Attached files
| file | filename |
|---|---|
| EX-32.2 - EX-32.2 - UNITED BANCORPORATION OF ALABAMA INC | h68620exv32w2.htm |
| EX-32.1 - EX-32.1 - UNITED BANCORPORATION OF ALABAMA INC | h68620exv32w1.htm |
| EX-31.2 - EX-31.2 - UNITED BANCORPORATION OF ALABAMA INC | h68620exv31w2.htm |
| EX-31.1 - EX-31.1 - UNITED BANCORPORATION OF ALABAMA INC | h68620exv31w1.htm |
Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2009
Commission file number 000-25917
UNITED BANCORPORATION OF ALABAMA, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 63-0833573 | |
| (State or other jurisdiction of | (I.R.S. Employer Identification Number) | |
| incorporation or organization) | ||
| 200 East Nashville Avenue, Atmore, Alabama | 36502 | |
| (Address of principal executive offices) | (Zip Code) | |
(251) 446-6000
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such report(s), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of regulation S-T (§ 232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files.
Yes o No o
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
| Large accelerated filer o | Accelerated filer o | Non-accelerated filer o | Smaller reporting company þ | |||
| (Do not check if a smaller reporting company) |
Indicate by check mark whether the registrant is a shell company (as define in Rule 12b-2 of the
Exchange Act). Yes o No þ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of
November 12, 2009.
Class A Common Stock.... 2,257,314 Shares
Class B Common Stock.... -0- Shares
Class B Common Stock.... -0- Shares
UNITED BANCORPORATION OF ALABAMA, INC.
FORM 10-Q
For the Quarter Ended September 30, 2009
INDEX
2
Table of Contents
PART I—FINANCIAL INFORMATION
| Item 1. | Financial Statements |
| September 30, | December 31, | |||||||
| 2009 | 2008 | |||||||
| (Unaudited) | ||||||||
Assets |
||||||||
Cash and due from banks |
$ | 18,880,834 | $ | 35,148,646 | ||||
Interest bearing deposits in banks |
18,239,582 | 91,773,852 | ||||||
Federal funds sold |
10,000,000 | 16,600,000 | ||||||
Cash and cash equivalents |
47,120,416 | 143,522,498 | ||||||
Securities available for sale (amortized cost of $71,737,776
and $84,725,733 respectively) |
73,148,560 | 85,526,712 | ||||||
Securities held to maturity (market values of $22,115,977
and $6,596,039 respectively) |
21,938,005 | 6,550,000 | ||||||
Loans |
290,993,469 | 279,779,877 | ||||||
Less: Allowance for loan losses |
5,425,934 | 3,591,558 | ||||||
Net loans |
285,567,535 | 276,188,319 | ||||||
Premises and equipment, net |
17,908,795 | 18,856,327 | ||||||
Interest receivable |
2,922,682 | 3,253,604 | ||||||
Intangible assets |
934,763 | 934,763 | ||||||
Other assets |
17,142,461 | 15,212,784 | ||||||
Total assets |
466,683,217 | 550,045,007 | ||||||
Liabilities and Stockholders’ Equity |
||||||||
Deposits: |
||||||||
Non-interest bearing |
119,517,816 | 172,291,464 | ||||||
Interest bearing |
291,181,990 | 318,864,162 | ||||||
Total deposits |
410,699,806 | 491,155,626 | ||||||
Securities sold under agreements to repurchase |
0 | 1,861,237 | ||||||
Advances from Federal Home Loan Bank of Atlanta |
1,470,050 | 1,609,900 | ||||||
Treasury, tax, and loan account |
947,383 | 495,572 | ||||||
Interest payable |
726,416 | 912,570 | ||||||
Accrued expenses and other liabilities |
1,790,186 | 1,577,461 | ||||||
Note payable to Trust |
10,310,000 | 10,310,000 | ||||||
Total liabilities |
425,943,841 | 507,922,366 | ||||||
Stockholders’ equity |
||||||||
Preferred stock of $.01 par value. Authorized 250,000 shares;
10,300 shares, net of discount |
9,999,251 | 9,953,381 | ||||||
Class A common stock, $0.01 par value.
Authorized 5,000,000 shares; issued and outstanding,
2,388,992 and 2,388,125 shares, respectively |
23,890 | 23,881 | ||||||
Class B common stock, $0.01 par value.
Authorized 250,000 shares; no shares issued or outstanding |
0 | 0 | ||||||
Additional paid in capital |
6,611,511 | 6,429,869 | ||||||
Unearned stock based compensation |
(74,141 | ) | (87,446 | ) | ||||
Accumulated other comprehensive income net of tax |
846,467 | 480,584 | ||||||
Retained earnings |
24,388,315 | 26,572,188 | ||||||
| 41,795,293 | 43,372,457 | |||||||
Less: 131,678 and 155,855 treasury shares, at cost, respectively |
1,055,917 | 1,249,816 | ||||||
Total stockholders’ equity |
40,739,376 | 42,122,641 | ||||||
Total liabilities and stockholders’ equity |
$ | 466,683,217 | $ | 550,045,007 | ||||
See Notes to Consolidated Financial Statements
3
Table of Contents
United Bancorporation of Alabama, Inc.
And Subsidiary
Consolidated Statements of Operations and Comprehensive Loss
And Subsidiary
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30 | September 30 | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
Interest income: |
||||||||||||||||
Interest and fees on loans |
$ | 4,264,037 | $ | 5,207,737 | $ | 12,677,927 | $ | 15,088,408 | ||||||||
Interest on investment securities: |
||||||||||||||||
Taxable |
539,386 | 771,681 | 1,790,193 | 2,476,620 | ||||||||||||
Nontaxable |
299,750 | 333,840 | 935,223 | 1,029,517 | ||||||||||||
Total investment income |
839,136 | 1,105,521 | 2,725,416 | 3,506,137 | ||||||||||||
Other interest income |
50,970 | 83,169 | 217,881 | 484,905 | ||||||||||||
Total interest income |
5,154,143 | 6,396,427 | 15,621,224 | 19,079,450 | ||||||||||||
Interest expense: |
||||||||||||||||
Interest on deposits |
1,648,308 | 2,276,454 | 5,308,732 | 7,245,415 | ||||||||||||
Interest on other borrowed funds |
82,100 | 341,195 | 285,150 | 1,293,213 | ||||||||||||
Total interest expense |
1,730,408 | 2,617,649 | 5,593,882 | 8,538,628 | ||||||||||||
Net interest income |
3,423,735 | 3,778,778 | 10,027,342 | 10,540,822 | ||||||||||||
Provision for loan losses |
1,900,000 | 750,000 | 4,500,000 | 1,490,000 | ||||||||||||
Net interest income after
provision for loan losses |
1,523,735 | 3,028,778 | 5,527,342 | 9,050,822 | ||||||||||||
Noninterest income: |
||||||||||||||||
Service charge on deposits |
920,166 | 885,734 | 2,636,443 | 2,541,477 | ||||||||||||
Investment securities gains (losses), net |
3,250 | (238 | ) | 175,316 | (177 | ) | ||||||||||
Mortgage loan and related fees |
39,315 | 31,653 | 116,600 | 150,524 | ||||||||||||
Other |
220,167 | 212,722 | 619,978 | 686,322 | ||||||||||||
Total noninterest income |
1,182,898 | 1,129,871 | 3,548,337 | 3,378,146 | ||||||||||||
Noninterest expense: |
||||||||||||||||
Salaries and benefits |
2,108,779 | 2,186,778 | 6,468,604 | 6,411,926 | ||||||||||||
Net occupancy expense |
624,273 | 725,162 | 1,801,185 | 1,850,400 | ||||||||||||
Other |
1,241,381 | 1,322,475 | 3,693,702 | 3,771,948 | ||||||||||||
Total noninterest expense |
3,974,433 | 4,234,415 | 11,963,491 | 12,034,274 | ||||||||||||
Earnings (losses) before income tax benefits |
(1,267,800 | ) | (75,766 | ) | (2,887,812 | ) | 394,694 | |||||||||
Income tax benefits |
(588,412 | ) | (166,192 | ) | (1,413,600 | ) | (240,273 | ) | ||||||||
Net earnings (losses) |
(679,388 | ) | 90,426 | (1,474,212 | ) | 634,967 | ||||||||||
Preferred stock dividends |
128,750 | — | 331,890 | — | ||||||||||||
Accretion on preferred stock discount |
15,510 | — | 45,870 | — | ||||||||||||
Net earnings (losses) available to common shareholders |
$ | (823,648 | ) | $ | 90,426 | $ | (1,851,972 | ) | $ | 634,967 | ||||||
Basic earnings (losses) per share |
($0.37 | ) | $ | 0.04 | ($0.83 | ) | $ | 0.28 | ||||||||
Diluted earnings (losses) per share |
($0.37 | ) | $ | 0.04 | ($0.83 | ) | $ | 0.28 | ||||||||
Basic weighted average shares outstanding |
2,253,942 | 2,252,698 | 2,240,982 | 2,251,078 | ||||||||||||
Diluted weighted average shares outstanding |
2,253,942 | 2,259,767 | 2,240,982 | 2,258,147 | ||||||||||||
Cash dividend per share |
$ | — | $ | 0.08 | $ | — | $ | 0.23 | ||||||||
Statement of Comprehensive Income (Loss) |
||||||||||||||||
Net earnings (losses) |
