<PAGE>
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, 1995.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission file number: 0-13585
NATIONAL CITY BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
INDIANA 35-1632155
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. BOX 868, EVANSVILLE, INDIANA 47705-0868
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (812) 464-9800
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 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 practicable date.
CLASS OUTSTANDING AT MAY 12, 1995
(Common stock,
$3.33 1/3 par value) 3,660,742
<PAGE>
NATIONAL CITY BANCSHARES, INC.
INDEX
PAGE NO.
PART I - FINANCIAL INFORMATION
Condensed consolidated statements of
financial position-
March 31, 1995, December 31, 1994,
and March 31, 1994 1
Condensed consolidated statements of income-
three months ended March 31, 1995 and 1994 2
Condensed consolidated statements of cash flows-
three months ended March 31, 1995 and 1994 3-4
Notes to condensed consolidated financial statements 5
Management's discussion and analysis of financial
condition and results of operations 6-9
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K 10
SIGNATURES 10
<PAGE>
NATIONAL CITY BANCSHARES, INC. and Subsidiaries
Condensed Consolidated Statements of Financial Position
(Dollar Amounts Other Than Share Data in Thousands)
<TABLE>
<CAPTION>
March December March
31 31 31
1995 1994 1994
-------- -------- --------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 26,204 $ 36,343 $ 24,050
Interest-bearing deposits in banks 4,031 5,116 10,712
Securities held to maturity 78,991 73,688 70,476
Securities available for sale 100,663 110,831 117,515
Federal funds sold 800 - 21,130
Loans 492,734 483,592 437,777
Less: Allowance for loan losses 3,800 3,794 3,840
-------- -------- --------
Loans, net 488,934 479,798 433,937
Premises and equipment 11,033 10,504 10,277
Other real estate owned 379 605 646
Other assets 13,047 14,879 12,935
-------- -------- --------
Total Assets $724,082 $731,764 $701,678
-------- -------- --------
-------- -------- --------
LIABILITIES
Deposits:
Noninterest-bearing demand $ 78,734 $ 85,340 $ 78,056
Interest-bearing savings and time 528,786 530,628 515,698
-------- -------- --------
Total deposits 607,520 615,968 593,754
Federal funds purchased and securities
sold under agreements to repurchase 19,085 21,610 13,458
Notes issued to the U.S. Treasury 2,103 2,675 2,355
Guaranteed bank loan of
Employee Stock Ownership Plan - - 432
Other liabilities 6,347 5,392 5,612
-------- -------- --------
Total liabilities 635,055 645,645 615,611
-------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
SHAREHOLDERS' EQUITY
Common stock -- $3.33 1/3 par value 12,193 12,194 12,434
<S> <C> <C> <C> <C> <C> <C>
Number of shares at:
3/31/95 12/31/94 3/31/94
--------- --------- ---------
Authorized 5,000,000 5,000,000 5,000,000
Outstanding 3,657,970 3,658,142 3,730,327
Capital surplus 33,102 33,113 35,774
Retained earnings 44,774 43,008 38,454
Unrealized gain(loss) on securities
available for sale (1,042) (2,196) (163)
Employee Stock Ownership Plan
obligation guaranty - - (432)
-------- -------- --------
Total shareholders' equity 89,027 86,119 86,067
-------- -------- --------
Total Liabilities and
Shareholders' Equity $724,082 $731,764 $701,678
-------- -------- --------
-------- -------- --------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
NATIONAL CITY BANCSHARES, INC. and Subsidiaries
Condensed Consolidated Statements of Income
(Dollar Amounts Other Than Share Data in Thousands)
<TABLE>
<CAPTION>
Three Months
Ended
March 31
--------------------
1995 1994
------- -------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $10,734 $ 8,719
Interest and dividends on securities 2,693 2,386
Interest on federal funds sold 145 253
Interest on deposits in banks 52 133
------- -------
Total interest income 13,624 11,491
------- -------
INTEREST EXPENSE
Interest on deposits 5,191 4,292
Interest on funds borrowed 212 118
------- -------
Total interest expense 5,403 4,410
------- -------
NET INTEREST INCOME 8,221 7,081
Provision for loan losses 18 (153)
------- -------
Net interest income after
provision for loan losses 8,203 7,234
------- -------
NONINTEREST INCOME
Trust income 300 289
Service charges on deposit accounts 541 478
Securities gains (losses) 6 (182)
Other 437 310
------- -------
Total noninterest income 1,284 895
NONINTEREST EXPENSE
Salaries and employee benefits 3,013 2,886
Premises and equipment 806 814
Assessments of the FDIC 343 344
Other 1,431 1,286
------- -------
Total noninterest expense 5,593 5,330
------- -------
Income before income taxes 3,894 2,799
Income taxes 1,324 898
------- -------
NET INCOME $ 2,570 $ 1,901
------- -------
------- -------
Earnings per share $0.70 $0.51
Weighted average shares outstanding 3,658,985 3,739,626
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
