<PAGE>
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, 1998
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
--------------
---------------------------------------------
(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.
Class Outstanding at May 11, 1998
----- ---------------------------
Common Stock, $1.00 Par Value 8,648,120
<PAGE>
INDEX
ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION PAGE
- ----------------------------- ----
Item 1. Financial Statements (Unaudited)
Consolidated statements of condition
March 31, 1998 and December 31, 1997 ...................... 3
Consolidated statements of income
Three month periods ended March 31,1998 and 1997 ........... 4
Consolidated statements of other comprehensive income
Three month periods ended March 31, 1998 and 1997 .......... 6
Consolidated statements of cash flows
Three month periods ended March 31, 1998 and 1997 .......... 7
Notes to the unaudited consolidated financial statements
March 31, 1998 ............................................. 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations .................................. 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk.. 22
PART II. OTHER INFORMATION
- --------------------------
Item 6. Exhibits and Reports on Form 8-K ................................ 22
SIGNATURES............................................................... 23
FORWARD LOOKING INFORMATION
- -----------------------------
Statements contained in this Quarterly Report on Form 10-Q which are not
historical facts are forward-looking statements. In addition, Alabama National
BanCorporation (the "Company"), through its senior management, from time to time
makes forward-looking public statements concerning its expected future
operations and performance and other developments. Such forward-looking
statements are necessarily estimates reflecting the Company's best judgement
based upon current information and involve a number of risks and uncertainties,
and various factors which could cause results to differ materially from those
contemplated by such forward looking statements. Such factors could include
those identified from time to time in the Company's Securities and Exchange
Commission filings and other public announcements. With respect to the adequacy
of the allowance for loan losses for the Company, these factors include the rate
of growth in the economy, especially in the Southeast, the relative strength and
weakness in the consumer and commercial credit sectors and in the real estate
markets and the performance of the stock and bond markets.
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED)
ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION (UNAUDITED)
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
-------------- -----------------
(In thousands)
<S> <C> <C>
ASSETS
Cash and due from banks........................................................... $ 40,193 $ 42,438
Interest-bearing deposits in other banks.......................................... 6,841 2,391
Investment securities (estimated market values of $52,667and $56,997)............. 52,287 56,519
Securities available for sale..................................................... 170,749 157,094
Trading securities................................................................ 8,131 399
Federal funds sold and securities purchased under resell agreements............... 39,556 50,009
Loans............................................................................. 853,051 844,865
Unearned income................................................................... (1,742) (2,075)
---------- ----------
Loans, net of unearned income..................................................... 851,309 842,790
Allowance for loan losses......................................................... (12,959) (12,829)
---------- ----------
Net loans......................................................................... 838,350 829,961
Property, equipment and leasehold improvements, net............................... 32,538 31,539
Intangible assets................................................................. 8,603 8,726
Cash surrender value of life insurance............................................ 26,167 25,842
Other assets...................................................................... 57,907 69,248
---------- ----------
Totals............................................................................ $1,281,322 $1,274,166
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest bearing.............................................................. $ 138,820 $ 146,006
Interest bearing................................................................. 828,865 782,964
---------- ----------
Total deposits..................................................................... 967,685 928,970
Federal funds purchased and securities sold under repurchase agreements............ 115,067 139,118
Treasury, tax and loan account..................................................... 2,040 6,762
Short-term borrowings.............................................................. 27,000 27,750
Accrued expenses and other liabilities............................................. 49,345 59,046
Long-term debt..................................................................... 19,576 14,587
---------- ----------
Total liabilities.................................................................. 1,180,713 1,176,233
Common stock, $1 par, authorized 10,000,000 shares; issued
8,648,120 shares at March 31, 1998 and December 31, 1997......................... 8,648 8,648
Additional paid-in capital......................................................... 61,551 61,551
Retained earnings.................................................................. 29,830 27,369
Unearned restricted stock.......................................................... (69) (92)
Accumulated other comprehensive income, net of tax................................. 649 457
---------- ----------
Total stockholders' equity......................................................... 100,609 97,933
---------- ----------
Totals............................................................................ $1,281,322 $1,274,166
========== ==========
</TABLE>
See accompanying notes to unaudited consolidated financial statements
3
<PAGE>
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,
-----------------------
1998 1997
------- -------
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans............................................................. $19,244 $18,183
Interest on securities................................................................. 3,346 2,862
Interest on deposits in other banks.................................................... 29 2
Interest on trading securities......................................................... 52 40
Interest on Federal funds sold and securities purchased
under resell agreements.............................................................. 761 563
------- -------
Total interest income.................................................................... 23,432 21,650
INTEREST EXPENSE
Interest on deposits................................................................... 9,361 8,549
Interest on Federal funds purchased and securities sold
under repurchase agreements........................................................... 1,640 905
Interest on long and short-term borrowings............................................. 838 630
------- -------
Total interest expense................................................................... 11,839 10,084
------- -------
Net interest income...................................................................... 11,593 11,566
Provision for loan losses................................................................ 265 486
------- -------
Net interest income after provision for loan losses...................................... 11,328 11,080
NONINTEREST INCOME:
Securities gains....................................................................... 28 11
