repricing in the
first three months. While this is technically correct, in reality, the
repricing and maturity of these balances is longer than presented on the
table. As rates change, Management is evaluating the gap. The Company's
targeted gap range is for rate sensitive assets to equal rate sensitive
liabilities. The Company is moving to make more fixed rate loans as
interest rates have been decreasing. The Company is also repricing its
liabilities as it can, encouraging customers to leave liabilities with the
Bank for longer periods of time. There is no hedging.
<PAGE>
<PAGE>
Interest Rate Sensitivity Analysis
December 31, 1995
<TABLE>
<CAPTION>
Interest Sensitive Within
------------------------------------------------------------------------
0-3 Month 4-12 Months 1-5 Years >5 Years Total
--------- ----------- --------- -------- -----
($ in thousands)
<S> <C> <C> <C> <C> <C>
Assets
Earning Assets:
Federal funds sold $ 3,247 $ - $ - $ - $ 3,247
Securities 4,565 9,396 7,272 - 21,233
Loans 39,428 6,379 12,736 852 59,395
Less allowance for loan losses - - - (594) (594)
------- ------- ------- -------- -------
Total earning assets $47,240 $15,775 $20,008 $ 258 $83,281
Cash and other assets - - - 14,665 14,665
------- ------- ------- ------- -------
$47,240 $15,775 $20,008 $14,923 $97,946
======= ======= ======= ======= =======
Liabilities and Shareholders' Equity
Interest bearing demand deposits $30,711 $ - $ - $ - $30,711
Savings deposits 2,593 - - - 2,593
Certificates Under $100,000 11,846 9,331 7,864 21 29,062
Certificates Over $100,000 6,087 3,684 2,218 - 11,989
Debt 18 839 - - 857
------- ------- ------- ------- -------
Total interest bearing liabilities $51,255 $13,854 $10,082 $ 21 $75,212
Noninterest bearing demand deposits - - - 14,848 14,848
Other liabilities - - - 767 767
Shareholders' equity - - - 7,119 7,119
------- ------- -------- ------- -------
$51,255 $13,854 $10,082 $22,755 $97,946
======= ======= ======= ======= =======
Rate sensitivity gap ($4,015) $ 1,921 $ 9,926 ($7,832) $ -
======= ======= ======= ======= =======
Cumulative sensitive gap ($4,015) ($2,094) $ 7,832 $ -
======= ======= ======= =======
Percent of total earnings assets (4.10%) (2.14%) 8.00% -
======= ======= ======= =======
Percent of rate sensitive assets to rate
sensitive liabilities 92.17% 113.87% 198.45%
======= ======= =======
</TABLE>
<PAGE>
<PAGE>
Asset/Liability Management
- --------------------------
The Investment Committee of the Bank's Board of Directors meets
monthly to review the interest rate sensitivity, liquidity (both with and
without considering loan demand), dependency ratio, volatile funds, core
deposits, temporary investments, capital adequacy, nonperforming assets,
return on equity, return on assets, spreads and income and expense items.
The Asset/Liability Management Committee evaluates all data, makes recommend-
ations and initiates corrective action as required. If the Company determines
that its gap position is out of range, the Company takes steps to make a
change in order to bring the gap back to a proper level. This is controlled
by pricing. The Company has a strong core deposit base and does not depend on
large volatile deposits. The Company's goal is to position its rate
sensitive assets and liabilities as close to equal as possible. However,
Management believes that the Company has a range that would be acceptable
in an increasing or decreasing rate environment.
Cash Flows
- ----------
The Company's cash flow requirements depend on customer deposits and
withdrawals of funds, borrower's requests for funds to satisfy their credit
needs, Company interest payment receipts and obligations, and the payment
of normal operating expenses. Management believes the Company's sources of
funds will be adequate to meet its liquidity requirements for 1996.
The Company's securities portfolio is one of the significant sources
of its liquidity. Federal funds sold provide immediately available funds
to meet cash needs. Maturities of and interest earned on securities
provide a constant source of funds. In addition, these securities can be
pledged against loans made to the Company and high quality securities can
be readily sold to provide additional liquidity. Maturities of and
installment payments on customer loans made by the Company provide a steady
flow of funds. The Company's deposit base also enhances liquidity.
Finally, federal funds can be purchased and other borrowings made to meet
cash needs of the Company. On December 31, 1994, the Company's need for
funds for loans and securities exceeded its deposits, thereby placing the
Company in the position of purchasing federal funds amounting to
$2,980,000. On December 31, 1995, the Company's liquidity position
resulted in excess funds allowing the Company to be in the position of
selling federal funds totalling $3,247,000.
Cash flows of the Company are provided by operating activities such as
interest on loans, interest and gains on securities, interest on federal
funds sold and service charges and fees. Cash is used for operating
activities such as payments of interest and noninterest expenses. There
was an increase in cash provided by operating activities during 1995. The
decrease in other assets from 1994 to 1995 is primarily the result of
payment for a U.S. Treasury Note which matured on December 31, 1994, for
which the Company received payment in January, 1995. Other significant
changes in cash flows from operating activities during 1995, except the
increase in net income, resulted from noncash activities.
Cash used in investing activities during 1995 increased primarily as
the result of the purchase of securities and loans made to customers.
Additionally, cash flows were used to fund purchases of Bank premises and
equipment including the construction of the Big Cove branch and completion
of the second floor at the Main Office. These uses of funds were offset by
<PAGE>
<PAGE>
proceeds from sales of securities and, as compared to 1994, increased
proceeds from maturities of securities, sales of loans, and sales of other
real estate and other loan assets. As previously discussed, the
disposition of the Decatur branch occurred in 1994. There was no
corresponding disposition of branch and related fixed assets during 1995.
The primary financing activity of the Company was an increase in deposits
at the Bank. Additional funds were provided from the issuance of common
stock during the fourth quarter of 1995. Funds were used to decrease
federal funds purchased and make principal payments on debt.
CAPITAL ADEQUACY
The Federal Reserve Board requires bank holding companies to maintain
a ratio of primary capital to total assets of at least 6%. On December 31,
1995, the primary capital ratio of the Company, as defined by the Federal
Reserve Board, was 7.23%, compared to 8.67% at December 31, 1994, and 8.91%
at December 31, 1993.
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 December 31, 1995:
Minimum BankAlabama
Bank Regulatory Regulatory at
Capital Requirements Requirement Dec. 31, 1995
-------------------- ----------- -------------
Tier 1 capital to risk-
adjusted assets 4.00% 9.15%
Total risk-based capital
to risk-adjusted assets 8.00% 9.96%
Tier 1 capital as a % of
average total assets 4.00% 7.30%
Currently, the Company's capital exceeds the minimum risk based guidelines
adopted by the Federal Reserve Board and the Company was placed in the
well-capitalized category by the FDIC.
The Company's average stockholders' equity as a percentage of average
total assets for the year ended December 31, 1995, was 7.23%, compared to
8.13% for the year ended December 31, 1994.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ---------------------------------------------------
The financial statements appearing on pages 5 through 22 of the
BancAlabama, Inc., 1995 Annual Report to Shareholders are incorporated
herein by reference in this Form 10-K Annual Report.
<PAGE>
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
- --------------------------------------------------------------------
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -----------------------------------------------------------
Directors
- ---------
The names and ages of the Directors of the Company, their principal
occupations, and the years in which their terms on the Board of Directors
will expire are as follows:
<TABLE>
<CAPTION>
Term Principal Positions Held
Name Age Expires During Past Five Years
---- --- ------- ------------------------
<S> <C> <C> <C>
James E. Campbell 60 1996 Retired. Formerly Radiologist at
Radiology Associates, P.C. Vice
Chairman of BankAlabama-Huntsville.
William R. Collins 65 1996 Chairman of the Board and Chief
Executive Officer of BancAlabama,
Inc. Chairman and Chief Executive
Officer of BankAlabama-Huntsville.
Paul W. Thompson 76 1996 Retired. Formerly President of
Wholesale Electric Supply Company.
Philip W. Bentley, Jr. 52 1997 President of Bentley Pontiac,
Cadillac, Inc., Bentley Imports,
Inc., Bentley Mitsubishi, and
Bentley Automotive, Inc.
Billy P. Brooks 62 1997 Owner and President of Brooks &
Collier, Inc. Owner of Brooks
Nursery.
Barney C. Nickelson 46 1997 Manager of Burnett-Nickelson Invest-
ments. Officer and director of DNL
Development, Inc. Vice Chairman of
the Board of BancAlabama, Inc.
Oliver D. Street, III 70 1997 Major General (U.S. Army Retired).
Treasurer, BancAlabama, Inc.
<PAGE>
<PAGE>
Steven R. Townson (1) 38 1998 President and Chief Operating
Officer of BancAlabama, Inc., and
BankAlabama-Huntsville. From April
1993 to July 1995, Vice President,
Financial Institutions for First
Tennessee Bank National Association,
in Chattanooga, Tennessee. From
June 1989 to March 1993, Assistant
Vice President, Corporate Lending
Division of AmSouth Bank, N.A., in
Tuscaloosa, Alabama.
</TABLE>
__________________
(1) Mr. Townson became the President and Chief Operating Officer of
BankAlabama-Huntsville on October 9, 1995, and the President, Chief
Operating Officer and a director of BancAlabama, Inc., on October 9,
1995.
Directors of the Company are elected for three-year terms on a staggered
basis.
Executive Officers
- ------------------
The Company's executive officers are William R. Collins, who serves as
Chief Executive Officer and Chairman of the Board of the Company; Barney C.
Nickelson, who serves as Vice Chairman of the Board of the Company; Steven
R. Townson, who serves as President and Chief Operating Officer of the
Company; Oliver D. Street, III, who serves as Treasurer of the Company;
Michael J. Williams, who serves as Chief Financial Officer of the Company;
and Jean D. Snead, who serves as Secretary of the Company. Additional
information concerning Messrs. Collins, Nickelson, Townson, Bentley and
Street appears under the caption DIRECTORS above.
The executive officers of the Bank and their positions with the Bank
are as follows: William R. Collins, Chief Executive Officer; Steven R.
Townson, President and Chief Operating Officer; Michael J. Williams, Chief
Financial Officer and Cashier; Robert F. Harwell, Jr., Executive Vice President
and Chief Lending Officer; Robert E. DeNeefe, Senior Vice President; and Jean
D. Snead, Vice President and Secretary. Information concerning Mr. Collins
and Mr. Townson is presented under the caption DIRECTORS above. The following
table presents information as to the age and business experience of Messrs.
DeNeefe, Harwell, and Williams and Mrs. Snead:
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Officer
Name Age Since Principal Positions Held During Past Five Years
- ---- --- ------- -----------------------------------------------
<S> <C> <C> <C>
Robert E. DeNeefe 55 1995 Senior Vice President of BankAlabama-Huntsville
since February, 1996. Owner and Chief Execu-
tive Officer of Benchmark Mortgage Corporation
from 1991 to 1995.
Robert F. Harwell, Jr. 40 1992 Executive Vice President and Chief Lending
Officer since October, 1995. President of Bank-
Alabama-Huntsville August, 1992 to October 1995.
Executive Vice President and Senior Lending
Officer of Colonial Bank from 1988 to 1992.
Jean D. Snead 64 1989 Vice President and Secretary of BankAlabama-
Huntsville and BancAlabama, Inc.
Michael J. Williams 35 1993 Chief Financial Officer and Cashier of
BankAlabama-Huntsville since December, 1993.
Chief Financial Officer of BancAlabama, Inc.
since March, 1994. Chief Financial Officer,
Secretary and Treasurer of BMR Financial
Group, Inc., Atlanta, Georgia, from August
1992 to December 15, 1993; Controller from
October 1991 to July 1992. From 1983 to
1991, Arthur Andersen & Co., Atlanta, most
recently as audit manager.
</TABLE>
All executive officers of the Bank are elected by the Bank's Board of
Directors and serve until removed by the Bank's Board of Directors.
<PAGE>
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
- --------------------------------
The Securities and Exchange Commission has adopted rules requiring
certain disclosures concerning the compensation and other benefits paid or
awarded by a company to its chief executive officer and to its four (4)
most highly compensated executive officers receiving compensation exceeding
$100,000. In 1995, the Company did not have any executive officer, other
than its Chief Executive Officer, who received compensation exceeding
$100,000.
The following table summarizes the compensation of William R. Collins,
the Company's Chief Executive Officer, for the periods indicated:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
--------------------------
Annual Compensation
-------------------
Name and Other Annual All Other
Principal Position Year Salary Bonus Compensation Compensation
- ------------------ ---- ------ ----- ------------ ------------
(1) (2) (3)
<S> <C> <C> <C> <C> <C>
William R. Collins, 1995 $140,000 - - $66,847
Chairman and Chief 1994 $140,000 - - 7,459
Executive Officer of 1993 $140,000 - - 7,459
BancAlabama, Inc. and
BankAlabama-Huntsville
</TABLE>
___________________
(1) Includes amounts deferred by Mr. Collins under the Company's 401(k)
Plan and Trust.
