-----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, GuySi25oTvQi0gKkO3Al4tu6lQKWuKWlbACBMJPKAwNzaBFx2/xV342zicYWJ1bZ oPaH6MdOA0kpmNIqK62FQw== 0000905870-96-000021.txt : 19960814 0000905870-96-000021.hdr.sgml : 19960814 ACCESSION NUMBER: 0000905870-96-000021 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FNB CORP/NC CENTRAL INDEX KEY: 0000764811 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] 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: 96610647 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 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 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 1,803,003 shares of $2.50 par value common stock outstanding at July 19, 1996. 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 1996 1995 1995 Cash and due from banks $ 10,153,261 $ 11,837,605 $ 8,764,539 Federal funds sold - 1,650,000 2,600,000 Investment securities: Available for sale, at estimated fair value(amortized cost of $25,260,957, $18,690,507 and $28,183,155) 25,053,292 18,800,267 28,375,645 Held to maturity (estimated fair value of $57,433,590, $56,411,187 and $57,008,236) 58,633,939 55,905,263 56,160,814 Loans 185,605,875 172,196,954 179,922,737 Less: Allowance for loan losses (1,920,198) (1,837,256) (1,902,640) Net loans 183,685,677 170,359,698 178,020,097 Premises and equipment 5,918,240 5,667,952 6,029,541 Other assets 4,297,872 3,429,601 3,727,476 TOTAL ASSETS $287,742,281 $ 67,650,386 $283,678,112 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Noninterest-bearing demand deposits $ 37,252,713 $ 37,533,696 $ 38,590,985 Interest-bearing deposits: NOW, savings and money market deposits 81,561,396 77,982,983 78,728,366 Time deposits of $100,000 or more 37,468,815 27,020,230 36,427,161 Other time deposits 98,131,085 95,464,399 96,397,964 Total deposits 254,414,009 238,001,308 250,144,476 Retail repurchase agreements 3,099,675 2,322,457 4,641,527 Federal funds purchased 285,000 - - Other liabilities 2,749,757 2,671,721 2,897,038 TOTAL LIABILITIES 260,548,441 242,995,486 257,683,041 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 - 1,802,778, 1,796,768 and 1,797,995 4,506,945 4,491,920 4,494,988 Surplus 113,055 - 18,705 Retained earnings 22,710,899 20,090,539 21,354,335 Net unrealized securities gains (losses) (137,059) 72,441 127,043 TOTAL SHAREHOLDERS' EQUITY 27,193,840 24,654,900 25,995,071 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $287,742,281 $267,650,386 $283,678,112 See accompanying notes to consolidated financial statements.
1 FNB Corp. and Subsidiary CONSOLIDATED STATEMENTS OF INCOME Six Months Ended June 30, 1996 1995 INTEREST INCOME: Interest and fees on loans $ 8,150,262 $ 7,541,044 Interest and dividends on investment securities: Taxable income 2,342,727 2,014,322 Non-taxable income 371,801 308,881 Federal funds sold 14,670 67,626 Total interest income 10,879,460 9,931,873 INTEREST EXPENSE: Deposits 4,603,365 4,176,789 Retail repurchase agreements 92,400 82,158 Federal funds purchased 30,257 13,108 Total interest expense 4,726,022 4,272,055 NET INTEREST INCOME 6,153,438 5,659,818 Provision for loan losses 195,000 220,000 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 5,958,438 5,439,818 OTHER OPERATING INCOME: Service charges on deposit accounts 722,706 641,819 Annuity and brokerage commissions 80,890 97,853 Credit card income 151,163 119,845 Other service charges, commissions and fees 146,643 152,255 Losses on sales of investment securities - (414,596) Other income 73,241 70,613 Total other operating income 1,174,643 667,789 OTHER OPERATING EXPENSE: Personnel expense 2,362,966 2,185,547 Net occupancy expense 233,821 230,296 Furniture and equipment expense 330,869 227,274 Data processing services 456,830 427,949 Restructuring charges - 460,457 Other expense 1,023,949 1,283,199 Total other operating expense 4,408,435 4,814,722 INCOME BEFORE INCOME TAXES 2,724,646 1,292,885 Income taxes 827,622 359,629 NET INCOME $ 1,897,024 $ 933,256 PER SHARE DATA: Net income $ 1.05 $ .52 Cash dividends declared .30 .24 Average number of shares outstanding 1,800,230 1,799,976 See accompanying notes to consolidated financial statements.
