-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CtmovbSve1lBtQyWFJlrMeUK2mdPhn8YBgTko7y869yMKv5xjutYjh6fEELtz0I7 18t5x1EfK18ZHkys0HRzuw== 0000037808-97-000030.txt : 19970515 0000037808-97-000030.hdr.sgml : 19970515 ACCESSION NUMBER: 0000037808-97-000030 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FNB CORP/PA CENTRAL INDEX KEY: 0000037808 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 251255406 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08144 FILM NUMBER: 97603573 BUSINESS ADDRESS: STREET 1: HERMITAGE SQUARE CITY: HERMITAGE STATE: PA ZIP: 16148 BUSINESS PHONE: 4129816000 MAIL ADDRESS: STREET 1: HERMITAGE SQUARE CITY: HERMITAGE STATE: PA ZIP: 16148 FORMER COMPANY: FORMER CONFORMED NAME: CITIZENS BUDGET CO DATE OF NAME CHANGE: 19750909 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 -------------- 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 0-8144 ------ F.N.B. CORPORATION - ---------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Pennsylvania 25-1255406 - ---------------------------- --------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) Hermitage Square, Hermitage, PA 16148 - --------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (412) 981-6000 - --------------------------------------------------------------------------- (Registrant's telephone number, including area code) Not applicable - -------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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 --- --- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No --- ---- APPLICABLE ONLY TO CORPORATE ISSUERS: 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 April 30, 1997 ----- ----------------------------- Common Stock, $2 Par Value 14,045,908 Shares - -------------------------- ----------------- F.N.B. CORPORATION FORM 10-Q March 31, 1997 INDEX PART I - FINANCIAL INFORMATION PAGE Item 1. Financial Statements Consolidated Balance Sheet 2 Consolidated Income Statement 3 Consolidated Statement of Cash Flows 4 Notes to Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6 PART II - OTHER INFORMATION Item 1. Legal Proceedings 12 Item 2. Changes in Securities 12 Item 3. Defaults Upon Senior Securities 12 Item 4. Submission of Matters to a Vote of Security Holders 12 Item 5. Other Information 12 Item 6. Exhibits and Reports on Form 8-K 12 Signatures 14 F.N.B. CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET Dollars in thousands, except par values Unaudited MARCH 31, DECEMBER 31, 1997 1996 ----------- ------------- ASSETS Cash and due from banks $ 79,542 $ 95,035 Interest bearing deposits with banks 2,243 1,334 Federal funds sold 22,040 6,225 Loans held for sale 5,368 9,610 Securities available for sale 302,571 301,341 Securities held to maturity (fair value of $148,601 and $156,663) 150,047 157,659 Loans, net of unearned income of $22,447 and $23,371 1,643,444 1,621,922 Allowance for loan losses (27,037) (26,382) ------------- ------------ NET LOANS 1,616,407 1,595,540 ------------- ------------ Premises and equipment 42,373 41,057 Other assets 47,279 45,210 ------------- ------------ $ 2,267,870 $ 2,253,011 ============= ============ LIABILITIES Deposits: Non-interest bearing $ 214,922 $ 202,049 Interest bearing 1,676,399 1,655,401 ------------- ------------ TOTAL DEPOSITS 1,891,321 1,857,450 Other liabilities 28,824 33,194 Short-term borrowings 115,989 143,992 Long-term debt 45,735 35,088 ------------- ------------ TOTAL LIABILITIES 2,081,869 2,069,724 ------------- ------------ STOCKHOLDERS' EQUITY Preferred stock - $10 par value Authorized - 20,000,000 shares Outstanding - 323,268 and 352,531 shares Aggregate liquidation value - $8,082 and $8,813 3,233 3,525 Common stock - $2 par value Authorized - 100,000,000 shares Outstanding - 12,175,196 and 12,115,349 shares 24,350 24,231 Additional paid-in capital 92,608 92,376 Retained earnings 66,553 61,894 Net unrealized securities gains 721 2,748 Treasury stock - 58,301 and 62,723 shares at cost (1,464) (1,487) ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 186,001 183,287 ------------ ------------ $ 2,267,870 $ 2,253,011 ============ ============ See accompanying Notes