-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Q4N3gv7EdS9ZTDEZE+H1WtC6lTxa++gPuzLLv/XnOWWpWp/ywljALXX/P7bvxFBx GFfGYl+YlSZE8jBLMCT/cA== 0000905870-95-000026.txt : 19951120 0000905870-95-000026.hdr.sgml : 19951120 ACCESSION NUMBER: 0000905870-95-000026 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 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: 95593104 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 September 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 1,797,734 shares of $2.50 par value common stock outstanding at October 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 September 30, December 31, ASSETS 1995 1994 1994 Cash and due from banks $ 10,101,219 $ 8,594,034 $ 9,348,113 Federal funds sold 1,110,000 2,225,000 - Investment securities: Available for sale, at estimated fair value (amortized cost of $17,596,230, $25,864,213 and $25,713,359) 17,643,012 25,196,478 24,569,036 Held to maturity (estimated fair value of $59,266,365, $49,627,640 and $50,809,510) 58,927,148 50,349,271 52,414,194 Loans 179,946,120 164,519,018 168,327,821 Less: Allowance for loan losses (1,918,551) (1,692,125) (1,719,717) Net loans 178,027,569 162,826,893 166,608,104 Premises and equipment 5,615,433 5,264,596 5,024,522 Other assets 3,716,288 3,817,684 3,651,740 TOTAL ASSETS $275,140,669 $258,273,956 $261,615,709 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Noninterest-bearing demand deposits $ 33,645,798 $ 36,333,073 $ 37,282,808 Interest-bearing deposits: NOW, savings and money market deposits 77,882,815 85,770,243 82,400,774 Time deposits of $100,000 or more 33,276,391 18,525,436 20,191,213 Other time deposits 98,470,076 89,326,413 90,050,517 Total deposits 243,275,080 229,955,165 229,925,312 Retail repurchase agreements 3,216,322 3,304,685 3,526,226 Federal funds purchased - - 3,050,000 Other liabilities 3,367,950 1,828,234 1,735,041 TOTAL LIABILITIES 249,859,352 235,088,084 238,236,579 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 - 1,797,734, 1,200,000 and 1,200,000 4,494,335 3,000,000 3,000,000 Surplus 14,007 900,000 900,000 Retained earnings 20,742,098 19,726,577 20,234,383 Net unrealized securities gains (losses) 30,877 (440,705) (755,253) TOTAL SHAREHOLDERS' EQUITY 25,281,317 23,185,872 23,379,130 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $275,140,669 $258,273,956 $261,615,709
See accompanying notes to consolidated financial statements. 1 FNB Corp. and Subsidiary CONSOLIDATED STATEMENTS OF INCOME Nine Months Ended September 30, 1995 1994 INTEREST INCOME: Interest and fees on loans $ 11,542,039 $ 9,696,456 Interest and dividends on investment securities: Taxable income 3,063,765 2,735,783 Non-taxable income 453,498 487,788 Federal funds sold 102,400 64,438 Total interest income 15,161,702 12,984,465 INTEREST EXPENSE: Deposits 6,461,909 5,026,191 Retail repurchase agreements 113,150 36,875 Federal funds purchased 13,431 10,742 Total interest expense 6,588,490 5,073,808 NET INTEREST INCOME 8,573,212 7,910,657 Provision for loan losses 350,000 115,000 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 8,223,212 7,795,657 OTHER OPERATING INCOME: Service charges on deposit accounts 996,148 897,948 Annuity and brokerage commissions 143,576 260,476 Credit card income 187,283 55,356 Other service charges, commissions and fees 208,343 212,537 Losses on sales of securities (414,596) - Other income 107,964 128,328 Total other operating income 1,228,718 1,554,645 OTHER OPERATING EXPENSE: Personnel expense 3,310,483 3,693,285 Net occupancy expense 344,790 344,575 Furniture and equipment expense 336,907 399,189 Data processing services 645,135 168,767 Restructuring charges 460,457 - Other expense 1,800,060 1,781,254 Total other operating expense 6,897,832 6,387,070 INCOME BEFORE INCOME TAXES 2,554,098 2,963,232 Income taxes 735,578 860,172 NET INCOME $ 1,818,520 $ 2,103,060 PER SHARE DATA: Net income $ 1.01 $ 1.17 Cash dividends declared .37 .347 Average number of shares outstanding 1,799,012 1,800,000