2 FNB Corp. and Subsidiary CONSOLIDATED STATEMENTS OF INCOME Three Months Ended June 30, 1996 1995 INTEREST INCOME: Interest and fees on loans $ 4,106,460 $ 3,843,971 Interest and dividends on investment securities: Taxable income 1,133,382 1,015,178 Non-taxable income 193,632 149,448 Federal funds sold 9,487 53,986 Total interest income 5,442,961 5,062,583 INTEREST EXPENSE: Deposits 2,286,957 2,150,682 Retail repurchase agreements 46,684 42,078 Federal funds purchased 12,139 545 Total interest expense 2,345,780 2,193,305 NET INTEREST INCOME 3,097,181 2,869,278 Provision for loan losses 95,000 125,000 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 3,002,181 2,744,278 OTHER OPERATING INCOME: Service charges on deposit accounts 374,179 338,218 Annuity and brokerage commissions 36,670 33,937 Credit card income 82,920 67,442 Other service charges, commissions and fees 61,751 72,437 Losses on sales of investment securities - - Other income 33,299 39,097 Total other operating income 588,819 551,131 OTHER OPERATING EXPENSE: Personnel expense 1,181,771 1,096,921 Net occupancy expense 114,565 111,869 Furniture and equipment expense 166,119 108,032 Data processing services 242,226 219,825 Restructuring charges - - Other expense 517,712 591,252 Total other operating expense 2,222,393 2,127,899 INCOME BEFORE INCOME TAXES 1,368,607 1,167,510 Income taxes 416,363 367,400 NET INCOME $ 952,244 $ 800,110 PER SHARE DATA: Net income $ .53 $ .44 Cash dividends declared .15 .12 Average number of shares outstanding 1,801,478 1,799,952 See accompanying notes to consolidated financial statements.
3 FNB Corp. and Subsidiary CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended June 30, 1996 1995 OPERATING ACTIVITIES: Net income $ 1,897,024 $ 933,256 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of premises and equipment 321,594 205,350 Provision for loan losses 195,000 220,000 Deferred income taxes 56,733 (257,759) Deferred loan fees and costs, net 126,788 (24,538) Premium amortization and discount accretion of investment securities, net 11,044 93,995 Amortization of intangibles 21,934 29,558 Losses on sales of investment securities - 414,596 Net decrease (increase) in loans held for sale 365,503 (139,600) Decrease (increase) in other assets (532,735) 55,865 Increase in other liabilities 1,840 720,448 NET CASH PROVIDED BY OPERATING ACTIVITIES 2,464,725 2,251,171 INVESTING ACTIVITIES: Available-for-sale securities: Proceeds from sales - 5,896,328 Proceeds from maturities 8,112,397 877,492 Purchases (5,234,844) (249,405) Held-to-maturity securities: Proceeds from maturities 13,319,961 9,577,838 Purchases (15,755,586) (13,079,417) Net increase in loans (6,364,041) (3,774,915) Proceeds from sales of premises and equipment 9,575 620 Purchases of premises and equipment (323,437) (848,780) Other, net (19,274) (64,099) NET CASH USED IN INVESTING ACTIVITIES (6,255,249) (1,664,338) FINANCING ACTIVITIES: Net increase in deposits 4,269,533 8,075,996 Decrease in retail repurchase agreements (1,541,852) (1,203,769) Increase (decrease) in federal funds purchased 285,000 (3,050,000) Common stock issued 106,307 - Common stock repurchased - (52,800) Cash dividends and fractional shares paid (539,742) (216,768) NET CASH PROVIDED BY FINANCING ACTIVITIES 2,579,246 3,552,659 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,211,278) 4,139,492 Cash and cash equivalents at beginning of period 11,364,539 9,348,113 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 10,153,261 $ 13,487,605 Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 4,526,180 $ 3,800,489 Income taxes 866,058 589,647 See accompanying notes to consolidated financial statements.
