<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 0-25160
ALABAMA NATIONAL BANCORPORATION
-------------------------------
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 63-1114426
-------- ----------
(State of Incorporation) (I.R.S. Employer Identification No.)
1927 FIRST AVENUE NORTH, BIRMINGHAM, ALABAMA 35203-4009
-------------------------------------------------------
(Address of principal executive office)
Registrant's telephone number, including area code: (205) 583-3654
--------------
101 CARNOUSTIE, SHOAL CREEK, AL 35242
-------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Class Outstanding at March 31, 1995
----- -----------------------------
<S> <C>
Common Stock, $1.00 Par Value 6,200,418
</TABLE>
<PAGE> 2
INDEX
ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
PART 1. FINANCIAL INFORMATION PAGE
----
<S> <C>
Item 1. Financial Statements (Unaudited)
Consolidated statements of condition
March 31, 1996 and December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated statements of income
Three month periods ended March 31, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated statements of cash flows
Three month periods ended March 31, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to the unaudited consolidated financial statements
March 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED)
ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION (UNAUDITED)
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
-------------- -----------------
(In thousands)
<S> <C> <C>
ASSETS
Cash and due from banks . . . . . . . . . . . . . . . . . . . . $ 25,953 $ 37,288
Interest-bearing deposits in other banks . . . . . . . . . . . . 8,713 11,168
Investment securities (estimated market values of $76,680 and
$55,860) . . . . . . . . . . . . . . . . . . . . . . . . . . . 76,778 55,847
Securities available for sale . . . . . . . . . . . . . . . . . 74,473 87,867
Trading securities . . . . . . . . . . . . . . . . . . . . . . . 1,844 4,402
Federal funds sold and securities purchased under agreements
to resell . . . . . . . . . . . . . . . . . . . . . . . . . . 29,460 37,320
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 540,342 536,110
Unearned income . . . . . . . . . . . . . . . . . . . . . . . . (2,052) (2,133)
-------- --------
Loans, net of unearned income . . . . . . . . . . . . . . . . . 538,290 533,977
Allowance for loan losses . . . . . . . . . . . . . . . . . . . (8,541) (8,640)
-------- --------
Net loans....... . . . . . . . . . . . . . . . . . . . . . . . . 529,749 525,337
Property, equipment and leasehold improvements, net . . . . . . 19,059 18,802
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . 7,489 7,595
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . 20,960 20,948
-------- --------
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . $794,478 $806,574
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Noninterest bearing . . . . . . . . . . . . . . . . . . . $ 97,223 $106,570
Interest bearing . . . . . . . . . . . . . . . . . . . . 534,076 540,044
-------- --------
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . 631,299 646,614
Federal funds purchased and securities sold under
agreements to repurchase . . . . . . . . . . . . . . . . . . . 65,721 58,921
Treasury, tax and loan account . . . . . . . . . . . . . . . . . 3,162 2,432
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . 21,250 21,280
Accrued expenses and other liabilities . . . . . . . . . . . . . 15,498 21,413
Capital lease obligations . . . . . . . . . . . . . . . . . . . 319 324
-------- --------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 737,249 750,984
-------- --------
STOCKHOLDERS' EQUITY:
Common stock, $1 par; authorized 10,000,000 shares;
issued 6,566,968 shares . . . . . . . . . . . . . . . . . . 6,567 6,567
Additional paid-in capital . . . . . . . . . . . . . . . . . . . 51,923 51,923
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . 4,209 2,267
Treasury stock, 366,550 shares at cost . . . . . . . . . . . . . (5,023) (5,023)
Unearned restricted stock . . . . . . . . . . . . . . . . . . . (255) (278)
Unrealized gain (loss) on available for sale securities,
net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . (192) 134
-------- --------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . 57,229 55,590
-------- --------
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $794,478 $806,574
======== ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE> 4
ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
For the three months
ended March 31,
---------------
1996 1995
---- ----
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans . . . . . . . . . . . . . . . . . . . . $12,485 $6,558
Interest on securities . . . . . . . . . . . . . . . . . . . . . . 2,245 1,306
Interest on deposits in other banks . . . . . . . . . . . . . . . . 113 -
Interest on trading securities . . . . . . . . . . . . . . . . . . 79 -
Interest on federal funds sold and securities purchased under
agreements to resell . . . . . . . . . . . . . . . . . . . . . . 626 99
------- ------
Total interest income . . . . . . . . . . . . . . . . . . . . . . . . . 15,548 7,963
INTEREST EXPENSE:
Interest on deposits . . . . . . . . . . . . . . . . . . . . . . . 6,184 3,307
Interest on federal funds purchased and securities sold under
agreements to resell . . . . . . . . . . . . . . . . . . . . . . 931 350
Interest on long and short-term borrowings . . . . . . . . . . . . 475 206
------- ------
Total interest expense . . . . . . . . . . . . . . . . . . . . . . . . 7,590 3,863
------- ------
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . 7,958 4,100
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . 147 -
------- ------
Net interest income after provision for loan losses . . . . . . . . . . 7,811 4,100
NONINTEREST INCOME:
Securities gains . . . . . . . . . . . . . . . . . . . . . . . . . 31 -
Service charges on deposit accounts . . . . . . . . . . . . . . . . 822 341
Investment services . . . . . . . . . . . . . . . . . . . . . . . . 2,345 111
Trust department income . . . . . . . . . . . . . . . . . . . . . . 330 276
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 528 152
------- ------
Total noninterest income . . . . . . . . . . . . . . . . . . . . . . . 4,056 880
</TABLE>
4
<PAGE> 5
ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
For the three months
ended March 31,
---------------
1996 1995
---- ----
<S> <C> <C>
NONINTEREST EXPENSE:
Salaries and employee benefits . . . . . . . . . . . . . . . . . . . 5,056 1,861
