<PAGE>
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

         [X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended March 31, 2002
                               ---------------

Commission file number 2-78572
                       -------


                     UNITED BANCORPORATION OF ALABAMA, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

        Delaware                                       63-0833573
--------------------------------------------------------------------------------
(State or other jurisdiction of            (IRS Employer Identification Number)
 incorporation or organization)

                         P.O. Drawer 8, Atmore, AL 36504
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                  251-368-2525
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code:)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 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 x  No
                                      ---   ---

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of May 1, 2002.

                  Class A Common Stock....... 1,098,352 Shares
                  Class B Common Stock.......       -0- Shares


<PAGE>


                     UNITED BANCORPORATION OF ALABAMA, INC.

                                    FORM 10-Q

                      For the Quarter Ended March 31, 2002

                                      INDEX

<Table>
<Caption>
PART I - FINANCIAL INFORMATION                                                                         PAGE
------------------------------                                                                         ----
<S>                                                                                                    <C>
Item 1.  Financial Statements

         Consolidated Balance Sheets                                                                     3

         Consolidated Statements of Operations and Comprehensive Income                                  4

         Consolidated Statement of Cash Flows                                                            5

         Notes to Consolidated Financial Statements                                                      6

Item 2.  Management's Discussion and Analysis of Financial Condition
                  and Results of Operations                                                              8

Item 3.  Market Risk Disclosures                                                                        12

PART II - OTHER INFORMATION

Item 4.           Submission of Matters to a Vote of Security Holders                                   15

Item 6.  (a)      Exhibits                                                                              15

         (b)      Reports on Form 8-K                                                                   15
</Table>


<PAGE>



                     UNITED BANCORPORATION OF ALABAMA, INC.
                                 AND SUBSIDIARY
                                  CONSOLIDATED
                                 BALANCE SHEETS


<Table>
<Caption>
                                                                    March 31,     December 31,
                                                                       2002           2001
                                                                    Unaudited       Audited
<S>                                                                <C>              <C>
Assets
Cash and due from banks                                            $  8,670,952     16,704,812
Federal funds sold                                                    7,102,000      2,644,000
                                                                   ------------   ------------
         Cash and cash equivalents                                   15,772,952     19,348,812

Interest bearing deposits with other
  financial institutions                                                     --             --
Securities available for sale (amortized cost of $45,587,781         45,897,338     41,615,592
    and 41,167,492 respectively)
Securities held to maturity (market values of $0                              0              0
   and $0 respectively)
Loans                                                               151,215,651    149,045,609
Less:  Unearned income                                                        0              0
         Allowance for loan losses                                    1,999,622      1,993,245
                                                                   ------------   ------------
         Net loans                                                  149,216,029    147,052,364

Premises and equipment, net                                           5,853,169      5,901,032
Interest receivable and other assets                                  5,368,986      6,037,732
                                                                   ------------   ------------
         Total assets                                               222,108,474    219,955,532
                                                                   ============   ============

Liabilities and Stockholders' Equity
Deposits:
  Non-interest bearing                                             $ 35,688,819     33,406,633
  Interest bearing                                                  145,753,160    147,102,536
                                                                   ------------   ------------
         Total deposits                                             181,441,979    180,509,169

Securities sold under agreements to repurchase                       11,870,344      9,069,292
Other borrowed funds                                                  5,817,689      6,235,327
Accrued expenses and other liabilities                                  799,010      2,295,251
                                                                   ------------   ------------
         Total liabilities                                          199,929,022    198,109,039


Stockholders' equity:
  Class A common stock.  Authorized 5,000,000
  shares of $.01 par value; 1,160,281 and 1,159,481
  shares issued respectively                                             11,603         11,595

  Class B common stock of $.01 par value
  Authorized 250,000 shares;
  -0- shares issued and outstanding                                           0              0
  Preferred stock of $.01 par value.  Authorized
  250,000 shares; -0- shares issued
  and outstanding                                                             0              0
Surplus                                                               5,050,620      5,056,304
Accumulated other comprehensive
  income                                                                185,734        268,863
Retained earnings                                                    17,380,875     16,961,631
                                                                   ------------   ------------
                                                                     22,628,832     22,298,393
Less 61,929 and 62,181 treasury shares, at cost respectively            449,380        451,900
                                                                   ------------   ------------
         Total stockholders' equity                                  22,179,452     21,846,493
                                                                   ------------   ------------
         Total liabilities and stockholders' equity                 222,108,474    219,955,532
                                                                   ============   ============
</Table>


