0000905870-95-000020.txt : 19950816
0000905870-95-000020.hdr.sgml : 19950816
ACCESSION NUMBER: 0000905870-95-000020
CONFORMED SUBMISSION TYPE: 10QSB
PUBLIC DOCUMENT COUNT: 5
CONFORMED PERIOD OF REPORT: 19950630
FILED AS OF DATE: 19950814
SROS: NASD
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: FNB CORP/NC
CENTRAL INDEX KEY: 0000764811
STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022]
IRS NUMBER: 561456589
STATE OF INCORPORATION: NC
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10QSB
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-13823
FILM NUMBER: 95563898
BUSINESS ADDRESS:
STREET 1: 101 SUNSET AVE
STREET 2: P O BOX 1328
CITY: ASHEBORO
STATE: NC
ZIP: 27203
BUSINESS PHONE: 9106268300
MAIL ADDRESS:
STREET 1: P.O. BOX 1328
CITY: ASHEBORO
STATE: NC
ZIP: 27203
10QSB
1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from_________________to________________
Commission File Number 0-13823
FNB CORP.
(Exact name of registrant as specified in its charter)
North Carolina 56-1456589
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 Sunset Avenue, Asheboro, North Carolina 27203
(Address of principal executive offices) (Zip Code)
(910) 626-8300
(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_____
The registrant had 1,796,768 shares of $2.50 par value common stock
outstanding at July 19, 1995.
Transitional Small Business Disclosure Format (Check One): Yes____
No X
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
FNB Corp. and Subsidiary
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
ASSETS 1995 1994 1994
Cash and due from
banks $ 11,837,605 $ 8,925,396 $ 9,348,113
Federal funds sold 1,650,000 1,375,000 -
Investment securities:
Available for sale,
at estimated fair
value (amortized
cost of $18,690,507,
$26,040,635 and
$25,713,359) 18,800,267 25,543,779 24,569,036
Held to maturity
(estimated fair value
of $56,411,187,
$47,776,215 and
$50,809,510) 55,905,263 48,080,987 52,414,194
Loans 172,196,954 163,495,441 168,327,821
Less: Allowance for
loan losses (1,837,256) (1,770,789) (1,719,717)
Net loans 170,359,698 161,724,652 166,608,104
Premises and equipment 5,667,952 5,357,461 5,024,522
Other assets 3,429,601 3,523,004 3,651,740
TOTAL ASSETS $ 267,650,386 $ 254,530,279 $ 261,615,709
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing
demand deposits $ 37,533,696 $ 36,843,313 $ 37,282,808
Interest-bearing
deposits:
NOW, savings and
money market
deposits 77,982,983 85,964,281 82,400,774
Time deposits of
$100,000 or more 27,020,230 19,473,499 20,191,213
Other time deposits 95,464,399 87,362,146 90,050,517
Total deposits 238,001,308 229,643,239 229,925,312
Retail repurchase
agreements 2,322,457 136,471 3,526,226
Federal funds purchased - - 3,050,000
Other liabilities 2,671,721 1,946,021 1,735,041
TOTAL LIABILITIES 242,995,486 231,725,731 238,236,579
Shareholders' equity:
Preferred stock -
$10.00 par value;
authorized 200,000
shares, none issued - - -
Common stock - $2.50
par value; authorized
5,000,000 shares,
issued shares -
1,796,768, 1,200,000
and 1,200,000 4,491,920 3,000,000 3,000,000
Surplus - 900,000 900,000
Retained earnings 20,090,539 19,232,473 20,234,383
Net unrealized
securities gains
(losses) 72,441 (327,925) (755,253)
TOTAL SHAREHOLDERS'
EQUITY 24,654,900 22,804,548 23,379,130
TOTAL LIABILITIES
AND SHAREHOLDERS'
EQUITY $ 267,650,386 $ 254,530,279 $ 261,615,709
See accompanying notes to consolidated financial statements.
1
FNB Corp. and Subsidiary
CONSOLIDATED STATEMENTS OF INCOME
Six Months Ended
June 30,
1995 1994
INTEREST INCOME:
Interest and fees on loans $ 7,541,044 $ 6,318,491
Interest and dividends on
investment securities:
Taxable income 2,014,322 1,794,024
Non-taxable income 308,881 333,481
Federal funds sold 67,626 24,403
Total interest income 9,931,873 8,470,399
INTEREST EXPENSE:
Deposits 4,176,789 3,305,466
Retail repurchase agreements 82,158 273
Federal funds purchased 13,108 7,029
Total interest expense 4,272,055 3,312,768
NET INTEREST INCOME 5,659,818 5,157,631
Provision for loan losses 220,000 85,000
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 5,439,818 5,072,631
OTHER OPERATING INCOME:
Service charges on deposit
accounts 641,819 590,556
Annuity and brokerage
commissions 97,853 233,979
Credit card income 119,845 21,485
Other service charges,
commissions and fees 152,255 153,325
Losses on sales of securities (414,596) -
Other income 70,613 92,579
Total other operating income 667,789 1,091,924
OTHER OPERATING EXPENSE:
Personnel expense 2,185,547 2,446,509
Net occupancy expense 230,296 226,887
Furniture and equipment expense 227,274 269,171
Data processing services 427,949 79,407
Restructuring charges 460,457 -
Other expense 1,283,199 1,173,084
Total other operating expense 4,814,722 4,195,058
INCOME BEFORE INCOME TAXES 1,292,885 1,969,497
Income taxes 359,629 576,541
NET INCOME $ 933,256 $ 1,392,956
PER SHARE DATA:
Net income $ .52 $ .77
Cash dividends declared .24 .227
Average number of shares
outstanding 1,799,976 1,800,000
See accompanying notes to consolidated financial statements.
2
FNB Corp. and Subsidiary
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
June 30,
1995 1994
INTEREST INCOME:
Interest and fees on loans $ 3,843,971 $ 3,235,429
Interest and dividends on
investment securities:
Taxable income 1,015,178 904,098
Non-taxable income 149,448 158,044
Federal funds sold 53,986 13,033
Total interest income 5,062,583 4,310,604
INTEREST EXPENSE:
Deposits 2,150,682 1,644,644
Retail repurchase agreements 42,078 273
Federal funds purchased 545 5,701
Total interest expense 2,193,305 1,650,618
NET INTEREST INCOME 2,869,278 2,659,986
Provision for loan losses 125,000 50,000
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 2,744,278 2,609,986
OTHER OPERATING INCOME:
Service charges on deposit
accounts 338,218 307,943
Annuity and brokerage
commissions 33,937 129,134
Credit card income 67,442 10,566
Other service charges,
commissions and fees 72,437 62,291
Losses on sales of securities - -
Other income 39,097 36,269
Total other operating income 551,131 546,203
OTHER OPERATING EXPENSE:
Personnel expense 1,096,921 1,242,448
Net occupancy expense 111,869 105,853
Furniture and equipment expense 108,032 132,578
Data processing services 219,825 40,648
Restructuring charges - -
Other expense 591,252 595,304
Total other operating expense 2,127,899 2,116,831
INCOME BEFORE INCOME TAXES 1,167,510 1,039,358
Income taxes 367,400 309,802
NET INCOME $ 800,110 $ 729,556
PER SHARE DATA:
Net income $ .44 $ .41
Cash dividends declared .12 .113
Average number of shares
outstanding 1,799,952 1,800,000
See accompanying notes to consolidated financial statements.
3
FNB Corp. and Subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
1995 1994
OPERATING ACTIVITIES:
Net income $ 933,256 $ 1,392,956
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and amortization
of premises and equipment 205,350 220,260
Provision for loan losses 220,000 85,000
Deferred income taxes (257,759) 60,567
Deferred loan fees and costs,
net (24,538) (360,810)
Premium amortization and
discount accretion of
investment securities, net 93,995 268,593
Amortization of intangibles 29,558 39,593
Losses on sales of securities 414,596 -
Net decrease (increase) in
loans held for sale (139,600) 992,013
Decrease (increase) in other
assets 55,865 (240,662)
Increase in other liabilities 720,448 487,806
NET CASH PROVIDED BY OPERATING
ACTIVITIES 2,251,171 2,945,316
INVESTING ACTIVITES:
Available-for-sale securities:
Proceeds from sales 5,896,328 -
Proceeds from maturities 877,492 5,108,504
Purchases (249,405) (2,033,678)
Held-to-maturity securities:
Proceeds from maturities 9,577,838 10,517,988
Purchases (13,079,417) (9,609,046)
Net increase in loans (3,774,915) (6,754,234)
Proceeds from sales of
premises and equipment 620 155
Purchases of premises and
equipment (848,780) (154,398)
Other, net (64,099) (82,091)
NET CASH USED IN INVESTING
ACTIVITIES (1,664,338) (3,006,800)
FINANCING ACTIVITIES:
Net increase in deposits 8,075,996 5,383,183
Increase (decrease) in retail
repurchase agreements (1,203,769) 136,471
Decrease in federal funds
purchased (3,050,000) (1,800,000)
Common stock repurchased (52,800) -
Cash dividends and fractional
shares paid (216,768) (408,000)
NET CASH PROVIDED BY FINANCING
ACTIVITIES 3,552,659 3,311,654
NET INCREASE IN CASH AND CASH
EQUIVALENTS 4,139,492 3,250,170
Cash and cash equivalents at
beginning of period 9,348,113 7,050,226
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 13,487,605 $ 10,300,396
Supplemental disclosure of
cash flow information:
Cash paid during the period
for:
Interest $ 3,800,489 $ 3,226,994
Income taxes 589,647 432,414
See accompanying notes to consolidated financial statements.
4
FNB Corp. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying consolidated financial statements, prepared
without audit, include the accounts of FNB Corp. (the
Corporation) and its wholly-owned subsidiary, First National
Bank and Trust Company (the Bank). All significant
intercompany balances and transactions have been eliminated
in consolidation.
2. For purposes of reporting cash flows, cash and cash equivalents
include cash on hand, amounts due from banks, and federal funds
sold. Generally, federal funds are purchased and sold for
one-day periods.
