<PAGE>
================================================================================
U.S. 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, 2000
COMMISSION FILE NUMBER: 1-13472
* * * * * *
NATIONAL BANCSHARES CORPORATION OF TEXAS
(Exact name of registrant as specified in its charter)
TEXAS 74-1692337
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
12400 HWY 281 NORTH, SAN ANTONIO, TEXAS 78216-2811
(Address of principal executive offices)
(210) 403-4200
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that registrant was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes X No____
State the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 4,114,085 shares of Common
Stock, $.001 par value, outstanding as of May 8, 2000.
================================================================================
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
NATIONAL BANCSHARES CORPORATION OF TEXAS AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
MARCH 31, DECEMBER 31,
2000 1999
------------ ------------
<S> <C> <C>
Cash and due from banks $ 22,732 $ 30,394
Interest-bearing accounts 2,392 2,299
Federal funds sold 42,332 11,949
Investment securities available for sale 218,430 221,268
Investment securities held to maturity 3,908 66
Loans, net of discounts 242,440 247,406
Allowance for possible loan losses (3,009) (2,841)
Bank premises and equipment, net 20,133 19,784
Goodwill 8,333 8,427
Other assets 10,284 11,032
------------ -----------
Total Assets $ 567,975 $ 549,784
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand deposits - non-interest bearing $ 80,859 $ 70,629
Interest-bearing transaction accounts (NOW) 79,359 82,717
Savings and money market accounts 117,697 110,433
Certificates and time deposits under $100,000 135,140 131,322
Certificates and time deposits $100,000 and over 94,512 94,639
------------ -----------
Total Deposits 507,567 489,740
------------ -----------
Accrued interest payable and other liabilities 2,611 2,394
Other borrowings 2,541 2,317
Long term notes payable 4,200 4,700
------------ -----------
Total Liabilities 516,919 499,151
Stockholders' Equity:
Common Stock, $.001 par value, 100,000,000 shares authorized, 4,751,834
issued and 4,153,447 outstanding at March 31, 2000 and
4,669,834 issued and 4,111,834 outstanding at December 31, 1999 5 5
Additional paid-in capital 31,919 30,909
Retained earnings 32,360 31,421
Accumulated other comprehensive income (loss) (2,731) (1,751)
Treasury Stock, at cost (598,387 shares in 2000, 558,000 in 1999) (10,497) (9,951)
------------ -----------
Total Stockholders' Equity 51,056 50,633
------------ -----------
Total Liabilities and Stockholders' Equity $ 567,975 $ 549,784
============ ===========
</TABLE>
See Notes to Consolidated Financial Statements.
2
<PAGE>
NATIONAL BANCSHARES CORPORATION OF TEXAS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------
MARCH 31, 2000 MARCH 31, 1999
-------------- --------------
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 5,668 $ 4,488
Interest on investment securities 3,392 3,541
Interest on federal funds sold 353 380
Interest on deposits in banks 34 30
-------------- --------------
TOTAL INTEREST INCOME 9,447 8,439
INTEREST EXPENSE:
Interest on deposits 4,254 3,571
Interest on debt 122 192
-------------- --------------
TOTAL INTEREST EXPENSE 4,376 3,763
NET INTEREST INCOME 5,071 4,676
Less: Provision for possible loan losses 190 123
-------------- --------------
NET INTEREST INCOME AFTER PROVISION FOR
POSSIBLE LOAN LOSSES 4,881 4,553
NON-INTEREST INCOME:
Service charges and fees 984 792
Net realized gains on sales of securities 7 29
Net gains on sales of other real estate and assets 11 26
Miscellaneous income 96 287
-------------- --------------
TOTAL NON-INTEREST INCOME 1,098 1,134
NON-INTEREST EXPENSE:
Salaries and employee benefits 2,420 2,223
Occupancy and equipment expenses 829 720
Goodwill amortization 94 94
Other expenses 1,155 1,157
-------------- --------------
TOTAL NON-INTEREST EXPENSE 4,498 4,194
INCOME BEFORE FEDERAL INCOME TAXES 1,481 1,493
Federal income tax expense 542 656
-------------- --------------
NET INCOME $ 939 $ 837
============== ==============
BASIC EARNINGS PER SHARE $ 0.23 $ 0.20
============== ==============
DILUTED EARNINGS PER SHARE $ 0.22 $ 0.20
============== ==============
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE>
NATIONAL BANCSHARES CORPORATION OF TEXAS AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK OTHER
------------------------------ COMPREHENSIVE
NUMBER PAID-IN- RETAINED TREASURY INCOME(LOSS),
OF SHARES PAR CAPIAL EARNINGS STOCK NET OF TAX TOTAL
---------- ------- --------- --------- --------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1999 4,197 $ 5 $ 28,629 $ 28,683 $ (8,506) $ 3,395 $52,206
Net income -- -- -- 2,738 -- -- 2,738
Unrealized loss on securities AFS,
net of tax and reclassification
adjustment -- -- -- -- -- (5,146) (5,146)
--------
Total comprehensive income (loss) (2,408)
--------
Reduction of deferred tax valuation