                                       3
<PAGE>
                     UNITED BANCORPORATION OF ALABAMA, INC.
                                 AND SUBSIDIARY
         CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
                                   (UNAUDITED)

<Table>
<Caption>
                                                                      Three Months Ended
                                                                           March 31
                                                                      2002          2001
<S>                                                                <C>           <C>
Interest income:
  Interest and fees on loans                                        2,929,058     3,331,818
  Interest on investment securities available for sale:
    Taxable                                                           347,004       634,440
    Nontaxable                                                        222,255       256,987
  Interest on investment securities held to maturity:
    Taxable                                                                 0             0
    Nontaxable                                                              0             0
                                                                   ----------    ----------
   Total investment income                                            569,259       891,427
  Other interest income                                                54,725       145,654
                                                                   ----------    ----------
      Total interest income                                         3,553,042     4,368,899

Interest expense:
  Interest on deposits                                              1,139,701     1,960,742
  Interest on other borrowed funds                                    136,665       278,087
                                                                   ----------    ----------
      Total interest expense                                        1,276,366     2,238,829

      Net interest income                                           2,276,676     2,130,070

Provision for loan losses                                             186,000       120,000
                                                                   ----------    ----------

      Net interest income after
        provision for loan losses                                   2,090,676     2,010,070

Noninterest income:
  Service charge on deposits                                          375,778       366,763
  Commission on credit life                                            11,868        11,867
  Investment securities gains and (losses), net                             0        65,671
  Other                                                               138,598       130,081
                                                                   ----------    ----------
      Total noninterest income                                        526,244       574,382

Noninterest expense:
  Salaries and benefits                                             1,093,934     1,026,690
  Net occupancy expense                                               409,915       308,902
  Other                                                               589,130       569,058
                                                                   ----------    ----------
      Total non-interest expense                                    2,092,979     1,904,650

      Earnings before income tax expense                              523,941       679,802
Income tax expense                                                    127,617       179,997
                                                                   ----------    ----------
      Net earnings                                                    396,324       499,805
                                                                   ==========    ==========

Basic earnings per share                                           $     0.36    $     0.46
Diluted earnings per share                                         $     0.36    $     0.45
Basic weighted average shares outstanding                           1,098,352     1,095,706
                                                                   ==========    ==========
Diluted weighted average shares outstanding                         1,110,902     1,105,551
                                                                   ==========    ==========


Statement of Comprehensive Income

Net Income                                                            396,324       499,805

Other Comprehensive Income, net of tax:
      Unrealized holding (losses) arising during the period           (83,127)      572,500
      Cumulative effect of a change in accounting for
          investment securities (Note 2)                                   --        21,746
       Less: Reclassification adjustment for gains (losses)
                 included in net income                                    --        65,671
                                                                   ----------    ----------
Comprehensive income                                                  313,197     1,137,976
                                                                   ==========    ==========
</Table>



                                       4
<PAGE>
                     UNITED BANCORPORATION OF ALABAMA, INC.
                                 AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001
                                   (UNAUDITED)

