<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 September 30, 1999
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 November 10, 1999
----- --------------------------------
Common Stock, $1.00 Par Value 11,063,780
<PAGE>
INDEX
ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION PAGE
- ----------------------------- ----
Item 1. Financial Statements (Unaudited)
Consolidated statements of condition
September 30, 1999 and December 31, 1998 ...........................3
Consolidated statements of income
Three months ended September 30, 1999 and 1998;
nine months ended September 30, 1999 and 1998 ......................4
Consolidated statements of other comprehensive income
Three months ended September 30, 1999 and 1998;
nine months ended September 30, 1999 and 1998 ......................8
Consolidated statements of cash flows
nine months ended September 30, 1999 and 1998 .....................10
Notes to the unaudited consolidated financial statements
September 30, 1999 ................................................11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations .........................................13
Item 3. Quantitative and Qualitative Disclosures about Market Risk ........29
PART II. OTHER INFORMATION
- --------------------------
Item 6. Exhibits and Reports on Form 8-K ..................................29
SIGNATURES ...................................................................30
FORWARD-LOOKING INFORMATION
- ---------------------------
Statements contained in this Quarterly Report on Form 10-Q that are not
historical facts are forward-looking statements. In addition, Alabama National
BanCorporation ("Alabama National"), 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 Alabama National's best
judgement based upon current information and involve a number of risks and
uncertainties. Various factors 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 Alabama National's Securities and
Exchange Commission filings and other public announcements. With respect to the
adequacy of the allowance for loan losses for Alabama National, 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
------------------------------------
(In thousands, except share amounts)
<TABLE>
<CAPTION>
September 30, 1999 December 31, 1998
------------------ -----------------
(Unaudited)
<S> <C> <C>
Assets
Cash and due from banks ................................................... $ 68,014 $ 70,813
Interest-bearing deposits in other banks .................................. 12,996 225
Investment securities (estimated market values of $21,743 and $35,214) .... 21,520 34,655
Securities available for sale ............................................. 326,661 289,558
Trading securities ........................................................ 3,573 5,534
Federal funds sold and securities purchased under resell agreements ....... 61,535 57,076
Loans held for sale ....................................................... 8,162 19,047
Loans ..................................................................... 1,253,886 1,088,425
Unearned income ........................................................... (1,080) (1,398)
----------- -----------
Loans, net of unearned income ............................................. 1,252,806 1,087,027
Allowance for loan losses ................................................. (17,553) (16,540)
----------- -----------
Net loans ................................................................. 1,235,253 1,070,487
Property, equipment and leasehold improvements, net ....................... 43,565 38,875
Intangible assets ......................................................... 10,898 8,226
Cash surrender value of life insurance .................................... 31,254 29,669
Receivable from investment division customers ............................. 12,114 22,776
Other assets .............................................................. 27,823 25,108
----------- -----------
Totals .................................................................... $ 1,863,368 $ 1,672,049
=========== ===========
Liabilities and Stockholders' Equity
Deposits:
Noninterest bearing...................................................... $ 221,065 $ 232,450
Interest bearing......................................................... 1,187,900 1,042,725
----------- -----------
Total deposits ............................................................ 1,408,965 1,275,175
Federal funds purchased and securities sold under repurchase agreements ... 146,540 162,633
Treasury, tax and loan account ............................................ 4,833 1,506
Short-term borrowings ..................................................... 48,389 21,700
Accrued expenses and other liabilities .................................... 45,975 47,714
Long-term debt ............................................................ 71,025 32,328
----------- -----------
Total liabilities ......................................................... 1,725,727 1,541,056
Common stock, $1 par, authorized 17,500,000 shares; issued 11,184,909 and
10,971,686 shares at September 30, 1999 and
December 31, 1998, respectively ......................................... 11,185 10,972
Additional paid-in capital ................................................ 81,908 78,570
Retained earnings ......................................................... 50,736 40,584
Treasury stock at cost, 121,129 shares at September 30, 1999 .............. (3,226) -
Unearned ESOP shares ...................................................... - (75)
Accumulated other comprehensive income (loss), net of tax ................. (2,962) 942
----------- -----------
Total stockholders' equity ................................................ 137,641 130,993
----------- -----------
Totals .................................................................... $ 1,863,368 $ 1,672,049
=========== ===========
</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 September 30,
-------------------
1999 1998
---- ----
Interest income:
<S> <C> <C>
Interest and fees on loans................................................. $ 26,482 $ 22,841
Interest on securities..................................................... 5,238 4,977
Interest on deposits in other banks........................................ 65 36
Interest on trading securities............................................. 83 33
Interest on Federal funds sold and securities purchased
under resell agreements.................................................. 491 1,130
----------- ----------
Total interest income.......................................................... 32,359 29,017
Interest expense:
Interest on deposits....................................................... 12,247 12,035
Interest on Federal funds purchased and securities sold
under repurchase agreements.............................................. 1,994 1,895
Interest on long and short-term borrowings................................. 1,080 658
----------- ----------
Total interest expense......................................................... 15,321 14,588
----------- ----------
Net interest income............................................................ 17,038 14,429
Provision for loan losses...................................................... 408 277
----------- ----------
Net interest income after provision for loan losses............................ 16,630 14,152
Noninterest income:
Securities gains........................................................... - 1
Gain on disposition of assets.............................................. 38 39
Service charges on deposit accounts........................................ 1,916 1,888
Investment services........................................................ 2,136 2,541
Trust department income.................................................... 550 510
Origination and sale of mortgage loans..................................... 860 1,105
Bank owned life insurance.................................................. 386 281
Other...................................................................... 1,047 720
----------- ----------
Total noninterest income....................................................... 6,933 7,085
</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 September 30,
-------------------
1999 1998
---- ----
Noninterest expense:
<S> <C> <C>
Salaries and employee benefits............................................. 9,048 8,606
Occupancy and equipment expenses........................................... 1,885 1,784
Other...................................................................... 4,301 3,544
---------- ----------
Total noninterest expense...................................................... 15,234 13,934
---------- ----------
Income before provision for income taxes....................................... 8,329 7,303
Provision for income taxes..................................................... 2,609 2,251
---------- ----------
Net income..................................................................... $ 5,720 $ 5,052
========== ==========
Net income per common share (basic)............................................ $ .51 $ .47
========== ==========
Weighted average common shares outstanding (basic)............................. 11,127 10,861
========== ==========
Net income per common share (diluted).......................................... $ .51 $ .45
========== ==========
Weighted average common and common equivalent shares outstanding (diluted)..... 11,315 11,161
========== ==========
</TABLE>
See accompanying notes to unaudited consolidated financial statements
5
<PAGE>
Alabama National BanCorporation and Subsidiaries
Consolidated Statements of Income (Unaudited)
---------------------------------------------
(In thousands, except per share data)
<TABLE>
<CAPTION>
For the nine months
ended September 30,
-------------------
1999 1998
---- ----
<S> <C> <C>
Interest income:
Interest and fees on loans .................................................. $ 73,877 $ 68,488
Interest on securities ...................................................... 14,716 13,711
Interest on deposits in other banks ......................................... 86 100
Interest on trading securities .............................................. 292 191
Interest on Federal funds sold and securities purchased
under resell agreements ................................................... 1,867 3,341
---------- ----------
Total interest income ........................................................... 90,838 85,831
Interest expense:
Interest on deposits ........................................................ 34,327 34,935
Interest on Federal funds purchased and securities sold
under repurchase agreements ............................................... 5,377 5,165
Interest on long and short-term borrowings .................................. 2,758 2,349
---------- ----------
Total interest expense .......................................................... 42,462 42,449
---------- ----------
Net interest income ............................................................. 48,376 43,382
Provision for loan losses ....................................................... 1,338 888
---------- ----------
