<PAGE> 1
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 10-QSB
[] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
COMMISSION FILE NUMBER: 1-13472
* * * * * *
NATIONAL BANCSHARES CORPORATION OF TEXAS
(Exact name of small business issuer as specified in its charter)
TEXAS 74-1692337
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
104 EAST MANN ROAD, LAREDO, TEXAS 78042
(Address of principal executive offices)
(210) 724-2424
(Issuer's telephone number)
N/A
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes |X| No____
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by court. Yes |X| No ___
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 4,658,734 shares of
Common Stock, $.001 par value, as of August 6, 1996.
Transitional Small Business Disclosure Format (check one): Yes___ No |X|
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<PAGE> 2
Part I. Financial Information
Item 1. Financial Statements
NATIONAL BANCSHARES CORPORATION OF TEXAS AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
JUNE 30, DECEMBER 31,
1996 1995
---------- ----------
ASSETS:
Cash and due from banks $ 16,377 $ 14,707
Interest-bearing accounts 131 193
Federal funds sold 10,440 19,845
Investment securities available for sale 84,282 66,864
Investment securities held to maturity 65,754 65,775
Loans, net of discounts 92,547 91,588
Allowance for possible loan losses (2,020) (1,906)
Bank premises and equipment, net 6,611 6,569
Other assets 7,087 6,457
---------- ----------
Total Assets $ 281,209 $ 270,092
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Demand deposits, non-interest bearing $ 38,393 $ 37,706
Interest-bearing transaction accounts (NOW) 31,103 31,379
Savings and money market accounts 53,873 52,111
Certificates and time deposits under $100,000 74,750 72,481
Certificates and time deposits $100,000
and over 42,641 38,260
---------- ----------
Total Deposits 240,760 231,937
---------- ----------
Accrued interest, taxes and other liabilities 1,220 1,097
Short term notes payable 140 --
Long term notes payable 361 366
---------- ----------
Total Liabilities 242,481 233,400
---------- ----------
Series B Redeemable preferred stock (A) -- 715
---------- ----------
Stockholders' Equity:
Common Stock, $.001 par value, 100,000,000
shares authorized, issued and outstanding:
4,658,734 at June 30, 1996 and 4,529,855
at December 31, 1995 5 4
Surplus - common stock 16,341 15,619
Retained earnings 22,224 19,611
Unrealized gain on securities available
for sale, net of tax 158 743
---------- ----------
Total Stockholders' Equity 38,728 35,977
---------- ----------
Total Liabilities and Stockholders' Equity $ 281,209 $ 270,092
========== ==========
(A) Series B Redeemable Preferred Stock with a par value of $0.01 per share,
redeemable at $1 per share on December 31, 1996 if not
converted at the rate of 5.59998 shares for each share of
common Stock on or before that date. None outstanding at June 30,
1996 and 715,000 shares outstanding at December 31, 1995.
See Notes to Consolidated Financial Statements.
2
<PAGE> 3
NATIONAL BANCSHARES CORPORATION OF TEXAS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands, except per share amounts)
(Unaudited)
THREE MONTHS SIX MONTHS
ENDED ENDED
--------------- ----------------
JUNE JUNE JUNE JUNE
30, 30, 30, 30,
1996 1995 1996 1995
------- ------- ------- -------
INTEREST INCOME:
Interest and Fees on Loans $ 2,503 $ 2,438 $ 4,959 $ 4,792
Interest on Investment Securities 2,311 1,963 4,396 3,921
Interest on Federal Funds Sold 185 270 468 501
Interest on Deposits in Banks 3 9 5 13
------- ------- ------- -------
TOTAL INTEREST INCOME 5,002 4,680 9,828 9,227
INTEREST EXPENSE:
Interest on Deposits 1,920 1,788 3,809 3,476
Interest on Debt 7 36 14 105
------- ------- ------- -------
TOTAL INTEREST EXPENSE 1,927 1,824 3,823 3,581
NET INTEREST INCOME 3,075 2,856 6,005 5,646
Less: Provision (Credit) for
Possible Loan Losses 10 (240) 30 (210)
------- ------- ------- -------
NET INTEREST INCOME AFTER
PROVISION (CREDIT) FOR
POSSIBLE LOAN LOSSES 3,065 3,096 5,975 5,856
NON-INTEREST INCOME:
Service Charges and Fees 561 525 1,156 1,040
Net realized Losses on Sales
of Securities (1) -- (1) (1)
Net Gains on Sales of Other
Real Estate and Assets 16 13 15 73
Miscellaneous Income 25 29 170 58
------- ------- ------- -------
TOTAL NON-INTEREST INCOME 601 567 1,340 1,170
NON-INTEREST EXPENSE:
Salaries and Employee Benefits 1,147 1,067 2,299 2,147
Occupancy and Equipment Expenses 385 319 740 605
Other Expenses 849 915 1,577 1,747
------- ------- ------- -------
TOTAL NON-INTEREST EXPENSE 2,381 2,301 4,616 4,499
INCOME BEFORE FEDERAL INCOME
TAXES AND EXTRAORDINARY ITEM 1,285 1,362 2,699 2,527
Federal Income Tax Expense 33 28 86 60
------- ------- ------- -------
INCOME BEFORE EXTRAORDINARY ITEM 1,252 1,334 2,613 2,467
Gain Realized on Prepayment of
Debt, net of tax -- -- -- 219
------- ------- ------- -------
NET INCOME $ 1,252 $ 1,334 $ 2,613 $ 2,686
======= ======= ======= =======
INCOME PER COMMON AND
COMMON-EQUIVALENT SHARE:
Before Extraordinary Item $ 0.27 $ 0.28 $ 0.55 $ 0.52
Extraordinary Item -- -- -- 0.04
------- ------- ------- -------
NET INCOME PER SHARE $ 0.27 $ 0.28 $ 0.55 $ 0.56
======= ======= ======= =======
Weighted Average Number of
Common and Common-
Equivalent Shares Outstanding 4,718,145 4,771,392 4,713,790 4,773,338
See Notes to Consolidated Financial Statements.