NATIONAL CITY BANCSHARES, INC. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
Three Months
Ended
March 31
-------------------
1995 1994
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net Income $ 2,570 $ 1,901
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 343 350
Amortization 411 731
Provision for loan losses 18 (153)
Write-down of securities and other assets - 175
Securities losses (gains) (6) 7
(Gain) on sale of premises and equipment - (5)
Loss on sale of other real estate owned 42 -
Increase (decrease) in deferred taxes 49 106
Changes in assets and liabilities:
(Increase) decrease in income earned
but not collected 1,410 671
(Increase) decrease in other assets (199) (337)
Increase (decrease) in accrued interest payable 368 (179)
Increase (decrease) in other liabilities 383 610
-------- --------
Net cash flows provided by operating activities 5,389 3,877
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Net (increase) decrease in interest-bearing
deposits in banks 1,085 2,868
Proceeds from matured securities held to maturity 3,130 18,047
Proceeds from matured securities available for sale 12,365 6,587
Purchases of securities held to maturity (8,569) (14,480)
Purchases of securities available for sale (522) (24,262)
(Increase) decrease in federal funds sold (800) 21,094
(Increase) decrease in loans made to customers (9,154) (2,573)
Capital expenditures (920) (204)
Proceeds from sale of other real estate owned 218 60
Proceeds from sale of premises and equipment - 11
-------- --------
Net cash flows provided by (used in)
investing activities (3,167) 7,148
-------- --------
</TABLE>
(Continued on next page)
The accompanying notes are an integral part of these statements.
<PAGE>
NATIONAL CITY BANCSHARES, INC. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Continued)
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
Three Months
Ended
March 31
-------------------
1995 1994
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
<S> <C> <C>
Net increase (decrease) in deposits $ (8,448) $(12,894)
Net increase (decrease) in federal funds
purchased and securities sold under
agreements to repurchase (2,525) 285
Net proceeds (payments) on notes issued to
the U.S. Treasury (572) (3,038)
Dividends paid (805) (822)
Repurchase of common stock (172) (570)
Sale of common stock 161 179
-------- --------
Net cash flows provided by (used in)
financing activities (12,361) (16,860)
-------- --------
Net increase (decrease) in cash and due from banks (10,139) (5,835)
Cash and due from banks at beginning of period 36,343 29,885
-------- --------
Cash and due from banks at end of period $ 26,204 $ 24,050
-------- --------
-------- --------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $5,036 $4,589
Income taxes 212 139
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Change in allowance for unrealized gain (loss)
on securities available for sale $1,884 $(1,040)
Increase (decrease) in deferred taxes
attributable to securities available for sale (730) 408
Employee Stock Ownership Plan obligation
guaranty note payment - 109
Other real estate acquired in settlement of loans - 19
Transfer from other real estate owned to other assets 7 -
Transfer from premises and equipment to other
real estate owned 41 -
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
NATIONAL CITY BANCSHARES, INC. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
While the interim amounts are unaudited, they do reflect all adjustments
which, in the opinion of management, are necessary for a fair statement of
the results of operations for the interim periods. All such adjustments are
of a normal recurring nature. Year-end balance sheet amounts are condensed
from audited financial statements.
Because the results from commercial banking operations are so closely
related and responsive to changes in economic conditions, the results for
any interim period are not necessarily indicative of the results that can be
expected for the entire year.
NOTE 2
In the normal course of business, there are outstanding various other
commitments and contingent liabilities which are not reflected in the
accompanying financial statements. The Corporation uses the same credit
policies in making commitments and conditional obligations as it does for
other instruments.
<TABLE>
<CAPTION>
3/31/95 12/31/94
------------ -----------
<S> <C> <C>
Standby letters of credit $16,406,000 $16,274,000
Commitments to extend credit $73,193,000 $77,576,000
</TABLE>
<PAGE>
NATIONAL CITY BANCSHARES, INC. and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
NET INCOME
Net income for the quarter ended March 31, 1995, was $2,570,000, or $0.70
per share, compared to $1,901,000, or $0.51 per share, for the first quarter
of 1994. This is an increase of $669,000, or 35.2 percent, in net income.
The weighted average number of shares outstanding was 3,658,985 and
3,739,626 for the three months ended March 31, 1995 and 1994, respectively.