Net interest income after provision for loan losses ............................. 47,038 42,494
Noninterest income:
Securities gains ............................................................ 189 174
Gain on disposition of assets ............................................... 246 328
Service charges on deposit accounts ......................................... 5,538 5,362
Investment services ......................................................... 7,857 8,346
Trust department income ..................................................... 1,620 1,567
Origination and sale of mortgage loans ...................................... 3,229 3,017
Bank owned life insurance ................................................... 1,111 879
Other ....................................................................... 2,596 1,878
---------- ----------
Total noninterest income ........................................................ 22,386 21,551
</TABLE>
6
<PAGE>
Alabama National BanCorporation and Subsidiaries
Consolidated Statements of Income (Unaudited) (Continued)
---------------------------------------------------------
(In thousands, except per share data)
<TABLE>
<CAPTION>
For the nine months
ended September 30,
-------------------
1999 1998
<S> <C> <C>
Noninterest expense:
Salaries and employee benefits ................................................... $ 27,538 $ 25,825
Occupancy and equipment expenses ................................................. 5,272 5,018
Other ............................................................................ 13,043 12,321
--------- ----------
Total noninterest expense ............................................................ 45,853 43,164
--------- ----------
Income before provision for income taxes ............................................. 23,571 20,881
Provision for income taxes ........................................................... 7,452 6,530
--------- ----------
Net income ........................................................................... $ 16,119 $14,351
========= ==========
Net income per common share (basic) ................................................... $ 1.45 $ 1.34
========= ==========
Weighted average common shares outstanding (basic) .................................... 11,084 10,722
========= ==========
Net income per common share (diluted) ................................................. $ 1.43 $ 1.30
========= ==========
Weighted average common and common equivalent shares outstanding (diluted) ............ 11,273 11,078
========= ==========
</TABLE>
See accompanying notes to unaudited consolidated financial statements
7
<PAGE>
Alabama National BanCorporation and Subsidiaries
Consolidated Statements of Other Comprehensive Income (Unaudited)
-----------------------------------------------------------------
(In thousands)
<TABLE>
<CAPTION>
For the three months
ended September 30,
-------------------
1999 1998
---- ----
<S> <C> <C>
Net income .............................................................................. $ 5,720 $ 5,052
Other comprehensive income (loss):
Unrealized gains (loss) on securities available for sale ............................ (755) 1,629
Less: Reclassification adjustment for net gains included
in net income ....................................................................... - 1
--------- ------------
Other comprehensive income (loss), before tax ........................................... (755) 1,628
Provision for (benefit of) income taxes related to
items of other comprehensive income ................................................. (475) 592
--------- ------------
Other comprehensive income (loss), net of tax ........................................... (280) 1,036
--------- ------------
Comprehensive income .................................................................... $ 5,440 $ 6,088
========= ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements
8
<PAGE>
Alabama National BanCorporation and Subsidiaries
Consolidated Statements of Other Comprehensive Income (Unaudited)
-----------------------------------------------------------------
(In thousands)
<TABLE>
<CAPTION>
For the nine months
ended September 30,
-------------------
1999 1998
---- ----
<S> <C> <C>
Net income .............................................................................. $ 16,119 $ 14,351
Other comprehensive income (loss):
Unrealized gains (loss) on securities available for sale ............................ (5,959) 2,024
Less: Reclassification adjustment for net gains included
in net income ....................................................................... 189 174
---------- ----------
Other comprehensive income (loss), before tax ........................................... (6,148) 1,850
Provision for (benefit of) income taxes related to
items of other comprehensive income ................................................. (2,244) 667
---------- ----------
Other comprehensive income (loss), net of tax ........................................... (3,904) 1,183
---------- ----------
Comprehensive income .................................................................... $ 12,215 $ 15,534
========== ==========
</TABLE>
See accompanying notes to unaudited consolidated financial statements
9
<PAGE>
Alabama National BanCorporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
------------------------------------------------
(In thousands)
<TABLE>
<CAPTION>
For the nine months
ended September 30,
-------------------
1999 1998
---- ----
<S> <C> <C>
Net cash flows provided (used) by operating activities ....................................... $ 30,526 $ (1,295)
Cash flows from investing activities:
Proceeds from maturities of investment securities ............................................ 13,100 23,817
Purchases of securities available for sale ................................................... (210,425) (208,134)
Proceeds from sale of securities available for sale .......................................... 256 241
Proceeds from maturities of securities available for sale .................................... 166,571 94,698
Net (increase) decrease in interest bearing deposits in other banks .......................... (12,771) 1,869
Net (increase) decrease in Federal funds sold and securities purchased
under resell agreements .................................................................. (4,459) 8,338
Net increase in loans ........................................................................ (156,236) (62,622)
Purchases of property, equipment and leasehold improvements .................................. (6,900) (2,804)
Proceeds from sale of property, equipment and leasehold improvements ......................... 18 108
Purchase of treasury stock for issuance in purchase business combination ..................... (3,226) --
Cash paid in purchase business combination, net of cash received ............................. (114) --
--------- ---------
Net cash used in investing activities ........................................................ (214,186) (144,489)
--------- ---------
Cash flows from financing activities:
Net increase in deposits ..................................................................... 133,790 129,659
Increase (decrease) in Federal funds purchased and securities sold
under agreements to repurchase ........................................................... (16,093) 38,672
Net increase (decrease) in short and long-term borrowings and capital leases ................. 68,427 (6,778)
Exercise of stock options .................................................................... 704 2,184
Dividends on common stock .................................................................... (5,967) (4,061)
--------- ---------
Net cash provided by financing activities .................................................... 180,861 159,676
--------- ---------
Increase (decrease) in cash and cash equivalents ............................................. (2,799) 13,892
Cash and cash equivalents, beginning of period ............................................... 70,813 53,216
--------- ---------
Cash and cash equivalents, end of period ..................................................... $ 68,014 $ 67,108
========= =========
Supplemental schedule of noncash investing and financing activities
Acquisition of collateral in satisfaction of loans ........................................... $ 1,017 $ 1,050
========= =========
Assets acquired in purchase business combination ............................................. $ 3,704 $ --
========= =========
Liabilities assumed in purchase business combination ......................................... $ 721 $ --
========= =========
Adjustment to market value of securities available for sale, net
of deferred income taxes ................................................................. $ (3,904) $ 1,183
========= =========
</TABLE>
See accompanying notes to unaudited consolidated financial statements
10
<PAGE>
ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
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 nine months ended September 30, 1999
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, 1999. These
interim financial statements should be read in conjunction with the consolidated
financial statements and footnotes thereto included in Alabama National's Form
10-K for the year ended December 31, 1998.
NOTE B - COMMITMENT AND CONTINGENCIES
- -------------------------------------
Alabama National'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
- ---------------------------------------
Derivative Investments and Hedging Activities
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities, ("Statement 133"). Statement 133 standardizes the
accounting for derivative instruments, including certain derivative instruments
embedded in other contracts, by requiring that an entity recognize those items
as assets or liabilities in the statement of financial position and measure them
at fair value. If certain conditions are met, an entity may elect to designate a
derivative instrument as a hedging instrument. Statement 133 generally provides
for matching the timing of gain or loss recognition on the hedging instrument
with the recognition of (a) the changes in the fair value of the hedged asset or
liability that are attributable to the hedged risk or (b) the earnings effect of
the hedged forecasted transaction. Statement 133, as amended by Statement 137,
is effective for all fiscal quarters of all fiscal years beginning after June
15, 2000. Management of Alabama National does not expect the adoption of
Statement 133 to have a material impact on its financial statements since it
does not invest in derivative instruments
Mortgage-Backed Securities
In October 1998, the FASB issued Statement of Financial Accounting Standards No.
134, Accounting for Mortgage-Backed Securities Retained after the Securitization
of Mortgage Loans Held for Sale by a Mortgage Banking Enterprise, an amendment
of FASB Statement No. 65, ("Statement 134"). Statement 134 amends prior
accounting standards with respect to the classification of retained interests,
such as mortgage-backed securities, following a securitization of mortgage loans
held for sale. This statement became effective for the first quarter of 1999.
