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 September 30, 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 September 30, 1997.
PART I. - FINANCIAL INFORMATION
NBC CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME FOR
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996.
(Unaudited)
(Amounts in thousands, except per share data)
Nine Months Ended
__________________
1997 1996
_______ _______
INTEREST INCOME:
Interest and Fees on Loans $26,787 $24,457
Interest Income on Balances Due From Banks 25 18
Interest on U. S. Treasury Securities and
U. S. Government Agencies and Corp. 4,511 4,758
Interest on Obligation of States and
Political Subdivisions 2,701 2,826
Interest on Other Securities 263 288
Interest on Federal Funds Sold and Securities
Purchased under Agreements to Resell 660 284
_______ _______
Total Interest Income 34,947 32,631
INTEREST EXPENSE:
Interest on Time Certificates of Deposit of
$100,000 or More 2,834 2,794
Interest on Other Deposits 11,930 11,064
Interest on Federal Funds Purchased and
Securities Sold Under Agreement to Repurchase 368 64
Interest on Demand Notes Issued to the U. S.
Treasury and on Other Borrowed Money 675 450
_______ _______
Total Interest Expense 15,807 14,372
Net Interest Income 19,140 18,259
Provision for Possible Loan Losses 780 873
_______ _______
Net Interest Income After Provision for
Loan Losses 18,360 17,386
_______ _______
NONINTEREST INCOME:
Income from Fiduciary Activities 825 681
Service Charge on Deposit Accounts 2,698 2,618
Other Noninterest Income 1,957 1,648
_______ _______
Total Noninterest Income 5,480 4,947
Gains (Losses) on Securities (58) 6
_______ _______
NON INTEREST EXPENSE:
Salaries and Employee Benefits 7,692 7,412
Expense of Premises and Fixed Assets 2,117 1,896
Other Noninterest Expense 4,210 4,044
_______ _______
Total Noninterest Expense 14,019 13,352
_______ _______
Income Before Income Taxes 9,763 8,987
Applicable Income Taxes 2,756 2,432
_______ _______
NET INCOME 7,007 6,555
Net Earning Per Share 5.84 5.46
NBC CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share data)
Sep.30,1997 Dec.31,1996
ASSETS (Unaudited) (Audited)
_______ _______
Cash and Balances Due From Banks:
Noninterest-Bearing Balances $26,208 $29,126
Interest-Bearing Balances 302 493
_______ _______
Total Cash and Due From Banks 26,510 29,619
Held-To-Maturity Securities (Market
Value of $34,209 at September 30,
1997 and $34,633 at December 31,
1996) 31,351 31,673
Available-For-Sale Securities
Mortgage-Backed Securities 48,237 38,871
All Other Available-For-Sale
Securities 97,900 97,298
_______ _______
Total Securities 177,488 167,842
Federal Funds Sold and Securities Purchased
Under Agreement to Resell 8,920 9,100
Loans 397,567 386,518
Less: Unearned Interest (215) (903)
Less: Reserve for Loan Losses (6,990) (6,778)
_______ _______
Net Loans 390,362 378,837
Bank Premises and Equipment (Net) 13,553 13,267
Interest Receivable 5,741 5,756
Other Real Estate Owned 211 730
Other Assets 11,036 9,279
_______ _______
TOTAL ASSETS 633,821 614,430
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-Interest Bearing 74,921 71,601
Interest-Bearing Time, $100,000 or More 90,969 62,091
Other Interest-Bearing 352,946 383,060
_______ _______
Total Deposits 518,836 516,752
Federal Funds Purchased and Securities Sold
Under Agreements to Repurchase 15,350 9,321
Demand Notes Issued to the U. S. Treasury 2,908 1,411
Other Borrowed Funds 18,561 13,300
Interest Payable 2,171 2,206
Other Liabilities 4,473 6,592
TOTAL LIABILITIES 562,299 549,582
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 36,937 30,409
Net Unrealized Holding Gains (losses) on
Available-for-Sale Securities 383 237
TOTAL STOCKHOLDERS' EQUITY 71,522 64,848
_______ _______
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY 633,821 614,430
NBC CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited)
(Amounts in thousands)
1997 1996
_______ _______
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 7,007 $ 6,555
Adjustments to reconcile net income to
net cash
Depreciation and Amortization 1,149 1,094
Deferred Income Taxes (Credits) (153) 1,055
Provision for Loan Losses 780 873
Loss (Gain) on Sale of Securities 58 (6)
(Increase) Decrease in Interest
Receivable 14 260
(Increase) Decrease in Other Assets (1,315) (4,493)
Increase (Decrease) in Interest Payable (35) (412)
Increase (Decrease) in Other Liabilities (3,411) 815
_______ _______
Net Cash Provided by Operating Activities 4,094 5,741
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Maturities of Securities 23,455 9,848