(2) "Other Annual Compensation" does not include the value of certain
perquisites or other personal benefits, securities and property, if
any, furnished by the Company to Mr. Collins (or for which it
reimburses Mr. Collins), including the use of corporate vehicles,
unless the value of such benefits in total exceeds the lesser of
$50,000 or 10% of the total annual salary and bonus reported in the
above table for Mr. Collins.
(3) "All Other Compensation" is composed of that portion of the premiums
paid by the Company in the years ended December 31, 1995, 1994, and
1993, related to whole life insurance on Mr. Collins, the proceeds of
which will be paid to his spouse in the event of his death. "All
Other Compensation" for the year ended December 31, 1995, also
includes the transfer of the life insurance policies to Mr. Collins,
which had a cash surrender value of $65,348 on the date of transfer,
in exchange for cancellation by Mr. Collins of the Company's future
liability to provide deferred compensation and death benefits.
Stock Option Grants, Exercises and Year End Values
- --------------------------------------------------
The Company from time to time awards stock options to executive
officers and other key employees pursuant to two stock option plans
<PAGE>
<PAGE>
approved by the shareholders of the Company. No options were granted to or
exercised by Mr. Collins during the year ended December 31, 1995. The
following table sets forth the values as of December 31, 1995, of the
unexercised stock options held by Mr. Collins under the Company's two stock
option plans:
<TABLE>
<CAPTION>
STOCK OPTION VALUES AT DECEMBER 31, 1995
----------------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised In-the-
Options at Year End Money Options at Year End
----------------------------- -----------------------------
(1)
<S> <C> <C> <C> <C>
Name Exercisable Unexcercisable Exercisable Unexercisable
- ---- ----------- -------------- ----------- -------------
William R. Collins 60,000 -0- 60,000 -0-
</TABLE>
____________________
(1) Values are calculated by subtracting the $10.00 per share exercise
price of the options from the most recent sale price for the Common
Stock on January 15, 1996, of $11.00 per share.
Compensation of Directors
- -------------------------
The Bylaws of the Company permit the Board of Directors to fix the
compensation of directors. The directors of the Company received no
compensation in 1995 for their services as directors or for attendance at
any meeting of the Board of Directors or any committee meeting.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------------------------------------------------------------------------
As of January 15, 1996, there were outstanding 703,122 shares of the
Company's common stock, $1.00 par value (the "Common Stock"). Holders of
Common Stock are entitled to one vote per share on all matters to be voted
upon by shareholders.
The following table sets forth information as of January 15, 1996, as
to (a) the only persons who were known by the Company to own beneficially
more than 5% of the outstanding Common Stock of the Company, (b) the shares
of such Common Stock beneficially owned by the directors and nominees of
the Company, (c) the shares of such Common Stock beneficially owned by
William R. Collins, the Company's Chief Executive Officer, and (d) the
shares of such Common Stock beneficially owned by all executive officers,
directors and nominees of the Company as a group. Unless otherwise
indicated, each shareholder named has sole voting and dispositive power
with respect to his shares.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Name or Number Number of Shares Percent of Total
in Group (1) Beneficially Owned Outstanding (2)
-------------- ------------------ ----------------
Directors and Nominees
- ----------------------
<S> <C> <C>
William R. Collins (3) 112,225 14.71%
Steven R. Townson (4) 40,000 5.49%
James E. Campbell (5) 32,700 4.65%
Philip W. Bentley, Jr. (6) 22,500 3.20%
Billy P. Brooks (7) 20,615 2.93%
Paul W. Thompson 20,000 2.84%
Oliver D. Street, III 15,400 2.19%
Barney C. Nickelson (8) 11,200 1.59%
More than 5% Shareholders who are not
Officers or Directors or Nominees
- -------------------------------------
Estate of John J. Weed, Deceased (9) 46,050 6.55%
All Directors and Executive Officers as
a Group (10 PERSONS) 297,640(10) 36.83%
- ---------------------------------------
</TABLE>
(1) Unless otherwise indicated, the mailing address is in care of the
Company, Post Office Box 293, Huntsville, Alabama 35804.
(2) Shares issuable under immediately exercisable options are considered
outstanding for the purposes of calculating the percentage of Common
Stock owned by executive officers, directors and 5% shareholders who
have immediately exercisable options, but such shares are not
considered outstanding with respect to executive officers, directors
and 5% shareholders who do not have any such options.
(3) Includes 60,000 shares which are subject to immediately exercisable
stock options held by Mr. Collins.
(4) Includes 25,000 shares which are subject to immediately exercisable
stock options held by Mr. Townson.
(5) Includes 10,000 shares of Common Stock in the name of Radiology of
Huntsville, P.C., Profit Sharing Plan for the benefit of J. E.
Campbell, participant; and 300 shares in his granddaughters' names.
(6) Includes 12,500 shares owned by Bentley Pontiac, Inc.
(7) Includes 2,500 shares held in the name of his wife, Doris B. Brooks;
3,852 shares held in the name of Prudential Securities, Inc.,
Custodian for Doris Brooks; and 4,063 shares held in the name of
Prudential Securities, Inc., Custodian for Billy P. Brooks.
<PAGE>
<PAGE>
(8) Includes 1,000 shares held in the name of Christy B. Nickelson, as
Custodian for minor children and a minor nephew, and 10,000 shares
owned jointly with his wife, Christy B. Nickelson.
(9) Includes 16,050 shares owned by Mr. Weed's surviving spouse.
(10) Includes 105,000 shares which are subject to immediately exercisable
stock options.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
Directors and officers of the Company and the Bank and their relatives
and business associates may be customers of, and have transactions with,
the Bank in the ordinary course of business in the past and in the future.
All outstanding loans and commitments to be included in such transactions
are made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions
with other persons, and do not involve more than normal risk of
collectibility or present other unfavorable features.
<PAGE>
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
- -------------------------------------------------------------------------
(a) (1) The financial statements and other financial information of
BancAlabama, Inc., and subsidiary set forth below and the
Independent Auditor's Report thereon are incorporated by
reference from the BancAlabama, Inc., 1995 Annual Report to
Shareholders:
Page in 1995
Annual Report
To Shareholders
---------------
Independent Auditor's Report 5
Consolidated Balance Sheets at December 31,
1995 and 1994 6
Consolidated Statements of Operations
for the years ended December 31, 1995,
1994, and 1993 7
Consolidated Statements of Changes in Stock-
holders' Equity for the years ended December
31, 1995, 1994 and 1993 8
Statements of Cash Flows for the years ended
December 31, 1995, 1994, and 1993 9
Notes to Consolidated Financial Statements 10-22
(2) All other financial statement schedules are omitted because the
information is not applicable or is not material or because the
required information is included in the financial statements or
notes thereto.
(3) Exhibits:
<TABLE>
<CAPTION>
Form 10-K
Exhibit Page or Method
Number Description of Filing
---------- -------------- ---------------------
<S> <C> <C>
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
4.1 Specimen Stock Certificate A
10.1 Registrant's 1989 Incentive Stock Option Plan B*
<PAGE>
<PAGE>
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 Plan F*
10.10 Cancellation of Incentive Stock Options agreement
between Registrant and William R. Collins cancelling
the Incentive Stock Option Agreement dated January 22,
1990 F*
10.11 Cancellation of Incentive Stock Options agreement
between Registrant and Jean D. Snead cancelling the
Incentive Stock Option Agreement dated January 22, 1990 F*
10.12 Cancellation of Incentive Stock Options 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*
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 Agree-
ment 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*
<PAGE>
<PAGE>
10.17 Nonstatutory Stock Option Agreement dated July 17,1995,
granting Steven R. Townson an option to purchase an
aggregate of 25,000 shares of the Registrant's Common
Stock. G*
10.18 Nonstatutory Stock Option Agreement dated December 1,
1995, granting Robert C. DeNeefe an option to purchase
an aggregate of 10,000 shares of the Registrant's
Common Stock. --*
10.19 Executive Benefit Agreement between BankAlabama-
Huntsville and Williams R. Collins dated March 22,
1996, effective January 3, 1995. --*
13.1 BancAlabama, Inc., 1995 Annual Report to Shareholders --
21.1 Subsidiary of Registrant --
23.1 Consent of Browder & Associates, P.C. --
27.1 Financial Data Schedule --
99.1 Proxy Statement for 1995 Annual Meeting of Shareholders
to be held April 9, 1996, sent to shareholders on March
15, 1996 --
99.2 Form of Proxy --
</TABLE>
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.
G Incorporated by reference to exhibits filed with the Registrant's
Quarterly Report on From 10-Q for the quarter ended September 30,
1995, under the Securities Exchange Act of 1934.
<PAGE>
<PAGE>
* Denotes management contract or compensatory plan or arrangement
required to be filed as an exhibit to this report.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the fourth quarter of the
year ended December 31, 1995.
(c) Exhibits. The response to this portion of Item 14 is submitted as a
separate section of this report.
(d) Financial Statement Schedules. The response to this portion of Item
14 is submitted as a separate section of this report.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: March 29, 1996 By: William R. Collins
-----------------------------------------
William R. Collins
Chief Executive Officer and
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signatures Title Date
---------- ----- ----
William R. Collins Chief Executive Officer March 29, 1996
- ----------------------- Chairman of the Board
William R. Collins (Principal Executive Officer)
Barney C. Nickelson Vice Chairman of the Board March 29, 1996
- -----------------------
Barney C. Nickelson
Steven R. Townson President, Chief Operating March 29, 1996
- ----------------------- Officer and Director
Steven R. Townson
Oliver D. Street, III Treasurer and Director March 29, 1996
- -----------------------
Oliver D. Street, III
Philip W. Bentley, Jr. Director March 29, 1996
- -----------------------
Philip W. Bentley, Jr.
James E. Campbell Director March 29, 1996
- -----------------------
James E. Campbell
Paul W. Thompson Director March 29, 1996
- -----------------------
Paul W. Thompson
Billy P. Brooks Director March 29, 1996
- -----------------------
Billy P. Brooks
Michael J. Williams Chief Financial Officer March 29, 1996
- ----------------------- (Principal Financial and
Michael J. Williams Accounting Officer)
<PAGE>
<PAGE>
STATE OF ALABAMA
COUNTY OF MADISON
NONSTATUTORY STOCK OPTION AGREEMENT
THIS NONSTATUTORY STOCK OPTION AGREEMENT (hereinafter "Option" or
"Agreement"), is made as of this 1st day of December, 1995, between
BancAlabama, Inc., a Delaware one bank holding corporation having its
principal office in Huntsville, Alabama (the "Corporation"), and Robert E.
DeNeefe (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 Robert E. DeNeefe 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:
<PAGE>
<PAGE>
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 ten thousand (10,000) 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 ELEVEN DOLLARS ($11.00)
per share.
SECTION THREE
TIME OF EXERCISE OF INCENTIVE 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
<PAGE>
<PAGE>
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;
<PAGE>
<PAGE>
(ii) any merger, consolidation, or other combination involving
the Corporation whether or not the Corporation is the surviving
corporation;
(iii) any agreement or agreements with any individual entities
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
<PAGE>
<PAGE>
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.
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.
<PAGE>
<PAGE>
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
<PAGE>
<PAGE>
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.
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 1st day of December, 1995.
BANCALABAMA, INC.
a Delaware corporation
By Williams R. Collins
-------------------------------------
Its Chief Executive Officer
ATTEST: Jean D. Snead
----------------------
Its Secretary
Robert E. DeNeefe
------------------------------------
Robert E. DeNeefe
"PARTICIPANT"
<PAGE>
<PAGE>
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 1st day of
December, 1995.
Mary M. Wolfe
____________________________________
Notary Public
My Commission Expires: 05-06-96
STATE OF ALABAMA
COUNTY OF MADISON
I, the undersigned, a Notary Public, in and for said County, in said
State, hereby certify that Robert E. DeNeefe, 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 1st day of December,
1995.
Mary M. Wolfe
____________________________________
Notary Public
My Commission Expires: 05-06-96
<PAGE>
<PAGE>
EXECUTIVE BENEFIT AGREEMENT
=======================================
BY AND BETWEEN
BANKALABAMA-HUNTSVILLE,
AN ALABAMA BANKING ORGANIZATION
AND
WILLIAM R. COLLINS
=======================================
DATED: MARCH 22, 1996
<PAGE>
<PAGE>
I N D E X
TO
EXECUTIVE BENEFIT AGREEMENT
SECTION DESCRIPTION PAGE
1. Maintenance of Insurance Policies .........................1
2. Executive Benefits ........................................2
3. Bank Benefits .............................................3
4. Incidents of Ownership ....................................3
5. Dividends .................................................3
6. Premium Payments ..........................................3
7. Beneficiary Designation ...................................4
8. Termination ...............................................4
9. Miscellaneous .............................................4
<PAGE>
<PAGE>
EXECUTIVE BENEFIT AGREEMENT
THIS EXECUTIVE BENEFIT AGREEMENT (the "Agreement") is made and entered
into effective January 3, 1995, as of the 22nd day of March, 1996, by and
between BANKALABAMA-HUNTSVILLE, an Alabama banking organization (the
"Bank"), and WILLIAM R. COLLINS (the "Executive").