3
<PAGE> 4
NATIONAL BANCSHARES CORPORATION OF TEXAS AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Unrealized
Preferred Stock (A) Common Stock (B) Retained Gain(Loss)
Par Value Surplus Par Value Surplus Earnings Securities(C) Total
------------- ----------- ------------- ----------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1995 $ 22 $ 2,171 $ 4 $ 14,537 $ 13,487 $ (835) $ 29,386
Net Income -- -- -- -- 6,124 -- 6,124
Redemption of Preferred
Stock (13) (1,257) -- 159 -- -- (1,111)
Conversion of Preferred
to Common Stock (9) (914) -- 923 -- -- --
Net Value Change -- -- -- -- -- 1,578 1,578
------------- ----------- ------------- ----------- ------------ -------------- ------------
Balance at December 31, 1995 -- -- 4 15,619 19,611 743 35,977
============= =========== ============= =========== ============ ============== ============
Net Income -- -- -- -- 2,613 -- 2,613
Conversion of Series B
Preferred to Common Stock -- -- 1 714 -- -- 715
Stock Options Exercised -- -- -- 8 -- -- 8
Net Value Change -- -- -- -- -- (585) (585)
------------- ----------- ------------- ----------- ------------------------------------------
Balance at June 30, 1996 $ -- $ -- $ 5 $ 16,341 $ 22,224 $ 158 $ 38,728
============= =========== ============= =========== ============ ============== ============
</TABLE>
<TABLE>
<CAPTION>
Preferred Common
Stock (A) Stock (B)
--------------------- -----------------
(Number of Shares)
<S> <C> <C>
Balance at January 1, 1995 2,193,315 4,414,133
Redemption of Preferred Stock (1,270,339) --
Conversion of Preferred to Common Stock (922,976) 115,722
--------------------- -----------------
Balance at December 31, 1995 -- 4,529,855
Conversion of Preferred B to Common Stock -- 127,679
Exercise of Stock Options -- 1,200
--------------------- -----------------
Balance at June 30, 1996 -- 4,658,734
===================== =================
Book Value per Share at June 30,1996 (Full Dollars) $ -- $ 8.31
===================== =================
</TABLE>
(A) Series A Convertible Preferred Stock with a par value of $0.01 per share,
callable at $1.00 or convertible to 1/8 share of Common Stock.
(B) Common Stock with a par value of $0.001 per share, 100,000,000 shares
authorized.
(C) Net unrealized holding gains (losses) on securities available for sale,
net of tax effect.
See Notes to Consolidated Financial Statements.
4
<PAGE> 5
NATIONAL BANCSHARES CORPORATION OF TEXAS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------------------------
1996 1995
--------------------- ---------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 2,613 $ 2,686
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 511 278
Credit for deferred federal income taxes 17 653
Provision (credit) to allowance for possible loan losses 30 (210)
Net realized losses (gains) on securities available for sale 1 1
Direct write-downs of other real estate owned 3 --
Gain on sale of other real estate owned and other assets (15) (73)
Extraordinary gain on prepayment of debt (gross) -- (224)
Increase in accrued interest receivable and other assets (174) (149)
Increase (decrease) in accrued interest payable and other
liabilities 124 (352)
--------------------- ---------------------
Net cash provided by operating activities 3,110 2,610
Cash Flows from Investing Activities:
Net decrease in federal funds sold 9,405 4,985
Net decrease (increase) in interest-bearing accounts 62 (268)
Net increase in loans (934) (1,219)
Purchases of securities available for sale (28,709) (6,816)
Proceeds from sales of securities available for sale 4,045 1,985
Proceeds from maturities of securities available for sale 6,078 6,654
Purchases of securities held to maturity (12,875) (6,742)
Proceeds from maturities of securities held to maturity 12,841 8,946
Capital expenditures (389) (663)
Proceeds from sale of other real estate owned 71 170
--------------------- ---------------------
Net cash (used in) provided by investing activities (10,405) 7,032
Cash Flows from Financing Activities:
Net increase (decrease) in demand deposits, NOW accounts,
savings and money market accounts 2,172 (5,495)
Net increase in certificates of deposit and time deposits 6,650 2,845
Proceeds from advances on short term debt 140 --
Principal payments on other debt (5) (2,370)
Proceeds from exercise of common stock options 8 --
Redemption of Series A Convertible Preferred Stock -- (378)
--------------------- ---------------------
Net cash used in (provided by) financing activities 8,965 (5,398)
Net increase in cash and due from banks 1,670 4,244
Cash and due from banks at beginning of period 14,707 9,794
--------------------- ---------------------
Cash and due from banks at end of period $ 16,377 $ 14,038
===================== =====================
Schedule of Supplemental Cash Flow Information:
Interest Paid $ 3,793 $ 3,451
Federal Income Taxes Paid $ 58 $ 108
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE> 6
NATIONAL BANCSHARES CORPORATION OF TEXAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements of National
Bancshares Corporation of Texas and its wholly-owned subsidiaries have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The consolidated financial statements include the
accounts of the parent company and all subsidiaries, and all significant
intercompany balances and transactions have been eliminated. Certain items in
prior year's financial statements have been reclassified in conformity with
the current year's presentation. The consolidated financial statements are
unaudited, but include all adjustments (consisting primarily of normal
recurring accruals) which, in the opinion of management, are necessary for a
fair statement of the results of the periods presented. The results of
operations for the six month period ended June 30, 1996 are not necessarily
indicative of the results that may be reported for the entire year. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Form 10-KSB for the year ended
December 31, 1995.
Note 2 - Subsidiaries
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary, NBT of Delaware, Inc. and the accounts of NBT of
Delaware, Inc.'s wholly-owned subsidiaries NBC Bank - Eagle Pass, N.A., Eagle
Pass, Texas; NBC Bank - Laredo, N.A., Laredo, Texas; and NBC Bank - Rockdale,
Rockdale, Texas.
