<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended:
June 30, 2000
Commission file number: 0-29422
Eufaula BancCorp, Inc.
(Exact name of Registrant as specified incits charter)
Delaware 63-0989868
(State of Incorporation) (I.R.S. Employer Identification No.)
224 East Broad Street
Eufaula, Alabama 36027
(Address of principal executive offices) (Zip Code)
(334) 687-3581
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter periods that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------- --------
The number of shares outstanding of registrant's common stock, par value $1.00
per share, at June 30, 2000 was 2,625,273.
<PAGE>
EUFAULA BANCCORP, INC.
FORM 10-QSB
June 30, 2000
INDEX
PART I. Financial Information:
Item 1. Consolidated Statements of Condition, June
30, 2000 and December 31, 1999. 3
Consolidated Statements of Income for the
Three and Six months ended June 30, 2000 and 4
1999.
Consolidated Statements of Cash Flow for the
Six months ended June 30, 2000 and 1999. 5
Notes to Consolidated Financial Statements. 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations. 7-11
PART II. Other Information
Item 1. Legal Proceedings 12
Item 2. Change in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security
Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
2
<PAGE>
Part I. EUFAULA BANCCORP, INC.
Item 1 CONSOLIDATED STATEMENTS OF CONDITION
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
--------- -----------
<S> <C> <C>
(In thousands, except per share data)
ASSETS
Cash and Due From Banks................................................. $ 10,773 $ 10,301
-------- --------
Short-Term Investments:
Federal Funds Sold and Securities Purchased
Under Agreement to Resell........................................... 400 400
Other Short-Term Investments.......................................... 0 47
-------- --------
Total Short-Term Investments............................................ 400 447
Securities Available-for-Sale........................................... 27,488 22,716
-------- --------
Investment Securities................................................... 19,541 11,084
-------- --------
Total Loans............................................................. 228,165 205,945
Allowance for Loan Losses............................................. (2,968) (2,556)
-------- --------
Net Loans............................................................ 225,197 203,389
-------- --------
Premises and Equipment.................................................. 6,595 6,530
-------- --------
Goodwill................................................................ 1,273 1,312
-------- --------
Other Real Estate....................................................... 628 141
-------- --------
Other Assets............................................................ 5,157 4,902
-------- --------
Total Assets......................................................... $297,052 $260,822
======== ========
LIABILITIES
Deposits:
Demand................................................................ $ 31,834 $ 25,351
Savings and Interest-Bearing Demand................................... 66,861 65,758
Time.................................................................. 152,987 135,076
-------- --------
Total Deposits....................................................... 251,682 226,185
Federal Funds Purchased and Securities Sold Under
Agreements to Repurchase.............................................. 21,066 11,617
Notes Payable........................................................... 1,000 1,000
Other Liabilities....................................................... 2,730 2,551
-------- --------
Total Liabilities.................................................... 276,478 241,353
-------- --------
CAPITAL ACCOUNTS
Preferred Stock (Par value of $.10; 50 shares authorized in 1999
and 1998; none outstanding)........................................... 0 0
Common Stock (Par value of $1.00; 5,000 shares authorized; 2,625 and
2,625 shares outstanding in 2000 and 1999, respectively)............... 2,625 2,625
Surplus................................................................. 6,059 6,059
Undivided Profits....................................................... 12,392 11,431
Accumulated Other Comprehensive Income.................................. (502) (646)
-------- --------
Total Capital Accounts............................................... 20,574 19,469
-------- --------
Total Liabilities and Capital Accounts............................... $297,052 $260,822
======== ========
</TABLE>
3
<PAGE>
EUFAULA BANCCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
---------------------- ----------------------
(In thousands, except per share data) 2000 1999 2000 1999
------ ------ ------- ------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and Fees on Loans......................... $5,288 $4,431 $10,172 $8,216
Interest on Securities:
Taxable Securities............................... 508 326 942 651
Nontaxable Securities............................ 233 97 421 195
Interest on Federal Funds Sold and
Securities Purchased Under
Agreements to Resell............................. 3 74 18 74
Interest on Deposits in Banks...................... 0 2 0 3
------ ------ ------- ------
TOTAL INTEREST INCOME.......................... 6,032 4,930 11,553 9,139