4 FNB Corp. and Subsidiary NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. FNB Corp. is a one-bank holding company whose wholly-owned subsidiary is the First National Bank and Trust Company (the "Bank"). The Bank is an independent community bank that offers full banking and trust services to consumer and business customers primarily in the region of North Carolina that includes Randolph, Montgomery and Chatham counties. The accompanying consolidated financial statements, prepared without audit, include the accounts of FNB Corp. and the Bank (collectively the "Corporation"). All significant intercompany balances and transactions have been eliminated. The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 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. Loans as presented are increased by net deferred expense of $212,026 and $133,400 at June 30, 1996 and December 31, 1995, respectively, and are reduced by net unearned income of $318,081 at June 30, 1995. 4. Significant components of other expense were as follows: Three Months Ended Six Months Ended June 30, June 30, 1996 1995 1996 1995 FDIC insurance $ 9,662 $127,974 $ 17,850 $255,948 Stationery, printing and supplies 58,958 63,271 133,935 135,380 Deferred acquisition costs charged to expense - - - 113,833
5. In 1995, management adopted a comprehensive restructuring project for the purpose of reengineering Bank operations to become more competitive and cost-effective in developing business and servicing customers and to improve long-term profitability. In connection with this project, certain positions within the Bank have either been realigned or eliminated. It is expected that all significant project costs were incurred in and paid in 1995. 5 A summary of the restructuring charges, all of which were incurred or accrued during the three months ended March 31, 1995, is as follows: Retirement benefits $ 256,266 Other personnel costs 44,850 Total personnel costs 301,116 Professional fees related to restructuring project 159,341 Total restructuring charges $ 460,457
6. All per share data has been retroactively adjusted to reflect the three-for-two common stock spliteffected in the form of a 50% stock dividend paid in the second quarter of 1995. 7. 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 "Parent Company") and its wholly-owned subsidiary, First National Bank and Trust Company (the "Bank"), collectively referred to as the "Corporation". This discussion should be read in conjunction with the financial information appearing elsewhere in this report. OVERVIEW The Corporation earned $1,897,024 in the first six months of 1996, a 103.3% increase over the same period in 1995. Earnings per share, adjusted for the three-for-two common stock split in 1995, increased from $.52 to $1.05 in comparing these six-month periods. The 1995 results, especially as related to the operations of the first quarter, were impacted by restructuring charges and losses on sales of investment securities discussed in more detail in the "Earnings Review" and in "Business Development matters". Earnings for the 1996 second quarter amounted to $952,244, which represents a 19.0% increase from the 1995 second quarter and a gain in earnings per share from $.44 to $.53. Total assets were $287,742,281 at June 30, 1996, up 7.5% from June 30, 1995 and 1.4% from December 31, 1995. Loans amounted to $185,605,875 at June 30, 1996, increasing 7.8% from June 30, 1995 and 3.2% from December 31, 1995. Total deposits grew 6.9% from June 30, 1995 and 1.7% from December 31, 1995 to $254,414,009 at June 30, 1996. On December 30, 1993, the Corporation entered into definitive agreements to acquire two mutual savings banks 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. In 1995, the agreements expired without the acquisitions having been completed due to changes in federal and state regulatory policies which strictly limited the circumstances under which such transactions would be permitted. EARNINGS REVIEW The Corporation's net income increased $963,768 or 103.3% in the first six months of 1996 compared to the same period of 1995 and increased $152,134 or 19.0% in comparing second quarter periods. Earnings were negatively affected in the 1995 first quarter by restructuring charges of $460,457 and losses on sales of investment securities of $414,596, which were charges taken for the strategic purposes discussed in "Business Development Matters". Additionally, certain costs, amounting to $113,833, that had been deferred in connection with the proposed acquisitions discussed in the "Overview" were charged to expense in the 1995 first quarter. Earnings were positively impacted in the first six months and second quarter of 1996 by increases in net interest income of $493,620 or 8.7% and $227,903 or 7.9%, respectively. As discussed in "Other Operating Expense", earnings are being favorably affected, since the 1995 third quarter, by a significant reduction in the rate charged for FDIC insurance. Compared to the same periods of 1995, FDIC insurance expense was $238,098 lower in the first six months of 1996 and $118,312 lower in the second quarter. 