to Consolidated Financial Statements F.N.B. CORPORATION AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENT Dollars in thousands, except per share data Unaudited Three Months Ended March 31 1997 1996 ---------- ---------- INTEREST INCOME Loans, including fees $ 37,530 $ 34,963 Securities: Taxable 5,754 5,628 Tax exempt 497 446 Dividends 262 237 Other 577 771 ---------- ---------- TOTAL INTEREST INCOME 44,620 42,045 ---------- ---------- INTEREST EXPENSE Deposits 16,648 16,059 Short-term borrowings 1,418 1,209 Long-term debt 754 742 ---------- ---------- TOTAL INTEREST EXPENSE 18,820 18,010 ---------- ---------- NET INTEREST INCOME 25,800 24,035 Provision for loan losses 1,987 1,593 ---------- ---------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 23,813 22,442 ---------- ---------- NON-INTEREST INCOME Insurance commissions and fees 1,031 921 Service charges 2,600 2,445 Trust 439 384 Gain on sale of securities 493 288 Other 947 488 ---------- ---------- TOTAL NON-INTEREST INCOME 5,510 4,526 ---------- ---------- 29,323 26,968 ---------- ---------- NON-INTEREST EXPENSES Salaries and employee benefits 10,866 9,719 Net occupancy 1,589 1,490 Amortization of intangibles 237 270 Equipment 1,390 1,334 Deposit insurance 192 309 Other 5,225 5,653 ---------- ---------- TOTAL NON-INTEREST EXPENSES 19,499 18,775 ---------- ---------- INCOME BEFORE INCOME TAXES 9,824 8,193 Income taxes 3,171 2,525 ---------- ---------- NET INCOME $ 6,653 $ 5,668 ========== ========== NET INCOME PER COMMON SHARE: Primary $ .50 $ .43 ========== ========== Fully Diluted $ .49 $ .41 ========== ========== CASH DIVIDENDS PER COMMON SHARE $ .15 $ .15 ========== ========== AVERAGE COMMON SHARES OUTSTANDING 12,674,891 12,484,692 ========== ========== See accompanying Notes to Consolidated Financial Statements F.N.B. CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS Dollars in thousands Unaudited Three Months Ended March 31 1997 1996 ---------- ---------- OPERATING ACTIVITIES Net income $ 6,653 $ 5,668 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,454 1,487 Provision for loan losses 1,987 1,593 Deferred taxes (564) 448 Net gain on sale of securities (493) (288) Net gain (loss) on sale of loans (477) (73) Proceeds from sale of loans 6,395 2,841 Loans originated for sale (1,676) (2,318) Net change in: Interest receivable (1,926) (445) Interest payable 500 1,084 Other, net (4,269) 514 ---------- ---------- Net cash flows from operating activities 7,584 10,511 ---------- ---------- INVESTING ACTIVITIES Net change in: Interest bearing deposits with banks (909) (1,283) Federal funds sold (15,815) 28,270 Loans (22,084) (30,957) Securities available for sale: Purchases (86,910) (58,136) Sales 14,388 23,389 Maturities 68,580 25,773 Securities held to maturity: Purchases (1,867) (25,837) Maturities 9,471 7,899 Increase in premises and equipment (2,534) (3,076) ---------- ---------- Net cash flows from investing activities (37,680) (33,958) ---------- ---------- FINANCING ACTIVITIES Net change in: Non-interest bearing deposits 12,873 (5,534) Interest bearing deposits 20,998 35,716 Short-term borrowings (28,003) (743) Increase in long-term debt 11,671 1,710 Decrease in long-term debt (1,024) (900) Net acquisition of treasury stock 57 72 Cash dividends paid (1,969) (1,588) ---------- ---------- Net cash flows from financing activities 14,603 28,733 ---------- ---------- NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS (15,493) 5,286 Cash and due from banks at beginning of period 95,035 83,931 ---------- ---------- CASH AND DUE FROM BANKS AT END OF PERIOD $ 79,542 $ 89,217 ========== ========== See accompanying Notes to Consolidated Financial Statements F.N.B. CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) MARCH 31, 1997 BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements give retroactive effect to the merger of a subsidiary of F.N.B. Corporation (the Corporation) with and into Southwest Banks, Inc. (Southwest). The merger which was consummated on January 21, 1997 resulted in the Corporation issuing a total of 2,851,907 shares of common stock. This transaction has been accounted for on a pooling-of-interests basis, and the financial statements prior to the combination have been restated to reflect the Southwest acquisition. The financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 1997 are not necessarily indicative of the results that may be expected for the year ended December 31, 1997. For further information, refer to the consolidated financial statements and footnotes thereto incorporated by reference in the Corporation's annual report on Form 10-K for the year ended December 31, 1996. