-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, LZd8YQ5TD+Ja6gqfnJCamDtN2QDSkaKtPerc1klkNEkgnDiJUG5EsesLJLOhL2r8 fuSfnbijAMS5HX7n/itehw== 0000037808-95-000003.txt : 19950517 0000037808-95-000003.hdr.sgml : 19950517 ACCESSION NUMBER: 0000037808-95-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950511 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FNB CORP/PA CENTRAL INDEX KEY: 0000037808 STANDARD INDUSTRIAL CLASSIFICATION: 6022 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: 95536592 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, 1995 -------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to _______________________ Commission file number 0-8144 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 25, 1995 ----- ----------------------------- Common Stock, $2 Par Value 8,188,246 Shares - - -------------------------- ---------------- F.N.B. CORPORATION FORM 10-Q March 31, 1995 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 15 -1- F.N.B. CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET Dollars in thousands MARCH 31, DECEMBER 31, 1995 1994 ------------ ------------ (Unaudited) (Audited) ------------ ------------ ASSETS Cash and due from banks $ 54,705 $ 60,451 Interest bearing deposits with banks 6,222 2,770 Federal funds sold 29,546 4,016 Securities available for sale 108,443 120,061 Investment securities (fair value of $231,517 and $246,834) 237,414 257,956 Loans available for sale 5,055 5,904 Loans, net of unearned income of $22,014 and $22,022 1,192,014 1,188,399 Allowance for loan losses (20,922) (20,295) ------------ ------------ NET LOANS 1,176,147 1,174,008 ------------ ------------ Premises and equipment 22,875 22,982 Other assets 44,029 44,275 ------------ ------------ $ 1,679,381 $ 1,686,519 ============ ============ LIABILITIES Deposits: Non-interest bearing $ 162,881 $ 163,566 Interest bearing 1,270,754 1,261,839 ------------ ------------ TOTAL DEPOSITS 1,433,635 1,425,405 Short-term borrowings 51,559 69,365 Other liabilities 23,804 26,142 Long-term debt 39,631 39,017 ------------ ------------ TOTAL LIABILITIES 1,548,629 1,559,929 ------------ ------------ MINORITY INTEREST 540 ------------ STOCKHOLDERS' EQUITY Preferred stock - $10 par value Authorized - 20,000,000 shares Outstanding - 456,138 and 456,288 shares Aggregate liquidation value - $11,403 and $11,407 4,561 4,563 Common stock - $2 par value Authorized - 20,000,000 shares Outstanding - 8,198,867 and 8,163,014 shares 16,432 16,364 Additional paid-in capital 52,147 51,686 Retained earnings 56,318 53,121 Net unrealized securities gains 1,579 625 Treasury stock - 17,043 and 18,974 shares at cost (285) (309) ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 130,752 126,050 ------------ ------------ $ 1,679,381 $ 1,686,519 ============ ============ See accompanying Notes to Consolidated Financial Statements -2- F.N.B. CORPORATION AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENT Dollars in thousands, except per share data Unaudited Three Months Ended March 31 1995 1994 --------- --------- INTEREST INCOME Loans, including fees $ 27,636 $ 24,986 Securities: Taxable 4,232 4,795 Tax exempt 375 397 Dividends 156 149 Other 236 240 --------- --------- TOTAL INTEREST INCOME 32,635 30,567 INTEREST EXPENSE Deposits 11,897 10,928 Short-term borrowings 849 845 Long-term debt 781 624 TOTAL INTEREST EXPENSE 13,527 12,397 --------- --------- NET INTEREST INCOME 19,108 18,170 Provision for loan losses 1,541 2,686 --------- --------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 17,567 15,484 --------- --------- NON-INTEREST INCOME Insurance commissions and fees 737 991 Service charges 1,731 1,607 Trust 406 389 Gain on sale of securities 167 424 Other 368 231 --------- --------- TOTAL NON-INTEREST INCOME 3,409 3,642 --------- --------- 20,976 19,126 --------- --------- NON-INTEREST EXPENSES Salaries and employee benefits 7,464 7,094 Net occupancy 1,164 1,173 Amortization of intangibles 328 376 Equipment 945 992 Deposit insurance 934 939 Other 4,281 4,275 --------- --------- TOTAL NON-INTEREST EXPENSES 15,116 14,849 --------- --------- INCOME BEFORE INCOME TAXES 5,860 4,277 Income taxes 1,876 1,344 --------- --------- NET INCOME $ 3,984 $ 2,933 ========= ========= NET INCOME PER COMMON SHARE: Primary $ .46 $ .33 ========= ========= Fully diluted $ .44 $ .32 ========= ========= CASH DIVIDENDS PER COMMON SHARE $ .07 $ .07 ========= ========= AVERAGE COMMON SHARES OUTSTANDING 