7 Return on average assets, affected by the restructuring charges and losses on sales of investment securities in 1995, improved from 0.71% in the first six months of 1995 to 1.32% in the first six months of 1996. Similarly, return on average shareholders' equity improved from 7.76% to 14.17% in comparing the same periods. In comparing second quarter periods, return on average assets improved from 1.21% in 1995 to 1.32% in 1996 and return on average shareholders' equity improved from 13.15% to 14.07%. 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 $6,153,438 in the first six months of 1996 compared to $5,659,818 in the same period of 1995. This increase of $493,620 or 8.7% resulted primarily from a 9.1% increase in the level of average earning assets coupled with a slight improvement in the net yield on earning assets, or net interest margin, from 4.85% in the first six months of 1995 to 4.86% in the same period of 1996. In comparing second quarter periods, net interest income increased $227,903 or 7.9%, reflecting an 8.9% increase in average earning assets while the net interest margin was unchanged at 4.87%. Following a period of generally lower interest rates which had ultimately resulted in a decline in the net interest margin, interest rates began to increase 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 second half of 1995 and in the first quarter of 1996, have resulted in an improvement in the net interest margin. Additionally, there had been a continuing negative impact on the margin from certain variable-rate time deposits with rate floors in excess of current market rates. Such variable-rate time deposits were phased out over a two-year period that commenced in January 1994. On a taxable equivalent basis, the increases in net interest income in the first six months and second quarter of 1996 were $564,000 and $270,000, respectively, reflecting changes in the relative mix of taxable and non-taxable earning assets. 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 net interest spread tend to correlate with movements in the prime rate of interest. There are variations, however, in the degree and timing of rate changes, compared to prime, for the different types of earning assets and interest-bearing liabilities. 8 The prime rate, which had been 6.00% at December 31, 1993, moved up significantly in 1994 to close the year at 8.50% and, after certain changes during 1995, remained at that level at December 31, 1995. The average prime for those three years amounted to 6.20%, 7.09% and 8.82%, 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 second half of the year when, in response to actions taken by the Federal Reserve, it decreased twice. In the first quarter of 1996 the prime rate decreased again to 8.25%. The average prime was 8.31% in the first six months of 1996 compared to 8.89% in the same period of 1995. In comparing six-month periods, the net interest spread increased by 7 basis points from 4.03% in 1995 to 4.10% in 1996 as the result of an increase in the average total yield on earning assets coupled with a decrease in the average rate paid on interest-bearing liabilities, or cost of funds. The yield on earning assets increased by 4 basis points from 8.34% in 1995 to 8.38% in 1996, while the cost of funds decreased by 3 basis points in moving from 4.31% to 4.28%. A comparison of second quarter periods indicates a slightly greater improvement of 8 basis points in the net interest spread, which increased from 4.03% to 4.11%. Unlike the situation for the six months, however, the second quarter comparison saw a decline in the yield on earning assets, although that decline of 6 basis points was more than offset by a decrease of 14 basis points in the cost of funds. 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 positively impacted in the first six months and second quarter of 1996 compared to the same periods in 1995 by decreases in the provision of $25,000 and $30,000, respectively. Other Operating Income Total other operating income, or noninterest income, increased $506,854 or 75.9% in the first six months of 1996 compared to the same period in 1995 due principally to the recognition in the 1995 first quarter of losses on sales of investment securities of $414,596 (see "Business Development Matters"). In comparing second quarter periods, noninterest income increased $37,688 or 6.8%. The 1996 increases reflect in part the general increase in the volume of business. The increase in service charges on deposit accounts resulted primarily from increases in the fees collected on returned checks and overdraft items and in the daily charges collected on overdraft balances, the latter service