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions that effect the amounts reported in the financial statements. Actual results could differ from those estimates. PER SHARE AMOUNTS Per share amounts are adjusted for the common stock dividends, including the 5% stock dividend approved on April 23, 1997. Primary earnings per common share is calculated by dividing net income, adjusted for preferred stock dividends declared, by the sum of the weighted average number of shares of common stock outstanding and the number of shares of common stock which would be issued assuming the exercise of vested stock options during each period. Fully diluted earnings per common share is calculated by dividing net income by the weighted average number of shares of common stock outstanding, assuming the conversion of outstanding convertible preferred stock from the beginning of the year or date of issuance and the exercise of vested stock options. In February 1997, the Financial Accounting Standards Board issued Statement No. 128 (FAS No. 128), "Earnings per Share," which is required to be adopted on December 31, 1997. At that time, the Corporation will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating earnings per share, the dilutive effect of stock options will be excluded. The impact of FAS No. 128 on the calculations of primary and fully diluted earnings per share is immaterial for the quarters ended March 31, 1997 and 1996. Cash dividends per common share are based on the actual cash dividends declared adjusted for stock dividends. Book value per common share is based on shares outstanding at each period end adjusted retroactively for stock dividends. CASH FLOW INFORMATION Following is a summary of supplemental cash flow information (in thousands): Three months ended March 31 1997 1996 -------- -------- Cash paid for: Interest $ 18,320 $ 16,926 Noncash Investing and Financing Activities: Acquisition of real estate in settlement of loans 64 33 Loans granted in the sale of other real estate 821 139 MERGERS AND DIVESTITURE F.N.B. Corporation (the Corporation) completed its merger with Southwest Banks, Inc. (Southwest), a bank holding company headquartered in Naples, Florida, effective January 21, 1997. Under the terms of the merger agreement, each outstanding share of Southwest's common stock was converted into .819 share of the Corporation's common stock with cash being paid in lieu of fractional shares. A total of 2,851,907 shares of the Corporation's common stock were issued. Results for 1996 are restated to reflect this acquisition as a pooling of interests. Operating results of the Corporation and Southwest for the three months ended March 31, 1996, prior to restatement are (in thousands): F.N.B. Corporation Southwest Combined ----------- ---------- ---------- Net interest income $ 19,587 $ 4,178 $ 24,035 Net income 4,867 801 5,668 The Corporation completed its merger with West Coast Bancorp, Inc. (West Coast), a bank holding company headquartered in Cape Coral, Florida, effective April 18, 1997. Under the terms of the merger agreement, each outstanding share of West Coast's common stock was converted into .794 share of the Corporation's common stock with cash being paid in lieu of fractional shares. A total of 1,197,128 shares of the Corporation's common stock were issued. At the time of the merger, West Coast had total assets and deposits of $192 million and $156 million, respectively. The transaction was accounted for as a pooling of interests. On November 6, 1996, the Corporation announced an arrangement with Sun Bancorp, Inc. (Sun), a bank holding company headquartered in Selinsgrove, Pennsylvania, with