<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(MARK ONE)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT FOR THE
- --- TRANSITION PERIOD FROM TO
--------------- ----------------
COMMISSION FILE NO. 333-1546
FNB BANCSHARES, INC.
--------------------
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
SOUTH CAROLINA 57-1033165
-------------- ----------
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
POST OFFICE BOX 1539, GAFFNEY, SOUTH CAROLINA 29342
---------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(864) 488-2265
--------------
(ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
--------------
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE
LAST REPORT)
CHECK WHETHER THE ISSUER: (1) FILED ALL REPORTS REQUIRED TO BE FILED BY
SECTION 13 OR 15(D) OF THE EXCHANGE ACT DURING THE PAST 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
STATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES
OF COMMON EQUITY, AS OF THE LATEST PRACTICABLE DATE:
616,338 SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE, WERE ISSUED
AND OUTSTANDING AS OF AUGUST 7, 1998.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE): YES NO X
-- --
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FNB BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, 1998 DECEMBER 31, 1997
(UNAUDITED) (AUDITED)
----------- ---------
<S> <C> <C>
ASSETS
Cash and Cash Equivalents:
Cash and due from Banks $ 1,093,530 $ 1,007,433
Federal Funds Sold 3,640,000 1,430,000
------------ ------------
4,733,530 2,437,433
Securities held to maturity 1,550,608 1,501,331
Time Deposits with other Banks 500,000 600,000
Loans Receivable 17,387,504 14,168,832
Less Allowance for loan loss (235,482) (152,614)
------------ ------------
Loans, net 17,152,022 14,016,218
Premises and equipment 758,191 760,843
Accrued Interest Receivable 136,324 122,499
Other Assets 470,718 481,984
------------ ------------
Total Assets $ 25,301,393 $ 19,920,308
LIABILITIES
Deposits:
Non-interest bearing transaction accounts $ 3,070,385 $ 2,478,018
Interest bearing transaction accounts 3,000,655 2,532,105
Savings 2,052,770 1,358,378
Time deposits $100,000 and over 3,215,140 2,141,145
Other time deposits 7,573,623 5,050,222
------------ ------------
18,912,573 13,559,868
Securities sold under agreements to repurchase 535,317 424,413
Accrued Interest Payable 42,430 72,832
Other Liabilities 94,630 154,014
------------ ------------
Total Liabilities 19,584,950 14,211,127
------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value; 10,000,000
shares authorized and unissued
Common Stock, $.01 par value; 10,000,000
shares authorized; 616,338 shares issued 6,163 6,163
Capital surplus 6,112,318 6,112,318
Retained earnings (deficit) (402,038) (409,300)
------------ ------------
Total Stockholders' equity 5,716,443 5,709,181
------------ ------------
Total Liabilities and Stockholders' equity $ 25,301,393 $ 19,920,308
</TABLE>
See Accompanying Notes to Financial Statements
-2-
<PAGE> 3
PART I - FINANCIAL INFORMATION (CONTINUED)
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
FNB BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
INTEREST INCOME
Loans, including fees $ 400,294 $ 190,075
Investment securities, taxable 30,047 19,205
Federal funds sold 58,555 79,046
Time Deposits with Other Banks 7,233 0
--------- ---------
Total Interest Income 496,129 288,326
--------- ---------
INTEREST EXPENSE
Time deposits $100,000 and over 42,781 18,539
Other deposits 136,556 65,014
Securities sold under agreement to repurchase 5,843 6,082
--------- ---------
Total Interest Expense 185,180 89,635
--------- ---------
NET INTEREST INCOME 310,949 198,691
Provision for loan loss 45,000 39,000
--------- ---------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 265,949 159,691
--------- ---------
OTHER INCOME
Service charges on deposit accounts 28,994 17,223
Other service charges, commissions and fees 18,442 8,698
Rental Income 0 2,472
--------- ---------
47,436 28,393
--------- ---------
OTHER EXPENSE
Salaries and employee benefits 147,649 149,990
Occupancy Expense 23,660 22,676
Furniture and equipment 26,019 19,029
Other operating expense 96,164 78,824
--------- ---------
293,492 270,519
--------- ---------
INCOME (LOSS) BEFORE TAXES 19,893 (82,435)
INCOME TAX EXPENSE (BENEFIT) 0 0
--------- ---------
NET INCOME (LOSS) $ 19,893 $ (82,435)
PER SHARE
Average shares outstanding 616,338 616,338
Net income (loss) $ .03 $ (.13)
</TABLE>
See Accompanying Notes to Financial Statements
-3-
<PAGE> 4
PART I - FINANCIAL INFORMATION (CONTINUED)
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
FNB BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
INTEREST INCOME
Loans, including fees $ 756,664 $ 305,450
Investment securities, taxable 56,881 31,603
Federal funds sold 108,798 168,169
Time Deposits with Other Banks 14,612 0
--------- ---------
Total Interest Income 936,955 505,222
--------- ---------
INTEREST EXPENSE
Time deposits $100,000 and over 81,261 32,731
Other deposits 251,407 113,821
