EX-99 3 a4500475ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 FNB Corp. Announces Third Quarter Results ASHEBORO, N.C.--(BUSINESS WIRE)--Oct. 23, 2003--FNB Corp. (Nasdaq: FNBN), the holding company for First National Bank and Trust Company, Rowan Bank and Dover Mortgage Company, today announced its financial results for the third quarter of 2003. Net income for the third quarter fell to $1.533 Million, or $.26 per diluted share, from $2.293 Million, or $.43 per diluted share, in the same period of 2002. For the first nine months of 2003, net income was $6.475 Million, or $1.10 per diluted share, compared to $5.972 Million, or $1.18 per diluted share, in the same period last year. At September 30, 2003, total assets were $795,275,000, loans were $567,861,000 and deposits were $599,383,000. Return on average equity on an annualized basis for the first nine months of 2003 was 11.07% and return on average assets was 1.09%. Return on tangible equity and assets (calculated by deducting average goodwill from average equity and from average assets) amounted to 13.72% and 1.11%, respectively. The mergers of Rowan Bank and Dover Mortgage Company with FNB Corp., effective August 1, 2002 and April 1, 2003, respectively, were accounted for as purchase business combinations and, accordingly, there were no restatements of prior period financial information. Two items significantly impacted third quarter results, one negatively and one positively. The Corporation sustained a reduction of approximately $1,250,000 in income from mortgage loan sales of Dover Mortgage Company as a result of the failure to properly obtain forward sales commitments when certain interest rate locks or commitments to lend were entered into with potential borrowers. Failure to adhere to policies in connection with forward sales commitments, along with steep increases in conforming mortgage interest rates, created the reduction in income enumerated above. The Corporation is continuing to review and enhance the controls and procedures in place at this recently acquired subsidiary, which had not been subject to public reporting company requirements previously. The second item, which positively impacted quarterly results by $213,000, is due to the reduction in income tax expense for the change in the valuation allowance for state deferred income tax assets. Commenting about the quarterly operations, FNB Chairman and President Michael Miller stated, "We're pleased to have an extremely good foundation for our business that can withstand a downturn in earnings like we experienced last quarter. Our dedicated team will continue to work hard for the communities and shareholders we are proud to serve. We are pushing to improve our business in spite of the weak regional economy and interest rate environment. New checking account products and promotions already have received very positive customer response, and we are also pleased to have introduced the CDARStm (Certificate of Deposit Account Registry Service) product, which can provide up to $1 Million in FDIC insurance on customers' certificates of deposit." Net interest income declined $190,000 or 2.8% in the third quarter of 2003 compared to the same period in 2002, demonstrating the continuing negative effect that the prolonged low-rate environment is having on the net interest margin. Net interest income increased $1,239,000 or 6.7% in comparing nine-month results due primarily to the growth in earning assets. The net interest margin, negatively affected by the continuing decline in interest rates and also impacted by structural changes in the balance sheet as a result of acquisitions, amounted to 3.83% on a taxable equivalent basis in the first nine months of 2003 compared to 4.49% in the same period of 2002. For the 2003 third quarter, the net interest margin was 3.70% compared to 4.44% in the 2002 third quarter. Noninterest income increased $1,039,000 or 48% in the third quarter of 2003 compared to the same period of 2002 and $6,918,000 or 124% in comparing year-to-date results. The improvement in this line item was due largely to higher levels of fee and service charge income, growing wealth management services revenues and an increase in income from the company-wide mortgage banking operations. Noninterest expense was $2,286,000 or 43% higher in the third quarter and $7,496,000 or 53% higher in the first nine months of 2003, due primarily to the company acquisitions. At September 30, 2003, the allowance for loan losses was $6,098,000, amounting to 1.14% of loans held for investment compared to 1.22% at December 31, 2002 and 1.18% at September 30, 2002. The provision for loan losses recorded in the third quarter of 2003, reflecting increases in historical charge-off trends due to economic conditions, amounted to $455,000 compared to $285,000 in the third quarter of 2002. For the first nine months of 2003, the provision was $1,535,000 compared to $1,325,000 in the same period of 2002. As of September 