charge being initially implemented in the 1995 second quarter. Annuity and brokerage commissions declined in the first six months of 1996 because of a reduction in sales of tax-deferred annuity products. Credit card income increased due to the continuing development of the new credit card operation discussed in "Business Development Matters". Other Operating Expense Total other operating expense, or noninterest expense, decreased $406,287 or 8.4% in the first six months of 1996 compared to the same period of 1995 due primarily to the recognition in the 1995 first quarter of restructuring charges of $460,457 (see "Business Development Matters") and of certain costs charged to 9 "other expense", amounting to $113,833, that had been deferred in connection with proposed acquisitions (see "Overview"). In comparing third quarter periods, noninterest expense increased $94,494 or 4.4%. The 1996 results were generally impacted by the continuing effects of inflation. FDIC insurance expense decreased $238,098 or 93.0% in the first six months of 1996 and $118,312 or 92.5% in the second quarter, reflecting the effect of a rate reduction as discussed below. The levels of certain expenses, including personnel, are being favorably affected by the comprehensive project undertaken in 1995 for the reengineering of Bank operations (see "Business Development Matters"). There has been a decrease in the number of full-time equivalent employees. As is the situation for other operating expenses, however, personnel expense is subject to the continuing effects of inflation through normal salary adjustments and higher costs of fringe benefits. Personnel expense is also being impacted in 1996 by changes in the incentive compensation program. Furniture and equipment expense has increased due to a higher level of depreciation charges associated primarily with computer equipment purchases in 1995 (see "Business Development Matters"). 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, 1995 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 there is only a minimum annual charge of $2,000 for the majority of 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 commencing in the 1995 third quarter when the effect of the rate adjustment was initially recorded. Consequently, FDIC insurance expense for the entire 1995 year amounted to only $281,894 with the expense for the first six months of 1996 amounting to $17,850. 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 at the rate of 85 to 90 basis points on their SAIF deposits. The Bank's maximum, one-time assessment for its SAIF deposits at June 30, 1996, under the proposed legislation as described, would be $140,000. Income Taxes The effective income tax rate increased from 27.8% in the first six months of 1995 to 30.4% in the same period of 1996 due principally to an increase 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 Parent Company for payment of dividends, debt service and other operational requirements. Liquidity is immediately available from four major sources: (a) cash on hand and on deposit at other banks, (b) the 10 outstanding balance of federal funds sold, (c) lines for the purchase of federal funds from other banks and (d) the available-for-sale securities portfolio. 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 four 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 securities 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 $81,561,000 as of June 30, 1996. 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, 1996, the Corporation had a Tier 1 capital ratio of 14.34% and a total capital ratio of 15.35%. 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 six months, 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, 1996, the Corporation had a leverage ratio of 9.48%. BALANCE SHEET REVIEW Total assets at June 30, 1996 were higher than at June 30, 1995 and December 31, 1995 by $20,092,000 or 7.5% and $4,064,000 or 1.4%, respectively; deposits were ahead by $16,413,000 or 6.9% and $4,270,000 or 1.7%. Average assets increased $24,148,000 or 9.2% in the first six months of 1996 compared to the same period in 1995, while average deposits increased $19,166,000 or 8.3%; the second quarter increases being $23,847,000 or 9.0% and $18,834,000 or 8.0%, 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, 1996, when the growth in total assets significantly exceeded that for loans, the level of investment securities was increased $8,981,000 or 12.0%. In the shorter period of the first six months of 1996, however, when the growth in loans exceeded that for total assets, there was a net decrease in investment securities of $849,000 or 1.0%. 