allowance -- -- 2,227 -- -- -- 2,227
Exercise of Common Stock options 9 -- 53 -- -- -- 53
Treasury stock purchased (94) -- -- -- (1,445) -- (1,445)
--------- -------- --------- --------- --------- ----------- --------
BALANCE AT DECEMBER 31, 1999 4,112 5 30,909 31,421 (9,951) (1,751) 50,633
Net income -- -- -- 939 -- -- 939
Unrealized loss on securities AFS,
net of tax and reclassification
adjustment -- -- -- -- -- (980) (980)
--------
Total comprehensive income (loss) (41)
--------
Reduction of deferred tax valuation
allowance -- -- 498 -- -- -- 498
Exercise of Common Stock options 82 -- 512 -- -- -- 512
Treasury stock purchased (40) -- -- -- (546) -- (546)
--------- -------- --------- --------- --------- ----------- --------
BALANCE AT MARCH 31, 2000 4,154 $ 5 $ 31,919 $ 32,360 $(10,497) $ (2,731) $51,056
========= ======== ========= ========= ========= =========== ========
Disclosure of reclassification amount:
<CAPTION>
2000
- -----
<S> <C>
Unrealized loss on securities arising during period $ (985)
Reclassification adjustment for gains included in income, net of tax of $2 5
--------
Net unrealized loss on securities, net of tax $ (980)
========
<CAPTION>
1999
- -----
<S> <C>
Unrealized loss on securities arising during period $(4,063)
Reclassification adjustment for losses included in income, net of tax benefit of ($558) (1,083)
--------
Net unrealized loss on securities, net of tax $(5,146)
========
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE>
NATIONAL BANCSHARES CORPORATION OF TEXAS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------------
2000 1999
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 939 $ 837
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 592 505
Tax benefit realized from utilization of deferred tax assets 498 617
Provision for possible loan losses 190 123
Net realized gain on securities available for sale (7) (29)
Write-down of other real estate owned - 20
Gain on sale of other real estate owned and other assets (11) (23)
(Increase) decrease in accrued interest receivable and other assets 548 (211)
Increase in accrued interest payable and other liabilities 219 159
--------------- ---------------
Net cash provided by operating activities 2,968 1,998
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) decrease in federal funds sold (30,383) 15,187
Net (increase) decrease in interest-bearing accounts (93) 62
Net decrease (increase) in loans 4,944 (11,257)
Purchases of securities available for sale (8,257) (19,286)
Proceeds from sales of securities available for sale 8,972 1,119
Proceeds from maturities of securities available for sale 579 2,501
Purchases of securities held to maturity (3,842) -
Proceeds from maturities of securities held to maturity - 3,120
Capital expenditures (780) (1,495)
Proceeds from sale of other real estate owned 713 121
--------------- ---------------
Net cash used in investing activities (28,147) (9,928)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits, NOW accounts,
savings and money-market accounts 14,137 6,823
Net increase in certificates of deposit and time deposits 3,691 1,913
Proceeds from advances on other borrowings and long term debt 223 1,953
Principal payments on other borrowings and long term debt (500) (655)
Purchase of treasury stock (546) (510)
Proceeds from exercise of common stock options 512 6
--------------- ---------------
Net cash provided by financing activities 17,517 9,530
Net increase (decrease) in cash and due from banks (7,662) 1,600
Cash and due from banks at beginning of year 30,394 16,473
--------------- ---------------
Cash and due from banks at end of year $ 22,732 $ 18,073
=============== ===============
SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 4,185 $ 3,818
Federal income taxes paid 10 112
Non-cash items:
Loans originated to facilitate the sale of foreclosed assets - 89
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE>
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 the
instructions to Form 10-Q of Regulation S-K. 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. All significant intercompany balances and
transactions have been eliminated. Certain items in prior period'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 three-month period ended March 31, 2000
are not necessarily indicative of the results that may be reported for
the entire period. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's
Form 10-K for the year ended December 31, 1999.
NOTE 2 - SUBSIDIARIES
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries, NBT Securities Holdings, Inc. and NBT
of Delaware, Inc. It also includes the accounts of NBT Securities
Holdings, Inc.'s wholly-owned subsidiary, NBC Financial, Inc. and the
accounts of NBT of Delaware, Inc.'s wholly-owned subsidiaries (i) NBC
Bank, N.A. (Eagle Pass, Texas); (ii) NBC Bank - Laredo, N.A. (Laredo,
Texas); (iii) NBC Bank (Rockdale, Texas); (iv) NBC Bank - Central, N.A.
(Luling, Texas); and (v) NBC Holdings - Texas, Inc. (San Antonio, Texas).