8,188,728 8,163,870 ========= ========= See accompanying Notes to Consolidated Financial Statements -3- F.N.B. CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS Dollars in thousands Unaudited Three Months Ended March 31 1995 1994 --------- --------- OPERATING ACTIVITIES Net income $ 3,984 $ 2,933 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,287 1,693 Provision for loan losses 1,541 2,686 Deferred taxes 406 (1,048) Gain on securities available for sale (167) (424) (Gain) loss on loan sales (4) 38 Proceeds from sale of loans 5,468 14,012 Change in: Interest receivable 709 (1,005) Interest payable 40 3,668 Loans available for sale 4,615 (34,799) Other, net (3,539) (21) --------- --------- Net cash flows from operating activities 14,340 (12,267) --------- --------- INVESTING ACTIVITIES Net change in interest bearing deposits with banks (3,452) (3,070) Net change in federal funds sold (25,530) (7,913) Purchase of securities available for sale (3,437) (23,317) Purchase of investment securities (527) (10,655) Proceeds from sale of securities available for sale 478 4,882 Proceeds from maturity of securities available for sale 16,393 24,378 Proceeds from maturity of investment securities 20,693 18,681 Net change in loans (14,311) 10,841 Increase in premises and equipment (655) (512) --------- --------- Net cash flows from investing activities (10,348) 13,315 --------- --------- FINANCING ACTIVITIES Net change in non-interest bearing deposits (685) (6,261) Net change in interest bearing deposits 8,915 (3,038) Net change in short-term borrowings (17,806) 2,614 Increase in long-term debt 1,117 894 Decrease in long-term debt (503) (689) Proceeds from sale of stock 356 200 Purchase of treasury stock (345) (88) Cash dividends paid (787) (758) --------- --------- Net cash flows from financing activities (9,738) (7,126) --------- --------- NET DECREASE IN CASH AND DUE FROM BANKS (5,746) (6,078) Cash and due from banks at beginning of period 60,451 59,978 --------- --------- CASH AND DUE FROM BANKS AT END OF PERIOD $ 54,705 $ 53,900 ========= ========= See accompanying Notes to Consolidated Financial Statements -4- F.N.B. CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) March 31, 1995 BASIS OF PRESENTATION The accompanying unaudited condensed consolidated 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, 1995 are not necessarily indicative of the results that may be expected for the year ended December 31, 1995. For further information, refer to the consolidated financial statements and footnotes there to included in the Corporation's annual report on Form 10-K for the year ended December 31, 1994. PER SHARE AMOUNTS Per share amounts are adjusted for common stock dividends. 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 stock options during each period. Fully diluted earnings per common share is calculated by dividing net income, adjusted for minority interest, 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 stock options. 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. LOANS On January 1, 1995, the Corporation adopted Statement of Financial Accounting Standards (FAS) No. 114, "Accounting by Creditors for Impairment of a Loan," which requires that impaired loans be identified and measured based on the present value of expected future cash flows discounted at the loan's effective interest rate, or at the loan's observable market price or the fair value of the collateral if the loan is collateral dependent. FAS No. 114 had no material effect on the Corporation's financial position or results of operations. CASH FLOW INFORMATION Following is a summary of supplemental cash flow information (in thousands): Three months ended March 31 1995 1994 ------- ------- Cash paid for: Interest $14,211 $10,080 Income taxes 560 331 Noncash Investing and Financing Activities: Acquisition of real estate in settlement of loans 595 127 Loans granted in the sale of other real estate 46 516 -5- 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 investment portfolio, the Corporation generally has sufficient sources of funds available as needed to meet its routine, operational cash needs. In addition to normal liquidity provided from operations, 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 $24.0 million was unused at March 31, 1995. To further meet its liquidity needs, the Corporation also has access to the Federal Reserve System, the Federal Home Loan Bank and other uncommitted