Occupancy and equipment expenses . . . . . . . . . . . . . . . . . . 1,055 562
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,165 978
------ ------
Total noninterest expense . . . . . . . . . . . . . . . . . . . . . . . 8,276 3,401
------ ------
Income before provision for income taxes and
minority interest in earnings of consolidated
subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,591 1,579
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . 1,337 332
------ ------
Income before minority interest in earnings of
consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . 2,254 1,247
Minority interest in earnings of consolidated
subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 189
------ ------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,252 1,058
======
Less cash dividends on preferred stock . . . . . . . . . . . . . . . . 79
------
Net income available for common shares . . . . . . . . . . . . . . . . $ 979
======
Net income per common share . . . . . . . . . . . . . . . . . . . . . . $ .35 $ .38
====== ======
Weighted average common and common equivalent
shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . 6,385 2,527
====== ======
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
5
<PAGE> 6
ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
For the three months
ended March 31,
---------------
1996 1995
---- ----
(In thousands)
<S> <C> <C>
NET CASH USED BY OPERATING ACTIVITIES . . . . . . . . . . . . . . . . . $ (361) $ (79)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investment securities . . . . . . . . . . . . . . . . . . (22,626) -
Proceeds from maturities of investment securities . . . . . . . . . . . 1,618 243
Purchases of securities available for sale . . . . . . . . . . . . . . (10,972) -
Proceeds from sale of securities available for sale . . . . . . . . . . 953 -
Proceeds from maturities of securities available for sale . . . . . . . 22,814 521
Net decrease in interest-bearing deposits in other banks . . . . . . . 2,455 -
Net decrease in federal funds sold and securities purchased
under agreements to resell . . . . . . . . . . . . . . . . . . . . 7,860 460
Net increase in loans . . . . . . . . . . . . . . . . . . . . . . . . . (4,486) (8,445)
Purchases of property, equipment and leasehold improvements . . . . . (750) -
Proceeds from sale of property, equipment and leasehold improvements . 27 -
Proceeds from sale of life insurance policy . . . . . . . . . . . . . . 250 -
Proceeds from sale of other real estate owned . . . . . . . . . . . . . 13 -
-------- -------
Net cash used in investing activities . . . . . . . . . . . . . . . . . (2,844) (7,221)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits . . . . . . . . . . . . . . . . . (15,315) 13,206
Increase (decrease) in federal funds purchased, securities sold under
agreements to repurchase, and treasury, tax and loan account . . . 7,530 (9,603)
Net increase(decrease) in notes payable and capital lease obligations . (35) 2,546
Dividends on common stock . . . . . . . . . . . . . . . . . . . . . . . (310) -
Dividends on preferred stock . . . . . . . . . . . . . . . . . . . . . - (79)
Repurchase of preferred stock . . . . . . . . . . . . . . . . . . . . . - (2,500)
-------- -------
Net cash provided by (used in) financing activities . . . . . . . . . . (8,130) 3,570
-------- -------
Decrease in cash and cash equivalents. . . . . . . . . . . . . . . . . (11,335) (3,730)
Cash and cash equivalents, beginning of period . . . . . . . . . . . . 37,288 18,268
-------- -------
Cash and cash equivalents, end of period . . . . . . . . . . . . . . . $ 25,953 $14,538
======== =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest . . . . . . . . . . . . . . . . . . . . . . . . $ 7,222 $ 4,114
======== =======
Cash paid for income taxes . . . . . . . . . . . . . . . . . . . . . . $ 725 $ 300
======== =======
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES:
Acquisition of collateral in satisfaction of a loan . . . . . . . . . . $ 6 $ -
======== =======
Adjustment to market value of other real estate owned . . . . . . . . . $ 16 $ -
======== =======
Adjustment to market value of securities available for sale,
net of deferred income taxes . . . . . . . . . . . . . . . . . . $ 326 $ 726
======== =======
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
6
<PAGE> 7
ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three months ended
March 31, 1996 are subject to year-end audit and are not necessarily indicative
of the results of operations to be expected for the year ending December 31,
1996. For further information, refer to the consolidated financial statements
and footnotes thereto included in Form 10-K, Annual Report under the Securities
Exchange Act of 1934, for the year ended December 31, 1995.
NOTE B - COMMITMENT AND CONTINGENCIES
The Company's subsidiary banks make loan commitments and incur contingent
liabilities in the normal course of business which are not reflected in the
consolidated statements of condition.
NOTE C - INTANGIBLES
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of,"
("Statement 121") which requires impairment losses to be recorded on long-lived
assets used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the assets' carrying amount. Statement 121 also addresses the accounting for
long-lived assets that are expected to be disposed of. The Company adopted
Statement 121 effective January 1, 1996. The adoption of Statement 121 did not
have a material effect on the Company's unaudited consolidated financial
statements.
In May 1995, the FASB issued Statement of Financial Accounting Standards No.
122 "Accounting for Mortgage Servicing Rights, an Amendment of FASB No. 65,"
("Statement 122"). Statement 122 requires companies that originate mortgage
loans to capitalize the cost of mortgage servicing rights separate from the
cost of originating the loan when a definitive plan to sell or securitize those
loans and retain the mortgage servicing rights exist. Prior to the adoption
of Statement 122 only mortgage servicing rights that are purchased from other
parties are capitalized and recorded as an asset. Therefore, Statement 122
eliminates the accounting inconsistencies that existed between mortgage
servicing rights that are derived from loan origination activities and those
acquired through purchase transactions. Statement 122 also requires that
capitalized mortgage servicing rights be assessed for impairment based on the
fair value of those rights. The Company adopted Statement 122 effective
January 1, 1996, with no material effect on the Company's unaudited
consolidated financial statements.