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. Based on funds requirements, the Bank was a net purchaser of federal funds at June 30, 1996. Loans The Corporation's primary source of revenue and largest component of earning assets is the loan portfolio. Loans increased $13,409,000 or 7.8% during the twelve-month period ended June 30, 1996. The net loan increase during the first six months of 1996 was $5,683,000 or 3.2%. Average loans were $14,414,000 or 8.5% higher in the first six months of 1996 than in the same period of 1995. The ratio of average loans to average deposits, in comparing six-month periods, increased from 73.1% in 1995 to 73.3% in 1996. The ratio of loans to deposits at June 30, 1996 was 73.0%. Loan growth and the composition of the loan portfolio are being affected by management's decision in March 1996 to discontinue the purchase of retail installment loan contracts from automobile and equipment dealers (see "Business Development Matters"). The outstanding balance of these loan contracts, which are primarily included in consumer loans, experienced a net decrease of $5,012,626 during the first six months of 1996. Consequently, total consumer loans declined significantly during that time and to a lesser extent during the twelve-month period ended June 30, 1996. Other consumer loan elements, including credit cards and home equity lines of credit, have continued to grow. Changes in the credit card operation are discussed in "Business Development Matters". The commercial loan portfolio accounted for more than half of total loan growth during the twelve-month period ended June 30, 1996, with a very strong gain also being recorded by the residential construction and mortgage loan portfolio. During the shorter period of the first six months of 1996, however, the situation was reversed with the residential construction and mortgage loan portfolio being responsible for more than half of total loan growth. 12 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. This evaluation is inherently subjective as it requires material estimates, including the amounts and timing of future cash flows expected to be received on impaired loans that may be susceptible to significant change. 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. In general, broad interest rate declines tend to encourage customers to consider alternative investments such as mutual funds and tax-deferred annuity products, while interest rate increases tend to have the opposite effect. 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 were 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 $3,100,000 at June 30, 1996 and $2,322,000 at June 30, 1995. Further, the level of time deposits obtained from governmental units fluctuates, amounting to $17,520,000, $11,190,000 and $17,820,000 at June 30, 1996, June 30, 1995 and December 31, 1995, respectively. BUSINESS DEVELOPMENT MATTERS As discussed in the "Overview", the Corporation had entered into definitive agreements to acquire two mutual savings banks. In 1995, the agreements expired without the acquisitions having been completed due to changes in federal and state regulatory policies which strictly limited the circumstances under which such transactions would be permitted. 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 marketing efforts were undertaken in 1995, primarily to Bank customers. 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 currently plan to resume any major data processing operations, the level of computer equipment was significantly increased in 1995 through expanded 13 use of personal computer networks. The new networks allow for a more direct input of basic loan and deposit account information to the data files maintained by the service bureau. Capital expenditures in 1995, which totaled $1,302,230, related primarily to the increase in computer equipment. Since most of this equipment was not placed into service until late in 1995, the full effect on annual depreciation expense first occurs in 1996. In 1995, as discussed in Note 5 to Consolidated Financial Statements, management adopted a comprehensive restructuring project for the purpose of reengineering Bank operations to become more competitive and cost-effective in developing business and servicing customers and to improve long-term profitability. In connection with this project, certain positions within the Bank have either been realigned or eliminated. Total restructuring charges in 1995 (all recorded in the first quarter), with the expectation that all significant costs were incurred and paid within that year, amounted to $460,457, of which $301,116 related to personnel costs and $159,341 to professional fees. The Bank also decided in March 1995 to recognize losses of $414,596 from the sales of certain investment securities held in the available-for-sale 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 had a significant adverse impact on 1995 earnings, management believes these decisions will enhance the long-term value of the Corporation and strengthen the competitive position of its community banking operations. Management decided in March 1996 that the Bank would discontinue the purchase of retail installment loan contracts from automobile and equipment dealers, due largely to the declining yields being experienced in this loan program. Contracts of this nature included in loans amounted to $33,525,143 at December 31, 1995 and $28,512,517 at June 30, 1996. While there will be no purchases of new contracts, current plans call for the collection of outstanding loans based on their contractual terms. It is expected that the funds previously invested in this loan program will be redeployed, as loan payments occur, to other loan programs or to the investment securities portfolio. 