funding sources. Interest rate sensitivity measures the impact that future changes in interest rates will have on net interest income. The cumulative gap reflects a point-in-time net position of assets and liabilities repricing in specified time periods. The gap is one measurement of risk inherent in a 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 a combination of asset and liability amortizations, maturities and repricing opportunities. Non-maturity deposit balances have been allocated to various repricing intervals to more accurately depict their true behavior and characteristics. This allocation was done in accordance with Section 305 of the Federal Deposit Insurance Corporation Improvement Act. Based on the cumulative one year gap in this table and assuming no restructuring or modifications to asset/liability composition, a rise in interest rates would have a negative impact on net interest income. Gap alone does not accurately measure the magnitude of changes in net interest income since changes in interest rates do not affect all categories of assets and liabilities equally or simultaneously. Recognizing that traditional gap analyses do not measure dynamically the exposure to interest rate changes, the Corporation also relies on computer simulation modeling to measure the effect of upward and downward interest rate changes on net interest income. Simulation has been in use at the Corporation's lead bank (representing 54% of consolidated assets) and is currently being implemented at its other subsidiaries. Through the review of gap analyses and 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 through matched maturity funding. -6- Following is the gap analysis as of March 31, 1995 (in thousands): Within 4-12 1-5 Over 3 Months Months Years 5 years Total --------- --------- --------- --------- ---------- Interest Earning Assets Interest bearing deposits with banks $ 6,122 $ 100 $ 6,222 Federal funds sold 29,546 29,546 Securities: Available for sale 8,674 27,972 $ 58,144 $ 13,653 108,443 Held for investment 11,260 39,791 176,650 9,713 237,414 Loans, net of unearned 254,769 195,482 407,591 339,227 1,197,069 --------- --------- --------- --------- ---------- 310,371 263,345 642,385 362,593 1,578,694 Other assets 100,687 100,687 --------- --------- --------- --------- ---------- $ 310,371 $ 263,345 $ 642,385 $ 463,280 $1,679,381 ========= ========= ========= ========= ========== Interest Bearing Liabilities Deposits: Interest checking $ 7,647 $ 22,940 $ 122,345 $ 152,932 Savings 42,833 128,498 256,994 428,325 Time deposits 137,899 241,323 310,275 689,497 Short-term borrowings 17,720 16,605 17,234 51,559 Long-term debt 743 5,572 21,487 $ 11,829 39,631 --------- --------- --------- --------- ---------- 206,842 414,938 728,335 11,829 1,361,944 Other liabilities 186,685 186,685 Stockholders' equity 130,752 130,752 --------- --------- --------- --------- ---------- $ 206,842 $ 414,938 $ 728,335 $ 329,266 $1,679,381 ========= ========= ========= ========= ========== Period Gap $ 103,529 $(151,593)$ (85,950)$ 134,014 ========= ========= ========= ========= Cumulative Gap $ 103,529 $ (48,064)$(134,014) ========= ========= ========= Rate Sensitive Assets/Rate Sensitive Liabilities (Cumulative) 1.50 0.92 0.90 1.16 ========= ========= ========= ========= Cumulative Gap as a Percent of Total Assets 6.2% (2.9%) (8.0%) ========= ========= ========= Capital Resources The assessment of capital adequacy depends on a number of factors such as asset quality, liquidity, earnings performance and changing competitive conditions and economic forces. The Corporation maintains 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 mainly by earnings retention. Since December 31, 1994, total retained earnings has increased $3.2 million as a result of earnings retention. For the three months ended March 31, 1995, the return on average equity was 12.56%. Total cash dividends declared represented 19.74% of net income. Book value per share was $14.56 at March 31, 1995, compared to $14.04 at December 31, 1994. The Corporation's capital position continues to exceed regulatory minimums. The primary indicators relied on by the Federal Reserve Board and other bank and thrift regulators in measuring strength of capital position are the Core Capital, Total Risk-Based Capital and Leverage ratios. Following is a table summarizing these ratios and the related regulatory minimums as of March 31, 1995 and December 31, 