-----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, Qu37Mk3xi3Mlf1BnAcCOaR6ii+XKMrfwTERYnlPGhgXeLAsP06R2pGShCM547n8v k/XRbTmivgAU6WjvrUo3Fw== 0000950168-97-003337.txt : 19971117 0000950168-97-003337.hdr.sgml : 19971117 ACCESSION NUMBER: 0000950168-97-003337 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NONE 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: 10-Q SEC ACT: SEC FILE NUMBER: 000-13823 FILM NUMBER: 97718180 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 10-Q 1 FNB CORP. 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 0-13823 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) (910) 626-8300 (Registrant's telephone number, including area code) 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 1,817,256 shares of $2.50 par value common stock outstanding at November 6, 1997. PART I. FINANCIAL INFORMATION Item 1. Financial Statements FNB Corp. and Subsidiary CONSOLIDATED BALANCE SHEETS
September 30, ----------------------------------- December 31, ASSETS 1997 1996 1996 ------------- ------------- ------------- Cash and due from banks $ 12,331,035 $ 11,499,468 $ 13,052,150 Federal funds sold -- 8,100,000 -- Investment securities: Available for sale, at estimated fair value (amortized cost of $29,550,120, $25,336,568 and $28,875,531) 29,643,623 25,204,638 28,928,543 Held to maturity (estimated fair value of $58,843,653, $57,525,441 and $61,274,858) 58,516,379 58,242,929 61,387,196 Loans 211,501,710 191,148,360 195,272,683 Less: Allowance for loan losses (2,188,476) (1,959,638) (1,985,581) ------------- ------------- ------------- Net loans 209,313,234 189,188,722 193,287,102 ------------- ------------- ------------- Premises and equipment 6,143,442 6,119,525 6,290,471 Other assets 4,753,644 4,301,581 4,189,015 ------------- ------------- ------------- TOTAL ASSETS $ 320,701,357 $ 302,656,863 $ 307,134,477 ============= ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Noninterest-bearing demand deposits $ 35,912,097 $ 38,841,700 $ 38,805,364 Interest-bearing deposits: NOW, savings and money market deposits 87,057,063 80,383,848 82,576,792 Time deposits of $100,000 or more 51,996,700 45,218,260 48,944,981 Other time deposits 103,116,662 103,470,397 101,052,928 ------------- ------------- ------------- Total deposits 278,082,522 267,914,205 271,380,065 Retail repurchase agreements 7,296,864 3,809,475 3,724,929 Federal funds purchased 875,000 -- 575,000 Other liabilities 3,181,976 3,017,509 2,687,241 ------------- ------------- ------------- TOTAL LIABILITIES 289,436,362 274,741,189 278,367,235 ------------- ------------- ------------- 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 - 1,816,853, 1,803,004 and 1,806,994 4,542,133 4,507,510 4,517,485 Surplus 456,816 116,175 213,510 Retained earnings 26,204,334 23,379,063 24,001,259 Net unrealized securities gains (losses) 61,712 (87,074) 34,988 ------------- ------------- ------------- TOTAL SHAREHOLDERS' EQUITY 31,264,995 27,915,674 28,767,242 ------------- ------------- ------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 320,701,357 $ 302,656,863 $ 307,134,477 ============= ============= =============
See accompanying notes to consolidated financial statements. 1 FNB Corp. and Subsidiary CONSOLIDATED STATEMENTS OF INCOME
Nine Months Ended September 30, ------------------------- 1997 1996 ----------- ----------- INTEREST INCOME: Interest and fees on loans $13,853,084 $12,366,713 Interest and dividends on investment securities: Taxable income 3,527,849 3,450,503 Non-taxable income 680,301 568,197 Federal funds sold 90,609 31,687 ----------- ----------- Total interest income 18,151,843 16,417,100 ----------- ----------- INTEREST EXPENSE: Deposits 7,613,564 6,911,701 Retail repurchase agreements 192,209 128,711 Federal funds purchased 22,749 42,433 ----------- ----------- Total interest expense 7,828,522 7,082,845 ----------- ----------- NET INTEREST INCOME 10,323,321 9,334,255 Provision for loan losses 470,000 305,000 ----------- ----------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 9,853,321 9,029,255 ----------- ----------- OTHER OPERATING INCOME: Service charges on deposit accounts 1,114,437 1,060,490 Annuity and brokerage commissions 236,788 148,170 Cardholder and merchant services income 254,203 231,046 Other service charges, commissions and fees 301,917 219,416 Other income 203,718 108,119 ----------- ----------- Total other operating income 2,111,063 1,767,241 ----------- ----------- OTHER OPERATING EXPENSE: Personnel expense 3,908,156 3,562,709 Net occupancy expense 432,153 356,003 Furniture and equipment expense 589,197 495,756 Data processing services 823,771 688,097 Other expense 1,629,266 1,611,122 ----------- ----------- Total other operating expense 7,382,543 6,713,687 ----------- ----------- INCOME BEFORE INCOME TAXES 4,581,841 4,082,809 Income taxes 1,399,525 1,247,170 ----------- ----------- NET INCOME $ 3,182,316 $ 2,835,639 =========== =========== PER SHARE DATA: Net income $ 1.76 $ 1.57 Cash dividends declared .54 .45 Weighted average number of shares outstanding 1,811,450 1,801,148