assets of approximately $373 million. Under the agreement, Sun will receive 100% of the ownership of Bucktail Bank and Trust Company, a subsidiary of the Corporation, having total assets of approximately $120 million. The Corporation will receive Sun stock worth approximately $18.6 million, which represents a 13.8% ownership of Sun. The transaction is expected to close during the second quarter of 1997. PART I ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. LIQUIDITY AND INTEREST RATE SENSITIVITY The Corporation monitors its liquidity position on an ongoing basis to assure that it is able to meet the need for funds at all times. Given the monetary nature of its assets and liabilities and the significant source of liquidity provided by its available for sale securities portfolio, the Corporation has sufficient sources of funds available to meet its cash needs. Additionally, the Corporation has external sources of funds available should it desire to use them. These include approved lines of credit with several major domestic banks, of which $17.0 million was unused at March 31, 1997. To further meet its liquidity needs, the Corporation also has access to the Federal Home Loan Bank and the Federal Reserve System, as well as other funding sources. Through the review of the gap analysis and net interest income simulation modeling, management continually monitors the Corporation's exposure to changing interest rates. Management attempts to mitigate repricing mismatches through asset and liability pricing and matched maturity funding. Interest rate sensitivity estimates the impact that future changes in interest rates will have on net interest income. The gap is one measurement of risk inherent in the balance sheet as it relates to changes in interest rates and their effect on net interest income. The gap analysis which follows is based on the amortizations, maturities and repricing of assets and liabilities. Non-maturity deposit balances have been allocated to various repricing intervals to estimate their characteristics. The cumulative gap reflects the net position of assets and liabilities repricing in specified time periods. Based on the cumulative one year gap and assuming no restructuring or modifications to asset/liability composition, a rise in interest rates would result in a minimal reduction in net interest income. Following is the gap analysis as of March 31, 1997 (in thousands): WITHIN 4-12 1-5 OVER 3 MONTHS MONTHS YEARS 5 YEARS TOTAL --------- ---------- -------- ---------- ---------- INTEREST EARNING ASSETS Interest bearing deposits with banks $ 2,143 $ 100 $ 2,243 Federal funds sold 22,040 22,040 Loans held for sale 5,368 5,368 Securities: Available for sale 22,227 28,406 $ 200,741 $ 51,197 302,571 Held to maturity 12,843 49,335 77,762 10,107 150,047 Loans, net of unearned 398,347 367,024 630,673 247,400 1,643,444 --------- ---------- --------- --------- ---------- 462,968 444,865 909,176 308,704 2,125,713 Other assets 142,157 142,157 --------- ---------- --------- --------- ---------- $ 462,968 $ 444,865 $ 909,176 $ 450,861 $2,267,870 ========= ========== ========= ========= ========== INTEREST BEARING LIABILITIES Deposits: Interest checking $ 96,864 $ 178,235 $ 275,099 Savings 193,930 344,505 538,435 Time deposits 205,445 $ 366,931 $ 290,424 65 862,865 Short-term borrowings 73,627 11,673 30,689 115,989 Long-term debt 1,778 8,092 20,851 15,014 45,735 --------- ---------- --------- --------- ---------- 571,644 386,696 311,275 568,508 1,838,123 Other liabilities 243,746 243,746 Stockholders' equity 186,001 186,001 --------- ---------- --------- --------- ---------- $ 571,644 $ 386,696 $ 311,275 $ 998,255 $2,267,870 ========= ========== ========= ========= ========== PERIOD GAP $(108,676) $ 58,169 $ 597,901 $(547,394) ========= ========== ========= ========= CUMULATIVE GAP $(108,676) $ (50,507)$ 547,394 ========= ========== ========= CUMULATIVE GAP AS A PERCENT OF TOTAL ASSETS (4.8%) (2.2%) (24.1%) ========= ========== ========= RATE SENSITIVE ASSETS/RATE SENSITIVE LIABILITIES (CUMULATIVE) 0.81 0.95 1.43 1.16 ========= ========== ========= ========= CAPITAL RESOURCES The