1994, respectively (in thousands): MARCH 31, DECEMBER 31, REGULATORY 1995 1994 MINIMUMS ------------ ------------ ---------- Capital Ratios: Core Capital 10.95% 10.58% 4.00% Total Risk-Based Capital 13.08 12.71 8.00 Leverage 7.56 7.25 5.00 -7- Core Capital consists of common and qualifying preferred stockholders' equity less non-qualifying intangibles and Total Risk-Based Capital consists of Core Capital, qualifying subordinated debt and a portion of the allowance for loan losses both calculated with reference to risk-weighted assets consisting of both on- and off- balance sheet risks. The Leverage ratio consists of Core Capital divided by quarterly average assets less non- qualifying intangibles. Under Federal Reserve Board policy, a bank holding company is required to serve as a source of financial and managerial strength to its subsidiary banks and may not conduct its operations in an unsafe or unsound manner. In addition, it is the Federal Reserve Board's policy that, in serving as a source of strength to its subsidiary banks, a bank holding company should stand ready to use available resources to provide adequate capital funds to its subsidiary banks during periods of financial stress or adversity, in circumstances where it might not do so absent such policy, and should maintain the financial flexibility and capital-raising capacity to obtain additional resources for assisting its subsidiary banks. The failure of a bank holding company to serve as a source of strength to its subsidiary banks would generally be considered by the Federal Reserve Board to be an unsafe and unsound banking practice, a violation of Federal Reserve Board regulations, or both. 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, loans 90 days or more past due, and restructured loans. Non-accrual loans represent loans on which interest accruals have been discontinued. 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. Interest received on non-accrual loans is either applied against principal or reported as interest income, according to management's judgment as to the collectibility of principal. Loans which reach non-accrual status may not be restored to accrual status until all delinquent principal and interest has been paid, or the loan becomes both secured and in the process of collection. Restructured loans are loans with respect to which a borrower has been granted a concession on the interest rate or the original repayment terms because of financial difficulties. Following is a summary of non-performing assets (in thousands): MARCH 31, DECEMBER 31, 1995 1994 ------------ ------------ Non-performing assets: Non-accrual loans $ 8,794 $ 9,512 Loans past due 90 days or more 2,524 2,621 Restructured loans 3,234 3,157 ------- ------- Total non-performing loans 14,552 15,290 Other real estate owned 3,954 3,675 ------- ------- Total non-performing assets $18,506 $18,965 ======= ======= Asset quality ratios: Non-performing loans as percent of total loans 1.22% 1.28% Non-performing assets as percent of total assets 1.10% 1.12% Non-accrual loans totaled $8.8 million at March 31, 1995, representing a decrease of $718,000 from $9.5 million at December 31, 1994. The ratio of non-accrual loans to total loans decreased from .80% at December 31, 1994 to .73% at March 31, 1995. The decrease was the result of management's continued focus on improved asset quality. 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. -8- 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, concentrations of credit and off-balance sheet risk. Following is a summary of changes in the allowance for loan losses and selected ratios (dollars in thousands): At or for the Three Months Ended March 31, ------------------- 1995 1994 ------- ------- Balance at beginning of period $20,295 $16,440 Charge-offs (1,342) (933) Recoveries 428 526 ------- ------- Net charge-offs (914) (407) Provision for loan losses 1,541 2,686 ------- ------- Balance at end of period $20,922 $18,719 ======= ======= Net charge-offs as percent of average loans, net of unearned (annualized) .31% .14% Allowance for loan losses to: Total loans, net of unearned income 1.75% 1.65% Non-performing assets 113.06% 90.38% The allowance for loan losses totaled $20.9 million at March 31, 1995, representing an increase of $2.2 million or 11.77% compared to March 31, 1994. The ratio of allowance for loan losses to total loans has increased from 1.65% at March 31, 1994 to 1.75% at March 