See accompanying notes to consolidated financial statements. 2 FNB Corp. and Subsidiary CONSOLIDATED STATEMENTS OF INCOME Three Months Ended September 30, ----------------------- 1997 1996 ---------- ---------- INTEREST INCOME: Interest and fees on loans $4,855,622 $4,216,451 Interest and dividends on investment securities: Taxable income 1,151,891 1,107,776 Non-taxable income 227,386 196,396 Federal funds sold 26,814 17,017 ---------- ---------- Total interest income 6,261,713 5,537,640 ---------- ---------- INTEREST EXPENSE: Deposits 2,599,476 2,308,336 Retail repurchase agreements 79,287 36,311 Federal funds purchased 13,934 12,176 ---------- ---------- Total interest expense 2,692,697 2,356,823 ---------- ---------- NET INTEREST INCOME 3,569,016 3,180,817 Provision for loan losses 230,000 110,000 ---------- ---------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 3,339,016 3,070,817 ---------- ---------- OTHER OPERATING INCOME: Service charges on deposit accounts 386,713 337,784 Annuity and brokerage commissions 72,563 67,280 Cardholder and merchant services income 72,590 79,883 Other service charges, commissions and fees 91,814 72,773 Other income 113,977 34,878 ---------- ---------- Total other operating income 737,657 592,598 ---------- ---------- OTHER OPERATING EXPENSE: Personnel expense 1,342,972 1,199,743 Net occupancy expense 142,398 122,182 Furniture and equipment expense 202,700 164,887 Data processing services 273,604 231,267 Other expense 535,473 587,173 ---------- ---------- Total other operating expense 2,497,147 2,305,252 ---------- ---------- INCOME BEFORE INCOME TAXES 1,579,526 1,358,163 Income taxes 489,881 419,548 ---------- ---------- NET INCOME $1,089,645 $ 938,615 ========== ========== PER SHARE DATA: Net income $ .60 $ .52 Cash dividends declared .18 .15 Weighted average number of shares outstanding 1,814,196 1,802,964 See accompanying notes to consolidated financial statements. 3 FNB Corp. and Subsidiary CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, ---------------------------- 1997 1996 ------------ ------------ OPERATING ACTIVITIES: Net income $ 3,182,316 $ 2,835,639 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of premises and equipment 555,821 482,391 Provision for loan losses 470,000 305,000 Deferred income taxes (benefit) (103,809) (64,559) Deferred loan fees and costs, net 323,933 265,232 Premium amortization and discount accretion of investment securities, net (21,664) 29,998 Amortization of intangibles 24,251 32,905 Net decrease (increase) in loans held for sale (476,250) 5,306 Increase in other assets (530,812) (451,831) Increase in other liabilities 545,989 258,813 ------------ ------------ NET CASH PROVIDED BY OPERATING ACTIVITIES 3,969,775 3,698,894 ------------ ------------ INVESTING ACTIVITES: Available-for-sale securities: Proceeds from maturities 16,296,849 11,558,226 Purchases (16,960,157) (8,774,291) Held-to-maturity securities: Proceeds from maturities 4,267,140 13,818,718 Purchases (1,385,186) (15,864,280) Net increase in loans (16,335,014) (11,738,996) Proceeds from sales of premises and equipment 1,181 20,320 Purchases of premises and equipment (408,792) (685,519) Other, net 22,419 (35,653) ------------ ------------ NET CASH USED IN INVESTING ACTIVITIES (14,501,560) (11,701,475) ------------ ------------ FINANCING ACTIVITIES: Net increase in deposits 6,702,457 17,769,729 Increase (decrease) in retail repurchase agreements 3,571,935 (832,052) Increase in federal funds purchased 300,000 -- Common stock issued 267,954 109,992 Cash dividends paid (1,031,676) (810,159) ------------ ------------ NET CASH PROVIDED BY FINANCING ACTIVITIES 9,810,670 16,237,510 ------------ ------------ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (721,115) 8,234,929 Cash and cash equivalents at beginning of period 13,052,150 11,364,539 ------------ ------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 12,331,035 $ 19,599,468 ============ ============ Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 7,726,419 $ 7,277,550 Income taxes 1,333,031 1,367,131
