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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1996
Commission File Number 0-12885
NBC Capital Corporation
(Exact name of registrant as specified in its charter)
Delaware 64-0694755
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
NBC Plaza, Starkville, Mississippi 39759
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(601) 323-1341
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: None
Name of each exchange on which registered: None
Securities registered pursuant to Section 12(g) of the Act:
Common stock, $1 par value
(Title of Class)
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 by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to the Form 10-K. ( X )
Aggregate market value of the voting stock held by nonaffiliates was
approximately:
$65,164,000
___________________________
(based on most recent sale)
Indicate the number of shares outstanding of each of the issuers'
classes of common stock as of the latest practicable date:
Common Stock, $1 par value - 1,200,000 shares outstanding as
of December 31, 1996.
Documents incorporated by reference -
Annual report to shareholders for 1996 - Parts II and IV
Proxy statement dated March 17, 1997 - Part III
PART I
ITEM 1 - BUSINESS
NBC Capital Corporation
NBC Capital Corporation (the Company) is a multi-bank holding
company which was organized under the laws of the State of Mississippi
in 1984 and was reorganized in 1987 under the laws of the State of
Delaware. On July 2, 1984, the Company acquired all of the outstanding
common stock of the National Bank of Commerce of Mississippi (NBC), a
national banking corporation. On January 1, 1994, the Company acquired
more than 99% of the outstanding common stock of NBC of Tuscaloosa
(formerly First State Bank of Tuscaloosa). For the year ended
December 31, 1996, these financial institutions and their subsidiaries
accounted for 100% of the Company's consolidated income and approximately
99% of its consolidated expenses.
National Bank of Commerce of Mississippi
NBC was originally formed through a series of mergers which began
in 1972 and concluded on October 1, 1974. In March, 1991, NBC acquired
the assets and assumed the liabilities of the Bank of Philadelphia, a
$75 million institution. NBC operates under the original Federal
Charter granted to the First National Bank of Monroe County in 1887.
NBC is the largest commercial bank domiciled in the eastern area
of the state known as the Golden Triangle. A total of 25 banking
facilities and an operations center serve the communities of Aberdeen,
Amory, Artesia, Brooksville, Columbus, Hamilton, Maben, Philadelphia
and Starkville. This area extends into five Mississippi counties with
a radius of approximately 65 miles from the home office in Starkville.
NBC is engaged in the general banking business and activities
closely related to banking as authorized by the banking laws and
regulations of the United States. There were no significant changes
in the business activities of NBC during 1996.
NBC provides a complete line of wholesale and retail services
including mortgage loans and trust. The customer base is well
diversified and consists of business, industry, agriculture,
government, education and individual accounts. Profitability and
growth have been consistent throughout the history of the bank.
NBC utilizes a written Asset/Liability Management Policy which
calls for maintaining the 24 month GAP within a tolerance of + 5% -
10% of total assets. The financial plan calls for a return on assets
of 1.5% and a minimum return on equity of 10%.
NBC is operated in a conservative fashion while meeting the
needs of the community. There has been no disposition of any material
amounts of assets nor has there been a material change in the mode of
conducting business. No major changes in operation are planned for
the near future.
NBC of Tuscaloosa
NBC of Tuscaloosa was organized in 1968 and as a national bank
operates under the regulations of the Office of the Comptroller of
the Currency ("OCC").
NBC of Tuscaloosa is located in Tuscaloosa, Alabama, a city with
a population of approximately 85,000 people. It was acquired by the
Company on January 1, 1994. Management of the Company is of the
opinion that this acquisition provides for new opportunities for
growth and expansion. Tuscaloosa, Alabama, is a city that expects
future economic development. As an example, Mercedes has recently
completed construction of an automotive plant in the Tuscaloosa area.
Management of the Company believes the acquisition places the Company
in a position to participate in the economic development.
NBC of Tuscaloosa competes with many other financial institutions
in the Tuscaloosa area, most of which are larger. NBC of Tuscaloosa
had total assets of $85 million at December 31, 1996, and reported net
income of $842 thousand for the year ended December 31, 1996. The
bank's history has been one of moderate growth and average earnings
when compared to its peer group.
NBC of Tuscaloosa is engaged in the general banking business and
activities closely related to banking as authorized by current laws
and regulations.
NBC of Tuscaloosa provides a complete line of wholesale and
retail services, including mortgage loans. The customer base consists
principally of business, industry and individual accounts.
The Company operates NBC of Tuscaloosa in a conservative fashion
while meeting the needs of the community.
NBC of Tuscaloosa has adopted the asset/liability management
policy of NBC. The financial plan calls for a return on assets of
1% and a minimum return on equity (net of goodwill) of 9%.
NBC Service Corporation
NBC Service Corporation (Service) is a wholly-owned subsidiary
of NBC and was formed to provide additional financial services that
otherwise might not be provided by NBC. For the years 1996 and 1995,
its primary activity was limited to its investment in Commerce National
Insurance Company (CNIC) of which Service owns 79%. Commerce National
Insurance Company is a credit life insurance company whose primary
source of income is from premiums on credit life insurance on loans
issued by NBC.
Philadelphia Finance Corporation
Philadelphia Finance Corporation (Finance), a wholly-owned
subsidiary of NBC, is a finance company that provides lending and
financing services to consumers. It engages in consumer financing,
and its loans are of a smaller amount and a higher interest rate than
that of NBC. Finance has one office located in Philadelphia,
Mississippi.
Competition
NBC and its subsidiaries currently serve five counties and nine
municipalities in North Mississippi. Over this same area, the bank
competes directly with approximately 15 competing banking institutions,
credit unions, finance companies, brokerage firms, mortgage companies
and insurance companies. The institutions range in asset size from
approximately $100 million to in excess of $5 billion. NBC is the
largest bank domiciled in its immediate service area. Asset size of
competitive banks depends on whether the reference is made to the
branch banks or to their parent banks. Several other competitors are
branches or divisions of nationwide companies with more resources than
the Company and its subsidiaries.
NBC of Tuscaloosa is located in Tuscaloosa, Alabama, and has a
main office and three branch locations. The bank competes with
approximately eight other financial institutions, most of which are
larger. The other institutions range in size from approximately $20
million to $15 billion. Asset size of the competitive banks depends
on whether reference is made to the branch banks or to their parent
bank. NBC of Tuscaloosa also competes with numerous credit unions,
finance companies, etc., many of which are branches of nationwide
companies. The acquisition of NBC of Tuscaloosa by the Company
provides NBC of Tuscaloosa with access to resources, products, and
services previously unavailable, thereby improving its competitive
position.