Since Alabama National does not securitize mortgage loans, no financial
statement impact has resulted from adopting this statement.
NOTE D - REPURCHASE OF TREASURY STOCK
- -------------------------------------
In the third quarter of 1999, the Board of Directors of Alabama National
authorized the repurchase of 121,129 shares of common stock. This repurchase,
which was completed during the third quarter at a cost of $3,226,000, was
specifically related to Alabama National's issuance of an identical number of
shares to acquire Rankin Insurance Agency in May
11
<PAGE>
1999 in a purchase business combination. The proforma impact of the purchase
business combination on Alabama National's financial statements for periods
prior to acquisition is not significant and, thus, not presented herein.
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 1999 and 1998 nine months and the 1999 and 1998 quarters.
<TABLE>
<CAPTION>
Per Share
Income Shares Amount
------ ------ ------
<S> <C> <C> <C>
(In thousands, except per share amounts)
THREE MONTHS ENDED SEPTEMBER 30, 1999
Basic EPS net income ......................... $ 5,720 11,127 $ 0.51
==========
Effect of dilutive securities options ........ -- 188
--------- ---------
Diluted EPS .................................. $ 5,720 11,315 $ 0.51
========= ========= ==========
THREE MONTHS ENDED SEPTEMBER 30, 1998
Basic EPS net income ......................... $ 5,052 10,861 $ 0.47
==========
Effect of dilutive securities options ........ -- 300
--------- ---------
Diluted EPS .................................. $ 5,052 11,161 $ 0.45
========= ========= ==========
NINE MONTHS ENDED SEPTEMBER 30, 1999
Basic EPS net income ......................... $16,119 11,084 $ 1.45
==========
Effect of dilutive securities options ........ -- 189
--------- ---------
Diluted EPS .................................. $16,119 11,273 $ 1.43
========= ========= ==========
NINE MONTHS ENDED SEPTEMBER 30, 1998
Basic EPS net income ......................... $14,351 10,722 $ 1.34
==========
Effect of dilutive securities options ........ -- 356
--------- ---------
Diluted EPS .................................. $14,351 11,078 $ 1.30
========= ========= ==========
</TABLE>
NOTE F - SEGMENT REPORTING
- ---------------------------
Alabama National's reportable segments represent the distinct major product
lines it offers and are viewed separately for strategic planning purposes by
management. The following table is a reconciliation of the reportable segment
revenues, expenses, and profit to Alabama National's consolidated totals (in
thousands).
<TABLE>
<CAPTION>
Investment Mortgage Retail and
Services Trust Lending Commercial Corporate Elimination
Division Division Division Banking Overhead Entries Total
-------- -------- -------- ------- --------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Nine months ended September 30, 1999:
- -------------------------------------
Interest income $ 1,570 $ 274 $ 89,861 $ (72) $ (795) $ 90,838
Interest expenses 543 216 41,947 551 (795) 42,462
-----------------------------------------------------------------------------------------
Net interest income 1,027 58 47,914 (623) 48,376
Provision for loan losses 1,338 1,338
Noninterest income 8,029 $ 1,620 3,229 9,333 175 22,386
Noninterest expense 7,844 856 1,694 33,457 $ 2,002 45,853
-----------------------------------------------------------------------------------------
Net income before tax $ 1,212 $ 764 $ 1,593 $ 22,452 $ (2,450) $ -- $ 23,571
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
Nine months ended September 30, 1998:
- -------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest income $ 1,125 $ 331 $ 85,285 $ (61) $ (849) $ 85,831
Interest expenses 245 277 42,088 688 (849) 42,449
-----------------------------------------------------------------------------------------
Net interest income 880 54 43,197 (749) 43,382
Provision for loan losses 888 888
Noninterest income 8,012 $ 1,567 3,017 8,807 148 21,551
Noninterest expense 7,385 886 1,424 31,847 $ 1,622 43,164
-----------------------------------------------------------------------------------------
Net income before tax $ 1,507 $ 681 $ 1,647 $ 19,269 $ (2,223) $ -- $ 20,881
=========================================================================================
</TABLE>
Corporate overhead is comprised primarily of compensation and benefits for
executive management, interest expense on a line of credit, and merger-related
costs.
12
<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 Alabama National and results of operations as of the dates and for
the periods indicated. On December 31, 1998, Community Bank of Naples, National
Association ("Naples"), a bank headquartered in Naples, Florida, was merged with
and into a subsidiary of Alabama National, pursuant to which each share of
Naples common stock was converted into 0.53271 shares of Alabama National's
common stock for a total of 532,608 shares of Alabama National common stock
issued to Naples shareholders. On October 2, 1998, Community Financial
Corporation ("CFC'), a one bank holding company headquartered in Mableton,
Georgia, was merged with and into Alabama National, pursuant to which each share
of CFC common stock was converted into 0.351807 shares of Alabama National's
common stock for a total of 1,076,032 shares of Alabama National common stock
issued to CFC shareholders. The Naples and CFC mergers were accounted for as
poolings of interest and accordingly, financial statements for all periods have
been restated to reflect the results of operations of the companies on a
combined basis from the earliest period presented, except for dividends per
share.
This information should be read in conjunction with Alabama National'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 Alabama National's Annual Report on Form
10-K for the year ended December 31, 1998.
Performance Overview
- --------------------
Alabama National's net income was $5.72 million for the third quarter of 1999
(the "1999 third quarter") compared to $5.05 million for the third quarter of
1998 (the "1998 third quarter"). Net income for the nine month period ended
September 30, 1999 (the "1999 nine months") was $16.12 million compared to
$14.35 million for the nine months ended September 30, 1998 (the "1998 nine
months"). Net income per diluted common share for the 1999 and 1998 third
quarters was $.51 and $.45, respectively. For the 1999 nine months, net income
per diluted common share was $1.43 compared to $1.30 for the 1998 nine months.
----
The annualized return on average assets for Alabama National was 1.27% for the
1999 third quarter compared to 1.25% for the 1998 third quarter. The annualized
return on average assets for Alabama National was 1.25% for the 1999 nine months
compared to 1.23% for the 1998 nine months. The annualized return on average
stockholders' equity increased for the 1999 third quarter to 16.45%, as compared
to 15.81% for the 1998 third quarter. The annualized return on average
stockholders' equity increased for the 1999 nine months to 15.86%, as compared
to 15.60% for the 1998 nine months. Book value per share at September 30, 1999
was $12.44, an increase of $.50 from year end 1998. Tangible book value per
share at September 30, 1999 was $11.46, an increase of $.27 from year end 1998.
Alabama National paid cash dividends totaling $0.54 on common shares during the
1999 nine months, compared to $0.45 on common shares during the 1998 nine
months.
Net Income
- ----------
The principal reason for the increases in net income described above was the
growth in net interest income, which is the difference between the income earned
on interest bearing assets and the interest paid on deposits and borrowings used
to support such assets, for the 1999 third quarter and the 1999 nine months,
compared to the same periods in 1998. Net interest income increased by $2.6
million, or 18.1%, to $17.0 million during the 1999 third quarter from $14.4
million during the 1998 third quarter. Net interest income increased to $48.4
million during the 1999 nine months from $43.4 million during the 1998 nine
months, an increase of $5.0 million, or 11.5%. The increase in the net interest
income for the 1999 nine months in comparison with the 1998 nine months occurred
despite the recovery of interest associated with the collection of previously
charged-off loans totaling $567,000 included in the 1998 nine months.