$ | (679,388 | ) | $ | 90,426 | $ | (1,474,212 | ) | $ | 634,967 | ||||||
Other comprehensive income (loss), net of tax: |
||||||||||||||||
Unrealized holding gains (losses) arising during
the period |
962,744 | (157,301 | ) | 471,073 | (299,010 | ) | ||||||||||
Reclassification adjustment for (gains) losses
included in net earnings (losses) |
(1,950 | ) | 143 | (105,190 | ) | 106 | ||||||||||
Comprehensive income (loss) |
$ | 281,406 | $ | (66,732 | ) | $ | (1,108,329 | ) | $ | 336,063 | ||||||
See Notes to Consolidated Financial Statements
4
Table of Contents
(Unaudited)
| Nine Months Ended | ||||||||
| September 30 | ||||||||
| 2009 | 2008 | |||||||
Cash flows from operating activities |
||||||||
Net earnings (losses) |
$ | (1,474,212 | ) | $ | 634,967 | |||
Adjustments to reconcile net earnings (losses) to net
cash provided by operating activities |
||||||||
Provision for loan losses |
4,500,000 | 1,490,000 | ||||||
Depreciation of premises and equipment |
987,806 | 992,540 | ||||||
Net amortization (accretion) of premuim / discount
on investment securities available for sale |
98,221 | (796,266 | ) | |||||
Net amortization of premium on investment securities held to maturity |
164,338 | — | ||||||
(Gain) loss on sales of investment securities available for sale, net |
(175,316 | ) | 177 | |||||
(Gain) loss on sale of other real estate |
(34,432 | ) | 1,045 | |||||
Writedown of other real estate |
4,500 | 85,000 | ||||||
Stock-based compensation |
24,694 | 21,307 | ||||||
(Gain) loss on disposal of equipment |
9,790 | (14,316 | ) | |||||
Decrease in interest receivable |
330,922 | 628,298 | ||||||
(Increase) decrease in other assets |
(3,225,259 | ) | 243,236 | |||||
Decrease in interest payable |
(186,154 | ) | (238,592 | ) | ||||
Increase (decrease) in accrued expenses and other liabilities |
382,961 | (25,055 | ) | |||||
Net cash provided by operating activities |
1,407,859 | 3,022,341 | ||||||
Cash flows from investing activities |
||||||||
Proceeds from maturities, calls, and principal
repayments of investment securities available for sale |
37,218,049 | 1,032,513,350 | ||||||
Proceeds from maturities, calls, and principal
repayments of investment securities held to maturity |
7,050,000 | — | ||||||
Proceeds from sales of investment securities available for sale |
14,258,707 | 12,492,231 | ||||||
Purchases of investment securities available for sale |
(35,187,842 | ) | (1,043,937,077 | ) | ||||
Purchases of investment securities held to maturity |
(22,602,343 | ) | (1,050,000 | ) | ||||
Net increase in loans |
(16,264,417 | ) | (33,970,557 | ) | ||||
Purchases of premises and equipment, net |
(58,064 | ) | (2,779,715 | ) | ||||
Proceeds from sale of premises and equipment |
8,000 | 23,600 | ||||||
Proceeds from sale of other real estate |
242,932 | 113,279 | ||||||
Net cash used in investing activities |
(15,334,978 | ) | (36,594,889 | ) | ||||
Cash flows from financing activities |
||||||||
Net decrease in deposits |
(80,455,820 | ) | (12,808,906 | ) | ||||
Net increase (decrease) in securities sold under
agreements to repurchase |
(1,861,237 | ) | 20,562,196 | |||||
Cash dividends — preferred stock |
(331,890 | ) | — | |||||
Cash dividends — common stock |
(173,046 | ) | (506,328 | ) | ||||
Proceeds from exercise of stock options |
— | 9,986 | ||||||
Proceeds from sale of common stock |
5,130 | 6,732 | ||||||
Purchase of treasury stock |
— | (63,019 | ) | |||||
Proceeds from sale of treasury stock |
29,938 | 93,515 | ||||||
Repayments of advances from FHLB Atlanta |
(139,850 | ) | (139,850 | ) | ||||
Increase (decrease) in other borrowed funds |
451,811 | (444,540 | ) | |||||
Net cash provided by (used in) financing activities |
(82,474,964 | ) | 6,709,786 | |||||
Net decrease in cash and cash equivalents |
(96,402,082 | ) | (26,862,762 | ) | ||||
Cash and cash equivalents, beginning of period |
143,522,498 | 54,119,315 | ||||||
Cash and cash equivalents, end of period |
$ | 47,120,416 | $ | 27,256,553 | ||||
Supplemental disclosures |
||||||||
Cash paid during the period for: |
||||||||
Interest |
$ | 5,780,036 | $ | 8,777,220 | ||||
Income taxes |
55,984 | 83,171 | ||||||
Noncash transactions |
||||||||
Transfer of loans to other real estate
through foreclosure |
$ | 2,385,201 | $ | 4,610,674 | ||||
See Notes to Consolidated Financial Statements
5
Table of Contents
UNITED BANCORPORATION OF ALABAMA, INC.
AND SUBSIDIARY
AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
NOTE 1 — General
This report includes interim consolidated financial statements of United Bancorporation of Alabama,
Inc. (the “Corporation”) and its wholly-owned subsidiary, United Bank (the “Bank”). The interim
consolidated financial statements in this report have not been audited. In the opinion of
management, all adjustments necessary to present fairly the financial position and the results of
operations for the interim periods have been made. All such adjustments are of a normal recurring
nature. The results of operations are not necessarily indicative of the results of operations for
the full year or any other interim periods. For further information, refer to the consolidated
financial statements and footnotes included in the Corporation’s Annual Report on Form 10-K for the
year ended December 31, 2008.
6
Table of Contents
NOTE 2 — Net Earnings (Losses) per Share
Basic net earnings (losses) per share were computed by dividing net earnings (losses) by the
weighted average number of shares of common stock outstanding during the three and nine month
periods ended September 30, 2009 and 2008. Common stock outstanding consists of issued shares less
treasury stock. Diluted net earnings (losses) per share for the three and nine month periods ended
September 30, 2009 and 2008 were computed by dividing net earnings (losses) by the weighted average
number of shares of common stock and the dilutive effects of the shares subject to options and
restricted stock grants awarded under the Corporation’s equity incentive plans, based on the
treasury stock method using an average fair market value of the stock during the respective
periods. Presented below is a summary of the components used to calculate diluted earnings
(losses) per share for the three and nine months ended September 30, 2009 and 2008:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30 | September 30 | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
Diluted earnings (losses) per share |
$ | (0.37 | ) | $ | 0.04 | $ | (0.83 | ) | $ | 0.28 | ||||||
Weighted average common
shares outstanding |
2,253,942 | 2,252,698 | 2,240,982 | 2,251,078 | ||||||||||||
Effect of the assumed exercise of
stock options based on the
treasury stock method using
average market price |
— | 7,069 | — | 7,069 | ||||||||||||
Total weighted average common
shares and potential common
stock outstanding |
2,253,942 | 2,259,767 | 2,240,982 | 2,258,147 | ||||||||||||
7
Table of Contents
NOTE 3 — Investment Securities
Available for Sale
The amortized cost and fair value of investment securities available for sale at September 30, 2009
and December 31, 2008 were as follows:
| Gross | Gross | |||||||||||||||
| Amortized | unrealized | unrealized | Fair | |||||||||||||
| cost | gains | losses | value | |||||||||||||
September 30, 2009 |
||||||||||||||||
U.S. Treasury securities |
$ | 3,027,602 | $ | 5,211 | $ | — | $ | 3,032,813 | ||||||||
U.S. government
sponsored agencies |
39,075,340 | 648,672 | (5,588 | ) | 39,718,424 | |||||||||||
State and political subdivisions |
29,624,681 | 931,514 | (161,748 | ) | 30,394,447 | |||||||||||
Mortgage-backed securities |
— | — | — | — | ||||||||||||
Equity securities |
10,153 | — | (7,277 | ) | 2,876 | |||||||||||
| $ | 71,737,776 | $ | 1,585,397 | $ | (174,613 | ) | $ | 73,148,560 | ||||||||
December 31, 2008 |
||||||||||||||||