NOTE 3 - INVESTMENT SECURITIES
The following tables present the amortized cost and approximate fair
value of the investment securities portfolio as of March 31, 2000 and
December 31, 1999 (Dollars in thousands):
<TABLE>
<CAPTION>
MARCH 31, 2000
----------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED APPROXIMATE
COST GAINS LOSSES FAIR VALUE
----------------------------------------------------------
<S> <C> <C> <C> <C>
SECURITIES AVAILABLE FOR SALE:
U.S. Treasury securities $154,502 $ 40 $ (1,332) $ 153,210
U.S. Government agency and mortgage-backed securities 13 (1,821) 60,544
62,352
Other securities including Federal Reserve Bank stock 5,714 - (1,038) 4,676
------------ ---------- ----------- ---------------
Total $222,568 $ 53 $ (4,191) $ 218,430
============ ========== =========== ===============
SECURITIES HELD TO MATURITY:
U.S. Government agency and mortgage-backed securities $ 3,842 $ 5 $ - $ 3,847
Foreign debt securities 66 - (5) 61
------------ ---------- ----------- ---------------
Total $ 3,908 $ 5 $ (5) $ 3,908
============ ========== =========== ===============
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, 1999
-----------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED APPROXIMATE
COST GAINS LOSSES FAIR VALUE
-----------------------------------------------------
<S> <C> <C> <C> <C>
SECURITIES AVAILABLE FOR SALE:
U.S. Treasury securities $163,546 $ 214 $ (523) $ 163,237
U.S. Government agency and mortgage-backed securities 54,665 7 (1,257) 53,415
Other securities including Federal Reserve Bank stock 5,710 - (1,094) 4,616
------------ ---------- ----------- ------------
Total $223,921 $ 221 $ (2,874) $ 221,268
============ ========== =========== ============
SECURITIES HELD TO MATURITY:
Foreign debt securities
66 - (5) 61
------------ ---------- ----------- ------------
Total $ 66 $ - $ (5) $ 61
============ ========== =========== ============
</TABLE>
Unrealized gains and losses on investment securities held at March 31,
2000 and December 31, 1999 have been determined to be temporary market
fluctuations.
The following table shows the maturity schedule of the Company's
investment portfolio as of March 31, 2000 (Dollars in thousands):
<TABLE>
<CAPTION>
MARCH 31, 2000
---------------------------------------------------------
AVAILABLE FOR SALE HELD TO MATURITY
---------------------------- --------------------------
AMORTIZED APPROXIMATE AMORTIZED APPROXIMATE
COST FAIR VALUE COST FAIR VALUE
------------ -------------- ---------- -------------
<S> <C> <C> <C> <C>
Due in one year or less $ 18,700 $ 18,702 $ - $ -
Due in one year to five years 125,781 124,244 1,064 1,059
Due from five to ten years 62,975 61,552 2,844 2,849
Due after ten years 1,508 1,509 - -
------------ -------------- ---------- -------------
Total $ 209,264 $ 206,307 $ 3,908 $ 3,908
Equity Securities 5,374 4,337 - -
Mortgage backed securities 7,890 7,746 - -
Federal Reserve Bank Stock 340 340 - -
------------ -------------- ---------- -------------
Total $ 222,568 $ 218,430 $ 3,908 $ 3,908
============ ============== ========== =============
</TABLE>
The carrying value of investment securities pledged to secure public
funds amounted to approximately $87,248,000 at March 31, 2000 and
$92,225,000 at December 31, 1999.
NOTE 4 - LOANS AND ALLOWANCE FOR POSSIBLE LOAN LOSSES
An analysis of the allowance for possible loan losses for the three
months ended March 31, 2000 and 1999 is presented below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------
MARCH 31, MARCH 31,
2000 1999
-------------- -------------
(Dollars in Thousands)
<S> <C> <C>
Balance at beginning of period $ 2,841 $ 2,670
Provision for possible loan losses 190 123
Losses charged to the allowance (58) (31)
Recoveries credited to the allowance 36 29
-------------- -------------
Net charge-offs (22) (2)
-------------- -------------
Balance at end of period $ 3,009 $ 2,791
============== =============
</TABLE>
7
<PAGE>
A loan is considered impaired when, based on current information and
events, it is probable that the Company will be unable to collect all
amounts due according to the contractual terms of the loan agreement,
including scheduled principal and interest payments. At March 31, 2000
and 1999, the Banks had impaired loans of $1,919,000 and $1,072,000,
respectively. The allowance for loan losses related to those loans was
$293,000 and $113,000, respectively. The average recorded investment in
impaired loans during the three months ended March 31, 2000 and 1999, was
$2,006,000 and $665,000, respectively. Interest income of approximately
$32,000 and $15,000 on impaired loans was recognized for cash payments
received during the three months ended March 31, 2000 and 1999,
respectively.
NOTE 5 - OTHER BORROWINGS AND NOTES PAYABLE
On March 31, 2000, NBT of Delaware, Inc. maintained a margin account
which is secured by investment securities. The interest rate is variable
(7.3125% at March 31, 2000). The balance at March 31, 2000 was
$2,541,000.
On October 2, 1999, the Company executed a $3,237,000 note with The
Independent BankersBank in Dallas. The note bears a variable interest
rate at prime rate as published by the Wall Street Journal (9.00% at
March 31, 2000). Principal payments of $161,825 plus interest are due
quarterly beginning January 2, 2000 with unpaid principal plus accrued
interest due at maturity. The note matures on October 2, 2002. The note
is collateralized by the common stock of NBT of Delaware, Inc. and the
stock of the subsidiary banks. The balance at March 31, 2000 was
$2,161,000. The Company also executed a one year $1 million revolving
line of credit dated October 29, 1999 with The Independent BankersBank.
The line bears interest at Wall Street Journal prime with any outstanding
interest to be paid quarterly. The outstanding balance at March 31, 2000
was $0. The Company is required to meet certain debt convenants, of which
full compliance was met at March 31, 2000.
In July 1995, September 1998, December 1998 and January 1999, a
subsidiary Bank borrowed $175,000, $100,000, $1,250,000 and $1,000,000,
respectively, from the Federal Home Loan Bank of Dallas. The notes bear
interest rates of 6.393%, 5.15%, 5.126%, and 5.216%, respectively. The
maturity dates of the notes are August 2015, October 2018, January 2004,
and February 2004, respectively. Principal and interest payments are due
monthly in the approximate amount of $45,000 per month in the aggregate
with the remaining balances due at maturity. The aggregate balance
outstanding at March 31, 2000 was $2,039,000.