R E C I T A L S
The Executive is a key employee of the Bank and is currently employed
as its chief executive officer. The Bank desires to provide the Executive
with certain insurance and retirement benefits as an inducement to secure
the continued employment of the Executive and to reward the Executive for
previous services rendered to the Bank.
A G R E E M E N T
THEREFORE, in consideration of the mutual promises herein contained,
the parties agree as follows:
1. MAINTENANCE OF INSURANCE POLICIES. The Executive is the owner of
the insurance policies described on Exhibit "A" attached hereto (the
"Policies"). The Policies shall be used to provide the benefits available
to the Executive pursuant to this Agreement. The parties therefore agree
that the Policies will be subject to the terms and conditions of this
Agreement and the parties shall take all such action as may be reasonably
necessary to conform the Policies to the terms and conditions of this
Agreement.
2. EXECUTIVE BENEFITS. The Executive shall have the following
benefits pursuant to this Agreement and the Policies:
(a) A death benefit which shall be paid from the Policies to the
designated beneficiary of the Executive in the event of the death of the
Executive equal to the sum of (i) $176,000, and (ii) the product of
$162,000 multiplied by a fraction the numerator of which is the number of
months remaining for loan withdrawals under 2(b) below at the date of the
Executive's death and the denominator of which is 120. To illustrate the
<PAGE>
<PAGE>
benefit under this subsection 2(a), assume the Executive dies at age 76
after making loan withdrawals for 72 months, the amount of the insurance
benefit under this subsection 2(a) would be $240,800 [$176,000 + ($162,000
x 48/120)]. If the Executive dies before age 70, the insurance benefit
would be $338,000; if the Executive dies after age 80, the insurance
benefit would be $176,000.
(b) The right commencing at age seventy (70) to withdraw from
the cash values of the Policies in proportion to each Policy's cash value
the sum of One Thousand Three Hundred and Fifty Dollars ($1,350) per month
for a period ten (10) years or until the death of the Executive, whichever
first occurs. The withdrawals from the cash value of the Policies as
herein authorized shall be Policy loans to the Executive which shall be
repaid solely from the insurance benefit payable upon the death of the
Executive.
(c) Repayment of the loans outstanding against the Policies
pursuant to subsection 2(b) above from the insurance proceeds payable at
the death of the Executive.
3. BANK BENEFITS. The Bank shall be entitled to receive the
remaining death benefits payable with respect to the Policies less the
amounts payable under subsections 2(a) and 2(c) above.
4. INCIDENTS OF OWNERSHIP. The Executive shall be each Policy's
sole and absolute owner, and he may exercise all ownership rights and
incidents of ownership granted to each Policy's owner by the insurer,
except as may be expressly provided to the contrary in this Agreement. It
is the intention of the parties that the Executive retain all rights that
each Policy grants to the owner thereof, except the Bank's right to be paid
the amounts specified in Section 3 hereof. All provisions of this
Agreement and the beneficiary designation shall be construed so as to carry
out such intention.
<PAGE>
<PAGE>
5. DIVIDENDS. All dividends declared on the Policies shall be
applied to buy additional paid-up insurance on the life of the Executive.
6. PREMIUM PAYMENTS. On or before the due date of each Policy
premium, or within the grace period provided in the Policy, the Bank shall
pay the full amount of the premium to the insurer, and shall, upon request,
promptly furnish to the Executive evidence of timely payment of such
premium. The Bank shall annually furnish to the Executive a statement of
the amount of income reportable by him for federal and state income tax
purposes as a result of such premium payments. The Bank shall pay the
premium due on such Policies until the death of the Executive even if the
Executive's employment is terminated with the Bank anytime prior to his
death.
7. BENEFICIARY DESIGNATION. The parties agree that the beneficiary
designation provision of the Policies shall conform to the provisions of
this Agreement. Upon the death of the Executive, the Bank and the
Executive shall promptly take all action necessary to obtain the death
benefits provided under the Policies.
8. TERMINATION. This Agreement may be terminated only by mutual
agreement of the parties. If this Agreement is terminated, the Executive
shall have all rights of ownership with respect to the Policies, including
the right to designate a beneficiary or beneficiaries to receive all of the
insurance proceeds payable upon his death without any obligation to pay the
Bank any part of such insurance proceeds.
9. MISCELLANEOUS.
9.1. INSURERS PROTECTED. The insurers shall be fully discharged
from their obligations under the Policies by payment of each Policy's death
benefit to the beneficiaries named in the Polices subject to each Policy's
terms and conditions. In no event shall an insurer be considered a party
to this Agreement. No provision of this Agreement shall be construed as
<PAGE>
<PAGE>
enlarging, changing, varying, or in any other way affecting an insurer's
obligations as expressly provided in each Policy.
9.2. THE BANK AS FIDUCIARY. The Bank is the named fiduciary
under this Agreement and as such it shall have the authority to control the
administration of this Agreement, and it shall be responsible for
establishing and carrying out a funding policy and method consistent with
the Agreement's objectives. The Bank will make all determinations relating
to the rights and benefits conferred by this Agreement, and its decision
regarding any claim by the Executive or his beneficiary for benefits under
this Agreement must be stated in writing and delivered or mailed to the
Executive or such beneficiary. Such decision shall set forth the specific
reasons for any such denial and shall afford the Executive or his
beneficiary an opportunity for a full and fair review of the decision.
9.3. BINDING AGREEMENT. This Agreement is binding on and
enforceable by and against the parties, their successors, legal
representatives and assigns.
9.4. GOVERNING LAW. This Agreement will be governed by and
construed according to the laws of Alabama.
9.5. SEVERABILITY. No part of this Agreement will be affected if
any other part of it is held invalid or unenforceable.
9.6. NOTICES. All notices required or permitted to be given
under this Agreement must be given in writing, and will be deemed given
when personally delivered or, if earlier, when received after mailing by
registered or certified United States mail, postage prepaid, with return
receipt requested. Notice to the Executive is valid if sent to him at his
address as it appears in the Bank's records.
9.7. WAIVER. Any party's failure to insist on compliance or
enforcement of any provision of this Agreement shall neither affect its
validity nor enforceability or constitute a waiver of future enforcement of
that provision or of any other provision of this Agreement.
<PAGE>
<PAGE>
9.8. COPIES. More than one (1) copy of this Agreement may be
executed and all parties agree and acknowledge that each executed copy
shall be a duplicate original.
9.9. GENDER AND NUMBER. Whenever the context of this Agreement
requires, the masculine gender includes the feminine and neuter, and the
singular number includes the plural and VICE VERSA.
IN WITNESS WHEREOF, the parties hereto have hereunto executed this
Agreement on the date and year first above written.
William R. Collins
--------------------------------------
WILLIAM R. COLLINS
BANKALABAMA-HUNTSVILLE,
an Alabama banking organization
By: Steven R. Townson
---------------------------------------
President
<PAGE>
<PAGE>
EXHIBIT "A"
TO
EXECUTIVE BENEFIT AGREEMENT
DESCRIPTION OF POLICIES
Northwestern Mutual Life Insurance Policy 11260510 insuring William R.
Collins, Sr.
Northwestern Mutual Life Insurance Policy 13204687 insuring William R.
Collins, Sr.
<PAGE>
<PAGE>
BANCALABAMA, INC.
ANNUAL REPORT 1995
<PAGE>
<PAGE>
March, 1996
TO OUR SHAREHOLDERS
[Picture of William R. Collins omitted]
BancAlabama, Inc. and its wholly-owned subsidiary BankAlabama-
Huntsville are pleased to report that 1995 was a year of new records for
your Company, with total assets increasing to $97,946,679 and improved
earnings of eighty-seven cents per share. The financial position and
results of operation are discussed in the President's report on the
following page.
In July, 1995 we employed Steven R. Townson who became President and
Chief Operating Officer of the Company in October 1995. Mr. Townson brings
thirteen years of experience to the Company. He began his banking career
at AmSouth Bank in 1988 and moved from AmSouth Bank to First Tennessee in
Chattanooga in 1993, where he remained until coming to BancAlabama, Inc.
He is a Chattanooga native with strong ties to Alabama.
We decided to expand our branching system in the Spring of 1995 by
locating an office on Highway 431 South in the Big Cove area. Construction
was started in September, 1995 with plans to open in early 1996. This was
accomplished. The Big Cove area is a high-growth area and we are pleased
to be the first bank to locate there.
We expanded our real estate department during the last quarter of
1995. Mr. Robert E. DeNeefe, who has been in mortgage lending in the
Huntsville area since 1963, now heads up the real estate lending for the
bank. We look forward to the department's increased contribution in 1996.
During January, 1996, the common stock of BancAlabama, Inc. began
trading on the OTC Bulletin Board. This should give our stockholders a
greater market for the trading of their shares.
Your Company enjoyed a good year in 1995. Many individuals had a part
in setting these new records. We thank you for making it possible. We
offer a service which has supported customer growth and we are committed to
continuing with relationship banking and quality service. The staff joins
with me in thanking the customers and shareholders for this support.
W.R. Collins
- ------------------------------------
William R. Collins
Chairman and Chief Executive Officer
<PAGE>
<PAGE>
March, 1996
TO OUR SHAREHOLDERS
[Picture of Steven R. Townson omitted]
BancAlabama, Inc. continued to achieve record levels of earnings
during 1995, primarily through growth and expansion within Madison County.
Through the efforts of our employees, BancAlabama has improved the quality
and expanded the scope of the services provided to our customers and
community. As a result of these achievements, BancAlabama has reached
several financial goals in 1995 which were highlighted by:
<circle> Reported record earnings of $.87 per share in 1995, an increase of
32 percent over 1994 reported earnings, and the third consecutive year of
improved results. In addition, net income increased 34 percent to $539,378
in 1995.
<circle> Return on equity of 9.3 percent in 1995, the third straight year
earnings have continued to increase. Return on assets remained level
during 1995, primarily due to rapid asset growth, reaching .67 percent.
<circle> The Company's capital position increased in 1995 from $4,985,000
to $7,119,000 and remains adequate. Due to the tremendous asset growth,
the equity-to-asset ratio declined from 8.7 percent as reported in 1994 to
7.2 percent in 1995, excluding the impact of the mark-to-market adjustment
to securities available for sale. While the Company has experienced
unusually high growth during 1995, asset quality continues to remain
satisfactory.
Strategically, 1995 was an ephemeral year as BancAlabama completed
significant aspects of our expansion in our lines of business. BancAlabama
finalized the consolidation of operations with Benchmark Mortgage
Corporation. This addition will continue to produce higher fee income
levels, while aiding in the management of interest rate volatility. This
addition should assist in the building of the foundation for future growth
and sustainable higher profitability levels.
BancAlabama's strategic plan should continue to provide higher profits
in the future, while emphasizing the importance of our employees, the
customer and community we serve, and our shareholders. We will continue to
serve this community and you can "Expect the Best at BankAlabama".
Steven Townson
- -------------------------------------
Steven R. Townson
President and Chief Operating Officer
<PAGE>
<PAGE>
[Picture of Banking Management Team Omitted]
BankAlabama is pleased to introduce its Banking Management Team.
They are as follows:
Seated, left to right: Jean D. Snead, Vice President and Corporate
Secretary has been with the bank since November, 1989
Steven R. Townson joined BankAlabama in July, 1995 and is currently the
bank's President and Chief Operating Officer.
Standing, left to right: Robert E. DeNeefe joined the bank in December,
1995 as a Senior Vice President and Real Estate Division Manager.
Richard T. Perdue, our Vice President and Commercial Loan Officer is also
the bank's Branch Administrator. Richard joined the bank in June of 1993.
Michael J. Williams joined the bank in December, 1993 as the bank's Cashier
and Chief Financial Officer.
Middie Y. Thompson is the Personnel and Marketing Officer and has been with
the bank since June, 1990.
Robert F. Harwell is an Executive Vice President responsible for the
lending functions of the bank. Bob joined BankAlabama in August of 1992.
These individuals along with a fine staff are committed to providing
quality personal banking to the shareholders and customers of BankAlabama.
<PAGE>
<PAGE>
BROWDER & ASSOCIATES, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
2320 HIGHLAND AVENUE SOUTH, SUITE 290
BIRMINGHAM, ALABAMA 35205-2900
__________________
TELEPHONE (205) 933-6855
FACSIMILE (205) 930-9486
Member of:
Alabama Society of CPAs
American Institute of CPAs
Private Companies Practice Section
SEC Practice Section
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
BancAlabama, Inc. and Subsidiary
We have audited the accompanying consolidated balance sheets of
BancAlabama, Inc. and subsidiary as of December 31, 1995 and 1994, and the
related consolidated statements of operations, changes in stockholders'
equity and cash flows for each of the three years in the period ended
December 31, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures int he financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of BancAlabama, Inc. and subsidiary as of December 31, 1995 and
1994, and the consolidated results of its operations and cash flows for
each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.
BROWDER & ASSOCIATES, P.C.