<Table>
<Caption>
                                                                                 2002            2001
<S>                                                                          <C>             <C>
Operating Activities
 Net Income                                                                  $    396,324         499,805
 Adjustments to Reconcile Net Income to Net Cash
  Provided by Operating Activities
   Provision for Loan Losses                                                      186,000         120,000
   Depreciation on Premises and Equipment                                         215,965         126,705
   Amortization of Investment Securities held to maturity                              --              --
   Amortization of Investment Securities Available for Sale                          (810)        (27,214)
   (Gain) Loss on Sale of Investment Securities Available for Sale                     --         (65,671)
   Writedown of Other Real Estate                                                  17,135              --
   (Increase) Decrease in Interest Receivable
    and Other Assets                                                              707,028         667,271
   Decrease in Accrued Expenses
    and Other Liabilities                                                      (2,545,802)       (920,382)
                                                                             ------------    ------------
 Net Cash Provided (Used)  by Operating Activities                             (1,024,160)        400,514
                                                                             ------------    ------------
Investing Activities
  Proceeds From Sales of Investment Securities Available for Sale                      --       5,080,187
  Proceeds From Maturities of Investment Securities held to maturity                   --              --
  Proceeds From Maturities of Investment Securities Available for Sale          2,046,014       4,878,001
  Purchases of Investment Securities held to maturity                                  --              --
  Purchases of Investment Securities Available for Sale                        (6,465,493)     (3,300,209)
  Net Increase in Loans                                                        (2,349,665)     (1,529,084)
  Purchases of Premises and Equipment                                            (168,102)       (476,057)
  Purchases of Other Real Estate                                                       --              --
  Proceeds From Sales of Other Real Estate                                             --              --
                                                                             ------------    ------------
 Net Cash Used by Investing Activities                                         (6,937,246)      4,652,838
                                                                             ------------    ------------
Financing Activities
  Net Increase in Deposits,                                                       932,810     (21,617,488)
 Net Increase in securities sold under
  agreement to repurchase                                                       2,801,052       1,879,467
  Proceeds from Sale of Treasury Stock                                              6,963          12,453
 Exercise of stock options                                                         12,800              --
 Proceeds from sale of common stock                                                    --          25,521
  Increase in Other Borrowed Funds                                                631,921       7,979,320
                                                                             ------------    ------------
 Net Cash (Used) Provided  by Financing Activities                              4,385,546     (11,720,727)
                                                                             ------------    ------------
 Decrease  in Cash and Cash Equivalents                                        (3,575,860)     (6,667,374)
Cash and Cash Equivalents at Beginning of Period                               19,348,812      20,360,173
                                                                             ------------    ------------
Cash and Cash Equivalents at End of Period                                     15,772,952      13,692,799
                                                                             ============    ============

Supplemental disclosures

Cash paid during the year for:
     Interest                                                                   1,621,410       1,806,543
                                                                             ============    ============

     Income Taxes                                                                      --              --
                                                                             ============    ============

Transfer of Held to Maturity to Available for Sale                                     --      13,975,608
                                                                             ============    ============
</Table>



                                       5
<PAGE>

                     UNITED BANCORPORATION OF ALABAMA, INC.
                                 AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
                                   (UNAUDITED)

Note 1  - General

This report includes interim consolidated financial statements of United
Bancorporation of Alabama, Inc. (the "Corporation" or "Company") 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 Company's annual report on
Form 10-K for the year ended December 31, 2001.

NOTE 2 - New Accounting Pronouncements

In July 2001, the FASB issued Statement No. 141, Business Combinations, and
Statement No. 142, Goodwill and Other Intangible Assets. Statement 141 requires
that the purchase method of accounting be used for all business combinations
initiated after September 30, 2001. Statement 141 also specifies criteria that
intangible assets acquired in a purchase method business combination must meet
to be recognized and reported separate from goodwill. Statement 142 require that
goodwill and intangible assets with indefinite useful lives no longer be
amortized, but instead be tested for impairment at least annually in accordance
with the provisions of Statement 142. Statement 142 will also require that
intangible assets with estimable useful lives be amortized over their respective
estimated useful lives to their estimated residual values, and reviewed for
impairment in accordance with FASB Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of. The
Corporation adopted the provisions of Statement No. 141 in 2001 and Statement
142 effective January 1, 2002. The Corporation does not currently have any
goodwill capitalized on its balance sheet. Accordingly, the Company currently
does not expect the adoption of Statements 141 and 142 to have an impact on the
consolidated financial statements of the Corporation.

In July 2001, the FASB issued Statement No. 143, Accounting for Asset Retirement
Obligations. That standard requires entities to record the fair value of a
liability for an asset retirement obligation in the period in which it is
incurred. When a liability is initially recorded, the entity must capitalize the
cost by increasing the carrying amount of the related long-lived asset. Over
time, the liability is accreted to its present value each period, and the
capitalized cost is depreciated over the useful life of the related asset. Upon
settlement of the liability, an entity either settles the obligation for its
recorded amount or incurs a gain or loss upon settlement. The Company is
required to adopt the provisions of Statement 143 for fiscal years beginning
after September 15, 2002. The Corporation is currently assessing whether
Statement 143 will have an impact on its consolidated financial statements.