31, 1995. The ratio of allowance for loan losses to non-performing assets increased to 113.06% at March 31, 1995, compared to 90.38% at March 31, 1994. The ratio of net charge-offs to average loans, net of unearned income, outstanding (annualized) increased from .14% at March 31, 1994 to .31% at March 31, 1995, a result of slight increases in charge-offs for commercial and consumer loans during the first three months of 1995 and the Corporation realizing a substantial recovery in the first quarter of 1994. FINANCIAL INFORMATION SUMMARY Net income for the first quarter of 1995 was $4.0 million compared to $2.9 million for the first quarter of 1994. Primary earnings per share for those periods were $.46 and $.33, respectively, and $.44 and $.32 on a fully diluted basis. Highlights for the first quarter of 1995 include: * A 12.56% return on average equity and a .96% return on average assets. * A net interest margin on a fully taxable equivalent basis of 5.04%. * The provision for loan losses for the first quarter of 1995 at $1.5 million was 42.63% lower than the provision recorded for the first quarter of 1994. -9- First Three Months of 1995 as Compared to First Three Months of 1994: 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 1995 1994 -------------------------------- -------------------------------- Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate ---------- ---------- ------ ---------- ---------- ------ Assets Interest earning assets: Interest bearing deposits with banks $ 3,996 $ 48 4.79% $ 10,861 $ 36 1.33% Federal funds sold 12,601 188 5.97 20,682 204 3.95 Securities: U.S. Treasury and other U.S. Government agencies and corporations 315,417 4,232 5.44 371,552 4,795 5.23 States of the U.S. and political subdivisions (1) 35,246 548 6.22 36,410 600 6.59 Other securities (1) 14,043 179 5.09 10,808 191 7.07 Loans (1) (2) 1,195,994 27,951 9.48 1,132,566 25,313 9.06 ---------- -------- ---------- -------- Total interest earning assets 1,577,297 33,146 8.52 1,582,879 31,139 7.97 ---------- -------- ---------- -------- Cash and due from banks 52,309 49,408 Allowance for loan losses (20,779) (17,395) Premises and equipment 22,987 23,962 Other assets 45,672 48,573 ---------- ---------- $1,677,486 $1,687,427 ========== ========== Liabilities Interest bearing liabilities: Deposits: Interest bearing demand $ 156,380 686 1.78 $ 169,168 821 1.97 Savings 444,599 2,730 2.49 510,925 3,178 2.52 Other time 665,163 8,481 5.17 611,750 6,929 4.59 Short-term borrowings 59,698 849 5.75 66,289 845 5.16 Long-term debt 39,053 781 8.00 31,394 624 7.95 ---------- -------- ---------- -------- Total interest bearing liabilities 1,364,893 13,527 4.02 1,389,526 12,397 3.62 Non-interest bearing demand deposits 155,292 152,320 Other liabilities 28,658 28,355 ---------- ---------- 1,548,843 1,570,201 ---------- ---------- Minority Interest 520 ---------- Stockholders' Equity Preferred stock 4,562 4,581 Common stock 16,415 15,577 Additional paid-in capital 52,035 46,540 Retained earnings 54,902 48,232 Net unrealized securities gains 1,033 1,980 Treasury stock (304) (204) ---------- ---------- Total stockholders' equity 128,643 116,706 ---------- ---------- $1,677,486 $1,687,427 ========== ========== Excess of interest earning assets over interest bearing liabilities $ 212,404 $ 193,353 ========== ========== Net interest income $ 19,619 $ 18,742 ======== ======== Net interest spread 4.50% 4.35% ===== ===== Net interest margin (3) 5.04% 4.80% ===== ===== (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 outstanding 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.
-10- 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 1995, net interest income, on a fully taxable equivalent basis, totaled $19.6 million, representing a 4.68% increase over the first three months of 1994. Net interest income as a percentage of average earning assets (commonly referred to as the margin) rose to 5.04% at March 31, 1995 from 4.80% at March 31, 1994. Net interest income can be analyzed in terms of the impact of changing volumes of interest earning assets and interest bearing liabilities. The following table sets forth certain information regarding changes in net interest income attributable to changes in the volumes of interest earning assets and interest bearing liabilities and changes in the rates for the three months ending March 31, 1995 as compared to the three months ending March 31, 1994 (in thousands): Volume