Stock has been repurchased by the Corporation for the dividend reinvestment
program and during 1994 for the stock repurchase program approved March 15,
1994.
NET INTEREST INCOME
Net interest income in the first quarter of 1995 increased $1,151,000, or
15.5 percent, on a tax equivalent basis, from the year-ago quarter. Average
earning assets were $680 million and $657 million, an increase of $23
million, or 3.5 percent, during the first quarters of 1995 and 1994,
respectively. Loans increased an average of $55 million, or 12.9 percent,
for the quarter. All other types of earning assets decreased, with the
largest decrease being in average federal funds sold which decreased $23
million, or 69.6 percent, for the quarter.
The increased net interest income was due to a change in the mix of average
earning assets. Total interest income increased $2,144,000, or 18.1
percent, on a tax equivalent basis, during the first three months of 1995
from the same period of 1994, compared to a $993,000, or 22.5 percent
increase in total interest expense. The increase in interest income
resulted from higher rates of interest earned and a change in the mix of
average earning assets.
The net interest margin increased to 5.12 percent for the first quarter of
1995, compared to 4.59 percent during the year-ago quarter.
<PAGE>
UNDERPERFORMING ASSETS
Listed below is a two-year comparison of the underperforming assets.
<TABLE>
<CAPTION>
3/31/95 3/31/94
---------- ----------
<S> <C> <C>
Nonaccrual loans $ 726,000 $1,253,000
Restructured loans 67,000 166,000
90 days past due loans 407,000 355,000
---------- ----------
Total underperforming loans 1,200,000 1,774,000
Nonaccrual securities:
Agency-issued collateralized
mortgage obligation - 30,000
Other real estate held 379,000 646,000
---------- ----------
Total underperforming assets $1,579,000 $2,450,000
---------- ----------
---------- ----------
</TABLE>
Past due 90 days or more, nonaccrual, and renegotiated loans have decreased
from 0.4 percent of total loans at March 31, 1994, to 0.2 percent as of
March 31, 1995. Of the loans in this category, 47.5 and 54.5 percent were
secured by real estate at March 31, 1995 and 1994, respectively. Potential
problem loans, other than underperforming loans, amounted to $14,150,000 at
March 31, 1995, and $16,217,000 at March 31, 1994.
PROVISION FOR LOAN LOSSES
Net charge-offs amounted to $12,000 during the first quarter of 1995,
compared to net recoveries of $202,000 in the year-earlier period.
The provision for loan losses during the first three months of 1995 was
$18,000 compared to a negative $153,000 for the first three months of 1994.
The negative provision was due to net recoveries of $202,000. The provision
is based on the quarterly review of the allowance for possible loan losses.
Some of the factors used in this review include current economic conditions
and forecasts, risk by type of loan, previous loan loss experience, and
evaluation of specific borrowers and collateral. As of March 31, 1995,
management considered the reserve for loan losses adequate to provide for
potential losses.
NONINTEREST INCOME
Noninterest income for the first quarter of 1995 increased $389,000, or 43.5
percent, from the year-ago period. Trust income increased $11,000, or 3.8
percent, and service charges on deposit accounts increased $63,000, or 13.2
percent, over the first three months of 1994. Net securities gains were
$6,000 for the first quarter of 1995 compared to net losses of $182,000 for
the same period in 1994. The losses were mainly due to a permanent write-
down on an interest-only bond. Other noninterest income increased
$127,000, or 41.0 percent, during 1995. This increase was mainly due to a
refund from prior years' Indiana Franchise tax in the amount of $115,000.
<PAGE>
NONINTEREST EXPENSE
Noninterest expense increased $263,000, or 4.9 percent, in the first quarter
of 1995. Salaries and employee benefits increased $127,000, or 4.4 percent,
over the year-ago period. Expenses of premises and equipment and the cost
of Federal Deposit Insurance were approximately the same for both years.
Other items in this category increased $145,000, or 11.3 percent. This
increase was partially due to a $129,000 one-time contract settlement.
FINANCIAL POSITION ANALYSIS
Cash and due from banks increased $2,154,000, or 9.0 percent, and interest-
bearing deposits in banks decreased $6,681,000, or 62.4 percent, during the
past year. Federal funds sold decreased $20,330,000, or 96.2 percent.