------ ------ ------- ------
INTEREST EXPENSE
Interest on Deposits............................... 2,751 2,167 5,308 4,022
Interest on Federal Funds Purchased
and Securities Sold Under Agreements to
Repurchase...................................... 293 115 448 183
Interest on Notes Payable.......................... 30 0 52 0
------ ------ ------- ------
TOTAL INTEREST EXPENSE......................... 3,074 2,282 5,808 4,205
------ ------ ------- ------
NET INTEREST INCOME............................ 2,958 2,648 5,745 4,934
Provision for Possible Loan Losses................. 252 366 508 675
------ ------ ------- ------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES...................... 2,706 2,282 5,237 4,259
------ ------ ------- ------
OTHER INCOME
Service Charges on Deposit Accounts................ 273 259 516 483
Security Gains..................................... (16) 0 (16) 0
Other Operating Income............................. 203 225 395 441
------ ------ ------- ------
TOTAL OTHER INCOME............................. 460 484 895 924
------ ------ ------- ------
OTHER EXPENSE
Salaries........................................... 935 837 1,848 1,647
Employee Benefits.................................. 295 331 645 670
Net Occupancy Expense.............................. 173 105 328 199
Equipment Expense.................................. 132 156 279 290
Data Processing Expense............................ 128 87 235 169
Other Operating Expenses........................... 623 572 1,154 1,278
------ ------ ------- ------
TOTAL OTHER EXPENSE............................ 2,286 2,088 4,489 4,171
------ ------ ------- ------
INCOME BEFORE INCOME TAXES......................... 880 678 1,643 1,012
INCOME TAX EXPENSE................................. 232 228 445 337
------ ------ ------- ------
NET INCOME..................................... $ 648 $ 450 $ 1,198 $ 675
====== ====== ======= ======
EARNINGS PER SHARE:
BASIC.......................................... $ 0.25 $ 0.17 $ 0.46 $ 0.26
====== ====== ======= ======
DILUTED........................................ $ 0.24 $ 0.16 $ 0.43 $ 0.24
====== ====== ======= ======
AVERAGE SHARES ISSUED AND
OUTSTANDING....................................... 2,625 2,621 2,625 2,621
FULLY DILUTED SHARES ISSUED AND
OUTSTANDING..................................... 2,743 2,751 2,743 2,751
</TABLE>
4
<PAGE>
EUFAULA BANCCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
June 30,
-------------------------------
2000 1999
--------- --------
<S> <C> <C>
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income...................................................... $ 1,198 $ 348
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation................................................. 257 160
Amortization of Goodwill..................................... 39 0
Provision for Possible Loans Losses.......................... 508 649
Gain on Sales of Securities.................................. (17) 0
Accretion of Bond Discount, Net.............................. (2) (193)
(Increase) Decrease in Other Assets.......................... (255) 218
Increase (Decrease) in Other Liabilities..................... 179 1,790
--------- --------
Net Cash Provided by Operating Activities....................... 1,907 2,972
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Maturities of Investment Securities.............. 0 1,907
Proceeds from Maturities of Securities Available-for-Sale...... 0 0
Proceeds from Sales of Securities Available-for-Sale........... 250 0
Purchase of Investment Securities.............................. (3,507) (1,325)
Purchase of Available-for-Sale Securities...................... (850) 0
Increase (Decrease) in Federal Funds, Net...................... 0 (2,050)
(Increase) Decrease in Other Short-Term Investments............ ( 47) 45
Increase in Loans.............................................. (22,220) (42,515)
Capital Additions.............................................. (322) (505)
--------- --------
Net Cash Used in Investing Activities........................... ( 26,696) (44,443)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (Decrease) in Demand, Savings and Interest-Bearing
Demand Deposits............................................ 7,586 40,541
Increase in Time Deposits....................................... 17,911 0
Repayment of Notes Payable...................................... 0 2,150
Exercise of Stock Options....................................... 0 0
Dividends Paid.................................................. (236) (223)
--------- --------
Net Cash Provided by (Used in) Financing Activities............. 25,261 42,468
--------- --------
Net Increase (Decrease) in Cash and Cash Equivalents............ 472 997
Cash and Cash Equivalents, Beginning............................ 10,301 7,820
Cash and Cash Equivalents, Ending............................... $ 10,773 $ 8,817
========= ========
</TABLE>
5
<PAGE>
EUFAULA BANCCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Principles of Consolidation:
The consolidated financial statements of Eufaula BancCorp, Inc. ("EBC")
include the accounts of the parent company and its wholly-owned subsidiaries
Southern Bank of Commerce, Eufaula, Alabama and First American Bank, Walton
County, Florida. All material inter-company transactions have been eliminated.