7
<PAGE> 8
ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE D-MERGERS AND ACQUISITIONS
On December 29, 1995, Alabama National BanCorporation ("ANB") merged ("the
Merger") with National Commerce Corporation ("NCC") and Commerce Bankshares,
Inc. ("CBS") (collectively the "Company"). The Merger was accomplished by
converting each share of NCC stock into 348.14 shares of ANB stock and each
share of CBS stock into 7.0435 shares of ANB stock for a total of 3,106,981
shares (or 50.1%) of the Company stock. The Merger was accounted for as a
"reverse acquisition," whereby NCC is deemed to have acquired ANB for financial
reporting purposes. However, ANB remains the continuing legal entity and
registrant for Securities and Exchange Commission filing purposes. Consistent
with the reverse acquisition accounting treatment, the historical financial
statements of the Company presented for the three months ended March 31, 1995
are actually only the consolidated financial statements of NCC and differ from
the consolidated financial statements of ANB as previously reported. The
operations of ANB are included in the financial statements from the date of the
Merger. The historical stockholders' equity of NCC prior to the Merger is
retroactively restated for the equivalent number of shares received in the
Merger after giving effect to any difference in par value of ANB's and NCC
stock by an offset to paid-in capital.
The purchase price, determined by the ANB common stock average closing price
for the month of March 1995, prior to the announcement of the Merger plus
direct acquisition costs, was allocated to the ANB assets and liabilities
acquired based on their fair market value at the date of acquisition. The
excess of the purchase price over the fair market value of net assets acquired
is being amortized on a straight line basis over twenty five years. The ANB
assets purchased and liabilities assumed (at fair market values) as of December
29, 1995 were as follows (in thousands):
<TABLE>
<S> <C>
Cash, due from banks, interest-bearing deposits with other
banks, and federal funds sold . . . . . . . . . . . . . . . . . $ 27,788
Securities available for sale . . . . . . . . . . . . . . . . . . . . . 27,821
Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . 19,954
Loans, net of unearned income and allowance for loan losses . . . . . . 204,485
Bank premises and equipment . . . . . . . . . . . . . . . . . . . . . . 11,734
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,423
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,354
Deposits assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . (253,611)
Liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . (20,217)
---------
Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . $ 31,731
=========
</TABLE>
The following pro forma consolidated results of operations for the three months
ended March 31, 1995, are presented as if the Merger had occurred on January 1,
1995.
<TABLE>
<CAPTION>
For the three months
ended March 31,1995
-------------------
(In thousands, except per share data)
<S> <C>
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . $7,395
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . 62
Noninterest income . . . . . . . . . . . . . . . . . . . . . . . . . . 1,548
Noninterest expense . . . . . . . . . . . . . . . . . . . . . . . . . . 6,098
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . 681
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,102
Earnings per common and common equivalent share . . . . . . . . . . . . $ .33
</TABLE>
8
<PAGE> 9
ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE D-MERGERS AND ACQUISITIONS (CONTINUED)
Historical financial information of Alabama National BanCorporation and its
subsidiaries prior to the Merger described above is as follows:
<TABLE>
<CAPTION>
December 29, 1995 March 31, 1995
----------------- --------------
Statement on Condition Data (In thousands)
<S> <C> <C>
Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . $ 19,877 $ 33,873
Securities available for sale . . . . . . . . . . . . . . . . . . . . . 27,821 18,235
Loans, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202,762 191,901
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298,683 277,099
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253,611 246,161
Stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . 26,994 30,938
</TABLE>
<TABLE>
<CAPTION>
For the three months
ended March 31,1995
-------------------
Statement on Income Data (In thousands, except per share data)
<S> <C>
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . $3,543
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . 62
Noninterest income . . . . . . . . . . . . . . . . . . . . . . . . . . 671
Noninterest expense . . . . . . . . . . . . . . . . . . . . . . . . . . 2,664
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,038
Net income per common share . . . . . . . . . . . . . . . . . . . . . . $ .30
</TABLE>
CBS was formed on April 4, 1995 to succeed as owner of all the interest of
National Bank of Commerce of Birmingham ("NBC"), a consolidated subsidiary of
NCC. CBS, a bank and thrift holding company, was formed primarily to
accomplish the acquisition of Talladega Federal Savings and Loan Association
(TFSLA). On July 20, 1995, CBS issued 600,125 shares of its common stock to
NCC and 95,126 shares of its common stock to the individual stockholders of NBC
in exchange for all the common stock of NBC and became a consolidated
subsidiary of NCC. Also, on August 1, 1995, CBS acquired all of the stock of
TFSLA for $1,703,000 in cash. This acquisition was accounted for under the
purchase method; accordingly, the purchase price was allocated to the assets
and liabilities based on their values. No goodwill was recorded.
At the date of acquisition, TFSLA had assets of $34,982,000 and equity of
$1,813,000. The results of operations of TFSLA are included in NCC's results
of operations beginning August 1, 1995. TFSLA was merged with Citizens Bank of
Talladega, another subsidiary of the Company on December 29, 1995.
