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, 1998
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 - 4,800,000 shares as of March 31, 1998.
PART I. - FINANCIAL INFORMATION
NBC CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME FOR
THREE MONTHS ENDED MARCH 31, 1998 AND 1997.
(Unaudited)
(Amounts in thousands, except per share data)
Three Months Ended
__________________
1998 1997
_______ _______
INTEREST INCOME:
Interest and Fees on Loans $ 9,051 $ 8,673
Interest Income on Balances Due From Banks 23 6
Interest on U. S. Treasury Securities and
U. S. Government Agencies and Corp. 1,354 1,516
Interest on Obligation of States and
Political Subdivisions 1,188 915
Interest on Other Securities 32 27
Interest on Federal Funds Sold and Securities
Purchased under Agreements to Resell 266 196
_______ _______
Total Interest Income 11,914 11,333
INTEREST EXPENSE:
Interest on Time Certificates of Deposit of
$100,000 or More 982 817
Interest on Other Deposits 4,200 3,932
Interest on Federal Funds Purchased and
Securities Sold Under Agreement to Repurchase 162 106
Interest on Demand Notes Issued to the U. S.
Treasury and on Other Borrowed Money 242 202
_______ _______
Total Interest Expense 5,586 5,057
Net Interest Income 6,328 6,276
Provision for Possible Loan Losses 260 260
_______ _______
Net Interest Income After Provision for
Loan Losses 6,068 6,016
_______ _______
NONINTEREST INCOME:
Income from Fiduciary Activities 294 275
Service Charge on Deposit Accounts 912 905
Other Noninterest Income 813 739
_______ _______
Total Noninterest Income 2,019 1,919
Gains (Losses) on Securities (24) (55)
_______ _______
NONINTEREST EXPENSE:
Salaries and Employee Benefits 2,679 2,626
Expense of Premises and Fixed Assets 785 687
Other Noninterest Expense 1,432 1,346
_______ _______
Total Noninterest Expense 4,896 4,659
_______ _______
Income Before Income Taxes 3,167 3,221
Applicable Income Taxes 788 907
_______ _______
NET INCOME $ 2,379 $ 2,314
======= =======
Net Earning Per Share $ .50 $ .48
======= =======
NBC CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share data)
Mar.31,1998 Dec.31,1997
___________ ___________
ASSETS (Unaudited) (Audited)
Cash and Balances Due From Banks:
Noninterest-Bearing Balances $ 25,337 $ 23,536
Interest-Bearing Balances 104 319
___________ ___________
Total Cash and Due From Banks 25,441 23,855
Held-To-Maturity Securities (Market Value of
$34,036 at March 31, 1997 and $34,633 at
December 31, 1996) 31,162 31,358
Available-For-Sale Securities
Mortgage-Backed Securities 39,419 43,179
All Other Available-For-Sale Securities 130,959 111,175
___________ ___________
Total Securities 201,540 185,712
Federal Funds Sold and Securities Purchased
Under agreement to Resell 23,232 18,948
Other Earning Assets 2,795 0
Loans 394,460 394,810
Less: Unearned Interest (33) (104)
Less: Reserve for Loan Losses (6,874) (7,016)
___________ ___________
Net Loans 387,553 387,690
Bank Premises and Equipment (Net) 13,205 13,356
Interest Receivable 5,971 6,352
Other Real Estate Owned 397 225
Other Assets 13,966 10,688
___________ ___________
TOTAL ASSETS $ 674,100 $ 646,826
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-Interest Bearing $ 76,923 $ 74,083
Interest-Bearing Time, $100,000 or More 103,515 69,204
Other Interest-Bearing 382,517 386,037
___________ ___________
Total Deposits 562,955 529,324
Federal Funds Purchased and Securities Sold
Under Agreements to Repurchase 15,188 20,021
Demand Notes Issued to the U. S. Treasury 1,893 2,411
Other Borrowed Funds 14,250 15,213
Interest Payable 2,180 2,479
Other Liabilities 4,452 6,760
TOTAL LIABILITIES 600,918 576,208
Stockholders' Equity:
Common Stock $1 par Value, Authorized
3,000,000 shares, Issued and Outstanding
1,200,000 4,800 4,800
Surplus 33,002 33,002
Undivided Profits 34,772 32,392
Net Unrealized Holding Gains (losses) on
Available-for-Sale Securities 608 424
___________ ___________
TOTAL STOCKHOLDERS' EQUITY 73,182 70,618
___________ ___________
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 674,100 $ 646,826
=========== ===========
NBC CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
(Amounts in thousands)
1998 1997
________ ________
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 2,379 $ 2,314
Adjustments to reconcile net income to net cash