Note 3 - Investment Securities
The following tables present the amortized cost and approximate fair value of
the investment securities portfolio as of June 30, 1996 and December 31, 1995:
<TABLE>
<CAPTION>
June 30, 1996
--------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Approximate
Cost Gains Losses Fair Value
----------------------------- -------------- -----------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Available-For-Sale Securities:
U.S. Treasury Securities 80,756 315 (672) 80,399
U. S. Government agency and mortgage-backed securities 691 19 -- 710
Equity securities including Federal Reserve Bank Stock 2,784 389 -- 3,173
----------------------------- -------------- -----------------
Totals 84,231 723 (672) 84,282
============================= ============== =================
Held-to-Maturity Securities:
U.S. Treasury Securities 62,207 352 (324) 62,235
U. S. Government agency and mortgage-backed securities 3,464 3 (10) 3,457
States and political subdivision - tax exempt 20 -- -- 20
Foreign debt securities 63 -- (7) 56
----------------------------- -------------- -----------------
Totals 65,754 355 (341) 65,768
============================= ============== =================
</TABLE>
6
<PAGE> 7
<TABLE>
<CAPTION>
December 31, 1995
------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Approximate
Cost Gains Losses Fair Value
--------------- -------------- ---------------- ---------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Securities Available For Sale:
U.S. Treasury Securities $ 63,631 $ 1,094 $ (43) $ 64,682
U. S. Government agency and mortgage-backed securities 717 24 -- 741
Equity securities including Federal Reserve Bank Stock 1,407 34 -- 1,441
--------------- -------------- ----------------- --------------
Totals $ 65,755 $ 1,152 $ (43) $ 66,864
=============== ============== ================= ==============
Securities Held To Maturity:
U.S. Treasury Securities $ 61,906 $ 1,310 $ (29) $ 63,187
U. S. Government agency and mortgage-backed securities 3,812 22 (2) 3,832
States and municipal securities 20 -- -- 20
Foreign debt securities 37 3 -- 40
--------------- -------------- ----------------- --------------
Totals $ 65,775 $ 1,335 $ (31) $ 67,079
=============== ============== ================= ==============
</TABLE>
Unrealized gains and losses on investment securities held at June 30, 1996 and
December 31, 1995 have been judged to be temporary market fluctuations with no
material financial impact on the Company.
The following table shows the maturity schedule of the Company's investment
portfolio as of June 30, 1996:
<TABLE>
<CAPTION>
June 30, 1996
------------------------------------------------------------------------
Available For Sale Held To Maturity
---------------------------------- -----------------------------------
Amortized Approximate Amortized Approximate
Cost Fair Value Cost Fair Value
-------------- ----------------- ---------------- -----------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Due in one year or less $ 18,566 $ 18,590 $ 10,081 $ 10,088
Due in one year to five years 62,725 62,355 52,182 52,201
Due from five to ten years -- -- 27 22
Due after ten years 2,940 3,337 3,464 3,457
-------------- ----------------- ---------------- -----------------
Totals $ 84,231 $ 84,282 $ 65,754 $ 65,768
============== ================= ================ =================
</TABLE>
The carrying value of investment securities pledged to secure public funds
amounted to approximately $36,336,000 at June 30, 1996 and $33,406,000 at
December 31, 1995.
Note 4 - Allowance for Possible Loan Losses
An analysis of the allowance for possible loan losses for the six months ended
June 30, 1996 and 1995 is presented below:
<TABLE>
<CAPTION>
Six Months Ended
-----------------------------------------
June 30, 1996 June 30, 1995
--------------------------------------------
(Dollars in Thousands)
<S> <C> <C>
Balance at beginning of period $ 1,906 $ 2,495
Provisions (Credits) to allowance for possible loan losses 30 (210)
Losses charged to the allowance (76) (175)
Recoveries credited to the allowance 160 205
------------------- --------------------
Net recoveries (charge-offs) 84 30
------------------- --------------------
Balance at end of period $ 2,020 $ 2,315
=================== ====================
</TABLE>
7
<PAGE> 8
Note 5 - Debt
The Company has received advances on a margin account secured by fifty percent
of the market value of certain equity securities. Interest is computed based
on the prevailing market rate. The maximum balance outstanding during 1996 was
$279,948, with the balance at June 30, 1996 of $139,928. The maximum credit
available at June 30, 1996 was $1,384,000.
In May 1994 and July 1995, a subsidiary Bank borrowed $200,000 and $175,000,
respectively, from the Federal Home Loan Bank of Dallas. The notes bear
interest rates of 7.49% and 6.393%, respectively. The maturity dates of the
notes are June 1999 and August 2015, respectively. Principal and interest
payments are due monthly in the approximate amount of $2,900 per month in the
aggregate with the remaining balances due at maturity. Both of these loans are
secured by a certain block of fixed rate mortgage loans carried by the
subsidiary Bank.
Note 6 - Income Tax Expense
The provision for Federal income tax expense is less than that computed by
applying the federal statutory rate of 34% as indicated in the following
analysis:
<TABLE>
<CAPTION>
Six Months Ended
-----------------------------------------
June 30, 1996 June 30, 1995
-------------------- --------------------
(Dollars in thousands)
<S> <C> <C>
Tax based on statutory rate $ 918 $ 859
Decrease in deferred tax asset valuation allowance (929) (900)
Alternative minimum tax 54 59
Other, net 43 42
-------------------- --------------------
Federal income tax expense $ 86 $ 60
==================== ====================
</TABLE>
The Company had approximately $110 million in net operating loss carryforwards
at June 30, 1996 which will be available to reduce tax liabilities through the
year 2006. The net operating loss carryforwards, along with certain other
items, create deferred tax assets. A valuation allowance has been created to
reduce deferred tax assets to an amount more likely than not to be realized.