Supervision and Regulation
The Company and its subsidiaries are subject to state and federal
banking laws and regulations which impose specific requirements or
restrictions on and provide for general regulatory oversight with
respect to virtually all aspects of operations. These laws and
regulations are generally intended to protect depositors, not
shareholders. To the extent that the following summary describes
statutory or regulatory provisions, it is qualified in its entirety
by reference to the particular statutory and regulatory provisions.
Any change in applicable laws or regulations may have a material
effect on the business and prospects of the Company. Beginning with
the enactment of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA") and following with Federal Deposit
Insurance Corporation Improvement Act (FDICIA), which was enacted in
1991, numerous additional regulatory requirements have been placed on
the banking industry, and additional changes have been proposed. The
operations of the Company and its subsidiaries may be affected by
legislative changes and the policies of various regulatory authorities.
The Company is unable to predict the nature or the extent of the effect
on its business and earnings that fiscal or monetary policies, economic
control, or new federal or state legislation may have in the future.
The Company is a bank holding company within the meaning of the
Bank Holding Company Act of 1956 (the Act) and is registered as such
with the Board of Governors of the Federal Reserve System (the Federal
Reserve Board). As a bank holding company, the Company is required
to file with the Federal Reserve Board an annual report and such other
information as may be required. The Federal Reserve Board may also
make examinations of the Company. In addition, the Federal Reserve
Board has the authority to regulate provisions of certain bank holding
company debt.
The Act requires every bank holding company to obtain the prior
approval of the Federal Reserve Board before acquiring substantially
all the assets of or direct or indirect ownership or control of more
than 5% of the voting shares of any bank which is not already
majority-owned. The Act also prohibits a bank holding company, with
certain exceptions, from engaging in or acquiring direct or indirect
control of more than 5% of the voting shares of any company engaged in
non-banking activities. One of the principal exceptions to these
prohibitions is for engaging in or acquiring shares of a company
engaged in activities found by the Federal Reserve Board by order or
regulation to be so closely related to banking or managing banks as to
be a proper incident thereto. The Act prohibits the acquisition by a
bank holding company of more than 5% of the outstanding voting shares
of a bank located outside the state in which the operations of its
banking subsidiaries are principally conducted, unless such an
acquisition is specifically authorized by statute of the state in
which the bank to be acquired is located. The Act and regulations of
the Federal Reserve Board also prohibit a bank holding company and its
subsidiaries from engaging in certain tie-in arrangements in connection
with any extension of credit or provision of any property or services.
As a bank holding company, the Company is required to give the
Federal Reserve prior written notice of any purchase or redemption of
its outstanding equity securities if the gross consideration for the
purchase or redemption, when combined with the net consideration paid
for all such purchases or redemptions during the preceding 12 months,
is equal to 10% or more of the Company's consolidated net worth. The
Federal Reserve may disapprove such a purchase or redemption if it
determines that the proposal constitutes an unsafe or unsound practice,
would violate any law, regulation, Federal Reserve order or directive
or any condition imposed by, or written agreement with, the Federal
Reserve.
In accordance with Federal Reserve Board policy, the Company is
expected to act as a source of financial strength to the subsidiaries.
The Federal Reserve Board may require a bank holding company to
terminate any activity or relinquish control of a nonbank subsidiary
(other than a nonbank subsidiary of a bank) upon the Federal Reserve
Board's determination that such activity or control constitutes a
serious risk to the financial soundness or stability of any subsidiary
depository institution of the bank holding company. Further, federal
bank regulatory authorities have additional discretion to require a
bank holding company to divest itself of any bank or nonbank subsidiary
if the agency determines that divestiture may aid the depository
institution's financial condition.
Dividends paid by the Company are substantially provided from
dividends from the banking subsidiaries. Generally, the approval of the
OCC is required if the total of all dividends declared by a bank in any
calendar year exceeds the total of its net profits for that year
combined with its retained net profits of the preceding two years. At
December 31, 1996, the banking subsidiaries had available for payment
of dividends to the Company, without prior approval of their regulator,
approximately $10 million.
The Federal Reserve Board, FDIC and OCC have established risk-based
capital guidelines for holding companies, such as the Company, and its
subsidiary banks. The capital-based regulatory framework contains five
categories of compliance with regulatory capital requirements, including
"well capitalized," adequately capitalized," undercapitalized,"
significantly undercapitalized," and critically undercapitalized." The
Company's strategy related to risk-based capital is to maintain capital
levels which will be sufficient to qualify the Company's banking
subsidiaries for the "well capitalized" category under the guidelines
set forth by the FDICIA. Maintaining capital ratios at the "well
capitalized" level avoids certain restrictions which, for example,
could impact the Company's banking subsidiaries' FDIC assessment, trust
services and asset/liability management. At December 31, 1996, the
tier I and total capital ratios, respectively, of the Company
(consolidated) and its subsidiary banks (individually) were well above
the minimum 6% and 10% levels required to be categorized as a "well
capitalized" insured depository institution.
The FDIC, OCC and Federal Reserve Board have historically had
common capital adequacy guidelines involving minimum (a) leverage
capital and (b) risk-based capital requirements:
(a) The first requirement establishes a minimum ratio of capital
as a percentage of total assets. The FDIC, OCC, and Federal Reserve
Board require institutions to maintain a minimum leverage ratio of
Tier 1 capital (as defined) to total average assets based on the
institution's rating under the regulatory CAMEL rating system.
Institutions with CAMEL ratings of one that are not anticipating or
experiencing significant growth and have well-diversified risk are
required to maintain a minimum leverage ratio of 3 percent. An
additional 100 to 200 basis points are required for all but these
most highly rated institutions.
(b) The second requirement also establishes a minimum ratio of
capital as a percentage of total assets, but gives weight to the
relative risk of each asset. The FDIC, OCC, and Federal Reserve Bank
require institutions to maintain a minimum ratio of Tier 1 capital to
risk-weighted assets of 4.0 percent. Banks must also maintain a
minimum ratio of total capital to risk-weighted assets of 8.0 percent.
At December 31, 1996, the Company's Tier 1 and total capital ratios
were 15.6% and 16.9%, respectively.
Under these guidelines, banks' and bank holding companies' assets
are given risk-weights of 0%, 20%, 50%, or 100%. In addition, certain
off-balance sheet items are given credit conversion factors to convert
them to asset equivalent amounts to which an appropriate risk-weight
will apply. These computations result in the total risk-weighted
assets. Most loans are assigned to the 100% risk category, except for
first mortgage loans fully secured by residential property and, under
certain circumstances, residential construction loans, both of which
carry a 50% rating. Most investment securities are assigned to the
20% category, except for municipal or state revenue bonds, which have
a 50% rating, and direct obligations of or obligations guaranteed by
the United States Treasury or United States Government agencies, which
have a 0% rating.