assessment of capital adequacy depends on a number of factors such as asset quality, liquidity, earnings performance, changing competitive conditions and economic forces. The Corporation seeks to maintain a strong capital base to support its growth and expansion activities, to provide stability to current operations and to promote public confidence. The capital management function is a continuous process. Central to this process is internal equity generation accomplished by earnings retention. Since December 31, 1996, stockholders' equity has increased $4.7 million as a result of earnings retention. For the three months ended March 31, 1997, the return on average equity was 14.44%. Total cash dividends declared represented 29.59% of net income. Book value per share was $13.98 at March 31, 1997, compared to $13.79 at December 31, 1996. NON-PERFORMING ASSETS AND ALLOWANCE FOR LOAN LOSSES Non-performing assets include non-performing loans and other real estate owned. Non-performing loans include non-accrual loans and restructured loans. Non-accrual loans represent loans on which interest accruals have been discontinued. It is the Corporation's policy to discontinue interest accruals when principal or interest is due and has remained unpaid for 90 days or more unless the loan is both well secured and in the process of collection. When a loan is placed on non-accrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the allowance for loan losses. Non-accrual loans may not be restored to accrual status until all delinquent principal and interest has been paid, or the loan becomes both well secured and in the process of collection. Consumer installment loans are generally charged off against the allowance for loan losses upon reaching 90 to 180 days past due, depending on the installment loan type. Restructured loans are loans in which the borrower has been granted a concession on the interest rate or the original repayment terms due to financial distress. Following is a summary of non-performing assets (dollars in thousands): MARCH 31, DECEMBER 31, 1997 1996 ------------ ------------ Non-performing assets: Non-accrual loans $ 7,591 $ 6,998 Restructured loans 2,071 2,146 ------- ------- Total non-performing loans 9,662 9,144 Other real estate owned 3,027 4,518 ------- ------- Total non-performing assets $12,689 $13,662 ======= ======= Asset quality ratios: Non-performing loans as percent of total loans .59% .56% Non-performing assets as percent of total assets .56% .61% Non-performing loans are closely monitored on an ongoing basis as part of the Corporation's loan review process. The potential risk of loss on these loans is evaluated by comparing the loan balance to the present value of projected future cash flows or the value of any underlying collateral, recognizing losses where appropriate. Management's analysis of the allowance for loan losses includes the evaluation of the loan portfolio based on internally generated loan review reports and the historical loss experience of the remaining balances of the various homogeneous loan pools which comprise the loan portfolio. Specific factors which are evaluated include the previous loan loss experience with the customer, the status of past due interest and principal payments on the loan, the collateral position of the loan, the quality of financial information supplied by the borrower and the general financial condition of the borrower. Historical loss experience on the remaining portfolio segments is considered in conjunction with current status of economic conditions, loan loss trends, delinquency and non-accrual trends, credit administration and concentrations of credit risk. Following is a summary of changes in the allowance for loan losses and selected ratios (dollars in thousands): THREE MONTHS ENDED MARCH 31, ------------------ 1997 1996 -------- -------- Balance at beginning of period $26,382 $23,135 Charge-offs (1,563) (1,774) Recoveries 231 422 ------- ------- Net charge-offs (1,332) (1,352) Provision for loan losses 1,987 1,593 ------- ------- Balance at end of period $27,037 $23,376 ======= ======= Allowance for loan losses to: Total loans, net of