The TFSLA assets purchased and liabilities assumed as of August 1, 1995 were as
follows (in thousands):
<TABLE>
<S> <C>
Cash, due from banks, interest-bearing deposits with other
banks, and federal funds sold . . . . . . . . . . . . . . . . . $ 4,815
Securities available for sale . . . . . . . . . . . . . . . . . . . . . 334
Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . 5,583
Loans, net of unearned income and allowance for loan losses . . . . . . 16,757
Bank premises and equipment . . . . . . . . . . . . . . . . . . . . . . 528
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,028
Deposits assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . (32,956)
Liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . (386)
--------
Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,703
========
</TABLE>
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BASIS OF PRESENTATION
The following is a discussion and analysis of the consolidated financial
condition of the Company at March 31, 1996, and the results of its operations
for the three month periods ended March 31, 1996 and 1995. On December 29,
1995, Alabama National BanCorporation ("ANB") merged ("the Merger") with
National Commerce Corporation ("NCC") and Commerce Bancshares, Inc. ("CBS")
(collectively the "Company"). The Merger was accomplished, among other things,
by converting each share of NCC stock into 348.14 shares of ANB stock and each
share of CBS stock into 7.0435 shares of ANB stock for a total of 3,106,981
shares (or 50.1%) of the Company stock. The Merger was accounted for as a
"reverse acquisition," whereby NCC is deemed to have acquired ANB for financial
reporting purposes. However, ANB remains the continuing legal entity and
registrant for Securities and Exchange Commission filing purposes. Consistent
with the reverse acquisition accounting treatment, the historical financial
statements of the Company presented for the three months ended March 31, 1995,
are the consolidated financial statements of NCC and differ from the
consolidated financial statements of ANB previously reported. The results of
operations of ANB are included in the financial statements from the date of the
Merger. (See Note D to the Company's unaudited consolidated financial
statements.)
This information should be read in conjunction with the Company's unaudited
consolidated financial statements and related notes appearing elsewhere in this
report and Management's Discussion and Analysis of Financial Condition and
Results of Operations appearing in the Company's Annual Report on Form 10-K for
the year ended December 31, 1995.
PERFORMANCE OVERVIEW
The Company's net income was $2,252,000 for the first quarter of 1996 (the
"1996 Quarter") compared to $1,058,000 for the same period in 1995 (the "1995
quarter"), an increase of 112.9%. Net income per common share for the 1996
quarter was $.35 on 6,384,544 average common and common equivalent shares
outstanding compared to $.38 for the 1995 quarter on 2,526,898 average common
and common equivalent shares outstanding.
The return on average assets for the Company was 1.12% for the 1996 quarter
compared to 1.08% for the 1995 quarter. The return on average stockholders'
equity was 15.99% for the 1996 quarter compared to 16.62% for the 1995 quarter.
Book value at March 31, 1996, was $9.23, an increase of $.26 from December 31,
1995. Tangible book value at March 31, 1996, was $8.02, an increase of $.28
from year end 1995. The Company paid a $.05 cash dividend on common shares in
the 1996 quarter.
NET INCOME
The principal reason for the increase in net income for the 1996 quarter over
the 1995 quarter was the Merger.
The largest component of the Company's net income is its net interest income,
which is the difference between the income earned on assets and the interest
paid on deposits and borrowing used to support such assets. As a result of the
Merger, average earning assets for the 1996 quarter increased by approximately
$292.1 million and average interest- bearing liabilities increased by
approximately $261.2 million. The Company's net interest income benefited
from the faster growth of average earning assets than average interest-bearing
liabilities. The average taxable equivalent rates earned on assets were 8.54%
for the 1996 quarter compared to 8.58% for the 1995 quarter. The average rates
paid on interest-bearing liabilities were 4.81% for the 1996 quarter compared
to 4.93% for the 1995 quarter. The net interest margin for the 1996 quarter
was 4.32% compared to 4.40% for the 1995 quarter.
The following table depicts, on a taxable equivalent basis for the 1996 and
1995 quarters, certain information related to the Company's average balance
sheet and its average yields on assets and average costs of liabilities. Such
yields or costs are derived by dividing income or expense by the average daily
balance of the associated assets or liabilities.
10
<PAGE> 11
AVERAGE BALANCES, INCOME AND EXPENSES AND RATES
(AMOUNTS IN THOUSANDS, EXCEPT YIELDS AND RATES)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
------------------------------- -------------------------------
1996 1995
------------------------------- -------------------------------
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
ASSETS: BALANCE EXPENSE RATE BALANCE EXPENSE RATE
------- ------- ------ ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Earning assets:
Loans (1) (3).......................... $526,309 $12,557 9.54% $287,999 $6,589 9.15%
Securities:
Taxable............................... 136,406 2,042 5.99 77,669 1,306 6.73
Tax exempt............................ 15,224 308 8.09 - - -
Cash balances in other banks........... 7,357 113 6.14 - - -
Funds sold............................. 46,499 626 5.39 6,825 99 5.80
Trading account securities............. 4,773 79 6.62 - - -
-------- ------- -------- ------
Total earning assets (2).......... 738,568 15,725 8.54 372,493 7,994 8.58
-------- ------- -------- ------
Cash and due from banks.................. 28,679 14,231
Premises and equipment................... 19,431 6,065
Other assets............................. 28,962 5,878
Allowance for loan losses................ (8,627) (5,120)
-------- --------
Total assets ..................... $805,013 $393,547
======== ========
LIABILITIES:
Interest-bearing liabilities:
Interest-bearing transaction accounts.. $ 99,191 $ 792 3.19 $ 28,483 $ 212 2.98
Savings and money market deposits...... 172,322 1,554 3.61 122,459 1,383 4.52
Time deposits.......................... 260,433 3,838 5.89 124,020 1,711 5.52
Funds purchased........................ 71,583 931 5.20 25,798 350 5.43
Other short-term borrowings............ 27,470 468 6.81 12,199 199 6.53
Long-term debt......................... 321 7 8.72 343 8 9.33
-------- ------- -------- ------
Total interest-bearing
liabilities..................... 631,320 7,590 4.81 313,302 3,863 4.93
-------- ------- ---- -------- ------ -------
Demand deposits ......................... 98,481 47,597
Accrued interest and other liabilities... 18,861 7,186
Stockholders' equity..................... 56,351 25,462
-------- --------
Total liabilities and
stockholders' equity............... $805,013 $393,547
======== ========
Net interest spread....................... 3.73% 3.65%
==== ====
Net interest income/margin on
a taxable equivalent basis............. 8,135 4.42% 4,131 4.44%
==== ====
Tax equivalent adjustment................ 177 31
------- ------
Net interest income/margin............... $ 7,958 4.32% $4,100 4.40%
======= ==== ====== ====
</TABLE>
- - ------------
(1) Average loans include nonaccrual loans. All loans and deposits are
domestic.