The primary supervisory authority of NBC and NBC of Tuscaloosa is
the OCC. The OCC regulates or monitors virtually all areas of
operations, including security devices and procedures, adequacy of
capitalization and loss reserves, loans, investments, borrowings,
deposits, mergers, issuances of securities, payment of dividends,
interest rates payable on deposits, interest rates or fees chargeable
on loans, establishment of branches, corporate reorganizations,
maintenance of books and records, and adequacy of staff training to
carry on safe lending and deposit gathering practices. The OCC also
imposes limitations on the aggregate investment in real estate, bank
premises, and furniture and fixtures. In addition to regular
examinations, the institution must furnish to its regulator quarterly
reports containing a full and accurate statement of its affairs.
Banks are subject to the provisions of Section 23A of the Federal
Reserve Act, which place limits on the amount of loans or extensions of
credit to, or investments in, or certain other transactions with,
affiliates and on the amount of advances to third parties collateralized
by the securities or obligations of affiliates. The aggregate of all
covered transactions is limited in amount, as to any one affiliate, to
10% of the bank's capital and surplus and, as to all affiliates combined,
to 20% of the bank's capital and surplus. Furthermore, within the
foregoing limitations as to amount, each covered transaction must meet
specified collateral requirements. Compliance is also required with
certain provisions designed to avoid the taking of low quality assets.
Banks are also subject to the provisions of Section 23B of the
Federal Reserve Act which, among other things, prohibit an institution
from engaging in certain transactions with certain affiliates unless the
transactions are on terms substantially the same, or at least as
favorable to such institution or its subsidiaries, as those prevailing
at the time for comparable transactions with non-affiliated companies.
The Bank is subject is certain restrictions on extensions of credit to
executive officers, directors, certain principal shareholders, and their
related interests. Such extensions of credit (i) must be made on
substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with third
parties and (ii) must not involve more than the normal risk of repayment
or present other unfavorable features.
National banks are required by the National Bank Act to adhere to
branch office banking law. NBC and NBC of Tuscaloosa may open branches
throughout Mississippi or Alabama with the prior approval of the OCC.
In addition, with prior regulatory approval, the subsidiary banks are
able to acquire existing banking operations in Mississippi and Alabama.
Furthermore, federal legislation has recently been passed which permits
interstate branching. The new law permits out of state acquisitions
by bank holding companies (subject to veto by new state law),
interstate branching by banks if allowed by state law, interstate
merging by banks, and de novo branching by national banks if allowed by
state law.
The Community Reinvestment Act requires that, in connection with
examinations of financial institutions within their respective
jurisdictions, the Federal Reserve, the FDIC, or the OCC shall evaluate
the record of the financial institutions in meeting the credit needs of
their local communities, including low and moderate income neighborhoods,
consistent with the safe and sound operation of those institutions.
These factors are also considered in evaluating mergers, acquisitions,
and applications to open a branch or facility.
Interest and certain other charges collected or contracted by Banks
are often subject to state usuary laws and certain federal laws
concerning interest rates. The loan operations are also subject to
certain federal laws applicable to credit transactions, such as the
federal Truth-In-Lending Act, governing disclosures of credit terms to
consumer borrowers; the Home Mortgage Disclosure Act of 1975, requiring
financial institutions to provide information to enable the public and
public officials to determine whether a financial institution will be
fulfilling its obligation to help meet the housing needs of the community
it serves; the Equal Credit Opportunity Act, prohibiting discrimination
on the basis of race, creed or other prohibited factors in extending
credit; the Fair Credit Reporting Act of 1978, governing the use and
provision of information to credit reporting agencies; the Fair Debt
Collection Act, governing the manner in which consumer debts may be
collected by collection agencies; and the rules and regulations of the
various federal agencies charged with the responsibility of implementing
such federal laws. The deposit operations also are subject to the Right
to Financial Privacy Act, which imposes a duty to maintain
confidentiality of consumer financial records and prescribes procedures
for complying with administrative subpoenas of financial records, and
the Electronic Funds Transfer Act and Regulation E issued by the Federal
Reserve Board to implement that act, which governs automatic deposits to
and withdrawals from deposit accounts and customers' rights and
liabilities arising from the use of automated teller machines and other
electronic banking services.
Subsidiary banks of a bank holding company are subject to certain
restrictions imposed by the Federal Reserve Act on any extensions of
credit to the bank holding company or any of its subsidiaries, on
investments in stock or other securities thereof and on the taking of
such stock or securities as collateral for loans to any borrower.
The bank subsidiaries are members of the FDIC and their deposits are
insured as provided by law.
Finance and CNIC are subject to regulation by the applicable state
agencies. These agencies set reserve requirements, reporting standards,
and establish regulations, all of which affect business operations.
Governmental Monetary Policies
As banks chartered under the laws of the United States, NBC and NBC
of Tuscaloosa are members of the Federal Reserve System. Their earnings
are affected by the fiscal and monetary policies of the Federal Reserve
System which regulates the national money supply in order to mitigate
recessionary and inflationary pressures. The techniques used by the
Federal Reserve System include setting the reserve requirements of
depository institutions and establishing the discount rate on member
bank borrowings. The Federal Reserve System also conducts open market
operations in United States Government securities.
The policies of the Federal Reserve System and other regulatory
agencies have a direct effect on the amount of bank loans and deposits,
and the interest rates charged and paid thereon. While the impact these
policies may have upon the future business and earnings of the financial
institutions cannot be accurately predicted, such policies can materially
affect the earnings of commercial banks.
Sources and Availability of Funds
The materials essential to the business of the Company and its
subsidiaries consist primarily of funds derived from deposits and other
borrowing in the financial markets. The availability of funds is
primarily dependent upon the economic policies of the government, the
economy in general and the institution's ability to compete in the market
place.
Seasonability
Neither the Company nor any of its subsidiaries are dependent upon
any seasons.
Dependence Upon A Single Customer
Neither the Company nor any of its subsidiaries are dependent upon
a single customer or very few customers.
Executive Officers
The executive officers of the Company and its bank subsidiaries,
National Bank of Commerce of Mississippi and NBC of Tuscaloosa are
listed below. The title indicates a position held in the Company and
the bank subsidiaries.
Name and Title Age Five Year Experience
_____________________________ ___ ____________________________________
L. F. Mallory, Jr. 54 Chairman of the Board, President and
Chairman, President and Chief Executive Officer, NBC
Chief Executive Office Capital Corporation and NBC of
Mississippi
Bobby Harper 55 Chairman of Executive Committe, NBC
Chairman of the Executive Capital Corporation and NBC of
Committee Mississippi, Columbus Banking
Center
Hunter M. Gholson 64 Secretary of NBC Capital Corporation
Secretary and NBC of Mississippi
Mark A. Abernathy 40 Executive Vice President and Chief
Executive Vice President and Operating Officer, NBC Capital
Chief Operating Officer, NBC Corporation and NBC of Mississippi.