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 periods. 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. On June 3, 1997, the Corporation entered into a definitive agreement to acquire Home Savings Bank of Siler City, Inc., SSB ("Home Savings") of Siler City, North Carolina. Under terms of the agreement, Home Savings will be merged into the Bank. The acquisition will be accounted for as a purchase transaction and is subject to several conditions, including the affirmative vote of at least two-thirds of Home Savings' shareholders and approval from applicable regulatory agencies. Completion of the transaction is expected in the first quarter of 1998. At September 30, 1997, Home Savings operated one office and had approximately $56,379,000 in total assets, $45,396,000 in deposits and $9,533,000 in stockholders' equity. To effect the acquisition, FNB Corp. intends to issue common stock and to pay cash to shareholders of Home Savings in an amount equal to $15.50 per share of the common stock of Home Savings. Home Savings shareholders will be able to elect stock or cash or a combination thereof, subject to the limitation that FNB Corp. common stock issued in the merger will not be more than 60% and not less than 50% of the total consideration. Concurrently with the execution of the agreement, FNB Corp. received an option to purchase 19.9% of Home Savings' common stock. The option is exercisable only under certain specified conditions. 4. Loans as presented are reduced by net unearned income of $237,964 at September 30, 1997 and are increased by net deferred expense of $130,027 and $37,998 at September 30, 1996 and December 31, 1996, respectively. 5 5. Significant components of other expense were as follows:
Three Months Ended Nine Months Ended September 30, September 30, ------------------ -------------------- 1997 1996 1997 1996 ------- ------- -------- -------- Stationery, printing and supplies $78,809 $73,960 $241,954 $207,895
6. 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 $3,182,316 in the first nine months of 1997, a 12.2% increase over the same period in 1996. Earnings per share increased from $1.57 to $1.76 in comparing these nine-month periods. For the 1997 third quarter, earnings amounted to $1,089,645, which represents a 16.1% increase from the 1996 third quarter and a gain in earnings per share from $.52 to $.60. Results for both the first nine months and third quarter of 1996 were negatively impacted by a special legislative assessment for FDIC insurance purposes as further discussed in the "Earnings Review" and in "Other Operating Expense". Total assets were $320,701,357 at September 30, 1997, up 6.0% from September 30, 1996 and 4.4% from December 31, 1996. Loans amounted to $211,501,710 at September 30, 1997, increasing 10.6% from September 30, 1996 and 8.3% from December 31, 1996. Total deposits grew 3.8% from September 30, 1996 and 2.5% from December 31, 1996 to $278,082,522 at September 30, 1997. On June 3, 1997, the Corporation entered into a definitive agreement to acquire Home Savings Bank of Siler City, Inc., SSB ("Home Savings") of Siler City, North Carolina. Under terms of the agreement, Home Savings will be merged into the Bank. The acquisition will be accounted for as a purchase transaction and is subject to several conditions, including the affirmative vote of at least two-thirds of Home Savings' shareholders and approval from applicable regulatory agencies. Completion of the transaction is expected in the first quarter of 1998. At September 30, 1997, Home Savings operated one office and had approximately $56,379,000 in total assets, $45,396,000 in deposits and $9,533,000 in stockholders' equity. To effect the acquisition, FNB Corp. intends to issue common stock and to pay cash to shareholders of Home Savings in an amount equal to $15.50 per share of the common stock of Home Savings. Home Savings shareholders will be able to elect stock or cash or a combination thereof, subject to the limitation that FNB Corp. common stock issued in the merger will not be more than 60% and not less than 50% of the total consideration. Concurrently with the execution of the agreement, FNB Corp. received an option to purchase 19.9% of Home Savings' common stock. The option is exercisable only under certain specified conditions. EARNINGS REVIEW The Corporation's net income increased $346,677 or 12.3% in the first nine months of 1997 compared to the same period of 1996 and increased $151,030 or 16.1% in comparing third quarter periods. Earnings were positively impacted in the first nine months and third quarter of 1997 by increases in net interest income of $989,066 or 10.6% and $388,199 or 12.2%, respectively, and by increases of $343,822 and $145,059 in total other operating income. These gains were significantly offset, however, by increases in total other operating expense of $668,856 in the first nine months of 1997 and $191,985 in the 1997 third quarter and by increases in the provision for loan losses amounting to $165,000 and $120,000, respectively. 