(2) Tax equivalent adjustments are based on an assumed tax rate of 34%, and do
not give effect to the disallowance for Federal income tax purposes of
interest expense related to certain tax exempt assets.
(3) Fees in the amount of $383,000 and $132,000 are included in interest and
fees on loans for the three months ended March 31, 1996 and 1995,
respectively.
11
<PAGE> 12
The following table sets forth, on a taxable equivalent basis, the effect which
varying levels of earning assets and interest-bearing liabilities and the
applicable rates had on changes in net interest income from the 1996 quarter
compared to the 1995 quarter. For the purposes of this table, changes which
are not solely attributable to volume or rate are allocated to volume and rate
on a pro rata basis.
ANALYSIS OF CHANGES IN NET INTEREST INCOME
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31,
---------------------------------------
1996 COMPARED TO 1995
VARIANCE DUE TO
---------------------------------------
VOLUME YIELD/RATE TOTAL
-------- ------------ ---------
<S> <C> <C> <C>
EARNING ASSETS:
Loans............................................................ $5,675 $ 293 $5,968
Securities:
Taxable..................................................... 894 (158) 736
Tax exempt.................................................. 308 - 308
Cash balances in other banks..................................... 113 - 113
Funds sold....................................................... 536 (9) 527
Trading account securities....................................... 79 - 79
------ ----- ------
Total interest income.................................... 7,605 126 7,731
INTEREST-BEARING LIABILITIES:
Interest-bearing transaction accounts....................... 563 17 580
Savings and money market deposits........................... 487 (316) 171
Time deposits............................................... 2,005 122 2,127
Funds purchased.................................................. 597 (16) 581
Other short-term borrowings...................................... 260 9 269
Long-term debt................................................... (1) - (1)
------ ----- ------
Total interest expense....................................... 3,911 (184) 3,727
------ ----- ------
Net interest income on a taxable
equivalent basis........................................... $3,694 $ 310 4,004
====== =====
Taxable equivalent adjustment.................................... (146)
------
Net interest income.............................................. $3,858
======
</TABLE>
12
<PAGE> 13
Net revenue from earning assets during the 1996 quarter increased $3.9 million
or 94.1%, over the corresponding period in 1995. Approximately 92% of this
increase came from volume, resulting from the Merger.
The provision for loan losses represents a charge to current earnings necessary
to maintain the allowance for loan losses at an appropriate level based on
management's analysis of the potential risk in the loan portfolio. The amount
of the provision is a function of the level of loans outstanding, the level of
non-performing loans, historical loan loss experience, the amount of loan
losses actually charged against the allowance during a given period and current
and anticipated economic conditions. The provision for loan losses was set at
$147,000 for the 1996 quarter. No provision was made during the 1995 quarter.
Charge-offs exceeded recoveries by $246,000 for the 1996 quarter compared to
net recoveries of $21,000 for the same period of 1995. The allowance for loan
losses as a percentage of outstanding loans, net of unearned income was 1.59%
at March 31, 1996, compared to 1.62% at year-end 1995. However, because of the
inherent uncertainty of assumptions made during the assessment process, there
can be no assurance that loan losses in future periods will not exceed the
allowance for loan losses or that additional allocations to the allowance will
not be required. See Asset Quality.
Noninterest income for the 1996 quarter was $4.1 million, compared to $880,000
for the same period in 1995, an increase of 360.9%. Approximately $745,000 of
this increase came from banks acquired in the Merger, including $506,000 in
service charges on deposits and $228,000 in other non-interest income.
Continued increased activity in the investment services division resulted in an
increase of $2.2 million over the same period in 1995. Management anticipates
this increased activity to continue but is unable to predict the impact on the
future results of operations. Trust fees increased in the 1996 quarter $54,000
or 19.6% over the 1995 quarter. Other noninterest income increased $148,000 in
the 1996 quarter or 97.4% over the 1995 quarter.
Noninterest expense for the 1996 quarter was $8.3 million compared to $3.4
million, a 143.3% increase over the same period in 1995. Approximately $2.4
million of this increase came from the banks acquired in the Merger. Also,
approximately $632,000 were expenses associated with the parent company and not
applicable to the 1995 period. Salaries and employee benefits increased $3.2
million in the 1996 quarter when compared to the 1995 quarter. Approximately
$1.5 million of this increase was from the banks acquired in the merger and the
parent company salaries and benefits. Approximately 71% of the rest of the
increase or $1.2 million, was the result of increased activity in the
investment services division. Occupancy and equipment expense increased
$493,000 or 87.7% in the 1996 quarter compared to the 1995 quarter.
Approximately $439,000, or 89.0%, of this increase was the result of banks
acquired in the Merger. Other noninterest expense increased $1.2 million or
121.3% in the 1996 quarter compared to the 1995 quarter. Again, substantially
all of this increase came from the banks acquired in the Merger and the
expenses of the parent company. The Company's efficiency ratio, which is
noninterest expense as a percentage of net interest income plus noninterest
income, net of gains on sale of assets was 69.06% for the 1996 quarter compared
to 68.29% for the 1995 quarter, an increase of .77%.