Securities decreased $8,337,000, or 4.4 percent, during the past year. The
largest decrease was in U.S. Government securities which decreased
$5,846,000, or 6.5 percent. Other decreases were in municipals which
decreased $1,244,000, or 2.9 percent, and U.S. Treasury securities which
decreased $866,000, or 3.2 percent. Other debt securities increased
$1,007,000, or 3.9 percent. Equity securities increased $64,000, or 2.4
percent, due to the purchase of additional stock in the Federal Home Loan
Bank. Amortized cost and fair values of securities with dollar amounts in
thousands are as follows:
Securities held to maturity:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
U.S. Government and agency
securities $10,061 $ 59 $ 87 $10,033
State and municipal
securities:
Taxable 2,280 21 54 2,247
Nontaxable 39,384 1,231 230 40,385
Corporate securities 19,928 62 320 19,670
Mortgage-backed securities 7,338 79 111 7,306
------- ------ ---- -------
$78,991 $1,452 $802 $79,641
------- ------ ---- -------
</TABLE>
Securities available for sale:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
U.S. Government and agency
securities $ 61,736 $228 $ 679 $ 61,285
Corporate securities 6,855 - 106 6,749
Mortgage-backed securities 31,052 47 1,019 30,080
-------- ---- ------ --------
99,643 275 1,804 98,114
Equity securities 2,732 - 183 2,549
-------- ---- ------ --------
$102,375 $275 $1,987 $100,663
-------- ---- ------ --------
-------- ---- ------ --------
</TABLE>
<PAGE>
At March 31, 1995, the security portfolio included $2,954,000 in structured
notes, which were comprised on $1,452,000 in multi-coupon step-up notes that
have a price volatility comparable to a callable U.S. Government agency of
like maturity, $1,002,000 in a capped floating rate note that will mature
within one year, and $500,000 in a delevered floating note. These
securities have risk characteristics which are well within the constraints
of the non-structured securities held in the security portfolio.
As part of its strategic plan, the Corporation successfully increased total
loans while maintaining high credit standards and competitive rates. Loans
increased $54,957,000, or 12.6 percent, during the past year. The largest
increases were in consumer loans which increased $21,187,000, or 28.8
percent, and in commercial loans which increased $18,412,000, or 19.0
percent. Loans secured by real estate increased $14,496,000, or 6.1
percent. All other types of loans also increased, except agricultural loans
which decreased $595,000, or 3.0 percent.
Other real estate owned decreased $267,000, or 41.3 percent, from March 31,
1994.
Total deposits have increased $13,766,000, or 2.3 percent, since March 31,
1994. Noninterest-bearing deposits increased slightly, while interest-
bearing deposits increased $13,088,000, or 2.5 percent, during this period.
SHAREHOLDERS' EQUITY
The Corporation and each subsidiary have capital ratios which substantially
exceed all regulatory requirements. The Corporation's capital ratios are
shown below.
<TABLE>
<CAPTION>
Minimum
Requirements 3/31/95 3/31/94
------------ ------- -------
<S> <C> <C> <C>
Tier I capital to
risk-based assets 4.00% 17.19% 18.36%
Total capital to
risk-based assets 8.00% 17.92% 19.19%
Tangible equity to
tangible assets 3.00% 12.16% 12.10%
</TABLE>
<PAGE>
NATIONAL CITY BANCSHARES, INC. and Subsidiaries
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits -
NONE
(b) Reports on Form 8-K -
NONE
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NATIONAL CITY BANCSHARES, INC
(Registrant)
By /S/ HAROLD A. MANN
Harold A. Mann
Secretary and Treasurer
(On behalf of the registrant
and in his capacity as Chief
Accounting Officer.)
May 12, 1995
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 26204
<INT-BEARING-DEPOSITS> 4031
<FED-FUNDS-SOLD> 800
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 100663
<INVESTMENTS-CARRYING> 78991
<INVESTMENTS-MARKET> 79641
<LOANS> 492734
<ALLOWANCE> 3800
<TOTAL-ASSETS> 724082
<DEPOSITS> 607520
<SHORT-TERM> 21188
<LIABILITIES-OTHER> 6347
<LONG-TERM> 0
<COMMON> 12193
0
0
<OTHER-SE> 76834
<TOTAL-LIABILITIES-AND-EQUITY> 724082
<INTEREST-LOAN> 10734
<INTEREST-INVEST> 2693
<INTEREST-OTHER> 197
<INTEREST-TOTAL> 13624
<INTEREST-DEPOSIT> 5191
<INTEREST-EXPENSE> 212
<INTEREST-INCOME-NET> 8221
<LOAN-LOSSES> 18
<SECURITIES-GAINS> 6
<EXPENSE-OTHER> 5593
<INCOME-PRETAX> 3894
<INCOME-PRE-EXTRAORDINARY> 3894
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2570
<EPS-PRIMARY> 0.7
<EPS-DILUTED> .7
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 00
</TABLE>