Service charges on deposit accounts.................................................... 1,249 1,258
Investment services.................................................................... 3,089 1,954
Trust department income................................................................ 420 375
Origination and sale of mortgage loans................................................. 1,263 541
Other.................................................................................. 510 344
------- -------
Total noninterest income................................................................. 6,559 4,483
</TABLE>
4
<PAGE>
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,
--------------------
1998 1997
-------- --------
<S> <C> <C>
NONINTEREST EXPENSE:
Salaries and employee benefits........................................................................... 7,590 6,127
Occupancy and equipment expenses......................................................................... 1,421 1,351
Other.................................................................................................... 3,503 3,413
------- -------
Total noninterest expense................................................................................. 12,514 10,891
------- -------
Income before provision for income taxes.................................................................. 5,373 4,672
Provision for income taxes................................................................................ 1,625 1,547
------- -------
Net income................................................................................................ $ 3,748 $ 3,125
======= =======
Net income per common share (basic)....................................................................... $ .43 $ .36
======= =======
Weighted average common shares outstanding (basic)........................................................ 8,648 8,571
======= =======
Net income per common share (diluted)..................................................................... $ .42 $ .35
======= =======
Weighted average common and common equivalent shares outstanding (diluted)................................ 8,960 8,877
======= =======
</TABLE>
See accompanying notes to unaudited consolidated financial statements
5
<PAGE>
ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME (UNAUDITED)
-----------------------------------------------------------------
(IN THOUSANDS)
<TABLE>
<CAPTION>
For the three months
ended March 31,
---------------------
1998 1997
------- ------
<S> <C> <C>
Net income ............................................. $3,748 $3,125
------ ------
Other comprehensive income:
Unrealized gains (losses) on securities available for
sale ............................................... 299 (855)
------ ------
Other comprehensive income (loss), before tax .......... 299 (855)
Provision for (benefit of) income taxes related to items
of other comprehensive income ........................ 107 (329)
------ ------
Other comprehensive income (loss), net of tax .......... 192 (526)
------ ------
Comprehensive income ................................... $3,940 $2,599
====== ======
See accompanying notes to unaudited consolidated financial statements
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the three months
ended March 31,
----------------------------
1998 1997
--------- --------
(In thousands)
<S> <C> <C>
Net cash flows provided by (used by) operating activities............................ $ (1,738) $6,450
Cash flows from investing activities:
Purchases of investment securities................................................... - -
Proceeds from maturities of investment securities.................................... 4,203 6,068
Purchases of securities available for sale........................................... (29,862) (18,445)
Proceeds from sale of securities available for sale.................................. - 1,422
Proceeds from maturities of securities available for sale............................ 16,476 2,373
Net decrease in interest bearing deposits in other banks............................. (4,450) 100
Net (increase) decrease in Federal funds sold and securities purchased
under resell agreements............................................................. 10,453 (6,136)
Net increase in loans................................................................ (8,654) (6,810)
Purchases of property, equipment and leasehold improvements.......................... (1,567) (1,152)
Proceeds from sale of other real estate.............................................. - 29
--------- --------
Net cash used in investing activities................................................ (13,401) (22,551)
--------- --------
Cash flows from financing activities:
Net increase in deposits............................................................. 38,715 49,156
Decrease in Federal funds purchased and securities sold
under agreements to repurchase...................................................... (24,051) (10,705)
Net decrease in short and long-term borrowings and capital leases.................... (483) (21,617)
Exercise of stock options and conversion of debentures............................... - 205
Dividends on common stock............................................................ (1,287) (741)
--------- --------
Net cash provided by financing activities............................................ 12,894 16,298
--------- --------
Increase (decrease) in cash and cash equivalents..................................... (2,245) 197
Cash and cash equivalents, beginning of period....................................... 42,438 45,050
--------- --------
Cash and cash equivalents, end of period............................................. $40,193 $45,247
--------- --------
Supplemental disclosure of cash flow information:
Cash paid for interest............................................................... $11,575 $ 9,907
--------- --------
Cash paid for income taxes........................................................... $ $ 263
--------- --------
Supplemental schedule of noncash investing and financing activities
Acquisition of collateral in satisfaction of loans................................... $ 829 $ 189
--------- --------
Adjustment to market value of securities available for sale, net
of deferred income taxes............................................................ $ 192 $ (526)
--------- --------
</TABLE>
See accompanying notes to unaudited consolidated financial statements
7
<PAGE>
ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
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, 1998 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, 1998. These interim
financial statements should be read in conjunction with the consolidated
financial statements and footnotes thereto included in the Company's Form 10-K
for the year ended December 31, 1997.
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 - RECENTLY ISSUED PRONOUNCEMENTS
- ---------------------------------------
Comprehensive Income
In June 1997, the FASB issued Statement of Financial Standards No. 130,
Reporting Comprehensive Income ("Statement 130"). Statement 130 establishes
standards for reporting and display of comprehensive income and its components
(revenues, expenses, gains, and losses) in a full set of general-purpose
financial statements. This Statement requires that all items that are required
to be recognized under accounting standards as components of comprehensive
income be reported in a financial statement that is displayed with the same
prominence as other financial statements. Comprehensive income includes all
changes in equity during a period, excluding investments by and distributions to
stockholders. As a result of implementing Statement 130, the Company recorded
other comprehensive income (loss), net of income taxes, of $192,000 and
$(526,000) for the 1998 Quarter and 1997 Quarter, respectively. These amounts
had previously been reported as a direct change in shareholders' equity and
relate to the change in unrealized gains (losses) on securities available for
sale.