During the six months ended June 30, 1996 and 1995, the valuation allowance
has been reduced to adjust the recorded deferred tax asset to the realizable
amount. Pursuant to Statement of Financial Accounting Standards No, 109,
"Accounting for Income Taxes", reductions to the valuation allowance are
recorded as decreases in current period income tax expense.
8
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Management's Discussion and Analysis of Financial Condition and
Results of Operations of the Company analyzes the major elements of the
Company's consolidated balance sheets and statements of income. This
discussion should be read in conjunction with the Consolidated Financial
Statements, accompanying notes, and selected financial data appearing
elsewhere in this Report.
Results of Operations
Net income for the three months ended June 30, 1996 was $1.3 million
or $.27 per common share (4,718,145 weighted average shares), compared with
$1.3 million or $.28 per common share (4,771,392 weighted average shares) for
the three months ended June 30, 1995. The three months ended June 30, 1995,
included a $240,000 credit to the provision for possible loan losses compared
to a $10,000 provision expense provided during the three months ended June 30,
1996. Excluding the credit to the provision for possible loan losses, net
income for the three months ended June 30, 1996 increased 14 percent over the
three month period of June 30, 1995. The $158,000 or 14.4 percent increase
in net income before the credit to the provision for possible loan losses
for the three months ended June 30, 1996 over the prior year's same period
was primarily attributable to a $219,000 or 7.7 percent increase in net
interest income. This improvement primarily results from an increase in the
average balance of the investment security portfolio and the retirement of
all of the Parent Company's debt totaling $4 million during 1995. The debt
generated interest expense offsetting interest income in the amount of
$36,000 for the three months ended June 30, 1995. Non-interest income for
the three months ended June 30, 1996 improved $34,000 over the same period
of 1995 and non-interest expense for the three months ended increased by
$80,000 over the like period of 1995.
Net income for the six months ended June 30, 1996 was $2.6 million or
$.55 per common share (4,713,790 weighted average shares), compared with $2.5
million or $.52 per common share (4,773,338 weighted average shares) for the
six months ended June 30, 1995 before an extraordinary credit due to the
prepayment of debt of $219,000, net of tax or $.04 per common share. After the
extraordinary credit, total net income for the six months ended June 30, 1995
was $2.7 million or $.56 per common share.
For the six months ended June 30, 1996, the Company's return on
average assets was 1.90% compared to 2.05% for the six months ended June 30,
1995. The Company's return on average equity for the six months ended June 30,
1996 was 14.06% compared to 16.74% for the six months ended June 30, 1995.
Excluding the net $210,000 credit to the provision for possible loan losses
and the net $219,000 extraordinary credit realized in 1995, the adjusted
return on average assets would be 1.73% and the adjusted return on average
equity would be 14.06%. Therefore, with the exclusion of the nonrecurring
items, the return on average assets has improved and the return on average
equity has remained the same over the prior year. The ratio of average
stockholders' equity to total average assets was 13.5% and 12.3% for the six
months ended June 30, 1996 and 1995, respectively.
Net Interest Income
Net interest income constitutes the principal source of income for
the Banks and represents the difference between interest income on
interest-earning assets and interest expense on interest-bearing liabilities.
The increase of $359,000 or 6.4 percent in net interest income for the six
months ended June 30, 1996 compared to the same period in 1995 was due
primarily to an increase in the investment securities portfolio, the increase
in average yield on loans and the liquidation of all of the Parent Company's
debt. On an average basis, other debt at June 30, 1996 decreased 82.5 percent
compared to the June 30, 1995. The net interest margin for the six months
ended June 30, 1996 was 4.78 percent compared to 4.72 percent as of June 30,
1995. The net interest margin is the net return on earning assets which is
computed by dividing taxable equivalent net interest income by average total
earning assets.
The net interest spread increased four basis points to 3.97 percent
at June 30, 1996 from 3.93 percent at June 30, 1995. The increase in the net
interest spread is primarily due to higher rates and volume of earning assets
in 1996.
9
<PAGE> 10
INTEREST EARNED/INCURRED AND RATES
(Dollars in Thousands)
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
---------------------------------------- --------------------------------------
June 30, 1996 June 30, 1995
---------------------------------------- --------------------------------------
Interest Interest
Average Income/ Average Average Income/ Average
Balance Expense Yield/Rate Balance Expense Yield/Rate
- ------------------------------------------ ------------- ------------- --------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Interest-bearing accounts $ 195 $ 5 5.14% $ 474 $ 13 5.53%
Federal funds sold 17,053 468 5.50% 16,807 501 6.01%
Investment securities:
US Treasuries 138,034 4,222 6.13% 127,619 3,746 5.92%
US Government agencies 4,364 149 6.87% 5,235 162 6.24%
States and political subdivisions 20 1 6.27% 42 1 4.80%
Other 1,819 24 2.66% 343 12 7.06%
------------- ------------- --------------- ----------- ------------- -------------
Total investment securities 144,237 4,396 6.11% 133,239 3,921 5.93%
Loans, net of discounts (A) 91,029 4,970 10.95% 91,451 4,805 10.60%
------------- ------------- --------------- ----------- ------------- -------------
Total interest-earning assets 252,514 9,839 7.81% 241,971 9,240 7.70%
Non-interest bearing assets:
Cash and due from banks 12,156 11,600
Allowance for possible loan losses (1,963) (2,509)
Other assets 13,731 12,828
------------- -----------
Total assets 276,438 263,890
============= ===========
Interest-bearing liabilities:
Interest bearing transaction accounts 31,371 453 2.89% 32,770 464 2.86%
Time deposits 168,155 3,356 4.00% 156,727 3,012 3.88%
Other debt 386 14 7.27% 2,205 105 9.60%
------------- ------------- --------------- ----------- ------------- -------------
Total interest-bearing liabilities 199,912 3,823 3.84% 191,702 3,581 3.77%
Non-interest bearing liabilities:
Demand deposits 37,720 37,793
Other liabilities 1,315 1,314
------------- -----------
Total liabilities 238,947 230,809
Redeemable preferred stock 231 715
Stockholders' equity (F) 37,260 32,366
------------- -----------
Total liabilities and stockholders'
equity $ 276,438 $263,890
============= ===========
Taxable-equivalent net interest income $ 6,016 $ 5,659
Less: taxable-equivalent adjustment 11 13
------------- -------------
Net interest income $ 6,005 $ 5,646
============= =============
Net interest spread (B) 3.97% 3.93%
=============== =============
Net interest margin (C) 4.78% 4.72%
=============== =============
Selected operating ratios:
Return on average assets (D) 1.90% 2.05%
=============== =============
Return on average equity (E) 14.06% 16.74%
=============== =============
</TABLE>
- ----------------------
(A) Non-accrual loans are included in the average balances used in calculating
this table.