U.S. government
sponsored agencies |
$ | 38,977,901 | $ | 574,397 | $ | — | $ | 39,552,298 | ||||||||
State and political subdivisions |
33,040,244 | 511,299 | (428,646 | ) | 33,122,897 | |||||||||||
Mortgage-backed securities |
12,707,588 | 193,462 | (49,533 | ) | 12,851,517 | |||||||||||
Equity securities |
— | — | — | — | ||||||||||||
| $ | 84,725,733 | $ | 1,279,158 | $ | (478,179 | ) | $ | 85,526,712 | ||||||||
The gross gains and gross losses realized by the Corporation from sales of investment securities
available for sale for the three and nine months ended September 30, 2009 and 2008 were as follows:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30 | September 30 | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
Gross gains realized |
$ | 3,250 | $ | — | $ | 192,603 | $ | 3,761 | ||||||||
Gross losses realized |
— | (238 | ) | (17,287 | ) | (3,938 | ) | |||||||||
Net gain (loss) realized |
$ | 3,250 | $ | (238 | ) | $ | 175,316 | $ | (177 | ) | ||||||
8
Table of Contents
Those investment securities classified as available for sale which have an unrealized loss position
at September 30, 2009 and December 31, 2008 are detailed below:
September 30, 2009
| Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||
| Unrealized | Unrealized | Unrealized | ||||||||||||||||||||||
| Description of Securities | Fair Value | losses | Fair Value | losses | Fair Value | losses | ||||||||||||||||||
U.S. government
sponsored agencies |
$ | 4,063,355 | $ | (5,588 | ) | $ | — | $ | — | $ | 4,063,355 | $ | (5,588 | ) | ||||||||||
State and political subdivisions |
267,705 | (10,540 | ) | 2,056,266 | (151,208 | ) | 2,323,971 | (161,748 | ) | |||||||||||||||
Equity securities |
2,876 | (7,277 | ) | — | — | 2,876 | (7,277 | ) | ||||||||||||||||
| $ | 4,333,936 | $ | (23,405 | ) | $ | 2,056,266 | $ | (151,208 | ) | $ | 6,390,202 | $ | (174,613 | ) | ||||||||||
December 31, 2008
| Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||
| Unrealized | Unrealized | Unrealized | ||||||||||||||||||||||
| Description of Securities | Fair Value | losses | Fair Value | losses | Fair Value | losses | ||||||||||||||||||
U.S. government sponsored agencies &
mortgage-backed securities |
$ | 2,453,105 | $ | (27,224 | ) | $ | 1,191,568 | $ | (22,309 | ) | $ | 3,644,673 | $ | (49,533 | ) | |||||||||
State and political subdivisions |
7,843,035 | (387,848 | ) | 1,218,280 | (40,798 | ) | 9,061,315 | (428,646 | ) | |||||||||||||||
| $ | 10,296,140 | $ | (415,072 | ) | $ | 2,409,848 | $ | (63,107 | ) | $ | 12,705,988 | $ | (478,179 | ) | ||||||||||
The unrealized losses at both September 30, 2009 and December 31, 2008, were attributable to
changes in market interest rates since the securities were purchased. The Corporation
systematically evaluates investment securities for other-than-temporary declines in fair value on a
quarterly basis. This analysis requires management to consider various factors, which include (1)
duration and magnitude of the decline in value, (2) the financial condition of the issuer or
issuers, (3) structure of the security and (4) the Corporation’s intent to sell the security or
whether it is more likely than not that the Corporation would be required to sell the security
before its anticipated recovery in market value.
The Corporation performed its quarterly analysis of the securities with an unrealized loss position
as of September 30, 2009, and concluded that none of the investment securities were
other-than-temporarily impaired.
9
Table of Contents
The following table presents the amortized costs, fair value and weighted-average yield of
securities available for sale by contractual maturity at September 30, 2009. In some cases, the
issuers may have the right to call or prepay obligations without call or prepayment penalties prior
to the contractual maturity date. Rates are calculated on a fully tax-equivalent basis using a 35%
Federal Income Tax rate.
| Within 1 | 1 to 5 | 5 to 10 | Over 10 | |||||||||||||||||
| Year | Years | Years | Years | Total | ||||||||||||||||
Amortized Cost |
||||||||||||||||||||
U.S. Treasury securities |
$ | — | $ | 3,027,602 | $ | — | $ | — | $ | 3,027,602 | ||||||||||
U.S. government
sponsored agencies |
— | 25,775,727 | 13,299,613 | — | 39,075,340 | |||||||||||||||
State and political subdivisions |
1,094,954 | 6,833,511 | 11,891,456 | 9,804,760 | 29,624,681 | |||||||||||||||
Equity securities |
10,153 | — | — | — | 10,153 | |||||||||||||||
Total |
$ | 1,105,107 | $ | 35,636,840 | $ | 25,191,069 | $ | 9,804,760 | $ | 71,737,776 | ||||||||||
Fair Value |
||||||||||||||||||||
U.S. Treasury securities |
$ | — | $ | 3,032,813 | $ | — | $ | — | $ | 3,032,813 | ||||||||||
U.S. government
sponsored agencies |
— | 26,120,869 | 13,597,555 | — | 39,718,424 | |||||||||||||||
State and political subdivisions |
1,100,825 | 7,040,858 | 12,247,502 | 10,005,262 | 30,394,447 | |||||||||||||||
Equity securities |
2,876 | — | — | — | 2,876 | |||||||||||||||
Total |
$ | 1,103,701 | $ | 36,194,540 | $ | 25,845,057 | $ | 10,005,262 | $ | 73,148,560 | ||||||||||
Total Average Yield |
3.93 | % | 3.06 | % | 3.92 | % | 4.15 | % | 3.53 | % | ||||||||||
10
Table of Contents
Held to Maturity
The amortized cost and fair value of investment securities held to maturity at September 30,
2009 and December 31, 2008 were as follows:
| Gross | Gross | |||||||||||||||
| Amortized | unrealized | unrealized | Fair | |||||||||||||
| cost | gains | losses | value | |||||||||||||
September 30, 2009 |
||||||||||||||||
U.S. government
sponsored agencies |
$ | 21,438,005 | $ | 202,967 | $ | (24,995 | ) | $ | 21,615,977 | |||||||
Other domestic debt securities |
500,000 | — | — | 500,000 | ||||||||||||
| $ | 21,938,005 | $ | 202,967 | $ | (24,995 | ) | $ | 22,115,977 | ||||||||
December 31, 2008 |
||||||||||||||||
U.S. government
sponsored agencies |
$ | 6,050,000 | $ | 46,539 | $ | (500 | ) | $ | 6,096,039 | |||||||
Other domestic debt securities |
500,000 | — | — | 500,000 | ||||||||||||
| $ | 6,550,000 | $ | 46,539 | $ | (500 | ) | $ | 6,596,039 | ||||||||
There were no sales of securities held to maturity for the three and nine months ended
September 30, 2009 and 2008.
Those investment securities classified as held to maturity which have an unrealized loss position
at September 30, 2009 and December 31, 2008, are detailed below:
September 30, 2009
| Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||
| Unrealized | Unrealized | Unrealized | ||||||||||||||||||||||
| Fair Value | losses | Fair Value | losses | Fair Value | losses | |||||||||||||||||||
Description of Securities |
||||||||||||||||||||||||
U.S. government
sponsored agencies |
$ | 2,975,616 | $ | (24,995 | ) | $ | — | $ | — | $ | 2,975,616 | $ | (24,995 | ) | ||||||||||
Other domestic debt
securities |
— | — | — | — | — | — | ||||||||||||||||||
Total temporarily impaired
securities |
$ | 2,975,616 | $ | (24,995 | ) | $ | — | $ | — | $ | 2,975,616 | $ | (24,995 | ) | ||||||||||
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December 31, 2008
| Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||
| Unrealized | Unrealized | Unrealized | ||||||||||||||||||||||
| Fair Value | losses | Fair Value | losses | Fair Value | losses | |||||||||||||||||||
Description of Securities |
||||||||||||||||||||||||
U.S. government
sponsored agencies |
$ | 999,500 | $ | (500 | ) | $ | — | $ | — | $ | 999,500 | $ | (500 | ) | ||||||||||
Other domestic debt securities |
— | — | — | — | — | — | ||||||||||||||||||
Total temporarily impaired
securities |
$ | 999,500 | $ | (500 | ) | $ | — | $ | — | $ | 999,500 | $ | (500 | ) | ||||||||||
The Corporation performed its quarterly analysis of the securities with an unrealized loss position
as of September 30, 2009, and concluded that none of the investment securities were
other-than-temporarily impaired.