Segment Reporting
In June 1997, the FASB issued Statement of Financial Standards No. 131,
Disclosures About Segments of a Business Enterprise and Related Information
("Statement 131"). Statement 131, effective for fiscal years beginning after
December 15, 1997, establishes standards for the way that public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. Early application is permitted, but is
not required, and comparative information for interim periods in the initial
year of application must be reported in statements for interim periods in the
second year of application.
8
<PAGE>
Pensions and Other Postretirement Benefits
In February 1998, the FASB issued Statement of Financial Standards No. 132,
Employers' Disclosures About Pensions and Other Postretirement Benefits
("Statement 132"). Statement 132, effective for fiscal years beginning after
December 15, 1997, standardizes the disclosure requirements for pensions and
other postretirement benefits, eliminates certain disclosures, and requires
additional information on changes in the benefit obligations and fair values of
plan assets. Restatement of disclosures for previous periods is required.
NOTE D-MERGERS AND ACQUISITIONS
- -------------------------------
On March 5, 1998, the Company entered into an Agreement and Plan of Merger (the
"Merger Agreement") with Public Bank Corporation ("Public"), headquartered in
St. Cloud Florida. Under terms of the Merger Agreement, the Company will issue
a total of 550,000 shares of Company common stock in exchange for the issued and
outstanding shares of Public common stock for an exchange ratio of 0.2353134
shares of Company common stock for each share of Public common stock. Pursuant
to the Merger Agreement, the total number of shares of Company common stock
issued to Public shareholders is subject to an upward adjustment of up to 25,000
shares in certain circumstances. The Merger Agreement provides that Public will
be merged with and into the Company and Public's subsidiary bank, Public Bank,
will become a wholly owned subsidiary of the Company. Public had assets of $52.4
million at March 31, 1998. The merger with Public, which is subject to the
approval of the shareholders of Public and certain regulatory approvals, is
expected to be completed by June 30, 1998 and is expected to be accounted for as
a pooling of interests.
NOTE E -- EARNINGS PER SHARE
- ----------------------------
The following table reflects the reconciliation of the numerator and denominator
of the basic earnings per share computation to the diluted earnings per share
computation for the 1998 and 1997 Quarters:
Per Share
Income Shares Amount
------ ------ ---------
1998
Basic EPS net income........................... $ 3,748 8,648 $ 0.43
=======
Effect of dilutive securities options......... - 312
------- -----
Diluted EPS.................................... $ 3,748 8,960 $ 0.42
======= ===== =======
1997
Basic EPS net income........................... $ 3,125 8,571 $ 0.36
=======
Effect of dilutive securities options......... - 306
------- -----
Diluted EPS.................................... $ 3,125 8,877 $ 0.35
======= ===== =======
9
<PAGE>
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, 1998, and the results of its operations
for the three month periods ended March 31, 1998 and 1997. On November 30,
1997, First American Bancorp ("FAB"), a one bank holding company headquartered
in Decatur, Alabama, was merged with and into the Company, pursuant to which
each outstanding share of FAB common stock was converted into .7199 shares of
the Company's common stock for a total of 2,071,966 shares of Company common
stock issued to FAB shareholders. The FAB Merger was accounted for as a pooling
of interests. Accordingly, the unaudited financial statements as of and for the
quarter ended March 31, 1997 have been restated to reflect the financial
position and results of operations of FAB and differ from the unaudited
financial statements of the Company as previously reported.
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, 1997.
PERFORMANCE OVERVIEW
- --------------------
The Company's net income was $3,748,000 for the first quarter of 1998 (the "1998
Quarter") compared to $3,125,000 for the same period in 1997 (the "1997
Quarter"), an increase of 19.9%. Net income per common share - diluted for the
1998 Quarter was $.42 on 8,960,000 average common and common equivalent shares
outstanding compared to $.35 for the 1997 Quarter on 8,877,000 average common
and common equivalent shares outstanding.
The return on average assets for the Company was 1.16% for the 1998 Quarter
compared to 1.13% for the 1997 Quarter. The return on average stockholders'
equity was 14.97% for the 1998 Quarter compared to 13.96% for the 1997 Quarter.
Book value per share at March 31, 1998, was $11.63, an increase of $.31 from
December 31, 1997. Tangible book value per share at March 31, 1998, was $10.64,
an increase of $.32 from year end 1997. The Company paid a $.15 per share cash
dividend on common shares in the 1998 Quarter compared to $.115 per share in the
1997 Quarter.
NET INCOME
- ----------
The increase in net income for the 1998 Quarter over the 1997 Quarter resulted
primarily from growth in noninterest income, which grew faster than related
noninterest expenses.