3. On December 30, 1993, the Corporation entered into definitive
agreements to acquire two mutual savings banks, Home Savings
Bank of Siler City, SSB ("Home") of Siler City, North Carolina
and Randleman Savings Bank, SSB ("Randleman") of Randleman,
North Carolina, in merger/conversion transactions, pursuant to
which the savings banks would convert from mutual to stock form
and the Corporation would simultaneously acquire the shares
issued in the conversions. Consummation of such proposed
acquisitions is subject to regulatory approval by the Federal
Deposit Insurance Corporation, the Board of Governors of the
Federal Reserve System and the Administrator of the North
Carolina Savings Institutions Division. At December 31, 1994,
Home operated one office and had approximately $43,614,000 in
total assets, $37,732,000 in deposits and $5,105,000 in
retained earnings. On this same date, Randleman had
approximately $15,610,000 in total assets, $13,459,000 in
deposits and $2,100,000 in retained earnings.
Regulatory applications for approval to consummate the proposed
acquisitions were filed in April, 1994. Substantial changes in
regulatory policy occurring shortly after the applications were
filed effectively resulted in a moratorium on federal approval
of merger/conversions, and the Corporation subsequently
withdrew the applications to the FDIC and the Federal Reserve.
Due to the likelihood that regulatory approval would not be
received for an acquisition of the magnitude represented by
Home, the agreement with Home was discontinued in May, 1995.
The Corporation and Randleman are exploring other methods of
effecting a combination and continue to monitor developments in
federal regulations and policy with respect to merger/
conversions.
The Corporation has incurred certain costs in connection with
the proposed Randleman acquisition. Those costs, which
amounted to $71,494 at June 30, 1995, have been deferred and
are included in other assets on the consolidated balance sheet.
Costs amounting to $113,833, previously deferred in connection
with the proposed Home acquisition, were charged to expense in
the first quarter of 1995.
4. Loans as presented are net of unearned income of $318,081,
$2,048,192 and $944,168 at June 30, 1995, June 30, 1994 and
December 31, 1994, respectively.
5
5. Significant components of other expense were as follows:
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
FDIC insurance $127,974 $123,924 $255,948 $247,880
Stationery, printing
and supplies 63,271 72,234 135,380 142,341
Deferred acquisition
costs charged to
expense - - 113,833 -
6. In 1995, management adopted a comprehensive restructuring
project for the purpose of reengineering all Bank operations to
become more competitive and cost-effective in developing
business and servicing customers and to improve long-term
profitability. This project, scheduled for completion in 1995,
will eliminate or realign some positions within the bank and
will result in one-time charges to earnings. It is expected
that the most significant costs have been incurred in the first
half of 1995.
A summary of the restructuring charges incurred or accrued
during the six months ended June 30, 1995 is as follows:
Retirement benefits $256,266
Other personnel costs 48,431
Total personnel costs 304,697
Professional fees related to
restructuring project 155,760
Total restructuring charges $460,457
7. Certain amounts for 1994 have been reclassified to conform with
the presentation for 1995. The reclassifications had no effect
on shareholders' equity or net income as previously reported.
8. All references to per share data have been restated to reflect
the three-for-two stock split in May 1995.
9. In the opinion of management, the financial information
furnished in this report includes all adjustments (consisting
of normal recurring accruals) necessary to a fair statement of
the results for the periods presented.
6
Item 2. Management's Discussion and Analysis or Plan of
Operation
The purpose of this discussion and analysis is to assist in
the understanding and evaluation of the financial condition,
changes in financial condition and results of operations of FNB
Corp. (the Corporation) and its wholly-owned subsidiary, First
National Bank and Trust Company (the Bank). This discussion and
analysis should be read in conjunction with the financial
information appearing elsewhere in this report.
OVERVIEW
The Corporation earned $933,256 in the first six months of
1995, a 33.0% decline from the same period in 1994. Earnings per
share decreased from $.77 to $.52 in comparing these six-month
periods. The 1995 results, especially as related to the
operations of the first quarter, have been impacted by certain
special charges described in more detail in the "Earnings
Review". Earnings for the 1995 second quarter amounted to
$800,110, which represents a 9.7% increase from the 1994 second
quarter and a gain in earnings per share from $.41 to $.44.
Total assets were $267,650,386 at June 30, 1995, up 5.2%
from June 30, 1994 and 2.3% from December 31, 1994. Loans
amounted to $172,196,954 at June 30, 1995, increasing 5.3% from
June 30, 1994 and 2.3% from December 31, 1994. Total deposits
grew 3.6% from June 30, 1994 and 3.5% from December 31, 1994 to
$238,001,308 at June 30, 1995.
In December 1993, the Corporation entered into definitive
agreements to acquire two mutual savings banks, Home Savings Bank
of Siler City, SSB ("Home") and Randleman Savings Bank, SSB
("Randleman"), which had total assets at December 31, 1994 of
$43,614,000 and $15,610,000, respectively. In 1994, the
Corporation withdrew the applications it had filed with the FDIC
and Federal Reserve for approval of the acquisitions as
substantial changes in regulatory policy in 1994 effectively
resulted in a moratorium on federal approval of such
merger/conversion transactions. Due to the likelihood that
regulatory approval would not be received for an acquisition of
the magnitude of Home, the agreement with Home was discontinued
in May 1995. The Corporation and Randleman are exploring other
methods of effecting a combination and continue to monitor
developments in federal regulations and policy with respect to
merger/conversions.
EARNINGS REVIEW
The Corporation's net income declined $459,700 or 33.0% in
the first six months of 1995 compared to the same period of 1994
and increased $70,554 or 9.7% in comparing second quarter
periods. The earnings decline for the first six months of 1995
primarily related to the first quarter results which were
negatively affected by restructuring charges of $460,457 and
losses on sales of securities of $414,596, which are considered
one-time charges taken for the strategic purposes discussed in
"Business Development Matters". Additionally, and as further
discussed in "Other Operating Expense", there was a $113,833
charge to expense in the 1995 first quarter related to costs that
had been deferred in connection with the proposed acquisition of
Home Savings Bank of Siler City, SSB. Earnings were positively
impacted in the first six months of 1995 by an increase of
$502,187 or 9.7% in net interest income. Similarly, the 1995
second quarter results benefited from a $209,292 or 7.9% increase
in net interest income.
Return on average assets, affected by the special charges
in 1995, declined from 1.11% in the first six months of 1994 to
0.71% in the first six months of 1995. Similarly, return on
average shareholders'
7
equity declined from 12.33% to 7.76% in comparing the same periods.
In comparing second quarter periods, however, with increased
net income in 1995, return on average assets improved from
1.15% in 1994 to 1.21% in 1995 and return on average
shareholders' equity improved from 12.86% to 13.15%.
Net Interest Income
Net interest income is the difference between interest income,
principally from loans and investments, and interest expense,
principally on customer deposits. Changes in net interest income
result from changes in interest rates and in the volume, or average
dollar level, and mix of earning assets and interest-bearing
liabilities.
Net interest income was $5,658,818 in the first six months
of 1995 compared to $5,157,631 in the same period of 1994. This
increase of $502,187 or 9.7% resulted from an improvement in the
net yield on earning assets, or net interest margin, from 4.53%
in the first six months of 1994 to 4.74% in the same period of
1995 coupled with a 4.3% increase in the level of average earning
assets. In comparing second quarter periods, net interest income
increased in similar fashion by $209,292 or 7.9%, as the net
interest margin improved from 4.64% to 4.76% and average earning
assets increased 4.6%. The net interest margin, affected for
some period prior to early 1994 by a significant decline in the
interest rate structure, had generally improved until the second
quarter of 1993 as a result of lower deposit rates and then
decreased as the impact of declining yields on earning assets
became more significant. The interest rate scenario changed
significantly in 1994, influenced by actions taken by the Federal
Reserve to combat a possible resurgence in inflation. The
interest rate increases in 1994 and early 1995 have resulted in
an improvement in the net interest margin. Additionally, there
has been a continuing negative impact on the margin from certain
variable-rate time deposits with minimum rates in excess of
current market rates. Such variable-rate time deposits are being
phased out over a two-year period that commenced in January 1994.
On a taxable equivalent basis, the increase in net interest
income in the first six months and second quarter of 1995 were
slightly lower at $493,000 and $203,000, respectively, reflecting
a decline in the yield of non-taxable investment securities.
Table 1 on page 15 and Table 2 on page 16 set forth for the
periods indicated information with respect to the Corporation's
average balances of assets and liabilities, as well as the total
dollar amounts of interest income (taxable equivalent basis) from
earning assets and interest expense on interest-bearing
liabilities, resultant rates earned or paid, net interest income,
net interest spread and net yield on earning assets. Net
interest spread refers to the difference between the average
yield on earning assets and the average rate paid on interest-
bearing liabilities. Net yield on earning assets, or net
interest margin, refers to net interest income divided by average
earning assets and is influenced by the level and relative mix of
earning assets and interest-bearing liabilities. Changes in net
interest income on a taxable equivalent basis, as measured by
volume and rate variances, are also analyzed in Tables 1 and 2.
Volume refers to the average dollar level of earning assets and
interest-bearing liabilities.
Changes in the net interest margin and spread tend to
correlate with movements in the prime rate of interest. The
prime rate, which had been 6.00% at December 31, 1992 and 1993,
moved up significantly in 1994 to close the year at 8.50%. The
average prime for those three years amounted to 6.25%, 6.00% and
7.09%, respectively. The prime rate had declined significantly
from 1991 to 1993, but began to increase in 1994 following steps
taken by the Federal Reserve to combat a possible resurgence in
inflation. The prime rate increased towards the end of the first
quarter in 1994 and an additional four times during the remainder
of that year. In the first quarter of 1995, it increased again
to 9.00% and remained at that level at June 30,
8
1995. Subsequent to that time, actions taken by the Federal
Reserve have resulted in a decrease of the prime rate to 8.75%
and there appears to be some possibility of a further 1995
decrease. The average prime was 8.89% in the first six months
of 1995 compared to 6.43% in the same period of 1994. In
comparing six-month periods, the net interest spread improved
modestly by 3 basis points from 3.89% in 1994 to 3.92% in 1995
due to the fact that a higher level of interest rates has, on a
year-to-date basis, resulted in a greater increase in the
average total yield on earning assets than in the average rate
paid on interest-bearing liabilities, or cost of funds. The
yield on earning assets increased by 88 basis points from 7.35%
in 1994 to 8.23% in 1995, while the cost of funds increased by
85 basis points in moving from 3.46% to 4.31%. A comparison of
second quarter periods, however, reveals that the net interest
spread, which declined from 3.99% to 3.92%, has become subject
to pressure from a faster rate of increase in the cost of funds
than in the yield on earning assets. While the second quarter
increase in the yield on earning assets was 88 basis points,
the same as on the year-to-date basis, the cost of funds
increased 95 basis points.