The following table presents the amortized costs, fair value and weighted-average yield of
securities held to maturity by contractual maturity at September 30, 2009. In some cases, the
issuers may have the right to call or prepay obligations without call or prepayment penalties prior
to the contractual maturity date. Rates are calculated on a fully tax-equivalent basis using a 35%
Federal Income Tax rate.
| Within 1 | 1 to 5 | 5 to 10 | Over 10 | |||||||||||||||||
| Year | Years | Years | Years | Total | ||||||||||||||||
Amortized Cost |
||||||||||||||||||||
U.S. government
sponsored agencies |
$ | — | $ | 6,026,974 | $ | 15,411,031 | $ | — | $ | 21,438,005 | ||||||||||
State and political subdivisions |
— | — | — | — | — | |||||||||||||||
Other domestic debt securities |
— | 500,000 | — | — | 500,000 | |||||||||||||||
Total |
$ | — | $ | 6,526,974 | $ | 15,411,031 | $ | — | $ | 21,938,005 | ||||||||||
Fair Value |
||||||||||||||||||||
U.S. government
sponsored agencies |
$ | — | $ | 6,124,417 | $ | 15,491,560 | $ | — | $ | 21,615,977 | ||||||||||
State and political subdivisions |
— | — | — | — | — | |||||||||||||||
Other domestic debt securities |
— | 500,000 | — | — | 500,000 | |||||||||||||||
Total |
$ | — | $ | 6,624,417 | $ | 15,491,560 | $ | — | $ | 22,115,977 | ||||||||||
Total Average Yield |
0.00 | % | 3.15 | % | 3.71 | % | 0.00 | % | 3.54 | % | ||||||||||
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NOTE 4 – Allowance for Loan Losses
The following table summarizes the activity in the allowance for loan loss for the nine
month periods ended September 30 ($ in thousands):
| September 30 | ||||||||
| 2009 | 2008 | |||||||
Balance at beginning of year |
3,592 | 3,982 | ||||||
Provision charged to expense |
4,500 | 1,490 | ||||||
Loans charged off |
(2,708 | ) | (2,361 | ) | ||||
Recoveries |
42 | 40 | ||||||
Balance at end of period |
5,426 | 3,151 | ||||||
At September 30, 2009 and 2008, the amounts of nonaccrual loans were $18,612,640 and
$6,488,722 respectively.
NOTE 5 – Operating Segments
The Corporation operates in only one segment – commercial banking.
NOTE 6 – Stock Based Compensation
At September 30, 2009, the Corporation had two stock-based compensation plans. The 1998 Stock
Option Plan and the 2007 Equity Incentive Plan are described more fully in Note 13 to the
Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31,
2008. The Corporation recognizes compensation expense for all stock based payments based upon the
grant date fair value.
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Stock Options
1998 Stock Option Plan
The following table represents stock option activity for the nine months ended September 30, 2009:
| Weighted | ||||||||||||
| Weighted | average | |||||||||||
| average | remaining | |||||||||||
| Shares under | exercise price | contractual | ||||||||||
| option | per share | life | ||||||||||
Options outstanding, beginning of period |
38,806 | 15.36 | ||||||||||
Granted |
— | — | ||||||||||
Surrendered |
— | — | ||||||||||
Exercised |
— | — | ||||||||||
Options outstanding, end of period |
38,806 | 15.36 | 2.3 | |||||||||
Exercisable, end of period |
38,406 | 15.33 | 2.2 | |||||||||
The following table displays information pertaining to the intrinsic value of option shares
outstanding and exercisable for the periods ended September 30, 2009 and 2008, respectively.
| 2009 | 2008 | |||||||
Aggregate intrinsic value
of outstanding options |
$ | — | $ | 48,461 | ||||
Aggregate intrinsic value
of exercisable options |
$ | — | $ | 48,461 | ||||
The 1998 Stock Option Plan terminated pursuant to its terms effective December 22, 1998 and no
additional awards will be made under such plan.
2007 Equity Incentive Plan
The following table represents stock option activity for the nine months ended September 30, 2009:
| Weighted | ||||||||||||
| Weighted | average | |||||||||||
| average | remaining | |||||||||||
| Shares under | exercise price | contractual | ||||||||||
| option | per share | life | ||||||||||
Options outstanding, beginning of period |
— | — | ||||||||||
Granted |
4,000 | 14.85 | ||||||||||
Surrendered |
— | — | ||||||||||
Exercised |
— | — | ||||||||||
Options outstanding, end of period |
4,000 | 14.85 | 9.7 | |||||||||
Exercisable, end of period |
800 | 14.85 | 9.7 | |||||||||
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The following is a summary of the Corporation’s weighted average assumptions used to estimate
the weighted-average per share fair value of options granted on the date of grant using the
Black-Scholes option-pricing model.
| 2009 | 2008 | |||||
Weighted-average expected life (in years)
|
10 | N/A | ||||
Expected Volatility
|
20.00 | % | N/A | |||
Risk-free interest rate
|
3.86 | % | N/A | |||
Expected dividend yield
|
2.02 | % | N/A | |||
Weighted-average fair value of
options granted during the period
|
$ | 3.88 | N/A | |||
Restricted Stock
The following table represents restricted stock activity under the 2007 Equity Incentive Plan
for the nine months ended September 30, 2009:
| Restricted | Weighted | |||||||
| stock | average | |||||||
| activity | fair value | |||||||
Shares under grant at beginning of period |
9,580 | 17.34 | ||||||
Granted |
442 | 14.85 | ||||||
Surrendered |
— | — | ||||||
Vested |
— | — | ||||||
Shares under grant at end of period |
10,022 | 17.20 | ||||||
Shares available for future stock grants to employees and directors under the 2007 Equity
Incentive Plan of United Bancorporation of Alabama, Inc. were 293,978 at September 30, 2009.
As of September 30, 2009, there was $90,162 of total unrecognized compensation costs related to the
nonvested share based compensation arrangements granted under the 1998 and 2007 Plans. That cost
is expected to be recognized over a period of approximately 3.75 years.
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NOTE 7 – Fair Value of Financial Instruments
The measurement of fair value under US GAAP uses a hierarchy intended to maximize the use of
observable inputs and minimize the use of unobservable inputs. This hierarchy uses three levels of
inputs to measure the fair value of assets and liabilities as follows:
| • | Level 1 — Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Level 1 also includes U.S. Treasury and federal agency securities and federal agency mortgage-backed securities, which are traded by dealers or brokers in active markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. | ||
| • | Level 2 — Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third party pricing services for identical or similar assets or liabilities. | ||
| • | Level 3 — Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities. |
Assets Measured at Fair Value on a Recurring Basis
Following is a description of the valuation methodologies used for instruments measured at fair
value on a recurring basis and recognized in the accompanying balance sheet, as well as the general
classification of such instruments pursuant to the valuation hierarchy.
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Available-for-Sale Securities
Where quoted market prices are available in an active market, securities are classified within
Level 1 of the valuation hierarchy. Level 1 securities would include highly liquid government
bonds, mortgage products and exchange traded equities. If quoted market prices are not available,
then fair values are estimated by using pricing models, quoted prices of securities with similar
characteristics or discounted cash flows. Level 2 securities include U.S. agency securities,
mortgage-backed agency securities, obligations of states and political subdivisions and certain
corporate, asset backed and other securities. In certain cases where Level 1 or Level 2 inputs are
not available, securities are classified within Level 3 of the hierarchy. Currently, substantially
all of the Corporation’s available-for-sale securities are considered to be Level 2 securities.
| Fair Value Measurements at September 30, 2009 Using | ||||||||||||||
| Quoted Prices | Significant Other | Significant | ||||||||||||
| Assets/Liabilities | in Active Markets for | Observable | Unobservable | |||||||||||
| Measured at | Identical Assets | Inputs | Inputs | |||||||||||
| Fair Value | (Level 1) | Level (2) | (Level 3) | |||||||||||
AFS Securities
|
$ | 73,148,560 | $ | 4,030,963 | $ | 69,117,597 | $— | |||||||
Assets Measured at Fair Value on a Non-recurring Basis
Following is a description of the valuation methodologies used for instruments measured at fair
value on a non-recurring basis and recognized in the accompanying balance sheet, as well as the
general classification of such instruments pursuant to the valuation hierarchy.
Impaired Loans
Loan impairment is reported when full payment under the loan terms is not expected. Impaired loans
are carried at the present value of estimated future cash flows using the loan’s existing rate, or
the fair value of collateral if the loan is collateral dependent. A portion of the allowance for
loan losses is allocated to impaired loans if the value of such loans is deemed to be less than the
unpaid balance. If these allocations cause the allowance for loan losses to require increase, such
increase is reported as a component of the provision for loan losses. Loan losses are charged
against the allowance when management believes the uncollectability of a loan is confirmed. When
the fair value of the collateral is based on an observable market price or a current appraised
value, the Corporation records the loan impairment as nonrecurring Level 2. When an appraised value
is not available or management determines the fair value of the collateral is further impaired
below the appraised value and there is no observable market price, the Corporation records the loan
impairment as nonrecurring Level 3.
Foreclosed Assets (Other Real Estate)
Foreclosed assets are adjusted to fair value upon transfer of the loans to foreclosed assets.
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Subsequently, foreclosed assets are carried at the lower of carrying value or fair value. Fair
value is based upon independent market prices, appraised values of the collateral or management’s
estimation of the value of the collateral. When the fair value of the collateral is based on an
observable market price or a current appraised value, the Corporation records the foreclosed assets
as non-recurring Level 2. When an appraised value is not available or management determines the
fair value of the collateral is further impaired below the appraised value and there is no
observable market price, the Corporation records the foreclosed asset as nonrecurring Level 3.