Income tax expense increased $1.0 million for the 1996 quarter compared to the
1995 quarter. This increase was the result of NCC using substantially all of
its loss carry forwards and credit carry forwards in the year ended December
31, 1995. The effective tax rates for the 1996 and 1995 quarters were 37.23%
and 21.03%, respectively.
EARNING ASSETS
Loans comprised the largest single category of the Company's earning assets on
March 31, 1996. Loans, net of unearned income were $538.3 million or 67.8% of
total assets at March 31, 1996, compared to $534.0 million or 66.2% at December
31, 1995. Loans grew $4.3 million or .8%.
Investment securities increased $20.9 million in the 1996 quarter. Purchases
of investment securities totaled $22.6 million and maturities and calls of
investment securities totaled $1.6 million.
Securities available for sale decreased $13.4 million in the 1996 quarter.
Purchases of available for sale securities totaled $11 million and maturities
and calls of available for sale securities totaled $22.8 million. Sales of
available for
13
<PAGE> 14
sale securities totaled $1 million. Write down to estimated market value of
available for sale securities totaled $.5 million.
Overall investment securities and securities available for sale increased $7.5
million during the 1996 quarter. Trading accounts securities decreased $2.6
million in the 1996 quarter. The trading account securities are securities
owned by the Company prior to delivery to the Company's customers. It is the
policy of the Company to limit positions in such securities to reduce its
exposure to market and interest rate changes . Federal funds sold and
securities purchased under agreements to resell totaled $29.5 million at March
31, 1996 compared to $37.3 at December 31, 1995, a decrease of $7.9 million.
Interest-bearing deposits in other banks at March 31, 1996 were $8.7 million
compared to $11.2 million at December 31, 1995, a decrease of $2.5 million.
Substantially all of these deposits are with the Federal Home Loan Bank.
DEPOSITS AND OTHER FUNDING SOURCES
Deposits decreased $15.3 million from year-end 1995, or 2.4% to $631.3 million
at March 31, 1996. Noninterest bearing demand deposits decreased $9.3 million
and interest-bearing deposits decreased $6.0 million. Approximately two thirds
of the $15.3 million decrease in deposits resulted from the use by one customer
of escrow funds held by one of the subsidiary banks.
Federal funds purchased and securities sold under agreements to repurchase
totaled $65.7 million at March 31, 1996 an increase of $6.8 million from
December 31, 1995. Short-term borrowings and the Treasury tax and loan account
were $24.4 million at March 31, 1996 and increase of $700,000 over December 31,
1995.
The Company's only long-term debt at March 31, 1996 was capital lease
obligations which decreased $5,000 during the 1996 quarter.
ASSET QUALITY
Nonperforming loans are comprised of loans past due 90 days or more and still
accruing interest, loans accounted for on a nonaccrual basis and loans in which
the terms have been restructured to provide a reduction or deferral of interest
or principal because of a deterioration in the financial position of the
borrower. Accrual of interest is discontinued 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. A delinquent loan is generally placed on nonaccrual
status when it becomes 90 days or more past due. When a loan is placed on
nonaccrual status, all interest which has been accrued on the loan but remains
unpaid is reversed and deducted from earnings as a reduction of reported
interest income. No additional interest is accrued on the loan balance until
the collection of both principal and interest becomes reasonably certain. When
a problem loan is finally resolved, there may ultimately be an actual writedown
or charge-off of the principal balance of the loan which would necessitate
additional charges to earnings.
At March 31, 1996, nonperforming assets totaled $2.8 million, a decrease of
$74,000 from December 31, 1995. Nonperforming assets as a percentage of loans
plus other real estate was .52% at March 31, 1996 compared to .54% at December
31,1995.
14
<PAGE> 15
NONPERFORMING ASSETS
(AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGES)
<TABLE>
<CAPTION>
March 31, December 31,
---------------------------
1996 1995
---------- -----------
<S> <C> <C>
Nonaccrual loans....................................................... $1,283 $1,243
Restructured loans..................................................... 918 891
Loans past due 90 days or more and still accruing...................... 4 121
------ ------
Total nonperforming loans......................................... 2,205 2,255
Other real estate owned................................................ 601 625
------ ------
Total nonperforming assets........................................ $2,806 $2,880
====== ======
Nonperforming assets to period-end loans and
foreclosed real estate............................................ .52% .54%
Allowance for loan losses to period-end
nonperforming assets.............................................. 304.38 300.00
Net charge-offs (recoveries) to average loans.......................... 19(1) (.04)
</TABLE>
- - ----------------
(1) Annualized
Net charge-offs for the 1996 quarter totaled $246,000 or .19% (annualized) of
average loans for the period. The allowance for loan losses as a percentage of
total loans was 1.59% at March 31,1996 compared to 1.62% on December 31,1995.
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(AMOUNTS IN THOUSANDS)
<TABLE>
<S> <C>
Allowance for loan losses at December 31,1995 .. $8,640
Charge-offs:
Commercial, financial and agricultural ..... 472
Real estate mortgage ....................... 64
Consumer ................................... 112
------
Total charge-offs ......................... 648
Recoveries:
Commercial, financial and agricultural ..... 305
Real estate mortgage ....................... 37
Consumer ................................... 60
------
Total recoveries .......................... 402
------
Net charge-offs .......................... 246
Provision charged to income .................... 147
------
Allowance for loan losses at March 31, 1996 .... $8,541
======
</TABLE>
15
<PAGE> 16
The loan portfolio is periodically reviewed to evaluate the outstanding loans
and to measure both the performance of the portfolio and the adequacy of the
allowance for loan losses. This analysis includes a review of delinquency
trends, actual losses and internal credit ratings. Based on this analysis,
management considers the allowance for loan losses at March 31, 1996 to be
adequate to cover possible loan losses in the portfolio as of that date.