The consolidated statements of condition as of June 30, 2000 and the
related consolidated statements of income for the six month period ended June
30, 2000 and 1999 and the consolidated statements of cash flows for the six
month period ended June 30, 2000 and 1999 are unaudited; in the opinion of
management, all adjustments necessary for a fair presentation of the financial
statements are included.
2. Results of Operations
The results for the six month period ended June 30, 2000 are not
necessarily indicative of the results for the entire year of 2000. This report
should be read in conjunction with EBC's 1999 Annual Report to Shareholders for
a complete understanding of EBC's accounting policies and their effect on the
financial statements as a whole.
3. Capital Accounts
Basic EPS was computed by dividing net income by the weighted average
shares of common stock outstanding of 2,625,273 for 1999 and 1998. Diluted EPS
was computed by dividing net income by the sum of the weighted average shares of
common stock outstanding and the effect of stock options outstanding. The
effect of the stock options was to increase the weighted average number of
shares by 117,000 in 2000 and 131,000 in 1999.
4. Comprehensive Income (Loss)
In January, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income", which establishes standards for reporting comprehensive
income and its components. Comprehensive income is defined as all changes in
the equity of a business enterprise from transactions and other events and
circumstances, except those resulting from investments by owners and
distributions to owners. The Company's comprehensive income, which includes net
income and the change in unrealized gain (loss) on securities available for
sale, net of tax, was ($502) thousand and ($646) thousand for the six months
ended June 30, 2000 and 1999, respectively.
5. Supplementary Data for Cash Flows
Interest paid on notes payable during the six months ended June 30, 2000
and 1999 amounted to $52 thousand and $0 respectively.
6. Branch Sale
On August 4, 2000, Southern Bank of Commerce, a subsidiary of Eufaula
BancCorp, completed the sale of its Huntsville and Madison, Alabama Branch
locations to First American Bank of Decatur, Alabama, a subsidiary of Alabama
National BanCorporation, Birmingham, Alabama. The Huntsville and Madison
locations had total assets of approximately $66 million and $5.7 million,
respectively, as of the closing date. Through the first six months of 2000 these
two Branch locations accounted for approximately $384 thousand of the $1.198
million in net income reported by the Company.
6
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and review of Eufaula BancCorp, Inc. ("EBC") and
its subsidiaries, Southern Bank of Commerce ("SBC") and First American Bank
("FAB"), focuses on the results from operations which are not otherwise apparent
from the consolidated financial statements. Reference should be made to these
financial statements and the notes to the financial statements for an
understanding of this review and discussion.
Forward Looking Statements
--------------------------
This 10-QSB contains forward-looking statements based on current
expectations that involve a number of risks and uncertainties. The factors that
could cause actual results to differ materially from those we are projecting
include the following: general economic conditions; competitive factors and
pricing pressure; changes in product mix; changes in interest risks; and the
risk factors listed from time to time in the company's SEC reports, including
but not limited to the report on Form 10-QSB for the quarter ended June 30,
2000.
Results of Operations
---------------------
Net income for the three months ended June 30, 2000 was $648 million, or
$0.25 per share compared with $450 million, or $0.17 per share during the same
period in 1999. Net income for the six months ended June 30, 2000 was $1,198
million, or $0.46 per share compared with $675 million, or $0.26 per share
during the same period in 1999. The annualized return on average assets from
continuing operations for the six months ended June 30, 2000 and 1999 was 0.86%
and 0.66% respectively, while the annualized return on average equity was 12.14%
and 7.16% respectively for the same periods.