The following table presents the assets carried on the balance sheet by asset type and by level
within valuation hierarchy (as described above) as of September 30, 2009, for which a nonrecurring
change in fair value has been recorded during the nine months ended September 30, 2009.
| Carrying Value at September 30, 2009 | Nine Months Ended | |||||||||||||||||||
| September 30, 2009 | ||||||||||||||||||||
| Total gains | ||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | (losses) | ||||||||||||||||
Impaired loans (1) |
$ | 17,465,119 | $ | — | $ | 1,607,890 | $ | 15,857,229 | $ | (4,349,171 | ) | |||||||||
Foreclosed assets |
7,695,702 | — | 7,695,702 | — | 29,932 | |||||||||||||||
| (1) | Losses related to loans were recognized as either charge-offs or specific allocations of the allowance for loan loss |
Fair Value of Financial Instruments
The assumptions used in estimating the fair value of the Corporation’s financial instruments are
explained below. Where quoted market prices are not available, fair values are based on estimates
using discounted cash flow and other valuation techniques. Discounted cash flows can be
significantly affected by the assumptions used, including the discount rate and estimates of future
cash flows. The following fair value estimates cannot be substantiated by comparison to independent
markets and should not be considered representative of the liquidation value of the Corporation’s
financial instruments, but rather a good–faith estimate of the fair value of financial instruments
held by the Corporation. Accounting pronouncements issued by FASB concerning fair value measurement
exclude certain financial instruments and all nonfinancial instruments from its disclosure
requirements.
The following methods and assumptions were used by the Corporation in estimating the fair value of
its financial instruments:
| (a) | Cash and Short-term Investments | ||
| Fair value approximates the carrying value of such assets. |
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| (b) | Investment Securities and Other Securities | ||
| The fair value of investment securities is based on quoted market prices. The fair value of other securities, which includes Federal Home Loan Bank stock and other correspondent stocks, approximates their carrying value. | |||
| (c) | Loans | ||
| The fair value of loans is calculated using discounted cash flows and excludes lease–financing arrangements. The discount rates used to determine the present value of the loan portfolio are estimated market discount rates that reflect the credit and interest rate risk inherent in the loan portfolio. The estimated maturities are based on the Corporation’s historical experience with repayments adjusted to estimate the effect of current market conditions. | |||
| (d) | Bank Owned Life Insurance | ||
| The fair value of bank owned life insurance approximates its carrying value. | |||
| (e) | Deposits | ||
| The fair value of deposits with no stated maturity, such as non–interest bearing demand deposits, NOW accounts, savings and money market deposit accounts, approximates the carrying value. Certificates of deposit have been valued using discounted cash flows. The discount rates used are based on estimated market rates for deposits of similar remaining maturities. | |||
| The fair value estimates in the table below do not include the benefit that results from the low–cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market. | |||
| (f) | Securities Sold Under Agreements to Repurchase | ||
| Due to their short–term nature, the fair value of securities sold under agreements to repurchase approximates their carrying value. | |||
| (g) | FHLB, Other Borrowed Funds and Subordinated Debt | ||
| The fair value of the Corporation’s other borrowed funds and subordinated debt approximates the carrying value of such liabilities. The fair value of FHLB advances have been valued using discounted cash flows. The discount rates used are based on estimated market rates for borrowings of similar remaining maturities. | |||
| (h) | Accrued Interest | ||
| The fair value of accrued interest receivable and payable approximates their carrying value. | |||
| (i) | Commitments to Extend Credit and Standby Letters of Credit | ||
| There is no market for the commitment to extend credit and standby letters of credit and they were issued without explicit cost. Therefore, it is not practical to establish their fair value. |
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The carrying value and estimated fair value of the Corporation’s financial instruments at
September 30, 2009 and December 31, 2008 are as follows (in thousands):
| September 30, 2009 | December 31, 2008 | |||||||||||||||
| Carrying | Estimated | Carrying | Estimated | |||||||||||||
| amount | fair value | amount | fair value | |||||||||||||
| (Dollars in Thousands) | ||||||||||||||||
Financial assets: |
||||||||||||||||
Cash and short–term
investments |
$ | 47,120 | $ | 47,120 | $ | 143,522 | $ | 143,546 | ||||||||
Investment securities |
95,087 | 95,265 | 92,077 | 92,123 | ||||||||||||
Loans, net of the
allowance for loan losses |
285,568 | 287,487 | 276,188 | 275,720 | ||||||||||||
Bank owned life insurance |
2,700 | 2,700 | 2,601 | 2,601 | ||||||||||||
Accrued interest receivable |
2,923 | 2,923 | 3,254 | 3,254 | ||||||||||||
Financial liabilities: |
||||||||||||||||
Deposits |
410,700 | 415,581 | 491,156 | 492,531 | ||||||||||||
Securities sold under
agreements to repurchase |
— | — | 1,861 | 1,861 | ||||||||||||
Other borrowed funds |
947 | 947 | 496 | 496 | ||||||||||||
FHLB advances |
1,470 | 1,672 | 1,610 | 2,206 | ||||||||||||
Subordinated Debt |
10,310 | 10,310 | 10,310 | 10,310 | ||||||||||||
Accrued interest payable |
726 | 726 | 913 | 913 | ||||||||||||
NOTE 8 – Recently Issued Accounting Pronouncements
On April 9, 2009, the FASB issued three related accounting pronouncements intended to provide
additional application guidance and enhance disclosures regarding fair value measurements and
impairments of securities. In particular, these pronouncements: (1) provide guidelines for making
fair value measurements more consistent with the existing accounting principles when the volume and
level of activity for the asset or liability have decreased significantly; (2) enhance consistency
in financial reporting by increasing the frequency of fair value disclosures and (3) modify
existing general standards of accounting for and disclosure of other-than-temporary impairment
(“OTTI”) losses for impaired debt securities.
The fair value measurement guidance of these pronouncements reaffirms the need for entities to use
judgment in determining if a formerly active market has become inactive and in determining fair
values when markets have become inactive. The changes to fair value disclosures relate to
financial instruments that are not currently reflected on the balance sheet at fair value. Prior
to these pronouncements, fair value disclosures for these instruments were required for annual
statements only. These disclosures now are required to be included in interim financial
statements. The general standards of accounting for OTTI losses were changed to require the
recognition of an OTTI loss in earnings only when an entity (1) intends to sell the debt security;
(2) more likely than not will be required to sell the security before recovery of its amortized
cost basis or (3) does not expect to recover the entire amortized cost basis of the security. In
situations when an entity intends to sell or more likely than not will be required to sell the
security, the entire OTTI loss must be recognized in earnings. In all other situations, only the
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portion of the OTTI losses representing the credit loss must be recognized in earnings, with the
remaining portion being recognized in other comprehensive income, net of deferred taxes.
All three pronouncements were effective for interim and annual periods ending after June 15,
2009. Entities were permitted to early adopt the provisions of these pronouncements for interim
and annual periods ending after March 15, 2009, but had to adopt all three concurrently. The
Corporation adopted these provisions of these pronouncements for the quarterly period ending June
30, 2009, as required with no material impact to the financial statements.
On May 28, 2009, the FASB issued an accounting pronouncement establishing general standards of
accounting for and disclosure of subsequent events, which are events occurring after the balance
sheet date but before the date the financial statements are issued or available to be issued. In
particular, the pronouncement requires entities to recognize in the financial statements the effect
of all subsequent events that provide additional evidence of conditions that existed at the balance
sheet date, including the estimates inherent in the financial preparation process. Entities may
not recognize the impact of subsequent events that provide evidence about conditions that did not
exist at the balance sheet date but arose after that date. This pronouncement also requires
entities to disclose the date through which subsequent events have been evaluated. This
pronouncement was effective for interim and annual reporting periods ending after June 15,
2009. The Corporation adopted the provisions of this pronouncement for the quarter ended June 30,
2009, as required, and adoption did not have a material impact on the Corporation’s financial
statements taken as a whole. See NOTE 9 below for the disclosure as required by the standard.
On June 29, 2009, the FASB issued an accounting pronouncement establishing the FASB Accounting
Standards Codification TM (the “ASC”) as the source of authoritative accounting principles
recognized by the FASB to be applied by nongovernmental entities. This pronouncement was effective
for financial statements issued for interim and annual periods ending after September 15, 2009, for
most entities. On the effective date, all non-SEC accounting and reporting standards will be
superseded. The Corporation adopted this new accounting pronouncement for the quarterly period
ended September 30, 2009, as required, and adoption did not have a material impact on the
Corporation’s financial statements taken as a whole.
NOTE 9 – Subsequent Events
The Corporation has evaluated all subsequent events through November 12, 2009, the last
business day before the filing date of this Form 10-Q with the Securities and Exchange Commission,
to ensure that this From 10-Q includes appropriate disclosure of events both recognized in the
financial statements as of September 30, 2009, and events which occurred subsequent to September
30, 2009 but were not recognized in the financial statements. As of November 12, 2009, there were
no subsequent events which required recognition or disclosure.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward Looking Statements
When used or incorporated by reference herein, the words “anticipate”, “estimate”, “expect”,
“project”, “target”, “goal”, and similar expressions, are intended to identify forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933. Such forward-looking
statements are subject to certain risk, uncertainties, and assumptions including those set forth
herein. Should one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those expected or projected.
These forward-looking statements speak only as of the date they are made. The Corporation
expressly disclaims any obligations or undertaking to publicly release any updates or revisions to
any forward-looking statement contained herein to reflect any change in the Corporation’s
expectations with regard to any change in events, conditions or circumstances on which any such
statement is based.