Rate Net ------- ------- ------- Interest Income Interest bearing deposits with banks $ (137) $ 149 $ 12 Federal funds sold (389) 373 (16) Securities: U.S. Treasury and other U.S. Government agencies and corporations (3,030) 2,467 (563) States of the U.S. and political subdivisions (75) 23 (52) Other securities 196 (208) (12) Loans 5,895 (3,257) 2,638 ------- ------- ------- 2,460 (453) 2,007 ------- ------- ------- Interest Expense Deposits: Interest bearing demand (241) 106 (135) Savings (1,654) 1,206 (448) Other time 2,580 (1,028) 1,552 Short-term borrowings (98) 102 4 Long-term debt 613 (456) 157 ------- ------- ------- 1,200 (70) 1,130 ------- ------- ------- Net Change $ 1,260 $ (383) $ 877 ======= ======= ======= 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. Total interest income on a fully taxable equivalent basis increased $2.0 million or 6.45% for the first three months of 1995, compared to the first three months of 1994. Interest income on taxable securities decreased by $563,000 or 11.74% over these same periods primarily as a result of maturities of taxable securities being used to fund loan demand. The greater loan demand resulted in an increase of $2.6 million in interest income on loans, including fees, on a fully taxable equivalent basis. Total interest expense increased $1.1 million or 9.12% for the three months ended March 31, 1995, compared to the three months ended March 31, 1994. Interest expense on deposits accounted for the majority of this increase, $969,000, as a result of the increasing interest rate environment and the change in the deposit mix from savings accounts to higher paying certificate accounts. The provision for loan losses totaled $1.5 million for the first three months of 1995, representing a decrease of $1.1 million or 42.63% from the first three months of 1994, a direct result of the improvement in asset quality at the Corporation. The provision for loan losses charged to operations is a direct result of management's analysis of the adequacy of the allowance for loan losses which takes into consideration all factors relevant to the collectibility of the existing portfolio. -11- Total non-interest income decreased slightly during the first three months of 1995, compared to the same period of 1994 due to a decrease in the gain on sale of securities. Total non-interest expenses increased $267,000 or 1.80% during the first three months of 1995, compared to the first three months of 1994. Salaries and employee benefits accounted for the majority of this increase. Income before taxes was $5.9 million for the first three months of 1995, representing an increase of $1.6 million or 37.01% over the same period of 1994. Income taxes increased $532,000 or 39.58% over the same periods due to more taxable income being generated by the Corporation. Consolidated net income was $4.0 million for the first three months of 1995, representing a $1.1 million or 35.83% increase over the first three months of 1994. The Corporation's return on average assets was .96% and .70% for the first three months of 1995 and 1994, respectively, while the return on average equity was 12.56% and 10.19% for those same periods. 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: 3.1. Articles of Incorporation as currently in effect and any amendments thereto. (Incorporated by reference to Exhibit 3.1. of the Corporation's Form 10-K for the year ended December 31, 1992). 3.2. By-laws of the Corporation as currently in effect (incorporated by reference to Exhibit 4 of the Corporation's Form 10-Q for the quarter ended June 30, 1994). -12- 4 The rights of holders of equity securities are defined in portions of the Articles of Incorporation and By-laws. The Articles of Incorporation are incorporated by reference to Exhibit 3.1. of the registrant's Form 10-K for the year ended December 31, 1992. The By-laws are incorporated by reference to Exhibit 4 of the registrant's Form 10-Q for the quarter ended June 30, 1994. A designation statement defining the rights of F.N.B. Corporation Series A - Cumulative Convertible Preferred Stock is incorporated by reference to Form S-14, Registration Statement of F.N.B. Corporation, File No. 2-96404. A designation statement defining the rights of F.N.B. Corporation Series B - Cumulative Convertible Preferred Stock is incorporated by reference to Exhibit 4 of the registrant's Form 10-Q for the quarter ended June 30, 1992. The Corporation agrees to furnish to the Commission upon request copies of all instruments not filed herewith defining the rights of holders of long-term debt of the Corporation and its subsidiaries. 