Net Interest Income
-------------------
Net interest income, the principal source of earnings, is the difference
between the income generated by earning assets and the total interest cost of
the funds obtained to carry them. Net interest income, as referred to in this
discussion, is presented on a fully tax-equivalent basis, which adjusts for the
tax-exempt status of income earned on certain loans and investments. The
reported interest income for the tax-free assets is increased by the amount of
tax savings less the nondeductible portion of interest expense incurred to
acquire the tax-free assets. Net interest income is affected by variations in
both interest rates and the volume of interest-earning assets and interest-
bearing liabilities.
On a tax equivalent basis, net interest income for the first six months of
2000 was $5.97 million compared with $5.04 million in the first six months of
1999. Net interest income also increased when compared with 1998. This
increase in net interest income was primarily the result of higher loan volume
and increased income from nontaxable securities. The net interest margin
through June 30, 2000 was 4.46% compared with 4.69% and 5.04% for the years
ended December 31, 1999 and 1998, respectively. EBC expects no material change
in the net interest margin through the remainder of 2000.
EBC has debt of approximately $1 million at June 30, 2000 and interest
expense associated with this debt totaled $52 thousand during the first six
months of 2000 compared with $0 during the same period in 1999.
The following table is a comparison of the net interest margin:
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
Yield on Earning Assets 8.97% 8.83% 9.16%
Break-even Yield 4.51% 4.14% 4.12%
Net Interest Margin 4.46% 4.69% 5.04%
Net Interest Spread 3.82% 4.08% 4.25%
</TABLE>
7
<PAGE>
Loans and Leases
----------------
EBC's gross loans and leases totaled $228.2 million at June 30, 2000
compared with $205.9 million at December 31, 1999. The Company has no foreign
loans or leases and it is the policy of the Company to avoid out of territory
loans.
A sound credit policy combined with periodic and independent credit reviews
is the key factor of the credit risk management program. All affiliate banks
operate under written loan policies that help maintain a consistent lending
function and provide sound credit decisions. Credit decisions continue to be
based on the borrower's cash flow position and the value of the underlying
collateral, as well as other relevant factors. Each bank is responsible for
evaluating its loans to identify those credits beginning to show signs of
deterioration so that prompt corrective action may be taken. In addition, a
credit administration staff operates independently of the affiliate banks. This
review team performs periodic examinations of each bank's loans and related
documentation. Results of these examinations are reviewed with the Chairman and
Chief Executive Officer, the management and board of the respective affiliate
banks and the Audit Committees.
The following table lists those loans and leases by type which are on non-
accrual status; loans by type 90 days or more past due and still accruing;
renegotiated loans by type and loans transferred to other real estate:
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999 1998
------ ----- ------
<S> <C> <C> <C>
(In thousands)
Non-performing loans:
Non-accrual loans:
Commercial & Financial $ 77 $ 274 $ 111
Real Estate 471 71 185
Consumer 32 54 16
$ 580 ----- ------
$ 399 $ 312
----- ------
Past due 90 days or more
and still accruing:
Commercial $ 0 $ 0 $ 0
Real Estate 0 0 0
Consumer 29 0 8
----- ------
29 $ 0 $ 8
----- ------
Renegotiated Loans: $ 0 $ 0 $ 0
----- ------
Total non-performing Loans: $ 609 $ 399 $ 320
Other Real Estate, Net $ 628 141 1,276
----- ------
Total non-performing
Assets: $2,237 $ 540 $1,596
===== ======
Non-Performing Loans as a %
of Outstanding Loans 0.27% .19% .21%
Non-Performing Assets as a
% of Equity Capital 6.01% 2.77% 8.43%
</TABLE>
All loans listed above as non-accrual, 90 days or more past due and
renegotiated were classified as either substandard, doubtful or loss as of June
30, 2000.
Management remains committed to reducing the level of non-performing assets
and to minimize future risks by continuous review of the loan portfolio.
Allowance for Loan and Lease Losses
-----------------------------------
The provision for loan losses represents management's evaluation of the
overall loan portfolio quality and loss experience. During management's
periodic review of the provision throughout each quarter, the amount to be
provided is determined by the level of net charge-offs, the size of the loan
portfolio, non-performing assets, anticipated and current economic conditions
and specific reviews of performing and non-performing loans.