30, 2003, nonperforming loans were $6,410,000 in total, compared to $6,212,000 and $5,150,000 at December 31, 2002 and September 30, 2002, respectively. Nonaccrual loans and accruing loans past due 90 days or more amounted to $5,370,000 and $1,040,000, respectively, at September 30, 2003, $4,944,000 and $1,268,000 at December 31, 2002, and $4,552,000 and $598,000 at September 30, 2002. Loans considered impaired as of September 30, 2003 totaled $904,000 (all of which was also on nonaccrual status) compared to $3,211,000 and $1,560,000 as of December 31, 2002 and September 30, 2002, respectively. FNB Corp. is the central North Carolina-based bank holding company for First National Bank and Trust Company, Rowan Bank and Dover Mortgage Company. First National Bank and Trust (www.fnbnc.com) operates seventeen community offices in Archdale, Asheboro, Biscoe, Ellerbe, Laurinburg, Pinehurst, Ramseur, Randleman, Rockingham, Seagrove, Siler City, Southern Pines and Trinity. Rowan Bank (www.rowanbank.com) operates three community offices in China Grove, Kannapolis and Salisbury. Dover Mortgage Company (www.dovermortgage.com) operates six mortgage production offices in Charlotte, Goldsboro, Greenville, Lake Norman, Raleigh and Wilmington. Through its subsidiaries, FNB offers a complete line of consumer, mortgage and business banking services, including loan, deposit, cash management, trust and wealth management and internet banking services. Deposits are insured by the Federal Deposit Insurance Corporation. FNB Corp. stock is traded on the NASDAQ National Market System under the symbol "FNBN". Market makers for FNB Corp. stock are Scott & Stringfellow, Keefe, Bruyette & Woods, Goldman Sachs, Fig Partners, Ferris Baker Watts, Knight Securities, Ryan Beck & Company, Trident Securities, Sandler O'Neill & Partners and Stern Agee and Leach. This news release contains forward-looking statements. Such statements are subject to certain factors which may cause the company's results to vary from those expected, including the risks set forth from time to time in the company's filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's judgment only as of the date hereof. The company undertakes no obligation to publicly revise these forward-looking statements to reflect events and circumstances that arise after the date hereof. FNB Corp. and Subsidiaries CONSOLIDATED FINANCIAL INFORMATION (In thousands except per share data) Three Months Ended Nine Months Ended September 30, September 30, ----------------------- ----------------------- 2003 2002 2003 2002 ----------------------- ----------------------- SUMMARY OF OPERATIONS Interest income: Loans $8,073 $7,885 $24,404 $21,331 Investment securities: Taxable income 1,135 2,005 4,076 6,513 Non-taxable income 452 305 1,184 888 Other 47 74 232 120 -------------------------------------------------- Total interest income 9,707 10,269 29,896 28,852 Interest expense 3,221 3,593 10,184 10,379 -------------------------------------------------- Net interest income 6,486 6,676 19,712 18,473 Provision for loan losses 455 285 1,535 1,325 -------------------------------------------------- Net interest income after provision for loan losses 6,031 6,391 18,177 17,148 Noninterest income 3,225 2,186 12,477 5,559 Noninterest expense 7,563 5,277 21,748 14,252 -------------------------------------------------- Income before income taxes 1,693 3,300 8,906 8,455 Income taxes 160 1,007 2,431 2,483 -------------------------------------------------- Net income $1,533 $2,293 $6,475 $5,972 ================================================== Per share data: Net income: Basic $0.27 $0.45 $1.16 $1.22 Diluted 0.26 0.43 1.10 1.18 Cash dividends declared 0.14 0.14 0.42 0.42 September 30, December 31, ------------------ 2003 2002 2002 ------ ------ ------ BALANCE SHEET INFORMATION Total assets $795,275 $742,590 $754,370 Cash and due from banks 23,694 20,387 15,944 Investment securities 147,591 170,905 153,857 Loans 567,861 496,098 502,342 Other earning assets 7,540 14,283 41,638 Goodwill 16,325 12,601 12,601 Deposits 599,383 580,250 592,354 Other interest- bearing liabilities 108,716 80,822 81,815 Shareholders' equity 79,939 73,429 73,090 Per share data: Book value $14.08 $13.57 $13.49 Closing market price 24.95 16.84 19.39 FNB Corp. is the holding company for First National Bank and Trust Company, Rowan Bank and Dover Mortgage Company. Rowan and Dover were acquired effective August 1, 2002 and April 1, 2003, respectively, under merger transactions accounted for as purchase business combinations. Prior period financial information has not been restated. FNB Corp. stock is traded on the NASDAQ National Market System under the symbol "FNBN". Market makers for FNB Corp. stock are Scott & Stringfellow, Keefe, Bruyette & Woods, Goldman Sachs, Fig Partners, Ferris Baker Watts, Knight Securities, Ryan Beck & Company, Trident Securities, Sandler O'Neill & Partners and Stern Agee and Leach. CONTACT: FNB Corp. Jerry A. Little, 336-626-8300