Average earning assets for the 1999 third quarter and nine months increased by
approximately $204.3 million and $170.9 million, respectively, and was
substantially matched by growth in average interest-bearing liabilities of
$167.9 million and $124.9 million during the 1999 third quarter and nine months,
respectively. The average taxable equivalent rate earned on assets was 8.02% and
7.93% for the 1999 third quarter and nine months compared to 8.26% and 8.43% for
the 1998 third quarter and nine months, respectively. The average rate paid on
interest-bearing liabilities was 4.38% and 4.31% for the 1999 third quarter and
nine months, respectively, compared to 4.74% and 4.76% for the 1998 third
quarter and nine months, respectively. The net interest margin for the 1999
third quarter and nine months was 4.19% and 4.18%, respectively, compared to
4.06% and 4.22% for the 1998 third quarter and nine months, respectively. The
net interest margin for the 1999 third quarter improved over that of the 1998
third quarter as the decline in the cost of interest-bearing liabilities in 1999
exceeded the 1999 third quarter decline in yields on earning assets.
13
<PAGE>
The following tables depict, on a taxable equivalent basis for the 1999 and 1998
third quarter and nine months, certain information related to Alabama National'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.
AVERAGE BALANCES, INCOME AND EXPENSES AND RATES
(Amounts in thousands, except yields and rates)
<TABLE>
<CAPTION>
Three months ended September 30,
--------------------------------------------------------------------------
1999 1998
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Cost Balance Expense Cost
----------- ------- ------ ------- ------- ------
Assets:
Earning assets:
Loans (1) (3) .............................. $ 1,226,461 $ 26,530 8.58% $ 1,004,886 $ 22,883 9.03%
Securities:
Taxable ................................... 302,275 4,832 6.34 290,207 4,581 6.26
Tax exempt ................................ 33,624 615 7.26 31,819 689 8.59
Cash balances in other banks ............... 4,246 65 6.07 2,108 36 6.78
Funds sold ................................. 40,727 491 4.78 77,655 1,130 5.77
Trading account securities ................. 6,016 83 5.47 2,372 33 5.52
------------- ------- --------- ------
Total earning assets (2) ............... 1,613,349 32,616 8.02 1,409,047 29,352 8.26
------------- ------- --------- ------
Cash and due from banks ...................... 67,595 55,010
Premises and equipment ....................... 45,616 35,290
Other assets ................................. 73,084 119,839
Allowance for loan losses .................... (17,419) (15,910)
-------------- ------------
Total assets .......................... $ 1,782,225 $ 1,603,276
============== ============
Liabilities:
Interest-bearing liabilities:
Interest-bearing transaction accounts ...... $ 201,940 1,293 2.54 163,220 1,079 2.62
Savings deposits ........................... 322,225 2,788 3.43 321,676 3,078 3.80
Time deposits .............................. 639,341 8,166 5.07 551,645 7,879 5.67
Funds purchased ............................ 143,385 1,994 5.52 139,821 1,895 5.38
Other short-term borrowings ................ 12,880 181 5.58 9,631 117 4.82
Long-term debt ............................. 68,506 899 5.21 34,429 540 6.22
------------- ------ ----------- ------
Total interest-bearing liabilities .... 1,388,277 15,321 4.38 1,220,422 14,588 4.74
------------- ------ ----------- ------
Demand deposits .............................. 219,187 195,907
Accrued interest and other liabilities ....... 36,803 60,133
Stockholders' equity ......................... 137,958 126,814
----------- -----------
Total liabilities and stockholders' equity $ 1,782,225 $ 1,603,276
=========== ===========
Net interest spread .......................... 3.64% 3.52%
==== ====
Net interest income/margin on
a taxable equivalent basis ................. 17,295 4.25% 14,764 4.16%
==== ====
Tax equivalent adjustment (2) ................ 257 335
--------- ---------
Net interest income/margin ................... $ 17,038 4.19% $ 14,429 4.06%
========= ==== ========= ====
</TABLE>
- ----------------
(1) Average loans include nonaccrual loans. All loans and deposits are
domestic.
(2) Tax equivalent adjustments are based upon assumed tax rate of 34%, and do
not reflect the disallowance for Federal income tax purposes of interest
expense related to certain tax exempt assets.
(3) Fees in the amount of $710,000 and $888,000 are included in interest and
fees on loans for the three months ended September 30, 1999 and 1998,
respectively.
14
<PAGE>
AVERAGE BALANCES, INCOME AND EXPENSES AND RATES
(Amounts in thousands, except yields and rates)
<TABLE>
<CAPTION>
Nine months ended September 30,
------------------------------------------------------------------------
1999 1998
---------------------------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Cost Balance Expense Cost
-------- ------- ----- -------- ------- ------
Assets:
Earning assets:
Loans (1) (3) .............................. $ 1,163,205 $ 74,029 8.51% $ 993,545 $ 68,590 9.23%
Securities:
Taxable ................................... 290,197 13,491 6.22 262,938 12,457 6.33
Tax exempt ................................ 33,465 1,856 7.42 32,962 1,989 8.07
Cash balances in other banks ............... 1,972 86 5.83 2,164 100 6.18
Funds sold ................................. 49,683 1,867 5.02 78,871 3,341 5.66
Trading account securities ................. 7,163 292 5.45 4,345 191 5.88
----------- --------- --------- -------
Total earning assets (2) ............... 1,545,685 91,621 7.93 1,374,825 86,668 8.43
------------ --------- --------- -------
Cash and due from banks ...................... 64,227 54,852
Premises and equipment ....................... 42,147 35,129
Other assets ................................. 84,215 107,804
Allowance for loan losses .................... (17,149) (15,415)
------------ ------------
Total assets .......................... $ 1,719,125 $ 1,557,195
============ ============
Liabilities:
Interest-bearing liabilities:
Interest-bearing transaction accounts ...... $ 191,999 3,344 2.33 $ 162,957 3,255 2.67
Savings deposits ........................... 318,487 7,994 3.36 313,561 8,962 3.82
Time deposits .............................. 592,350 22,989 5.19 537,204 22,718 5.65
Funds purchased ............................ 145,187 5,377 4.95 129,169 5,165 5.35
Other short-term borrowings ................ 23,197 935 5.39 25,498 1,283 6.73
Long-term debt ............................. 47,036 1,823 5.18 25,017 1,066 5.70
----------- ------ --------- --------
Total interest-bearing liabilities .... 1,318,256 42,462 4.31 1,193,406 42,449 4.76
----------- ------ ------------- -------
Demand deposits .............................. 216,458 188,013
Accrued interest and other liabilities ....... 48,533 52,803
Stockholders' equity ......................... 135,878 122,973
----------- ------------
Total liabilities and stockholders' equity $ 1,719,125 $ 1,557,195
----------- -----------
Net interest spread .......................... 3.62% 3.67%
==== ====
Net interest income/margin on
a taxable equivalent basis ................. 49,159 4.25% 44,219 4.30%
==== ====
Tax equivalent adjustment (2) ................ 783 837
---------- ---------
Net interest income/margin ................... $ 48,376 4.18% $ 43,382 4.22%
---------- ==== --------- ====
</TABLE>
- ----------------
(1) Average loans include nonaccrual loans. All loans and deposits are
domestic.
(2) Tax equivalent adjustments are based upon assumed tax rate of 34%, and do
not reflect the disallowance for Federal income tax purposes of interest
expense related to certain tax exempt assets.
(3) Fees in the amount of $2,196,000 and $2,289,000 are included in interest
and fees on loans for the nine months ended September 30, 1999 and 1998,
respectively.