Capital Corporation and NBC Prior to joining NBC in 1994, he
of Mississippi was Consumer Regional Executive
Officer of Nations Bank, Nashville,
Tennessee.
Richard Haston 50 Treasurer and Assistant Secretary,
Treasurer and Assistant NBC Capital Corporation, and
Secretary, NBC Capital Executive Vice President and
Corporation and Executive Chief Financial Officer, NBC of
Vice President and Chief Mississippi since October 1, 1996;
Financial Officer, NBC of Executive Vice President and Chief
Mississippi Financial Officer of Legacy
Securities Corp., Memphis,
Tennessee, March, 1996 -
September, 1996; President and Chief
Financial Officer of Calabare
Financial Group, Inc., Memphis,
Tennessee, June, 1993 -
February, 1996
Carl M. Holloway 50 Vice President, NBC Capital
Vice President, NBC Capital Corporation and Executive Vice
Corporation, and Executive President, NBC of Mississippi
Vice President, NBC of
Mississippi
Joel C. Clements 49 Vice President, NBC Capital
Vice President, NBC Capital Corporation and Executive Vice
Corporation and Executive President, NBC of Mississippi
Vice President, NBC of
Mississippi
Clifton B. Fowler 48 Vice President, NBC Capital
Vice President, NBC Capital Corporation and President, NBC of
Corporation and President, Mississippi, Starkville Banking
NBC of Mississippi, Center. Has held current position
Starkville Banking Center since November, 1990. Prior to
joining NBC was with Trustmark
National Bank.
Thomas J. Prince, Jr. 55 Vice President, NBC Capital
Vice President, NBC Capital Corporation and President, NBC
Corporation and President, of Mississippi, Aberdeen
NBC of Mississippi, Aberdeen Banking Center
Banking Center
Kenneth A. Madison 64 Vice President, NBC Capital
Vice President, NBC Capital Corporation, and President,
Corporation and President, NBC of Mississippi,
NBC of Mississippi, Philadelphia Banking Center. Has
Philadelphia Banking Center held current position since March,
1991. Prior to joining NBC was
President and C/E/O of Bank of
Philadelphia, Philadelphia,
Mississippi
Thomas P. Hester 63 President and other positions of
President, NBC of Tuscaloosa NBC of Tuscaloosa
Rex D. Poole 59 Vice President, NBC Capital
Vice President, NBC Capital Corporation and Senior Vice
Corporation and Senior Vice President and Trust Officer,
President and Trust Officer, NBC of Mississippi
NBC of Mississippi
Donald J. Bugea, Jr. 43 Executive Vice President and
Executive Vice President and Investment Officer, NBC of
Investment Officer, NBC of Mississippi. Has held current
Mississippi position since January, 1992.
Prior to joining NBC was Senior
Vice President and Cashier,
NBC of Baton Rouge, Louisiana
Terrence Y. Dewitt 35 Executive Vice President and other
Executive Vice President, positions of NBC of Tuscaloosa
NBC of Tuscaloosa
Personnel
At December 31, 1996, NBC and NBC of Tuscaloosa had 337 full-
time employees. The Company, Service and CNIC had no employees at
December 31, 1996. The finance company had three employees.
ITEM 2 - PROPERTIES
The Company, Service and CNIC owned no properties at December 31,
1996.
The following listing describes the locations and general character of
the Bank-owned properties:
Approximate
Office Space
Type Location (Square Feet)
______________________________ _________________________ _____________
NBC of Mississippi:
Main Office Starkville, Mississippi 35,000
University Branch Starkville, Mississippi 1,485
Motor Branch Starkville, Mississippi 2,000
82 Branch Starkville, Mississippi 2,077
Operations Center Starkville, Mississippi 16,500
Starkville Crossing Starkville, Mississippi 2,000
Main Office Columbus, Mississippi 36,000
North Columbus Branch Columbus, Mississippi 1,440
Fairlane Branch Columbus, Mississippi 2,400
Gardner Blvd. Branch Columbus, Mississippi 1,156
Bluecutt Road Branch Columbus, Mississippi 3,200
Main Office Aberdeen, Mississippi 11,026
Maple Street Branch Aberdeen, Mississippi 998
Highway 45 North Branch Aberdeen, Mississippi 1,205
Main Office Amory, Mississippi 8,550
Medical and Industrial
Center Branch Amory, Mississippi 950
Main Office Artesia, Mississippi 1,500
Main Office Brooksville, Mississippi 3,000
Main Office Hamilton, Mississippi 1,800
Main Office Maben, Mississippi 4,000
Main Office Philadelphia, Mississippi 6,000
Northside Branch Philadelphia, Mississippi 300
Courtside Branch Philadelphia, Mississippi 400
Southside Branch Philadelphia, Mississippi 450
Operations Center Philadelphia, Mississippi 6,600
Westside Branch Philadelphia, Mississippi 3,250
NBC of Tuscaloosa:
Main Office Tuscaloosa, Alabama 6,400
Northport Branch Tuscaloosa, Alabama 3,018
University Branch Tuscaloosa, Alabama 2,480
North Tuscaloosa Branch Tuscaloosa, Alabama 3,250
Finance operates out of NBC's building located in Philadelphia,
Mississippi.
In the opinion of management, all properties are in good condition
and are adequate to meet the needs of the communities they serve.
ITEM 3 - LEGAL PROCEEDINGS
There are no pending proceedings of a material nature to which the
Company, NBC, NBC of Tuscaloosa, Service, Finance, or CNIC is a party.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5 - MARKET FOR COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
(a) The information titled "Market Information" and contained on
Page 34 of the Company's annual report to shareholders for the year
1996 is incorporated herein by reference in response to this item and
included in this report as Exhibit 13.a.
(b) At December 31, 1996, the Company had approximately 1,800 security
holders.
(c) Dividends on common stock were declared semiannually in June and
December of the years reported and totaled as follows:
December 31,
______________________
1996 1995
__________ __________
Dividends declared, $2.45 per share $2,940,000 $ -
Dividends declared, $2.40 per share - 2,880,000
__________ __________
$2,940,000 $2,880,000
========== ==========
ITEM 6 - SELECTED FINANCIAL DATA
The information titled "Selected Financial Data" and contained on
Page 34 of the Company's annual report to the shareholders for the year
1996 is incorporated herein by reference in response to this item and
included in this report as Exhibit 13.b.