unearned income 1.65% 1.44% Non-performing loans 279.83% 255.64% REGULATORY MATTERS The Corporation and its banking subsidiaries are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Corporation's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation and its banking subsidiaries must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Corporation's and banking subsidiaries' capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Quantitative measures established by regulators to ensure capital adequacy require the Corporation and its banking subsidiaries to maintain minimum amounts and ratios of total and tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and of tier 1 capital to average assets (as defined). Management believes, as of March 31, 1997, that the Corporation and each of its banking subsidiaries meet all capital adequacy requirements to which they are subject. Following are capital ratios as of March 31, 1997 for the Corporation (dollars in thousands): To Be Well Capitalized Under For Capital Prompt Corrective Actual Adequacy Purposes Action Provisions ----------------- ------------------ ---------------- Amount Ratio Amount Ratio Amount Ratio --------- ------- ---------- ------- --------- ------- Total Capital $213,167 13.6% $125,582 8.0% $156,977 10.0% (to risk-weighted assets) Tier 1 Capital 183,421 11.7% 62,791 4.0% 94,186 6.0% (to risk-weighted assets) Tier 1 Capital 183,421 8.1% 90,193 4.0% 112,742 5.0% (to average assets) As of December 31, 1996, the Corporation and each of its banking subsidiaries have been categorized as "well capitalized" under the regulatory framework for prompt corrective action. FINANCIAL INFORMATION SUMMARY Net income for the first three months of 1997 was $6.7 million compared to $5.7 million for the first three months of 1996. Primary earnings per share for those periods were $.50 and $.43, respectively, and $.49 and $.41 on a fully diluted basis. Highlights for the first three months of 1997 include: * A 14.45% return on average equity and a 1.19% return on average assets. * A net interest margin on a fully taxable equivalent basis of 5.01%. FIRST THREE MONTHS OF 1997 AS COMPARED TO FIRST THREE MONTHS OF 1996: The following table provides information regarding the average balances and yields and rates on interest earning assets and interest bearing liabilities (dollars in thousands):
Three Months Ended March 31 1997 1996 ----------------------------- ----------------------------- AVERAGE YIELD/ AVERAGE YIELD/ BALANCE INTEREST RATE BALANCE INTEREST RATE --------- --------- --------- --------- --------- --------- ASSETS Interest earning assets: Interest bearing deposits with banks $ 1,697 $ 40 9.35% $ 3,981 $ 62 6.21% Federal funds sold 41,581 537 5.16 52,414 710 5.42 Securities: U.S. Treasury and other U.S. Government agencies and corporations 373,642 5,754 6.25 376,650 5,628 6.01 States of the U.S. and political subdivisions(1) 48,939 723 5.91 43,100 646 6.00 Other securities(1) 21,995 290 5.28 18,133 261 5.75 Loans (1) (2) 1,639,510 37,761 9.34 1,473,423 35,299 9.64 ---------- -------- ---------- -------- Total interest earning assets 2,127,364 45,105 8.59 1,967,701 42,606 8.71 ---------- -------- ---------- -------- Cash and due from banks 68,004 77,421 Allowance for loan losses (26,916) (23,373) Premises and equipment 41,905 37,281 Other assets 48,299 48,252 ---------- ---------- $2,259,421 $2,107,282 ========== ========== LIABILITIES Interest bearing liabilities: Deposits: Interest bearing demand $ 286,991 $ 1,524 2.15 $ 270,428 $ 1,475 2.19 Savings 518,269 3,577 2.80 443,154 2,808 2.55 Other time 864,858 11,547 5.41 852,731 11,776 5.55 Short-term borrowings 122,554 1,418 4.69 83,786 1,209 5.80 Long-term debt 39,802 754 7.58 40,138 742 7.39 --------- ------- ---------- -------- Total interest bearing liabilities 1,832,474 18,820 4.16 1,690,237 18,010 4.28 ---------- ------- ---------- -------- Non-interest bearing demand deposits 205,985 201,020 Other liabilities 34,224 42,440 ---------- ---------- 2,072,683 1,933,697 ---------- ---------- STOCKHOLDERS' EQUITY 186,738 173,585 ---------- ---------- $2,259,421 $2,107,282 ========== ========== Excess