However, because of the inherent uncertainty of assumptions made during the
evaluation process, there can be no assurance that loan losses in future
periods will not exceed the allowance for loan losses or that additional
allocations to the allowance will not be required.
INTEREST RATE SENSITIVITY
The Company monitors and manages the pricing and maturity of its assets and
liabilities in order to diminish the potential adverse impact that changes in
interest rates could have on its net interest income. The principal monitoring
technique employed by the Company is the measurement of the interest
sensitivity "gap," which is the positive or negative dollar difference between
assets and liabilities that are subject to interest rate repricing within a
given period of time. Interest rate sensitivity can be managed by repricing
assets and liabilities, selling securities available for sale, replacing an
asset or liability at maturity or by adjusting the interest rate during the
life of an asset or liability. Managing the amount of assets and liabilities
repricing in this same time interval helps to hedge the risk and minimize the
impact of rising or falling interest rates on net interest income.
The Company evaluates interest sensitivity risk and then formulates guidelines
regarding asset generation and repricing, funding sources and pricing and
off-balance sheet commitments in order to decrease interest sensitivity risk.
The Company uses computer simulations to measure the net income effect of
various interest rate scenarios. The modeling reflects interest rate changes
and the related impact on net income over specified periods of time.
The following table illustrates the Company's interest rate sensitivity at
March 31, 1996, assuming relevant assets and liabilities are collected and
paid, respectively, in accordance with their stated maturities.
16
<PAGE> 17
INTEREST SENSITIVITY ANALYSIS
(AMOUNTS IN THOUSANDS, EXCEPT RATIOS)
<TABLE>
<CAPTION>
MARCH 31, 1996
-----------------------------------------------------------------------------------
AFTER ONE AFTER THREE
THROUGH THROUGH GREATER
WITHIN THREE TWELVE WITHIN ONE THAN ONE
ONE MONTH MONTHS MONTHS YEAR YEAR TOTAL
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Earning assets:
Loans (1)............................ $ 193,462 $ 99,867 $ 93,754 $ 387,083 $149,924 $537,007
Securities (2)....................... 1,844 2,061 15,297 19,202 130,217 149,419
Interest-bearing deposits in
other banks........................ 8,713 - - 8,713 - 8,713
Funds sold............................. 29,460 - - 29,460 - 29,460
--------- --------- --------- --------- -------- --------
Total interest-earning assets.... 233,479 101,928 109,051 444,458 280,141 724,599
LIABILITIES:
Interest-bearing liabilities:
Interest-bearing deposits:
Demand deposits.................... 99,817 - - 99,817 - 99,817
Savings deposits................... 172,988 - - 172,988 - 172,988
Time deposits (3).................. 29,721 76,298 91,637 197,656 63,615 261,271
Funds purchased...................... 65,721 - - 65,721 - 65,721
Short-term borrowings (4)............ 24,412 - - 24,412 - 24,412
Long-term debt....................... 1 4 15 20 299 319
--------- --------- --------- --------- -------- --------
Total interest-bearing
liabilities.................... 392,660 76,302 91,652 560,614 63,914 624,528
--------- --------- --------- --------- -------- --------
Period gap............................. $(159,181) $ 25,626 $ 17,399 $(116,156) $216,227
========= ========= ========= ========= ========
Cumulative gap......................... $(159,181) $(133,555) $(116,156) $(116,156) $100,071 $100,071
========= ========= ========= ========= ======== ========
Ratio of cumulative gap to total
earning assets....................... (21.97)% (18.43)% (16.03)% (16.03)% 13.81%
</TABLE>
- - ---------------
(1) Excludes nonaccrual loans of $1,283,000.
(2) Excludes investment equity securities of $3,676,000.
(3) Excludes matured certificates which have not been redeemed by the customer
and on which no interest is accruing.
(4) Includes treasury, tax and loan account of $3,162,000.
The Company generally would benefit from increasing market rates of interest
when it has an asset-sensitive gap and generally would benefit from decreasing
market rates of interest when it is liability sensitive. The Company is
liability sensitive through the one year time frame. However, the Company's gap
analysis is not a precise indicator of its interest sensitivity position. The
analysis presents only a static view of the timing of maturities and repricing
opportunities, without taking into consideration that changes in interest
rates do not affect all assets and liabilities equally. For example, rates paid
on a substantial portion of core deposits may change contractually within a
relatively short time frame, but those rates are viewed by management as
significantly less interest-sensitive than market-based rates such as those paid
on non-core deposits. Accordingly, management believes that a
liability-sensitive gap position is not as indicative of the Company's true
interest sensitivity as it would be for an organization which depends to a
17
<PAGE> 18
greater extent on purchased funds to support earning assets. Net interest
income may be affected by other significant factors in a given interest rate
environment, including changes in the volume and mix of earning assets and
interest-bearing liabilities.
LIQUIDITY AND CAPITAL ADEQUACY
The Company's net loan to deposit ratio increased to 85.3% at March 31, 1996,
compared to 82.6% at year end 1995. The Company's liquid assets as a
percentage of total deposits were 10.2% at March 31, 1996, compared to 13.3% at
year-end 1995. Management also analyzes the level of off-balance sheet assets
such as unfunded loan commitments and outstanding letters of credit as they
relate to the levels of cash, cash equivalents, liquid investments and
available funds lines in an attempt to minimize the possibility that a
potential shortfall will exist. Based on this analysis, management believes
that the Company has adequate liquidity to meet short-term operating
requirements. However, no assurances can be given in this regard.
