Item 1 - Business: National Bancshares Corporation (the "Company"), incorporated in 1985, is a one bank holding company for First National Bank, Orrville, Ohio (the "Bank"). The formation was approved by shareholders on April 24, 1986 and consummated on June 2, 1986. The Bank offers a full line of services usually found in any commercial bank operation, including checking accounts, savings accounts, certificates of deposit, personal loans, loans to business and industry, installment loans, safety deposit boxes and credit cards. The Bank does not have trust powers and, therefore, does not offer trust services. The Bank operates nine full service offices and one limited service office in a market area comprising most of Wayne County, portions of western Stark County, northeastern Holmes County and southern Medina County. There are approximately 17 other banking and thrift organizations in the immediate market area. No major elimination of services presently offered is anticipated in the immediate future.
The Bank is a member of the Federal Reserve System and its deposits are insured by the Federal Deposit Insurance Corporation. It is subject to supervision, examination and regulation by the Comptroller of the Currency. The Company is subject to supervision, examination and regulation by the Federal Reserve System. Management is not currently aware of any regulatory recommendations which if were to be implemented would have a material effect on the registrant.
Item 2
Item 2 - Properties: The headquarters of the Company and the Bank are located in Orrville, Ohio. The Bank has a total of nine banking office buildings which are located in Orrville, Dalton, Kidron, Smithville, Mt. Eaton, Apple Creek, Lodi and Seville, Ohio. All buildings are owned by the Bank with the exception of the Seville Office which is a leased facility.
Item 3
Item 3 - Legal Proceedings There were no legal proceedings other than ordinary routine litigation incidental to business during 1994.
Item 10
Item 10 - Executive Officers The Executive Officers of the Company are as follows:
Name Age Position Charles J. Dolezal 42 President President of First National Bank
Michael D. Hofstetter 42 Sr. Vice President & Secretary-Treasurer Sr. Vice President & Controller of First National Bank
There is no family relationship between any of the above executive officers. Mr. Dolezal has been an executive officer of the Company since its formation in 1986 and the Bank during the past 5 years. Mr. Hofstetter was appointed Sr. Vice President and Secretary-Treasurer of the Company on January 1, 1990 and has been an executive officer of the Bank during the past 5 years.
PAGE 4 VOLUME AND RATE VARIANCE ANALYSIS
The following table represents a summary analysis of changes in interest income, interest expense and the resulting net interest income on a tax equivalent basis for the periods presented each, as compared with the preceding period. Volume is based on daily average balances.
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NONACCRUAL AND PAST DUE LOANS Generally, recognition of interest income is discontinued where reasonable doubt exists as to the collectability of the interest. Income from nonaccrual loans is recorded when received. The difference between interest income recognized on such loans and income that would have been recognized at original contractual rates is immaterial. The bank generally places loans on a non-accrual status when a default of principal or interest has existed for 90 days or more. The bank generally does not renegotiate loans due to deterioration in the financial position of the borrower. The amounts of renegotiated loans are not considered material.
POTENTIAL LOAN PROBLEMS Management reviews the loan portfolio for potential loan problems on a monthly basis. The following loans were classified by management and include in the above nonaccrual and past due loan totals. The amount shown below is the outstanding loan balance which has not been reduced by collateral values.
LOAN CONCENTRATIONS Due to the nature of our market area, it is management's opinion there are no significant loan concentrations of 10% of total loans to borrowers engaged in similar activities other than noted in the loan categories disclosed in Footnote 4 on Page 13 of the Annual Report to Shareholders.
PAGE 8 SUMMARY OF LOAN LOSS EXPERIENCE The determination of the balance of the allowance for loan losses historically has been based on an overall analysis of the loan portfolio and reflects an amount, which, in management's judgment, is adequate to provide for potential loan losses. This analysis considers, among other things, the Company's loan loss experience, present and potential risks of the loan portfolio and general economic conditions. In addition, management considers the examinations of the loan portfolio by federal regulatory agencies and internal reviews and evaluations. The Company's allocation of the allowance for loan losses by category represents only an estimate for each category of loans based upon a detailed review of the loan portfolio by management.
Transactions in the allowance for loan losses are maintained by three major loan categories and the summary of such transactions for periods indicated follows:
PAGE 9 DEPOSITS
The classification of average deposits and the average rate paid on such deposits for periods ending December 31, 1994, 1993 and 1992 is included in Analysis of Net Interest Earnings included in the Annual Report to Shareholders (Appendix A, Page 18).
The summary of maturities of time deposits of $100,000 or more is included in footnote 7 of the financial statements included in the Annual Report to Shareholders (Appendix A, Page 14, Note 7).
PAGE 10 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: 3-21-95 /s/ Charles J. Dolezal -------------------- ------------------------------------- Charles J. Dolezal, President
DATE: 3-21-95 /s/ Michael D. Hofstetter -------------------- ------------------------------------- Michael D. Hofstetter, Secretary- Treasurer (Principal Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
DATE: 3-21-95 /s/ Charles J. Dolezal -------------------- ------------------------------------- Charles J. Dolezal, Chairman
DATE: 3-21-95 /s/ James L. Gerber -------------------- ------------------------------------- James L. Gerber, Director
DATE: 3-21-95 /s/ Sara E. Balzarini -------------------- ------------------------------------- Sara E. Balzarini, Director
DATE: 3-21-95 /s/ John E. Sprunger -------------------- ------------------------------------- John E. Sprunger, Director
DATE: 3-21-95 /s/ James F. Woolley -------------------- ------------------------------------- James F. Woolley, Director
DATE: 3-21-95 /s/ Paul H. Smucker -------------------- ------------------------------------- Paul H. Smucker, Director
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