8
<PAGE>
During the first six months 2000, EBC made provisions for loan losses of
$508 thousand compared with $675 thousand for the same period in 1999. Total
non-performing loans increased $210 thousand from $540 thousand at December 31,
1999 to $609 thousand at June 30, 2000. Net charge-offs through June 30, 2000
totaled $96 thousand.
<TABLE>
<CAPTION>
June 30, Year Ended December 31,
2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
Allowance as a percentage of total
loans and leases 1.30% 1.24% .88%
</TABLE>
The allowance for loan losses as a percentage of non-performing loans was
approximately 487% at June 30, 2000, compared with 641% at December 31, 1999.
Securities Available for Sale
-----------------------------
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999 1998
------- ------- -------
<S> <C> <C> <C>
(In thousands)
Market Value $27,488 $22,716 $21,219
Amortized Cost 26,716 23,793 21,066
------- ------- -------
Difference $ (772) $(1,077) $ 153
======= ======= =======
</TABLE>
During the first six months of 2000, EBC had no security gains or losses.
Investment Securities
---------------------
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999 1998
------- ------- ------
<S> <C> <C> <C>
(In thousands)
Market Value $19,261 $11,158 $7,602
Amortized Cost 19,541 11,084 7,221
------- ------- ------
Difference $ (280) $ 74 $ 381
======= ======= ======
</TABLE>
At June 30, 2000, EBC's securities portfolio classified as Investment
Securities was composed primarily of municipal and long-term corporate
securities.
Non-Interest Income
-------------------
Management continues to emphasize the growth of non-interest income in
providing new revenue to the income stream. Future profitability depends upon
income derived from providing loan and deposit services, brokerage fees,
mortgage service fees and service charges on deposit accounts.
9
<PAGE>
The table represented below is a comparison of the dollar and percentage
change for each component of non-interest income:
<TABLE>
<CAPTION>
Six months ended
June 30, Change
------------------ -----------------
2000 1999 $ %
----- ----- ------- -------
<S> <C> <C> <C> <C>
(Dollars in Thousands)
Service Charges on Deposit Accounts $ 516 $ 483 $ 33 6.83%
Security Gains (Losses) (16) 0 (16) -
Other Income 395 441 (46) (10.43%)
----- ----- ---- -------
Total Other Income $ 895 $ 924 $(29) (3.14%)
===== ===== ==== =======
</TABLE>
Excluding security gains and losses, non-interest income decreased approximately
$13 thousand when comparing 2000 with 1999 results. EBC is focusing on non-
interest income revenues and opportunities to increase fee income.
Non-Interest Expense
--------------------
Control of non-interest expenses continues to be one of EBC's major
objectives. Non-interest expenses include salaries, employee benefits,
occupancy costs, equipment and other operating expenses:
<TABLE>
<CAPTION>
Six months ended
June 30, Change
------------------- -------------------
<S> <C> <C> <C> <C>
(Dollars in Thousands) 2000 1999 $ %
-------- ------- ------ -------
Salaries $1,848 $1,647 $ 201 12.20%
Pension and Employee Benefits 645 670 (25) (3.73%)
Net Occupancy Expense 328 199 129 64.82%
Equipment Expense 279 290 (11) (3.79%)
Data Processing Expense 235 169 66 39.05%
Other Operating Expense 1,154 1,278 (124) (9.70%)
------ ------ ----- ------
Total Non-Interest Expense $4,489 $4,171 $ 318 7.62%
====== ====== ===== ======
</TABLE>
The increase in non-interest expense when comparing the six months ended
June 30, 2000 with the same period in 1999, was primarily the result of higher
occupancy costs related to the Huntsville operation. Additionally, the increase
in salaries during this same time frame was primarily the result of higher
staffing costs at the parent level.
Income Taxes
------------
The effective tax rate of EBC for the six month period ended June 30, 2000
was 27% compared to 33% for the same period in 1999.
Capital and Liquidity
---------------------
The assessment of capital adequacy depends primarily on a number of factors
which include asset quality, liquidity, stability of earnings, changing
competitive forces, economic conditions in the various markets served and
strength of management. Management of capital focuses on achieving a rate of
return for shareholders while following guidelines set forth by bank regulators.