SUPPLEMENTAL STATISTICAL INFORMATION
I. Distribution of Assets, Liabilities, and Stockholders' Equity;
Interest Rates and Interest Differential
A. Average balance sheets (consolidated):
(In Thousands)
Assets 1996 1995 1994
________ ________ ________
Cash and due from banks $ 25,942 $ 20,406 $ 19,515
Securities:
Taxable 108,918 115,574 120,870
Non-taxable 66,972 68,934 57,649
________ ________ ________
Total securities 175,890 184,508 178,519
Federal funds sold and
securities purchased under
agreement to resell 6,680 6,809 4,882
Loans, net of unearned interest 364,957 338,631 306,702
Less reserve for loan losses 6,691 6,136 5,488
________ ________ ________
Net loans 358,266 332,495 301,214
Other assets 28,672 26,483 23,582
________ ________ ________
Total Assets $595,450 $570,701 $527,712
======== ======== ========
Liabilities and
Stockholders' Equity
Deposits:
Noninterest-bearing $ 71,941 $ 69,058 $ 65,010
Interest-bearing 437,030 422,451 386,000
________ ________ ________
Total deposits 508,971 491,509 451,010
Federal funds purchased and
securities sold under
agreement to repurchase 4,087 2,185 5,557
Borrowed funds 11,674 11,670 13,367
Other liabilities 7,735 6,601 5,111
________ ________ ________
Total liabilities 532,467 511,965 475,045
Stockholders' equity 62,983 58,736 52,667
________ ________ ________
Total Liabilities and
Stockholders' Equity $595,450 $570,701 $527,712
======== ======== ========
B. Analysis of Net Interest Earnings
The table below shows, for the periods indicated, an analysis of
net interest earnings, including the average amount of interest-
earning assets and interest-bearing liabilities outstanding during
the period, the interest earned or paid on such amounts, the
average yields/rates paid and the net yield on interest-earning
assets:
($ In Thousands)
Average Balance
____________________________
1996 1995 1994
________ ________ ________
EARNING ASSETS
Net loans $358,266 $332,495 $301,214
Federal funds sold and
securities purchased under
agreement to resell 6,680 6,809 4,882
Securities:
Taxable 108,918 115,574 120,870
Nontaxable 66,972 68,934 57,649
________ ________ ________
Totals 540,836 523,812 484,615
________ ________ ________
INTEREST-BEARING LIABILITIES
Interest-bearing deposits 437,030 422,451 386,000
Borrowed funds, federal funds
purchased securities sold
under agreement to repurchase 15,761 13,855 18,924
________ ________ ________
Totals 452,791 436,306 404,924
________ ________ ________
Net Amounts $ 88,045 $ 87,506 $ 79,691
======== ======== ========
($ In Thousands) Yields Earned
Interest for the Year And
Ended December 31, Rates Paid (%)
_______________________ ______________
1996 1995 1994 1996 1995 1994
_______ _______ _______ ____ ____ ____
EARNING ASSETS
Net loans $32,913 $30,731 $25,217 9.19 9.24 8.37
Federal funds sold and
securities purchased
under agreement to
resell 402 446 258 6.02 6.55 5.28
Securities:
Taxable 6,789 7,233 7,231 6.23 6.26 5.98
Nontaxable 3,741 3,840 3,107 5.59 5.57 5.39
_______ _______ _______
Totals 43,845 42,250 35,813 8.11 8.06 7.39
_______ _______ _______
INTEREST-BEARING
LIABILITIES
Interest-bearing
deposits 18,513 17,906 12,747 4.24 4.24 3.30
Borrowed funds,
federal funds
purchased securities
sold under agreement
to repurchase 795 779 798 5.04 5.62 4.22
_______ _______ _______
Totals 19,308 18,685 13,545 4.26 4.28 3.35
_______ _______ _______
Net Amounts $24,537 $23,565 $22,268
======= ======= =======
Net yield on earning assets 4.54 4.50 4.59
(1) Interest and yields on tax-exempt obligations are not on a
fully taxable equivalent basis.
(2) For the purpose of these computations, nonaccruing loans
are included in the average loan balances outstanding.
C. Increase (Decrease) in Interest Income and Interest Expense
The following table analyzes the changes in both the rate and volume
components of net interest revenue:
(In Thousands) (In Thousands)
1996 Over 1995 1995 Over 1994
______________________ ______________________
Change Due To: Change Due To:
______________________ ______________________
Total Rate Volume Total Rate Volume
______ ______ ______ ______ ______ ______
EARNING ASSETS
Net loans $2,182 $ (164) $2,346 $5,514 $2,757 $2,757
Federal funds sold and
securities purchased
under agreement to
resell (44) (36) (8) 188 71 117
Securities:
Taxable (444) (35) (409) 2 32 (30)
Nontaxable (99) 15 (114) 733 107 626
______ ______ ______ ______ ______ ______
Totals $1,595 $ (220) $1,815 $6,437 $2,967 $3,470
====== ====== ====== ====== ====== ======
INTEREST-BEARING
LIABILITIES
Interest-bearing deposits $ 607 $ - $ 607 $5,159 $3,874 $1,285
Interest on borrowed
funds and federal funds
purchased and securities
sold under agreement to
repurchase 16 (47) 63 (19) 80 (99)
______ ______ ______ ______ ______ ______
Totals $ 623 $ (47) $ 670 $5,140 $3,954 $1,186
====== ====== ====== ====== ====== ======
NOTE: (1) Change in volume is the change in volume times the previous
year's rate.
(2) Change in rate is the change in rate times the previous year's
balance.
(3) The change in interest due to both rate and volume has been
allocated to volume and rate changes in proportion to the
relationship of the absolute dollar amounts of change to each.
II. INVESTMENT PORTFOLIO
A. The following tables present the book values of securities as of the
dates indicated:
(In Thousands)
December 31,
____________________________
1996 1995 1994
________ ________ ________
U. S. Treasury $ 31,680 $ 26,039 $ 23,907
U. S. Government agencies and
mortgage-backed securities 63,055 81,300 76,779
States and political subdivisions 67,795 66,950 70,917
Other 5,312 5,054 4,543
________ ________ ________
Total book value $167,842 $179,343 $176,146
======== ======== ========
B. The following table sets forth the maturities of investment and
mortgage-backed securities (carrying values) at December 31,
1996, and the weighted average yield of such securities:
($ In Thousands)
Weighted Average Yield
______________________________________________
0 - 1 Yield 1 - 5 Yield 5 - 10 Yield
Year (%) Years (%) Years (%)
_______ _____ _______ _____ _______ _____
Securities:
U. S. Treasury $ 4,017 6.6% $27,458 6.1% $ 205 6.4%
U. S. Govern-
ment agencies 7,838 7.1% 16,141 6.4% 205 7.5%
States and
political
subdivisions 6,764 4.5% 29,942 4.9% 7,764 6.3%
Other 85 7.5% 773 6.3% 546 7.3%
_______ _______ _______
Total $18,704 $74,314 $ 8,720
======= ======= =======
10+ Yield
Years (%)
_______ _____
States and
political
subdivisions $23,325 6.3%
Other (equity
securities) 3,908 5.9%
_______
Total $27,233
=======
Book Yield
Value (%)
_______ _____
Mortgage-
backed
securities $38,871 6.4%
=======
NOTE: Interest and yields on tax-exempt obligations are not on
a taxable equivalent basis.