Provision for Loan Losses
This provision is the charge against earnings to provide an
allowance or reserve for possible future losses on loans. The
amount of each period's charge is affected by several
considerations including management's evaluation of various risk
factors in determining the adequacy of the allowance (see "Asset
Quality"), actual loan loss experience and loan portfolio growth
Earnings were negatively impacted in the first six months and
second quarter of 1995 compared to the same periods in 1994 by
increases in the provision of $135,000 and $75,000, respectively.
Other Operating Income
Total other operating, or noninterest, income decreased
$424,135 or 38.8% in the first six months of 1995 compared to the
same period in 1994 due principally to losses on sales of
securities in the 1995 first quarter of $414,596 (see "Business
Development Matters"). In comparing second quarter periods,
noninterest income increased $4,928 or 0.9%. The increase in
service charges on deposit accounts resulted primarily from the
change in the 1994 fourth quarter in the method of collecting
fees on returned checks and overdraft items and from the
implementation of daily charges on overdraft balances in May
1995. Annuity and brokerage commissions declined because of a
reduction in sales of tax-deferred annuity products. There was a
lower level of "other income" in the first six months of 1995 due
largely to a reduction in gains on loan sales. Increases in
mortgage loan rates have negatively impacted both mortgage loan
activity and the average level of profitability on loans actually
sold. Credit card income increased due to a new program (see
"Business Development Matters").
Other Operating Expense
Total other operating, or noninterest, expense increased
$619,664 or 14.8% in the first six months of 1995 compared to the
same period of 1994 due primarily to restructuring charges
recorded in the 1995 first quarter of $460,457 (see "Business
Development Matters") and to deferred acquisition costs charged
to expense in the 1995 first quarter of $113,833. In comparing
second quarter periods, noninterest expense increased $11,068 or
0.5%. The components of other operating expense have been
significantly changed by the Bank's decision in 1994 to outsource
its data processing operations (see "Business Development
Matters"). The conversion of data processing operations to a
service bureau arrangement was completed in the 1994 fourth
quarter. Consequently, the level of expense for data processing
services, which includes trust and credit card processing costs
in addition to basic data processing operations, has increased
9
significantly in 1995. Personnel and equipment costs are being
reduced, however, as a result of the outsourcing decision. A
change in credit card operations (see "Business Development
Matters") has also contributed to a higher cost of data
processing services.
Personnel expense, as noted above, has been positively
impacted by the outsourcing of data processing operations with
only a slight offset from the change implemented in mid-1994 in
credit card operations. Additional reductions in personnel and
other expenses are resulting from the comprehensive project being
undertaken in 1995 for the reengineering of all bank operations
(see "Business Development Matters"). The restructuring charges
noted above are expected to constitute the majority of the costs
to be incurred in connection with this project. The number of
full-time equivalent employees decreased in 1994, reflecting in
particular the outsourcing of data processing operations. A
further decrease has occurred in the first six months of 1995 as
the benefits of the reengineering project have begun to be
realized. As is the situation for other operating expenses,
personnel expense is subject to the continuing effects of
inflation through normal salary adjustments and higher costs of
fringe benefits.
As discussed in the "Overview", the Corporation in December
1993 entered into definitive agreements to acquire two mutual
savings banks, Home Savings Bank of Siler City, SSB ("Home") and
Randleman Savings Bank, SSB ("Randleman"). Changes in regulatory
policy, however, have effectively resulted in a moratorium on
federal approval of such merger/conversion transactions. Based
on the results of the continuing evaluation of the progress
toward finding a method of effecting a combination, the
Corporation elected to charge to expense in the first quarter of
1995 certain costs, amounting to $113,833, that had been deferred
in connection with the proposed Home acquisition. As noted in
the "Overview", the agreement with Home was formally discontinued
in May 1995. Costs deferred in connection with the proposed
Randleman acquisition amounted to $71,494 at June 30, 1995.
Because of the Federal Deposit Insurance Corporation
Improvement Act (FDICIA) enacted in 1989, FDIC insurance expense
was increased substantially, with the Bank's expense amounting to
$503,379 in the year ended December 31, 1994 and $255,948 in the
first six months of 1995. The FDIC has two separate insurance
funds, which are the Bank Insurance Fund (BIF) and the Savings
Association Insurance Fund (SAIF). When each fund reaches the
1.25 percent reserve ratio required by FDICIA, then the
corresponding insurance assessment rates can be lowered starting
within that semiannual period. While the BIF fund is expected to
reach the mandated reserve ratio in mid-1995, the SAIF fund may
not reach this level for several years. Since most of the Bank's
deposits are insured through BIF, the Bank could experience a
significant savings in FDIC insurance expense, if as currently
projected, the effective BIF rate is lowered by as much as 83%.
Income Taxes
The effective income tax rate decreased from 29.3% in the
first six months of 1994 to 27.8% in the same period of 1995 due
principally to a decrease in the ratio of taxable to tax-exempt
income.
LIQUIDITY
Liquidity refers to the continuing ability of the Bank to
meet deposit withdrawals, fund loan and capital expenditure
commitments, maintain reserve requirements, pay operating
expenses and provide funds to the Corporation for payment of
dividends, debt service and other operational requirements.
Liquidity is immediately available from three major sources:
(a) cash on hand and on deposit at other banks, (b) the
10
outstanding balance of federal funds sold and (c) the available-
for-sale securities portfolio. While additional liquidity is
readily obtainable by purchasing federal funds from other banks,
the Bank has not found it necessary to utilize this resource to
any substantial extent in recent years. Further, while
available-for-sale securities are intended to be a source of
immediate liquidity, the entire investment securities portfolio
is managed to provide both income and a ready source of
liquidity. The average portfolio life of debt securities is
approximately three and one-half years, resulting in a
substantial level of maturities each year. All debt securities
are of investment grade quality and, if the need arises, can be
promptly liquidated on the open market or pledged as collateral
for short-term borrowing.
In line with its approach to liquidity, the Bank as a matter
of policy does not solicit or accept brokered deposits for funding
asset growth. Instead, loans and other assets are based on a solid
core of local deposits and the Bank's strong capital position. To
date, the steady increase in deposits, retail repurchase agreements
and capital has been adequate to fund loan demand in the Bank's
market area, while maintaining the desired level of immediate
liquidity and a substantial investment portfolio available for both
immediate and secondary liquidity purposes.
ASSET/LIABILITY MANAGEMENT AND INTEREST RATE SENSITIVITY
One of the primary objectives of asset/liability management is
to maximize net interest margin while minimizing the earnings risk
associated with changes in interest rates. One method used to
manage interest rate sensitivity is to measure, over various time
periods, the interest rate sensitivity positions, or gaps; however,
this method addresses only the magnitude of timing differences and
does not address earnings or market value. Therefore, management
uses an earnings simulation model to prepare, on a regular basis,
earnings projections based on a range of interest rate scenarios in
order to more accurately measure interest rate risk.
The Bank's balance sheet is liability-sensitive, meaning that
in a given period there will be more liabilities than assets
subject to immediate repricing as market rates change. Because
immediately rate sensitive interest-bearing liabilities exceed rate
sensitive assets, the earnings position could improve in a
declining rate environment and could deteriorate in a rising rate
environment, depending on the correlation of rate changes in these
two categories. Included in interest-bearing liabilities subject
to rate changes within 30 days are NOW, savings, and money market
deposits totaling $77,983,000 as of June 30, 1995. These types of
deposits historically have not repriced coincidentally with or in
the same proportion as general market indicators.
CAPITAL ADEQUACY
Under guidelines established by the Federal Reserve Board,
capital adequacy is currently measured for regulatory purposes by
certain risk-based capital ratios, supplemented by a leverage
ratio. The risk-based capital ratios are determined by expressing
allowable capital amounts, defined in terms of Tier 1 and Tier 2,
as a percentage of risk-adjusted assets, which are computed by
measuring the relative credit risk of both the asset categories on
the balance sheet and various off-balance sheet exposures. Tier 1
capital consists primarily of common shareholders' equity and
qualifying perpetual preferred stock, net of goodwill and other
disallowed intangible assets. Tier 2 capital, which is limited to
the total of Tier 1 capital, includes allowable amounts of
subordinated debt, mandatory convertible securities, preferred
stock and the allowance for loan losses. Under current
requirements, the minimum Tier 1 capital ratio is 4% and the
minimum total capital ratio, consisting of both Tier 1 and Tier 2
capital, is 8%. At June 30, 1995, the Corporation had a Tier 1
capital ratio of 13.81% and a total capital ratio of 14.84%.
11
The leverage ratio, which serves as a minimum capital
standard, considers Tier 1 capital only and is expressed as a
percentage of average total assets for the most recent quarter,
after reduction of those assets for goodwill and other disallowed
intangible assets at the measurement date. The required ratio
ranges from 3% to 5%, subject to federal bank regulatory evaluation
of the organization's overall safety and soundness. At June 30,
1995, the Corporation had a leverage ratio of 9.29%.
BALANCE SHEET REVIEW
Total assets, which declined slightly in the 1995 first
quarter, grew 2.9% in the second quarter. Deposits grew similarly
in the second quarter at a rate of 3.4%, but the comparison to
prior periods has been affected by the new retail repurchase
agreements program. Total assets at June 30, 1995 were higher than
at June 30, 1994 and December 31, 1994 by $13,120,000 or 5.2% and
$6,034,000 or 2.3%, respectively; deposits were ahead by $8,358,000
or 3.6% and $8,076,000 or 3.5%. A new retail repurchase agreements
program that commenced in the second quarter of 1994 generated
$2,322,000 of the total asset balance at June 30, 1995, $136,000 at
June 30, 1994 and $3,526,000 at December 31, 1994. Average assets
increased $10,411,000 or 4.1% in the first six months of 1995
compared to the same period in 1994, while average deposits
increased $5,090,000 or 2.2%; the second quarter increases being
$11,530,000 or 4.6% and $6,521,000 or 2.9%, respectively.
Investment Securities
Additions to the investment securities portfolio depend to a
large extent on the availability of investable funds that are not
otherwise needed to satisfy loan demand. During the twelve-month
period ended June 30, 1995, when significant loan growth occurred
relative to the growth in total assets, there was a modest increase
in the level of investment securities, amounting to $1,081,000 or
1.5%. Of this total increase, $607,000 resulted from the change in
the valuation of available-for-sale securities for unrealized gains
and losses. Investable funds not otherwise utilized are
temporarily invested on an overnight basis as federal funds sold,
the level of which is affected by such considerations as near-term
loan demand and liquidity needs.