14 TABLE 1 CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Taxable Equivalent Basis, Dollars in Thousands) 1996 SIX MONTHS ENDED JUNE 30 Average Interest Rates Average Income/ Earned/ Balance Expense Paid EARNING ASSETS Loans (2) (3) $ 184,109 $ 8,174 8.90% Investment securities: Taxable income 71,079 2,500 7.04 Non-taxable income (2) 13,539 582 8.59 Federal funds sold 570 15 5.16 Total earning assets 269,297 11,271 8.38 Cash and due from banks 8,983 Other assets, net 8,121 TOTAL ASSETS $ 286,401 INTEREST-BEARING LIABILITIES Interest-bearing deposits: NOW accounts $ 34,549 349 2.02 Savings deposits 30,421 391 2.58 Money market accounts 16,075 220 2.75 Certificates and other time deposits 134,969 3,644 5.41 Retail repurchase agreements 4,251 92 4.36 Federal funds purchased 1,091 30 5.56 Total interest-bearing liabilities 221,356 4,726 4.28 Noninterest-bearing demand deposits 35,284 Other liabilities 2,977 Shareholders' equity 26,784 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 286,401 NET INTEREST INCOME AND SPREAD $ 6,545 4.10% NET YIELD ON EARNING ASSETS 4.86% (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 and yields related to certain investment securities and loans exempt from both federal and state income tax or from state income tax alone are stated on a fully taxable equivalent basis, assuming a 34% federal tax rate and applicable state tax rate, reduced by the nondeductible portion of interest expense. (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) 1995 SIX MONTHS ENDED JUNE 30 Average Interest Rates Average Income/ Earned/ Balance Expense Paid EARNING ASSETS Loans (2) (3) $ 169,695 $ 7,575 8.98% Investment securities: Taxable income 64,774 2,126 6.57 Non-taxable income (2) 10,195 484 9.50 Federal funds sold 2,269 68 6.01 Total earning assets 246,933 10,253 8.34 Cash and due from banks 9,007 Other assets, net 6,313 TOTAL ASSETS $ 262,253 INTEREST-BEARING LIABILITIES Interest-bearing deposits: NOW accounts $ 32,082 338 2.12 Savings deposits 30,093 439 2.94 Money market accounts 17,587 270 3.10 Certificates and other time deposits 116,526 3,130 5.42 Retail repurchase agreements 3,236 82 5.12 Federal funds purchased 456 13 5.80 Total interest-bearing liabilities 199,980 4,272 4.31 Noninterest-bearing demand deposits 35,844 Other liabilities 2,365 Shareholders' equity 24,064 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 262,253 NET INTEREST INCOME AND SPREAD $ 5,981 4.03% NET YIELD ON EARNING ASSETS 4.85% (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 and yields related to certain investment securities and loans exempt from both federal and state income tax or from state income tax alone are stated on a fully taxable equivalent basis, assuming a 34% federal tax rate and applicable state tax rate, reduced by the nondeductible portion of interest expense. (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 1 CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Taxable Equivalent Basis, Dollars in Thousands) SIX MONTHS ENDED JUNE 30 1996 Versus 1995 Interest Variance due to (1) Net Volume Rate Change EARNING ASSETS Loans (2) (3) $ 665 $ (66) $ 599 Investment securities: Taxable income 216 158 374 Non-taxable income (2) 147 (49) 98 Federal funds sold (44) (9) (53) Total earning assets 984 34 1,018 Cash and due from banks Other assets, net TOTAL ASSETS INTEREST-BEARING LIABILITIES Interest-bearing deposits: NOW accounts 27 (16) 11 Savings deposits 5 (53) (48) Money market accounts (22) (28) (50) Certificates and other time deposits 520 (6) 514 Retail repurchase agreements 23 (13) 10 Federal funds purchased 18 (1) 17 Total interest-bearing liabilities 571 (117) 454 Noninterest-bearing demand deposits Other liabilities Shareholders' equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY NET INTEREST INCOME AND SPREAD $ 413 $ 151 $ 564 NET YIELD ON EARNING ASSETS (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 and yields related to certain investment securities and loans exempt from both federal and state income tax or from state income tax alone are stated on a fully taxable equivalent basis, assuming a 34% federal tax rate and applicable state tax rate, reduced by the nondeductible portion of interest expense. (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.