See accompanying notes to consolidated financial statements. 2 FNB Corp. and Subsidiary CONSOLIDATED STATEMENTS OF INCOME Three Months Ended September 30, 1995 1994 INTEREST INCOME: Interest and fees on loans $ 4,000,995 $ 3,377,965 Interest and dividends on investment securities: Taxable income 1,049,443 941,759 Non-taxable income 144,617 154,307 Federal funds sold 34,774 40,035 Total interest income 5,229,829 4,514,066 INTEREST EXPENSE: Deposits 2,285,120 1,720,725 Retail repurchase agreements 30,992 36,602 Federal funds purchased 323 3,713 Total interest expense 2,316,435 1,761,040 NET INTEREST INCOME 2,913,394 2,753,026 Provision for loan losses 130,000 30,000 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 2,783,394 2,723,026 OTHER OPERATING INCOME: Service charges on deposit accounts 354,329 307,392 Annuity and brokerage commissions 45,723 26,497 Credit card income 67,438 33,871 Other service charges, commissions and fees 56,088 59,212 Losses on sales of securities - - Other income 37,351 35,749 Total other operating income 560,929 462,721 OTHER OPERATING EXPENSE: Personnel expense 1,124,936 1,246,776 Net occupancy expense 114,494 117,688 Furniture and equipment expense 109,633 130,018 Data processing services 217,186 89,360 Restructuring charges - - Other expense 516,861 608,170 Total other operating expense 2,083,110 2,192,012 INCOME BEFORE INCOME TAXES 1,261,213 993,735 Income taxes 375,949 283,631 NET INCOME $ 885,264 $ 710,104 PER SHARE DATA: Net income $ .49 $ .39 Cash dividends declared .13 .18 Average number of shares outstanding 1,797,115 1,800,000
See accompanying notes to consolidated financial statements. 3 FNB Corp. and Subsidiary CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended September 30, 1995 1994 OPERATING ACTIVITIES: Net income $ 1,818,520 $ 2,103,060 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of premises and equipment 308,024 327,405 Provision for loan losses 350,000 115,000 Deferred income taxes (58,162) 313,493 Deferred loan fees and costs, net (92,009) (466,702) Premium amortization and discount accretion of investment securities, net 121,963 348,902 Amortization of intangibles 44,336 59,390 Losses on sales of securities 414,596 - Net decrease (increase) in loans held for sale (233,600) 984,236 Increase in other assets (493,277) (574,114) Increase in other liabilities 1,397,809 413,485 NET CASH PROVIDED BY OPERATING ACTIVITIES 3,578,200 3,624,155 INVESTING ACTIVITES: Available-for-sale securities: Proceeds from sales 5,896,328 - Proceeds from maturities 1,928,649 6,090,481 Purchases (249,405) (2,901,190) Held-to-maturity securities: Proceeds from maturities 13,607,837 14,127,990 Purchases (20,116,148) (15,505,695) Net increase in loans (11,411,849) (7,826,077) Proceeds from sales of premises and equipment 1,395 155 Purchases of premises and equipment (898,935) (212,966) Other, net 5,928 (203,839) NET CASH USED IN INVESTING ACTIVITIES (11,236,200) (6,431,141) FINANCING ACTIVITIES: Net increase in deposits 13,349,768 5,695,109 Increase (decrease) in retail repurchase agreements (309,904) 3,304,685 Decrease in federal funds purchased (3,050,000) (1,800,000) Proceeds from issuance of common stock 16,422 - Repurchase of common stock (52,800) - Cash dividends and fractional shares paid (432,380) (624,000) NET CASH PROVIDED BY FINANCING ACTIVITIES 9,521,106 6,575,794 NET INCREASE IN CASH AND CASH EQUIVALENTS 1,863,106 3,768,808 Cash and cash equivalents at beginning of period 9,348,113 7,050,226 CASH AND CASH EQUIVALENTS AT END OF PERIOD $11,211,219 $10,819,034 Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 5,758,000 $ 5,008,252 Income taxes 631,320 779,250
See accompanying notes to consolidated financial statements. 4 FNB Corp. and Subsidiary NOTES TO CONSOLIDATED FINANCIAL STATEMENT 1. The accompanying consolidated financial statements, preparedwithout 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 case 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 September 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 $55,247, $1,732,724 and $944,168 at September 30, 1995, September 30, 1994 and December 31, 1994, respectively. 