(B) The net interest spread is the difference between the average rate on
total interest-earning assets and interest-bearing liabilities.
(C) The net interest margin is the annualized taxable-equivalent net interest
income divided by average interest-earning assets.
(D) The return on assets ratio was computed by dividing annualized net income
by average total assets.
(E) The return on equity ratio was computed by dividing annualized net income
by average total stockholders' equity.
(F) The average balance has been adjusted to exclude the effect of the
unrealized gain or loss on securities available for sale.
10
<PAGE> 11
The following table analyzes the increase in taxable-equivalent net
interest income stemming from changes in interest rates and from asset and
liability volume, including mix, for the six months ended June 30, 1996 and
1995. Non-accruing loans have been included in assets for calculating this
table, thereby reducing the yield on loans. The changes in interest due to
both rate and volume in the table below have been allocated to volume or rate
change on a pro-rata basis.
ANALYSIS OF CHANGES IN TAXABLE EQUIVALENT NET INTEREST INCOME
<TABLE>
<CAPTION>
June 30, 1996 vs. June 30, 1995
---------------------------------------------------
Increase Due to Changes in
-------------------------------------
(Decrease) Rates Volume
------------- ------------------- ------------------
(Dollars in Thousands)
<S> <C> <C> <C>
Taxable-equivalent interest income:
Interest-bearing accounts $ (8) $ 0 $ (8)
Federal funds sold (33) (40) 7
Investment securities 475 139 336
Loans, net of discounts 165 174 (9)
------------- ------------------- ------------------
Total taxable-equivalent interest income 599 273 326
Interest expense:
Interest-bearing deposits 333 123 210
Other debt (91) (4) (87)
------------- ------------------- ------------------
Total interest expense 242 119 123
------------- ------------------- ------------------
Taxable-equivalent net interest income $ 357 $ 154 $ 203
============= =================== ==================
</TABLE>
Taxable-equivalent net interest income for the six months ended June
30, 1996 increased $357,000 or 6.3% over the same period in 1995. The increase
is reflected in the increase in the market rates of earning assets and the
increase in the volume of earning assets.
11
<PAGE> 12
Interest Rate Sensitivity
Management seeks to maintain consistent growth of net interest income
through periods of changing interest rates by avoiding fluctuating net
interest margins. Interest rate sensitivity is the relationship between
changes in market interest rates and changes in net interest income due to
repricing characteristics of interest earning assets and liabilities.
The following table indicates the Company's interest rate sensitivity
position at June 30, 1996:
INTEREST-RATE SENSITIVE ASSETS AND LIABILITIES
(Dollars in thousands)
<TABLE>
<CAPTION>
Non-rate
Rate Sensitive Sensitive
------------------------------------------------------------- --------------
Immediately Within Within Over
0-30 days 90 days One Year Total One Year Total
--------------- -------------- -------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Earning Assets:
Loans, net of discounts $ 42,487 $ 3,883 $ 17,473 $ 63,843 $ 28,704 $ 92,547
Investment securities 2,027 4,011 22,636 28,674 121,362 150,036
Federal funds sold 10,440 -- -- 10,440 -- 10,440
Interest-bearing accounts 131 -- -- 131 -- 131
--------------- -------------- -------------- ------------- -------------- --------------
Total earning assets $ 55,085 $ 7,894 $ 40,109 $ 103,088 $ 150,066 $ 253,154
=============== ============== ============== ============= ============== ==============
Interest-bearing liabilities:
Interest-bearing transaction,
savings and money market 84,976 -- -- 84,976 -- 84,976
Certificates and time deposits 27,305 36,703 49,767 113,775 3,616 117,391
Debt 141 1 1 143 358 501
--------------- -------------- -------------- ------------- -------------- --------------
Total interest-bearing
liabilities $ 112,422 $ 36,704 $ 49,768 $ 198,894 $ 3,974 $ 202,868
=============== ============== ============== ============= ============== ==============
Interest sensitivity gap $ (57,337) $ (28,810) $ (9,659) $ (95,806)
=============== ============== ============== =============
Cumulative gap $ (57,337) $ (86,147) $ (95,806) $ (95,806)
=============== ============== ============== =============
Ratio of earning assets to
interest-bearing liabilities 49.0% 21.5% 80.6% 51.8%
</TABLE>
The interest rate sensitivity table reflects a cumulative liability
sensitive position during the one year period shown. Generally, this indicates
that the liabilities reprice more quickly than the assets in a given period,
and that a decline in market rates will benefit net interest income. An
increase in market rates would have the opposite effect.
12
<PAGE> 13
Non-Interest Income
The major components of non-interest income are service charges and
fees earned on deposit accounts. The following table summarizes changes in
non-interest income for the six months ended June 30, 1996 and 1995:
NON-INTEREST INCOME
(Dollars in thousands)
<TABLE>
<CAPTION>
Six Months Ended 1996/1995
--------------------------------------- -------------------------------
June 30, 1996 June 30, 1995 $ Change % Change
------------------- ------------------- -------------- ----------------
<S> <C> <C> <C> <C>
Service charges and fees $ 1,156 1,040 116 11.2%
Net realized losses on sales of securities (1) (1) -- 0.0%
Net gains on sales of other real estate owned 15 73 (58) -79.5%
Miscellaneous income 170 58 112 193.1%
------------------- ------------------- -------------- ----------------
Total non-interest income $ 1,340 $ 1,170 $ 170 14.5%
=================== =================== ============== ================
</TABLE>
The $170,000 or 14.5 percent increase in non-interest income for the
six months ended June 30, 1996 is due primarily to an increase in service
charges and fees on deposit account balances which have increased over 4%
since June 30, 1995. Also attributable to the increase is miscellaneous income
received by the Banks for the recovery of some stock that was written off in
previous years.