Loans
The Corporation's primary source of revenue and largest
component of earning assets is the loan portfolio. Loans increased
$8,702,000 or 5.3% during the twelve-month period ended June 30,
1995. The net loan increase during the first six months of 1995
was $3,869,000 or 2.3%, with the second quarter accounting for all
of this increase. Loan growth in the first quarter was flat due to
a decrease in the commercial loan portfolio which, as a result of
its more volatile nature, tends to have larger fluctuations, both
increases and decreases, than other portfolio components. The
commercial loan portfolio regained all of its first quarter loss in
the second quarter and registered a small net increase for the six-
onth period. Average loans were $11,320,000 or 7.2% higher in the
first six months of 1995 than in the same period of 1994. The
ratio of average loans to average deposits, in comparing six-month
periods, increased from 69.8% in 1994 to 73.1% in 1995. Part of
this increase is due to the effect of the new retail repurchase
agreements program which began generating additional funds in 1994
that can be used for loan growth and other purposes. The ratio of
loans to deposits at June 30, 1995 was 72.4%.
The residential construction and mortgage loan portfolio
accounted for more than three-fourths of the loan increase during
the last twelve months. The consumer loan portfolio was affected
by a decline in automobile loans that largely offset the gains in
credit card loans, in balances related to the home equity line
program and in
12
installment loans other than for automobiles. Automobile lending
was especially strong in the first half of 1994, but the pace has
significantly subsided since that time.
Asset Quality
Management considers the Bank's asset quality to be of primary
importance. A formal loan review function, independent of loan
origination, is used to identify and monitor problem loans. In
determining the allowance for loan losses and any resulting
provision to be charged against earnings, particular emphasis is
placed on the results of the loan review process. Consideration is
also given to historical loan loss experience, the value and
adequacy of collateral, and economic conditions in the Bank's
market area.
Management's policy in regard to past due loans is
conservative and normally requires a prompt charge-off to the
allowance for loan losses following timely collection efforts and a
thorough review. Further efforts are then pursued through various
means available. Loans carried in a nonaccrual status are
generally collateralized and the possibility of future losses is
considered minimal.
Deposits
The level and mix of deposits is affected by various factors,
including general economic conditions, the particular circumstances
of local markets and the specific deposit strategies employed.
Broad interest rate declines such as have occurred from 1991 to
early 1994 tend to encourage customers to consider alternative
investments such as mutual funds and tax-deferred annuity products.
Interest rate increases subsequent to this last broad decline have
tended to reduce the consideration of these alternative
investments.
The Bank's level and mix of deposits has been specifically
affected by the following factors. Certain variable-rate time
deposits with minimum rates in excess of current market rates are
being phased out over a two-year period that commenced in January
1994. A retail repurchase agreements program, established in the
second quarter of 1994, has tended to transfer funds away from
deposits. The balance of retail repurchase agreements was
$3,526,000 at December 31, 1994 and $2,322,000 at June 30, 1995.
Further, the level of public funds on deposit fluctuates, amounting
to $18,376,000, $11,578,000 and $10,940,000 at June 30, 1995, June
30, 1994 and December 31, 1994, respectively.
BUSINESS DEVELOPMENT MATTERS
As discussed in the "Overview" and "Other Operating Expense"
above, the Corporation has entered into a definitive agreement to
acquire a mutual savings bank. An additional agreement for the
acquisition of a mutual savings bank was discontinued in May 1995.
During 1994, a new credit card operation was established in
which the Bank carries its own credit card receivables as opposed
to the former fee-based arrangement under which accounts were
generated for and owned by a correspondent bank. As part of the
new credit card strategy, extensive customer solicitation efforts
are being undertaken in 1995. Additionally, the merchant aspect of
credit card operations has been shifted to an in-house basis from
the prior correspondent arrangement.
In a significant 1994 development, the Bank elected to
outsource all of its data processing, item capture and statement
rendering operations. The conversion to a service bureau
arrangement was completed in the 1994 fourth quarter. The major
items of data processing equipment that were no longer needed by
the Bank were acquired by the new processor. While the Bank does
not plan to resume any major data
13
processing operations, the level of computer equipment is
expected to be significantly increased in 1995 through
expanded use of personal computer networks. The new networks
will allow for a more direct input of basic loan and deposit
account information to the data files maintained by the service
bureau. Capital expenditures for these and other projects
are expected to be approximately $900,000 in 1995.
In 1995, management adopted a comprehensive restructuring
project for the purpose of reengineering all Bank operations to
become more competitive and cost-effective in developing business
and servicing customers and to improve long-term profitability.
This project, scheduled for completion in 1995, will eliminate or
realign some positions within the Bank and will result in one-time
charges to earnings. It is believed that the majority of these
restructuring charges were incurred or accrued in the 1995 first
quarter. The total recorded in the first quarter, which is equal
to the total for the first six months of 1995, was $460,457, of
which $304,697 related to personnel costs and $155,760 to
professional fees. The Bank also decided in March 1995 to
recognize losses of $414,596 from the sales of certain securities
held in the available-for-sale investment portfolio in order to
gain favorable tax treatment for the losses and to take advantage
of reinvestment opportunities at higher coupon rates. While these
actions will have a significant adverse impact on 1995 earnings,
management believes these decisions will enhance the long-term
value of FNB Corp. and insure the competitive edge of its community
banking operations.
14
TABLE 1
CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME
ANALYSIS
(Taxable Equivalent Basis, Dollars in Thousands)
1995 1994
SIX MONTHS ENDED JUNE 30 Average
Interest Rates
Average Income/ Earned/ Average
Balance Expense Paid Balance
EARNING ASSETS
Loans (2) (3) $169,695 $7,569 8.98 % $158,375
Investment securities:
Taxable income 64,774 2,014 6.22 66,746
Non-taxable income (2) 10,195 463 9.09 10,123
Federal funds sold 2,269 68 6.01 1,418
Total earning assets 246,933 10,114 8.23 236,662
Cash and due from banks 9,007 8,345
Other assets, net 6,313 6,835
TOTAL ASSETS $262,253 $251,842
INTEREST-BEARING
LIABILITIES
Interest-bearing deposits:
NOW accounts $ 32,082 338 2.12 $ 32,122
Savings deposits 30,093 439 2.94 31,864
Money market accounts 17,587 270 3.10 21,862
Certificates and other
time deposits 116,526 3,130 5.42 107,029
Retail repurchase
agreements 3,236 82 5.12 16
Federal funds purchased 456 13 5.80 350
Total interest-bearing
liabilities 199,980 4,272 4.31 193,243
Noninterest-bearing
demand deposits 35,844 34,165
Other liabilities 2,365 1,833
Shareholders' equity 24,064 22,601
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $262,253 $251,842
NET INTEREST INCOME AND
SPREAD $5,842 3.92 %
NET YIELD ON EARNING
ASSETS 4.74 %
(1) The mix variance, not separately stated, has been
proportionally allocated to the rate and volume variances
based on their absolute dollar amount.
(2) Interest income reated to tax-exempt securities and to certain
loans exempt from federal income tax is stated on a taxable
equivalent basis, assuming a 34% tax rate.
(3) Nonaccrual loans are included in the average loan balance.
Loan fees and the incremental direct costs associated with
making loans are deferred and subsequently recognized over the
life of the loan as an adjustment of interest income.
15
TABLE 1
CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME
ANALYSIS
(Taxable Equivalent Basis, Dollars in Thousands)
1994
SIX MONTHS ENDED
JUNE 30 Average 1995 Versus 1994
Interest Rates Interest Variance
Income/ Earned/ due to (1) Net
Expense Paid Volume Rate Change
EARNING ASSETS
Loans (2) (3) $ 6,343 8.05 % $ 469 $ 757 $1,226
Investment
securities:
Taxable income 1,794 5.38 (54) 274 220
Non-taxable
income (2) 500 9.88 4 (41) (37)
Federal funds sold 24 3.47 20 24 44
Total earning
assets 8,661 7.35 439 1,014 1,453
Cash and due from
banks
Other assets, net
TOTAL ASSETS
INTEREST-BEARING
LIABILITIES
Interest-bearing
deposits:
NOW accounts 316 1.98 - 22 22
Savings deposits 401 2.54 (23) 61 38
Money market
accounts 260 2.40 (57) 67 10
Certificates and
other time
deposits 2,328 4.39 221 581 802
Retail repurchase
agreements - 3.41 82 - 82
Federal funds
purchased 7 4.05 2 4 6
Total interest-
bearing
liabilities 3,312 3.46 225 735 960
Noninterest-bearing
demand deposits
Other liabilities
Shareholders' equity
TOTAL LIABILITIES
AND SHAREHOLDERS'
EQUITY
NET INTEREST INCOME
AND SPREAD $5,349 3.89 % $214 $279 $493
NET YIELD ON EARNING
ASSETS 4.53 %
(1) The mix variance, not separately stated, has been
proportionally allocated to the rate and volume variances
based on their absolute dollar amount.
(2) Interest income reated to tax-exempt securities and to certain
loans exempt from federal income tax is stated on a taxable
equivalent basis, assuming a 34% tax rate.
(3) Nonaccrual loans are included in the average loan balance.
Loan fees and the incremental direct costs associated with
making loans are deferred and subsequently recognized over the
life of the loan as an adjustment of interest income.
15a
TABLE 2
CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME
ANALYSIS
(Taxable Equivalent Basis, Dollars in Thousands)
1995 1994
THREE MONTHS ENDED JUNE 30 Average
Interest Rates
Average Income/ Earned/ Average
Balance Expense Paid Balance
EARNING ASSETS
Loans (2) (3) $170,750 $3,855 9.05 % $160,042
Investment securities:
Taxable income 63,968 1,015 6.35 66,241
Non-taxable income (2) 10,111 224 8.86 9,859
Federal funds sold 3,653 54 5.93 1,368
Total earning assets 248,482 5,148 8.30 237,510
Cash and due from banks 9,206 8,538
Other assets, net 6,531 6,641
TOTAL ASSETS $264,219 $252,689
INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
NOW accounts $ 32,799 172 2.10 $ 32,352
Savings deposits 29,950 222 2.97 32,341
Money market accounts 16,115 126 3.15 21,945
Certificates and other
time deposits 118,855 1,631 5.50 105,845
Retail repurchase
agreements 3,255 42 5.19 32
Federal funds purchased 44 - 4.97 530
Total interest-bearing
liabilities 201,018 2,193 4.38 193,045
Noninterest-bearing demand
deposits 36,289 35,004
Other liabilities 2,575 1,947
Shareholders' equity 24,337 22,693
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $264,219 $252,689
NET INTEREST INCOME AND
SPREAD $2,955 3.92 %
NET YIELD ON EARNING
ASSETS 4.76 %
(1) The mix variance, not separately stated, has been
proportionally allocated to the rate and volume variances
based on their absolute dollar amount.