In August 2001, the Financial Accounting Standards Board issued FASB Statement
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets
(Statement 144), which supersedes both FASB Statement No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of
(Statement 121) and the accounting and reporting provisions of APB Opinion No.
30, Reporting the Results of Operations--Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions (Opinion 30), for the disposal of a segment of a
business (as previously defined in that Opinion). Statement 144 retains the
fundamental provisions in Statement 121 for recognizing and measuring impairment
losses on



                                       6
<PAGE>

long-lived assets held for use and long-lived assets to be disposed of by sale,
while also resolving significant implementation issues associated with Statement
121. For example, Statement 144 provides guidance on how a long-lived asset that
is used, as part of a group, should be evaluated for impairment, establishes
criteria for when a long-lived asset is held for sale, and prescribes the
accounting for a long-lived asset that will be disposed of other than by sale.
Statement 144 retains the basic provisions of Opinion 30 on how to present
discontinued operations in the income statement but broadens that presentation
to include a component of an entity (rather than a segment of a business).
Unlike Statement 121, an impairment assessment under Statement 144 will never
result in a write-down of goodwill. Rather, goodwill is evaluated for impairment
under Statement No. 142, Goodwill and Other Intangible Assets.

The Company adopted the provisions of Statement 142 in the quarter ending March
31, 2002. The adoption of Statement 144 for long-lived assets held for use did
not have a material impact on the Company's financial statements because the
impairment assessment under Statement 144 is largely unchanged from Statement
121. The provisions of the Statement for assets held for sale or other disposal
did not have a material impact on the Company's financial statements.

NOTE 3 - Net Income per Share

Presented below is a summary of the components used to calculate diluted
earnings per share for the three months ended March 31, 2002 and 2001:

<Table>
<Caption>
                                                         2002             2001
                                                     ------------     ------------
<S>                                                  <C>              <C>
Diluted earnings per share:                                   .36              .45

   Weighted average common shares
      outstanding
                                                        1,098,352        1,095,706
   Effect of the assumed exercise of stock
        options based on the treasury stock
        method using average market price                  12,550           12,924
                                                     ------------     ------------
Total weighted average common shares
    and potential common stock outstanding
                                                        1,110,902        1,105,551
                                                     ============     ============
</Table>


                                       7

<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Results of Operations

The following financial review is presented to provide a comparative analysis of
the results of operations of United Bancorporation of Alabama, Inc. (the
"Corporation") and its subsidiary for the three months ended March 31, 2001 and
2002. This review should be read in conjunction with the consolidated financial
statements included in this Form 10-Q.

Summary

Net income after taxes for the three months ended March 31, 2002 decreased
$103,481, or 20.70%, as compared to the same period in 2001.

Net Interest Income

Total interest income decreased by $815,857, or 18.67%, during the first quarter
of 2002 compared to the first quarter of 2001. Average interest-earning assets
were $201,305,792 for the first quarter of 2002 as compared to $209,946,137 for
the same period in 2001, a decrease of $8,640,345 or 4.12%, due to the loss of
public funds that average approximately $20,000,000, which were on deposit
during the first two months of 2001. The average rate earned in 2002 was 7.14%
as compared to 8.42% in 2001, reflecting a continuing impact of the decrease in
rates by the Federal Reserve Board during the latter part of 2001. The net
interest margin increased to 4.57% for the first quarter of 2002, as compared to
4.09% for the same period in 2001. This increase is attributed to the fact that
interest bearing liabilities repriced slower than the interest earning assets
during the falling rate environment of 2001. The fact that interest rates have
remained relatively low during 2002 allowed the slower repricing
interest-bearing liabilities to continue to reprice at lower rates. The Bank
expects this trend to reverse as if interest rates rise.

Total interest expense decreased by $962,463, or 42.99%, in 2002. The decrease
in interest expense is attributed to the decrease in the average rate paid
during the first quarter of 2002 as a result of the repricing discussed above.
The average rate paid during the first quarter of 2002 was 3.11% as compared to
5.20% for the same period in 2001. This rate decrease is due to the lowering of
CD rates over the past year which were the result of a decrease in federal funds
rates. Average interest bearing liabilities increased to $166,577,542 in 2002,
from $163,944,640 in 2001, an increase of $2,632,902, or 1.61%.


                                       8
<PAGE>

Noninterest Income

Total noninterest income decreased to $526,244 for the first quarter of 2002, as
compared to $574,382 for the same period of 2001, a decrease of $48,138, or
8.38%. This decrease was caused primarily by the sale of securities in 2001 of
$65,671, compared to no such sales in 2002.