Non-Interest Expense
Non-interest expense includes all expenses of the Company other than
interest expense, loan loss provision and income tax expense. The following
table summarizes the changes in non-interest expense for the six months ended
June 30, 1996 and 1995:
NON-INTEREST EXPENSE
(Dollars in thousands)
<TABLE>
<CAPTION>
Six Months Ended 1996/1995
------------------------------------- -------------------------------
June 30, 1996 June 30, 1995 $ Change % Change
------------------ ----------------- -------------- ---------------
<S> <C> <C> <C> <C>
Salaries and employee benefits $ 2,299 $ 2,147 $ 152 7.1%
Occupancy and equipment expenses 740 605 135 22.3%
Data processing fees 253 347 (94) -27.0%
FDIC insurance 3 248 (245) -98.8%
Insurance 51 56 (5) -8.9%
Office supplies 173 124 49 39.5%
Postage & Courier 190 156 34 21.8%
Professional fees 355 456 (101) -22.2%
Miscellaneous other expenses 552 360 192 53.3%
------------------ ----------------- -------------- ---------------
Total non-interest expense $ 4,616 $ 4,499 $ 117 2.6%
================== ================= ============== ===============
</TABLE>
Total non-interest expense for the six months ended June 30, 1996
increased $117,000 or 2.6% over 1995. However, as a percentage of average
assets, non-interest expense declined slightly from 3.40% in 1995 to 3.34% in
1996. Salaries and benefits rose $152,000 or 7.1% in 1996 due to the addition
of personnel for the new San Antonio data center and the Eagle Pass branch
established in the last quarter of 1995. The $135,000 or 22.3% increase in
occupancy and equipment expenses is due to the completion of a $1.2 million
branch facility in Eagle Pass, Texas and the addition of $1 million in new
data and item processing equipment purchased throughout the year. The decline
in FDIC insurance premiums of $245,000 or 98.8% occurred as a result of a
reduction in the rates previously being charged by the FDIC. Data processing
fees also declined $94,000 or 27.0% due to two of the subsidiary Banks
changing from an outside data processor to the in-house system. Some of the
increase shown in occupancy and equipment and salaries and benefits offset
this decline.
13
<PAGE> 14
Income Taxes
The Company recognized income tax expense of $86,000 for the six
months ended June 30, 1996 compared to $60,000 for the six months ended June
30, 1995. At June 30, 1996, the Company had approximately $110 million in net
operating loss carryforwards that will be available to reduce income tax
liabilities in future years. If unused, approximately $106 million of such
carryforwards will expire in 2005, with the remaining approximately $4 million
expiring in 2006.
Loans
The following table presents the composition of the Company's loan
portfolio by type of loan:
LOAN PORTFOLIO
(Dollars in thousands)
<TABLE>
<CAPTION>
% of % of
June 30, 1996 Total December 31, 1995 Total
---------------------- ------------ ----------------------- ---------------
<S> <C> <C> <C> <C>
Commercial $ 13,579 14.7% $ 13,643 14.9%
Real estate construction 12,553 13.5% 11,868 13.0%
Real estate mortgage 51,629 55.8% 51,664 56.4%
Consumer installment loans,
net of unearned discount 14,786 16.0% 14,413 15.7%
---------------------- ------------ ----------------------- ---------------
Total loans $ 92,547 100.0% $ 91,588 100.0%
====================== ============ ======================= ===============
</TABLE>
Allowance for Loan Losses
The allowance for loan losses is established through charges to
operations in the form of a provision for loan losses. Loans, or portions
thereof, which are considered to be uncollectible are charged against the
allowance and subsequent recoveries, if any, are credited to the allowance.
The allowance represents the amount, which in the judgment of each subsidiary
Bank's management, will be adequate to absorb possible losses. The adequacy of
the allowance is determined by management's continuous evaluation of the loan
portfolio and by the employment of third party loan review consultants.
Industry concentrations, specific credit risks, past loan loss experience,
delinquency ratios, current loan portfolio quality and projected economic
conditions in the Bank's market areas are pertinent factors in determining the
adequacy of the allowance for loan losses. Loans identified as losses by
management, external loan review or bank examiners are charged-off.
The Company recorded net recoveries of $84,000 for the six months
ended June 30, 1996 compared to net recoveries of $30,000 for the six months
ended June 30, 1995. Despite loan growth in 1995, a credit to the provision
for loan losses of $210,000 was made to reduce the allowance for possible loan
losses to an appropriate level. The improvement in credit quality of the loan
portfolio and recoveries of previously charged-off loans that provided
unanticipated additions to the allowance for possible loan losses justify the
credit made to the allowance.
14
<PAGE> 15
The following table summarizes, for the periods presented, the
activity in the allowance for loan losses arising from provisions credited to
operations, loans charged off and recoveries of loans previously charged off.