Critical Accounting Estimates
The consolidated financial statements are prepared in accordance with accounting principles
generally accepted in the United States of America, which require management to make estimates and
assumptions. Management believes that its determination of the allowance for loan losses is a
critical accounting policy and involves a higher degree of judgment and complexity than the Bank’s
other significant accounting policies. Further, these estimates can be materially impacted by
changes in market conditions or the actual or perceived financial condition of the Bank’s
borrowers, subjecting the Bank to significant volatility of earnings.
The allowance for loan losses is regularly evaluated by management and reviewed by the Board of
Directors for accuracy by taking into consideration factors such as changes in the nature and
volume of the loan portfolio; trends in actual and forecasted portfolio credit quality, including
delinquency, charge-off and bankruptcy rates; and current economic conditions that may affect a
borrower’s ability to pay. The use of different estimates or assumptions could produce different
provisions for loan losses. The allowance for credit losses is established through the provision
for loan losses, which is a charge against earnings.
The estimation of fair value is significant to a number of the Corporation’s assets, including, but
not limited to, investment securities, impaired loans, other real estate, intangible assets and
other repossessed assets. See NOTE 7 — Fair Value of Financial Instruments for additional
discussion. Investment securities are recorded at fair value while impaired loans, other real
estate, intangible assets and other repossessed assets are recorded at either cost or fair value,
whichever is lower. Fair values for investment securities are based on quoted market prices, and
if not available, quoted prices on similar instruments. The fair values of other real estate and
repossessions are typically determined based on third-party appraisals less estimated costs to
sell. Intangible assets, such as the charter cost, discussed in Intangible Assets below,
are periodically evaluated to determine if any impairment might exist.
The estimation of fair value and subsequent changes of fair value of investment securities,
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impaired loans, other real estate, repossessions and intangible assets can have a significant
impact on the value of the Corporation, as well as have an impact on the recorded values and
subsequently reported net income.
Changes in interest rates is the primary determining factor in the fair value of investment
securities, and the value at which these assets are reported in the Corporation’s financial
statements. Local economic conditions are often the key factor in the valuation of impaired loans,
other real estate and repossessed assets. Changes in these factors can cause assets to be written
down and have an impact on the financial results. The overall financial condition and results of
operations of the banking unit is the primary determinant as to the value of recorded intangible
assets.
Results of Operations
The following financial review is presented to provide an analysis of the results of operations of
the Corporation and the Bank for the nine and three months ended September 30, 2009 and 2008,
compared. This review should be used in conjunction with the condensed consolidated financial
statements included in the Form 10-Q.
Nine Months Ended September 30, 2009 and 2008, Compared
Summary
The Corporation recorded a net loss for the nine months ended September 30, 2009 of $1,474,212, a
decrease of $2,109,179 from the profit of $634,967 recorded in the same period in 2008. Several
factors contributed to the loss. Economic conditions have caused an increase in non performing
loans; that is, loans that are having problems paying as agreed. The provision for possible loan
losses on these credits was increased for the nine months ended September 30, 2009 to $4,500,000
which represents a significant increase as compared to the provision recorded in the nine months
ended September 30, 2008 of $1,490,000. Also, as a result of the economic climate, the FDIC made
an additional assessment (in addition to the usual, quarterly amounts charged based on deposits) of
all banks to replenish the Deposit Insurance Fund. The amount of this assessment for the Bank was
$240,000. In light of the current economic and financial environment, additional, similar
assessments by the FDIC are possible and in fact anticipated. These items are discussed in detail
below.
Total assets at September 30, 2009 were $466,683,217 vs. $550,045,007 at year end, 2008
representing a decrease of approximately $83 million. The reduction was anticipated as the two,
temporary transactions that have been discussed in the 2008 Form 10-K and 2009 Form 10-Q filings
came to their planned conclusions. The $36 million of deposits held for the local municipal
government were dispersed for their intended use and the $62 million of deposits held for the local
customer in the customer accommodation transaction has likewise been dispersed to fund the
construction project. This decrease of $98 million has been offset by increases in deposits from
local, core customers particularly concentrated in time deposits and savings deposits.
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Net Interest Income
Total interest income for the first nine months of 2009 was $15,621,224. This represents a
decrease of $ 3,458,226 (18.1%) from the same period in 2008. This decrease occurred during a
period of significant rate reductions by the Federal Reserve, which produced declines in market
rates. Specifically, the target Fed Funds rate was reduced 400 basis points to 0.25% during the
period from January, 2008 through December, 2008 and negatively impacted prevailing market rates on
various loans, including, but not limited to, the prime rate. This reduced the yield earned on
loans whose interest rate adjusts with the level of the prime rate. As a result, the rate earned
on loans for the 2009 period was 5.64% compared to 6.63% in the 2008 period. Also contributing to
the decline in yield was the approximately $12,123,918 increase in nonaccrual loans at September
30, 2009 as compared to September 30, 2008.
Total interest expense for the first nine months of 2009 decreased by $2,944,746 (34.5%), to
$5,593,882 for the 2009 nine month period, from $8,538,628 in the 2008 period. This was a function
of the lower level of interest rates as time deposits matured and were reissued at lower interest
rates.
The net interest margin for the nine months ended September 30, 2009 decreased to 3.20% from 3.38%
in the same period in 2008. A substantial part of the decrease was caused by the customer
accommodation transactions discussed above which were invested at a spread of approximately 25
basis points (0.25%). Without these temporary transactions, the net interest margin would have
been approximately 3.42%.
Provision for Loan Losses
The provision for loan losses totaled $4,500,000 for the first nine months of 2009 as compared to
$1,490,000 for the same period in 2008, an increase of $3,010,000. The increase to the provision
reflects the growth of the loan portfolio, historical and current loan losses, the current
assessment of nonaccrual loans, and the general economy. Based on an analysis of the increased
level of both nonaccrual assets and charge offs experienced during the period, management
determined that an additional provision to increase the level of the Allowance for Loan Losses was
advisable. For a further, detailed discussion of these changes see Allowance for Loan
Losses below.
Noninterest Income
Total noninterest income increased $170,191 or 5.0% to $3,548,337 for the nine months ended
September, 2009 from $3,378,146 for the same period in 2008. A one time gain on the disposal of
the mortgage backed securities portfolio and increased revenue from service charges on deposit
accounts offset decreased revenue from mortgage origination fees and financial services sales
(securities and insurance).
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The disposal of the mortgage backed securities portfolio was undertaken to assure the availability
of liquid funds earlier in the year during the uncertain economic environment. In addition, the
bank continues to be in a position to allow time deposits to depart should rates being paid by
certain competitors draw funds away. The mortgage backed securities portfolio was chosen for
liquidation as this type of security requires constant monitoring and a large commitment of
management time, which could be better utilized.
Noninterest Expense
Total noninterest expense for the first nine months of 2009 was $11,963,491, which was a decrease
of $70,783, or 0.6%, from the $12,034,274 recorded in the same period of 2008. Between the two
periods, the cost of FDIC deposit insurance increased by $493,792 to $635,000 (including the
special assessment) as of September 30, 2009.
Salaries and benefits increased by $56,678 (0.9%) to $6,468,604. The majority of the increase is
due to the opening of a new, previously planned and committed retail branch facility in Loxley,
Alabama in late 2008.
Occupancy expenses were lower by $49,215 even considering the new Loxley branch and the placing
into service of a new facility in Milton, Florida.
Other expenses were lower by $78,246, despite the large increase in expense related to FDIC deposit
insurance.
As discussed in previous reports, the Corporation has put in place expense control measures to
identify and reduce expenditures that can be controlled. This initiative has shown results in
several areas. Total headcount has been reduced to 184 at September 30, 2009 from 193 at September
30, 2008 as the Corporation has looked at the work processes and adjusted staffing as turnover has
occurred. Capital expenditures have been controlled so that only expenditures that are mission
critical have been undertaken. The result has been flat depreciation expense even after placing
two new buildings in service. Other expenses show a reduction (after eliminating the increased
FDIC expenses) which is the result of reduced spending on discretionary items. Expenses necessary
to retain business and service customers continue, but the continuing review process has produced
savings in advertising, legal and check clearing expenses.
Income Taxes
Losses before taxes for the first nine months of 2009 were $2,887,812 as compared to earnings of
$394,694 in the same period of 2008, a decrease of $3,282,506. The income tax benefit for the
period ended September 30, 2009 was $1,413,600 compared to a benefit of $240,273 for the same
period in 2008.
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Three Months Ended September 30, 2009 and 2008, Compared
Summary
Net loss for the three months ended September 30, 2009 was $679,388, compared to net income of
$90,426 as of September 30, 2008, a decrease of $769,814. The major contributor to the loss was
the provision for loan losses of $1,900,000 for the quarter, which was $1,150,000 greater than the
$750,000 provided in the 2008 period.