Noninterest Expense

Total noninterest expense increased $188,329 or 9.89% during the first quarter
of 2002 partly due to increased salaries and benefits of $67,244. Most of the
salaries and benefits increase can be attributed to a new branch opening, which
also contributed to an increase in occupancy expense of $101,013. The Bank
increase in occupancy expense is also attributable to the Bank's conversion in
September of 2001 to house daily data processing expense of which is categorized
as occupancy expense as opposed to other noninterest expense, which rose
$20,072.

Income Taxes

Earnings before taxes for the first quarter of 2002 decreased $155,861, or
22.93%, compared to the same period of 2001. Income tax expense decreased to
$127,617 in 2002 from $179,997 in 2001, a decrease of $52,380, or 29.10%. The
effective tax rate decreased from 26.48% to 24.36%.

Financial Condition and Liquidity

Total assets on March 31, 2002 increased $2,152,942 or 0.98% as compared to
December 31, 2001. Average total assets for the first quarter of 2002 were
$219,628,247 as compared to $226,766,841 for the same period in 2001. The
decrease is largely attributable to public fund deposit that were lost in 2001
that averaged approximately $20,000,000 for the first two months of 2001, which
were not deposit in 2002.

Loans

Net loans increased by $2,163,665 or 1.47% at March 31, 2002, from December 31,
2001. Most of this growth in loans occurred in the Baldwin County region and in
agricultural lending in all markets. The net loan to deposit ratio on March 31,
2002 was 82.24%, as compared to 81.47% on December 31, 2001.

Allowance and Provision for Loan Losses

The allowance for loan losses represents 1.32% of gross loans at March 31, 2002,
as compared to 1.34% at year-end 2001. Loans on which the accrual of interest
had been discontinued amounted to $2,411,766 at March 31, 2002, as compared to
$2,184,316 at December 31, 2001. Part of this increase was due to one loan with
a balance of $117,617,


                                       9
<PAGE>

which had been classified nonaccrual during the first quarter of 2002.
Subsequent to quarter end, but which is now current and is performing per in
accordance with the loan agreement.

The provision for loan losses increased to $186,000 for the first three months
of 2002, as compared to $120,000 for the same period in 2001. Net charged-off
loans for the first quarter of 2002 were $179,623, as compared to $28,747 in for
the first quarter of 2001. Most of the net charge-off is attributable to one
loan to a borrower, which unexpectedly abandoned its business, resulting in a
net charge off $139,169 after liquidation of collateral.

The allowance for loan losses is maintained at a level which, in management's
opinion, is appropriate to provide for estimated losses in the portfolio at the
balance sheet date. Factors considered in determining the adequacy of the
allowance include historical loan loss experience, the amount of past due loans,
loans classified from the most recent regulatory examinations and internal
reviews, general economic conditions and the current portfolio mix. The amount
charged to operating expenses is that amount necessary to maintain the allowance
for loan losses at a level indicative of the associated risk, as determined by
management, of the current portfolio.

The allowance for loan losses consists of two portions: the classified portion
and the nonclassified portion. The classified portion is based on identified
problem loans and is calculated based on an assessment of credit risk related to
those loans. Specific loss estimate amounts are included in the allowance based
on assigned classifications as follows: substandard (15%), doubtful (50%), and
loss (100%).

The nonclassified portion of the allowance is for inherent losses that probably
exist as of the evaluation date even though they may not have been identified by
the more objective processes for the classified portion of the allowance. This
is due to the risk of error, and inherent imprecision in the process,and the
timing of when the Corporation receives accurate financial information from
borrowers. This portion of the allowance is particularly subjective and requires
judgments based upon qualitative factors which do not lend themselves to exact
mathematical calculations. Some of the factors considered are changes in credit
concentrations, loan mix, historical loss experience, and general economic
environment in the Corporation's markets.

While the total allowance is described as consisting of a classified and a
nonclassified portion, these terms are primarily used to describe a process.
Both portions are available to support inherent losses in the loan portfolio.
Management realizes that general economic trends greatly affect loan losses, and
no assurances can be made that future charges to the allowance for loan losses
will not be significant in relation to the amount provided during a particular
period, or that future evaluations of the loan portfolio based on conditions
then prevailing will not require sizable charges to income. Management does,
however, consider the allowance for loan losses to be appropriate for the
reported periods.



                                       10

<PAGE>

Non-performing Assets: The following table sets forth the Corporation's
non-performing assets at March 31, 2002 and December 31, 2001. Under the
Corporation's nonaccrual policy, a loan is placed on nonaccrual status when
collectibility of principal and interest is in doubt or when principal and
interest is 90 days or more past due.