February 2, 1996
<PAGE>
<PAGE>
BANCALABAMA, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
------------------ ------------------
<S> <C> <C>
ASSETS
Cash and Due from Bank $ 8,214,751 $ 5,096,029
------------------ ------------------
Earning Assets
Federal Funds Sold $ 3,247,000 $ -
Securities Available-for-Sale, at market value,
cost of $21,170,268 and $9,087,706 in 1995 and
1994, respectively 21,232,516 8,410,358
Loans 60,496,094 47,280,365
Less: Allowance for Loan Losses (594,095) (505,125)
------------------ ------------------
Net Loans $ 59,901,999 $ 46,775,240
------------------ ------------------
Total Earning Assets $ 84,381,515 $ 55,185,598
Bank Premises and Equipment, net 3,958,489 3,464,015
Accrued Interest Receivable 1,045,517 649,987
Other Real Estate and Other Loan Assets 194,000 81,805
Deferred Income Tax Benefit 8,000 207,000
Other Assets 144,407 626,100
------------------ ------------------
$ 97,946,679 $ 65,310,534
Total Assets ================== ==================
<PAGE>
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits and Interest Bearing Liabilities
Noninterest Bearing Demand Deposits $ 14,820,619 $ 9,973,389
Interest Bearing Demand Deposits 30,737,673 22,241,500
Savings Deposits 2,593,495 2,514,937
Time Deposits of $100,000 and over 11,738,312 3,482,370
Other Time Deposits 29,311,778 17,933,744
------------------ ------------------
Total Deposits $ 89,201,877 $ 56,145,940
Federal Funds Purchased - 2,980,000
Debt 856,701 931,581
------------------ ------------------
Total Deposits and Interest Bearing Liabilities $ 90,058,578 $ 60,057,521
Deferred Income Taxes Payable 159,898 -
Accrued Expenses and Other Liabilities 609,181 267,765
------------------ ------------------
Total Liabilities $ 90,827,657 $ 60,325,286
------------------ ------------------
Stockholders' Equity
Preferred Stock, par value $1.00 per share,
500,000 authorized, no shares issues and
outstanding $ - $ -
Common Stock, par value $1.00 per share,
2,000,000 shares authorized, and 693,122
shares issued and outstanding at December 31, 1995
and 1994, respectively 693,122 613,122
Additional Pain-In Capital 6,234,025 5,434,025
Unrealized Gain (Loss) on Securities Available-For-
Sale 37,048 (677,348)
Retained Earnings (Accumulated Deficit) 154,827 (384,551)
------------------ ------------------
Total Stockholders' Equity $ 7,119,022 $ 4,985,248
------------------ -----------------
Total Liabilities and Stockholders' Equity $ 97,946,679 $ 65,310,534
================== =================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<PAGE>
BANCALABAMA, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- -----
<S> <C> <C> <C>
Interest Income
Interest and fees on loans $ 6,043,527 $ 4,350,207 $ 3,648,394
Interest on Securities - Taxable 916,345 553,956 900,870
Interest on Securities - Tax-Exempt 741 644 690
Interest on Federal Funds Sold 199,211 31,846 36,595
------------- ------------- -------------
Total Interest Income $ 7,159,824 $ 4,936,653 $ 4,586,549
------------- ------------- -------------
Interest Expense
Interest on Deposits $ 3,123,816 $ 1,673,703 $ 1,743,052
Interest on Federal Funds Purchased 4,493 22,605 7,084
Interest on Debt 86,900 79,726 81,437
------------- ------------- -------------
Total Interest Expense $ 3,215,209 $ 1,776,034 $ 1,831,573
------------- ------------- -------------
Net Interest Income $ 3,944,615 $ 3,160,619 $ 2,754,976
Provision for Loan Losses 377,000 165,000 547,141
------------- ------------- -------------
Net Interest Income After Provision for Loan Losses $ 3,567,615 $ 2,995,619 $ 2,207,835
------------- ------------- -------------
Noninterest Income
Service Charges, Net of Refunds $ 819,069 $ 810,159 $ 809,613
Gains on Sales of Other Real Estate and
Other Loan Assets, Net 23,834 2,765 2,349
Gains on Sales of Loans 45,732 37,782 -
Gains on Sales of Securities, Net 5,320 6,707 267,238
Other Noninterest Revenue 63,676 41,838 41,942
Gain on Disposition of Bank Branch - 17,476 -
------------- ------------- -------------
Total Noninterest Income $ 957,631 $ 916,727 $ 1,121,142
------------- ------------- -------------
Noninterest Expense
Salaries and Employee Benefits $ 1,702,297 $ 1,599,351 $ 1,511,535
Occupancy Expenses 390,945 435,408 418,946
FDIC Insurance Premiums 85,128 149,046 162,238
Writedown of Bank Premises and Equipment 4,000 - 51,755
Other Noninterest Expenses 1,420,898 1,352,841 1,107,358
------------- ------------- -------------
Total Noninterest Expense $ 3,603,268 $ 3,536,646 $ 3,251,832
------------- ------------- -------------
Income Before Income Taxes $ 921,978 $ 375,700 $ 77,145
Provision (Benefit) for Income Taxes 382,600 (27,800) (175,000)
------------- ------------- -------------
Net Income $ 539,378 $ 403,500 $ 252,145
============= ============= =============
Net Earnings Per Share (NOTE 1) $ 0.87 $ 0.66 $ 0.45
============= ============= =============
Weighted Average Shares Outstanding $ 617,286 $ 613,122 $ 559,708
============ ============= =============
</TABLE>
See accompanying notes to consolidated financial statements.<PAGE>
<PAGE>
BANCALABAMA, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Unrealized Gain
Common Stock (Loss) on Retained
$1 Par Value Additional Securities Earnings
Preferred ----------------- Paid-In Available- (Accumulated
Stock Shares Amount Capital For-Sale Deficit) Total
--------- -------- ------- ------------- --------------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1993 $ - 543,122 $543,122 $ 4,804,025 $ - ($1,040,196) $4,306,951
Net Income - - - - - 252,145 252,145
Issuance of Common Stock - 70,000 70,000 630,000 - - 700,000
--------- ------- -------- ------------- --------------- ------------- ----------
Balance, December 31, 1993 $ - 613,122 $613,122 $ 5,434,025 $ - ($788,051) $5,259,096
Net Income - - - - - 403,500 403,500
Change in Unrealized Loss
on Securities Available-
For-Sale - - - - (677,348) - (677,348)
--------- ------- -------- ------------- --------------- ------------- ----------
Balance, December 31, 1994 $ - 613,122 $613,122 $ 5,434,025 ($677,348) ($384,551) $4,985,248
Net Income - - - - - 539,378 539,378
Issuance of Common Stock - 80,000 80,000 800,000 - - 880,000
Change in Unrealized Gain
on Securities Available-
For-Sale - - - - 714,396 - 714,396
--------- ------- -------- ------------- --------------- ------------- ----------
Balance, December 31, 1995 $ - 693,122 $693,122 $ 6,234,025 $ 37,048 $ 154,827 $7,119,022
========= ======= ======== ============= =============== ============= ==========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
<PAGE>
<PAGE>
BANCALABAMA, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
Cash Flows from Operating Activities: $ 539,378 $ 403,500 $ 252,145
Net Income
Adjustments to Reconcile Net Income to Net Cash
provided by Operating Activities:
Provision for Loan Losses 377,000 165,000 547,141
Depreciation 303,316 299,989 263,953
Provision (benefit) for Deferred Income Taxes 142,000 (32,000) (175,000)
Net (discount accretion) Premium Amortization (2,135) 22,454 70,617
Gains on Sales of Securities, Net (5,320) (6,707) (267,238)
Gains on Sales of Loans (45,732) (37,782) -
Gains on Sales of Other Real Estate and Other
Loan Assets, Net (24,071) (2,765) 85,949
Writedown of Bank Premises and Equipment 4,000 - 51,755
Gain on Disposition of Bank Branch - (17,476) -
Decrease (increase) in Assets:
Accrued Interest Receivable (395,530) (102,268) 147,661
Other Assets 680,693 (615,571) 35,604
Increase in Liabilities:
Accrued Expenses and Other Liabilities 359,314 143,028 (118,110)
------------- ------------- -------------
Net Cash Provided by Operating Activities $ 1,932,913 $ 219,402 $ 894,477
Cash Flows from Investing Activities:
Proceeds from the Sales of Securities $ 6,312,847 $ 6,661,108 $ 15,019,047
Proceeds from the Maturities of Securities 3,039,631 1,250,000 2,860,925
Proceeds from the Sales of Loans 759,124 163,332 347,274
Proceeds from the Sales of Other Real Estate and
Other Loan Assets 335,228 114,225 160,372
Proceeds from the Disposition of Fixed Assets - 117,808 -
Purchases of Securities (21,452,785) (4,222,413) (12,843,068)
Loans Made to Customers in Excess of Principal
Collected on Loans (14,640,503) (9,387,369) (1,272,157)
Purchases of Bank Premises and Equipment (801,790) (172,138) (487,753)
Payment for the Disposition of Bank Branch - (494,940) -
------------- ------------- -------------
Net Cash (used in) Provided by Investing Activities ($26,448,248) ($5,970,387) $ 3,784,640
Cash Flows from Financing Activities:
Net Proceeds from (maturities of) Certificates of
Deposit $ 19,633,976 $ 8,279,993 ($3,379,436)
Increase (decrease) in Demand Deposits and
Savings Accounts 13,421,961 (2,872,936) (4,103,203)
(Decrease) Increase in Federal Funds Purchased (2,980,000) 1,730,000 1,250,000
Principal Payments on Debt (74,880) (82,735) (77,829)
Proceeds from the Issuance of Common Stock 880,000 - 700,000
------------- ------------- -------------
Net Cash Provided by (used in) Financing Activities $ 30,881,057 $ 7,054,322 ($5,610,468)
------------- ------------- -------------
Net Increase (Decrease) in Cash and Cash Equivalents $ 6,365,722 $ 1,303,337 ($931,351)
Cash and Cash Equivalents - Beginning of Period 5,096,029 3,792,692 4,724,043
------------- ------------- -------------
Cash and Cash Equivalents - End of Year $ 11,461,751 $ 5,096,029 $ 3,792,692
============= ============= =============
<PAGE>
<PAGE>
Supplemental Disclosures:
Cash Paid (received) During the Year For:
Interest $ 3,019,303 $ 1,727,775 $ 1,961,677
============= ============= =============
Income Taxes $ 17,600 ($13,698) ($53,963)
============= ============= =============
Transfers of Loans to Other Real Estate and
Other Loan Assets $ 423,352 $ 128,615 $ 136,582
============= ============= =============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
<PAGE>
<PAGE>
BANCALABAMA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BancAlabama, Inc. ("Company") is a one-bank holding company with headquarters
in Huntsville, Alabama. The Company was formed in 1986 for the purpose of
holding the stock of a proposed bank, BankAlabama-Huntsville ("Bank"). The
Bank was formed and opened for business in 1988. The Company expanded beyond
its main office location in 1991 by opening three traditional branches and four
supermarket branches. A fifth supermarket branch opened in 1994. A super-
market branch located in Decatur, Alabama was sold in 1994. The Bank offers
traditional banking products and services to customers through locations
within the Huntsville-Madison County, Alabama market area. The Bank estab-
lished BancAlabama Financial Services, Inc. ("BFS"), in February, 1993 for
sales of annuities, mutual funds, and insurance policies. The operation of BFS
is subcontracted to an independent financial services company. In January,
1996, the Bank opened its ninth location, a traditional branch, in the Big Cove
area.
The accounting and reporting policies of the Company conform to generally
accepted accounting principles and to general practice within the banking
industry. The following is a summary of the more significant of those
policies. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amount of income and expenses during the reporting
periods. Actual results could differ from those estimates.
CONSOLIDATION AND BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of the
Company, its wholly-owned subsidiary, the Bank, and the Bank's wholly-owned
subsidiary, BFS. All material intercompany balances and transactions have been
eliminated in consolidation.
CASH AND CASH EQUIVALENTS
For purposes of reporting cash flows, cash and cash equivalents include cash
and due from banks and federal funds sold. Generally, federal funds are sold
for one-day periods.
SECURITIES
Effective January 1, 1994, the Company adopted Statement of Financial Account-
ing Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." SFAS No. 115 requires, among other things, that invest-
ments in debt securities and equity securities with readily determinable
market values be classified as held-to-maturity, available-for-sale or trading
securities. Securities held-to-maturity are those securities for which the
Company has the ability and intent to hold the security to maturity. Trading
securities are bought and held principally for the purpose of selling the
security in the near future. All other securities are classified as available
- -for-sale.
<PAGE>
<PAGE>
The classification of a security determines the recorded value and whether any
realized or unrealized gain or loss is recorded while holding the security.
Securities held-to-maturity are recorded at cost. Securities available-for-
sale are recorded at market value. Premiums and discounts are amortized or
accreted over the life of the related security as an adjustment to yield.
Premiums on callable securities are amortized to the first call date. Realized
gains and losses and permanent impairments in value are recorded separately as
a component of noninterest income and are derived using the specific identi-
fication method for determining the cost of the securities sold. Unrealized
gains and losses on securities available-for-sale, net of the related tax
effect, are excluded from earnings and reported as a separate component of
stockholders' equity. Trading securities are recorded at market value. Unrea-
lized gains and losses on trading securities are included in earnings.