A large 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. Net interest income was
$11.6 million during each of the 1998 and 1997 Quarters despite reduction in the
net interest spread and net interest margin. The net interest spread declined
by 44 basis points to 3.60% during the 1998 Quarter from 4.04% during the 1997
Quarter and the net interest margin declined by 51 basis points to 4.08% during
the 1998 quarter from 4.59% during the 1997 Quarter. Interest earning assets
increased by $129.5 million during the 1998 Quarter, or 12.8%, compared to the
1997 Quarter, and average interest bearing liabilities increased $129.3 million
during the 1998 Quarter, or 14.8%, compared to the 1997 Quarter. The Company's
investment in tax-free insurance policies, included other assets, averaged $21.5
million during the 1998 Quarter; otherwise, the growth in average interest
earning assets would have been higher. Despite the small increase in net
interest earning assets, average loans increased by $64.5 million, or 8.2%,
during the 1998 Quarter, compared with the 1997 Quarter. If not for the growth
in average loans relative to other earning assets net interest income would have
declined. Management expects competition for loans and relatively higher cost
marginal funding sources to continue and, therefore, expects slow growth in net
interest income.
The following table depicts, on a taxable equivalent basis for the 1998 and 1997
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>
AVERAGE BALANCES, INCOME AND EXPENSES AND RATES
(AMOUNTS IN THOUSANDS, EXCEPT YIELDS AND RATES)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-----------------------------------------------------------------------
1998 1997
--------------------------------- --------------------------------
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) ................................... $ 849,389 $19,274 9.08% $ 784,922 $18,183 9.27%
Securities:
Taxable ....................................... 184,892 2,929 6.34 149,184 2,456 6.59
Tax exempt .................................... 32,120 631 7.86 30,032 615 8.19
Cash balances in other banks .................... 1,994 29 5.82 173 2 4.62
Funds sold ...................................... 65,693 761 4.63 40,232 563 5.60
Trading account securities ...................... 3,452 52 6.03 3,506 40 4.56
---------- ------- ---------- -------
Total earning assets (2) .................... 1,137,540 23,676 8.33 1,008,049 21,859 8.67
---------- ------- ---------- -------
Cash and due from banks ......................... 35,207 40,650
Premises and equipment .......................... 28,044 25,197
Other assets .................................... 108,586 40,464
Allowance for loan losses ....................... (12,889) (11,033)
---------- ----------
Total assets ............................... $1,296,488 $1,103,327
========== ==========
LIABILITIES:
Interest-bearing liabilities:
Interest-bearing transaction accounts ........... $ 124,054 882 2.84 $ 109,713 731 2.67
Savings deposits ................................ 257,449 2,461 3.82 225,377 2,057 3.65
Time deposits ................................... 430,304 6,018 5.59 421,994 5,761 5.46
Funds purchased ................................. 134,301 1,640 4.88 71,942 905 5.03
Other short-term borrowings ..................... 40,675 593 5.83 29,665 455 6.14
Long-term debt .................................. 14,632 245 6.70 13,401 175 5.22
---------- ------- ---------- -------
Total interest-bearing liabilities ......... 1,001,415 11,839 4.73 872,092 10,084 4.63
---------- ------- ---- ---------- ------- ----
Demand deposits ................................... 144,276 125,044
Accrued interest and other liabilities ............ 50,627 16,652
Stockholders' equity .............................. 100,170 89,539
---------- ----------
Total liabilities and stockholders' equity.. $1,296,488 $1,103,327
========== ==========
Net interest spread ................................ 3.60% 4.04%
==== ====
Net interest income/margin on a taxable equivalent
basis ............................................ 11,837 4.16% 11,775 4.67%
==== ====
Tax equivalent adjustment (2)....................... 244 209
------- -------
Net interest income/margin ......................... $11,593 4.08% $11,566 4.59%
======= ==== ======= ====
</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 $545,000 and $554,000 are included in interest and
fees on loans for the three months ended March 31, 1998 and 1997,
respectively.
11
<PAGE>
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 1998 Quarter
compared to the 1997 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,
---------------------------------
1998 COMPARED TO 1997
VARIANCE DUE TO
---------------------------------
VOLUME YIELD/RATE TOTAL
------ ---------- ------
<S> <C> <C> <C>
EARNING ASSETS:
Loans...................................... $3,260 $(2,169) $1,091
Securities:
Taxable ................................ 1,052 (579) 473
Tax exempt ............................. 136 (120) 16
Cash balances in other banks .............. 26 1 27
Funds sold ................................ 768 (570) 198
Trading account securities ................ (3) 15 12
------ ------- ------
Total interest income ............... 5,239 (3,422) 1,817
INTEREST-BEARING LIABILITIES:
Interest-bearing transaction accounts .... 101 50 151
Savings and money market deposits ........ 304 100 404
Time deposits ............................ 116 141 257
Funds purchased .......................... 919 (184) 735
Other short-term borrowings .............. 283 (145) 138
Long-term debt ........................... 17 53 70
------ ------- ------
Total interest expense .............. 1,740 15 1,755
------ ------- ------
Net interest income on a taxable
equivalent basis .................. $3,499 $(3,437) 62
====== =======
Taxable equivalent adjustment ............ (35)
------
Net interest income ...................... $ 27
======
</TABLE>
12
<PAGE>
Net revenue from earning assets during the 1998 Quarter increased $1.8 million,
or 8.3%, over the corresponding period in 1997, most of which resulted from the
growth of loans among all earnings assets.
