<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended March 31, 1995
Commission File Number 33-3711
NATIONAL BANCSHARES CORPORATION
Ohio 34-1518564
---- ----------
State of incorporation IRS Employer
Identification No.
112 West Market Street, Orrville, Ohio 44667
--- ---- ------ ------- --------- ---- -----
Address of principal executive offices
Registrant's telephone number: (216) 682-1010
----- --------
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 registrant's classes
of common stock, as of May 4, 1995:
Common Stock, $10.00 Par Value: 732,156 Shares Outstanding
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National Bancshares Corporation
Index
Page
Number
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets 3
as of March 31, 1995 and
December 31, 1994 (Unaudited)
Consolidated Statements of Income 4
for the three months ended
March 31, 1995 and 1994
(Unaudited)
Consolidated Statements of Cash Flows 5
for the three months ended
March 31, 1995 and 1994
(Unaudited)
Notes to Consolidated Financial 6
Statements (Unaudited)
Item 2. Management's Discussion and Analysis 6
of Financial Condition and
Results of Operations
Part II. Other Information 8
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of matters to a vote of
security holders
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
Signatures 9
2
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<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS (Unaudited) 03/31/95 12/31/94
<S> <C> <C> <C>
ASSETS:
Cash and due from banks $ 7,415,939 $8,261,107
Investment securities being
held to maturity 83,230,325 85,550,038
Approximate market value
March 31, 1995 $ 83,340,000
December 31, 1994 $ 84,126,000
Investment securities available
for sale 4,786,457 4,687,610
Federal funds sold 5,845,000 11,885,000
Loans:
Commercial 20,653,764 18,030,839
Real estate mortgage 30,518,448 30,778,748
Installment 9,846,623 9,014,853
------------------------------
Total loans 61,018,835 57,824,440
Less: Unearned income 623,056 718,683
Allowance for loan losses 928,676 890,666
------------------------------
Loans, net 59,467,103 56,215,091
Accrued interest receivable 1,977,846 1,662,369
Premises and equipment 2,321,541 2,378,202
Other assets 2,568,298 2,402,567
==============================
TOTAL $167,612,509 $173,041,984
==============================
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Deposits
Demand $24,411,176 $24,036,115
Savings and N.O.W.s 73,402,702 77,298,869
Time 41,202,406 44,527,256
------------------------------
Total deposits 139,016,284 145,862,240
Securities sold under
repurchase agreements 5,030,112 3,269,919
Federal reserve note account 175,380 1,000,000
Accrued interest payable 388,876 374,890
Other liabilities 462,749 445,686
------------------------------
Total liabilities 145,073,401 150,952,735
------------------------------
SHAREHOLDERS' EQUITY
Common stock - $10 par value;
750,720 shares authorized, 732,156
shares issued and outstanding 7,321,560 7,321,560
Surplus 4,689,800 4,689,800
Retained Earnings 10,527,748 10,077,889
------------------------------
Total shareholders' equity 22,539,108 22,089,249
------------------------------
TOTAL $167,612,509 $173,041,984
==============================
See notes to consolidated financial statements
</TABLE>
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CONSOLIDATED STATEMENTS OF
INCOME
<TABLE>
<CAPTION>
(Unaudited) Three months ended
03/31/95 03/31/94
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $1,375,706 $1,105,811
Interest on federal funds sold 90,394 55,415
Interest and dividends
on investments
US government obligations 701,129 632,011
Obligations of states and
political subdivisions 264,004 270,827
Other securities 582,546 528,664
---------------------------
Total interest income 3,013,779 2,592,728
INTEREST EXPENSE:
Interest on deposits 1,015,212 849,615
Expense of funds purchased 58,264 24,266
---------------------------
Total interest expense 1,073,476 873,881
---------------------------
Net interest income 1,940,303 1,718,847
PROVISION FOR LOAN LOSSES 45,000 45,000
---------------------------
Net interest income after
provision for loan losses 1,895,303 1,673,847
NONINTEREST INCOME 193,792 181,651
NONINTEREST EXPENSE:
Salaries and employee benefits 628,489 545,832
Net occupancy expense 102,938 104,972
Data processing expense 172,893 164,106
Franchise tax 77,250 75,750
FDIC premium 78,100 72,302
Other expenses 333,156 287,735
---------------------------
Total noninterest expense 1,392,826 1,250,697
---------------------------
INCOME BEFORE INCOME TAXES 696,269 604,801
INCOME TAXES 144,887 111,669
---------------------------
NET INCOME $551,382 $493,132
===========================
EARNINGS PER COMMON SHARE * $0.75 $0.67
===========================
<FN>
* Earnings per common share have been restated for the 25% stock dividend
See notes to consolidated financial statements
</TABLE>
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CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited) Three Months Ended
03/31/95 03/31/94
<S> <C> <C> <C> <C>
Cash Flows From Operating Activities:
Net Income $551,382 $493,132
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating Activities