<Table>
<Caption>
                                                      March        December
         Description                                  2002           2001
                                                    ---------      ---------
                                                      (Dollars in Thousands)
<S>                                                 <C>            <C>
(A)      Loans accounted for on a                   $   2,411      $   2,184
         nonaccrual basis

(B)      Loans which are contractually
         past due ninety days or more as
         to interest or principal payments
         (excluding balances included in
         (A) above).                                       45             18

(C)      Loans, the term 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.                0              0

(D)      Other non-performing assets                      182            556
</Table>


Investment Securities

Investment securities available for sale increased by $4,281,746 or 10.29% in
the first quarter of 2002, from December 31, 2001.

Premises and Equipment

Premises and equipment decreased $47,863 during the first quarter of 2002 from
December 31,2001.

Deposits

Total deposits increased $932,810, or 0.52%, at March 31, 2002, from December
31, 2001. Non-interest bearing deposits increased $2,282,186 or 6.8% at quarter
end from the year-end total. Interest bearing deposits decreased $1,349,376, or
0.92%, at March 31, 2002, from December 31, 2001. The decrease in deposits was
the result of the Bank not renewing certain certificates of deposit that
matured. Average total deposits for the first quarter of 2002 were $180,796,674,
as compared to $184,177,956 for the same period in


                                       11

<PAGE>

2001, which can be traced primarily to the public funds that were on deposit for
the first two months of 2001, but not in 2002.

Other Borrowed Funds

Other borrowed funds decreased $417,638 or 6.70% due to the Bank's payment of a
FHLB advance, in 2002.

Capital Adequacy

The Corporation relies primarily on internally generated capital growth to
maintain capital adequacy. Total stockholders' equity on March 31, 2002, was
$22,179,452, an increase of $332,959, or 1.52%, from $21,846,493 at year-end
2001.

Primary capital to total assets at March 31, 2002, was 9.99%, as compared to
9.93% at year-end 2001. Total capital and allowances for loan losses to total
assets at March 31, 2002, were 10.89%, as compared to 10.84% at December 31,
2001. The Corporation had risk based capital of $23,993,000, or 14.63%, at March
31, 2002, as compared to $23,570,000, or 14.54% at year end 2001. The minimum
total capital requirement is 8.00%. Based on management's projections,
internally generated capital should be sufficient to satisfy capital
requirements in the foreseeable future for existing operations, but the growth
into new markets may require the Bank to access external funding sources.

Item 3. Market Risk Disclosures

Market risk is the risk of loss from adverse changes in market prices and rates.
The Bank's market risk arises principally from interest rate risk inherent in
its lending, deposit and borrowing activities. Management actively monitors and
manages its interest rate risk exposure. Although the Bank manages other risk,
such as credit quality and liquidity risk, in the normal course of business,
management considers interest rate risk to be its most significant market risk.
Interest rate risk could potentially have the largest material effect on the
Bank's financial condition and results of operations. Other types of market
risks, such as foreign currency exchange rate risk, generally do not arise in
the Bank's normal course of business activities to any significant extent.

The Bank's profitability is affected by fluctuations in interest rates.
Management's goal is to maintain a reasonable balance between exposure to
interest rate fluctuations and earnings. A sudden and substantial increase in
interest rates may adversely impact the Bank's earnings to the extent that the
interest rates on interest-earning assets and interest-bearing liabilities do
not change at the same speed, to the same extent or on the same basis.

The Bank's Asset Liability Management Committee ("ALCO") monitors and considers
methods of managing the rate and sensitivity repricing characteristics of the
balance sheet components consistent with maintaining acceptable levels of
changes in the net portfolio value ("NPV") and net interest income. NPV
represents the market values of portfolio equity and is



                                       12
<PAGE>

equal to the market value of assets minus the market value of liabilities, with
adjustments made for off-balance sheet items over a range of assumed changes in
market interest rates. A primary purpose of the Bank's ALCO is to manage
interest rate risk to effectively invest the Bank's capital and to preserve the
value created by its core business operations. As such, certain management
monitoring processes are designed to minimize the impact of sudden and sustained
changes in interest rates on NPV and net interest income.

