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 June 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 June 30, 1997.
PART I. - FINANCIAL INFORMATION
NBC CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME FOR
SIX MONTHS ENDED JUNE 30, 1997 AND 1996.
(Unaudited)
(Amounts in thousands, except per share data)
Six Months Ended
__________________
1997 1996
_______ _______
INTEREST INCOME:
Interest and Fees on Loans 17,600 15,981
Interest Income on Balances Due From Banks 14 11
Interest on U. S. Treasury Securities and
U. S. Government Agencies and Corp. 3,084 3,352
Interest on Obligation of States and
Political Subdivisions 1,809 1,899
Interest on Other Securities 64 188
Interest on Federal Funds Sold and Securities
Purchased under Agreements to Resell 430 228
_______ _______
Total Interest Income 23,001 21,659
INTEREST EXPENSE:
Interest on Time Certificates of Deposit of
$100,000 or More 1,784 1,866
Interest on Other Deposits 7,882 7,412
Interest on Federal Funds Purchased and
Securities Sold Under Agreement to Repurchase 225 7
Interest on Demand Notes Issued to the U. S.
Treasury and on Other Borrowed Money 400 300
_______ _______
Total Interest Expense 10,291 9,585
Net Interest Income 12,710 12,074
Provision for Possible Loan Losses 520 582
_______ _______
Net Interest Income After Provision for
Loan Losses 12,190 11,492
_______ _______
NONINTEREST INCOME:
Income from Fiduciary Activities 550 454
Service Charge on Deposit Accounts 1,839 1,729
Other Noninterest Income 1,319 985
_______ _______
Total Noninterest Income 3,708 3,168
Gains (Losses) on Securities (58) 6
_______ _______
NON INTEREST EXPENSE:
Salaries and Employee Benefits 5,123 4,969
Expense of Premises and Fixed Assets 1,389 1,243
Other Noninterest Expense 2,789 2,719
_______ _______
Total Noninterest Expense 9,301 8,931
_______ _______
Income Before Income Taxes 6,539 5,735
Applicable Income Taxes 1,839 1,494
_______ _______
NET INCOME 4,700 4,241
Net Earning Per Share 3.92 3.53
NBC CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share data)
Jun.30,1997 Dec.31,1996
___________ ___________
ASSETS (Unaudited) (Audited)
Cash and Balances Due From Banks:
Noninterest-Bearing Balances 32,008 29,126
Interest-Bearing Balances 436 493
___________ ___________
Total Cash and Due From Banks 32,444 29,619
Held-To-Maturity Securities (Market Value
of $34,036 at March 31, 1997 and $34,633
at December 31, 1996) 31,344 31,673
Available-For-Sale Securities
Mortgage-Backed Securities 44,613 38,871
All Other Available-For-Sale Securities 95,153 97,298
___________ ___________
Total Securities 171,110 167,842
Federal Funds Sold and Securities
Purchased Under Agreement to Resell 10,400 9,100
Loans 391,282 386,518
Less: Unearned Interest (346) (903)
Less: Reserve for Loan Losses (6,937) (6,778)
___________ ___________
Net Loans 383,999 378,837
Bank Premises and Equipment (Net) 13,773 13,267
Interest Receivable 5,858 5,756
Other Real Estate Owned 159 730
Other Assets 11,446 9,279
___________ ___________
TOTAL ASSETS 629,189 614,430
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-Interest Bearing 71,835 71,601
Interest-Bearing Time, $100,000 or More 98,414 62,091
Other Interest-Bearing 352,995 383,060
___________ ___________
Total Deposits 523,244 516,752
Federal Funds Purchased and Securities
Sold Under Agreements to Repurchase 13,738 9,321
Demand Notes Issued to the U. S. Treasury 4,200 1,411
Other Borrowed Funds 11,947 13,300
Interest Payable 2,278 2,206
Other Liabilities 4,798 6,592
___________ ___________
TOTAL LIABILITIES 560,205 549,582
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 34,629 30,409
Net Unrealized Holding Gains (losses) on
Available-for-Sale Securities 153 237
___________ ___________
TOTAL STOCKHOLDERS' EQUITY 68,984 64,848
___________ ___________
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY 629,189 614,430
NBC CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
(Amounts in thousands)
1997 1996
________ ________
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income 4,700 4,241
Adjustments to reconcile net income to
net cash:
Depreciation and Amortization 752 756
Deferred Income Taxes (Credits) (114) 1,247
Provision for Loan Losses 520 582
Loss (Gain) on Sale of Securities 58 (6)
(Increase) Decrease in Interest
Receivable (102) (232)
(Increase) Decrease in Other Assets (1,542) (2,753)
Increase (Decrease) in Interest Payable 72 (329)
Increase (Decrease) in Other Liabilities (1,796) 779
________ ________
Net Cash Provided by Operating Activities 2,548 4,286
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Maturities of Securities 15,371 7,290
Proceeds from Sale of Securities 5,576 1,006
Purchase of Securities (24,400) (8,967)
(Increase) Decrease in Loans (5,682) (13,179)
Additions to Bank Premises and Equipment (1,154) (960)
________ ________
Net Cash Used in Investing Activities (10,289) (14,809)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (Decrease) in Deposits 6,492 18,563
Dividend Paid on Common Stock (480) (444)
Increase (Decrease) in Borrowed Funds 5,854 (1,131)
________ ________
Net Cash Provided by Financing Activities 11,866 16,988
Net Increase (decrease) in Cash and Cash
Equivalents 4,125 6,465
Cash and Cash Equivalents at Beginning
of Year 38,719 28,393
________ ________
Cash and Cash Equivalents at End of Quarter 42,844 34,858
Cash Paid during Year for:
Interest 10,219 9,914
Income Taxes 1,490 916
PART I. ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 1997
Earnings for the first half of 1997 grew 10.8% to $4.70 million or
$3.92 per share. This compares to $4.24 million or $3.53 per share for
the first half 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 half of 1997 was $10.29 million
compared to $9.59 million in 1996. This represents an increase of 7.3%.
This increase resulted from a two (2) basis point improvement in the net
interest margin and a $26.5 million increase in earning assets.
Non-interest income grew 15.0% paced by a 21.1% increase in income
from the Company s Trust and Financial Management activities and a 6.4%
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 of 1997, as the company sold lower yielding securities
and reinvested proceeds at higher yields. The impact of these trans-
actions will produce increased investment portfolio income for the
company over the long term.
Non-interest expense increased 4.1% 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 $629 million during the first half of
1997. Deposits increased $6.5 million and Securities Sold Under
Agreements to Repurchase increased $4.4 million. These additional funds
were used to increase the investment securities portfolio by $3.3 million
and to fund loan growth of $4.8 million. Loan quality remains good and
management is committed to maintaining its strong underwriting standards.
Shareholders' equity increased from $64.8 million to $69.0 million
during the first half of 1997. This represented a 6.5% increase. During
the period 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 gain of $153,000 at June 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 June 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 June 30, 1997, this amounted to approximately $14,387,000.
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
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. The date for the
special shareholder meeting has not been set as of the date of filing
of this Form 10-Q. 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. The Record Date and the
Distribution Date have not been established at this time, pending the
special shareholder meeting required to authorize the additional shares
necessary to make the distribution.
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 six month period ending June 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
August 8, 1997 Richard T. Haston
Date Richard T. Haston
Treasurer and Assistant Secretary
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