7 As discussed in "Other Operating Expense", earnings have been favorably affected, since the 1995 third quarter, by a significant reduction in the rate charged for FDIC insurance. Due to the passage of legislation on September 30, 1996, however, the Bank was assessed $74,845 on a one-time basis for its deposits that are insured through the Savings Association Insurance Fund. This assessment, which was recorded on September 30, 1996 and is further discussed in "Other Operating Expense", was part of a broad change being implemented in connection with deposit insurance. Compared to the same periods of 1996 and considering the effect of the special assessment, FDIC insurance expense was $71,118 lower in the first nine months of 1997 and $73,674 lower in the third quarter. On an annualized basis, return on average assets improved from 1.32% in the first nine months of 1996 to 1.36% in the first nine months of 1997. Return on average shareholders' equity improved from 13.95% to 14.10% in comparing the same periods. In comparing third quarter periods, return on average assets improved from 1.30% to 1.38% and return on average shareholders' equity improved from 13.53% to 14.09%. 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 $10,323,321 in the first nine months of 1997 compared to $9,334,255 in the same period of 1996. This increase of $989,066 or 10.6% resulted primarily from an 8.7% increase in the level of average earning assets coupled with an improvement in the net yield on earning assets, or net interest margin, from 4.90% in the first nine months of 1996 to 4.99% in the same period of 1997. In comparing third quarter periods, net interest income increased $388,199 or 12.2%, reflecting a 9.7% increase in average earning assets and an improvement in the net interest margin from 4.97% to 5.06%. On a taxable equivalent basis, the increases in net interest income in the first nine months and third quarter of 1997 were $1,051,000 and $400,000, 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 of interest has moved to generally higher levels in recent years, due primarily to actions taken by the Federal Reserve to combat potential increases in inflation. After averaging 6.00% in 1993, the prime rate has subsequently averaged 7.09%, 8.82% and 8.28% in 1994, 1995 and 1996, respectively. The prime rate reached a level of 9.00% in the first quarter of 1995, and then, following actions by the Federal Reserve to lower interest rates, it decreased over time to a level of 8.25% in the first quarter of 1996. In the first quarter of 1997, the Federal Reserve elected to tighten rates, and the prime rate increased to 8.50%. The average prime rate was 8.42% in the first nine months of 1997 compared to 8.29% in the same period of 1996. In comparing nine-month periods, the net interest spread increased by 8 basis points from 4.14% in 1996 to 4.22% in 1997, reflecting an increase in the average total yield on earning assets that was only partially offset by an increase in the average rate paid on interest-bearing liabilities, or cost of funds. The yield on earning assets increased by 16 basis points from 8.39% in 1996 to 8.55% in 1997, while the cost of funds increased by 8 basis points from 4.25% to 4.33%. A comparison of third quarter periods indicates a similar improvement of 8 basis points in the net interest spread from 4.21% to 4.29%, with the yield on earning assets increasing 23 basis points compared to 15 basis points for 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 negatively impacted in the first nine months and third quarter of 1997 compared to the same periods in 1996 by increases in the provision of $165,000 and $120,000, respectively, due primarily to loan growth and increases in net loan charge-offs. As a percentage of average loans outstanding, however, net loan charge-offs were .18% (annualized) for the first nine months of both 1997 and 1996, thus reflecting no increase over the same period of 1996. Nonperforming loans as a percentage of total loans at September 30, 1997 were .08%, as compared to .12% at September 30, 1996. Other Operating Income Total other operating income, or noninterest income, for the first nine months and third quarter of 1997 increased $343,812 or 19.5% and $145,059 or 24.5%, respectively, compared to the same periods in 1996, reflecting in part the general increase in the volume of business. The gain in annuity and