The Bank's exposure to interest rate risk is reviewed on a quarterly basis by
the Board of Directors and the ALCO. Interest rate risk exposure is measured
using interest rate sensitivity analysis to determine the Bank's change in NPV
in the event of hypothetical changes in interest rates. Further, interest rate
sensitivity gap analysis is used to determine the repricing characteristics of
the Bank's assets and liabilities. The ALCO is charged with the responsibility
to maintain the level of sensitivity of the Bank's net interest margin within
Board approved limits.

Interest rate sensitivity analysis is used to measure the Bank's interest rate
risk by computing estimated changes in NPV of its cash flows from assets,
liabilities, and off-balance sheet items in the event of a range of assumed
changes in market interest rates. This analysis assesses the risk of loss in
market risk sensitive instruments in the event of a sudden and sustained 100 -
300 basis points increase or decrease in the market interest rates. The Bank
uses the HNC Asset Liability Model, which takes the current rate structure of
the portfolio and shocks for each rate level and calculates the new market value
equity at each level. The Bank's Board of Directors has adopted an interest rate
risk policy, which establishes maximum allowable decreases in net interest
margin in the event of a sudden and sustained increase or decrease in market
interest rates. The following table presents the Bank's projected change in NPV
for the various rate shock levels as of March 31, 2002. All market risk
sensitive instruments presented in this table are held to maturity or available
for sale. The Bank has no trading securities.

<Table>
<Caption>
                                                   CHANGE IN      CHANGE IN
          CHANGE IN                 MARKET         MARKET         MARKET
          INTEREST RATES            VALUE          VALUE          VALUE
          (BASIS POINTS)            EQUITY         EQUITY         EQUITY (%)
          --------------            ------         ---------      ----------
<S>                                 <C>            <C>            <C>

               300                  45,271           3,784             9
               200                  44,420           2,933             7
               100                  43,156           1,669             4
                 0                  41,487               0             0
              (100)                 39,585          (1,902)           (5)
              (200)                 37,115          (4,372)          (11)
              (300)                 34,073          (7,414)          (18)
</Table>

The preceding table indicates that at March 31, 2002, in the event of a sudden
and sustained increase in prevailing market interest rates, the Bank's NPV would
be expected to increase, and that in the event of a sudden decrease in
prevailing market interest rates, the Bank's NPV would be expected to decrease.


                                       13
<PAGE>

Computation of prospective effects of hypothetical interest rate changes
included in these forward-looking statements are subject to certain risks,
uncertainties, and assumptions including relative levels of market interest
rates, loan prepayments and deposit decay rates, and should not be relied upon
as indicative of actual results. Further, the computations do not contemplate
any actions the Bank could undertake in response to changes in interest rates.

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 risks, 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 Bank's
expectations with regard to any change in events, conditions or circumstances on
which any such statement is based.



                                       14
<PAGE>


                           PART II. OTHER INFORMATION


Item 4.  Submission of Matters to a Vote of Security Holders

     (a)  The Annual Meeting of Stockholders of United Bancorporation of
          Alabama, Inc. was held on May 1, 2002.

     (b)  The following nominees were elected as Directors of the Corporation,
          to serve until the 2005 Annual Meeting of Stockholders, by the votes
          indicated:

<Table>
<Caption>
                       Nominee                         For                 Against
                  -------------------              -----------         ---------------
<S>                                                <C>                 <C>
                  Dale Ash                           714,813                 -0-
                  Robert R. Jones III                714,813                 -0-
</Table>

          The Directors of the Corporation whose terms of office continued after
          the 2001 Annual Meeting are as follows:

<Table>
<Caption>
                                                       To Serve Until the Annual
                       Director                    Meeting of Stockholders in the year
                  --------------------             -----------------------------------
<S>                                                <C>
                  David Swift                                    2004
                  William C. Grissett                            2004
                  L. Walter Crim                                 2003
                  H. Leon Esneul                                 2003
                  William J. Justice                             2003
</Table>

Item 6.  Exhibits and Reports on Form 8-K.

     (A)  Exhibits. None

     (B)  During the quarter ended March 31, 2002, the Corporation did not file
          a Form 8-K Current Report with the Securities and Exchange Commission.



                                       15
<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.

                                       UNITED BANCORPORATION OF ALABAMA, INC.


Dated:  May 14, 2002                       /s/ Robert R. Jones III
        ------------                       ------------------------------------
                                           Robert R. Jones, III
                                           President & CEO



                                       16