10.1. Form of agreement regarding deferred payment of directors' fees by First National Bank of Pennsylvania. (Incorporated by reference to Exhibit 10.1. of the Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1993). 10.2. Form of agreement regarding deferred payment of directors' fees by F.N.B. Corporation. (Incorporated by reference to Exhibit 10.2. of the Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1993). 10.3. Form of Deferred Compensation Agreement by and between First National Bank of Pennsylvania and four of its executive officers. (Incorporated by reference to Exhibit 10.3. of the Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1993). 10.4. Employment Agreement between The Metropolitan Savings Bank of Youngstown and Samuel K. Sollenberger. (Incorporated by reference to Exhibit 10.4. of the Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1993). 10.5. Employment Agreement between F.N.B. Corporation and Peter Mortensen. (Incorporated by reference to Exhibit 10.5. of the Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1990). 10.6. Employment Agreement between F.N.B. Corporation and Stephen J. Gurgovits. (Incorporated by reference to Exhibit 10.6. of the Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1990). 10.7. Employment Agreement between F.N.B. Corporation and Samuel K. Sollenberger. (incorporated by reference to Exhibit 10.7. of the Corporation's Form 10-Q for the quarter ended March 31, 1994). 10.8. Employment Agreement between F.N.B. Corporation and William J. Rundorff. (Incorporated by reference to Exhibit 10.8. of the Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). 10.9. Supplemental Executive Retirement Plan of F.N.B. Corporation effective January 1, 1992. (Incorporated by reference to Exhibit 10.9. of the Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1993). 10.10. F.N.B. Corporation 1990 Stock Option Plan. (Incorporated by reference to Exhibit 10.10. of the Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1993). 10.11. F.N.B. Corporation Restricted Stock Bonus Plan dated January 1, 1994. (Incorporated by reference to Exhibit 10.11. of the Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1993). -13- 11 F.N.B. Corporation Statement re Computation of Per Share Earnings Dollars in thousands Three Months Ended March 31 1995 1994 --------- --------- Primary Net Income $ 3,984 $ 2,933 Less: Preferred Stock Dividends Declared (213) (214) --------- --------- Net Income Applicable to Common Stock $ 3,771 $ 2,719 ========= ========= Average Common Shares Outstanding 8,188,728 8,163,870 Net Effect of Dilutive Stock Options - Based on the Treasury Stock Method Using Average Market Price 29,846 13,685 --------- --------- 8,218,574 8,177,555 ========= ========= Net Income per Common Share $0.46 $0.33 ===== ===== Fully Diluted Net Income $ 3,984 $ 2,933 Plus: Minority Interest 12 --------- --------- Net Income Applicable to Common Stock $ 3,984 $ 2,945 ========= ========= Average Common Shares Outstanding 8,188,728 8,163,870 Series A Convertible Preferred Stock 38,322 61,393 Series B Convertible Preferred Stock 799,565 801,420 Minority Interest Convertible Preferred Stock 32,713 Net Effect of Dilutive Stock Options - Based on the Treasury Stock Method Using the Year-End Market Price, If Higher than Average Market Price 32,081 13,685 --------- --------- 9,058,696 9,073,081 ========= ========= Net Income per Common Share $0.44 $0.32 ===== ===== (b) Reports on Form 8-K No reports on Form 8-K were filed for the three months ended March 31, 1995. -14- 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 10, 1995 Peter Mortensen _________________________ _____________________________________ Peter Mortensen Chairman and President (Principal Executive Officer) Dated: May 10, 1995 John D. Waters _________________________ _____________________________________ John D. Waters Vice President and Chief Financial Officer (Principal Financial Officer) EX-27 2
9 1,000 3-MOS DEC-31-1995 MAR-31-1995 54705 6222 29546 0 108443 237414 231517 1197069 20922 1679381 1433635 51559 23804 39631 16432 0 4561 109759 1679381 27636 4763 236 32635 11897 13527 19108 1541 167 15116 5860 5860 0 0 3984 .46 .44 8.52 8794 2524 3234 0 20295 1342 428 20922 20922 0 0
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