Effective April 30, 1996, James A. Taylor, Chairman and Chief Executive
Officer, resigned from the Board of Directors of the Company. In connection
with Mr. Taylor's resignation, Mr. Taylor and Mr. Taylor's wife, Martha W.
Taylor, Secretary of the Company agreed to terminate their employment with the
Company. As part of a negotiated settlement of their employment contracts, Mr.
and Mrs. Taylor were paid approximately $900,000. Future payments under their
contracts would have been approximately $1.7 million. The cost of the
negotiated settlement will be charged against income for the three months
ending June 30, 1996. Financing for the transaction was obtained from an
independent bank.
The Company's stockholders' equity increased by $1.6 million to $57.2 million
at March 31, 1996 from December 31, 1995. This increase was attributable to:
<TABLE>
<S> <C>
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,252,000
Increase in unrealized losses on securities available for sale, net
of deferred income tax benefits . . . . . . . . . . . . . . . . . . . . . . . (326,000)
Cash dividends declared . . . . . . . . . . . . . . . . . . . . . . . . . . . (310,000)
Decrease in unearned restricted stock . . . . . . . . . . . . . . . . . . . . 23,000
----------
Net increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,639,000
==========
</TABLE>
A strong capital position is vital to the continued profitability of the
Company because it promotes depositor and investor confidence and provides a
solid foundation for future growth of the organization. The capital of the
Company and its subsidiary banks (the "Banks") exceeded all prescribed
regulatory capital guidelines at March 31, 1996. Under the capital guidelines
of their regulators, the Company and the Banks are currently required to
maintain a minimum risk-based total capital ratio of 8%, with at least 4%
being Tier 1 capital. Tier 1 capital consists of common stockholders' equity,
qualifying perpetual preferred stock and minority interests in equity accounts
of consolidated subsidiaries, less goodwill. In addition, the Company and the
Banks must maintain a minimum Tier 1 leverage ratio (Tier 1 capital to total
assets) of at least 3%, but this minimum ratio is increased by 100 to 200 basis
points for other than the highest rated institutions. The following table sets
forth the risk-based and leverage ratios of the Company and each subsidiary
bank at March 31, 1996:
18
<PAGE> 19
<TABLE>
<CAPTION>
TIER 1 RISK TOTAL RISK TIER 1
BASED BASED LEVERAGE
----- ----- --------
<S> <C> <C> <C>
Alabama National BanCorporation 9.11% 10.36% 6.24%
Subsidiary Banks:
National Bank of Commerce.............................. 11.38 12.63 8.02
Alabama Exchange Bank.................................. 13.36 14.61 9.22
Bank of Dadeville ..................................... 12.90 14.12 9.65
First National Bank of Ashland......................... 11.56 12.63 7.77
Gulf Bank.............................................. 11.15 12.40 9.74
Citizens Bank of Talladega............................. 14.74 15.99 7.71
St. Clair Federal Savings Bank......................... 10.58 11.83 7.41
Required minimums...................................... 4.00 8.00 4.00
</TABLE>
19
<PAGE> 20
Part II Other Information
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits:
27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
The Company filed one report on Form 8-K during the three months ended March
31, 1996 to report the completion of the Merger.
20
<PAGE> 21
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.
ALABAMA NATIONAL BANCORPORATION
DATE: MAY 1, 1996 /s/John H. Holcomb, III
------------ -----------------------
John H. Holcomb, III, its Chairman
and Chief Executive Officer
DATE: MAY 1, 1996 /s/Frank W. Whitehead
------------ ---------------------
Frank W. Whitehead, its Executive
Vice President, Treasurer and Chief
Financial Officer
21
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 25,953,000
<INT-BEARING-DEPOSITS> 8,713,000
<FED-FUNDS-SOLD> 29,460,000
<TRADING-ASSETS> 1,844,000
<INVESTMENTS-HELD-FOR-SALE> 74,473,000
<INVESTMENTS-CARRYING> 76,778,000
<INVESTMENTS-MARKET> 76,680,000
<LOANS> 538,290,000
<ALLOWANCE> (8,541,000)
<TOTAL-ASSETS> 794,478,000
<DEPOSITS> 631,299,000
<SHORT-TERM> 21,250,000
<LIABILITIES-OTHER> 84,381,000
<LONG-TERM> 319,000
0
0
<COMMON> 6,567,000
<OTHER-SE> 50,662,000
<TOTAL-LIABILITIES-AND-EQUITY> 794,478,000
<INTEREST-LOAN> 12,485,000
<INTEREST-INVEST> 2,358,000
<INTEREST-OTHER> 705,000
<INTEREST-TOTAL> 15,548,000
<INTEREST-DEPOSIT> 6,184,000
<INTEREST-EXPENSE> 7,590,000
<INTEREST-INCOME-NET> 7,958,000
<LOAN-LOSSES> 147,000
<SECURITIES-GAINS> 31,000
<EXPENSE-OTHER> 528,000
<INCOME-PRETAX> 3,591,000
<INCOME-PRE-EXTRAORDINARY> 3,591,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,252,000
<EPS-PRIMARY> .35
<EPS-DILUTED> .35
<YIELD-ACTUAL> 8.54
<LOANS-NON> 1,283,000
<LOANS-PAST> 4,000
<LOANS-TROUBLED> 918,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 8,640,000
<CHARGE-OFFS> 648,000
<RECOVERIES> 402,000
<ALLOWANCE-CLOSE> 8,541,000
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