Average yield on floating rate securities was determined
using the current yield.
C. Investment securities in excess of 10% of stockholders' equity.
At December 31, 1996, there were no securities from any issues
in excess of 10% of stockholders' equity.
III. LOAN PORTFOLIO
A. Type of loans
The amount of loans outstanding by type at the indicated dates
are shown in the following table:
(In Thousands)
December 31,
________________________________________________
Type 1996 1995 1994 1993 1992
______________ ________ ________ ________ ________ ________
Commercial,
financial and
agriculture $ 64,604 $ 56,219 $ 51,541 $ 35,177 $ 33,814
Real estate -
construction 13,578 11,892 12,372 2,777 3,491
Real estate -
mortgage 219,403 193,686 178,391 140,162 123,535
Installment
loans to
individuals 81,351 83,281 79,961 73,756 66,211
Other 7,582 5,989 5,297 5,654 5,522
________ ________ ________ ________ ________
Total loans 386,518 351,067 327,562 257,526 232,573
Unearned
interest (903) (2,649) (4,031) (5,597) (5,600)
________ ________ ________ ________ ________
$385,615 $348,418 $323,531 $251,929 $226,973
======== ======== ======== ======== ========
B. Maturities and sensitivities of loans to changes in interest rates:
(In Thousands)
December 31, 1996
______________________________________
Maturing
______________________________________
Within 1 - 5 Over
Type 1 Year Years 5 Years Total
________________________ ________ ________ ________ ________
Commercial, financial
and agricultural $ 51,448 $ 11,756 $ 1,400 $ 64,604
Real estate -
construction 13,503 43 32 13,578
Other loans, excluding
real estate - mortgage
and installment loans 6,697 885 - 7,582
________ ________ ________ ________
$ 71,648 $ 12,684 $ 1,432 $ 85,764
======== ======== ======== ========
Loans with: (1)
Predetermined interest
rates $ 46,021 $ 97,279 $ 20,049 $163,349
Floating interest
rates 221,259 456 19 221,734
________ ________ ________ ________
$267,280 $ 97,735 $ 20,068 $385,083
======== ======== ======== ========
(1) Excludes nonaccrual loans of $1,435.
C. Nonperforming loans
1. The following tables states the aggregate amount of loans
which were nonperforming in nature:
(In Thousands)
December 31,
______________________________________
Type 1996 1995 1994 1993 1992
__________________ ______ ______ ______ ______ ______
Loans accounted
for on a
nonaccrual basis $1,435 $2,028 $1,397 $1,451 $1,442
====== ====== ====== ====== ======
Accruing loans
past due 90 days
or more $ 727 $ 447 $ 601 $ 484 $ 794
====== ====== ====== ====== ======
Renegotiated
"troubled" debt $ 471 $ 390 $ 306 $ 853 $ 632
====== ====== ====== ====== ======
2. There were no loan concentrations in excess of 10% of total
loans at December 31, 1996.
3. There were no outstanding foreign loans at December 31,
1996.
4. Loans classified for regulatory purposes or for internal
credit review purposes that have not been disclosed in the
above table do not represent or result from trends or
uncertainties that management expects will materially
impact the financial condition of the Company or its
subsidiary banks, or their future operating results,
liquidity, or capital resources.
5. If all nonaccrual loans had been current throughout their
terms, interest income would have not been significantly
different for the years ended 1996, 1995, and 1994.
6. Management stringently monitors loans that are classified
as nonperforming. Nonperforming loans include nonaccrual
loans, loans past due 90 days or more, and loans renegotiated
or restructured because of a debtor's financial difficulties.
Loans are generally placed on nonaccrual status if any of the
following events occur: 1) the classification of a loan as
nonaccrual internally or by regulatory examiners,
2) delinquency on principal for 90 days or more unless
management is in the process of collection, 3) a balance
remains after repossession of collateral, 4) notification
of bankruptcy, or 5) management's judgment that nonaccrual
is appropriate.
7. At December 31, 1996, management was not aware of any
potential problem loans not previously disclosed.
D. Other interest-bearing assets
There were no other interest-bearing non-performing assets
at December 31, 1996.
IV. Summary of Loan Loss Experience
A. An analysis of the loan loss experience for the periods
indicated is as follows:
($ In Thousands)
December 31,
___________________________________________
1996 1995 1994 1993 1992
_______ _______ _______ _______ _______
Beginning balance $ 6,419 $ 5,719 $ 4,450 $ 3,204 $ 2,796
_______ _______ _______ _______ _______
Charge-offs:
Domestic:
Commercial,
financial and
agricultural (229) (237) (78) (151) (743)
Real estate (103) (109) (239) (80) (413)
Installment
loans and
other (904) (422) (392) (427) (822)
_______ _______ _______ _______ _______
Total charge-offs (1,236) (768) (709) (658) (1,978)
_______ _______ _______ _______ _______
Recoveries:
Domestic:
Commercial,
financial and
agricultural 49 54 48 122 79
Real estate 39 40 25 31 97
Installment
loans and
other 193 209 177 116 181
_______ _______ _______ _______ _______
Total recoveries 281 303 250 269 357
_______ _______ _______ _______ _______
Net charge-offs (955) (465) (459) (389) (1,621)
_______ _______ _______ _______ _______
Reserve of
acquired bank - - 494 - -
Provision charged
to operations 1,314 1,165 1,234 1,635 2,029
_______ _______ _______ _______ _______
Ending balance $ 6,778 $ 6,419 $ 5,719 $ 4,450 $ 3,204
======= ======= ======= ======= =======
Ratio of net
charge-offs to
average loans
outstanding .27 .14 .15 .13 .75
Ratio of reserve
for loan losses
to loans
outstanding at
year end 1.76 1.84 1.77 1.77 1.41
B. Determination of Reserve for Loan Losses
The information contained in Note A-6 to the financial statements
of the annual report to shareholders is incorporated herein by
reference and included in this report as Exhibit 13.d.
C. Loans and Risk Descriptions
Real Estate Loans
NBC and NBC of Tuscaloosa originate loans secured by commercial
real estate, one-to-four family residential properties, and
multi-family dwelling units (5 or more units). At December 31,
1996, these loans totaled $220 million or approximately 60% of
the loan portfolio.