(2) Interest income reated to tax-exempt securities and to certain
loans exempt from federal income tax is stated on a taxable
equivalent basis, assuming a 34% tax rate.
(3) Nonaccrual loans are included in the average loan balance.
Loan fees and the incremental direct costs associated with
making loans are deferred and subsequently recognized over the
life of the loan as an adjustment of interest income.
16
TABLE 2
CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME
ANALYSIS
(Taxable Equivalent Basis, Dollars in Thousands)
1994
THREE MONTHS ENDED
JUNE 30 Average 1995 Versus 1994
Interest Rates Interest Variance
Income/ Earned/ due to (1) Net
Expense Paid Volume Rate Change
EARNING ASSETS
Loans (2) (3) $ 3,248 8.13 % $ 226 $ 381 $ 607
Investment
securities:
Taxable income 904 5.46 (32) 143 111
Non-taxable
income (2) 237 9.62 6 (19) (13)
Federal funds sold 13 3.82 31 10 41
Total earning
assets 4,402 7.42 231 515 746
Cash and due from
banks
Other assets, net
TOTAL ASSETS
INTEREST-BEARING
LIABILITIES
Interest-bearing
deposits:
NOW accounts 159 1.97 2 11 13
Savings deposits 202 2.51 (16) 36 20
Money market
accounts 134 2.45 (41) 33 (8)
Certificates and
other time
deposits 1,149 4.36 153 329 482
Retail repurchase
agreements - 3.41 42 - 42
Federal funds
purchased 6 4.31 (7) 1 (6)
Total interest-
bearing
liabilities 1,650 3.43 133 410 543
Noninterest-bearing
demand deposits
Other liabilities
Shareholders' equity
TOTAL LIABILITIES
AND SHAREHOLDERS'
EQUITY
NET INTEREST INCOME
AND SPREAD $2,752 3.99 % $ 98 $105 $203
NET YIELD ON
EARNING ASSETS 4.64 %
(1) The mix variance, not separately stated, has been
proportionally allocated to the rate and volume variances
based on their absolute dollar amount.
(2) Interest income reated to tax-exempt securities and to certain
loans exempt from federal income tax is stated on a taxable
equivalent basis, assuming a 34% tax rate.
(3) Nonaccrual loans are included in the average loan balance.
Loan fees and the incremental direct costs associated with
making loans are deferred and subsequently recognized over the
life of the loan as an adjustment of interest income.
16a
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of FNB Corp. (the
"Corporation") was held on May 9, 1995. The total number of shares
of the Corporation's Common Stock, par value $2.50 per share,
outstanding as of March 30, 1995, the record date for the Annual
Meeting, was 1,200,000.
The following nominees were elected to the Board of Directors
for the terms indicated:
Class I Directors - Elected for One-Year Terms Expiring with
the Annual Meeting in 1996.
Nominee Votes For Withheld
James M. Culberson, Jr. 831,424 4,400
J. M. Ramsay III 831,824 4,000
Charles W. Stout, M.D. 831,824 4,000
Earlene V. Ward 831,824 4,000
Class II Directors - Elected for Two-Year Terms Expiring with
the Annual Meeting in 1997.
Nominee Votes For Withheld
W. L. Hancock 831,824 4,000
R. Reynolds Neely, Jr. 831,824 4,000
Richard K. Pugh 829,744 6,080
E. C. Watkins, Jr. 831,224 4,600
Class III Directors - Elected for Three-Year Terms Expiring
with the Annual Meeting in 1998.
Nominee Votes For Withheld
James M. Campbell, Jr. 832,224 3,600
Thomas A. Jordan 831,824 4,000
Michael C. Miller 831,824 4,000
The shareholders voted upon and approved the amendment to the
Corporation's bylaws to provide for staggered terms for Directors
and to increase the minimum number of directors to nine. The votes
on this proposal were as follows:
Votes for 804,090
Votes against 28,695
Abstaining 3,039
17
The shareholders ratified the selection of KPMG Peat Marwick,
Certified Public Accountants, as independent auditors of the
Corporation for the 1995 fiscal year. The votes on ratification
were as follows:
Votes for 831,529
Votes against 608
Abstaining 3,687
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Exhibits to this report are listed in the index to
exhibits on pages 15 and 16 of this report.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter
ended June 30, 1995.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FNB Corp.
(Registrant)
Date: August 8, 1995 By: /s/ Jerry A. Little
Jerry A. Little
Treasurer and Secretary
(Principal Financial
and Accounting Officer)
18
FNB CORP.
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit Page No.
3.10 Articles of Incorporation of the
Registrant, incorporated herein by
reference to Exhibit 3.1 to the
Registrant's Form S-14 Registration
Statement (No. 2-96498) filed March
16, 1985.
3.11 Articles of Amendment to Articles of
Incorporation of the Registrant,
adopted May 10, 1988, incorporated
herein by reference to Exhibit 19.10
to the Registrant's Form 10-Q
Quarterly Report for the quarter ended
June 30, 1988.
3.20 Amended and Restated Bylaws of the
Registrant, adopted May 9, 1995.
4 Specimen of Registrant's Common Stock
Certificate, incorporated herein by
reference to Exhibit 4 to Amendment
No. 1 to the Registrant's Form S-14
Registration Statement (No. 2-96498)
filed April 19, 1985.
10.10 Form of Split Dollar Insurance
Agreement dated as of November 1, 1987
between First National Bank and Trust
Company and certain of its key
employees and directors, incorporated
herein by reference to Exhibit 19.20 to
the Registrant's Form 10-Q Quarterly
Report for the Quarter ended June 30,
1988.
10.11 Form of Amendment to Split Dollar
Insurance Agreement dated as of
November 1, 1994 between First National
Bank and Trust Company and certain of
its key employees and directors,
incorporated herein by reference to
Exhibit 10.11 to the Registrant's Form
10-KSB Annual Report for the fiscal
year ended December 31, 1994.
19
10.20 Copy of Split Dollar Insurance
Agreement dated as of May 28, 1989
between First National Bank and Trust
Company and James M. Culberson, Jr.,
incorporated herein by reference to
Exhibit 10.30 to the Registrant's Form
10-K Annual Report for the fiscal year
ended December 31, 1989.
10.30 Copy of Stock Compensation Plan adopted
May 11, 1993, incorporated herein by
reference to Exhibit 10.40 to the
Registrant's Form 10-QSB Quarterly
Report for the quarter ended June 30,
1993.
10.31 Form of Incentive Stock Option Agreement
between FNB Corp. and certain of its key
employees, pursuant to the Registrant's
Stock Compensation Plan, incorporated
herein by reference to Exhibit 10.11
to the Registrant's Form 10-KSB Annual
Report for the fiscal year ended December
31, 1994.
10.32 Form of Nonqualified Stock Option
Agreement between FNB Corp. and certain
of its directors, pursuant to the
Registrant's Stock Compensation Plan,
incorporated herein by reference to
Exhibit 10.11 to the Registrant's Form
10-KSB Annual Report for the fiscal year
ended December 31, 1994.
10.40 Copy of FNB Corp. Savings Institutions
Management Stock Compensation Plan
adopted May 10, 1994, incorporated herein
by reference to Exhibit 10.40 to the
Registrant's Form 10-QSB Quarterly Report
for the quarter ended June 30, 1994.
27.10 Financial Data Schedule for the six months
ended June 30, 1995.
27.11 Amended and Restated Financial Data
Schedule for the three months ended March
31, 1995.
27.12 Restated Financial Data Schedule for the
fiscal year ended December 31, 1994.
20
EX-3
2
May 9, 1995
AMENDED AND RESTATED BYLAWS
OF
FNB CORP.
ARTICLE I
Offices
1. Princinal Office. The principal office of the
corporation shall be located at such place as the Board of
Directors may determine.
2. Other Offices. The corporation may have offices at such
other places, either within or without the State of North
Carolina, as the Board of Directors may from time to time
determine, or as the affairs of the corporation may require.
ARTICLE II
Shareholders' Meetings
1. Place of Meetings. All meetings of the shareholders shall be
held at the principal office of the corporation, or at such other
place, either within or without the State of North Carolina, as
shall be designated in the notice of the meeting or agreed upon
by a majority of the shareholders entitled to vote thereat.
2. Annual Meetings. The annual meeting of shareholders shall be
held on the second Tuesday in May, if not a legal holiday, but if
a legal holiday, then on the next day following not a legal
holiday, for the purpose of electing directors of the corporation
and for the transaction of such other business as may be properly
brought before the meeting.
3. Substitute Annual Meetings. If the annual meeting shall not
be held on the day designated by these bylaws, a substitute
annual meeting may be called in accordance with the provisions of
Section 4 of this Article. A meeting so called shall be
designated and treated for all purposes as the annual meeting.
4. Special Meetings. Special meetings of the shareholders may
be called at any time by the President, Secretary or Board of
Directors of the corporation.
5. Notice of Meetings. Written or printed notice stating the
time and place of the meeting shall be delivered no fewer than 10
nor more than 60 days before the date thereof, either
personally or by mail, by or at the direction of the President,
the Secretary, or other person calling the meeting, to each
shareholder of record entitled to vote at such meeting and to
each nonvoting shareholder entitled to notice of the meeting.
If the corporation is required by law to give notice of proposed
action to nonvoting shareholders and the action is to be taken
without a meeting pursuant to Se~ction 9 of this Article, written
notice of such proposed action shall be delivered to such
shareholders not less than 10 days before such action is taken.
If notice is mailed, such notice shall be effective when
deposited in the United States mail with postage thereon prepaid
and correctly addressed to the shareholder's address shown in the
corporation's current record of shareholders.