brokerage commissions resulted principally from increased brokerage commissions. The level of other service charges, commissions and fees is higher due primarily to the implementation in the 1996 third quarter of a fee charged to noncustomers for usage of the Bank's automated teller machines. Other Operating Expense Total other operating expense, or noninterest expense, was $668,856 or 10.0% higher in the first nine months of 1997 compared to the same period in 1996 and for the third quarter was $191,895 or 8.3% higher, due largely to costs associated with changes in operations, increased personnel expense and the continuing effects of inflation. Personnel expense was impacted by increased staffing requirements, normal salary adjustments and higher costs of fringe benefits. Net occupancy expense was affected by increased maintenance charges. The expanded use of personal computer networks has contributed to higher levels of equipment costs and data processing services. The 1996 results were specifically affected, as discussed below, by a one-time FDIC insurance assessment of $74,845 on September 30, 1996. 9 FDIC insurance expense has been significantly affected in recent years by major legislation, including the Federal Deposit Insurance Corporation Improvement Act (FDICIA) enacted in 1989. The FDIC currently has two separate insurance funds, which are the Bank Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF). As provided by FIDICA, the insurance assessment rate could be lowered once a fund had reached a mandated 1.25 percent reserve ratio. While the SAIF fund did not reach 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, resulting in 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. The Deposit Insurance Funds Act of 1996 (DIFA) was enacted on September 30, 1996 and has three main components. The first component included a one-time assessment on SAIF deposits to capitalize the SAIF fund to the mandated 1.25 percent reserve ratio. The second component is a requirement that the repayment of the Financing Corporation (FICO) bonds be shared by both banks and thrifts. The third component is the ultimate elimination of the BIF and SAIF funds by merging them into a new Deposit Insurance Fund. The one-time assessment on the Bank's SAIF deposits, which amounted to $74,845, was determined on the date of enactment and expensed at that time. Effective January 1, 1997, FDIC insurance premiums are being assessed for FICO bond purposes at an approximate rate of $.065 per $100 for SAIF deposits and at a rate equal to one-fifth of that for BIF deposits. Additional premiums could be assessed in order to maintain the BIF and SAIF funds at the required 1.25 percent reserve ratio. FDIC insurance expense for the first nine months of 1997 and 1996 (exclusive of the one-time assessment of $74,845 on September 30, 1996) amounted to $30,503 and $26,776, respectively, and was included in "other expense". Income Taxes The effective income tax rate of 30.6% in the first nine months of 1997 was unchanged from the effective rate for the same period of 1996. 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 five major sources: (a) cash on hand and on deposit at other banks, (b) the outstanding balance of federal funds sold, (c) lines for the purchase of federal funds from other banks, (d) the line of credit established at the Federal Home Loan Bank and (e) 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 five 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. Consistent 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 10 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 is a portion of the NOW, savings and money market deposits. These types of deposits historically have not repriced coincidentally with or in the same proportion as general market indicators. As a specific asset/liability management tool, the Bank, at September 30, 1997, had entered into interest rate floor agreements with a correspondent bank to protect certain variable-rate loans from the downward effects of their repricing in the event of a decreasing rate environment. The total notional amount of the agreements is $20,000,000. The agreements require the correspondent bank to pay to the Bank the difference between the specified floor rate of interest in each agreement and the prime rate of interest in the event that the prime rate is less. Any payments received under the agreements, net of premium amortization, will be treated as an adjustment of interest income on loans. CAPITAL ADEQUACY Under guidelines established by the Board of Governors of the Federal Reserve System, capital adequacy is currently measured for