15
<PAGE>
The following tables set 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 for the 1999 third
quarter and nine months compared to the 1998 third quarter and nine months,
respectively. For the purposes of these tables, changes that 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>
Three Months Ended September 30,
---------------------------------------------------------
1999 Compared to 1998
Variance Due to
---------------------------------------------------------
Volume Yield/Rate Total
---------------------------------------------------------
<S> <C> <C> <C>
Earning assets:
Loans ............................................. $ 4,840 $(1,193) $ 3,647
Securities:
Taxable ......................................... 192 59 251
Tax exempt ...................................... 37 (111) (74)
Cash balances in other banks ...................... 33 (4) 29
Funds sold ........................................ (469) (170) (639)
Trading account securities ........................ 50 -- 50
------- ------- -------
Total interest income ........................ 4,683 (1,419) 3,264
Interest-bearing liabilities:
Interest-bearing transaction accounts ............. 249 (35) 214
Savings and money market deposits ................. 5 (295) (290)
Time deposits ..................................... 1,173 (886) 287
Funds purchased ................................... 49 50 99
Other short-term borrowings ....................... 44 20 64
Long-term debt .................................... 459 (100) 359
------- ------- -------
Total interest expense ....................... 1,979 (1,246) 733
------- ------- -------
Net interest income on a taxable
equivalent basis ........................... $ 2,704 $ (173) 2,531
======= =======
Taxable equivalent adjustment ..................... 78
-------
Net interest income ............................... $ 2,609
=======
</TABLE>
16
<PAGE>
ANALYSIS OF CHANGES IN NET INTEREST INCOME
(Amounts in thousands)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
------------------------------------------------------------
1999 Compared to 1998
Variance Due to
------------------------------------------------------------
Volume Yield/Rate Total
------------------------------------------------------------
<S> <C> <C> <C>
Earning assets:
Loans ............................................. $ 11,085 $ (5,646) $ 5,439
Securities:
Taxable ......................................... 1,271 (237) 1,034
Tax exempt ...................................... 30 (163) (133)
Cash balances in other banks ...................... (8) (6) (14)
Funds sold ........................................ (1,129) (345) (1,474)
Trading account securities ........................ 116 (15) 101
-------- -------- --------
Total interest income ........................ 11,365 (6,412) 4,953
Interest-bearing liabilities:
Interest-bearing transaction accounts ............. 537 (448) 89
Savings and money market deposits ................. 139 (1,107) (968)
Time deposits ..................................... 2,225 (1,954) 271
Funds purchased ................................... 611 (399) 212
Other short-term borrowings ....................... (109) (239) (348)
Long-term debt .................................... 861 (104) 757
-------- -------- --------
Total interest expense ....................... 4,264 (4,251) 13
-------- -------- --------
Net interest income on a taxable
equivalent basis ........................... $ 7,101 $ (2,161) 4,940
======== ========
Taxable equivalent adjustment ..................... 54
--------
Net interest income ............................... $ 4,994
========
</TABLE>
17
<PAGE>
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
economic conditions. The provision for loan losses was $408,000 for the 1999
third quarter, compared with $277,000 in the 1998 third quarter. The provision
for loan losses was $1,338,000 for the 1999 nine months, compared to $888,000 in
the 1998 nine months. The higher provisions for loan losses in the 1999 third
quarter and 1999 nine months are attributable to the growth in loans during
these periods. In addition, Alabama National's loan loss experience reflected
net loan losses of $325,000 in the first nine months of 1999, compared with net
loan recoveries of $284,000 in the first nine months of 1998. The allowance for
loan losses as a percentage of outstanding loans, net of unearned income, was
1.40% at September 30, 1999, compared to 1.52% at December 31, 1998.
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 1999 third quarter was $6.9 million, compared
to $7.1 million for the 1998 third quarter. For the 1999 nine months,
noninterest income increased to $22.4 million compared to $21.6 million for the
1998 nine months. Noninterest income includes service charges on deposits,
investment services revenues, trust department revenues, and fees relating to
the sale and origination of mortgage loans. Service charges on deposits for both
the 1999 third quarter and 1998 third quarter were $1.9 million. For the 1999
nine months, service charge income increased to $5.5 million from the 1998 nine
months' level of $5.4 million. Reflecting a decline in customer demand for debt
securities, revenue in the investment services division totaled $2.1 million and
$7.9 million in the 1999 third quarter and nine months, respectively, compared
to $2.5 million and $8.3 million in the 1998 third quarter and nine months,
respectively. Trust fees remained relatively flat for the third quarter and nine
months of 1999 and 1998. Recent increases in mortgage rates contributed to the
$0.2 million decline in fees relating to the sale and origination of mortgage
loans between the 1999 and 1998 third quarters. However, Alabama National's
expanded geographic coverage in the mortgage origination business resulted in an
increase in such fees to $3.2 million for the 1999 nine months compared to $3.0
million for the 1998 nine months. Other noninterest income for the 1999 third
quarter and nine months was $1.0 million and $2.6 million, respectively,
compared to $0.7 million and $1.9 million for the 1998 third quarter and nine
months, respectively. This increase is primarily attributable to the operating
revenues of an insurance agency acquired in May 1999.
Noninterest expense was $15.2 million for the 1999 third quarter compared to
$13.9 million for the 1998 third quarter. For the 1999 nine months, noninterest
expense was $45.9 million compared to $43.2 million for the 1998 nine months.
Noninterest expense includes salaries and employee benefits, occupancy and
equipment expenses and other expenses. Salaries and employee benefits were $9.0
million for the 1999 third quarter compared to $8.6 million for the 1998 third
quarter. For the 1999 nine months, salaries and employee benefits were $27.5
million compared to $25.8 million in the 1998 nine months. The increase in
salaries and employee benefits partially results from the newly acquired
insurance agency noted above but primarily represents general staffing increases
in other areas of Alabama National relating to continued expansion. Occupancy
and equipment expense totaled $1.9 million in the 1999 third quarter and $1.8
million in the 1998 third quarter. Occupancy and equipment expense totaled $5.3
million in the 1999 nine months and $5.0 million in the 1998 nine months. Other
noninterest expense increased to $4.3 million in the 1999 third quarter,
compared with $3.5 million in the 1998 third quarter. Other noninterest expense
was $13.0 million in the 1999 nine months and $12.3 million in the 1998 nine
months.
Because of an increase in pre-tax income, income tax expense was $2.6 million
for the 1999 third quarter compared to $2.3 for the 1998 third quarter. For the
1999 nine months income tax expense was $7.5 million, compared to $6.5 million
for the 1998 nine months. The effective tax rates for the 1999 third quarter and
the 1999 nine months were 31.3% and 31.6%, respectively, compared to 30.8% and
31.3% for the same periods of 1998.
18
<PAGE>
Earning Assets
- --------------
Loans comprised the largest single category of Alabama National's earning assets
on September 30, 1999. Loans, net of unearned income, were $1.25 billion or
67.2% of total assets at September 30, 1999, compared to $1.09 billion or 65.0%
at December 31, 1998. Average loans grew $169.7 million, or 17.1%, during the
1999 nine months. The following table details the composition of the loan
portfolio by category at the dates indicated:
COMPOSITION OF LOAN PORTFOLIO
(Amounts in thousands, except percentages)
<TABLE>
<CAPTION>
September 30, 1999 December 31, 1998
--------------------- -----------------------
Percent Percent
Amount of Total Amount of Total
------ -------- ------ --------
<S> <C> <C> <C> <C>
Commercial, financial and
agricultural ......................... $ 254,639 20.31% $ 257,409 23.65%
Real estate:
Construction ......................... 142,291 11.35 74,024 6.80
Mortgage - residential ............... 330,216 26.34 291,644 26.80
Mortgage - commercial ................ 342,108 27.28 291,437 26.78
Mortgage - other ..................... 2,556 .20 2,215 .20
Consumer ............................... 75,317 6.01 77,187 7.09
Other .................................. 106,759 8.51 94,509 8.68
---------- ------ ---------- ------
Total gross loans .................... 1,253,886 100.00% 1,088,425 100.00%
------ ------
Unearned income ........................ (1,080) (1,398)
---------- ----------
Total loans, net of
unearned income .................... 1,252,806 1,087,027
Allowance for loan losses .............. (17,553) (16,540)
---------- ----------
Total net loans ...................... $1,235,253 $1,070,487
========== ==========
</TABLE>
19
<PAGE>
Investment securities decreased $13.1 million in the 1999 nine months entirely
as a result of maturities, including partial paydowns of mortgage backed
securities.