Depreciation and Amortization 169,304 160,617
Provision for Loan Losses 45,000 45,000
Net Losses on Sales of Investment Securities 0 0
Changes in Operating Assets and Liabilities (340,903) (451,028)
----------- -----------
Total Adjustments (126,599) (245,411)
----------- -----------
Net Cash Provided by Operating Activities 424,783 247,721
Cash Flows From Investing Activities:
Proceeds from Maturities of Investments 2,185,241 1,465,000
Proceeds from Sale of Investments 0 0
Purchases of Investment Securities 0 (5,945,253)
Net (Increase) in Loans (3,297,012) (744,635)
Decrease (Increase) in Other Assets 44,497 (69,198)
----------- -----------
Net Cash (Used in) Investing Activities (1,084,741) (5,306,299)
Cash Flows from Financing Activities:
Net (Decrease) in Demand
and Savings Accounts (3,521,106) (14,620)
Net (Decrease) in time deposits (3,324,850) (2,687,979)
Net Increase in Short-Term Borrowings 935,573 (247,696)
Dividends Paid (314,827) (304,708)
----------- -----------
Net Cash Provided by Financing Activities (6,225,210) (3,255,003)
----------- -----------
Net Change in Cash and Cash Equivalents (6,885,168) (8,313,581)
Cash and Cash Equivalents at Beginning of the Period 20,146,107 20,022,624
----------- -----------
Cash and Cash Equivalents at End of the Period $13,260,939 $11,709,043
=========== ===========
Supplemental Disclosure of Cash Flow Information
Cash Paid During the Period for
Interest $1,059,490 $908,423
Income Taxes ($10,678) $14,313
<FN>
Cash and Cash Equivalents include Cash and Due From Banks and Federal
Funds Sold. See notes to consolidated financial statements
</TABLE>
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National Bancshares Corporation
Note to Consolidated Financial Statements (Unaudited)
Note 1. Basis of Presentation
The consolidated balance sheet as of March 31, , the consolidated
statements of earnings for the three month periods ended March 31, 1995 and
1994, and the consolidated statements of cash flows for the three month periods
ended March 31, 1995 and 1994 have been prepared by the Corporation without
audit. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included.
The consolidated financial statements have been prepared in accordance
with the instructions to Form 10-Q, but do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. It is suggested that these statements be read in
conjunction with the consolidated financial statements and footnotes in the
Corporation's annual report on Form 10-K for the year ended December 31, 1994.
Operating results for the three months ended March 31, 1995 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1995.
A 5 for 4 (25%) stock dividend was declared on September 20, 1994.
The record date for the stock dividend was September 30, 1994 and issued
October 15, 1994. 314 fractional shares calculated were paid in cash,
resulting in 732,156 shares outstanding following the stock dividend. Earnings
per common share have been restated to reflect the 732,156 shares outstanding.
On January 1, 1995 the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 114, " Accounting by creditors for Impairment
of a Loan", and SFAS No. 118, "Accounting by creditors for Impairment of a Loan
- - Income Recognition and Disclosures", which impose certain requirements on the
measurement of impaired loans. The Company has previously measured such loans
in accordance with the methods prescribed in SFAS No. 114. Consequently, no
additional loss provisions were required by the adoption of these statements.
SFAS No. 114 also requires that impaired loans for which foreclosure is
probable be accounted for as loans. The amounts of impaired loans, as defined
in SFAS No. 114, and impaired loans for which foreclosure is probable are not
significant. Thus, neither the initial adoption of SFAS No. 114 and SFAS No.
118, nor the on-going effect of these statements, has had, or is expected to
have, a material effect on the financial condition or results of operations of
the Company and prior period amounts have not been restated.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
FINANCIAL CONDITION
Balance Sheets
Total assets decreased $5.4 million or 3.1% below 12/31/94. Cash and
due from banks decreased approximately $845 thousand, mainly the result of
decreased outgoing check letters at the end of the quarter as compared to
12/31/94. Total investment securities held to maturity decreased $2.3 million
from 12/31/94 mainly the result of maturities and early calls by issuers.. Net
loans increased $3.2 million or 5.5% due to increased demand in the commercial
loan and installment loan areas.
Total deposits declined $6.8 million or approximately 4.7% below
12/31/94. Non-interest bearing demand accounts had a modest increase of 1.6%,
open interest bearing accounts decreased by $3.9 million. Time deposits
decreased $3.3 or approximately 7.5% below 12/31/94 primarily in the public
fund jumbo CD accounts. Securities sold under repurchase agreements
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increased $1.7 million above 12/31/94. Total shareholders' equity increased
$450 thousand or 2.0% over 12/31/94 through retained earnings.