5 5. Significant components of other expense were as follows: Three Months Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 FDIC insurance $ 21,092 $127,750 $277,040 $375,630 Stationery, printing and supplies 87,519 77,142 222,899 219,483 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 nine months of 1995. A summary of the restructuring charges incurred or accrued during the nine months ended September, 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 $1,818,520 in the first nine months of 1995, a 13.5% decline from the same period in 1994. Earnings per share decreased from $1.17 to $1.01 in comparing these nine- 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 third quarter amounted to $885,264, which represents a 24.7% increase from the 1994 third quarter and a gain in earnings per share from $.39 to $.49. Total assets were $275,140,669 at September 30, 1995, up 6.5% from September 30, 1994 and 5.2% from December 31, 1994. Loans amounted to $179,946,120 at September 30, 1995, increasing 9.4% from September 30, 1994 and 6.9% from December 31, 1994. Total deposits grew 5.8% from September 30, 1994 and 5.8% from December 31, 1994 to $243,275,080 at September 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 $284,540 or 13.5% in the first nine months of 1995 compared to the same period of 1994 and increased $175,160 or 24.7% in comparing third quarter periods. The earnings decline for the first nine 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 nine months of 1995 by an increase of $662,555 or 8.4% in net interest income. Similarly, the 1995 third quarter results benefited from a $160,368 or 5.8% increase in net interest income. Earnings were negatively impacted in these same periods of 1995 by increases in the provision for loan losses of $235,000 and $100,000, respectively. 7 As discussed in "Other Operating Expense", earnings are being favorably affected, starting in the 1995 third quarter, by a significant reduction in the rate charged for FDIC insurance. Compared to the same periods of 1994, FDIC insurance expense was $98,590 lower in the first nine months of 1995 and $106,658 lower in the third quarter. Return on average assets, affected by the special charges in 1995, declined from 1.11% in the first nine months of 1994 to 0.92% in the first nine months of 1995. Similarly, return on average shareholders' equity declined from 12.31% to 9.94% in comparing the same periods. In comparing third quarter periods, however, with increased net income in 1995, return on average assets improved from 1.10% in 1994 to 1.31% in 1995 and return on average shareholders' equity improved from 12.29% to 14.15%. 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 $8,573,212 in the first nine months of 1995 compared to $7,910,657 in the same period of 1994. This increase of $662,555 or 8.4% resulted from an improvement in the net yield on earning assets, or net interest margin, from 4.58% in the first nine months of 1994 to 4.74% in the same period of 1995 coupled with a 4.5% increase in the level of average earning assets. In comparing third quarter periods, net interest income increased in similar fashion by $160,368 or 5.8%, as the net interest margin improved from 4.69% to 4.72% and average earning assets increased 4.7%. 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, later offset to some extent by Federal Reserve action to reduce rates in the 1995 third quarter, 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 nine months and third quarter of 1995 were slightly lower at $645,000 and $152,000, 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. 8 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 until the third quarter when, in response to action taken by the Federal Reserve, it decreased to 8.75%. There appears to be some possibility of a further 1995 decrease in the prime rate. The average prime was 8.85% in the first nine months of 1995 compared to 6.77% in the same period of 1994. In comparing nine-month periods, the net interest spread declined modestly by 3 basis points from 3.94% in 1994 to 3.91% in 1995 due to the fact that the average total yield on earning assets increased by slightly less than the average rate paid on interest-bearing liabilities, or cost of funds. The yield on earning assets increased by 84 basis points from 7.43% in 1994 to 8.27% in 1995, while the cost of funds increased by 87 basis points in moving from 3.49% to 4.36%. A comparison of third quarter periods, however, indicates greater pressure on the net interest spread, which declined from 4.01% to 3.89%. While the third quarter increase in the yield on earning assets was 77 basis points, the cost of funds increased 89 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 