ANALYSIS OF ALLOWANCE FOR LOAN LOSSES
(Dollars in thousands)
<TABLE>
<CAPTION>
Six Months ended June 30,
-------------------------------------------
1996 1995
----------------------- -------------------
<S> <C> <C>
Average loans outstanding $ 91,029 $ 91,451
Balance of allowance for loan losses
at beginning of year $ 1,906 $ 2,495
Provision (Credit) for loan losses 30 (210)
Charge-Offs:
Commercial 8 51
Real estate construction -- 5
Real estate mortgage -- --
Consumer installment 68 119
----------------------- -------------------
Total charge-offs 76 175
----------------------- -------------------
Recoveries:
Commercial 30 16
Real estate construction -- --
Real estate mortgage 31 62
Consumer installment 99 127
----------------------- -------------------
Total recoveries 160 205
----------------------- -------------------
Net charge-offs (recoveries) (84) (30)
----------------------- -------------------
Balance of allowance for loan losses at end of period $ 2,020 $ 2,315
======================= ===================
Net charge-offs (recoveries) as a percentage
of average loans outstanding -0.09% -0.03%
======================= ===================
Allowance for loan losses as a percentage of:
Total loans, net of unearned discount 2.18% 2.52%
======================= ===================
Non-performing assets 104.02% 144.42%
======================= ===================
</TABLE>
Non-Performing Assets
Non-performing assets consist of non-accrual loans, restructured
loans and foreclosed real estate. Loans to a customer whose financial
condition has deteriorated are considered for non-accrual status whether or
not the loan is ninety days or more past due. All installment loans past due
ninety days or more are placed on non-accrual status unless the loan is well
secured or in the process of collection. On non-accrual loans, interest income
is not recognized until actually collected. At the time the loan is placed on
non-accrual status, interest previously accrued but not collected is reversed
and charged against current income. Restructured loans are those which
concessions, including reduction of interest rates or deferral of interest or
principal, have been granted, due to the borrower's weakened financial
condition. Interest on restructured loans is generally accrued at the
restructured rates when it is anticipated that no loss of original principal
will occur. As of June 30, 1996, all restructured loans were performing.
15
<PAGE> 16
Foreclosed real estate consists of property which has been acquired
through foreclosure. At the time of foreclosure, the property is recorded at
the lower of the estimated fair value less selling expenses or the loan
balance with any write down charged to the allowance for loan losses. Any
future write downs on the property are charged to operations.
The following table discloses non-performing assets and loans ninety
days past due and still accruing interest as of June 30, 1996 and December 31,
1995:
NON-PERFORMING ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------------ -----------------
(Dollars in thousands)
<S> <C> <C>
Non-accrual loans $ 1,208 $ 1,177
Restructured loans 94 --
Foreclosed real estate 640 888
------------------ -----------------
Total non-performing assets $ 1,942 $ 2,065
================== =================
Non-performing assets as a percentage of:
Total assets 0.69% 0.76%
Total loans plus foreclosed real estate 2.08% 2.23%
Accruing loans past due 90 days or more $ 38 $ 383
</TABLE>
Independent third party loan reviews of the subsidiary Banks are
performed on an annual basis. The loans are also reviewed by banking
regulators on an eighteen month basis. On a monthly basis, the Board of
Directors' Loan Committee of each Bank reviews new loans, renewals and
delinquencies. Management of each Bank monitors on a continuing basis those
loans which it feels should be followed closely. The Banks are required by
regulation to have foreclosed real estate appraised periodically.
Liquidity
Liquidity is the ability to have funds available at all times to meet
the commitments of the Company. Asset liquidity is provided by cash and assets
which are readily marketable or pledgeable or which will mature in the near
future. Liquid assets include cash and short-term investments in time deposits
in banks, federal funds sold and securities available for sale. Liquidity is
also provided by access to core funding sources, primarily core depositors in
the Company's trade area. The Banks have not and do not solicit brokered
deposits as a funding source.
At June 30, 1996, the Company's liquid assets amounted to $111
million or 40% of total gross assets, up from 30% at June 30, 1995. Secondary
sources of liquidity include the Banks' ability to sell loan participations
and purchase federal funds.
The Parent Company liquidated all of its outstanding debt during 1995
totaling approximately $4 million. On a consolidated basis, the only debt
remaining is $363,000 relating to a subsidiary Bank's long-term borrowings
secured by certain fixed rate mortgage loans carried by the Bank which mature
in 1999 and 2015 and the Company's margin account which had an ending balance
of $140,000 at June 30, 1996.
The Company's principal source of funds consists of dividends
received from the Banks, which derive their funds from deposits, interest and
principal payments on loans and investment securities, sales of investment
securities and borrowings.
16
<PAGE> 17
Capital Resources
Total stockholders' equity increased $5.8 million to $38.7 million
at June 30, 1996 from $32.9 million at June 30, 1995. During 1995, all of the
Company's Series A Preferred Stock was either redeemed or converted into
Common Stock of the Company. Also, in February 1996, the Series B Preferred
Stock was converted into Common Stock at the ratio of 5.59998 shares for each
share of Common Stock. The ratio of total stockholders' equity to total assets
was 13.8 percent at June 30, 1996 compared with 12.5 percent at June 30, 1995.
The Company and subsidiary Banks are subject to minimum capital
ratios mandated by their respective banking industry regulators. The table
below illustrates the Company and subsidiary Bank's compliance with the
risk-based capital guidelines of the Federal Reserve Bank (FRB) and the Office
of the Comptroller of the Currency (OCC). These guidelines are designed to
measure Tier 1 and total capital while taking into consideration the risk
inherent in both on and off balance sheet items. Off balance sheet items at
June 30, 1996 include unfunded loan commitments and letters of credit.
Currently under the regulatory guidelines, the net unrealized gain or loss on
securities available for sale is not included in the calculation of risk based
capital and the leverage ratio. The leverage ratio is Tier 1 capital divided
by average total assets. A leverage ratio of 3.0 percent is the minimum
requirement for only the most highly rated banking organizations and all other
institutions are required to maintain a leverage ratio of 3 to 5 percent.
Tier 1 capital includes common stockholders' equity and qualifying
perpetual preferred stock. Tier 2 capital includes perpetual preferred stock
(to the extent ineligible for Tier 1), limited amounts of subordinated debt,
and a portion of the allowance for loan losses. Total capital is Tier 1
capital plus Tier 2 capital. The ratios are calculated by dividing the
qualifying capital by the risk-weighted assets.