EBC's equity capital totaled $ 20.57 million at June 30, 2000, compared to
the December 31, 1999 level of $19.47 million. The growth and retention of
earnings continues to be EBC's primary source of additional capital. Currently,
EBC does
10
<PAGE>
not have any plans for issuing subordinated notes and EBC has not issued any new
common or preferred stock during the past twelve months.
The table presented below is a comparison of capital ratios:
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999 1998
-------- ------ ------
<S> <C> <C> <C>
Equity Capital to Total Assets 6.93% 7.46% 9.37%
Primary Capital to Total Assets 7.85% 8.36% 9.98%
</TABLE>
The table presented below is a comparison of EBC's capital position with
regulatory capital requirements:
<TABLE>
June 30, Regulatory
2000 Requirements
-------- ------------
<S> <C> <C>
Total Capital/Total Assets 7.85% 6.00%
Primary Capital/Total Assets 7.85% 5.50%
Total Risk Based Capital 10.18% 8.00%
Tier 1 Capital 8.90% 4.00%
Leverage Ratio 6.53% 3.00%
</TABLE>
Liquidity management is concerned with meeting the cash requirements of
customers, including the withdrawal of funds by depositors or drawing down of
approved lines of credit and commitments by borrowers. EBC is aided
significantly in meeting its short-term liquidity needs by its strong capital
position, its high rate of internal capital generation and its level of loan
loss reserves.
Dividend Policy
---------------
EBC strives to maintain a balance between the retention of earnings for the
support of growth and expansion and a dividend payout that meets the required
return for investors. EBC anticipates continuing its policy of regular cash
dividends, although there is no assurance as to future increases in dividends
because they are dependent upon future earnings, capital requirements and
economic conditions.
The following table sets forth the dividend payout ratio for the last two
years and for the six months ended June 30, 2000:
<TABLE>
<CAPTION>
June 30, Year Ended,
-------- ----------------------
2000 1999 1998
-------- ------ ------
<S> <C> <C> <C>
Dividend payout ratio 19.70% 26.56% 45.71%
</TABLE>
Asset - Liability Management
----------------------------
EBC, like most financial institutions, provides for the relative stability
in profits and the control in interest rate risk through asset-liability
management. An important element of asset-liability management is the analysis
and examination of the extent to which such assets and liabilities are interest
rate sensitive and by monitoring an institution's interest rate sensitivity gap.
11
<PAGE>
An asset or liability is said to be interest rate sensitive within a specific
time period if it will mature or reprice within that time period. The interest
rate sensitivity gap is defined as the difference between the amount of
interest-earning assets expected to mature or reprice within a time period and
the amount of interest-bearing liabilities expected to mature or reprice within
that same time period. A gap is considered negative when the amount of interest
rate sensitive liabilities maturing within a specific time frame exceeds the
amount of interest rate sensitive assets maturing within that same time frame.
During a period of falling interest rates, a negative gap tends to result in an
increase in net interest income. Whereas in a rising interest rate environment,
an institution with a negative gap could experience the opposite results.
EBC continually monitors its asset-liability position in order to maximize
profits and minimize interest rate risk. Additionally, EBC can reduce the
impact that changing interest rates have on earnings and adapt to changes in the
economic environment by closely monitoring its Statement of Condition. There
have been no material changes in EBC's asset-liability position since December
31, 1999.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
Not Applicable
Item 2. Changes in Securities
---------------------
Not Applicable
Item 3. Defaults Upon Senior Securities
-------------------------------
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not Applicable
Item 5. Other Information
-----------------
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
The following exhibits are filed with this report or are incorporated by
references to previously filed materials.
Exhibit No. Description of Exhibit
----------- ----------------------
27 Financial Data Schedule.
Reports on Form 8-K
-------------------
Filed August 9, 2000 (Huntsville Sale Closing)
12
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
EUFAULA BANCCORP, INC.
BY /s/ John E. Burns
----------------------------
John E. Burns
Chief Financial Officer and
Principal Accounting Officer
Date: August 10, 2000
13
