UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the quarterly period ended March 31, 1997
Commission File Number 2-89900
NBC CAPITAL CORPORATION
(Exact name of registrant as specified in its charter.)
Mississippi 64-0694775
(State of other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
NBC Plaza, P. O. Box 1187, Starkville, Mississippi 39760
(Address of principal executive offices) (Zip Code)
Registrants's telephone number, including area code: (601) 323-1341
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date:
Common Stock, $1 Par Value - 1,200,000 shares as of March 31, 1997.
PART I. - FINANCIAL INFORMATION
NBC CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME FOR
THREE MONTHS ENDED MARCH 31, 1997 AND 1996.
(Unaudited)
(Amounts in thousands, except per share data)
Three Months Ended
__________________
1997 1996
_______ _______
INTEREST INCOME:
Interest and Fees on Loans $ 8,673 $ 7,920
Interest Income on Balances Due From Banks 6 5
Interest on U. S. Treasury Securities and
U. S. Government Agencies and Corp. 1,516 1,672
Interest on Obligation of States and
Political Subdivisions 915 950
Interest on Other Securities 27 94
Interest on Federal Funds Sold and Securities
Purchased under Agreements to Resell 196 133
_______ _______
Total Interest Income 11,333 10,774
INTEREST EXPENSE:
Interest on Time Certificates of Deposit of
$100,000 or More 817 943
Interest on Other Deposits 3,932 3,735
Interest on Federal Funds Purchased and
Securities Sold Under Agreement to Repurchase 106 5
Interest on Demand Notes Issued to the U. S.
Treasury and on Other Borrowed Money 202 152
_______ _______
Total Interest Expense 5,057 4,835
Net Interest Income 6,276 5,939
Provision for Possible Loan Losses 260 291
_______ _______
Net Interest Income After Provision for
Loan Losses 6,016 5,648
_______ _______
NONINTEREST INCOME:
Income from Fiduciary Activities 275 227
Service Charge on Deposit Accounts 905 859
Other Noninterest Income 739 463
_______ _______
Total Noninterest Income 1,919 1,549
Gains (Losses) on Securities (55) 3
_______ _______
NON INTEREST EXPENSE:
Salaries and Employee Benefits 2,626 2,462
Expense of Premises and Fixed Assets 687 616
Other Noninterest Expense 1,346 1,249
_______ _______
Total Noninterest Expense 4,659 4,327
_______ _______
Income Before Income Taxes 3,221 2,873
Applicable Income Taxes 907 756
_______ _______
NET INCOME $ 2,314 $ 2,117
======= =======
Net Earning Per Share $ 1.93 $ 1.76
NBC CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share data)
Mar.31,1997 Dec.31,1996
___________ ___________
ASSETS (Unaudited) (Audited)
Cash and Balances Due From Banks:
Noninterest-Bearing Balances $ 28,753 $ 29,126
Interest-Bearing Balances 285 493
_________ _________
Total Cash and Due From Banks 29,038 29,619
Held-To-Maturity Securities (Market
Value of $34,036 at March 31, 1997
and $34,633 at December 31, 1996) 31,468 31,673
Available-For-Sale Securities
Mortgage-Backed Securities 41,344 38,871
All Other Available-For-Sale Securities 98,959 97,298
_________ _________
Total Securities 171,771 167,842
Federal Funds Sold and Securities
Purchased Under Agreement to Resell 11,900 9,100
Loans 382,707 386,518
Less: Unearned Interest (492) (903)
Less: Reserve for Loan Losses (6,875) (6,778)
_________ _________
Net Loans 375,340 378,837
Bank Premises and Equipment (Net) 13,885 13,267
Interest Receivable 5,344 5,756
Other Real Estate Owned 112 730
Other Assets 11,692 9,279
_________ _________
TOTAL ASSETS $ 619,082 $ 614,430
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-Interest Bearing $ 71,683 $ 71,601
Interest-Bearing Time, $100,000 or More 87,407 62,091
Other Interest-Bearing 359,106 383,060
_________ _________
Total Deposits 518,196 516,752
Federal Funds Purchased and Securities
Sold Under Agreements to Repurchase 12,151 9,321
Demand Notes Issued to the U. S. Treasury 2,471 1,411
Other Borrowed Funds 12,532 13,300
Interest Payable 1,961 2,206
Other Liabilities 5,094 6,592
_________ _________
TOTAL LIABILITIES 552,405 549,582
Stockholders' Equity:
Common Stock $1 par Value, Authorized
3,000,000 shares, Issued and Outstanding
1,200,000 1,200 1,200
Surplus 33,002 33,002
Undivided Profits 32,723 30,409
Net Unrealized Holding Gains (losses) on
Available-for-Sale Securities (248) 237
_________ _________
TOTAL STOCKHOLDERS' EQUITY 66,677 64,848
_________ _________
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 619,082 $ 614,430
========= =========
NBC CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(Unaudited)
(Amounts in thousands)
1997 1996
_______ _______
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 2,314 $ 2,117
Adjustments to reconcile net income to net cash
Depreciation and Amortization 415 421
Deferred Income Taxes (Credits) 99 853
Provision for Loan Losses 260 291
Loss (Gain) on Sale of Securities 55 (3)
(Increase) Decrease in Interest Receivable 412 378
(Increase) Decrease in Other Assets (1,747) (2,425)
Increase (Decrease) in Interest Payable (245) (334)
Increase (Decrease) in Other Liabilities 973 (94)
_______ _______
Net Cash Provided by Operating Activities 2,536 1,204
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Maturities of Securities 7,311 5,840
Proceeds from Sale of Securities 5,580 3
Purchase of Securities (17,608) (14,311)
(Increase) Decrease in Loans 3,237 (2,225)
Additions to Bank Premises and Equipment (932) (783)
_______ _______
Net Cash Used in Investing Activities (2,412) (11,476)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (Decrease) in Deposits 1,443 17,124
Dividend Paid on Common Stock 0 0
Increase (Decrease) in Borrowed Funds 652 (703)
_______ _______
Net Cash Provided by Financing Activities 2,095 16,421
_______ _______
Net Increase (decrease) in Cash and Cash
Equivalents 2,219 6,149
Cash and Cash Equivalents at Beginning of Year 38,719 28,393
_______ _______
Cash and Cash Equivalents at End of Quarter $40,938 $34,542
======= =======
Cash Paid during Year for:
Interest $ 5,302 $ 5,170
Income Taxes 355 422
PART I. ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
MARCH 31, 1997
Earnings for the first quarter of 1997 grew 9.3% to $2.31 million or
$1.93 per share. This compares to $2.12 million or $1.76 per share for
the first quarter of 1996. These totals equate to a 1.5% return on
average assets and 14.1% return on average equity.