In the case of an annual or substitute annual meeting, the
notice of meeting need not specifically state the business to be
transacted thereat unless it is a matter with respect to which
specific notice to the shareholders is expressly required by the
provisions of the North Carolina Business Corporation Act. In
the case of a special meeting the notice of meeting shall
specifically state the purpose or purposes for which the meeting
is called.
When a meeting is adjourned for more than 120 days after the
date fixed for the original meeting or if a new record date for
the adjourned meeting is fixed, notice of the adjourned meeting
shall be given as in the case of an original meeting. When a
meeting is adjourned for 120 days or less and no new record date
for the adjourned meeting is fixed, it is not necessary to give
notice of the adjourned meeting other than by announcement at the
meeting at which the adjournment is taken.
6. Waiver of Notice. A shareholder may waive any notice
required by law, the Articles of Incorporation or these bylaws
before or after the date and time stated in the notice. Such
waiver must be in writing, be signed by the shareholder entitled
to the notice, and be delivered to the corporation for inclusion
in the minutes or filing with the corporate records. A
shareholder's attendance at a meeting waives objection to lack
of notice or defective notice of the meeting, unless the
shareholder at the beginning of the meeting objects to holding
the meeting or transacting business at the meeting. A
shareholder's attendance at a meeting also waives objection to
consideration of a particular matter at the meeting that is not
within the purpose or purposes described in the notice of
meeting, unless the shareholder objects to considering the
matter before it is voted upon.
7. Quorum. Shares representing a majority of the
outstanding votes entitled to vote upon a particular matter
within each voting group represented in person or by proxy shall
constitute a quorum at meetings of shareholders. If there is no
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quorum at the opening of a meeting of shareholders, such meeting
may be adjourned from time to time by a vote of a majority of the
votes cast on the motion to adjourn; at any adjourned meeting at
which a quorum is present, any business may be transacted which
might have been transacted at the original meeting unless a new
record date is or must be set for the adjourned meeting.
Once a share is represented for any purpose at a meeting, it
is deemed present for quorum purposes for the remainder of the
meeting and for any adjournment of that meeting unless a new
record date is set for that adjourned meeting.
8. Voting of Shares. Except as otherwise provided in the
Articles of Incorporation, each outstanding share having voting
rights shall be entitled to one vote on each matter submitted to
a vote at a meeting of the shareholders. Except in the election
of directors, a majority of the votes cast on any matter at a
meeting of shareholders at which a quorum is present shall be the
act of the shareholders on that matter, unless a greater vote is
required by law, by the Articles of Incorporatign or by a bylaw
adopted by the shareholders of the corporation.
9. Informal Action by Shareholders. Any action which is
required or permitted to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed,
either before or after the time the action which is the subject
of the shareholder approval is taken, by all of the persons who
would be entitled to vote upon such action at a meeting and
delivered to the corporation for inclusion in the minutes or
filing with the corporate records. Unless otherwise fixed by law
or these bylaws, the record date for determining the shareholders
entitled to take action without a meeting shall be the date the
first shareholder signs the consent.
10. Voting Lists. After fixing a record date for a meeting, the
corporation shall prepare an alphabetical list of the names of
all the shareholders entitled to notice of such meeting, arranged
by voting group and within each voting group by class or series
of shares, with the address of and number of shares held by each
shareholder. Such list shall be available for inspection by any
shareholder, beginning two business days after notice is given of
the meeting for which the list was prepared and continuing
through the meeting, at the corporation's principal office or at
a place identified in the meeting notice in the city where the
meeting will be held. A shareholder, or his agent or attorney,
is entitled on written demand to inspect and, subject to the
requirements of North Carolina law, to copy the list, during
regular business hours and at his expense, during the period it
is available for inspection. This list shall also be produced
and kept open at the time and place of the meeting and shall be
subject to inspection by any shareholder, or his agent or
attorney, during the whole time of the meeting or any
adjournment.
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11. Proxies. Shares may be voted either in person or by one or
more agents authorized by a written appointment form executed by
the shareholder or by his duly authorized attorney in fact. An
appointment form is valid for 11 months from the date of its
execution, unless a different period is expressly provided in the
appointment form. An appointment is revocable by the shareholder
unless the appointment form conspicuously states that it is
irrevocable and the appointment is coupled with an interest.
12. Shares Held bv Nominees. The corporation may establish a
procedure by which the beneficial owner of shares that are
registered in the name of a nominee is recognized by the
corporation as a shareholder. The extent of this recognition may
be determined in the procedure.
ARTICLE III
Directors
1. General Powers. Subject to the Articles of
Incorporation, all corporate powers shall be exercised by or
under the authority of, and the business and affairs of the
corporation be managed under the direction of, its Board of
Directors.
2. Number, Term and Qualifications. The number of directors of
the corporation shall be not less than nine (9) nor more than
twenty-five (25), the exact number of directors within such
minimum and maximum limits to be fixed and determined from time
to time by resolution by a majority of the full Board of
Directors or by resolution of the shareholders at any annual or
special meeting thereof.
The Board of Directors shall be divided into three classes,
which shall be as nearly equal in number as possible. In the
event of a change in the number of directors, the Board of
Directors shall determine the class or classes to which the
increased or decreased number of directors shall be apportioned;
provided, however, that no decrease in the number of directors
shall affect the term of any director then in office. The
directors elected at the 1995 Annual Meeting of Shareholders
shall be designated as Class I Directors, Class II Directors and
Class III Directors at the time of their election and shall have
terms of office as follows: the term of office of Class I
Directors shall expire at the 1996 Annual Meeting of
Shareholders, the term of office of Class II Directors shall
expire at the 1997 Annual Meeting of Shareholders, and the term
of office of Class III Directors shall expire at the 1998 Annual
Meeting of Shareholders, with the members of each class of
directors to hold office until their successors are elected and
qualified. At each Annual Meeting of Shareholders subsequent
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to the 1995 Annual Meeting of Shareholders, directors elected to
succeed those whose terms are expiring shall be elected for a
term of office to expire at the third succeeding Annual Meeting
of Shareholders and when their respective successors are elected
and qualified.
Directors need not be residents of the State of North
Carolina or shareholders of the corporation, except insofar as
such requirements are imposed by national banking laws or by
regulations of the Federal Reserve and/or the U.S. Comptroller of
the Currency.
3. Election of Directors. Except as provided in Section 5 of
this Article, the directors shall be elected at the annual
meeting of shareholders by a plurality of the votes cast.
4. Removal. Directors may be removed from office with or
without cause by the affirmative vote of a majority of the
outstanding votes of the corporation entitled to be cast at an
election of the directors. However, unless the entire Board of
Directors is removed, an individual director may be removed only
if the number of votes cast for the removal exceeds the number of
votes cast against the removal. If any directors are so removed,
new directors may be elected at the same meeting.
A director may not be removed by the shareholders at a
meeting unless the notice of the meeting states that the purpose,
or one of the purposes, of the meeting is removal of the
director.
5. Vacancies. Unless the Articles of Incorporation provide
otherwise, if a vacancy occurs on the Board of Directors,
including, without limitation, a vacancy resulting from an
increase in the number of directors or from the failure by the
shareholders to elect the full authorized number of directors,
the vacancy may be filled by the shareholders or the Board of
Directors. If the directors remaining in office constitute fewer
than a quorum of the Board of Directors, vacancies may be filled
by the affirmative vote of a majority of all the directors, or by
the sole remaining director. A vacancy that will occur at a
specific later date may be filled before the vacancy occurs but
the new director may not take office until the vacancy occurs.
A director elected to fill a vacancy shall serve for the
unexpired term of his predecessor in office and until his
successor is elected and qualified.
6. Chairman. There may be a Chairman of the Board of Directors
elected by the directors from their number at any meeting of the
Board. The Chairman shall preside at all meetings of the Board
of Directors and perform such other duties as may be directed by
the Board. The Chairman of the Board shall not be an officer of
the corporation unless specifically so designated by the Board.
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7. Compensation. The Board of Directors may compensate a
director for his services as such and may provide for the payment
of all expenses incurred by a director in attending regular and
special meetings of the Board or in otherwise fulfilling his
duties as a director.
8. Executive and Other Committees. Unless otherwise
provided in the Articles of Incorporation or the bylaws, the
Board of Directors, by resolution adopted by a majority of the
number of directors then in office, may designate from among its
members an executive committee and one or more other committees,
each consisting of two or more directors. To the extent
specified by the Board of Directors or in the Articles of
Incorporation of the corporation, such committees shall have and
may exercise all of the authority of the Board of Directors in
the management of the business and affairs of the corporation,
except that a committee may not authorize distributions; approve
or propose to shareholders action that North Carolina law
requires be approved by shareholders; fill vacancies on the Board
of Directors or on any committee; amend the Articles of
Incorporation; adopt, amend, or repeal bylaws; approve a plan of
merger not requiring shareholder approval; authorize or approve
reacquisition of shares of capital stock of the corporation,
except according to a formula or method prescribed by the Board
of Directors; or authorize or approve the issuance or sale or
contract for sale of shares, or determine the designation and
relative rights, preferences, and limitations of a class or
series of shares, except that the Board of Directors may
authorize a committee (or a senior executive officer of the
corporation) to do so within limits specifically prescribed by
the Board of Directors.
ARTICLE IV
Meetings of Directors
1. Regular Meetings. A regular meeting of the Board of
Directors shall be held immediately after, and at the same place
as, the annual meeting of the shareholders. In addition, the
Board of Directors may provide, by resolution, the time and
place, either within or without the State of North Carolina, for
the holding of additional regular meetings.
2. Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the Chairman of
the Board, the President or any two directors. Such meetings may
be held within or without the State of North Carolina.
3. Notice of Meetings. Regular meetings of the Board of
Directors may be held without notice.
The person or persons calling a special meeting of the Board
of Directors shall, at least two days before the meeting, give
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notice thereof by any usual means of communication. Such notice
need not specify the purpose for which the meeting is called.
4. Waiver of Notice. Any director may waive any required notice
before or after the date and time stated in the notice.
Attendance at or participation by a director in a meeting shall
constitute a waiver of notice of such meeting, unless the
director at the beginning of the meeting (or promptly upon his
arrival) objects to holding the meeting or transacting any
business at the meeting and does not thereafter vote for or
assent to action taken at the meeting.
5. Quorum. A majority of the number of directors
prescribed, or, if no number is prescribed, the number in office
immediately before the meeting begins, shall constitute a quorum
for the transaction of business at any meeting of the Board of
Directors.