LOANS
Loans are stated at the amount of unpaid principal, less the allowance for loan
losses. Interest income with respect to loans is accrued on the principal
amount outstanding. Loans generally are placed on nonaccrual status and the
accrual of interest is discontinued on a loan when the collection of principal
or interest is 90 days or more past due or sooner when, management believes,
after considering economic and business and collection efforts, that the
borrower's financial condition is such that collection of interest is doubtful.
When interest accrual is stopped, outstanding accrued interest is reversed and
charged to current operations. Generally, interest payments received on
nonaccrual loans are applied to principal.
The Bank originates, closes, and funds mortgage loans which third-party pur-
chasers have approved prior to closing and agreed to purchase after closing.
Each loan is individually approved by and sold to the purchaser. The payment
for a funded loan is generally received within 20 days after closing. However,
payment may be delayed to obtain additional documentation. The Bank earns the
related interest income on the funded loan from the date of closing until
payment is received from the third-party purchaser. As a result, funded loans
are classified in the loan portfolio, as an earning asset. The related fee
income from origination and transfer of mortgage loans is recorded as a com-
ponent of fees on loans. As funded loans are approved and awaiting transfer,
they are not considered in the Bank's loan portfolio analysis and, accordingly,
no related allowance for loan losses is considered necessary.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is established through a provision for loan
losses charged to expense. Loans are charged against the allowance for loan
losses when management believes the collectibility of principal is unlikely.
The allowance is the amount that management believes will be adequate to absorb
possible losses on existing loans which may become uncollectible, based on
evaluations of the collectibility of loans and prior loan loss experience. The
evaluations take into consideration such factors as changes in the nature and
volume of the loan portfolio, overall portfolio quality, review of specific
loan problems, and current economic conditions that may affect the borrowers'
ability to pay.
Effective January 1, 1995, the Company adopted SFAS No. 114, "Accounting by
Creditors for Impairment of a Loan." SFAS No. 114 requires that certain
impaired loans be measured at the present value of expected future cash flows
discounted at the loan's original effective interest rate or at the loan's
<PAGE>
<PAGE>
observable market price, or the fair value of the collateral if the loan is
collateral dependent. The effect of discounting is considered as a reserve
which is a part of the allowance for loan losses. Prior to the adoption of
SFAS No. 114, impaired loans were measured based on expected, undiscounted
future cash flows, or the fair value of the collateral if the loan was colla-
teral dependent.
BANK PREMISES AND EQUIPMENT
Bank premises and equipment are stated at cost less accumulated depreciation.
Depreciation expense is computed utilizing the straight-line method. The
estimated useful lives used in computing the depreciation are as follows:
Bank premises 5-40 years
Furniture, fixtures and equipment 3-10 years
Expenditures for maintenance and repairs are charged to operations as incurred;
expenditures for renewals and betterments are capitalized and depreciated over
the estimated useful lives of the assets. Property retired or sold is removed
from the premises and equipment and related accumulated depreciation accounts
and any gain or loss resulting therefrom is recorded as a component of non-
interest income.
OTHER REAL ESTATE AND OTHER LOAN ASSETS
Other real estate and other loan assets are carried at the lower of cost or
market value of the property, less estimated costs to sell. At the date of
foreclosure or repossession, any difference between the loan amount and the
value of the collateral which results in a loss is charged to the allowance for
loan losses. Any subsequent determination of an impairment in the value of the
property is recorded as a component of noninterest expense.
OTHER ASSETS
Other assets consist of prepaid expenses and accounts receivable. At December
31, 1994, the balance included a $500,000 U.S. Treasury Note which matured on
that date for which payment was received in January 1995.
INCOME TAXES
Income taxes consist of taxes currently payable and deferred taxes resulting
from the recognition of certain income and expenses in different periods for
financial statement and income tax reporting purposes. Deferred taxes are
provided primarily for the tax-effect of differences between securities, the
allowance for loan losses, and bank premises and equipment for financial
statement and income tax reporting purposes. Deferred tax assets and
liabilities represent the estimated future tax consequences of the differences
between the financial statement and income tax reporting bases, which will
either be deductible or taxable when the transaction is recorded for income tax
reporting purposes. Deferred taxes are computed on the liability method in
accordance with SFAS No. 109, "Accounting for Income Taxes." The Company, the
Bank, and BFS file a consolidated federal income tax return. The Company and
the Bank file a consolidated state income tax return. The consolidated amount
of current income tax expense is allocated between the Company, the Bank, and
BFS based upon the federal income tax provision (benefit) of each entity as if
each filed a separate return and assuming an election is made to apportion all
of the surtax exemption to the Company as allowed by income tax regulations.
The consolidated deferred tax provision (benefit) is allocated between the Com-
<PAGE>
<PAGE>
pany, the Bank, and BFS by applying SFAS No. 109 to each entity on a stand-
alone basis.
EARNINGS PER SHARE
The primary earnings per share amounts are computed based on the weighted
average number of common shares outstanding during each year. The effect of
shares that would be outstanding assuming the exercise of the stock options is
not material to the calculation of earnings per share.
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
In the ordinary course of business the Bank is a party to off-balance sheet
financial instruments consisting of commitments to extend credit, commercial
letters of credit and standby letters-of-credit. Such financial instruments
are recorded in the financial statements when the credit is extended.
RECLASSIFICATIONS
Certain 1994 and 1993 amounts have been reclassified in order to conform with
1995 presentation.
NOTE 2 - CASH AND DUE FROM BANKS
The Bank is required to maintain average reserve balances with the Federal
Reserve Bank. These reserve balances vary, depending on the types and amounts
of deposits received. The noninterest bearing cash balances needed to meet
these reserve requirements are $935,000 and $684,000 at December 31, 1995 and
1994, respectively.
Financial instruments that represent a concentration and potentially subject
the Company to credit risk include cash and due from banks with another
financial institution amounting to $4,373,172 and $1,828,375 at December 31,
1995 and 1994, respectively. This account is insured for $100,000 by the
Federal Deposit Insurance Corporation.
NOTE 3 - SECURITIES
The amortized cost and estimated market values of securities available-for-sale
as of December 31, 1995 are as follows:
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
----------- ---------- ---------- ----------
U.S. Treasury and U.S.
Government agencies $20,777,270 $ 62,227 $ -- $20,839,497
Obligations of states
and political subdivisions 12,693 2,036 -- 14,729
Mortgage-backed securities 380,305 -- 2,015 378,290
----------- ----------- --------- -----------
Total $21,170,268 $ 64,263 $ 2,015 $21,232,516
=========== =========== ========= ===========
<PAGE>
<PAGE>
The amortized cost and estimated market values of securities available-for-sale
as of December 31, 1994 are as follows:
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
----------- ---------- ---------- ---------
U.S. Treasury and U.S.
Government agencies $ 8,641,595 $ -- $ 651,543 $ 7,990,052
Obligations of states and
political subdivisions 12,420 878 -- 13,298
Mortgage-backed securities 433,691 -- 26,683 407,008
----------- ---------- --------- -----------
Total $ 9,087,706 $ 878 $ 678,226 $ 8,410,358
=========== ========== ========= ===========
Proceeds from sales of securities during 1995, 1994, and 1993 were $6,312,847,
$6,661,108, and $15,019,047, respectively. Gross gains of $25,808, $27,138, and
$272,238, and gross losses of $20,488, $20,431, and $5,000, were realized on
these sales in 1995, 1994, and 1993, respectively.
At January 1, 1994, all securities were classified as available-for-sale. The
effect of adopting SFAS No. 115 resulted in an unrealized gain on securities
available-for sale of $107,340. An unrealized loss on securities available-
for-sale of $677,348 was recorded at December 31, 1994. The change in the net
unrealized gain (loss) on securities available-for-sale during 1994 was a loss
of $784,688. At December 31, 1995, an unrealized gain on securities available-
for-sale of $62,248 was recorded. The change in the net unrealized gain (loss)
on securities available-for-sale during 1995 was a gain of $739,596.
Securities with amortized costs of $9,990,737 and $7,041,594, and market
values of $9,982,835 and $6,463,119, at December 31, 1995 and 1994,
respectively, were pledged to secure public deposits and for other purposes.
The amortized cost and estimated market value of securities at December 31,
1995, by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.
December 31, 1995
-------------------------
Estimated
Amortized Market
Cost Value
----------- -----------
Due in one year or less $ 500,000 $ 493,125
Due after one year through five years 8,501,127 8,475,847
Due after five years through ten years 11,276,416 11,366,775
Due after ten years 512,420 518,479
----------- ----------
20,789,963 20,854,226
Mortgage-backed securities 380,305 378,290
----------- -----------
Total $21,170,268 $21,232,516
=========== ===========
<PAGE>
<PAGE>
NOTE 4 - LOANS
The Bank extends loans primarily to customers in Madison County, Alabama. The
composition of the Company's loan portfolio at December 31, 1995 and 1994 is as
follows:
1995 1994
----------- -----------
Commercial, industrial, and agricultural $13,895,330 $12,280,602
Real estate loans - construction 11,029,037 8,093,522
- mortgage 27,575,008 20,737,075
Loan to individuals 6,658,135 5,782,103
Mortgage loans sold 1,100,948 68,563
Other loans (including overdrafts) 237,636 318,500
----------- -----------
Gross loans 60,496,094 47,280,365
Allowance for loan losses (594,095) (505,125)
----------- -----------
Net loans $59,901,999 $46,775,240
=========== ===========
At December 31, 1995 and 1994, nonaccrual loans totaled $573,219 and $297,664,
respectively. The amount of interest income that would have been recorded
during 1995 and 1994 if the above amounts had been current in accordance with
their original terms was approximately $45,700 and $41,300, respectively.
NOTE 5 - ALLOWANCE FOR LOAN LOSSES
Changes in the allowance for loan losses are as follows:
1995 1994 1993
-------- -------- --------
Balance at beginning of year $505,125 $595,860 $563,364
Provision for loan losses 377,000 165,000 547,141
Loans charged-off (326,131) (328,787) (587,199)
Recoveries of loans previously
charged-off 38,101 73,052 72,554
-------- -------- --------
Balance at end of year $594,095 $505,125 $595,860
======== ======== ========
Effective January 1, 1995, the Company adopted SFAS No. 114. The implementa-
tion did not have an impact on the Company's financial position or results of
operations. At December 31, 1995, the total recorded investment in impaired
loans was approximately $750,000, of which approximately $565,000 was on a
nonaccrual basis. At December 31, 1995, there was a related allowance for
loan losses for the impaired loans of approximately $159,000 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 1995 was approximately $595,000. The Company recognizes interest
income on impaired loans on an accrual basis, except for nonaccrual loans which
are recognized on a cash basis. For 1995, the Company recognized interest
income on impaired loans totalling approximately $36,000 and received interest
payments totalling approximately $52,400 on impaired loans.
<PAGE>
<PAGE>
NOTE 6 - BANK PREMISES AND EQUIPMENT
A summary of bank premises and equipment is as follows:
1995 1994
---------- ----------
Land $1,036,803 $ 895,807
Buildings 2,613,280 2,165,126
Furniture, fixtures and equipment 1,583,544 1,374,939
---------- ----------
5,233,627 4,435,872
Less: Accumulated depreciation (1,275,138) (971,857)
---------- ----------
Net carrying value $3,958,489 $3,464,015
========== ==========
Depreciation expense for the years ended December 31, 1995, 1994 and 1993
totaled $303,316, $299,989, and $263,953, respectively.
NOTE 7 - DEBT
Debt consists of the following as of December 31 of the respective year:
1995 1994
---------- ----------
Variable rate note payable to bank, secured by
real estate mortgage, assignment of leases and
pledge of common stock of bank, due $10,600
monthly (including principal and interest)
with remaining balance due August, 1996. $ 655,284 $ 716,599
Variable rate note payable to bank, secured by
real estate mortgage, due $2,800 monthly
(including principal and interest) with remain-
ing balance due August, 1996. 201,417 214,982
---------- ----------
Total debt $ 856,701 $ 931,581
========== ==========
The Company has available an unsecured line-of-credit agreement with a bank
through which it may borrow up to a total of $2 million, with additional
amounts available on a secured basis. Additional secured line-of-credit
agreements with two banks totalling $1.5 million are also available. At
December 31, 1995, no amounts were drawn against these lines. At December 31,
1994, $2,980,000 was taken against these lines of credit in the form of federal
funds purchased.
NOTE 8 - INCOME TAXES
The provision (benefit) for income taxes consists of the following for the
years ended December 31 of the respective year:
1995 1994 1993
---------- --------- ----------
Currently payable $ 240,600 $ 4,200 $ --
Deferred tax provision (benefit)
due to temporary differences 142,000 (32,000) (175,000)
---------- --------- ----------
Total $ 382,600 $ (27,800) $ (175,000)
========== ========== ===========
<PAGE>
<PAGE>
The following reconciles the tax provision with the expected provision obtained
by applying statutory rates to pretax income:
YEARS ENDED DECEMBER 31
-----------------------
1995 1994 1993
--------- ---------- ----------
Expected tax provision $ 313,500 $ 62,200 $ 26,000
Increase (decrease) resulting from:
Nondeductible operating expenses 13,600 -- --
State income tax expense 55,500 -- --
Tax benefit of net operating loss
carryforwards, net of valuation
allowance -- (58,000) (201,000)
Increase in expected utilization of
deferred tax asset -- (32,000) --
--------- --------- ----------
Tax provision (benefit) $ 382,600 $ (27,800) $ (175,000)
========= ========= ==========
Deferred tax liabilities recognized for taxable temporary differences totalled
$159,898 at December 31, 1995. Deferred tax assets recognized for deductible
temporary differences and loss carryforwards totalled $8,000 and $207,000 at
December 31, 1995 and 1994, respectively. No valuation allowance was consid-
ered necessary.