nine months and third quarter of 1995 compared to the same periods in 1994 by increases in the provision of $235,000 and $100,000, respectively. Other Operating Income Total other operating, or noninterest, income decreased $325,927 or 21.0% in the first nine 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 third quarter periods, noninterest income increased $98,208 or 21.2%. The increase in service charges on deposit accounts resulted primarily from a 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 in the first nine months of 1995 because of a reduction in sales of tax- deferred annuity products, although such sales were higher in the 1995 third quarter compared to the same period in 1994. There was a lower level of "other income" in the first nine 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 $510,762 or 8.0% in the first nine 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 third quarter periods, noninterest expense 9 decreased $108,902 or 5.0% due primarily to a significant reduction in the rate charged for FDIC insurance as discussed below. 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 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 nine 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 September 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 SAIF fund has not yet reached the mandated reserve ratio, the BIF fund was found in the third quarter of 1995 to have reached this level by the end of May 1995. Accordingly, the BIF rate was reduced effective June 1, 1995 and currently is as much as 83% lower than before for financial institutions with BIF-insured deposits. Since most of the Bank's deposits are insured through BIF, the Bank experienced a significant reduction in FDIC insurance expense in the 1995 third quarter when the effect of the rate adjustment was initially recorded. Consequently, FDIC insurance expense, compared to the same periods of 1994, was $98,590 lower in the first nine months of 1995 and $106,658 lower in the third quarter. Under legislation now being considered in connection with the SAIF fund, the FDIC insurance rate on SAIF deposits could be lowered to match that on BIF deposits. As part of this legislation, financial institutions would be charged a special, one-time assessment on their SAIF deposits. 10 Income Taxes The effective income tax rate of 28.8% in the first nine months of 1995 did not vary significantly from the 29.0% rate in the same period of 1994. 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 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 three-fourths 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 $77,883,000 as of September 30, 1995. These types of deposits historically have not repriced coincidentally with or in the same proportion as general market indicators. 11 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 September 30, 1995, the Corporation had a Tier 1 capital ratio of 13.63% and a total capital ratio of 14.66%. 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 September 30, 1995, the Corporation had a leverage ratio of 9.32%. BALANCE SHEET REVIEW Total assets at September 30, 1995 were higher than at September 30, 1994 and December 31, 1994 by $16,867,000 or 6.5% and $13,525,000 or 5.2%, respectively; deposits were ahead by $13,320,000 or 5.8% and $13,350,000 or 5.8%. Growth was significant in the 1995 third quarter when total assets and deposits increased by $7,491,000 or 2.8% and $5,274,000 or 2.2%, respectively. A new retail repurchase agreements program that commenced in the second quarter of 1994 generated $3,216,000 of the total asset balance at September 30, 1995, $3,305,000 at September 30, 1994 and $3,526,000 at December 31, 1994. Average assets increased $11,266,000 or 4.4% in the first nine months of 1995 compared to the same period in 1994, while average deposits increased $7,290,000 or 3.2%; the third quarter increases being $12,948,000 or 5.0% and $11,618,000 or 5.1%, 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 September 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 $1,024,000 or 1.4%. Of this total increase, $715,000 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 $15,427,000 or 9.4% during the twelve-month period ended September 30, 1995. The