NBC and NBC of Tuscaloosa originate commercial real estate loans
up to 80% of the appraised value. Currently, it is the
philosophy to originate these loans only to selected known
borrowers and on properties in the market area.
Of primary concern in commercial real estate lending is the
borrower's credit worthiness and the feasibility and cash flow
potential of the project. To monitor cash flows of borrowers,
annual financial statements are obtained from the borrower and
loan guarantors, if any. Although many banks have had
significant losses in commercial real estate lending, NBC and
NBC of Tuscaloosa have sustained few losses, and those losses
were not significant relative to the size of the entire
commercial real estate loan portfolio at the time.
NBC and NBC of Tuscaloosa originate loans secured by first and
junior liens on one-to-four family residences in their lending
areas. Typically, such loans are single family homes that
serve as the primary residence of the borrower. Generally,
these loans are originated in amounts up to 80% of the appraised
value or selling price of the property. In the past, very few
losses from these types of loans have been experienced.
Loans for multi-family (5 or more) residential properties are
generally secured by apartment buildings. Loans secured by
income properties are generally larger and involve greater risk
than residential loans because payments are often dependent on
the successful operation or management of the properties. As a
result, these types of loans may be more sensitive to adverse
conditions in the real estate market or the economy. Cash flow
and financial statements are obtained from the borrowers and any
guarantors. Also, rent rolls are often obtained.
Consumer and Other Loans
NBC and NBC of Tuscaloosa offer consumer loans in the form of
home improvement loans, mobile home loans, automobile loans
and unsecured personal loans. These loans totalled $81 million
or 21% of total loans at December 31, 1996. Consumer loans
are originated in order to provide a wide range of financial
services to customers and because the terms and normally higher
interest rates on such loans help maintain a profitable spread
between the average loan yield and the cost of funds.
In connection with consumer loan applications, the borrower's
income statement and credit bureau report are reviewed. In
addition, the relationship of the loan to the value of the
collateral is considered. All automobile loan applications
are reviewed, as well as the value of the unit which secured
the loan. NBC and NBC of Tuscaloosa intend to continue to
emphasize the origination of consumer loans. Management
believes that its loan loss experience in connection with its
consumer loan portfolio is favorable in comparison to industry
averages.
NBC and NBC of Tuscaloosa make commercial business loans on
both a secured and unsecured basis with terms which generally
do not exceed five years. Non-real estate commercial loans
primarily consist of short-term loans for working capital
purposes, inventories, seasonal loans, lines of credit and
equipment loans. A personal guaranty of payment by the
principals of any borrowing entity is often required and the
financial statements and income tax returns of the entity and
its guarantors are reviewed. At December 31, 1996, NBC and NBC
of Tuscaloosa's commercial business loans represented
approximately 13% of its total loan portfolio.
D. For the year 1997, losses for all loan categories, as a
percentage of average loans, are expected to approximate that
of 1996.
V. Deposits
($ In Thousands)
1996 1995 1994
______________ ______________ ______________
Amount Rate Amount Rate Amount Rate
________ ____ ________ ____ ________ ____
A. Average
deposits:
Domestic:
Noninterest-
bearing
deposits $ 71,941 - $ 69,058 - $ 65,010 -
Interest-
bearing
demand
deposits (1) 154,490 2.9% 156,657 3.1% 141,988 2.3%
Savings
deposits 29,292 2.2% 32,122 2.5% 30,717 2.5%
Time deposits 253,248 5.3% 233,672 5.3% 213,295 4.0%
Foreign N/A N/A N/A
________ ____ ________ ____ ________ ____
Total $508,971 $491,509 $451,010
======== ======== ========
(1) Includes Money Market accounts
B. Other categories
None
C. Foreign deposits
Not material
D. Time certificate of deposit of $100,000 or more and maturities at
December 31, 1996:
(In Thousands)
3 6
Months Months
3 Through Through Over
Months 6 12 12
Total Or Less Months Months Months
_______ _______ _______ _______ _______
Time certificates
of deposit of
$100,000 or more $62,091 $35,122 $ 7,104 $ 9,770 $10,095
======= ======= ======= ======= =======
E. Foreign office time deposits of $100,000 or more
Not applicable
VI. Return on Equity and Assets
The following financial ratios are presented for analytical
purposes:
December 31,
______________________
1996 1995 1994
______ ______ ______
Return on assets (net income divided by
total average assets) 1.4 1.4 1.4
Return on equity (net income divided by
average equity) 13.0 13.3 13.6
Dividend payout ratio (dividends per share
divided by net income per share) 35.9 36.9 34.4
Equity to asset ratio (average equity
divided by average total assets) 10.6 10.3 10.0
VII. Short-term borrowings
Federal
Funds
Purchased
And
Securities
Sold Under Treasury
Agreement Tax and
Agreement to Loan Note
Repurchase Payable
____________ ____________
Balance at December 31, 1996 $ 9,320,948 $ 1,411,286
Weighted average interest rate at
December 31, 1996 5.41% 4.78%
Maximum amount outstanding at any
month end for the year 1996 9,320,948 2,705,264
Average amount outstanding during
the year 1996 3,404,820 1,303,635
Weighted average interest rate during
the year 4.65% 4.47%
VIII. Capital adequacy data
Total capital of the Company as a percentage of total adjusted assets
was as follows:
($ In Thousands)
December 31,
__________________
1996 1995
________ ________
Total assets $614,430 $576,215
Allowance for loan losses 6,778 6,419
________ ________
Total adjusted assets $621,208 $582,634
======== ========
Total stockholders' equity (excluding
unrealized loss) $ 64,611 $ 59,366
Allowance for loan losses 6,778 6,419
Other components of capital - -
________ ________
Total primary capital 71,389 65,785
Total secondary capital - -
________ ________
Total capital $ 71,389 $ 65,785
======== ========
Ratio of total capital to total
adjusted assets 11.5% 11.3%
Tier 1 and total capital as a percentage of "risk-weighted" assets
at December 31, 1996 and 1995, are as follows:
December 31,
______________
1996 1995
______ ______
Tier 1 capital percentage 15.6% 16.4%
Total capital percentage 16.9% 17.6%
The Company's capital ratios exceed the minimum capital requirements
at December 31, 1996, and management expects this to continue.
IX. Interest Sensitivity Analysis
The following table reflects the year-end position of the Company's
interest-earning assets and interest-bearing liabilities which can
either reprice or mature within the designated time period. The
interest rate sensitivity gaps can vary from day-to-day and are not
necessarily a reflection of the future. In addition, certain assets
and liabilities within the same designated time period may
nonetheless reprice at different times and at different levels.