of interest earning assets over interest bearing liabilities $ 294,890 $ 277,464 ========== ========== Net interest income $ 26,285 $ 24,596 ======== ======== Net interest spread 4.43% 4.43% ====== ===== Net interest margin (3) 5.01% 5.01% ====== ===== (1) The amounts are reflected on a fully taxable equivalent basis using the federal statutory tax rate of 35% adjusted for certain federal tax preferences. (2) Average balance includes non-accrual loans. Loans consist of average total loans less average unearned income. The amount of loan fees included in interest income on loans is immaterial. (3) Net interest margin is calculated by dividing the difference between total interest earned and total interest paid by total interest earning assets.
Net interest income, the Corporation's primary source of earnings, is the amount by which interest and fees generated by interest earning assets, primarily loans and securities, exceed interest expense on deposits and borrowed funds. During the first three months of 1997, net interest income, on a fully taxable equivalent basis, totaled $26.3 million, representing a 6.87% increase over the first three months of 1996. Net interest income consisted of interest income of $45.1 million and interest expense of $18.8 million for the first three months of 1997 compared to $42.6 million and $18.0 million for each, respectively, for the first three months of 1996. Net interest margin fell to 5.01% at March 31, 1997 from 5.03% at March 31, 1996. The following table sets forth certain information regarding changes in net interest income attributable to changes in the volumes and rates of interest earning assets and interest bearing liabilities for the three months ending March 31, 1997 as compared to the three months ending March 31, 1996 (in thousands): VOLUME RATE NET ------- ------- ------- INTEREST INCOME Interest bearing deposits with banks $ (51) $ 29 $ (22) Federal funds sold (130) (43) (173) Securities: U.S. Treasury and other U.S. Government agencies and corporations (45) 171 126 States of the U.S. and political subdivisions 83 (6) 77 Other securities 47 (18) 29 Loans 3,713 (1,251) 2,462 ------- ------- ------ 3,617 (1,118) 2,499 ------- ------- ------ INTEREST EXPENSE Deposits: Interest bearing demand 86 (37) 49 Savings 529 240 769 Other time 164 (393) (229) Short-term borrowings 394 (185) 209 Long-term debt (6) 18 12 ------- ------- ------ 1,167 (357) 810 ------- ------- ------ NET CHANGE $ 2,450 $ (761) $ 1,689 ======= ======= ======= The amount of change not solely due to rate or volume changes was allocated between the change due to rate and the change due to volume based on the relative size of the rate and volume changes. Interest income on loans, on a fully taxable equivalent basis, increased 6.84% from $35.3 million for the three months ended March 31, 1996 to $37.8 million for the three months ended March 31, 1997. This increase was the result of an increase in average loans of 11.27% over this same period last year. Interest expense on deposits increased $589,000 or 3.67% for the three months ended March 31, 1997, compared to the three months ended March 31, 1996. This increase was the result of an increase in average deposits of 6.63% over this same three month period. Interest expense on short-term borrowings increased $209,000 or 17.29% for these same periods due to an increase in average short-term borrowings of 46.27%. The provision for loan losses totaled $2.0 million for the first three months of 1997, as compared to $1.6 million for the first three months of 1996. The increase in the provision for loan losses is a result of an increase in loan originations and management's analysis of the adequacy of the allowance for loan losses which takes into consideration factors relevant to the collectibility of the portfolio. Total non-interest income increased 21.85% during the first three months of 1997 compared to the same period of 1996. This increase was attributable to increases recognized on the sale of equity securities. Total non-interest expenses increased 3.88% during the first three months of 1997, compared to the first three months