regulatory purposes by certain risk-based capital ratios, supplemented by a leverage capital ratio. The risk-based capital ratios are determined by expressing allowable capital amounts, defined in terms of Tier I and Tier II, 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 I capital consists primarily of common shareholders' equity and qualifying perpetual preferred stock, net of goodwill and other disallowed intangible assets. Tier II capital, which is limited to the total of Tier I capital, includes allowable amounts of subordinated debt, mandatory convertible securities, preferred stock and the allowance for loan losses. Under current requirements, the minimum total capital ratio, consisting of both Tier I and Tier II capital, is 8.00% and the minimum Tier I capital ratio is 4.00%. At September 30, 1997, FNB Corp. and the Bank had total capital ratios of 15.78% and 15.45%, respectively, and Tier I capital ratios of 14.75% and 14.41%. 11 The leverage capital ratio, which serves as a minimum capital standard, considers Tier I 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. As currently required, the minimum leverage capital ratio is 4.00%. At September 30, 1997, FNB Corp. and the Bank had leverage capital ratios of 9.86% and 9.63%, respectively. The Bank is also required to comply with prompt corrective action provisions established by the Federal Deposit Insurance Corporation Improvement Act. To be categorized as well-capitalized, the Bank must have a minimum ratio for total capital of 10.00%, for Tier I capital of 6.00% and for leverage capital of 5.00%. As noted above, the Bank met all of those ratio requirements at September 30, 1997 and, accordingly, is well-capitalized under the regulatory framework for prompt corrective action. BALANCE SHEET REVIEW Total assets at September 30, 1997 were higher than at September 30, 1996 and December 31, 1996 by $18,044,000 or 6.0% and $13,567,000 or 4.4%, respectively; deposits were ahead by $10,169,000 or 3.8% and $6,703,000 or 2.5%. The balance of retail repurchase agreements, a program that has tended to transfer funds away from deposits, amounted to $7,297,000 at September 30, 1997, $3,809,000 at September 30, 1996 and $3,725,000 at December 31, 1996. Average assets increased $24,385,000 or 8.5% in the first nine months of 1997 compared to the same period in 1996, while average deposits increased $20,060,000 or 8.0%; the third quarter increases being $27,147,000 or 9.4% and $19,934,000 or 7.8%, 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. Although the growth in loans exceeded that for total assets during the twelve-month period ended September 30, 1997, the level of investment securities was increased by a net amount of $4,712,000 or 5.6% due to the redeployment of funds previously invested as federal funds sold. In the first nine months of 1997, however, when loan growth again exceeded that for total assets, there was a net reduction in the level of investment securities of $2,156,000 or 2.4%. 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 $20,354,000 or 10.6% during the twelve-month period ended September 30, 1997. The net loan increase during the first nine months of 1997 was $16,229,000 or 8.3%. Average loans were $17,119,000 or 9.2% higher in the first nine months of 1997 than in the same period of 1996. The ratio of average loans to average deposits, in comparing nine-month periods, increased from 73.4% in 1996 to 74.3% in 1997. The ratio of loans to deposits at September 30, 1997 was 76.1%. Loan growth and the composition of the loan portfolio are being affected by management's decision in June 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 $12,461,825 during the twelve-month 12 period ended September 30, 1997. Consequently, total consumer loans declined significantly during that period. 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 and the residential construction and mortgage loan portfolio have each experienced strong gains during both the twelve-month period ended September 30,1997 and the first nine months of 1997. 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. As part of the loan review function, a third party assessment group is employed to review the underwriting documentation and risk grading analysis. 