Securities available for sale increased $37.1 million in the 1999 nine months.
Purchases of available for sale securities totaled $210.4 million and
maturities, calls, partial paydowns, and sales of available for sale securities
totaled $166.8 million. Writedowns to estimated market value of available for
sale securities totaled $3.9 million, net of income taxes, during the 1999 nine
months.
Trading account securities, totaling $3.6 million at September 30, 1999, are
securities owned by Alabama National prior to sale and delivery to Alabama
National's customers. It is the policy of Alabama National 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
$61.5 million at September 30, 1999 and $57.1 at December 31, 1998.
Deposits and Other Funding Sources
- ----------------------------------
Deposits increased $133.8 million from year-end 1998, to $1.4 billion at
September 30, 1999. Most of the growth in deposits is related to consumer
certificates of deposit.
Federal funds purchased and securities sold under agreements to repurchase
totaled $146.5 million at September 30, 1999, a decrease of $16.1 million from
December 31, 1998 resulting from the increased use of deposits and short and
long-term debt to fund the continued growth in loans and securities available
for sale.
Alabama National's short-term debt at September 30, 1999 and December 31, 1998
is summarized as follows:
SHORT-TERM BORROWINGS
(Amounts in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---- ----
<S> <C> <C>
Note payable to independent bank under secured master note agreement;
rate varies with LIBOR and was 6.1313% and 6.3191% at September 30,
1999 and December 31,1998,
respectively; collateralized by the Company's stock in subsidiary banks. $16,389 $11,500
FHLB debt due May 24, 1999; rate varies with LIBOR and was 5.2875% at
December 31, 1998; collaterized by FHLB stock and
certain first mortgage loans. 9,200
FHLB debt due January 31, 1999; collateralized by FHLB stock
and certain first mortgage loans. 1,000
FHLB open ended notes payable, rate was 5.75% at September 30, 1999 as
determined daily by the FHLB; collateralized by FHLB stock
and certain first mortgage loans. 32,000
------------------------------------------
Total short-term borrowings $48,389 $21,700
==========================================
</TABLE>
20
<PAGE>
Alabama National's long-term debt at September 30, 1999 and December 31, 1998 is
summarized as follows:
LONG-TERM BORROWINGS
(Amounts in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---- ----
<S> <C> <C>
FHLB debt due July 11, 2002; interest at fixed rate of 5.78%;
convertible at the option of the FHLB on July 12, 1999 to a three
month LIBOR advance; collateralized by FHLB stock
and certain first mortgage loans. $5,000
FHLB debt due July 30, 2004; interest at fixed rate of 5.715%;
convertible at the option of the FHLB on July 30, 2001 to a three
month LIBOR advance; collateralized by FHLB stock
and certain first mortgage loans. $5,000
FHLB debt due October 21, 2003; interest at fixed rate of 4.30%;
convertible at the option of the FHLB on October 21, 2000 to a three
month LIBOR advance; collateralized by FHLB stock
and certain first mortgage loans. 10,000 10,000
FHLB debt due April 23, 2004; interest floats with LIBOR plus 28 basis
points and was 5.01125% at September 30, 1999, converting to 5.02%
from April 23, 2001 to April 23, 2004; convertible at the option of
the FHLB on April 23, 2001 to a three month LIBOR advance;
collateralized by FHLB stock and certain first mortgage loans. 13,700
FHLB debt due March 26, 2008; interest at fixed rate of 5.51%;
convertible at the option of the FHLB on March 26, 2003 to a three
month LIBOR advance; collateralized by FHLB stock
and certain first mortgage loans. 5,000 5,000
FHLB debt due July 25, 2001; interest at fixed rate of 6.40%;
collateralized by FHLB stock and certain pledged available
for sale securities 2,000 2,000
FHLB debt due June 18, 2003; interest at fixed rate of 5.40%;
convertible at the option of the FHLB on June 18, 2000 to a three
month LIBOR advance; collateralized by FHLB stock
and certain first mortgage loans. 5,000 5,000
FHLB debt due August 7, 2009; interest at fixed rate of 4.95%;
convertible at the option of the FHLB on February 7, 2000 to a three
month LIBOR advance; collateralized by FHLB stock
and certain first mortgage loans. 25,000
FHLB debt due November 5, 2003; interest at fixed rate of 4.74%;
convertible at the option of the FHLB on November 5, 2001 to a three
month LIBOR advance; collateralized by FHLB stock
and certain first mortgage loans. 5,000 5,000
Various notes payable 46
Capital leases payable 279 328
----------------------------------------
Total long-term borrowings $71,025 $32,328
========================================
</TABLE>
21
<PAGE>
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 could necessitate additional charges to
earnings.
At September 30, 1999, nonperforming assets totaled $5.6 million, a decrease of
$515,000 from December 31, 1998. Nonperforming assets as a percentage of loans
plus other real estate were 0.44% at September 30, 1999 compared to 0.56% at
December 31,1998.
NONPERFORMING ASSETS
(Amounts in thousands, except percentages)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
--------------- ----------------
<S> <C> <C>
Nonaccrual loans ....................................... $ 4,056 $ 4,357
Restructured loans ..................................... 499 499
Loans past due 90 days or more and still accruing ...... -- --
--------- ---------
Total nonperforming loans .......................... 4,555 4,856
Other real estate owned ................................ 1,020 1,234
--------- ---------
Total nonperforming assets ......................... $ 5,575 $ 6,090
========= =========
Allowance for loan losses to period-end loans .......... 1.40% 1.52%
Allowance for loan losses to period-end
nonperforming loans ................................ 385.36 340.61
Allowance for loan losses to period-end
nonperforming assets ............................... 314.85 271.59
Net charge-offs to average loans ....................... 0.04 0.01
Nonperforming assets to period-end loans
and other real estate owned ........................ 0.44 0.56
Nonperforming loans to period-end loans ................ 0.36 0.45
</TABLE>
22
<PAGE>
Net loan losses for the 1999 nine months totaled $325,000, or .04% of average
loans for the period. The allowance for loan losses as a percentage of total
loans, net of unearned income, was 1.40% at September 30, 1999, compared to
1.52% at December 31, 1998. The following table analyzes activity in the
allowance for loan losses for the 1999 nine months.
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
For the Nine Months Ended September 30, 1999
(Amounts in thousands, except percentages)
Allowance for loan losses at
beginning of period ................................. $16,540
Charge-offs:
Commercial, financial and agricultural .............. 160
Real estate - mortgage .............................. 246
Consumer ............................................ 469
-------
Total charge-offs .............................. 875
-------
Recoveries:
Commercial, financial and agricultural .............. 149
Real estate - mortgage .............................. 167
Consumer ............................................ 234
-------
Total recoveries ............................... 550
-------
Net charge-offs ............................... 325
Provision for loan losses ................................. 1,338
-------
Allowance for loan losses at
end of period ....................................... $17,553
=======
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 September 30, 1999 to be
adequate to cover probable 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.
23
<PAGE>
Interest Rate Sensitivity
- -------------------------
Alabama National 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. A monitoring technique
employed by Alabama National 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
the same time interval helps to hedge the risk and minimize the impact of rising
or falling interest rates on net interest income.
Alabama National 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. Alabama National 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 Alabama National's interest rate sensitivity at
September 30, 1999, assuming relevant assets and liabilities are collected and
paid, respectively, based upon historical experience rather than their stated
maturities.