of 1996. This increase was attributable to normal increases in compensation and the opening of additional offices since the first three months of 1996. Income before taxes was $9.8 million for the first three months of 1997, representing an increase of $1.6 million or 19.91% over the same period of 1996. Income taxes increased $646,000 or 25.58% over the same periods. Consolidated net income was $6.7 million for the first three months of 1997, representing a $985,000 or 17.38% increase over the first three months of 1996. The Corporation's return on average assets was 1.19% and 1.08% for the three months ended March 31, 1997 and 1996, while the return on average equity was 14.45% and 13.13% for those same periods, respectively. PART II ITEM 1. LEGAL PROCEEDINGS No material pending legal proceedings exist to which the Corporation or any of its subsidiaries is a party, or of which any of their property is the subject, except ordinary routine proceedings which are incidental to the ordinary conduct of business. In the opinion of management, pending legal proceedings will not have a material adverse effect on the consolidated financial position of the Corporation and its subsidiaries. ITEM 2. CHANGES IN SECURITIES Not applicable ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable ITEM 5. OTHER INFORMATION Not applicable ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 11. F.N.B. Corporation STATEMENT RE COMPUTATION OF PER SHARE EARNINGS Dollars in thousands THREE MONTHS ENDED MARCH 31, ----------------------- 1997 1996 ---------- ---------- PRIMARY Net Income $ 6,653 $ 5,668 Less: Preferred Stock Dividends Declared (160) (210) ---------- ---------- Net Income Applicable to Common Stock $ 6,493 $ 5,458 ========== ========== Average Common Shares Outstanding 12,674,891 12,484,692 Net Effect of Dilutive Stock Options and Stock Warrants - Based on the Treasury Stock Method Using Average Market Price 322,836 226,434 ---------- ---------- 12,997,727 12,711,126 ========== ========== Net Income per Common Share $.50 $.43 ==== ==== FULLY DILUTED Net Income Applicable to Common Stock $ 6,653 $ 5,668 ========== ========== Average Common Shares Outstanding 12,674,891 12,484,692 Series A Convertible Preferred Stock 24,479 32,353 Series B Convertible Preferred Stock 674,499 916,577 Net Effect of Dilutive Stock Options and Stock Warrants - Based on the Treasury Stock Method Using the Period-End Market Price, If Higher than Average Market Price 325,234 241,256 ---------- ---------- 13,699,103 13,674,878 ========== ========== Net Income per Common Share $.49 $.41 ==== ==== 27. Financial Data Schedule (filed herewith) (b) Reports on Form 8-K A report on Form 8-K, dated January 24, 1997, was filed by the Corporation. The Form 8-K disclosed information relating to the consummation of the merger with Southwest Banks, Inc. A report on Form 8-K, dated March 5, 1997, was filed by the Corporation. The Form 8-K included Audited Supplemental Consolidated Financial Statements for the years ended December 31, 1995, 1994 and 1993 with Report of Independent Auditors and Management's Discussion and Analysis. A report on Form 8-K, dated April 21, 1997, was filed by the Corporation. The Form 8-K disclosed information relating to the consummation of the merger with West Coast Bancorp, Inc. 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. F.N.B. Corporation ------------------------------ (Registrant) Dated: May 14, 1997 /s/Peter Mortensen ------------------------------ ------------------------------ Peter Mortensen Chairman and President (Principal Executive Officer) Dated: May 14, 1997 /s/John D. Waters ------------------------------ ------------------------------ John D. Waters Vice President and Chief Financial Officer (Principal Financial Officer) EX-27 2
9 1,000 3-MOS DEC-31-1997 MAR-31-1997 79,542 2,243 22,040 0 302,571 150,047 148,601 1,643,444 27,037 2,267,870 1,891,321 115,989 28,824 45,735 0 3,233 24,350 158,418 2,267,870 37,530 6,513 577 44,620 16,648 18,820 25,800 1,987 493 19,499 9,824 9,824 0 0 6,653 .50 .49 8.59 7,591 2,796 2,071 0 26,382 1,563 231 27,037 27,037 0 0
-----END PRIVACY-ENHANCED MESSAGE-----