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
$265,000 for the 1998 Quarter, compared with $486,000 during the 1997 Quarter.
Charge-offs exceeded recoveries by $135,000 for the 1998 Quarter compared to net
charge-offs of $291,000 for the same period of 1997. The allowance for loan
losses as a percentage of outstanding loans, net of unearned income was 1.52% at
March 31, 1998 and at year-end 1997. 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.
-------------
Total noninterest income for the 1998 Quarter was $6.6 million, compared to $4.5
million for the same period in 1997, an increase of $2.1 million, or 46.3%.
Investment services income of $3.1 million in the 1998 Quarter, increased by
$1.1 million, or 58.1%, compared with the 1997 Quarter, reflecting a favorable
bond market. Income from the origination and sale of mortgage loans was $1.3
million during the 1998 Quarter compared to $541,000 during the 1997 Quarter, an
increase of $722,000, or 133.5%, reflecting strong housing sales and refinancing
markets.
Total noninterest expense for the 1998 Quarter was $12.5 million compared to
$10.9 million, a $1.6 million, or 14.9%, increase over the same period in 1997.
Substantially all of the increase in noninterest expense was attributable to an
increase of $1.5 million, or 23.9%, in salaries and employee benefits to $7.6
million during the 1998 Quarter compared with $6.1 million during the 1997
Quarter, consistent with increased sales volume in the investment services
division and increased origination volume in the mortgage business.
Income tax expense increased $78,000, or 5.0%, to $1.6 million for the 1998
Quarter, an effective rate of 30.2%, compared to $1.5 million during the 1997
Quarter, an effective rate of 33.1%. The reduction in the Company's effective
tax rate is attributable to additional tax-free investments, especially life
insurance policies, during the 1998 Quarter compared with the 1997 Quarter.
EARNING ASSETS
- --------------
Loans comprised the largest single category of the Company's earning assets on
March 31, 1998. Loans, net of unearned income, were $851.3 million or 66.4% of
total assets at March 31, 1998 compared to $842.8 million or 66.1% at December
31, 1997, an increase of $8.5 million or 1.0%.
Investment securities decreased $4.2 million in the 1998 Quarter attributable to
maturities and calls. There were no purchases of investment securities during
the 1998 Quarter.
Securities available for sale increased $13.7 million in the 1998 Quarter.
Purchases of available for sale securities totaled $29.9 million and maturities
and calls of available for sale securities totaled $16.5 million. There were no
sales of available for sale securities in the 1998 Quarter, compared to sales of
$1.4 million in the 1997 Quarter. Unrealized gains on securities available for
sale totaled $649,000, net of deferred income taxes, at March 31, 1998
compared with $457,000, net of deferred income taxes, at December 31, 1997.
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 $40.0 million at March 31, 1998 compared to $50.0 at December 31, 1997,
a decrease of $10.0 million. Interest-bearing deposits in other banks at March
31, 1998 were $6.8 million compared to $2.4 million at December 31, 1997.
13
<PAGE>
DEPOSITS AND OTHER FUNDING SOURCES
- ----------------------------------
Deposits increased $38.7 million from year-end 1997, or 4.2% to $967.7 million
at March 31, 1998. Noninterest bearing demand deposits decreased $7.2 million
and interest-bearing deposits increased $45.9 million. Primarily all of the
growth in deposits related to consumer certificates of deposit.
Federal funds purchased and securities sold under agreements to repurchase
totaled $115.1 million at March 31, 1998, a decrease of $24.1 million from
December 31, 1997. Short-term borrowings and the Treasury tax and loan account
were $29.0 million at March 31, 1998, a decrease of $5.5 million over December
31, 1997. The decrease in borrowed funds reflects the emphasis on consumer
deposits and long-term debt to fund asset growth.
The Company's long-term debt, consisting primarily of Federal Home Loan Bank
advances, at March 31, 1998 totaled $19.6 million compared to $14.6 million at
December 31, 1997.
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 write down
or charge-off of the principal balance of the loan which would necessitate
additional charges to earnings.
At March 31, 1998, nonperforming assets totaled $6.2 million, a decrease of
$486,000 from December 31, 1997. Nonperforming assets as a percentage of loans
plus other real estate was .73% at March 31, 1998 compared to .79% at December
31,1997.
14
<PAGE>
NONPERFORMING ASSETS
(AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGES)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
--------- -----------
<S> <C> <C>
Nonaccrual loans.......................................... $ 3,645 $ 4,174
Restructured loans........................................ 1,003 1,052
Loans past due 90 days or more and still accruing......... - -
------- -------
Total nonperforming loans................................ 4,648 5,226
Other real estate owned................................... 1,554 1,462
------ ------
Total nonperforming assets............................... $ 6,202 $ 6,688
======= =======
Allowance for loan losses to period-end loans............. 1.52% 1.52%
Allowance for loan losses to period-end nonperforming
loans.................................................... 278.81 245.48
Allowance for loan losses to period-end nonperforming
assets................................................... 208.95 191.82
Net charge-offs to average loans.......................... 0.06(1) 0.15
Nonperforming assets to period-end loans and other real
estate owned............................................. 0.73 0.79
Nonperforming loans to period-end loans................... 0.55 0.62
</TABLE>
__________________
(1) Annualized
15
<PAGE>
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGES)
<TABLE>
<S> <C>
Allowance for loan losses at
beginning of period .................................... $12,829
Charge-offs:
Commercial, financial and agricultural ................. 69
Real estate - mortgage ................................. 65
Consumer ............................................... 552
-------
Total charge-offs ................................. 686
-------
Recoveries:
Commercial, financial and agricultural ................. 361
Real estate - mortgage ................................. 39
Consumer ............................................... 151
-------
Total recoveries .................................. 551
-------
Net charge-offs ................................... 135
Provision for loan losses ................................ 265
-------
Allowance for loan losses at period-end ................... $12,959
=======
</TABLE>
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, 1998 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.