INTEREST SENSITIVITY ANALYSIS
(Amounts in thousands, except ratios)
<TABLE>
<CAPTION>
September 30, 1999
----------------------------------------------------------------------------------------
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) ............................ $ 479,926 $ 114,547 $ 212,926 $ 807,399 $ 449,513 $ 1,256,912
Securities (2) ....................... 23,384 47,577 77,208 148,169 195,460 343,629
Interest-bearing deposits in
other banks ........................ 12,966 -- -- 12,966 -- 12,966
Funds sold ........................... 61,535 -- -- 61,535 -- 61,535
--------- --------- --------- ----------- --------- -----------
Total interest-earning assets ... $ 577,811 $ 162,124 $ 290,134 $ 1,030,069 $ 644,973 $ 1,675,042
Liabilities:
Interest-bearing liabilities:
Interest-bearing deposits:
Demand deposits .................. $ -- $ -- $ 212,701 $ 212,701 $ -- $ 212,701
Savings deposits ................. 327,814 -- -- 327,814 -- 327,814
Time deposits (3) ................ 117,413 96,438 343,102 556,953 90,432 647,385
Funds purchased ..................... 146,540 -- -- 146,540 -- 146,540
Short-term borrowings (4) ........... 53,222 -- -- 53,222 -- 53,222
Long-term debt ...................... 2 4 18 24 71,001 71,025
--------- --------- --------- ----------- --------- -----------
Total interest-bearing liabilities $ 644,991 $ 96,442 $ 555,821 $ 1,297,254 $ 161,433 $ 1,458,687
--------- --------- --------- ----------- --------- -----------
Period gap .............................. $ (67,180) $ 65,682 $(265,687) $ (267,185) $ 483,540
========= ========= =========== ========= =========
Cumulative gap .......................... $ (67,180) $ (1,498) $(267,185) $ (267,185) $ 216,355 $ 216,355
========= ========= ========= =========== ========= ===========
Ratio of cumulative gap to total
earning assets ......................... -4.01% -0.09% -15.95% -15.95% 12.92%
</TABLE>
- -----------------------------
(1) Excludes nonaccrual loans of $4,056,000.
(2) Excludes investment equity securities of $8,125,000.
(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 $4,833,000.
24
<PAGE>
Alabama National 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. Alabama
National is liability sensitive throughout most of the one year time frame.
However, Alabama National'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 Alabama National'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.
Market Risk
- -----------
Alabama National'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. Alabama National's market risk arises primarily from
inherent interest rate risk in its lending, investing and deposit gathering
activities. Alabama National 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 earning assets and interest-bearing liabilities which
quantifies, to a large extent, the degree of market risk inherent in Alabama
National'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; these 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 September 30, 1999, mortgage backed securities totaling
$212.6 million, or 11.4% of total assets and essentially every loan, net of
unearned income, (totaling $1.25 billion, or 67.2% 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 financial 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 $1.41 billion, or 75.6%, of total assets at September 30, 1999.
Since deposits are the primary funding source for earning assets, management
considers the associated market risk 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 Alabama National in its simulation analysis. Specifically, Alabama
National'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.
25
<PAGE>
The following table illustrates the results of simulation analysis used by
Alabama National 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 1999 nine months. Because of the inherent use of
estimates and assumptions in the simulation model used to derive this
information, the actual results for the 1999 nine months and the future impact
of market risk on Alabama National's net interest margin may differ from that
found in the table.
<TABLE>
<CAPTION>
MARKET RISK
(Amounts in thousands)
Nine months ended September 30, 1999 Nine months ended September 30, 1998
------------------------------------ ------------------------------------
Change in
Prevailing Interest Net Interest Change from Net Interest Change from
Rates Income Amount Income Amount Income Amount Income Amount
- ------------------- ----------------- --------------- ------------------ -----------------
<S> <C> <C> <C> <C>
+200 basis points $ 50,337 4.05% $ 46,165 6.41%
+100 basis points 49,356 2.03 44,773 3.21
0 basis points 48,376 - 43,382 -
- -100 basis points 46,535 (3.81) 42,021 (3.14)
- -200 basis points 44,693 (7.61) 40,655 (6.29)
</TABLE>
Liquidity and Capital Adequacy
- ------------------------------
Alabama National's net loan to deposit ratio was 88.9% at September 30, 1999,
compared to 85.2% at year end 1998. Alabama National's liquid assets as a
percentage of total deposits were 10.1% at September 30, 1999, compared to 10.0%
at year-end 1998. At September 30, 1999, Alabama National had unused federal
funds lines of approximately $101.2 million, unused lines at the Federal Home
Loan Bank of approximately $99.1 million and an unused credit line at an
independent bank of $3.6 million. Management 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
liquidity shortfall will exist. Based on this analysis, management believes that
Alabama National has adequate liquidity to meet short-term operating
requirements. However, no assurances can be given in this regard.
Alabama National's stockholders' equity increased by $6.6 million from December
31, 1998 to $137.6 million at September 30, 1999. This increase was attributable
to:
Net income ................................................. $ 16,119,000
Exercise of options ........................................ 704,000
Issue common stock for purchase business combination ....... 2,847,000
Repurchase common stock .................................... (3,226,000)
Dividends .................................................. (5,967,000)
Termination of ESOP plan ................................... 75,000
Decrease in unrealized gain on securities
available for sale, net of deferred taxes ................ (3,904,000)
------------
Net increase ............................................... $ 6,648,000
============
26
<PAGE>
A strong capital position is vital to the continued profitability of Alabama
National because it promotes depositor and investor confidence and provides a
solid foundation for future growth of the organization. The capital of Alabama
National and its subsidiary banks (the "Banks") exceeded all prescribed
regulatory capital guidelines at September 30, 1999. Under the capital
guidelines of their regulators, Alabama National 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, Alabama
National 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 Alabama
National and each of the Banks at September 30, 1999:
<TABLE>
<CAPTION>
Tier 1 Risk Total Risk Tier 1
Based Based Leverage
----- ----- --------
<S> <C> <C> <C>
Alabama National BanCorporation ................ 9.69 % 10.93 % 7.37 %
National Bank of Commerce of Birmingham ........ 9.07 10.30 7.54
Alabama Exchange Bank .......................... 13.79 15.04 8.03
Bank of Dadeville .............................. 13.23 14.19 8.63
Citizens & Peoples Bank, N.A ................... 14.40 15.58 9.50
Community Bank of Naples, N.A .................. 11.73 12.98 7.87
First American Bank ............................ 10.66 11.91 8.47
First Citizens Bank, N.A ....................... 16.87 18.12 8.37
First Gulf Bank ................................ 9.10 10.35 7.04
Georgia State Bank ............................. 12.16 13.41 7.99
Public Bank .................................... 14.29 15.54 9.58
Required minimums .............................. 4.00 8.00 4.00
</TABLE>
Year 2000
- ---------
Alabama National is aware of the many areas affected by the Year 2000 computer
issue as addressed by the Federal Financial Institutions Examination Council
("FFIEC") in its interagency statement which provided an outline for
institutions to effectively manage the Year 2000 challenges. The board of
directors has approved a Year 2000 plan, which includes multiple phases, tasks
to be completed, and target dates for completion. Issues addressed therein
include awareness, assessment, validation, implementation, testing and
contingency planning. Progress under this plan is reported to the board of
directors on a regular basis.
Alabama National's core bank operating software has been certified by the vendor
to be Year 2000 compliant. To verify this compliance, the Company loaded the
software along with general ledger data onto a separate test system. Dates on
the test system were advanced into 2000, and Alabama National personnel have
validated results from this test. Alabama National's testing and validation of
results indicate that the core bank operating software is 100% Year 2000
compliant and Alabama National's mission critical systems are also 100%
compliant. The Company also has a number
27
<PAGE>
of non-mission critical systems, and any Year 2000 compliance testing that
Alabama National itself can perform on these systems is complete. There are also
systems provided by third party vendors for which Alabama National is reliant
upon the vendors to provide testing data to validate. Alabama National has
received and validated testing data from all such outside vendors except for one
such vendor's system interface with another. Although the two vendors have
provided test data (which Alabama National has validated) on the underlying
systems, they have not provided test data on the interface between the two
systems. The interface is used to provide data that Alabama National can obtain
from other existing sources if necessary, and this data is immaterial to Alabama
National's operations. The vendors have indicated that test data on the
interface will be provided to Alabama National prior to November 30, 1999.