Proceeds from Sale of Securities 5,573 6
Purchase of Securities (38,510) 447
(Increase) Decrease in Loans (12,305) (30,841)
Additions to Bank Premises and Equipment (1,280) (1,257)
_______ _______
Net Cash Used in Investing Activities (23,067) (21,797)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (Decrease) in Deposits 2,084 5,286
Dividend Paid on Common Stock (480) (444)
Increase (Decrease) in Borrowed Funds 14,079 (9,418)
_______ _______
Net Cash Provided by Financing Activities 15,683 14,260
Net Increase (decrease) in Cash and Cash
Equivalents (3,290) (1,796)
Cash and Cash Equivalents at Beginning
of Year 38,719 28,393
_______ _______
Cash and Cash Equivalents at End of
Quarter 35,429 26,597
Cash Paid during Year for:
Interest 15,841 14,784
Income Taxes 2,377 1,387
PART I. ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 1997
Earnings for the first three quarters of 1997 grew 6.9% to
$7.01 million or $5.84 per share. This compares to $6.56
million or $5.46 per share for the first three quarters of
1996. These totals equate to a 1.5% return on average assets
and 13.7% return on average equity.
Net interest income for the first half of 1997 was $19.14
million compared to $18.26 million in 1996. This represents
an increase of 4.8%. This increase resulted from a one (1)
basis point decline in the net interest margin and a $29.7
million increase in earning assets.
Non-interest income grew 10.8% paced by a 21.1% increase in
income from the Company's Trust and Financial Management
activities and a 3.1% 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 first quarter of 1997, 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 5.0% for the period reported.
The majority of these increases are associated with special
projects such as centralized loan processing, imaging, and
sales and service training. All these projects were
undertaken to improve the Company's delivery systems. 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 sheet continues to show steady growth as
total assets increased from $614 million to $634 million
during the first three quarters of 1997. Deposits increased
$2.1 million, Securities Sold Under Agreements to Repurchase
increased $6.0 million and borrowed funds increased $5.2
million. These additional funds were used to increase the
investment securities portfolio by $9.6 million and to fund
loan growth of $11.0 million. Loan quality remains good and
management is committed to maintaining its strong underwriting
standards.
Shareholders' equity increased from $64.8 million to $71.5
million during the first three quarters of 1997. This
represented a 10.4% increase. During the period there was an
increase 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 gain of $383,000 at September 30, 1997.
The bank subsidiaries are required to maintain minimum amounts
of capital to total risk weighted assets as defined by the
banking regulators. At September 30, 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 September
30, 1997, this amounted to approximately $16,428,000. 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 the prior Form 10-Q, at the July meeting, the
Board of Directors of NBC Capital Corporation approved and
recommended to the Shareholders that the number of authorized
shares of common stock of the Corporation be increased from
3,000,000 to 10,000,000 shares. Of the additional shares
authorized, 5,200,000 shares will be available for general
corporate purposes.
At this same meeting, the Board of Directors authorized a 3
for 1 stock split. This stock split will be effected in the
form of a dividend, with a charge to undivided profits and a
credit to the common stock account for the aggregate par value
of the new shares issued. Each shareholder at the date of
record will receive three additional shares of stock for each
share of stock owned. This transaction will increase the
number of shares of common stock outstanding from 1,200,000 to
4,800,000.
A Special Meeting of Shareholders was held October 14, 1997,
and the increase in the number of shares authorized to
10,000,000 was approved. At its regular meeting on October
15, 1997, the Board of Directors established the Record Date
for the stock split at the close of business on October 15,
1997, and the Distribution Date as October 29, 1997.
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 nine month
period ending September 30, 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
November 7, 1997 Richard T. Haston
Date Richard T. Haston
Treasurer and Assistant Secretary
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