The Bank had available at December 31, 1994, unused operating loss carry-
forwards of approximately $890,000, which were applied against federal
taxable income during 1995.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
The consolidated financial statements do not reflect the Bank's various
commitments and contingent liabilities which arise in the normal course of
business and which involve elements of credit risk, interest rate risk and
liquidity risk. These commitments and contingent liabilities are commitments
to extend credit and standby letters-of-credit. A summary of the Bank's
commitments and contingent liabilities at December 31, 1995 and 1994 is as
follows:
1995 1994
---------- ----------
Commitments to extend credit $9,104,000 $7,865,000
Standby letters-of-credit 1,395,000 858,000
Commitments to extend credit and standby letters-of-credit all include exposure
to some credit loss in the event of nonperformance of the customer. The Bank's
credit policies and procedures for credit commitments and financial guarantees
are the same for existing extensions of credit. Because these instruments have
fixed maturity dates, and because many of them expire without being drawn upon,
they do not generally present any significant liquidity risk to the Bank.
During 1994, the Bank entered into an agreement whereby it originates, closes,
and sells certain loans to a home mortgage lender. The agreement provides
that, if the loan becomes more than sixty days past due within six months of
the mortgage company's purchase date, the Bank will repurchase the loan. Loans
<PAGE>
<PAGE>
sold with recourse totalled $1,738,650 and $1,118,810 at December 31, 1995 and
1994, respectively.
Certain bank facilities within supermarkets are leased under various operating
leases. These leases are renewable every five years from the dates of the
original leases, with a related increase in the lease payment. The length of
these leases, including renewals, is twenty years. Total rental expense was
$116,393, $157,968, and $178,989 in 1995, 1994, and 1993, respectively. Future
minimum rental commitments under these leases, including renewal options, are
as follows:
YEAR AMOUNT
---- ---------
1996 $ 167,149
1997 206,944
1998 206,944
1999 206,944
2000 206,944
Thereafter 2,547,054
Future minimum rentals under noncancelable leases total $175,000 at December
31, 1995.
NOTE 10 - REGULATORY RESTRICTIONS
Dividends payable by state banks in any year, without prior approval of the
appropriate regulatory authorities, are limited to the Bank's net profits, as
defined, for that year combined with its retained net profits for the preceding
two years. At December 31, 1995, there are retained net profits totalling
$24,325 available for distribution as dividends to the Company from the Bank.
NOTE 11 - STOCK OPTION PLANS
Under the 1989 Incentive Stock Option Plan, the Company could grant to employ-
ees and officers options for an aggregate of 100,000 shares of the Company's
common stock at not less than fair market value of such shares on the date
such option was granted, except that if such option was granted to an employee
or officer owning more than 10% of the voting power of all stock of the Com-
pany, then the price would not be less than 110% of the fair market value
of such shares on the date such option was granted. The options to purchase
shares were originally to expire 10 years after the date of the grant, except
for those granted to 10% stockholders at the time of grant whose grants were
to expire 5 years after the date of the grant.
Effective February 1, 1994, the Incentive Stock Option Plan was canceled, and
all remaining shares of common stock previously reserved for issuance were
transferred to the Nonstatutory Stock Option Plan. That plan was amended to
increase the number of shares of stock that may be issued from 50,000 to
132,000 shares.
Activity under the Incentive Stock Option Plan for the years ended December 31,
1994 and 1993 was as follows:
<PAGE>
<PAGE>
SHARES 1994 1993
------ -------- --------
Outstanding at beginning of year 70,000 66,000
Granted -- 10,000
Exercised -- --
Expired -- (6,000)
Transferred to Nonstatutory Stock
Option Plan (70,000) --
-------- --------
Outstanding at end of year (at
prices ranging from $10.00 to
$11.75 per share) -- 70,000
======== ========
Exercisable at end of year -- 70,000
======== ========
The Company's Nonstatutory Stock Option Plan for officers, directors and
employees grants options to purchase shares of the Company's common stock at an
option price as determined by the Board of Directors. Options granted under
this plan, after amended as described above, cannot exceed an aggregate of
132,000 shares and no options can be granted after the year 1999. Activity
under the plan for the years ended December 31, 1995, 1994 and 1993 is as
follows:
SHARES 1995 1994 1993
------ -------- -------- --------
Outstanding at beginning of year 92,000 26,000 26,000
Granted 35,000 2,000 --
Exercised -- -- --
Expired -- (6,000) --
Transferred from Incentive
Stock Option Plan -- 70,000 --
------- ------- -------
Outstanding at end of year (at
prices ranging from $10.00 to
$11.75 per share) 127,000 92,000 26,000
======= ======= =======
Exercisable at end of year 127,000 92,000 26,000
======= ======= =======
NOTE 12 - LOANS TO RELATED PARTIES
In the normal course of business, the Bank extends credit to directors, stock-
holders and officers, and the businesses and other entities in which they have
an equity interest, at terms and rates comparable, in the opinion of manage-
ment, to other loans of similar credit risk. These loans to ten persons and
their related interests totalled $2,609,157 and $1,660,412 at December 31,
1995 and 1994, respectively. During 1995, $935,075 of additional loans to these
related parties were made, and repayments of related party loans totalled
$13,670. None of the loans outstanding at December 31, 1995 have been
restructured and no loans to related parties were charged-off during 1995.
NOTE 13 - 401(K) PLAN AND TRUST
The Bank has a contributory 401(k) Plan and Trust ("Plan") covering substan-
tially all employees. Each year, each participant may elect to defer between
<PAGE>
<PAGE>
1% and 15% of his salary, which will then be contributed on his behalf to the
Plan. Such contributions are 100% vested and nonforfeitable at all times.
The Plan allows management to determine a matching contribution, if any, to be
made each year. For 1995, management determined only contributions up to 6% of
a participant's salary will be considered for an additional matching
contribution of 50%. Management elected not to make any contributions to the
Plan for the years ended December 31, 1994 and 1993.
NOTE 14 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company adopted SFAS No. 107, "Disclosures about Fair Values of Financial
Instruments" effective January 1, 1995. SFAS No. 107 requires disclosure of
fair value of financial instruments, whether or not recognized in the balance
sheet, for which it is practicable to estimate the fair value. Quoted market
prices are used where available, otherwise fair values are based on estimates
using present value or other valuation techniques. The techniques are
specifically affected by the assumptions used, including the discount rate and
estimates of future cash flows. Therefore, the estimates of fair value cannot
be substantiated by comparison to independent markets and, in many cases, could
not be realized in immediate settlement of the financial instruments. SFAS No.
107 excludes certain financial instruments and all nonfinancial instruments
from its disclosure. These estimated fair values are provided for disclosure
purposes only. Accordingly, the aggregate fair value amounts presented do not
impact the carrying values of financial statement amounts or represent the
underlying value of the Company.
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate
that value:
CASH AND CASH EQUIVALENTS - The carrying amounts are a reasonable estimate of
fair values.
SECURITIES - Fair value is based on quoted market price, if available. If
quoted market price is not available, fair value is estimated using quoted
market prices of comparable instruments.
LOANS - For floating rate loans that reprice periodically and with no change in
credit risk, fair values are based on carrying values. The fair value of other
types of loans is estimated by discounting the future cash flows using the
current rates at which similar loans would be made to borrowers with similar
credit ratings and for the same remaining maturities.
DEPOSITS - The fair value of noninterest bearing and interest bearing demand
deposits and savings deposits is the amount payable on demand at December 31,
1995. The carrying value of floating rate time deposits that reprice
periodically approximate their fair values at December 31, 1995. The fair
value of fixed-maturity certificates of deposit is estimated using a discounted
cash flow calculation that applies the interest rates currently offered for
deposits of similar remaining maturities.
DEBT - The carrying amount of debt approximates fair value.
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS - The Company has commitments to extend
credit and standby letters-of-credit. These types of credit are made at market
rates; therefore, there would be no market risk associated with these credits
which would create a significant fair value liability for the Company.
<PAGE>
<PAGE>
The carrying values and estimated fair values of the Company's financial
instruments at December 31, 1995 are as follows:
Estimated
Carrying Fair
Value Value
----------- -----------
Financial Assets:
Cash and Due From Banks $ 8,214,751 $ 8,214,751
Federal Funds Sold 3,247,000 3,247,000
Securities Available-for-Sale 21,232,516 21,232,516
Loans, net 59,901,999 60,044,004
Financial Liabilities:
Deposits $89,201,877 $87,425,267
Debt 856,701 856,701
Off-Balance Sheet Financial Instruments
Commitments to Extend Credit $ 9,104,000 $ 9,104,000
Standby Letters-of-Credit 1,395,000 1,395,000
NOTE 15 - PARENT COMPANY FINANCIAL STATEMENTS
The Company is the sole stockholder of the Bank, which is the sole stockholder
of BFS. The Company has control of the Bank through ownership and common
management. The Company is economically dependent upon the operations of the
Bank for rent income, which is used to fund debt service payments and pay other
expenses. The fixed assets of the Company and the stock of the Bank are
collateral for the debt.
The condensed financial information for the Company (Parent Company only) is as
follows:
BALANCE SHEETS
DECEMBER 31,
---------------------------
1995 1994
---- ----
Assets
- ------
Cash $ 166,324 $ 111,179
Investment in subsidiary 6,755,327 4,705,655
Bank premises, net 1,065,002 1,089,217
Tax benefit receivable 10,098 17,898
---------- ----------
Total Assets $7,996,751 $5,923,949
========== ==========
<PAGE>
<PAGE>
Liabilities and Stockholders' Equity
- ------------------------------------
Liabilities
Debt $ 856,701 $ 931,581
Accrued expenses 21,028 7,120
---------- ----------
Total Liabilities $ 877,729 $ 938,701
---------- ----------
Stockholders' Equity
Preferred stock, $1 par value,
500,000 shares authorized, no
shares issued $ -- $ --
Common stock, $1 par value, 2,000,000
shares authorized, and 693,122 and
613,122 shares issued and outstand-
ing at December 31, 1995 and 1994,
respectively 693,122 613,122
Additional paid-in capital 6,234,025 5,434,025
Unrealized gain (loss) on securities
available-for-sale 37,048 (677,348)
Retained earnings (accumulated deficit) 154,827 (384,551)
---------- ----------
Total Stockholders' Equity $7,119,022 $4,985,248
---------- ----------
Total Liabilities and Stockholders' Equity $7,996,751 $5,923,949
========== ==========
<PAGE>
<PAGE>
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31,
------------------------------------
1995 1994 1993
Income ---- ---- ----
- ------
Rent $ 171,600 $ 171,600 $ 171,600
Interest 4,323 4,431 7,465
---------- ---------- ----------
Total income 175,923 176,031 179,065
Expenses
- ---------
Interest 86,900 79,725 81,437
Legal and professional 28,013 25,750 15,687
Depreciation and amortization 24,215 24,216 24,793
Other 24,894 19,679 17,888
---------- ---------- ----------
Total expenses 164,022 149,370 139,805
---------- ---------- ----------
Operating income before
provision for income taxes 11,901 26,661 39,260
Provision for income taxes 7,800 -- --
---------- ---------- ----------
Income before net income of
subsidiary 4,101 26,661 39,260
Net income of subsidiary 535,277 376,839 212,885
---------- ---------- ----------
Net income $ 539,378 $ 403,500 $ 252,145
<PAGE>
<PAGE>
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
------------------------------------
1995 1994 1993
---- ---- ----
Cash Flows from Operating Activities
Net income $ 539,378 $ 403,500 $ 252,145
Adjustments to reconcile net income to
net cash (used in) provided by operat-
ing activities:
Depreciation and amortization 24,215 24,216 24,793
Increase in accrued expenses 13,908 3,235 1,267
Decrease (increase) in tax benefit
receivable 7,800 (17,898) 27,963
Equity in income of subsidiary (535,276) (376,839) (212,885)
Capital contributed to subsidiary (800,000) -- (700,000)
---------- ---------- ----------
Net cash (used in) provided by
operating activities (749,975) 36,214 (606,717)
---------- ---------- ----------
Cash Flows from Financing Activities
Principal payments on debt (74,880) (82,735) (77,829)
Proceeds from issuance of common stock 880,000 -- 700,000
---------- ---------- ----------
Net cash provided by (used in)
financing activities 805,120 (82,735) 622,171
---------- ---------- -----------
Net (Decrease) Increase in Cash (55,145) (46,521) 15,454
Cash at Beginning of Year 111,179 157,700 142,246
---------- ---------- -----------
Cash at End of Year $ 166,324 $ 111,179 $ 157,700
========== ========== ===========
Supplemental disclosures of cash
flow information (Parent Company
only):
1995 1994 1993
---- ---- ----
Interest paid $ 85,919 $ 78,065 $ 80,171
========== ========== ===========
Income tax refunds received $ -- $ -- $ 27,963
========== ========== ===========
<PAGE>
<PAGE>
OFFICERS - BANKALABAMA - HUNTSVILLE
W. R. Collins Chairman and Chief Executive Officer
Susan Askew Assistant Vice President/Branch Manager
Lorna Jo Bridges Auditor/Bank Secrecy Act/Compliance
Robert E. DeNeefe Senior Vice President/Real Estate Division Manager
Paul T. Eckley Assistant Vice President/Branch Manager
Terry C. Everhart Assistant Vice President/Branch Manager
Beatrice Vincent-Foster Assistant Vice President/Branch Manager
Robert F. Harwell, Jr. Executive Vice President & Chief Lending Officer
A. Ted Matsos Operations and Security Officer
Gay Pepper Assistant Cashier/Branch Manager
Richard T. Perdue Vice President/Commercial Loan Officer/
Branch Administrator
Mary Sue Scheer Assistant Cashier/Loan Officer
Jean D. Snead Vice President/Corporate Secretary
Middie Y. Thompson Vice President/Marketing/Personnel/CRA Officer
Steven R. Townson President and Chief Operating Officer
Archie H. Weaver Vice President/Branch Manager
Michael J. Williams Chief Financial Officer and Cashier
DIRECTORS - BANKALABAMA - HUNTSVILLE
Philip W. Bentley, Jr. President, Bentley Pontiac-Cadillac, Inc.