net loan increase during the first nine months of 1995 was $11,618,000 or 6.9%, with the third quarter 12 accounting for $7,749,000 or 66.7% 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 strong increase in the third quarter. Despite the quarterly fluctuations, the commercial loan portfolio accounted for more than 40% of total loan growth during both the twelve-month period ended September 30, 1995 and the first nine months of 1995. Average loans were $12,129,000 or 7.6% higher in the first nine months of 1995 than in the same period of 1994. The ratio of average loans to average deposits, in comparing nine-month periods, increased from 70.3% in 1994 to 73.3% 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 September 30, 1995 was 74.0%. The residential construction and mortgage loan portfolio accounted for approximately 40% of the loan increase during the last twelve months and 35% of the increase during the first nine months of 1995. The consumer loan portfolio has been adversely affected by a decline in automobile loans that has largely offset the gains in credit card receivables, in balances related to the home equity line program and in 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. Reflecting an improvement in the volume of automobile loans in the 1995 third quarter, however, the results of the consumer loan portfolio have contributed more significantly toward the net loan increases for the last twelve months and for the first nine months of 1995. 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 $3,216,000 at September 30, 1995. Further, the level of public funds on deposit fluctuates, amounting to $22,538,000, $10,081,000 and $10,940,000 at September 30, 1995, September 30, 1994 and December 31, 1994, respectively. 13 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 have been undertaken in 1995. Credit card receivables exceeded $1,200,000 at September 30, 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 processing operations, the level of computer equipment is being 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 $1,000,000 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 nine 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 NINE MONTHS ENDED SEPTEMBER 30 Average Interest Rates Average Income/ Earned/ Average Balance Expense Paid Balance EARNING ASSETS Loans (2) (3) $171,929 $11,580 9.00% $159,800 Investment securities: Taxable income 64,614 3,064 6.32 66,517 Non-taxable income (2) 10,274 682 8.84 9,996 Federal funds sold 2,318 102 5.91 2,175 Total earning assets 249,135 15,428 8.27 238,488 Cash and due from banks 9,130 8,428 Other assets, net 6,697 6,780 TOTAL ASSETS $264,962 $253,696 INTEREST-BEARING LIABILITIES Interest-bearing deposits: NOW accounts $ 32,142 513 2.13 $ 32,483 Savings deposits 29,931 646 2.89 31,845 Money market accounts 16,783 386 3.08 21,504 Certificates and other time deposits 119,831 4,917 5.49 106,689 Retail repurchase agreements 3,004 113 5.04 1,262 Federal funds purchased 310 14 5.79 332 Total interest-bearing liabilities 202,001 6,589 4.36 194,115 Noninterest-bearing demand deposits 35,989 34,865 Other liabilities 2,585 1,940 Shareholders' equity 24,387 22,776 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $264,962 $253,696 NET INTEREST INCOME AND SPREAD $ 8,839 3.91% NET YIELD ON EARNING ASSETS 4.73%
(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 related 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 1 CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Taxable Equivalent Basis, Dollars in Thousands) NINE MONTHS ENDED 1994 SEPTEMBER 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) $ 9,736 8.14% $ 771 $ 1,073 $1,844 Investment securities: Taxable income 2,736 5.48 (80) 408 328 Non-taxable income(2) 732 9.76 20 (70) (50) Federal funds sold 64 3.96 4 34 38 Total earning assets 13,268 7.43 715 1,445 2,160 Cash and due from banks Other assets, net TOTAL ASSETS INTEREST-BEARING LIABILITIES Interest-bearing deposits: NOW accounts 484 1.99 (5) 34 29 Savings deposits 609 2.56 (39) 76 37 Money market accounts 399 2.48 (98) 85 (13) Certificates and other time deposits 3,534 4.43 470 913 1,383 Retail repurchase agreements 37 3.91 60 16 76 Federal funds purchased 11 4.33 (1) 4 3 Total interest-bearing liabilities 5,074 3.49 387 1,128 1,515 Noninterest-bearing demand deposits Other liabilities Shareholders' equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY NET INTEREST INCOME AND SPREAD $ 8,194 3.94% $ 328 $ 317 $ 645 NET YIELD ON EARNING ASSETS 4.58%