15C TABLE 2 CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Taxable Equivalent Basis, Dollars in Thousands) 1996 THREE MONTHS ENDED JUNE 30 Average Interest Rates Average Income/ Earned/ Balance Expense Paid EARNING ASSETS Loans (2) (3) $ 185,509 $ 4,118 8.90% Investment securities: Taxable income 69,963 1,210 6.92 Non-taxable income (2) 14,386 303 8.41 Federal funds sold 731 10 5.21 Total earning assets 270,589 5,641 8.35 Cash and due from banks 9,387 Other assets, net 8,090 TOTAL ASSETS $ 288,066 INTEREST-BEARING LIABILITIES Interest-bearing deposits: NOW accounts $ 34,737 172 1.98 Savings deposits 30,704 194 2.54 Money market accounts 16,012 108 2.70 Certificates and other time deposits 135,288 1,814 5.38 Retail repurchase agreements 4,224 46 4.43 Federal funds purchased 880 12 5.53 Total interest-bearing liabilities 221,845 2,346 4.24 Noninterest-bearing demand deposits 36,101 Other liabilities 3,053 Shareholders' equity 27,067 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 288,066 NET INTEREST INCOME AND SPREAD $ 3,295 4.11% NET YIELD ON EARNING ASSETS 4.87% (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 and yields related to certain investment securities and loans exempt from both federal and state income tax or from state income tax alone are stated on a fully taxable equivalent basis, assuming a 34% federal tax rate and applicable state tax rate, reduced by the nondeductible portion of interest expense. (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) 1995 THREE MONTHS ENDED JUNE 30 Average Interest Rates Average Income/ Earned/ Balance Expense Paid EARNING ASSETS Loans (2) (3) $ 170,750 $ 3,857 9.05% Investment securities: Taxable income 63,968 1,074 6.72 Non-taxable income (2) 10,111 233 9.23 Federal funds sold 3,653 54 5.93 Total earning assets 248,482 5,218 8.41 Cash and due from banks 9,206 Other assets, net 6,531 TOTAL ASSETS $ 264,219 INTEREST-BEARING LIABILITIES Interest-bearing deposits: NOW accounts $ 32,799 172 2.10 Savings deposits 29,950 222 2.97 Money market accounts 16,115 126 3.15 Certificates and other time deposits 118,855 1,631 5.50 Retail repurchase agreements 3,255 42 5.19 Federal funds purchased 44 - 4.97 Total interest-bearing liabilities 201,018 2,193 4.38 Noninterest-bearing demand deposits 36,289 Other liabilities 2,575 Shareholders' equity 24,337 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 264,219 NET INTEREST INCOME AND SPREAD $ 3,025 4.03% NET YIELD ON EARNING ASSETS 4.87% (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 and yields related to certain investment securities and loans exempt from both federal and state income tax or from state income tax alone are stated on a fully taxable equivalent basis, assuming a 34% federal tax rate and applicable state tax rate, reduced by the nondeductible portion of interest expense. (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 TABLE 2 CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Taxable Equivalent Basis, Dollars in Thousands) THREE MONTHS ENDED JUNE 30 1996 Versus 1995 Interest Variance due to (1) Net Volume Rate Change EARNING ASSETS Loans (2) (3) $ 326 $ (65) $ 261 Investment securities: Taxable income 103 33 136 Non-taxable income (2) 92 (22) 70 Federal funds sold (38) (6) (44) Total earning assets 483 (60) 423 Cash and due from banks Other assets, net TOTAL ASSETS INTEREST-BEARING LIABILITIES Interest-bearing deposits: NOW accounts 10 (10) - Savings deposits 6 (34) (28) Money market accounts (1) (17) (18) Certificates and other time deposits 220 (37) 183 Retail repurchase agreements 11 (7) 4 Federal funds purchased 12 - 12 Total interest-bearing liabilities 258 (105) 153 Noninterest-bearing demand deposits Other liabilities Shareholders' equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY NET INTEREST INCOME AND SPREAD $ 225 $ 45 $ 270 NET YIELD ON EARNING ASSETS (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 and yields related to certain investment securities and loans exempt from both federal and state income tax or from state income tax alone are stated on a fully taxable equivalent basis, assuming a 34% federal tax rate and applicable state tax rate, reduced by the nondeductible portion of interest expense. (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.
16C 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 June 30, 1996. 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, 1996 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 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 Exhibit 3.20 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. 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. 18 Exhibit No. Description of Exhibit 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 10.31 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 10.32 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. 10.50 Copy of Employment Agreement dated as of December 27, 1995 between First National Bank and Trust Company and Michael C. Miller, incorporated herein by reference to Exhibit 10.50 to the Registrant's Form 10-KSB Annual Report for the fiscal year ended December 31, 1995. 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 JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-31-1996 JUN-30-1996 10,153,261 0 0 0 25,053,292 58,633,939 0 185,605,875 1,920,198 287,742,281 254,414,009 3,384,675 2,749,757 0 0 0 4,506,945 22,686,895 287,742,281 8,150,262 2,714,528 14,670 10,879,460 4,603,365 4,726,022 6,153,438 195,000 0 4,408,435 2,724,646 2,724,646 0 0 1,897,024 1.05 1.05 4.57 26,000 152,000 0 0 1,903,000 258,000 80,000 1,920,000 1,677,000 0 243,000
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