16
<PAGE>
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, 1998, assuming relevant assets and liabilities are collected and paid,
respectively, based upon historical experience rather than their stated
maturities.
17
<PAGE>
INTEREST SENSITIVITY ANALYSIS
(AMOUNTS IN THOUSANDS, EXCEPT RATIOS)
<TABLE>
<CAPTION>
MARCH 31, 1998
-----------------------------------------------------------------------------------
AFTER ONE AFTER THREE
THROUGH THROUGH
WITHIN ONE THREE TWELVE WITHIN ONE GREATER THAN
MONTH MONTHS MONTHS YEAR ONE YEAR TOTAL
---------- -------- --------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Earning assets:
Loans (1) ................................. $381,156 $ 52,939 $ 131,273 $ 565,368 $282,296 $ 847,664
Securities (2) ............................ 18,027 10,507 39,666 68,200 157,726 225,926
Interest-bearing deposits in other banks... 6,841 - - 6,841 - 6,841
Funds sold ................................ 39,556 - - 39,556 - 39,556
-------- -------- --------- --------- -------- ----------
Total interest-earning assets ........ $445,580 $ 63,446 $ 170,939 $ 679,965 $440,022 $1,119,987
LIABILITIES:
Interest-bearing liabilities:
Interest-bearing deposits:
Demand deposits ....................... $ - $ - $ 124,599 $ 124,599 $ - $ 124,599
Savings deposits ...................... 265,036 - - 265,036 - 265,036
Time deposits (3) ..................... 53,499 72,400 228,049 353,948 85,280 439,228
Funds purchased ........................... 115,067 - - 115,067 - 115,067
Short-term borrowings (4) ................. 29,040 - - 29,040 - 29,040
Long-term debt ............................ 14,202 4 18 14,224 5,352 19,576
-------- -------- --------- --------- -------- ----------
Total interest-bearing liabilities .... $476,844 $ 72,404 $ 352,666 $ 901,914 $ 90,632 $ 992,546
-------- -------- --------- --------- -------- ----------
Period gap ................................... $(31,264) $ (8,958) $(181,727) $(221,949) $349,390
======== ======== ========= ========= ========
Cumulative gap ............................... $(31,264) $(40,222) $(221,949) $(221,949) $127,441 $ 127,441
======== ======== ========= ========= ======== ==========
Ratio of cumulative gap to total earning
assets ....................................... (2.79)% (3.59)% (19.82)% (19.82)% 11.38%
</TABLE>
____________________________
(1) Excludes nonaccrual loans of $3,645,000.
(2) Excludes investment equity securities of $5,241,000.
(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 $2,040,000.
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 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.
18
<PAGE>
MARKET RISK
- -----------
The Company's earnings are dependent on its net interest income which is the
difference between interest income earned on all earning assets, primarily loans
and securities, and interest paid on all interest bearing liabilities, primarily
deposits. Market risk is the risk of loss from adverse changes in market prices
and rates. The Company's market risk arises primarily from inherent interest
rate risk in its lending, investing and deposit gathering activities. The
Company seeks to reduce its exposure to market risk through actively monitoring
and managing its interest rate risk. Management relies upon static "gap"
analysis to determine the degree of mismatch in the maturity and repricing
distribution of interest earning assets and interest bearing liabilities which
quantifies, to a large extent, the degree of market risk inherent in the
Company's balance sheet. Gap analysis is further augmented by simulation
analysis to evaluate the impact of varying levels of prevailing interest rates
and the sensitivity of specific earning assets and interest bearing liabilities
to changes in those prevailing rates. Simulation analysis consists of
evaluating the impact on net interest income given changes from 200 basis points
below to 200 basis points above the current prevailing rates. Management makes
certain assumptions as to the effect varying levels of interest rates have on
certain earning assets and interest bearing liabilities, which assumptions
consider both historical experience and consensus estimates of outside sources.
With respect to the primary earning assets, loans and securities, certain
features of individual types of loans and specific securities introduce
uncertainty as to their expected performance at varying levels of interest
rates. In some cases, imbedded options exist whereby the borrower may elect to
repay the obligation at any time. These imbedded prepayment options make
anticipating the performance of those instruments difficult given changes in
prevailing rates. At March 31, 1998, mortgage backed securities totaling
$131.6 million, or 10.3% of total assets and essentially every loan, net of
unearned income, (totaling $851.3 million, or 66.4% of total assets), carry such
imbedded options. Management believes that assumptions used in its simulation
analysis about the performance of financial instruments with such imbedded
options are appropriate. However, the actual performance of these financial
instruments may differ from management's estimates due to several factors,
including the diversity and sophistication of the customer base, the general
level of prevailing interest rates and the relationship to their historical
levels, and general economic conditions. The difference between those
assumptions and actual results, if significant, could cause the actual results
to differ from those indicated by the simulation analysis.