(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 related 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. 15b TABLE 2 CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Taxable Equivalent Basis, Dollars in Thousands) 1995 1994 THREE MONTHS ENDED SEPTEMBER 30 Average Interest Rates Average Income/ Earned/ Average Balance Expense Paid Balance EARNING ASSETS Loans (2) (3) $176,324 $4,011 9.04% $162,604 Investment securities: Taxable income 64,299 1,050 6.53 66,067 Non-taxable income(2) 10,429 219 8.37 9,746 Federal funds sold 2,414 34 5.72 3,664 Total earning assets 253,466 5,314 8.35 242,081 Cash and due from banks 9,372 8,591 Other assets, net 7,454 6,672 TOTAL ASSETS $270,292 $257,344 INTEREST-BEARING LIABILITIES Interest-bearing deposits: NOW accounts $ 32,260 175 2.15 $ 33,193 Savings deposits 29,612 207 2.78 31,808 Money market accounts 15,201 116 3.02 20,800 Certificates and other time deposits 126,334 1,787 5.61 106,020 Retail repurchase agreements 2,548 31 4.83 3,713 Federal funds purchased 23 1 5.57 297 Total interest-bearing liabilities 205,978 2,317 4.46 195,831 Noninterest-bearing demand deposits 36,274 36,242 Other liabilities 3,018 2,151 Shareholders' equity 25,022 23,120 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $270,292 $257,344 NET INTEREST INCOME AND SPREAD $2,997 3.89% NET YIELD ON EARNING ASSETS 4.72%
(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 related 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 TABLE 2 CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Taxable Equivalent Basis, Dollars in Thousands) THREE MONTHS ENDED 1994 SEPTEMBER 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) $3,393 8.30% $ 301 $ 317 $ 618 Investment securities: Taxable income 942 5.70 (26) 134 108 Non-taxable income (2) 232 9.51 16 (29) (13) Federal funds sold 40 4.34 (17) 11 (6) Total earning assets 4,607 7.58 274 433 707 Cash and due from banks Other assets, net TOTAL ASSETS INTEREST-BEARING LIABILITIES Interest-bearing deposits: NOW accounts 168 2.01 (5) 12 7 Savings deposits 208 2.59 (15) 14 (1) Money market accounts 139 2.64 (41) 18 (23) Certificates and other time deposits 1,206 4.51 255 326 581 Retail repurchase agreements 37 3.91 (14) 8 (6) Federal funds purchased 4 4.97 (3) - (3) Total interest- bearing liabilities 1,762 3.57 177 378 555 Noninterest-bearing demand deposits Other liabilities Shareholders' equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY NET INTEREST INCOME AND SPREAD $2,845 4.01% $ 97 $ 55 $ 152 NET YIELD ON EARNING ASSETS 4.69%
(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 related 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. 16b PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. Exhibits to this report are listed in the index to exhibits on pages 18 and 19 of this report. (b) Reports on Form 8-K. No reports on Form 8-K were filed during the quarter ended September 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: November 8, 1995 By:/s/ Jerry A. Little Jerry A. Little Treasurer and Secretary (Principal Financial and Accounting Officer) 17 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, incorporated herein by reference to the Registrant's Form 10-QSB Quarterly Report for the quarter ended June 30, 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. 18 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 Financial Data Schedule. 19 EX-27 2
9 This schedule contains summary financial information extracted from Form 10-QSB for the quarterly period ended September 30, 1995 and is qualified in its entirety by reference to such financial statements. 9-MOS DEC-31-1995 SEP-30-1995 10,101,219 0 1,110,000 0 17,643,012 58,927,148 0 179,946,120 1,918,551 275,140,669 243,275,080 3,216,322 3,367,950 0 4,494,335 0 0 20,786,982 275,140,669 11,542,039 3,517,263 102,400 15,161,702 6,461,909 6,588,490 8,573,212 350,000 (414,596) 6,897,832 2,554,098 2,554,098 0 0 1,818,520 1.01 1.01 4.59 103,000 246,000 0 0 1,720,000 259,000 108,000 1,919,000 1,700,000 0 219,000
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