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>
THREE MONTHS ENDED
-----------------------------
MARCH 31, MARCH 31,
2000 1999
------------- -------------
<S> <C> <C>
Tax Based on Statutory Rate $ 504 $ 508
Effect of Tax-exempt Income (4) (5)
Interest and other Nondeductible Expenses 3 -
Alternative Minimum Tax 33 30
Goodwill 7 7
Other - Net (1) 116
------------- -------------
$ 542 $ 656
============= =============
</TABLE>
For Federal income tax purposes, the Company has approximately $88
million in net operating loss carryforwards as of March 31, 2000 which
will be available to reduce income tax liabilities in future years. The
preconfirmation net operating loss carryforwards arose from the
Company's emergence from a reorganization under Chapter 11 of the United
States Bankruptcy Code in May 1992. If unused, approximately $84 million
of such carryforwards will expire in 2005, with the remaining
approximately $4 million expiring in 2006.
8
<PAGE>
Pursuant to SFAS No. 109, the Company has available certain deductible
temporary differences and net operating loss carryforwards for use in
future tax reporting periods, which created deferred tax assets. SFAS
No. 109 requires that deferred tax assets be reduced by a valuation
allowance if, based on the weight of the available evidence, it is more
likely than not that some portion or all of the deferred tax assets
will not be realized. During the three months ended March 31, 2000 and
1999, the deferred tax asset valuation allowance was reduced by
$498,000 and $617,000, respectively, to adjust the recorded net
deferred tax asset to an amount considered more likely than not to be
realized. The deferred tax asset net of the valuation allowance and
recorded on the books of the Company was $4,866,000 at March 31, 2000.
Realization of this asset is dependent on generating sufficient taxable
income prior to the expiration of the loss carryforwards. Realization
could also be affected by a significant ownership change of the Company
over a period of three years as set forth in the Internal Revenue Code.
Although realization of the net deferred tax asset is not assured
because of these uncertainties, management believes it is more likely
than not that a significant portion of the recorded deferred tax asset
will be realized.
In accordance with AICPA SOP No. 90-7, "Financial Reporting by Entities
in Reorganization Under the Bankruptcy Code", income tax benefits
recognized from preconfirmation net operating loss carryforwards and
other tax assets are used first to reduce the reorganization value in
excess of amounts allocable to identifiable assets and then to increase
additional paid-in capital.
NOTE 7 - INTANGIBLE ASSETS
The excess cost over fair value of net assets of businesses acquired
(goodwill) is amortized on a straight-line basis over 25 years.
Intangible assets are included in other assets. All such intangible
assets are periodically evaluated as to the recoverability of their
carrying value. The Company acquired three Wells Fargo branches in July
1997 and the First National Bank in Luling in September 1996 which
created the goodwill.
NOTE 8 - STOCK REPURCHASE PLAN
The Board of Directors approved a stock repurchase plan authorizing
management to purchase up to 900,000 shares of the Company's common stock
through the open market based on market conditions. In the first three
months of 2000, 40,387 shares and in 1999, 31,000 shares were purchased
by the Company through the open market at an average cost of $13.50 and
$16.45 per share, respectively.
9
<PAGE>
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 March 31, 2000 was $939,000 or
$.22 per diluted share compared with $837,000 or $.20 per diluted share
for the three months ended March 31, 1999. Net interest income for the
three months ended March 31, 2000 increased $395,000 over the same
period of 1999 which is due primarily to 19% growth in the loan
portfolio. Non-interest expenses were up $304,000, or 7.3%, for the
three months ended March 31, 2000 compared to the three months ended
March 31, 1999. This was due in part to salaries and benefits associated
with the opening of the broker-dealer, NBC Financial, Inc., which began
operations in September 1999 in addition to the hiring of personnel in
our growing markets. Non-interest income decreased $36,000 or 3.2% for
the three months ended March 31, 2000 compared to the three months ended
March 31, 1999, however, service charges and fee income were up $192,000
or 24% over the first quarter of 1999. The decline in non-interest
income is attributable to non-recurring miscellaneous income and gains
on securities and other real estate that occurred in 1999. The provision
for possible loan losses was $67,000 higher for the three months ended
March 31, 2000 than in the corresponding period last year to bring the
allowance for possible loan losses to an adequate level attributable to
loan growth.
Average assets have increased $46 million or 9% to $560 million for
the three months ended March 31, 2000 from an average of $514 million
for the three months ended March 31, 1999.
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 $395,000 or 8.4% in net interest income for
the three months ended March 31, 2000 compared to the same period in
1999 was due primarily to internal loan growth. Average loans increased
$51.7 million or 26% over the first quarter of 1999. Interest income
increased $1,008,000 or 11.9% over the same period in 1999 due primarily
to internal loan growth. Interest expense increased $613,000 or 16.3%
over the same period in 1999 due primarily to the $46.0 million or 10.2%
increase in average deposits. The net interest margin for the three
months ended March 31, 2000 decreased seven basis points to 4.11% when
compared to March 31, 1999. 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 decreased ten basis points to 3.55% for the
three months ended March 31, 2000 from 3.65% at March 31, 1999. The
decrease in the net interest spread is primarily due to the increase in
rates being paid on deposits.