($ In Thousands)
December 31, 1996
______________________________________
Interest Sensitive Within (Cumulative)
______________________________________
Total of
Within Within Within Interest-
3 12 5 Earning
Months Months Years Assets
________ ________ ________ ________
Interest-earning assets:
Loans $194,559 $271,168 $366,450 $386,518
Investment and
mortgage-backed
securities 20,511 46,274 141,922 167,842
Federal funds sold
and other 9,573 9,593 9,593 9,593
________ ________ ________ ________
Totals $224,663 $327,035 $517,965 $563,953
======== ======== ======== ========
Interest-bearing
liabilities:
Deposits and
borrowed funds $243,122 $352,440 $469,183 $469,183
======== ======== ======== ========
Sensitivity gap:
Dollar amount $(18,459) $(25,405) $ 48,782
Percent of total
interest-earning
assets (8.2%) (7.8%) 9.4%
The matching of assets and liabilities may be analyzed by examining
the extent to which such assets and liabilities are "interest rate
sensitive" and by monitoring an institution's interest rate
sensitivity "gap". An asset or liability is said to be interest
rate sensitive within a specific time period if it will mature or
reprice within that time period. The interest rate sensitivity gap
is defined as the difference between the amount of interest-earning
assets anticipated, based upon certain assumptions, to mature or
reprice within that time period. A gap is considered positive when
the amount of interest rate sensitive assets maturing within a
specific time frame exceeds the amount of interest rate sensitive
liabilities maturing within that same time frame. During a period
of falling interest rates, a negative gap would tend to result in
an increase in net interest income while a positive gap would tend
to adversely affect net interest income. In a rising interest rate
environment, an institution with a positive gap would generally be
expected, absent the effects of other factors, to experience a
greater increase in the yield of its assets relative to the costs
of its liabilities and thus an increase in the institution's net
interest income would result whereas an institution with a negative
gap could experience the opposite results.
At December 31, 1996, total interest-earning assets maturing or
repricing within one year was less than interest-bearing liabilities
maturing or repricing within the same time period by $25 million
(cumulative), representing a negative cumulative one year gap of 8%
of earning assets. Management of the Company believes this is the
proper position in the current interest rate environment.
Banking regulators have recently issued advisories concerning the
management of interest rate risk (IRR). The regulators consider
that effective interest rate management is an essential component
of safe and sound banking practices. To monitor its IRR, the
Company's risk management practices include (a) Risk Management,
(b) Risk Monitoring and (c) Risk Control. Risk Management consists
of a system in which a measurement is taken of the amount of
earnings at risk when interest rates change. The Company does this
by first preparing a "base strategy" which is the position of the
bank and its forecasted earnings based upon the current interest
rate environment or, most likely, interest rate environment. The
IRR is then measured based upon hypothetical changes in interest
rates by measuring the impact such a change will have on the "base
strategy."
Risk monitoring consists of evaluating the "base strategy" and the
assumptions used in its development based upon the current interest
rate environment. This evaluation is performed quarterly by
management or more often in a rapidly changing interest rate
situation and monitored by an Asset/Liability Management Committee.
Risk control is utilized based upon the setting of guidelines as to
the tolerance for interest rate exposure. These guidelines are set
by senior management and approved by the board of directors.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information contained on Pages 31 - 33 of the Company's 1996
annual report to shareholders is incorporated herein by reference in
response to this item and included in this report as Exhibit 13.c.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the Company, together with
the report thereon of T. E. Lott & Company, independent accountants, are
set forth on Pages 9 - 30 of the Company's 1996 annual report to
shareholders which is incorporated herein by reference and included in
this report as Exhibit 13.d.
ITEM 9 - DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Reference is made to the material under the captions, "Election of
Directors", "Executive Compensation and Other Information," of the
Company's proxy statement which is incorporated herein by reference.
ITEM 11 - EXECUTIVE COMPENSATION
Reference is made to the caption, "Executive Compensation and Other
Information" Pages 8 - 13 of the proxy statement which is incorporated
herein by reference.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Reference is made to Pages 2 - 7 of the Company's proxy statement
which is incorporated herein by reference.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Reference is made to Pages 13 - 14, "Other Information" of the
Company's proxy statement which is incorporated herein by reference.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed as part of this report:
1. Financial Statements
The consolidated financial statements for the years ended
December 31, 1996 and 1995, together with the report of T. E.
Lott & Company, independent accountants, dated January 23,
1997, appearing on Pages 9 - 30 of the 1996 annual report to
shareholders, are attached as Exhibit 13.d. to this Form 10K
Annual Report.
2. Financial Statement Schedules
Schedules not included have been omitted because they are not
applicable or the required information is shown in the financial
statements or notes thereto.
3. Exhibits:
1. - 2. None
3. Articles of Incorporation and By-Laws:
(Reference is made to Exhibits 3.1 and 3.2 of the
Company's Registration Statement on Form S-14 filed
on April 5, 1984, with the Securities and Exchange
Commission.)
4. - 9. None
10.1 Acquisition agreement between National Bank of Commerce
of Mississippi and Bank of Philadelphia filed as an
exhibit to Form 8K in October, 1990.
Purchase agreement between NBC Capital Corporation and
Charter Holding Company, Inc., filed as an exhibit to
Form 8K in August, 1993.
11. - 12. None
13. Annual report to shareholders - deemed filed herewith
only to the extent it is incorporated elsewhere
herein.
13.a. Market for Company's common stock - Page 34 of the
annual report to stockholders.
13.b. Selected Financial Data - Page 34 of the annual report
to stockholders.
13.c. Management's discussion and analysis of financial
condition and results of operations - Pages 31 - 33 of
the annual report to stockholders.
13.d. Consolidated financial statements - Pages 9 - 30 of
the annual report to stockholders.
14. - 21. None
22. Subsidiaries of Company
(b) No reports on Form 8-K were filed during the quarter ended
December 31, 1996.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
NBC CAPITAL CORPORATION
(Registrant)
By S/L. F. Mallory, Jr.
L. F. Mallory, Jr.
Chairman, President and Chief Executive
Officer
By S/Richard Haston
Richard Haston
Treasurer and Assistant Secretary
(Chief Financial and Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacity and on the dates indicated.
S/Mark A. Abernathy S/Robert A. Cunningham
(Director) (Director)
S/Thomas J. Prince S/Sammy J. Smith
(Director) (Director)
S/J. R. Scribner, Jr. S/Allen B. Puckett, III
(Director) (Director)
S/Ralph E. Pogue S/Carl M. Holloway
(Director) (Director)
S/Edith D. Millsaps S/Hunter M. Gholson
(Director) (Director)
S/Kenneth A. Madison S/Robert S. Jones
(Director) (Director)
S/James C. Ratcliff
(Director)
Date: March 12, 1997