Deposits totaled $967.7 million, or 75.5%, of total assets at March 31, 1998.
Since deposits are the primary funding source for earning assets, the associated
market risk is considered by management in its simulation analysis. Generally,
it is anticipated that deposits will be sufficient to support funding
requirements. However, the rates paid for deposits at varying levels of
prevailing interest rates have a significant impact on net interest income and
therefore, must be quantified by the Company in its simulation analysis.
Specifically, the Company's spread, the difference between the rates earned on
earning assets and rates paid on interest bearing liabilities, is generally
higher when prevailing rates are higher. As prevailing rates reduce, the spread
tends to compress, with severe compression at very low prevailing interest
rates. This characteristic is called "spread compression" and adversely effects
net interest income in the simulation analysis when anticipated prevailing rates
are reduced from current rates. Management relies upon historical experience to
estimate the degree of spread compression in its simulation analysis.
Management believes that such estimates of possible spread compression are
reasonable. However, if the degree of spread compression varies from that
expected, the actual results could differ from those indicated by the simulation
analysis.
The following table illustrates the results of simulation analysis used by the
Company to determine the extent to which market risk would have effected the net
interest margin if prevailing interest rates differed from actual rates during
the 1998 Quarter. Because of the inherent use of estimates and assumptions in
the simulation model used to derive this information, the actual results for the
1998 Quarter and, certainly, the future impact of market risk on the Company's
net interest margin, may differ from that found in the table.
19
<PAGE>
MARKET RISK
(AMOUNTS IN THOUSANDS)
Change in Change from
Prevailing Interest Net Interest 1998 Net Interest
Rates Income Amount Income Amount
- ------------------- ------------- -----------------
+200 basis points $12,650 9.12 %
+100 basis points 12,122 4.56
0 basis points 11,593 -
- -100 basis points 11,223 (3.19)
- -200 basis points 10,853 (6.38)
LIQUIDITY AND CAPITAL ADEQUACY
- ------------------------------
The Company's net loan to deposit ratio decreased to 88.0% at March 31, 1998,
compared to 90.7% at year end 1997. The Company's liquid assets as a percentage
of total deposits were 8.9% at March 31, 1998, compared to 10.2% at year-end
1997. At March 31, 1998, the Company had unused Federal funds lines of
approximately $96.0 million, unused lines at the Federal Home Loan Bank of $46,5
million and an unused credit line at an independent bank of $5.5 million.
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.
The Company's stockholders' equity increased by $2.7 million to $100.6 million
at March 31, 1998 from $97.9 million at December 31, 1997. This increase was
attributable to:
Net income ..................................................... $ 3,748,000
Increase in unrealized gain on securities available for
sale, net of deferred income taxes ............................ 192,000
Cash dividends declared ........................................ (1,287,000)
Decrease in unearned restricted stock .......................... 23,000
-----------
Net increase ................................................. $ 2,676,000
===========
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, 1998. 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, 1998:
20
<PAGE>
<TABLE>
<CAPTION>
TIER 1 RISK TOTAL RISK TIER 1
BASED BASED LEVERAGE
----- ----- --------
<S> <C> <C> <C>
Alabama National BanCorporation ................. 9.53% 10.78% 7.16%
National Bank of Commerce of Birmingham ......... 9.28 10.53 7.15
Alabama Exchange Bank ........................... 10.78 11.70 6.46
Bank of Dadeville ............................... 12.64 13.71 9.12
Citizens & Peoples Bank, N.A. ................... 47.62 48.17 26.42
First American Bank ............................. 10.37 11.62 8.69
First Citizens Bank, N.A. ....................... 14.85 16.05 9.19
First Gulf Bank ................................. 9.17 10.29 7.33
Required minimums ............................... 4.00 8.00 4.00
</TABLE>
21
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this Item is contained in Item 2 herein under the
heading "MARKET RISK."
<PAGE>
PART II OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
3.1 Certificate of Incorporation (filed as an Exhibit to the Company's
Registration Statement on Form S-1 (Commission File no. 33-83800)
and incorporated herein by reference).
3.1A Certificate of Amendment of Certificate of Incorporation (filed as
an Exhibit to the Company's Annual Report of Form 10-K for the
year ended December 31, 1996 and incorporated herein by
reference).
3.1B Certificate of Merger (filed as an Exhibit to the Company's Annual
Report of Form 10-K for the year ended December 31, 1997 and
incorporated herein by reference).
3.1C Certificate of Amendment of Certificate of Incorporation dated April
23, 1998.
3.2 Bylaws (filed as an Exhibit to the Company's Registration Statement on
Form S-1 (Commission File No. 33-83800) and incorporated herein
by reference).
10.1 Second Amendment To Credit Agreement between the Company and AmSouth
Bank dated January 19, 1998 (filed as an Exhibit to the Company's
Annual Report on Form 10-K for the year ended December 31, 1997
and is incorporated herein by reference).