10
<PAGE>
INTEREST EARNED/INCURRED AND RATES
(Dollars in thousands)
<TABLE>
<CAPTION>
FOR THREE MONTHS ENDED FOR THREE MONTHS ENDED
MARCH 31, 2000 MARCH 31, 1999
------------------------------------- ------------------------------------
INTEREST INTEREST
AVERAGE INCOME/ AVERAGE AVERAGE INCOME/ AVERAGE
BALANCE EXPENSE YIELD/RATE BALANCE EXPENSE YIELD/RATE
- ------------------------------------------ ---------- ----------- ------------ ---------- ---------- ------------
<S> <S> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Interest-bearing accounts $ 2,359 $ 34 5.78% $ 2,326 $ 30 5.23%
Federal funds sold 24,849 353 5.70% 27,784 380 5.55%
Investment securities (F):
US Treasuries 161,250 2,489 6.19% 211,975 3,292 6.30%
US Government agencies 57,517 888 6.19% 12,608 180 5.79%
Other 702 15 8.57% 1,592 69 17.58%
---------- ----------- ------------ ---------- ---------- ------------
Total investment securities 219,469 3,392 6.20% 226,175 3,541 6.35%
Loans, net of discounts (A) 249,166 5,672 9.13% 197,559 4,491 9.22%
---------- ----------- ------------ ---------- ---------- ------------
Total interest-earning assets 495,843 9,451 7.65% 453,844 8,442 7.54%
NON-INTEREST BEARING ASSETS:
Cash and due from banks 23,319 18,490
Allowance for possible loan losses (2,907) (2,717)
Other assets 43,685 44,987
---------- ----------
Total assets $ 559,940 $ 514,604
========== ==========
INTEREST-BEARING LIABILITIES:
Interest bearing transaction accounts 80,140 577 2.89% 64,878 391 2.44%
Savings, money market and certificates
of deposit 341,178 3,677 4.32% 315,596 3,180 4.09%
Other debt 7,072 122 6.92% 11,501 192 6.77%
---------- ----------- ------------ ---------- ---------- ------------
Total interest-bearing liabilities 428,390 4,376 4.10% 391,975 3,763 3.89%
NON-INTEREST BEARING LIABILITIES:
Demand deposits 74,708 69,734
Other liabilities 3,473 3,056
---------- ----------
Total liabilities 506,571 464,765
STOCKHOLDERS' EQUITY (F) 53,369 49,839
---------- ----------
Total liabilities and stockholders' $ 559,940 $ 514,604
========== ==========
Taxable equivalent net interest income 5,075 4,679
Less: taxable equivalent adjustment 4 3
----------- ----------
Net interest income $ 5,071 $ 4,676
=========== ==========
Net interest spread (B) 3.55% 3.65%
============ ============
Net interest margin (C) 4.11% 4.18%
============ ============
SELECTED OPERATING RATIOS:
Return on assets (D) 0.67% 0.65%
============ ============
Return on equity (E) 7.05% 6.81%
============ ============
</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 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 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.
11
<PAGE>
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 three months ended March 31, 2000 and 1999.
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>
THREE MONTHS ENDED MARCH 31, 2000
VS. MARCH 31, 1999
---------------------------------------------
INCREASE DUE TO CHANGE IN
-----------------------------
(DECREASE) RATE VOLUME
-------------- -------------- -------------
<S> <C> <C> <C>
TAXABLE-EQUIVALENT INTEREST INCOME:
Interest-bearing accounts.............................. $ 4 $ 4 $ -
Federal funds sold..................................... (27) 61 (88)
Investment securities.................................. (149) (66) (83)
Loans, net of unearned discount........................ 1,181 (296) 1,477
-------------- -------------- -------------
Total taxable-equivalent
interest income.................................. 1,009 (297) 1,306
-------------- -------------- -------------
INTEREST EXPENSE:
Interest-bearing accounts.............................. 683 336 347
Other debt............................................. (70) 29 (99)
-------------- -------------- -------------
Total interest expense.............................. 613 365 248
============== ============== =============
Taxable-equivalent net interest income..................... $ 396 $ (662) $ 1,058
============== ============== =============
</TABLE>
Taxable-equivalent net interest income for the three months ended March 31,
2000 increased $1.0 million or 12.0% over the same period in 1999. The increase
is reflected in the increase in the volume of earning assets offset by the
increase in the volume of interest bearing liabilities.
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.