Depreciation and Amortization 437 415
Deferred Income Taxes (Credits) (61) 99
Provision for Loan Losses 260 260
Loss (Gain) on Sale of Securities 24 55
(Increase) Decrease in Interest Receivable 381 412
(Increase) Decrease in Other Assets (6,329) (1,747)
Increase (Decrease) in Interest Payable (299) (245)
Increase (Decrease) in Other Liabilities (2,308) 973
________ ________
Net Cash Provided by Operating Activities (5,516) 2,536
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Maturities of Securities 10,470 7,311
Proceeds from Sale of Securities 5,569 5,580
Purchase of Securities (31,612) (17,608)
(Increase) Decrease in Loans (123) 3,237
Additions to Bank Premises and Equipment (235) (932)
________ ________
Net Cash Used in Investing Activities (15,931) (2,412)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (Decrease) in Deposits 33,631 1,443
Dividend Paid on Common Stock 0 0
Increase (Decrease) in Borrowed Funds (6,314) 652
________ ________
Net Cash Provided by Financing Activities 27,317 2,095
________ ________
Net Increase (decrease) in Cash and Cash
Equivalents 5,870 2,219
Cash and Cash Equivalents at Beginning of Year 42,803 38,719
________ ________
Cash and Cash Equivalents at End of Quarter $ 48,673 $ 40,938
======== ========
Cash Paid during Year for:
Interest $ 5,885 $ 5,302
Income Taxes 615 355
PART I. ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
MARCH 31, 1998
Earnings for the first quarter of 1998 grew 3.0% to $2.38 million or $.50
per share. This compares to $2.31 million or $.48 per share for the first
quarter of 1997. These totals equate to a 1.4 % return on average assets
and 13.2% return on average equity.
Net interest income for the first quarter of 1998 was $6.33 million
compared to $6.28 million in 1997. This represents an increase of .8%.
This increase resulted from a twenty-four (24) basis point decline in the
net interest margin and a $36.2 million increase in earning assets.
Non-interest income grew 5.2% paced by a 6.9% increase in income from the
Company's Trust and Financial Management activities and a 0.8% increase in
income from deposit accounts. Approximately $.025 per share was included in
the first quarter of 1997 from the sale of the assets of the company's
finance company subsidiary.
Intentional security losses of approximately $24,000 were generated during
the first quarter of 1998, 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 5.1% for the period reported. The majority
of this increase resulted from additional depreciation and amortization
expense associated with an upgrade in the mainframe computer and the
purchase of the equipment and software relating to the imaging of checks
and statements. These expenditures were incurred during the last three
quarters of 1997.
The company's balance sheet continues to show steady growth as total
assets increased from $647 million to $674 million during the first
quarter of 1998. Deposits increased $33.6 million while Securities Sold
Under Agreements to Repurchase and borrowed funds decreased $6.3 million.
The major portion of this net increase in available funds was used to
increase the investment securities portfolio by $15.8 million. Net
loans remained unchanged during the first quarter due to soft loan demand.
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 its strong underwriting standards because of
the soft in loan demand.
Shareholders' equity increased from $70.6 million to $73.2 million during
the first quarter of 1998. This represented a 3.7% increase. During the
period there was an increase in the market value of the investment
securities portfolio. This resulted in the unrealized gain on the
available for sale securities component of Shareholders' Equity increasing
from $242,000 at December 31, 1997, to $608,000 at March 31, 1998.
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, 1998, 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, 1998,
this amounted to approximately $13,208,000. 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 Not Applicable
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 ended March 31, 1998, 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, 1998 Richard T. Haston
Date Richard T. Haston
Treasurer and Assistant Secretary
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