6. Manner of Acting. Except as otherwise provided by law, the
Articles of Incorporation or these bylaws, an act of the majority
of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors.
The vote of a majority of the directors then holding office
shall be required to adopt, amend or repeal a bylaw, if otherwise
permissible. Approval of a transaction in which one or more
directors have an adverse interest shall require a majority, not
less than two, of the disinterested directors then in office,
even though less than a quorum.
7. Presumption of Assent. A director of the corporation who is
present at a meeting of the Board of Directors or a committee of
the Board of Directors when corporate action is taken shall be
deemed to have assented to the action taken unless his contrary
vote is recorded; he objects at the beginning of the meeting (or
promptly upon his arrival) to holding it or transacting business
at the meeting; his dissent or abstention is entered in the
minutes of the meeting; or he files written notice of dissent or
abstention with the presiding officer of the meeting before its
adjournment or with the corporation immediately after the
adjournment of the meeting. The right of dissent or abstention
is not available to a director who voted in favor of such action.
8. Informal Action by Directors and Attendance by
Telephone. Action taken by a majority of the directors without a
meeting is nevertheless Board action if written consent to the
action in question, describing the action taken, is signed by all
the directors and filed with the minutes of the proceedings of
the Board or with the corporate records, whether done before or
after the action so taken. Such action shall be effective when
the last director signs the consent, unless the consent specifies
a different effective date. The Board of Directors may permit
any or all directors to participate in a regular or special
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meeting by, or conduct the meeting through the use of, any means
of communication by which all directors participating may
simultaneously hear each other during the meeting. A director
participating in a meeting by this means is deemed to be present
in person at the meeting.
9. Loans to Directors. Except as otherwise provided by law, the
corporation shall not directly or indirectly lend money to or
guarantee the obligation of a director of the corporation unless
the particular loan or guarantee is approved by a majority of the
votes represented by the outstanding voting shares of all
classes, voting as a single voting group, except the votes of
shares owned by or voted under control of the benefited director,
or unless the corporation's Board of Directors determines that
the loan or guarantee benefits the corporation and either
approves the specific loan or guarantee or a general plan
authorizing loans and guarantees. The fact that a loan or
guarantee is made in violation of this Section does not affect
the borrower's liability on the loan.
ARTICLE V
Officers
1. Number. The officers of the corporation shall consist of a
Chairman, a President, a Secretary, a Treasurer, and such Vice
Presidents, Assistant Vice Presidents, Assistant Secretaries,
Assistant Treasurers and other officers as may be elected from
time to time. Any two or more offices may be held by the same
person, except the offices of President and Secretary, but no
officer may act in more than one capacity where action of two or
more officers is required. It shall not be necessary for any
officer to be a shareholder of the corporation.
2. Election and Term. Except as hereafter provided, the
officers of the corporation shall be elected by the Board of
Directors. Such election may be held at any regular or special
meeting of the Board. Unless otherwise determined by the Board
of Directors, the Chief Executive Officer may appoint assistant
officers. Each officer shall hold office until his death,
resignation, retirement, removal, disqualification or until his
successor is elected and qualified.
3. Removal. Any officer or agent elected or appointed by the
Board of Directors may be removed by the Board with or without
cause. Officers appointed by the Chief Executive Officer may be
removed by him. Any such removal shall be without prejudice to
the contract rights, if any, of the person so removed.
4. Compensation, The compensation of all officers of the
corporation other than assistant officers shall be fixed by the
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Board of Directors. No officer shall serve the corporation in
any other capacity and receive compensation therefor unless such
additional compensation be authorized by the Board of Directors.
The compensation of all assistant officers shall be fixed by the
Chief Executive Officer of the corporation or his designee.
5. President. The President shall, unless otherwise
determined by the Board of Directors, be the Chief Executive
Officer of the corporation and, subject to the control of the
Board of Directors, shall supervise and control the management of
the corporation according to these bylaws. He shall, in the
absence of the Chairman, preside at all meetings of the
shareholders. He shall sign, with any other proper officer,
certificates for shares of the corporation, and any deeds,
mortgages, bonds, contracts or other instruments that may
lawfully be executed on behalf of the corporation, except where
required or permitted by law to be otherwise signed and executed
and except where the signing and execution thereof shall be
delegated by the Board of Directors to some other officer or
agent; and, in general, he shall perform all duties incident to
the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
6. Vice Presidents. The Vice Presidents shall perform such
duties and shall have such other powers as the Board of Directors
or the President shall prescribe. The Board of Directors may
designate one or more Vice Presidents as Executive or Senior Vice
President, or any other title that the Board of Directors deems
appropriate, and may rank the Vice Presidents in order of
authority. The Vice President, or, if more than one, the highest
ranking available Vice President, shall, in the absence or
disability of the President, perform the duties and exercise the
powers of that office.
7. Secretary. The Secretary shall keep accurate records of the
acts and proceedings of all meetings of shareholders and
directors. He shall give all notices required by law and by
these bylaws. He shall have general charge of the corporate
records and books and of the corporate seal, and he shall affix
the corporate seal to any lawfully executed instruments requiring
it. He shall have general charge of the stock transfer books of
the Corporation and shall keep, at the registered or principal
office of the Corporation, a record of shareholders showing the
name and address of each shareholder and the number and class of
the shares held by each. He shall sign such instruments as may
require his signature, and in general, shall perform all duties
incident to the office of Secretary and such other duties as may
be assigned to him from time to time by the President or by the
Board of Directors.
8. Treasurer. The Treasurer shall have custody of all funds and
securities belonging to the Corporation and shall receive,
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deposit or disburse the same under the direction of the Board of
Directors and the President. He shall keep full and accurate
records of the finances of the Corporation in books especially
provided for the purpose; and he shall cause a true statement of
the assets and liabilities as of the close of each fiscal year
and of the results of its operations and of changes in surplus
for such fiscal year, all in reasonable detail, including
particulars as to convertible securities then outstanding, to be
made and filed at the registered or principal office of the
Corporation within four months after the end of such fiscal year.
The statement so filed shall be kept available for inspection by
any shareholder for a period of ten years and the Treasurer shall
mail or otherwise deliver a copy of the latest such statement to
any shareholder upon his written request therefor. The Treasurer
shall, in general, perform all duties incident to his office and
such other duties as may be assigned to him from time to time by
the President or by the Board of Directors.
9. Assistant Officers. The Assistant Vice Presidents,
Secretaries and Treasurers shall, in the absence or disability of
their superiors, perform the duties and exercise the powers of
those offices and shall, in general, perform such other duties as
shall be assigned to them by the President or by the respective
officers to whom they report.
10. Executive Officers. The Board of Directors may
designate any officer as Chief Executive Officer, Chief Operating
Officer, Chief Financial Officer or Chief Accounting Officer,
which officer shall have such authority as the Board of Directors
may designate.
11. Contract Rights. The appointment of an officer does not
itself create contract rights in the officer.
12. Bonds. The Board of Directors may by resolution require any
or all officers, agents and employees of the corporation to give
bond to the corporation, with sufficient sureties,
conditioned on the faithful performance of the duties of their
respective offices or positions, and to comply with such other
conditions as may from time to time be required by the Board of
Directors.
ARTICLE VI
Contracts. Checks and Deposits
1. Contracts. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or
execute and deliver any instrument on behalf of the
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corporation, and such authority may be general or confined to
specific instances.
2. Checks and Drafts. All checks, drafts or orders for the
payment of money issued in the name of the corporation shall be
signed by such officer or officers, agent or agents of the
corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
3. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of
the corporation in such depositories as the Board of Directors
shall direct.
ARTICLE VII
Certificates for Shares and Transfer Thereof
1. Certificates for Shares. The Chairman or the President and
the Secretary or the Treasurer or any other two officers
designated by the Board of Directors shall sign (either manually
or in facsimile) share certificates. Shares may but need not be
represented by certificates. Unless otherwise provided by law,
the rights and obligations of shareholders are identical whether
or not their shares are represented by certificates. If shares
are issued without certificates, the corporation shall, within a
reasonable time after such issuance, send the shareholder a
written statement of the information required on certificates by
law. At a minimum each share certificate or information
statement shall state on its face the following information: the
name of the corporation and that it is organized under the law
of North Carolina; the name of the person to whom issued; the
number and class of shares and the designation of the series, if
any, the certificate or information statement represents; if the
corporation is authorized to issue different classes of shares or
different series within a class, a summary of, or alternatively,
a conspicuous statement on the back or front of the certificate
or contained in the information statement that the corporation
will furnish in writing and without charge, the designations,
relative rights, preferences, and limitations applicable to each
class and the variations in rights, preferences, and limitations
determined for each series (and the authority of the Board of
Directors to determine variations for future series); and, a
conspicuous statement of any restrictions on the transfer or
registration of transfer of the shares.
2. Transfer of Shares. Transfer of shares of the
corporation evidenced by certificates shall be made only on the
stock transfer books of the corporation by the holder of record
thereof, or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the
Secretary or other officer or agent designated by the Board of
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Directors, and on surrender for cancellation of the certificate
for such shares. Transfer of shares of the corporation not
evidenced by certificates shall be made upon delivery to the
corporation of such documentation as the corporation shall
require.
3. Fixing Record Date. For the purpose of determining the
shareholders entitled to notice of a meeting of shareholders, to
vote, to take any other action, or to receive a dividend with
respect to their shares, the Board of Directors may fix in
advance a date as the record date for any such determination of
shareholders. Such record date fixed by the Board of Directors
under this Section shall not be more than 70 days before the
meeting or action requiring a determination of shareholders.
If no record date is fixed for the determination of
shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to a dividend, the close
of the business day before the first notice is delivered to
shareholders or the date on which the Board of Directors
authorizes the dividend, as the case may be, shall be the record
date for such determination of shareholders.
When a determination of shareholders entitled to vote at any
meeting - of shareholders has been made as provided in this
Section, such determination shall apply to any adjournment
thereof unless the Board of Directors fixes a new record date,
which it must do if the meeting is adjourned to a date more than
120 days after the date fixed for the original meeting.
4. Lost Certificates. If a shareholder claims that a
certificated security has been lost, apparently destroyed or
wrongfully taken, the corporation shall issue a new certificated
security or, at the option of the corporation, an equivalent
noncertificated security in place of the original security, if
the shareholder so requests before the corporation has notice
that the security has been acquired by a bona fide purchaser,
files with the corporation a sufficient indemnity bond if so
required by the corporation, and satisfies any other reasonable
requirements imposed by thq corporation.