12
<PAGE>
The following table indicates the Company's interest rate sensitivity position
at March 31, 2000:
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> <C> <C>
Earning assets:
Loans, net of discounts $ 61,996 $ 10,193 $ 25,909 $ 98,098 $ 144,342 $ 242,440
Investment securities 500 3,500 14,702 18,702 203,636 222,338
Federal funds sold 42,332 -- -- 42,332 -- 42,332
Interest-bearing accounts 83 200 1,649 1,932 460 2,392
------------ ------------ ----------- ------------ ----------- -----------
Total earning assets $ 104,911 $ 13,893 $ 42,260 $ 161,064 $ 348,438 $ 509,502
============ ============ =========== ============ =========== ===========
Interest-bearing liabilities:
Interest-bearing transaction,
savings and money market 197,056 -- -- 197,056 -- 197,056
Certificates and time deposits 40,808 56,445 126,243 223,496 6,156 229,652
Debt 4,738 72 331 5,141 1,600 6,741
------------ ------------ ----------- ------------ ----------- -----------
Total interest-bearing
Liabilities $ 242,602 $ 56,517 $ 126,574 $ 425,693 $ 7,756 $ 433,449
============ ============ =========== ============ =========== ===========
Interest sensitivity gap $ (137,691) $ (42,624) $ (84,314) $ (264,629)
============ ============ =========== ============
Cumulative gap $ (137,691) $ (180,315) $(264,629) $ (264,629)
============ ============ =========== ============
Ratio of earning assets to
interest-bearing liabilities 43.2% 24.6% 33.4% 37.8%
</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.
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 three months ended March 31, 2000 and 1999:
NON-INTEREST INCOME
(Dollars in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED 2000/1999
--------------------------- --------------------------
MARCH 31, MARCH 31,
2000 1999 $ CHANGE % CHANGE
------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Service charges and fees $ 984 $ 792 $ 192 24.2%
Net realized gains on sales of securities 7 29 (22) -75.9%
Net gains on sales of other real estate owned and assets 11 26 (15) 100.0%
Miscellaneous income 96 287 (191) -66.6%
------------- ------------- ----------- -------------
Total non-interest income $ 1,098 $ 1,134 $ (36) -3.2%
============= ============= =========== =============
</TABLE>
13
<PAGE>
The $36,000 or 3.2% decrease in non-interest income for the three months
ended March 31, 2000 over the three months ended March 31, 1999 is due to a
$191,000 decrease in non-recurring miscellaneous income representing an amount
over book value received on a charged off investment and some franchise tax
refunds. In addition, there was a $37,000 decrease in non-recurring gains on
the sales of securities and other real estate. However, service charge income
and fees were up $192,000 or 24% over the three months ended March 31, 1999.
This increase is a result of certain fee increases and broad based deposit
growth.
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 three months ended March
31, 2000 and 1999:
NON-INTEREST EXPENSE
(Dollars in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED 2000/1999
------------------------------- --------------------------
MARCH 31, MARCH 31,
2000 1999 $ CHANGE % CHANGE
---------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Salaries and employee benefits $ 2,420 $ 2,223 $ 197 8.9%
Occupancy and equipment expenses 829 720 109 15.1%
Data processing fees 99 83 16 19.3%
FDIC insurance 27 13 14 107.7%
Insurance 34 35 (1) -2.9%
Office supplies 153 181 (28) -15.5%
Postage and courier 138 134 4 3.0%
Professional fees 185 200 (15) -7.5%
Goodwill amortization 94 94 0 0.0%
Miscellaneous other expenses 519 511 8 1.6%
---------------- ------------- ------------ ------------
Total non-interest expense $ 4,498 $ 4,194 $ 304 7.3%
================ ============= ============ ============
</TABLE>
Total non-interest expense for the three months ended March 31, 2000
increased $304,000 or 7.3% over 1999. Salaries and benefits rose $197,000 or
8.9% in 2000. Salaries and benefits increased due to the hiring of personnel
for NBC Financial, Inc., the broker-dealer that began operations in September
1999, in addition to the hiring of additional personnel in our growing markets.
The $109,000 or 15.1% increase in occupancy and equipment expenses is due
primarily to the opening of the new 30,000 square foot building and associated
equipment costs for the San Antonio branch.
INCOME TAXES
The Company recognized income tax expense of $542,000 for the three months
ended March 31, 2000 compared to $656,000 for the three months ended March 31,
1999. At March 31, 2000, the Company had approximately $88 million in net
operating loss carryforwards that will be available to reduce income tax
liabilities in future years. If unused, approximately $84 million of such
carryforwards will expire in 2005, with the remaining approximately $4 million
expiring in 2006.
14
<PAGE>
LOANS
The following table presents the composition of the Company's loan portfolio
by type of loan:
LOAN PORTFOLIO
(Dollars in thousands)
<TABLE>
<CAPTION>
MARCH 31, % OF DECEMBER 31, % OF MARCH 31,
2000 TOTAL 1999 TOTAL 1999
-------------- --------- --------------- --------- ------------
<S> <C> <C> <C> <C> <C>
Commercial $ 37,168 15.3% $ 46,203 18.7% $ 33,204
Real estate construction 20,609 8.5% 21,959 8.9% 16,596
Real estate mortgage 157,999 65.2% 152,292 61.6% 127,448
Consumer installment,
net of unearned discount 26,664 11.0% 26,952 10.9% 26,227
-------------- --------- --------------- --------- ------------
Total loans $ 242,440 100.0% $ 247,406 100.0% $ 203,475
============== ========= =============== ========= ============
</TABLE>
Total loans have decreased 2.0% since December 31, 1999 and increased 19.1%
since March 31, 1999, respectively. The decrease in total loans at March 31,
2000 is due to the payoff of two certain loans totaling $7 million at the end
of the quarter. Real estate mortgage loans have shown a 3.7% and 24.0% increase
since December 31, 1999 and March 31, 1999, respectively.
ALLOWANCE FOR POSSIBLE LOAN LOSSES
The allowance for possible 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 the Company'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 Banks' market areas are pertinent factors in determining the
adequacy of the allowance for possibleloan losses. Loans identified as losses
by management, external loan review or bank examiners are charged-off.