Statements of Cash Flows
Net cash provided by operating activities for the first three months
of 1995 was $425 thousand as compared to $248 thousand for the same period in
1994. Net loans increased $3.3 million exceeding the proceeds of maturity
investment securities creating a net cash used in investing activities of $1.1
million. As a result of decreasing total deposits, $6.2 million net cashed was
used in financing activities. This caused a net decrease in cash and cash
equivalents of $6.2 million during the first three months of 1995. With total
cash and cash equivalents of $13.2 million as of 3/31/95, the Corporation's
liquidity ratios continue to remain favorable.
Analysis of Equity
Commercial banks whose deposits are insured by the Bank Insurance Fund
("BIF") are required to comply with certain minimum regulatory capital
requirements. The following is a summary of the Bank's regulatory capital
levels at 3/31/95.
<TABLE>
<CAPTION>
REGULATORY CAPITAL
(Dollars in Tangible Core Risk Based
Thousands) Capital Capital Capital
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total
regulatory
capital $20,966 19.84% $20,966 19.84% $21,895 20.72%
Fully phased
in regulatory
capital
requirement 1,585 1.50% 4,227 4.00% 8,454 8.00%
------------------------------------------------------------------------
Regulatory
capital
excess $19,381 18.34% $16,739 15.84% $13,441 12.72%
========================================================================
<FN>
*Adjusted risk based assets $ 105,672 (thousands)
</TABLE>
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RESULTS OF OPERATIONS
The company is on a fiscal year ending December 31st. Interest income
totaled $3.0 million or $421 thousand higher for the three months ended 3/31/95
as compared to same period in 1994. Interest expense was $1.1 million for the
three months ended 3/31/95 or $200 thousand above the same period in 1994. This
caused an increase of $221 thousand net interest income or approximately 12.9%
increase for the three month period ended 3/31/95 as compared to 3/31/94.. Net
interest rate margins were 5.52% and 5.28% for the first quarter of 1995 and
1994, respectively.
Provision for loan losses of $45,000 was the same for both three
months in 1995 and 1994. Net charge-offs for the three months ended 3/31/95
were $7 thousand as compared to $6 thousand for the same period in 1994.
Noninterest income was $194 thousand for the three months ended
3/31/95 or approximately $12 thousand above the same period in 1994.
Noninterest expense was $1.4 million for the three months ended 3/31/95 or
11.4% over the same period ended 3/31/94.
Net income was $551 thousand for the first quarter of 1995 or 11.8%
above the first quarter of 1994.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of matters to a vote of security holders - Notice
of annual meeting of shareholders and proxy statement dated
March 31, 1995 was filled on March 31, 1995.
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
<TABLE>
<S> <C> <C> <C>
Exhibit No. If incorporated by Reference,
Under Reg. Form 10-Q Documents with Which Exhibit
S-K, Item 601 Exhibit No. Description of Exhibits was Previously Filed with SEC
(11) 1 (pg 4) Computation of Earnings per Share Incorporated by reference
(27) Financial Data Schedule
</TABLE>
No other exhibits are required to be filed herewith pursuant to Item 601 of
Regulation S-K.
b. There were no Reports on Form 8-K filed for the quarter ended 3/31/95.
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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 Bancshares Corporation
Date: May 10, 1995 /s/ Charles J. Dolezal
--------------- -----------------------------------------
Charles J. Dolezal, President
Date: May 10, 1995 /s/ Michael D. Hofstetter
--------------- -----------------------------------------
Michael D. Hofstetter, Secretary - Treasurer
(Principal Financial Officer)
9
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 7,415,939
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 5,845,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 4,786,457
<INVESTMENTS-CARRYING> 83,230,325
<INVESTMENTS-MARKET> 83,340,000
<LOANS> 60,395,779
<ALLOWANCE> 928,676
<TOTAL-ASSETS> 167,612,509
<DEPOSITS> 139,016,284
<SHORT-TERM> 5,205,492
<LIABILITIES-OTHER> 851,625
<LONG-TERM> 0
<COMMON> 7,321,560
0
0
<OTHER-SE> 15,217,548
<TOTAL-LIABILITIES-AND-EQUITY> 22,539,108
<INTEREST-LOAN> 1,375,706
<INTEREST-INVEST> 1,547,679
<INTEREST-OTHER> 90,394
<INTEREST-TOTAL> 3,013,779
<INTEREST-DEPOSIT> 1,015,212
<INTEREST-EXPENSE> 1,073,476
<INTEREST-INCOME-NET> 1,940,303
<LOAN-LOSSES> 45,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,392,826
<INCOME-PRETAX> 696,269
<INCOME-PRE-EXTRAORDINARY> 696,269
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 551,382
<EPS-PRIMARY> 0.75
<EPS-DILUTED> 0.75
<YIELD-ACTUAL> 5.52
<LOANS-NON> 104,258
<LOANS-PAST> 106,746
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,732,773
<ALLOWANCE-OPEN> 890,666
<CHARGE-OFFS> 11,805
<RECOVERIES> 4,815
<ALLOWANCE-CLOSE> 928,676
<ALLOWANCE-DOMESTIC> 117,470
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 811,206
</TABLE>