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. A promotion that offered premium-rate certificates of deposit, based on a selected maturities, has resulted in a significant portion of the $6,426,000 increase in time deposits during the twelve-month period ended September 30, 1997. Similarly, money market accounts have been increased by a new high-yield product introduced in the 1996 fourth quarter. As noted in the "Balance Sheet Review", the retail repurchase agreements program has tended to transfer funds away from deposits. The balance of retail repurchase agreements was $7,297,000 at September 30, 1997 and $3,809,000 at September 30, 1996. Further, the level of time deposits obtained from governmental units fluctuates, amounting to $23,169,000, $20,673,000 and $21,602,000 at September 30, 1997, September 30, 1996 and December 31, 1996, respectively. BUSINESS DEVELOPMENT MATTERS As discussed in the "Overview" and in Note 3 to Consolidated Financial Statements, the Corporation has entered into a definitive agreement to acquire a savings bank which will be merged, upon the expected completion of the transaction in the first quarter of 1998, into the Bank. 13 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. Credit card receivables amounted to $2,390,753, $2,067,226 and $2,257,204 at September 30, 1997, September 30, 1996 and December 31, 1996, respectively. Additionally, the merchant services 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 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 was not recognized until 1996. Approximately one-third of 1996 capital expenditures, which totaled $1,019,109, also related to personal computer networks. 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 that were being experienced in this loan program. Contracts of this nature included in loans amounted to $11,640,487, $24,102,312 and $20,355,367 at September 30, 1997, September 30, 1996 and December 31, 1996, respectively. 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)
1997 1996 ----------------------------- ---------------------------- THREE MONTHS ENDED SEPTEMBER 30 Average Average Interest Rates Interest Rates Average Income/ Earned/ Average Income/ Earned/ Balance Expense Paid Balance Expense Paid -------- -------- ---- -------- -------- ---- EARNING ASSETS Loans (2) (3) $202,287 $ 13,876 9.17% $185,168 $ 12,403 8.92% Investment securities: Taxable income 71,710 3,778 7.03 70,215 3,685 7.00 Non-taxable income (2) 17,429 1,061 8.12 13,934 889 8.50 Federal funds sold 2,225 91 5.44 812 32 5.20 -------- -------- ---- -------- -------- ---- Total earning assets 293,651 18,806 8.55 270,129 17,009 8.39 -------- -------- ---- -------- -------- ---- Cash and due from banks 9,812 9,130 Other assets, net 8,277 8,096 -------- -------- TOTAL ASSETS $311,740 $287,355 ======== ======== INTEREST-BEARING LIABILITIES Interest-bearing deposits: NOW accounts $ 37,640 503 1.79 $ 34,584 505 1.94 Savings deposits 29,497 516 2.34 30,333 577 2.53 Money market accounts 18,792 502 3.57 15,934 325 2.71 Certificates and other time deposits 149,580 6,093 5.45 136,038 5,505 5.39 Retail repurchase agreements 5,740 192 4.45 3,957 129 4.33 Federal funds purchased 535 23 5.69 1,017 42 5.56 -------- -------- ---- -------- -------- ---- Total interest-bearing liabilities 241,784 7,829 4.33 221,863 7,083 4.25 -------- -------- ---- -------- -------- ---- Noninterest-bearing demand deposits 36,918 35,478 Other liabilities 2,952 2,906 Shareholders' equity 30,086 27,108 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $311,740 $287,355 ======== ======== NET INTEREST INCOME AND SPREAD $ 10,977 4.22% $ 9,926 4.14% ======== ==== ======== ==== NET YIELD ON EARNING ASSETS 4.99% 4.90% ==== ====
1997 Versus 1996 -------------------------------- NINE MONTHS ENDED SEPTEMBER 30 Interest Variance due to (1) -------------------- Net Volume Rate Change -------- -------- -------- EARNING ASSETS Loans (2) (3) $ 1,131 $ 342 $ 1,473 Investment securities: Taxable income 77 16 93 Non-taxable income (2) 214 (42) 172 Federal funds sold 58 1 59 -------- -------- -------- Total earning assets 1,480 317 1,797 -------- -------- -------- Cash and due from banks Other assets, net TOTAL ASSETS INTEREST-BEARING LIABILITIES Interest-bearing deposits: NOW accounts 40 (42) (2) Savings deposits (17) (44) (61) Money market accounts 64 113 177 Certificates and other time deposits 529 59 588 Retail repurchase agreements 59 4 63 Federal funds purchased (20) 1 (19) -------- -------- -------- Total interest-bearing liabilities 655 91 746 -------- -------- -------- Noninterest-bearing demand deposits Other liabilities Shareholders' equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY NET INTEREST INCOME AND SPREAD $ 825 $ 226 $ 1,051 ======== ======== ======== NET YIELD ON EARNING ASSETS
(1) The mix variance, not separately stated, has been proportionally allocated to the volume and rate 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. 15 TABLE 2 CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Taxable Equivalent Basis, Dollars in Thousands)