The Company recorded net charge-offs of $22,000 for the three months ended
March 31, 2000 compared to net charge-offs of $2,000 for the three months ended
March 31, 1999.
15
<PAGE>
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>
THREE MONTHS ENDED MARCH 31,
-------------------------------
2000 1999
-------------- --------------
<S> <C> <C>
Average loans outstanding $ 249,166 $ 197,559
============== ==============
ANALYSIS OF ALLOWANCE FOR LOAN LOSSES:
Balance at beginning of period $ 2,841 $ 2,670
Allowance on acquired loans - -
Charge-Offs:
Commercial 20 4
Real estate construction - -
Real estate mortgage - -
Consumer installment 38 27
-------------- --------------
Total charge-offs 58 31
-------------- --------------
Recoveries:
Commercial 16 5
Real estate construction - -
Real estate mortgage 5 7
Consumer installment 15 17
-------------- --------------
Total recoveries 36 29
-------------- --------------
Net charge-offs 22 2
Provision charged to operating expense 190 123
-------------- --------------
Balance of at end of period $ 3,009 $ 2,791
============== ==============
Net charge-offs as a percentage
of average loans outstanding 0.01% 0.00%
============== ==============
Allowance for loan losses as a percentage of:
total loans, net of unearned discount 1.24% 1.37%
============== ==============
</TABLE>
NON-PERFORMING ASSETS
Non-performing assets consist of non-accrual 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, 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.
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.
16
<PAGE>
The following table discloses non-performing assets and loans 90 days past
due and still accruing interest as of March 31, 2000 and December 31, 1999:
(Dollars in thousands)
NON-PERFORMING ASSETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
---------------- -----------------
<S> <C> <C>
Non-accrual loans $ 1,919 $ 2,095
Foreclosed real estate 204 906
---------------- -----------------
Total non-performing assets $ 2,123 $ 3,001
================ =================
Non-performing assets as a percentage of:
Total assets 0.37% 0.55%
Total loans plus foreclosed real estate 0.87% 1.21%
Accruing loans past due 90 days or more $ 653 $ 239
</TABLE>
Independent third party loan reviews of the subsidiary Banks are performed
on an annual basis. The loans are also reviewed by banking regulators,
typically 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 periodically appraise foreclosed real estate.
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. The liquidity of the Company is enhanced by the
fact that 75% of total deposits at March 31, 2000 were "core" deposits. Core
deposits, for this purpose, are defined as total deposits less public funds and
certificates of deposit greater than $100,000.
At March 31, 2000, the Company's liquid assets totaled $285 million or 50% of
total gross assets, which was the same percentage at March 31, 1999. Secondary
sources of liquidity include the Banks' ability to sell loan participations and
purchase federal funds. NBC-Eagle Pass has an approved federal funds line at a
correspondent bank. NBC-Laredo has an approved line of credit with the Federal
Home Loan Bank.
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.
CAPITAL RESOURCES
Total stockholders' equity decreased $1.1 million to $51.1 million at March
31, 2000 from $52.2 million at March 31, 1999. The ratio of total stockholders'
equity to total assets was 9.0% at March 31, 2000 compared with 10% at March
31, 1999. The Company began a stock repurchase plan in 1997 and has repurchased
598,387 common shares at a cost of $10.5 million through March 31, 2000 of
which $1.5 million has been purchased since March 31, 1999. The stock
repurchase in the last 12 months is one of the reasons for the
17
<PAGE>
decrease in total stockholders' equity. Another reason for the decline is the
change in unrealized gain or loss in the available for sale securities
portfolio of $5.2 million due to market fluctuations.
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 Banks' 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 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 less goodwill. Total
capital includes Tier 1 capital and a portion of the allowance for loan losses.
The ratios are calculated by dividing the qualifying capital by the
risk-weighted assets.
The table below illustrates the Company and each of its subsidiary Banks'
compliance with the risk-based capital guidelines as of March 31, 2000:
<TABLE>
<CAPTION>
NBC NBC NBC NBC
CONSOLIDATED EAGLE PASS LAREDO ROCKDALE LULING
-------------- ------------ ------------ ----------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Total average assets (net of goodwill) $ 551,753 $ 296,455 $ 103,506 $ 108,552 $ 30,297
Risk weighted assets (net of goodwill) $ 264,879 $ 147,241 $ 60,001 $ 31,587 $ 18,944
Tier 1 capital $ 44,686 $ 18,701 $ 8,549 $ 7,232 $ 4,217
Total capital $ 47,695 $ 20,015 $ 9,280 $ 7,680 $ 4,457
Leverage ratio 8.10% 6.31% 8.26% 6.66% 13.92%
Risk based capital ratios:
Tier 1 16.87% 12.70% 14.25% 22.90% 22.26%
Total capital 18.01% 13.59% 15.47% 24.31% 23.53%
</TABLE>
YEAR 2000
The Company conducted and completed an extensive program to address the
internal and external risks associated with the century date change to the Year
2000, which resulted with no significant disruptions.
The Company is currently not aware of any ongoing operational implications
related to the Year 2000 date change. However, it is subject to unique risks
and uncertainties due to the interdependencies in business and financial
markets, and the numerous activities and events outside of its control.