5. Holder of Record. The corporation may treat as absolute
owner of shares the person in whose name the shares stand of
record on its books just as if that person had full competency,
capacity and authority to exercise all rights of ownership
irrespective of any knowledge or notice to the contrary or any
description indicating a representative, pledge or other
fiduciary relation or any reference to any other instrument or to
the rights of any other person appearing upon its record or upon
the share certificates except that any person furnishing to the
corporation proof of his appointment as a fiduciary shall be
treated as if he were a holder of record of its share.
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The corporation may reject a vote, consent, waiver, or proxy
appointment if the Secretary or other officer or agent authorized
to tabulate votes, acting in good faith, has reasonable basis for
doubt about the validity of the signature on it or about the
signatory's authority to sign for the shareholder.
6. Reacquired Shares. The corporation may acquire its own
shares and shares so acquired constitute authorized but unissued
shares.
7. Richts, Options and Warrants. The corporation may issue
rights, options or warrants for the purchase of shares of the
corporation. The Board of Directors shall determine the terms
upon which the rights, options or warrants are issued, their form
and content, and the consideration for which the shares are to be
issued. Without limitation, the Board of Directors may include
on such rights, options and warrants restrictions or conditions
that preclude or limit the exercise, transfer or receipt of such
rights, options or warrants by the holder or holders, or
beneficial owner or owners, of a specified number or percentage
of the outstanding voting shares of the corporation or by any
transferee of such holder or owner, or that invalidate or void
such rights, options or warrants held by any such holder or owner
or by such transferee. In addition, the Board of Directors may
implement rights plans that create purchase or conversion rights
that are not exercisable by a hostile bidder involved in a
hostile takeover of the corporation.
ARTICLE VIII.
Indemnification
1. Extent. In addition to the indemnification otherwise
provided by law, the corporation shall indemnify and hold
harmless its directors and officers against liability and
litigation expense, including reasonable attorneys' fees, arising
out of their status as directors or officers or their activities
in any of such capacities or in any capacity in which any of them
is or was serving, at the corporation's request, in another
corporation, partnership, joint venture, trust or other
enterprise, and the corporation shall indemnify and hold harmless
those directors, officers or employees of the corporation and who
are deemed to be fiduciaries of the corporation's employee
pension and welfare benefit plans as defined under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA
fiduciaries") against all liability and litigation expense,
including reasonable attorneys' fees, arising out of their status
or activities as ERISA fiduciaries; provided, however, that the
corporation shall not indemnify a director or officer against
liability or litigation expense that he may incur on account of
his activities that at the time taken were known or reasonably
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should have been known by him to be clearly in conflict with the
best interests of the corporation, and the corporation shall not
indemnify an ERISA fiduciary against any liability or litigation
expense that he may incur on account of his activities that at
the time taken were known or reasonably should have been known by
him to be clearly in conflict with the best interests of the
employee benefit plan to which the activities relate. The
corporation shall also indemnify the director, officer, and ERISA
fiduciary for reasonable costs, expenses and attorneys' fees in
connection with the enforcement of rights to indemnification
granted herein, if it is determined in accordance with Section 2
of this Article that the director, officer and ERISA fiduciary is
entitled to indemnification hereunder.
2. Determination. Any indemnification under Section 1 of this
Article shall be paid by the corporation in any specific case
only after a determination that the director, officer or ERISA
fiduciary did not act in a manner, at the time the activities
were taken, that was known or reasonably should have been known
by him to be clearly in conflict with the best interests of the
corporation, or the employee benefit plan to which the activities
relate, as the case may be. Such determination shall be made
(a) by the affirmative vote of a majority (but not less than two)
of directors who are or were not parties to such action, suit or
proceeding or against whom any such claim is asserted
("disinterested directors") even though less than a quorum, or
(b) if a majority (but not less than two) of disinterested
directors so direct, by independent legal counsel in a written
opinion, or (c) by the vote of a majority of all of the voting
shares other than those owned or controlled by directors,
officers or ERISA fiduciaries who were parties to such action,
suit or proceeding or against whom such claim is asserted, or by
a unanimous vote of all of the voting shares, or (d) by a court
of competent jurisdiction,
3. Advanced Expenses. Expenses incurred by a director, officer
or ERISA fiduciary in defending a civil or criminal claim,
action, suit or proceeding may, upon approval of a majority
(but not less than two) of the disinterested directors, even
though less than a quorum, or, if there are less than two
disinterested directors, upon unanimous approval of the Board of
Directors, be paid by the corporation in advance of the final
disposition of such claim, action, suit or proceeding upon
receipt of an undertaking by or on behalf of the director,
officer or ERISA fiduciary to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified
against such expenses by the corporation.
4. Corporation, For purposes of this Article, references to
directors, officers or ERISA fiduciaries of the "corporation"
shall be deemed to include directors, officers and ERISA
fiduciaries of FNB Corp., its subsidiaries, and all constituent
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corporations absorbed into FNB Corp. or any of its subsidiaries
by a consolidation or merger.
5. Reliance and Consideration. Any director, officer or ERISA
fiduciary who at any time after the adoption of this Bylaw serves
or has served in any of the aforesaid capacities for or on behalf
of the corporation shall be deemed to be doing or to have done so
in reliance upon, and as consideration for, the right of
indemnification provided herein. Such right shall inure to the
benefit of the legal representatives of any such person and shall
not be exclusive of any other rights to which such person may be
entitled apart from the provision of this Bylaw. No amendment,
modification or repeal of this Article VIII shall adversely
affect the right of any director, officer or ERISA fiduciary to
indemnification hereunder with respect to any activities
occurring prior to the time of such amendment, modification or
repeal.
6. Insurance. The corporation may purchase and maintain
insurance on behalf of its directors, officers, employees and
agents and those persons who were serving at the request of the
corporation as a director, officer, partner or trustee of, or in
some other capacity in, another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity, or arising
out of his status as such, whether or not the corporation would
have the power to indemnify him against such liability under the
provisions of this Article or otherwise. Any full or partial
payment made by an insurance company under any insurance policy
covering any director, officer, employee or agent made to or on
behalf of a person entitled to indemnification under this Article
shall relieve the corporation of its liability for
indemnification provided for in this Article or otherwise to the
extent of such payment, and no insurer shall have a right of
subrogation against the corporation with respect to such payment.
ARTICLE IX
General Provisions
1. Dividends. Th6 Board of Directors may from time to time
declare, and the corporation may pay, dividends on its
outstanding shares in such manner and upon such terms and
conditions as are permitted by law and by its Articles of
Incorporation.
2. Waiver of Notice. Whenever any notice is required to be
given to any shareholder or director under the provisions of the
North Carolina Business Corporation Act or under the provisions
of the Articles of Incorporation or bylaws of the corporation, a
waiver thereof in writing signed by the person or persons
entitled to such notice, whether before or after the time stated
therein, shall be equivalent to such notice.
-15-
3. Fiscal Year. Unless otherwise ordered by the Board of
Directors, the fiscal year of the corporation shall be from
January 1 to December 31.
4. Inspection of Records bv Shareholders. The shareholders
shall not be entitled to inspect or copy any accounting records
of the corporation or any records of the corporation with respect
to any matter which the corporation determines in good faith may,
if disclosed, adversely affect the corporation in the conduct of
its business or may constitute material nonpublic information at
the time the shareholder's notice of demand to inspect and copy
is received by the corporation.
5. Amendments. Except as otherwise provided herein, these
bylaws may be amended or repealed and new bylaws may be adopted
by the affirmative vote of a majority of the directors then
holding office at any regular or special meeting of the Board of
Directors.
The Board of Directors shall have no power to adopt a bylaw:
(1) requiring more than a majority of the voting shares for a
quorum at a meeting of shareholders or more than a majority of
the votes cast to constitute action by the shareholders, except
where higher percentages are required by law; (2) providing for
the management of the corporation otherwise than by the Board of
Directors or its Executive or other committees; (3) increasing or
decreasing the number of directors authorized by these bylaws;
(4) classifying and staggering the election of directors.
No bylaw adopted or amended by the shareholders shall be
altered or repealed by the Board of Directors unless specifically
authorized by the shareholders at the time of such adoption or
amendment.
6. Inapplicability of Article 9. Article 9 of Chapter 55 of the
General Statutes of North Carolina entitled, "The North Carolina
Shareholder Protection Act," shall not apply to this corporation.
7. Inapplicability of Article 9. Article 9A of Chapter 55 of
the General Statutes of North Carolina, entitled "Control Share
Acquisition Act," shall not apply to this corporation.
-16-
EX-27
3
9
6-MOS
DEC-31-1995
JUN-30-1995
11,837,605
0
1,650,000
0
18,800,267
55,905,263
0
172,196,954
1,837,256
267,650,386
238,001,308
2,322,457
2,671,721
0
4,491,920
0
0
20,162,980
267,650,386
7,541,044
2,323,203
67,626
9,931,873
4,176,789
4,272,055
5,659,818
220,000
(414,596)
4,814,722
1,292,885
1,292,885
0
0
933,256
.52
.52
4.59
149,000
169,000
0
0
1,720,000
168,000
65,000
1,837,000
1,618,000
0
219,000
EX-27
4
9
3-MOS
DEC-31-1995
MAR-31-1995
10,104,157
0
2,615,000
0
18,952,290
53,367,045
0
168,265,885
1,748,616
260,089,157
230,161,223
3,729,667
2,263,449
0
3,000,000
0
0
20,934,818
260,089,157
3,697,073
1,158,577
13,640
4,869,290
2,026,107
2,078,750
2,695,540
95,000
(414,596)
2,686,823
125,375
125,375
0
0
133,146
.07
.07
4.57
149,000
224,000
0
0
1,720,000
93,000
27,000
1,749,000
1,530,000
0
219,000
EX-27
5
9
YEAR
DEC-31-1994
DEC-31-1994
9,348,113
0
0
0
24,569,036
52,414,194
0
166,327,821
1,719,717
261,615,709
229,925,312
6,576,226
1,735,041
0
3,000,000
0
0
20,379,130
261,615,709
13,228,841
4,368,181
91,034
17,688,056
6,880,389
6,978,734
10,709,322
220,000
0
8,577,948
3,986,252
3,986,252
0
0
2,826,866
1.57
1.57
4.46
0
118,000
0
0
1,745,000
436,000
191,000
1,720,000
1,501,000
0
219,000