1997 1996 ----------------------------- ---------------------------- THREE MONTHS ENDED SEPTEMBER 30 Average Average Interest Rates Interest Rates Average Income/ Earned/ Average Income/ Earned/ Balance Expense Paid Balance Expense Paid -------- -------- ---- -------- -------- ---- EARNING ASSETS Loans (2) (3) $208,472 $ 4,859 9.26% $187,263 $ 4,229 8.98% Investment securities: Taxable income 70,150 1,233 7.03 68,506 1,185 6.92 Non-taxable income (2) 17,640 355 8.04 14,715 307 8.35 Federal funds sold 1,900 27 5.60 1,291 17 5.23 -------- -------- ---- -------- -------- ---- Total earning assets 298,162 6,474 8.64 271,775 5,738 8.41 -------- -------- ---- -------- -------- ---- Cash and due from banks 9,863 9,421 Other assets, net 8,364 8,046 -------- -------- TOTAL ASSETS $316,389 $289,242 ======== ======== INTEREST-BEARING LIABILITIES Interest-bearing deposits: NOW accounts $ 38,283 173 1.79 $ 34,653 156 1.79 Savings deposits 29,294 171 2.32 30,159 186 2.44 Money market accounts 19,628 187 3.79 15,655 105 2.65 Certificates and other time deposits 150,393 2,069 5.46 138,153 1,861 5.35 Retail repurchase agreements 6,907 79 4.55 3,375 37 4.27 Federal funds purchased 960 14 5.76 871 12 5.55 -------- -------- ---- -------- -------- ---- Total interest-bearing liabilities 245,465 2,693 4.35 222,866 2,357 4.20 -------- -------- ---- -------- -------- ---- Noninterest-bearing demand deposits 36,818 35,862 Other liabilities 3,162 2,765 Shareholders' equity 30,944 27,749 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $316,389 $289,242 ======== ======== NET INTEREST INCOME AND SPREAD $ 3,781 4.29% $ 3,381 4.21% ======== ==== ======== ==== NET YIELD ON EARNING ASSETS 5.06% 4.97% ==== ====
1997 Versus 1996 -------------------------------- THREE MONTHS ENDED SEPTEMBER 30 Interest Variance due to (1) -------------------- Net Volume Rate Change -------- -------- -------- EARNING ASSETS Loans (2) (3) $ 494 $ 136 $ 630 Investment securities: Taxable income 29 19 48 Non-taxable income (2) 59 (11) 48 Federal funds sold 9 1 10 -------- -------- -------- Total earning assets 591 145 736 -------- -------- -------- Cash and due from banks Other assets, net TOTAL ASSETS INTEREST-BEARING LIABILITIES Interest-bearing deposits: NOW accounts 17 -- 17 Savings deposits (5) (10) (15) Money market accounts 30 52 82 Certificates and other time deposits 169 39 208 Retail repurchase agreements 40 2 42 Federal funds purchased 1 1 2 -------- -------- -------- Total interest-bearing liabilities 252 84 336 -------- -------- -------- Noninterest-bearing demand deposits Other liabilities Shareholders' equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY NET INTEREST INCOME AND SPREAD $ 339 $ 61 $ 400 ======== ======== ======== NET YIELD ON EARNING ASSETS
(1) The mix variance, not separately stated, has been proportionally allocated to the volume and rate 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. 16 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, 1997. ------------------------------------------ SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. FNB Corp. (Registrant) Date: November 7, 1997 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 2.10 Agreement and Plan of Reorganization and Merger by and among Home Savings Bank of Siler City, Inc., SSB, FNB Corp. and First National Bank and Trust Company dated June 3, 1997, incorporated herein by reference to Exhibit 2(a) to the Registrant's Current Report on Form 8-K dated June 3, 1997. 2.11 Stock Option Agreement issued by Home Savings Bank of Siler City, Inc., SSB to FNB. Corp. dated June 3, 1997, incorporated herein by reference to Exhibit 2(b) to the Registrant's Current Report on Form 8-K dated June 3, 1997. 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 June 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. 18 Exhibit No. Description of Exhibit 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, as amended, effective May 13, 1997, incorporated herein by reference to Exhibit 10.30 the Registrant's Form 10-Q Quarterly Report for the quarter ended June 30, 1997. 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 FDS --
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1997 SEP-30-1997 12,331,035 0 0 0 29,643,623 58,516,379 0 211,501,710 2,188,476 320,701,357 278,082,522 8,171,864 3,181,976 0 0 0 4,542,133 26,722,862 320,701,357 13,853,084 4,208,150 90,609 18,151,843 7,613,564 7,828,522 10,323,321 470,000 0 7,382,543 4,581,841 4,581,841 0 0 3,182,316 1.76 1.76 4.69 47,000 126,000 0 0 1,986,000 386,000 119,000 2,189,000 2,029,000 0 160,000
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