Net interest income for the first quarter of 1997 was $6.28 million
compared to $5.94 million in 1996. This represents an increase of 5.7%.
This increase resulted from a five (5) basis point improvement in the
net interest margin and a $24.5 million increase in earning assets.
Non-interest income grew 20.1% paced by a 21.2% increase in income from
the Company's Trust and Financial Management activities and a 5.3%
increase in income from deposit accounts. Additionally, approximately
$.10 per share was added to the first quarter of 1997 from the sale of
the assets of the company's finance company subsidiary.
Intentional security losses of approximately $58,000 were generated
during the quarter as the company sold lower yielding securities and
re-invested proceeds at higher yields. The impact of these transactions
will produce increased investment portfolio income for the company over
the long term.
Non-interest expense increased 7.7% for the period reported. The
majority of these increases are associated with special projects underway
related to centralized loan processing, imaging and sales and service
training. The cost related to two new branch facilities (Philadelphia,
Mississippi and Tuscaloosa, Alabama) are also reflected in these totals.
These branches were opened during March 1996.
The company's balance continues to show steady growth as total assets
increased from $614 million to $619 million during the quarter. Deposits
increased $1.4 million and Securities Sold Under Agreements to
Repurchase increased $2.8 million. Due to a softening in loan demand
during the quarter, these funds were used to increase the investment
securities portfolio. Management is hopeful that loan demand will
increase as we move into the spring and early summer months. Loan
quality remains good and management is committed to not relaxing the
underwriting standards because of the reduction in loan demand.
Shareholders' equity increased from $64.8 million to $66.7 million
during the first quarter. This represented a 2.9% increase. During
the quarter there was a decline in the market value of the investment
securities portfolio. This resulted in the unrealized gain (loss) on
the available for sale securities component of Shareholders' Equity
moving from an unrealized gain of $237,000 at December 31, 1996, to
an unrealized loss of $248,000 at March 31, 1997.
The bank subsidiaries are required to maintain minimum amounts of
capital to total risk weighted assets as defined by the banking
regulators. At March 31, 1997, the banks' Tier I, Tier II and Total
Capital Ratios exceeded the well capitalized standards developed under
the referenced regulatory guidelines.
Dividends paid by the Corporation are provided from dividends received
from the subsidiary banks. Under the regulations controlling national
banks, the payment of dividends by the banks without prior approval
from the Comptroller of the Currency is limited to the current year's
net profit and the retained net earnings of the two preceding years. At
March 31, 1997, this amounted to approximately $12,487,000. Also, under
regulations controlling national banks, the banks are limited in the
amounts they can lend to the Corporation and such loans are required to be
on a fully secured basis.
PART II
Item 1 Not Applicable
Item 2 Not Applicable
Item 3 Not Applicable
Item 4 Not Applicable
Item 5 Other Information
As disclosed in Management's Discussion and Analysis, during the first
quarter of 1997, the Corporation sold the assets of its finance company
subsidiary. Even though the subsidiary remains registered as a personal
finance company, no current business activity is being conducted.
In March 1997, the Financial Accountings Standards Board issued SFAS 128
on Earnings Per Share. The SEC requires disclosure of the impact that
recently issued (but not yet effective) accounting standards will have
on the financial statements of a registrant. Because of the simple
capital structure of NBC Capital Corporation, SFAS 128 will have no
impact on its financial statements.
Item 6 Not Applicable
The Financial information furnished herein has not been audited by
independent accountants; however, in the opinion of management, all
adjustments necessary for a fair presentation on the results of
operation for the three month period ending March 31, 1997, have been
included.
NBC CAPITAL CORPORATION
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
NBC CAPITAL CORPORATION
Registrant
May 7, 1997 Richard T. Haston
Date Richard T. Haston
Treasurer and Assistant Secretary
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