In addition to the systems outlined above, Alabama National is tracking the Year
2000 readiness of its utility companies and is finalizing contingency plans for
these services to critical operations.
Since it routinely upgrades and purchases technologically advanced software and
hardware, Alabama National has determined that the costs of making modifications
to correct any Year 2000 issues will not materially affect reported operating
results. Alabama National estimates that its remaining capital expenditures to
prepare for Year 2000 and correct for any Year 2000 issues should not exceed
$50,000, and its remaining operating expenditures (including personnel expenses
for Company employees) should not exceed $50,000. Alabama National also hired an
independent outside consulting firm to review its preparation for Year 2000.
This review confirmed Alabama National's Year 2000 compliance status.
Alabama National also recognizes the importance of determining that its
borrowers are addressing the Year 2000 problem to avoid deterioration of the
loan portfolio solely due to this issue. All material relationships have been
identified to assess the inherent risks and Year 2000 questionnaires have been
obtained from such borrowers where considered appropriate. Deposit customers
have received statement stuffers and informational material in this regard.
Alabama National is working on a one-on-one basis with any borrower that has
been identified as having high Year 2000 risk exposure.
Management does not believe that Alabama National will incur significant
additional costs associated with the Year 2000 issue. However, management cannot
predict the amount of financial difficulties it may incur due to customer and
vendor inability to perform according to their agreements with Alabama National
or the effects that other third parties may bring as a result of this issue.
Alabama National also anticipates that deposit customers may perceive a need for
increased cash in the latter part of 1999 and management has made liquidity
contingency plans to address this potential additional need for currency.
Management has held discussions with the Federal Reserve and the Federal Home
Loan Bank with regard to such potential increased currency and funding needs.
Although the Federal Reserve has announced plans to increase the amount of
currency in circulation in preparing for Year 2000, a lack of liquidity in the
financial system could have a significant negative impact on Alabama National.
Accordingly, there can be no assurance that the failure or delay of others to
address the issue or that the costs involved in such process will not have a
material adverse impact on Alabama National's business, financial condition and
results of operations.
Alabama National's contingency plans are being tested and may be modified as
testing progresses. The Securities and Exchange Commission has asked reporting
companies to address a reasonable "worst case" scenario with respect to theYear
2000 issue. Management's estimate of the "worst case" scenario is a loss of
electrical power and telecommunications service. Alabama National is prepared to
have a backup electrical power generator to run its mainframe computer system in
case of difficulties with its electricity vendor, but is unable to ascertain how
such a loss of electrical power would impact its operations and those of its
customers if such power loss was sustained for a material length of time.
28
<PAGE>
Item 3 - Quantitative and Qualitative Disclosures about Market Risk
The information required by this item is contained in Item 2 herein under the
headings "Interest Rate Sensitivity" and "Market Risk".
Part II Other Information
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits: Exhibit 3.1 - Certificate of Incorporation (filed as
an Exhibit to Alabama National's Registration Statement on Form S-1 (Commission
File no. 33-83800) and incorporated herein by reference).
Exhibit 3.1A - Certificate of Amendment of
Certificate of Incorporation (filed as an
Exhibit to Alabama National's Annual Report
of Form 10-K for the year ended December 31,
1994 and incorporated herein by reference).
Exhibit 3.1B - Certificate of Merger (filed as an
Exhibit to Alabama National's Annual Report
of Form 10-K for the year ended December 31,
1995 and incorporated herein by reference).
Exhibit 3.1C - Certificate of Amendment of
Certificate of Incorporation dated April 23,
1998 (filed as an Exhibit to Alabama
National's Report of Form 10-Q for the
quarter ended June 30, 1998 and incorporated
herein by reference).
Exhibit 3.2 - Bylaws (filed as an Exhibit to Alabama
National's Registration Statement on Form S-1
(Commission File No. 33-83800) and
incorporated herein by reference).
Exhibit 11 - Computation of Earnings Per Share
Exhibit 27 - Financial Data Schedules (for SEC use
only)
(b) Reports on Form 8-K
None
29
<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: November 10, 1999 /s/John H. Holcomb, III
----------------- -----------------------
John H. Holcomb, III, its Chairman and Chief
Executive Officer
Date: November 10, 1999 /s/William E. Matthews, V.
----------------- --------------------------
William E. Matthews, V., its Executive Vice
President and Chief Financial Officer
30
<PAGE>
EXHIBIT 11
Alabama National BanCorporation
Computation of Earnings Per Share (Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Per Share
Income Shares Amount
<S> <C> <C> <C>
THREE MONTHS ENDED SEPTEMBER 30, 1999
Basic EPS net income ............................ $ 5,720 11,127 $ 0.51
========
Effect of dilutive securities options ........... -- 188
------- ------
Diluted EPS ..................................... $ 5,720 11,315 $ 0.51
======= ====== ========
THREE MONTHS ENDED SEPTEMBER 30, 1998
Basic EPS net income ............................ $ 5,052 10,861 $ 0.47
========
Effect of dilutive securities options ........... -- 300
------- ------
Diluted EPS ..................................... $ 5,052 11,161 $ 0.45
======= ====== ========
NINE MONTHS ENDED SEPTEMBER 30, 1999
Basic EPS net income ............................ $16,119 11,084 $ 1.45
========
Effect of dilutive securities options ........... -- 189
------- ------
Diluted EPS ..................................... $16,119 11,273 $ 1.43
======= ====== ========
NINE MONTHS ENDED SEPTEMBER 30, 1998
Basic EPS net income ............................ $14,351 10,722 $ 1.34
========
Effect of dilutive securities options ........... -- 356
------- ------
Diluted EPS ..................................... $14,351 11,078 $ 1.30
======= ====== ========
</TABLE>
1
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SEPTEMBER 30, 1999 FINANCIAL STATEMENTS IN ITEM 1 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 68,014
<INT-BEARING-DEPOSITS> 12,996
<FED-FUNDS-SOLD> 61,535
<TRADING-ASSETS> 3,573
<INVESTMENTS-HELD-FOR-SALE> 326,661
<INVESTMENTS-CARRYING> 21,520
<INVESTMENTS-MARKET> 21,743
<LOANS> 1,252,806
<ALLOWANCE> (17,553)
<TOTAL-ASSETS> 1,863,368
<DEPOSITS> 1,408,965
<SHORT-TERM> 48,389
<LIABILITIES-OTHER> 45,975
<LONG-TERM> 71,025
0
0
<COMMON> 11,185
<OTHER-SE> 126,456
<TOTAL-LIABILITIES-AND-EQUITY> 1,863,368
<INTEREST-LOAN> 73,877
<INTEREST-INVEST> 14,716
<INTEREST-OTHER> 2,245
<INTEREST-TOTAL> 90,838
<INTEREST-DEPOSIT> 34,327
<INTEREST-EXPENSE> 42,462
<INTEREST-INCOME-NET> 48,376
<LOAN-LOSSES> 1,338
<SECURITIES-GAINS> 189
<EXPENSE-OTHER> 45,853
<INCOME-PRETAX> 23,571
<INCOME-PRE-EXTRAORDINARY> 16,119
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,119
<EPS-BASIC> 1.45
<EPS-DILUTED> 1.43
<YIELD-ACTUAL> 4.18
<LOANS-NON> 4,056
<LOANS-PAST> 0
<LOANS-TROUBLED> 499
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 16,540
<CHARGE-OFFS> 875
<RECOVERIES> 550
<ALLOWANCE-CLOSE> 17,553
<ALLOWANCE-DOMESTIC> 17,553
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