10.2 Agreement and Plan of Merger between the Company and Public Bank
Corporation dated March 5, 1998 (filed as an exhibit to the
Company's Registration Statement on Form S-4, (Commission File
No. 333-49771) and is incorporated herein by reference).
11 Computation of Earnings Per Share
27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the three months ended
March 31, 1998.
22
<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.
ALABAMA NATIONAL BANCORPORATION
DATE: May 11, 1998 /s/ John H. Holcomb, III
------------- --------------------------------------------
John H. Holcomb, III, its Chairman and Chief
Executive Officer
DATE: May 11, 1998 /s/ William E. Matthews, V.
------------- --------------------------------------------
William E. Matthews, V., its Executive
Vice President and Chief Financial Officer
23
<PAGE>
EXHIBIT 3.1C
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
OF
ALABAMA NATIONAL BANCORPORATION
ALABAMA NATIONAL BANCORPORATION, a corporation organized and existing under
the laws of the State of Delaware (the "Company"),
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Company at a regularly scheduled
meeting held on February 19, 1998, adopted a resolution, filed with the minutes
of the Board of Directors of the Company, setting forth and declaring advisable
the following amendment to the Certificate of Incorporation of the Company:
RESOLVED, the Certificate of Incorporation of Alabama National
BanCorporation be amended by deleting Paragraph A of Article Fourth in its
entirety and replacing such Paragraph A of Article Fourth with the
following:
"A. The total number of shares of stock which the corporation shall
have authority to issue is 17,600,000, consisting of (i) 17,500,000
shares of common stock, par value $1.00 per share ("Common Stock"),
and (ii) 100,000 shares of preferred stock, par value $1.00 per share
("Preferred Stock")."
SECOND: That pursuant to the above-described resolution of the Board of
Directors of the Company, the above-described amendment was submitted to the
Annual Meeting of the Stockholders of the Company held on April 23, 1998, upon
notice given in accordance with Section 222 of the General Corporation Law of
the State of Delaware, at which meeting the necessary number of shares of the
Company as required by the General Corporation Law of the State of Delaware was
voted in favor of the amendment.
THIRD: That the aforesaid amendment was duly adopted in accordance with the
applicable provisions of Sections 222 and 242 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, Alabama National BanCorporation has caused this
certificate to be signed by John H. Holcomb, III, its Chairman, and attested by
Kimberly Moore, its Secretary, the 23rd day of April, 1998.
/s/ John H. Holcomb, III
------------------------
JOHN H. HOLCOMB, III
Chairman
Attest:
/s/ Kimberly Moore
- ------------------
Kimberly Moore
Secretary
<PAGE>
ALABAMA NATIONAL BANCORPORATION
COMPUTATION OF EARNINGS PER SHARE (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
EXHIBIT 11
<TABLE>
<CAPTION>
PER SHARE
INCOME SHARES AMOUNT
<S> <C> <C> <C>
1998
Basic EPS net income ......................... $3,748 8,648 $0.43
=====
Effect of dilutive securities options ........ - 312
------ -----
Diluted EPS .................................. $3,748 8,960 $0.42
====== ===== =====
1997
Basic EPS net income ......................... $3,125 8,571 $0.36
=====
Effect of dilutive securities options ........ - 306
------ -----
Diluted EPS .................................. $3,125 8,877 $0.35
====== ===== =====
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 40,193
<INT-BEARING-DEPOSITS> 6,841
<FED-FUNDS-SOLD> 39,556
<TRADING-ASSETS> 8,131
<INVESTMENTS-HELD-FOR-SALE> 170,749
<INVESTMENTS-CARRYING> 52,287
<INVESTMENTS-MARKET> 52,667
<LOANS> 851,309
<ALLOWANCE> 12,959
<TOTAL-ASSETS> 1,281,322
<DEPOSITS> 967,685
<SHORT-TERM> 27,000
<LIABILITIES-OTHER> 49,345
<LONG-TERM> 19,576
0
0
<COMMON> 8,648
<OTHER-SE> 91,961
<TOTAL-LIABILITIES-AND-EQUITY> 1,281,322
<INTEREST-LOAN> 19,244
<INTEREST-INVEST> 3,346
<INTEREST-OTHER> 842
<INTEREST-TOTAL> 23,432
<INTEREST-DEPOSIT> 9,361
<INTEREST-EXPENSE> 11,839
<INTEREST-INCOME-NET> 11,593
<LOAN-LOSSES> 265
<SECURITIES-GAINS> 28
<EXPENSE-OTHER> 12,514
<INCOME-PRETAX> 5,373
<INCOME-PRE-EXTRAORDINARY> 5,373
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,748
<EPS-PRIMARY> 0
<EPS-DILUTED> .42
<YIELD-ACTUAL> 8.33
<LOANS-NON> 3,645
<LOANS-PAST> 0
<LOANS-TROUBLED> 1,003
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 12,829
<CHARGE-OFFS> 686
<RECOVERIES> 551
<ALLOWANCE-CLOSE> 12,959
<ALLOWANCE-DOMESTIC> 12,959
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 12,959
</TABLE>