Bentley Imports, Inc., Bentley Mitsubishi
and Bentley Automotive, Inc.
Billy P. Brooks Owner and President, Brooks and Collier, Inc.
Owner, Brooks Nursery
Dr. James E. Campbell Retired Radiologist, Vice Chairman,
BankAlabama-Huntsville
W. R. Collins Chairman of the Board and Chief Executive Officer,
BancAlabama, Inc., Chairman of the Board and
Chief Executive Officer, BankAlabama-Huntsville
Dr. Howard G. Miller Orthopaedic Surgeon, Orthopaedic Associates of
North Alabama P.C.
Larry D. Mullins Owner, Mullins Restaurant
Barney C. Nickelson Manager Burnett-Nickelson Investments, Officer and
Director, D N L Development, Inc., Vice Chairman
of the Board, BancAlabama, Inc.
O. D. Street, III Major General (U.S. Army Retired), Treasurer,
BancAlabama, Inc.
Paul W. Thompson Retired
Steven R. Townson President and Chief Operating Officer, BancAlabama,
Inc. & BankAlabama-Huntsville
Bob W. Wills President, S E A Wire and Cable, Inc.
<PAGE>
<PAGE>
ADVISORY BOARD - BANKALABAMA - HUNTSVILLE
James R. Brothers Engineer, U.S. Army Strategic Defense Command
Earl I. Eastin Retired; Investments
John R. Howard President, Howard and Vandiver Commercial Real
Estate, Inc.
Sang Yi Lee Certified Master Tailor and Designer
Lee's Tailoring Shop and Laundry Mat
David G. Martin Founder and President, Steak Out, Inc., Chairman
of the Board, Steak Out Franchising, Inc.
Edwin W. Powell Real Estate Broker; Owner, Big M. Development
Company
Gene Rodgers Electrical Contractor; Owner, R & S Electric
Company, Inc.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
LOCATIONS
<S> <C> <C>
MAIN OFFICE BRAHAN SPRINGS OFFICE
P.O. Box 293 2227 Drake Avenue SW
312 Clinton Avenue *BIG COVE OFFICE Huntsville, Alabama 35805
Huntsville, Alabama 35801 6388 U. S. Highway 431 (205) 551-9491
(205) 533-5548 Owens Cross Roads, Alabama 35763
(205) 551-7150
*CHASE PARK OFFICE *MADISON SQUARE OFFICE
5180 Moores Mill Road 5901 University Drive
Huntsville, Alabama 35811 HOURS Huntsville, Alabama 35806
(205) 551-9481 9:00 a.m. to 5:00 p.m. (205) 551-7101
Monday - Thursday
9:00 a.m. to 6:00 p.m.
Friday
CHASE PARK OFFICE MADISON SQUARE OFFICE BIG COVE OFFICE
9:00 a.m. to 5:00 p.m. 9:00 a.m. to 5:00 p.m. 9:00 a.m. to 5:00 p.m.
Monday - Thursday Monday - Thursday Monday - Thursday
9:00 a.m. to 6:00 p.m. 9:00 a.m. to 6:00 p.m. 9:00 a.m. to 6:00 p.m.
Friday Friday Friday
8:30 a.m. to 1:00 p.m. 8:30 a.m. to 1:00 p.m. 8:30 a.m. to 1:00 p.m.
Saturday Saturday Saturday
</TABLE>
Automatic Teller Machine - All Locations *Saturday Banking Hours
BANKALABAMA BANKING CENTERS
*LOGAN DRIVE BANKING CENTER
8404 S. Memorial Parkway
Huntsville, Alabama 35802
(205) 551-7120
In Kroger
*DRAKE AVENUE BANKING CENTER
2021 Drake Avenue SW
Huntsville, Alabama 35801
(205) 551-7130
In Kroger
<TABLE>
<S> <C> <C>
*OAKWOOD BANKING CENTER *MADISON BANKING CENTER
2110 Oakwood Avenue NW 300 Hughes Road
Huntsville, Alabama 35810 Madison, Alabama 35758
(205) 551-7140 (205) 464-3090
In Kroger BANKING CENTER HOURS in Kroger
10:00 a.m. to 8:00 p.m. Monday - Friday
10:00 a.m. to 5:00 p.m. Saturday
</TABLE>
*Automatic Teller Machines
<PAGE>
<PAGE>
SUBSIDIARY OF REGISTRANT
The sole subsidiary of the Registrant is BankAlabama-Huntsville,
an Alabama state chartered bank.
<PAGE>
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
We hereby consent to the incorporation by reference in the Annual
Report on Form 10-K of BancAlabama, Inc., for the fiscal year ended
December 31, 1995, of our report dated February 2, 1996, on the
consolidated financial statements of BancAlabama, Inc., and Subsidiary.
BROWDER & ASSOCIATES, P.C.
Birmingham, Alabama
March 29, 1996
<TABLE> <S> <C>
<PAGE>
<PAGE>
<ARTICLE> 9
<LEGEND>
Form 10-K for the year ended December 31, 1995.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 8,214,751
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 3,247,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 21,232,516
<INVESTMENTS-MARKET> 21,170,268
<LOANS> 60,496,094
<ALLOWANCE> 594,095
<TOTAL-ASSETS> 97,946,679
<DEPOSITS> 89,201,877
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,625,780
<LONG-TERM> 0
0
0
<COMMON> 693,122
<OTHER-SE> 6,425,900
<TOTAL-LIABILITIES-AND-EQUITY> 97,946,679
<INTEREST-LOAN> 6,043,527
<INTEREST-INVEST> 917,086
<INTEREST-OTHER> 199,211
<INTEREST-TOTAL> 7,159,824
<INTEREST-DEPOSIT> 3,123,816
<INTEREST-EXPENSE> 3,215,209
<INTEREST-INCOME-NET> 3,944,615
<LOAN-LOSSES> 377,000
<SECURITIES-GAINS> 5,320
<EXPENSE-OTHER> 3,603,268
<INCOME-PRETAX> 921,978
<INCOME-PRE-EXTRAORDINARY> 921,978
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 539,378
<EPS-PRIMARY> .87
<EPS-DILUTED> .87
<YIELD-ACTUAL> 5.56
<LOANS-NON> 573,219
<LOANS-PAST> 164,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 105,435
<ALLOWANCE-OPEN> 505,125
<CHARGE-OFFS> 326,131
<RECOVERIES> 38,101
<ALLOWANCE-CLOSE> 594,095
<ALLOWANCE-DOMESTIC> 594,095
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<PAGE>
<PAGE>
</TABLE>
<PAGE>
<PAGE>
BANCALABAMA, INC.
Post Office Box 293
Huntsville, Alabama 35804
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
APRIL 9, 1996
TO THE SHAREHOLDERS OF BANCALABAMA, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
BancAlabama, Inc. (the "Company") will be held at the Company's main office
at 312 Clinton Avenue, W., Huntsville, Alabama, on April 9, 1996, at 2:00
p.m. local time for the following purposes:
1. To elect three (3) Directors to the Board of Directors to serve a
three-year term and until their successors are duly elected and
qualified (designated as Proposal 1 in the accompanying Proxy
Statement).
2. To ratify the appointment by the Board of Directors of Browder &
Associates, P.C., as the Company's independent public accountants
for the current year (designated as Proposal 2 in the
accompanying Proxy Statement).
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The close of business on February 28, 1996, has been fixed as the
record date for determination of shareholders entitled to notice of and to
vote at the meeting.
A copy of the Annual Report to Shareholders for the year ended
December 31, 1995, is enclosed.
By order of the Board of Directors
Jean D. Snead
Secretary
Huntsville, Alabama
March 15, 1996
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN
THE ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. IF
YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU
HAVE PREVIOUSLY RETURNED YOUR PROXY.
<PAGE>
<PAGE>
BANCALABAMA, INC.
Post Office Box 293
Huntsville, Alabama 35804
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of BancAlabama, Inc. (the "Company"),
to be voted at the Annual Meeting of Shareholders to be held on April 9,
1996, and at any and all adjournments thereof (the "Meeting"). The form of
proxy permits specification, approval, disapproval or abstention as to each
of the two proposals. Proposals 1 and 2 will be presented at the Meeting
by management. If the enclosed form of proxy is properly executed,
returned and not revoked, it will be voted in accordance with the
directions, if any, made by the shareholder or, if directions are not made,
will be voted in favor of Proposals 1 and 2.
The cost of solicitation of proxies will be borne by the Company.
Proxies may be solicited by directors, officers, or regular employees of
the Company in person or by telephone or mail. The Company may reimburse
others for their expenses in forwarding solicitation material regarding the
Meeting to beneficial owners. On or about March 15, 1996, the Company will
commence mailing this Proxy Statement, the enclosed form of proxy, and
attached Notice to holders of its common stock.
Shareholders who sign proxies have the right to revoke them at any
time before they are voted by filing with the Secretary of the Company,
Jean D. Snead, either an instrument revoking the proxy or a duly executed
proxy bearing a later date, or by attending the Meeting and voting in
person.
The close of business on February 28, 1996, has been fixed as the
record date for the determination of shareholders entitled to notice of and
to vote at the Meeting.
GENERAL
The holders of a majority of the shares issued and outstanding and
entitled to vote must be present in person, or be represented by proxy, to
constitute a quorum and act upon the proposed business. Failure of a
quorum to be represented at the Meeting will necessitate an adjournment and
will subject the Company to additional expense.
Election of each director shall be by plurality vote. Approval of
Proposal 2 discussed in this Proxy Statement requires the affirmative vote
of the holders of a majority of the outstanding shares present and entitled
to vote at the Meeting. The Company's Certificate of Incorporation and
Bylaws do not contain any provisions concerning the treatment of
abstentions and broker non-votes. Delaware law treats abstentions as votes
which are not cast in favor of a proposal or nominee. Delaware law does
not address the treatment of broker non-votes; however, the Company will
treat broker non-votes as present for purposes of calculating the quorum
but as absent for purposes of calculating votes cast for or against a
proposal or nominee. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
EACH NOMINATED DIRECTOR AND FOR PROPOSAL 2.
<PAGE>
<PAGE>
COMMON STOCK OUTSTANDING AND PRINCIPAL SHAREHOLDERS
As of January 15, 1996, there were outstanding 703,122 shares of the
Company's common stock, $1.00 par value (the "Common Stock"). Holders of
Common Stock are entitled to one vote per share on all matters to be voted
upon by shareholders.
The following table sets forth information as of January 15, 1996, as
to (a) the only persons who were known by the Company to own beneficially
more than 5% of the outstanding Common Stock of the Company, (b) the shares
of such Common Stock beneficially owned by the directors and nominees of
the Company, (c) the shares of such Common Stock beneficially owned by
William R. Collins, the Company's Chief Executive Officer, and (d) the
shares of such Common Stock beneficially owned by all executive officers,
directors and nominees of the Company as a group. Unless otherwise
indicated, each shareholder named has sole voting and dispositive power
with respect to his shares.
<TABLE>
<CAPTION>
Name or Number Number of Shares Percent of Total
in Group (1) Beneficially Owned Outstanding (2)
-------------- ------------------ ----------------
Directors and Nominees
- ----------------------
<S> <C> <C>
William R. Collins (3) 112,225 14.71%
Steven R. Townson (4) 40,000 5.49%
James E. Campbell (5) 32,700 4.65%
Philip W. Bentley, Jr. (6) 22,500 3.20%
Billy P. Brooks (7) 20,615 2.93%
Paul W. Thompson 20,000 2.84%
Oliver D. Street, III 15,400 2.19%
Barney C. Nickelson (8) 11,200 1.59%
More than 5% Shareholders who are not
Officers or Directors or Nominees
- -------------------------------------
Estate of John J. Weed, Deceased (9) 46,050 6.55%
All Directors and Executive Officers as a
Group (10 Persons) 297,640(10) 36.83%
- -----------------------------------------
</TABLE>
(1) Unless otherwise indicated, the mailing address is in care of the
Company, Post Office Box 293, Huntsville, Alabama 35804.