FINANCIAL MODERNIZATION
On November 12, 1999, President Clinton signed into law the
Gramm-Leach-Bliley Act ("GLBA"). This comprehensive legislation eliminates the
barriers to affiliations among banks, securities firms, insurance companies and
other financial service providers. GLBA provides for a new type of financial
holding company structure under which affiliations among these entities may
occur, subject to the "umbrella" regulation of the FRB and regulation of
affiliates by the functional regulators, including the Securities and Exchange
Commission ("SEC") and state insurance regulators. Under GLBA, a financial
holding company may engage in a broad list of financial activities and any
non-financial activity that the FRB determines is complementary to a financial
activity and poses no substantial risk to the safety and soundness of
depository institutions or the financial system. In addition, GLBA permits
certain non-banking financial and financially
18
<PAGE>
related activities to be conducted by financial subsidiaries of a national
bank. In addition, GLBA imposes strict new privacy disclosure and opt-out
requirements regarding the ability of financial institutions to share personal
non-public customer information with third parties.
Under GLBA, a bank holding company may become certified as a financial
holding company by filing a declaration with the FRB, together with a
certification that each of its subsidiary banks is well capitalized, is well
managed, and has at least a satisfactory rating under the Community
Reinvestment Act of 1977 ("CRA"). The Company has elected to become a financial
holding company under GLBA and the election was made effective by the FRB as of
March 11, 2000. To date, the Company has not engaged in any additional
financial activities permitted by GLBA.
FORWARD-LOOKING INFORMATION
The Company may from time to time make "forward-looking" statements as such
term is defined in The Private Securities Litigation Reform Act of 1995 and
information relating to the Company and its subsidiaries that are based on the
beliefs of the Company's management. When used in this report, the words
"anticipate," "believe," "estimate," "expect" and "intend" and words or phrases
of similar import, as they relate to the Company or its subsidiaries or Company
management, are intended to identify forward-looking statements. Such
statements reflect the current risks, uncertainties and assumptions related to
certain factors including, without limitation, competitive factors, general
economic conditions, the interest rate environment, governmental regulation and
supervision, technological change, one-time events and other factors described
herein and in other filings made by the Company with the Securities and
Exchange Commission. Based upon changing conditions, should any one or more of
these risks or uncertainties materialize, or should any underlying assumptions
prove incorrect, actual results may vary materially from such forward-looking
statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
There has been no material change in the market risks faced by the Company
since December 31, 1999. For information regarding the Company's market risk,
refer to the Company's Annual Report on Form 10-K for the year ended December
31, 1999.
19
<PAGE>
PART II - OTHER INFORMATION:
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<S> <C> <C>
(a) 11.1 Statement regarding computation of Earnings Per Share
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None.
</TABLE>
20
<PAGE>
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: May 15, 2000 By: /s/ Anne R. Renfroe
--------------------------------------
Anne Renfroe, Chief Accounting Officer
and Principal Financial Officer
21
<PAGE>
EXHIBIT 11.1
NATIONAL BANCSHARES CORPORATION OF TEXAS AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------------
2000 1999
---------------- ---------------
<S> <C> <C>
BASIC EPS:
Net income $ 0.23 $ 0.20
================ ===============
DILUTED EPS:
Net income $ 0.22 $ 0.20
================ ===============
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------------
2000 1999
---------------- ---------------
<S> <C> <C>
Income available to common stockholders $ 939 $ 837
================ ===============
Weighted average number of common
shares used to calculate Basic EPS 4,149,445 4,169,848
Effect of dilutive stock options 69,723 96,768
---------------- ---------------
Weighted number of common shares
and dilutive potential common stock
used to calculate Diluted EPS 4,219,168 4,266,616
================ ===============
</TABLE>
22
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 22,732
<INT-BEARING-DEPOSITS> 2,392
<FED-FUNDS-SOLD> 42,332
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 218,430
<INVESTMENTS-CARRYING> 3,908
<INVESTMENTS-MARKET> 3,908
<LOANS> 242,440
<ALLOWANCE> 3,009
<TOTAL-ASSETS> 567,975
<DEPOSITS> 507,567
<SHORT-TERM> 2,541
<LIABILITIES-OTHER> 2,611
<LONG-TERM> 4,200
0
0
<COMMON> 5
<OTHER-SE> 51,056
<TOTAL-LIABILITIES-AND-EQUITY> 567,975
<INTEREST-LOAN> 5,668
<INTEREST-INVEST> 3,392
<INTEREST-OTHER> 387
<INTEREST-TOTAL> 9,447
<INTEREST-DEPOSIT> 4,254
<INTEREST-EXPENSE> 121
<INTEREST-INCOME-NET> 5,072
<LOAN-LOSSES> 190
<SECURITIES-GAINS> 7
<EXPENSE-OTHER> 4,498
<INCOME-PRETAX> 1,482
<INCOME-PRE-EXTRAORDINARY> 1,482
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 939
<EPS-BASIC> 0.23
<EPS-DILUTED> 0.22
<YIELD-ACTUAL> 7.65
<LOANS-NON> 1,919
<LOANS-PAST> 653
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 5,298
<ALLOWANCE-OPEN> 2,841
<CHARGE-OFFS> 58
<RECOVERIES> 36
<ALLOWANCE-CLOSE> 3,009
<ALLOWANCE-DOMESTIC> 3,009
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,844
</TABLE>