Net Interest Income
Total interest income decreased $1,242,284 (19.4%) in the third quarter of 2009 as compared to 2008
as interest rates had declined significantly and nonaccrual loans increased. The average of loans
outstanding decreased to $289 million from $294 million and the average rate earned during the
third quarter of 2009 was 5.60% as compared to 6.59% in 2008, reflecting the substantial reduction
in interest rates experienced since the third quarter of 2008 and the increase in the amount of
loans on nonaccrual status.
Total interest expense decreased by $887,241, or 33.9%, in the third quarter of 2009 compared to
the same period in 2008. Average interest bearing liabilities for the third quarter decreased
$74,071,000 to $308,598,000 as compared to 2008. The decrease was the result of a change in the
mix of liabilities as funds held as repurchase agreements in 2008 were converted to non-interest
bearing demand deposits in 2009. This was done by the customers for two reasons. The rate paid on
repurchase agreements to the Corporation’s customers declined to zero, as a result of the Federal
Reserve actions in reducing interest rates. At the same time, the FDIC put into place the
Transaction Account Guarantee Program, which United Bank elected to join and the repurchase
agreement customers chose unlimited FDIC insurance offered by demand accounts. As a result of the
decline in rates and the change in funding mix, the average rate paid on interest bearing
liabilities decreased to 2.22% in 2009 as compared to 2.71% in 2008.
The net interest margin decreased to 3.22% for the third quarter of 2009, as compared to 3.56% for
the same period in 2008. The reduction in the margin is a reflection of the reduction in the yield
on loans that immediately reprice with movements in interest rates, with a slower reaction in the
cost of funds as time deposits are repriced only as they reach maturity and are renewed. One effect
of the customer accommodation transaction is a reduction of the percentage net interest margin.
Without the temporary customer accommodation transaction, the percentage interest margin would have
been approximately 3.35%.
Provision for Loan Losses
The provision for loan losses totaled $1,900,000 for the third quarter of 2009 as compared to
$750,000 for the same period in 2008. Based on an analysis of the increased level of both
nonaccrual assets and charge offs experienced during the period, management determined that an
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additional provision to increase the level of the Allowance for Loan Losses was needed. For
further discussion of the provision for loan losses, see the Allowance for Loan Losses
discussion below.
Noninterest Income
Total noninterest income increased $53,027 or 4.7% for the third quarter of 2009 and is largely the
effect of a $34,342 increase attributable to service charges and fees on deposit accounts. A small
gain related to the investment portfolio and slight increases in mortgage and investment activity
also attributed to the overall increase.
Noninterest Expense
Total noninterest expense decreased $259,982, or 6.1%, during the third quarter of 2009 compared to
the same quarter of 2008. Salaries and benefits decreased $77,999, or 3.6%, in the third quarter
comparison primarily as the result of the reduction in headcount. Occupancy expense decreased
$100,889 between the two periods. Other noninterest expense decreased $81,094.
Income Taxes
Losses before taxes for the third quarter of 2009 were $1,267,800 as compared to losses of $75,766
in the third quarter of 2008, a decrease of $1,192,034. The income tax benefit for the third
quarter of 2009 was $588,412 as compared to a benefit of $166,192 for the same period in 2008.
Financial Condition and Liquidity
Total assets on September 30, 2009 were $466,683,217, a decrease of $83,361,790 or 15.2% from
December 31, 2008. The reduction was anticipated as the two, temporary transactions that have been
discussed in the 2008 Form 10-K and the 2009 Form 10-Q filings came to their planned conclusions.
The $36 million of deposits held for the local municipal government were dispersed for their
intended use and the $62 million of deposits held for the local customer in the customer
accommodation transaction have likewise been dispersed to fund the construction project. This
decrease of $98 million has been offset by increases in deposits from local, core customers
particularly concentrated in time deposits and savings deposits. The liquidity position continues
to be held at a higher than historic level because of the continued economic uncertainty. The
ratio of loans (net of allowance) to deposits plus repurchase agreements on September 30, 2009 was
69.5% as compared to 56.2% at December 31, 2008. The increase is the result of the decrease in
deposits as the customer accommodation transactions were completed and the associated deposits were
withdrawn as planned.
Cash and Cash Equivalents
Cash and cash equivalents as of September 30, 2009 decreased by $96,402,000, or by 67.2%, from
December 31, 2008. The decrease was a result of the conclusion of the customer accommodation
transaction.
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Investment Securities — Available for Sale
Investment securities available for sale decreased $12,378,000, or 14.5%, during the first nine
months of 2009 as new investments and a portion of maturing and called investment securities were
reinvested in the Held to Maturity category.
Investment Securities — Held to Maturity
Investment securities held to maturity increased $15,388,000, or 234.9%, during the first nine
months of 2009. The Corporation, in 2008, determined that a portion of the investment portfolio
represented a permanent investment and purchased securities in that amount that were designated as
held to maturity. Securities designated as held to maturity are not liquid or subject to sale. The
Corporation will review the limits on this category regularly.
Loans
Loans increased by $11,214,000 or 4.0% at September 30, 2009, from December 31, 2008. The
Corporation continues to seek loans in the markets it serves that are high quality and well
secured.
Allowance for Loan Losses
The allowance for losses on loans is maintained at levels that reflect the historic loss rate on
the majority of the portfolio and the difference between the loan balance and the fair value for
loans that are considered to be impaired. Loans are considered impaired when it is 1) probable
that the Corporation will be unable to collect all amounts due according to the contractual terms
of the loan agreements or 2) the loan terms have been renegotiated to provide a reduction or
deferral of interest or principal because of deterioration in the financial position of the
borrower. The historic loss rate is adjusted for the effects of: general economy, local economy,
trends in nonaccrual loans and past due loans, growth in loans and peer levels of reserves. Loans
that are deemed to be impaired are valued either at the present value of the cash flow anticipated
or the value of the collateral, reduced by the estimated costs to sell. As of September 30, 2009,
the reserve level of $5,425,934 is considered to be appropriate considering the reserves allocated
on specifically identified credits and a general allowance based on historic losses adjusted as
noted above. This reserve level is equivalent to 1.86% of gross loans and represents an increase
from the 1.28% carried at December 31, 2008. Net charged-off loans for the first nine months of
2009 were $2,666,000, as compared to $2,321,000 for the same period in 2008. Substantially all of
the loans charged off during the first nine months are among those previously identified as problem
loans by management in accordance with regulatory guidance pertaining to the allowance for loan
losses.
The Corporation has in place procedures to identify and deal with problem loans and potential
problem loans. It is the goal of the Corporation to identify problems, to develop and execute
strategies to deal with those identified and establish reserves to deal with identified and
historic shortfalls. Although reserves may be considered appropriate at a point in time, future
events may change the ability of a borrower to pay or the underlying value of collateral. The
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Corporation will continue to monitor closely the condition of the portfolio and, in the current,
uncertain economy, continue with its program to strengthen the level of reserves.
The following is a summary of information pertaining to the identified classifications of impaired
and past due loans:
| As of the nine months ended September 30, |
||||||||
| 2009 | 2008 | |||||||
Impaired loans with a valuation allowance |
$ | 16,830,865 | $ | 9,024,056 | ||||
Impaired loans without a valuation allowance |
3,852,298 | 1,665,591 | ||||||
Total impaired loans |
$ | 20,683,163 | $ | 10,689,647 | ||||
Valuation allowance related to impaired loans |
$ | 3,218,044 | $ | 722,275 | ||||
Total nonaccrual loans |
18,612,640 | 6,488,722 | ||||||
Total loans past due ninety days or more and still accruing |
36,102 | 28,435 | ||||||
Troubled debt restructured loans |
2,164,521 | 1,634,033 | ||||||
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Non-performing Assets: The following table sets forth the Corporation’s non-performing
assets at September 30, 2009 and December 31, 2008. Under the Corporation’s nonaccrual policy, a
loan is placed on nonaccrual status when collectibility of principal and interest is in doubt.
| September 30, | December 31, | |||||||||
| 2009 | 2008 | |||||||||
| Description | (Dollars in Thousands) | |||||||||
| A | Loans accounted for on a nonaccrual basis |
$ | 18,613 | $ | 14,700 | |||||
| B | Loans which are contractually
past due ninety days or more
as to interest or principal
payments (excluding balances
included in (A) above) |
36 | 28 | |||||||
| C | Loans, the terms of which have
been renegotiated to provide
a reduction or deferral of interest
or principal because of a
deterioration in the financial
position of the borrower. |
2,165 | 1,106 | |||||||
| D | Other non-performing assets |
7,696 | 5,524 | |||||||
Total |
$ | 28,510 | $ | 21,358 | ||||||
Premises and Equipment
Premises and equipment decreased $948,000 during the first nine months of 2009. The reduction is
the result of assets being depreciated and not replaced as capital expenditures have been
controlled in line with the expense control initiative discussed above. The Corporation has in
place a process where the necessity of any capital expenditure is scrutinized closely. As a
general rule, only expenditures that correct a potential negative impact on operations or customer
service or create cost savings are being approved.
Intangible Assets
As of September 30, 2009 and December 31, 2008, the Corporation had recorded $934,763 in intangible
assets.