The table below illustrates the Company and its subsidiary Bank's
compliance with the risk-based capital guidelines as of June 30, 1996:
<TABLE>
<CAPTION>
NBC Bank - NBC Bank - NBC Bank -
Consolidated Eagle Pass, N.A. Laredo, N.A. Rockdale
------------------ -------------------- ------------------ ------------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Total average assets $276,438 $161,101 $ 60,372 $ 53,133
Risk weighted assets $ 99,701 $ 46,423 $ 35,568 $ 17,013
Tier 1 capital $ 38,728 $ 16,167 $ 7,074 $ 6,854
Total Tier 2 capital $ 39,983 $ 16,753 $ 7,519 $ 7,066
Leverage ratio 14.01% 10.04% 11.72% 12.90%
Risk based capital ratios:
Tier 1 38.84% 34.83% 19.89% 40.29%
Tier 1 capital minimum 4.00% 4.00% 4.00% 4.00%
requirement
Total capital 40.10% 36.09% 21.14% 41.53%
Total capital minimum requirement 8.00% 8.00% 8.00% 8.00%
</TABLE>
17
<PAGE> 18
Part II - Other Information:
Item 4. Submission of Matters to a Vote of Security Holders
On May 24, 1996, the Company conducted its annual meeting of
shareholders. At the annual meeting the following directors of the Company
were elected with the shares represented voting as indicated:
For Against Abstain
Jay H. Lustig 3,732,025 -- 74,257
Marvin E. Melson 3,732,025 -- 74,257
H. Gary Blankenship 3,732,025 -- 74,257
John W. Lettunich 3,732,025 -- 74,257
Charles T. Meeks 3,732,025 -- 74,257
At the annual meeting the shareholders also approved the appointment
of Padgett, Stratemann & Co., L.L.P. as the Company's auditors with a vote of
3,785,917 shares for, 596 shares against and 14,020 shares abstaining.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits are included as part of this report:
*2.1 Third Amended Joint Plan of Reorganization, as approved U.S.
Bankruptcy Court, effective May 26, 1992
*3.1 Restated Articles of Incorporation and Statement of Relative
Rights and Preferences of Preferred Stock, filed December 29,
1994
*3.2 Bylaws of the Company
11.1 Statement Regarding computation of Earnings Per Share
*Previously filed with the Company's Form 10-SB.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed with the Securities and Exchange
Commission during the last quarter of the period covered by this report.
18
<PAGE> 19
SIGNATURES
In accordance with the requirements of the Securities Exchange Act, the
registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NATIONAL BANCSHARES CORPORATION OF TEXAS
Date: August 9, 1996 By: /s/ Anne Renfroe
-----------------------------------
Anne Renfroe, Chief Accounting
Officer and Principal
Financial Officer
19
<PAGE> 20
INDEX TO EXHIBITS
11.1 Statement Regarding computation of Earnings Per Share
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 11
NATIONAL BANCSHARES CORPORATION OF TEXAS AND SUBSIDIARIES
Computation of Earnings Per Share
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- ------------------------------
1996 1995 1996 1995
--------------- --------------- --------------- -------------
<S> <C> <C> <C> <C>
Net income per common shareholder:
Income before extraordinary credit $ 1,252 $ 1,334 $ 2,613 $ 2,467
Extraordinary credit, net of tax -- -- -- 219
--------------- --------------- --------------- -------------
Primary earnings applicable to common shareholders $ 1,252 $ 1,334 $ 2,613 $ 2,686
=============== =============== =============== =============
Common shares used in Primary per share calculation:
Weighted average number of common shares outstanding 4,658 4,422 4,621 4,418
Addition from assumed exercise of stock options 60 22 56 16
Addition from assumed exercise of Series A Convertible
Preferred Stock -- 199 -- 211
Addition from assumed conversion of Series B
Convertible Preferred Stock -- 128 37 128
--------------- --------------- --------------- -------------
Weighted average number of common and
common-equivalent shares outstanding 4,718 4,771 4,714 4,773
=============== =============== =============== =============
Primary earnings per common share:
Income before extraordinary credit $ .27 $ .28 $ .55 $ .52
Extraordinary credit -- -- -- .04
- -
--------------- --------------- --------------- -------------
Earnings per share $ .27 $ .28 $ .55 $ .56
=============== =============== =============== =============
</TABLE>
Note: Fully diluted earnings per share are not presented as dilution is
less than 3%.
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 16,377
<INT-BEARING-DEPOSITS> 131
<FED-FUNDS-SOLD> 10,440
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 84,282
<INVESTMENTS-CARRYING> 65,754
<INVESTMENTS-MARKET> 65,768
<LOANS> 92,547
<ALLOWANCE> 2,020
<TOTAL-ASSETS> 281,209
<DEPOSITS> 240,760
<SHORT-TERM> 140
<LIABILITIES-OTHER> 1,220
<LONG-TERM> 361
0
0
<COMMON> 5
<OTHER-SE> 38,723
<TOTAL-LIABILITIES-AND-EQUITY> 281,209
<INTEREST-LOAN> 4,959
<INTEREST-INVEST> 4,396
<INTEREST-OTHER> 473
<INTEREST-TOTAL> 9,828
<INTEREST-DEPOSIT> 3,809
<INTEREST-EXPENSE> 14
<INTEREST-INCOME-NET> 6005
<LOAN-LOSSES> 30
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 4,616
<INCOME-PRETAX> 2,699
<INCOME-PRE-EXTRAORDINARY> 2,699
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,613
<EPS-PRIMARY> .55
<EPS-DILUTED> .55
<YIELD-ACTUAL> 7.81
<LOANS-NON> 1,208
<LOANS-PAST> 38
<LOANS-TROUBLED> 94
<LOANS-PROBLEM> 5,729
<ALLOWANCE-OPEN> 1,906
<CHARGE-OFFS> 76
<RECOVERIES> 160
<ALLOWANCE-CLOSE> 2,020
<ALLOWANCE-DOMESTIC> 2,020
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,191
</TABLE>