(2) Shares issuable under immediately exercisable options are considered
outstanding for the purposes of calculating the percentage of Common
Stock owned by executive officers, directors and 5% shareholders who
have immediately exercisable options, but such shares are not
considered outstanding with respect to executive officers, directors
and 5% shareholders who do not have any such options.
<PAGE>
<PAGE>
(3) Includes 60,000 shares which are subject to immediately exercisable
stock options held by Mr. Collins.
(4) Includes 25,000 shares which are subject to immediately exercisable
stock options held by Mr. Townson.
(5) Includes 10,000 shares of Common Stock in the name of Radiology of
Huntsville, P.C., Profit Sharing Plan for the benefit of J. E.
Campbell, participant; and 300 shares in his granddaughters' names.
(6) Includes 12,500 shares owned by Bentley Pontiac, Inc.
(7) Includes 2,500 shares held in the name of his wife, Doris B. Brooks;
3,852 shares held in the name of Prudential Securities, Inc.,
Custodian for Doris Brooks; and 4,063 shares held in the name of
Prudential Securities, Inc., Custodian for Billy P. Brooks.
(8) Includes 1,000 shares held in the name of Christy B. Nickelson, as
Custodian for minor children and a minor nephew, and 10,000 shares
owned jointly with his wife, Christy B. Nickelson.
(9) Includes 16,050 shares owned by Mr. Weed's surviving spouse.
(10) Includes 105,000 shares which are subject to immediately exercisable
stock options.
PROPOSAL 1
ELECTION OF DIRECTORS
Nominees for Board of Directors
- -------------------------------
The Certificate of Incorporation of the Company provides for a Board
of Directors of not fewer than five nor more than twenty members, with the
exact number to be determined from time to time by resolution of the Board
of Directors and for such directors to be elected for three-year terms on a
staggered basis.
The Board of Directors has fixed the number of members of the Board of
Directors at ten (10) by resolution adopted on February 12, 1996. The
Board of Directors proposes to nominate the three (3) persons listed below
for election as directors to serve until the 1999 Annual Meeting of
Shareholders and until their successors are duly elected and qualified. It
is the desire of the Board of Directors that the Board have the option of
selecting up to two (2) additional directors to serve on the Board prior to
the election of directors at the next Annual Meeting of the Shareholders.
The names and ages of the nominees, their principal occupations during
the past five years, and the years in which they were first elected as
directors of the Company are as follows:
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Director Present Principal Occupation
Name Age Since And Business Experience
---- --- -------- ----------------------------
<S> <C> <C> <C>
James E. Campbell 60 1986 Retired. Formerly Radiologist at
Radiology Associates, P.C. Vice
Chairman of BankAlabama-Huntsville.
William R. Collins 65 1989 Chairman of the Board and Chief
Executive Officer of BancAlabama, Inc.
Chairman and Chief Executive Officer
of BankAlabama-Huntsville.
Paul W. Thompson 76 1986 Retired. Formerly President of
Wholesale Electric Supply Company.
</TABLE>
Unless directed to the contrary, the persons acting under the proxy
solicited hereby will vote for the nominees named above. Should any such
nominee become unable to accept election, which is not anticipated, it is
intended that the persons acting under the proxy will vote for the election
in his stead of such person as the Board of Directors may recommend.
Continuing Directors of the Company
- -----------------------------------
The incumbent directors of the Company include Messrs. James E.
Campbell, William R. Collins and Paul W. Thompson who are nominated for new
terms on the Board of Directors. The names and ages of the other incumbent
directors of the Company, their principal occupations for the past five
years, the year in which they were first elected as directors of the
Company, and the year in which their terms as directors will expire are as
follows:
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Director Present Principal Occupation
Name Age Since and Business Experience
---- --- -------- ----------------------------
<S> <C> <C> <C>
Philip W. Bentley, Jr. 52 1986 President of Bentley Pontiac,
Cadillac, Inc., Bentley Imports, Inc.,
Bentley Mitsubishi, and Bentley
Automotive, Inc. Term expires in
1997.
Billy P. Brooks 62 1990 Owner and President of Brooks &
Collier, Inc. Owner of Brooks
Nursery. Term expires in 1997.
Barney C. Nickelson 46 1986 Manager of Burnett-Nickelson Invest-
ments. Officer and director of DNL
Development, Inc. Vice Chairman of
the Board of BancAlabama, Inc. Term
expires in 1997.
Oliver D. Street, III 70 1986 Major General (U.S. Army Retired).
Treasurer, BancAlabama, Inc. Term
expires in 1997.
Steven R. Townson (1) 38 1995 President and Chief Operating Officer
of BancAlabama, Inc., and BankAlabama-
Huntsville. From April 1993 to July
1995, Vice President, Financial Insti-
tutions for First Tennessee Bank
National Association, in Chattanooga,
Tennessee. From June 1989 to March
1993, Assistant Vice President,
Corporate Lending Division of AmSouth
Bank, N.A., in Tuscaloosa, Alabama.
Term expires in 1998.
</TABLE>
__________________
(1) Mr. Townson became the President and Chief Operating Officer of
BankAlabama-Huntsville on October 9, 1995, and the President, Chief
Operating Officer and a director of BancAlabama, Inc., on October 9,
1995.
BOARD COMMITTEES AND ATTENDANCE
During the year ended December 31, 1995, the Company's Board of
Directors held nine (9) meetings. During 1995, all incumbent directors of
the Company attended 75% or more of the total number of meetings held by
the Company's Board of Directors. The Company does not have a standing
compensation, nominating or audit committee. All decisions made in these
areas during 1995 were made by the entire Board of Directors.
The Board of Directors of the Company's wholly-owned subsidiary bank,
BankAlabama-Huntsville (the "Bank"), held thirteen (13) meetings during the
1995 year. During 1995, all directors of the Bank attended 75% or more of
<PAGE>
<PAGE>
the total number of meetings held by the Bank's Board of Directors. The
Bank has a standing audit committee composed of Messrs. Nickelson and
Bentley, Mr. Larry D. Mullins and Mr. Bob W. Wills.
EXECUTIVE COMPENSATION
The Securities and Exchange Commission has adopted rules requiring
certain disclosures concerning the compensation and other benefits paid or
awarded by a company to its chief executive officer and to its four (4)
most highly compensated executive officers receiving compensation exceeding
$100,000. In 1995, the Company did not have any executive officer, other
than its Chief Executive Officer, who received compensation exceeding
$100,000.
The following table summarizes the compensation of William R. Collins,
the Company's Chief Executive Officer, for the periods indicated:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation
-------------------
Name and Other Annual All Other
Principal Position Year Salary Bonus Compensation Compensation
- ------------------ ---- ------ ----- ------------ ------------
(1) (2) (3)
<S> <C> <C> <C> <C> <C>
William R. Collins, 1995 $140,000 - - $66,847
Chairman and Chief 1994 $140,000 - - 7,459
Executive Officer of 1993 $140,000 - - 7,459
BancAlabama, Inc. and
BankAlabama-Huntsville
</TABLE>
__________________
(1) Includes amounts deferred by Mr. Collins under the Company's 401(k)
Plan and Trust.
(2) "Other Annual Compensation" does not include the value of certain
perquisites or other personal benefits, securities and property, if
any, furnished by the Company to Mr. Collins (or for which it
reimburses Mr. Collins), including the use of corporate vehicles,
unless the value of such benefits in total exceeds the lesser of
$50,000 or 10% of the total annual salary and bonus reported in the
above table for Mr. Collins.
(3) "All Other Compensation" is composed of that portion of the premiums
paid by the Company in the years ended December 31, 1995, 1994, and
1993, related to whole life insurance on Mr. Collins, the proceeds of
which will be paid to his spouse in the event of his death. "All
Other Compensation" for the year ended December 31, 1995, also
includes the transfer of the life insurance policies to Mr. Collins,
which had a cash surrender value of $65,348 on the date of transfer,
in exchange for cancellation by Mr. Collins of the Company's future
liability to provide deferred compensation and death benefits.
<PAGE>
<PAGE>
Stock Option Grants, Exercises and Year End Values
- --------------------------------------------------
The Company from time to time awards stock options to executive
officers and other key employees pursuant to two stock option plans
approved by the shareholders of the Company. No options were granted to or
exercised by Mr. Collins during the year ended December 31, 1995. The
following table sets forth the values as of December 31, 1995, of the
unexercised stock options held by Mr. Collins under the Company's two stock
option plans:
Stock Option Values at
December 31, 1995
-----------------------
Number of Securities
Underlying Unexercised Value of Unexercised In-the-
Options at Year End Money Options at Year End
(1)
---------------------- ----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
William R. Collins 60,000 -0- 60,000 -
____________
(1) Values are calculated by subtracting the $10.00 per share exercise
price of the options from the most recent sale price for the Common
Stock on January 15, 1996, of $11.00 per share.
Compensation of Directors
- -------------------------
The Bylaws of the Company permit the Board of Directors to fix the
compensation of directors. The directors of the Company received no
compensation in 1995 for their services as directors or for attendance at
any meeting of the Board of Directors or any committee meeting.
TRANSACTIONS WITH MANAGEMENT
Directors and officers of the Company and the Bank and their relatives
and business associates may be customers of, and have transactions with,
the Bank in the ordinary course of business in the past and in the future.
All outstanding loans and commitments to be included in such transactions
are made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions
with other persons, and do not involve more than normal risk of
collectibility or present other unfavorable features.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF AUDITORS
Subject to shareholder approval at the Meeting, the Board of Directors
of the Company has appointed Browder & Associates, P.C., as the Company's
independent public accountants to audit the financial statements of the
<PAGE>
<PAGE>
Company for the current fiscal year ending December 31, 1996, and to
perform other appropriate accounting services. Such appointment will be
presented to the shareholders for ratification at the Meeting. If the
shareholders do not ratify the appointment, the selection of another firm
will be considered by the Board.
Representatives of Browder & Associates, P.C., are expected to be
present at the Meeting to respond to questions from shareholders and will
be given the opportunity to make a statement if they so desire.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2.
OTHER
Management does not know of any other matters to be presented at the
Meeting for action by shareholders. However, if any other matters are
properly brought before the Meeting or any adjournment thereof, votes will
be cast pursuant to the proxies in accordance with the best judgment of the
proxy holders with respect to such matter.
DATE FOR RECEIPT OF SHAREHOLDERS' PROPOSALS
Proposals of shareholders intended to be presented at the 1997 Annual
Meeting must be received by the Company for inclusion in its 1997 Proxy
Materials no later than November 14, 1996.
UPON WRITTEN REQUEST OF ANY SHAREHOLDER TO JEAN D. SNEAD, SECRETARY OF
BANCALABAMA, INC., POST OFFICE BOX 293, HUNTSVILLE, ALABAMA 35804, THE
COMPANY WILL PROVIDE WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT
ON FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
By order of the Board of Directors
Jean D. Snead
Secretary
DATED: March 15, 1996
<PAGE>
<PAGE>
BANCALABAMA, INC.
PROXY FOR
ANNUAL MEETING OF SHAREHOLDERS
April 9, 1996
The undersigned hereby appoints Philip W. Bentley, Jr., and Billy P.
Brooks, or either of them, as Proxies, each with the power to appoint his
substitute, and hereby authorizes them to represent and to vote, as
designated below, all the shares of Common Stock of BancAlabama, Inc.,
which the undersigned would be entitled to vote if personally present at
the Annual Meeting of Shareholders to be held on April 9, 1996, or any
adjournment(s) thereof.
The Board of Directors recommends a FOR vote on the following
proposals:
1. ELECTION OF DIRECTORS
NOMINEES: James E. Campbell, William R. Collins, and Paul W.
Thompson
[ ] FOR all nominees listed above, except vote withheld from the
nominees (if any) whose names are written on the following
space:
[ ] WITHOUT AUTHORITY to vote for all nominees listed above.
2. PROPOSAL TO RATIFY THE APPOINTMENT OF BROWDER & ASSOCIATES, P.C.,
as Company's independent public accountants for the current year
ending December 31, 1996.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment(s)
thereof. If any nominee named above is not able to serve, the Proxies
shall vote for such other person or persons nominated in accordance with
their best judgment.
THIS PROXY IS SOLICITED ON BEHALF OF THE BANCALABAMA, INC., BOARD OF
DIRECTORS
<PAGE>
<PAGE>
This Proxy, when properly executed, will be voted in the manner directed
above or, IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS
1 and 2.
PLEASE SIGN HERE AND RETURN PROMPTLY
DATE ______________, 1996
Please sign exactly as your name appears at
left. If registered in the names of two or
more persons, each should sign. Executors,
administrators, trustees, guardians,
attorneys, partners and corporate officers
should show their titles.