Florida Charter - On July 2, 2004, the Corporation acquired a State of Florida banking charter from
a financial institution for $917,263. Subsequent to the purchase, the charter was terminated
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but the Corporation retained the legal right to branch into Florida through its existing Alabama
bank charter. The Corporation accounts for the charter cost as an indefinite lived intangible
asset because the legal right acquired does not have an expiration date under Florida banking laws
and there is no renewal process to keep the branching rights. The Corporation tests the intangible
asset each September 30 for impairment. At September 30, 2009, the Corporation operated three
branch offices in Florida.
Internet Domain Address - On March 21, 2007, the Bank purchased the rights to the internet domain
name www.unitedbank.com for $17,500. This internet domain is defined as an intangible
asset with an indefinite life and, as such, is not required to be amortized over any period of
time.
For the nine months ended September 30, 2009 no impairment was recorded related to the intangible
assets.
Deposits
Total deposits decreased $80,456,000 or 16.4%, at September 30, 2009 from December 31, 2008. The
reduction was anticipated as the two, temporary transactions that have been discussed in the 2008
Form 10-K and 2009 Form 10-Q filings came to their planned conclusions. The $36 million of
deposits held for the local municipal government were dispersed for their intended use and the $62
million of deposits held for the local customer in the customer accommodation transaction has
likewise been dispersed to fund the construction project. This decrease of $98 million has been
offset by increases in deposits from local, core customers particularly concentrated in time
deposits and savings deposits totaling approximately $17.5 million.
Repurchase Agreements
There was no amount held in securities sold under agreement to repurchase as of September 30, 2009,
as compared to the balance of $1,861,237 as of December 31, 2008. This decrease is the result of
customers choosing to move their funds into deposit accounts instead of repurchase agreements due
to deposit products that offered equal or higher interest rates, higher insurance coverage by the
FDIC, or both.
Liquidity
One of the Corporation’s goals is to provide an appropriate level of liquidity which is to say
providing adequate funds to meet changes in loan demand or any potential increase in the normal
level of deposit withdrawals. During the current economic unrest this goal has become more
important and the Corporation has maintained liquidity at a higher level than usual. Liquidity is
accomplished primarily by generating cash from operating activities and maintaining sufficient
short-term assets. These sources, coupled with a stable deposit base, allow the Corporation to
fund earning assets and maintain the availability of funds. Management believes that the
Corporation’s traditional sources of maturing loans and investment securities, cash from operating
activities and a strong base of core deposits are adequate to meet the Corporation’s liquidity
needs for normal operations. The stock of short term, liquid assets in the securities and short term investment
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portfolios have been maintained at higher than normal levels. To provide additional liquidity, the
Corporation can utilize short-term financing through the purchase of federal funds, and maintains
borrowing relationships with the Federal Home Loan Bank and Federal Reserve Bank to provide
liquidity. Should the Corporation’s traditional sources of liquidity be constrained, forcing the
Bank to pursue avenues of funding not typically used, the Corporation’s net interest margin could
be impacted negatively. The maintenance of the higher level of liquidity also has a negative impact
on the net interest margin. The Corporation’s bank subsidiary has an Asset Liability Management
Committee, which has as its primary objective the maintenance of specific funding and investment
strategies to achieve short-term and long-term financial goals. The Corporation’s liquidity at
September 30, 2009 is considered appropriate by management.
Capital Adequacy
The Corporation has generally relied primarily on internally generated capital growth to maintain
capital adequacy. Total stockholders’ equity on September 30, 2009, was $40,739,376, a decrease of
$1,383,265, or 3.3%, from December 31, 2008. This net decrease is a combination of 1) the current
period loss, 2) offset by the increase in unrealized gains on securities available for sale, and 3)
the payment of preferred stock dividends of $331,889 related to the U.S. Treasury’s Capital
Purchase Program as described in the footnotes to the audited financial statements accompanying the
Corporation’s Form 10-K for the year ended December 31, 2008.
In early 2009, the Corporation returned to its historic practice of semi-annual dividends. To
preserve capital in the current, uncertain economy, the Corporation declared, in lieu of a cash
dividend, a 1% stock dividend, payable on July 15, 2009 to shareholders of record on June 30, 2009.
The effect of this dividend was to increase the shares outstanding and reduce treasury shares,
both by 22,351 shares. This move was undertaken to retain cash and capital. The Corporation will
continue to evaluate economic conditions and earnings in determining the amount and form of any
future dividend payments.
The table below sets forth various capital ratios for the Corporation and the Bank. Under current
regulatory guidelines, debt associated with trust preferred securities qualifies as Tier 1 capital.
Regulatory guidelines limit the inclusion of trust preferred securities to 25% of Tier 1 capital.
At September 30, 2009, trust preferred securities included in Tier 1 capital totaled approximately
$9,740,000. The remaining $570,000 of trust preferred securities are included in the calculation
of Total Risk-Based Capital.
Quantitative measures established by regulation to ensure capital adequacy require the Corporation
and its Bank to maintain minimum total capital (Total Risk-Based Capital) of at least 8% of
risk-weighted assets, minimum core capital (Tier I Risk-Based Capital) of at least 4% of
risk-weighted assets, and a minimum leverage ratio of at least 4% of average assets. Management
believes, as of September 30, 2009 that the Corporation and its Bank meet all capital adequacy
requirements to which they are subject.
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As of September 30, 2009, the most recent notification from the appropriate regulatory agencies
categorized the Bank as “well capitalized” under the regulatory framework for prompt corrective
action. To be categorized as “well capitalized”, the Bank must maintain minimum Total Risk Based
Capital, Tier I Risk-Based Capital, and leverage ratios of at least 10%, 6%, and 5% respectively.
There are no conditions or events since that notification that management believes have changed the
Bank’s category. Like many banks, the Bank has received informal comments from regulatory
officials expressing a desire that higher capital ratios be maintained than are required as stated
above. Based on current information, the Bank would maintain its “well capitalized” status even
taking into account the informally-suggested higher ratios.
| Well | ||||||||
| September 30, | Capitalized | |||||||
| 2009 | Treatment | |||||||
United Bancorporation of Alabama, Inc. |
||||||||
Total risk-based capital |
16.21 | % | N/A | |||||
Tier 1 risk-based capital |
14.51 | N/A | ||||||
Leverage Ratio |
9.69 | N/A | ||||||
United Bank |
||||||||
Total risk-based capital |
15.59 | % | 10.00 | % | ||||
Tier 1 risk-based capital |
14.33 | 6.00 | ||||||
Leverage ratio |
9.81 | 5.00 | ||||||
Based on management’s projections, existing internally generated capital and the capital previously
raised by issuance of trust preferred securities and the Capital Purchase Program should be
sufficient to satisfy capital requirements in the foreseeable future for existing operations, and
for some expansion efforts. Continued growth into new markets may require the Corporation to
further access external funding sources. There can be no assurance that such funding sources will
be available to the Corporation.
Off Balance Sheet items
The Bank is a party to financial obligations with off balance sheet risk in the normal course of
business. The financial obligations include commitments to extend credit and standby letters of
credit issued to customers.
The following table sets forth the off balance sheet risk of the Bank as of September 30, 2009.
| September 30, | ||||
| 2009 | ||||
Commitments to extend credit |
$ | 36,653,000 | ||
Standby letters of credit |
1,611,000 | |||
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Item 4. Controls and Procedures
Based on evaluation of the Corporation’s disclosure controls and procedures (as such term is
defined in Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)), as of the end of the period covered by this quarterly report, the principal
executive officer and the principal financial officer of the Corporation have concluded that as of
such date the Corporation’s disclosure controls and procedures were effective to ensure that
information the Corporation is required to disclose in its filings under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified in the Securities
and Exchange Commission’s rules and forms, and to ensure that information required to be disclosed
by the Corporation in the reports that it files under the Exchange Act is accumulated and
communicated to the Corporation’s management, including its principal executive officer and
principal financial officer, as appropriate to allow timely decisions regarding required
disclosure.
There were no changes in the Corporation’s internal control over financial reporting identified in
connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15
that occurred during the last fiscal quarter that have materially affected, or are reasonably
likely to materially affect, the Corporation’s internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1A. Risk Factors
In addition to the risk factors previously disclosed in the Corporation’s Annual Report on Form
10-K for the fiscal year ended December 31, 2008, there continues to be the possibility that the
FDIC would make additional assessments to replenish the deposit insurance fund. Such an assessment
would have a negative impact on the earnings of the Corporation.
Item 6. Exhibits
| (a) | Exhibits. |
31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2
|
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2
|
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 |
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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.
Date: November 12, 2009 |
UNITED BANCORPORATION OF ALABAMA, INC. |
|||
| /s/ Robert R. Jones, III | ||||
| Robert R. Jones, III | ||||
| President and CEO | ||||
| /s/ Allen O. Jones, Jr. | ||||
| Allen O. Jones, Jr. | ||||
| Senior Vice President and CFO | ||||
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INDEX TO EXHIBITS
| EXHIBIT | ||
| NUMBER | DESCRIPTION | |
31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1
|
Certification pursuant to 18 U.S.C. Section 1350, adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2
|
Certification pursuant to 18 U.S.C. Section 1350, adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 |
37