Securities sold under agreement to repurchase 12,300 10,960
--------- ---------
Total Interest Expense 344,968 157,512
--------- ---------
NET INTEREST INCOME 591,987 347,710
Provision for loan loss 85,000 69,000
--------- ---------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 506,987 278,710
--------- ---------
OTHER INCOME
Service charges on deposit accounts 50,743 27,137
Other service charges, commissions and fees 30,075 519,731
Rental Income 0 4,944
--------- ---------
80,818 51,812
--------- ---------
OTHER EXPENSE
Salaries and employee benefits 292,808 311,152
Occupancy Expense 49,433 50,043
Furniture and equipment 50,869 37,665
Other operating expense 187,433 153,049
--------- ---------
580,543 551,909
--------- ---------
INCOME (LOSS) BEFORE TAXES 7,262 (221,387)
INCOME TAX EXPENSE (BENEFIT) 0 0
--------- ---------
NET INCOME (LOSS) $ 7,262 $(221,387)
PER SHARE
Average shares outstanding 616,338 616,338
Net income (loss) $ .01 $ (.36)
</TABLE>
See Accompanying Notes to Financial Statements
-4-
<PAGE> 5
PART I - FINANCIAL INFORMATION (CONTINUED)
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
FNB BANCSHARES, INC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED JUNE 30
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
NET INCOME (LOSS) $ 19,893 $(82,435)
Other comprehensive income, net of tax 0 0
Total other comprehensive income 0 0
Comprehensive income (loss) $ 19,893 $(82,435)
-------- --------
</TABLE>
See Accompanying Notes to Financial Statements
-5-
<PAGE> 6
PART I - FINANCIAL INFORMATION (CONTINUED)
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
FNB BANCSHARES, INC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
NET INCOME (LOSS) $ 7,262 $(221,387)
Other comprehensive income, net of tax 0 0
Total other comprehensive income 0 0
Comprehensive income (loss) $ 7,262 $(221,387)
--------- ---------
</TABLE>
See Accompanying Notes to Financial Statements
-6-
<PAGE> 7
PART I - FINANCIAL INFORMATION (CONTINUED)
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
FNB BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD ENDED JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
RETAINED
COMMON STOCK CAPITAL EARNINGS
SHARES AMOUNT SURPLUS (DEFICIT) TOTAL
-------- ------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1997 616,338 $6,163 $6,112,318 $(409,300) $5,709,181
Net income (loss) 0 0 0 7,262 7,262
------- ------ ---------- --------- ----------
BALANCE, JUNE 30, 1998 616,338 $6,163 $6,112,318 $(402,038) $5,716,443
</TABLE>
See Accompanying Notes to Financial Statements
-7-
<PAGE> 8
PART I - FINANCIAL INFORMATION (CONTINUED)
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
FNB BANCSHARES, INC.
UNAUDITED STATEMENTS OF CASH FLOWS
FROM DECEMBER 31 TO JUNE 30
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 7,262 $ (221,387)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities
Provision for loan losses 85,000 69,000
Depreciation 45,111 42,457
Accretion and premium amortization 223 (5,634)
Increase in interest receivable (13,825) (73,555)
Increase (decrease) in interest payable (30,402) 87,539
(Increase) decrease in other assets 11,266 (8,091)
Increase (decrease) in other liabilities (59,384) 18,811
----------- -----------
Net cash used by operating activities 45,251 (90,860)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase securities held to maturity (799,500) (1,354,133)
Maturity of securities held to maturity 750,000 350,000
Purchase Time Deposits (500,000) 0
Maturity of Time Deposits 600,000 0
Net increase in loans made to customers (3,220,804) (6,852,081)
Purchase premises and equipment (42,459) (112,647)
----------- -----------
Net cash used by investing activities (3,212,763) (7,968,861)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits, interest bearing
transaction accounts and savings accounts 1,755,309 1,657,847
Net increase in time deposits 3,597,396 2,904,606
Net increase (decrease) in Repurchase Agreements 110,904 515,223
----------- -----------
Net cash provided by financing activities 5,463,609 5,077,676
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,296,097 (2,982,045)
----------- -----------
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,437,433 8,272,680
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,733,530 $ 5,290,635
</TABLE>
See Accompanying Notes to Financial Statements
-8-
<PAGE> 9
PART I - FINANCIAL INFORMATION (CONTINUED)
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
FNB BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
ORGANIZATION AND CONSOLIDATION - FNB Bancshares, Inc. a bank holding company
(the "Company") and its subsidiary, First National Bank of the Carolinas (the
"Bank"), provide banking services to domestic markets principally in Cherokee
County, South Carolina. The Bank commenced operations on October 18, 1996. The
consolidated financial statements include the accounts of the parent company and
its wholly-owned subsidiary after elimination of all significant intercompany
balances and transactions.
BASIS OF PRESENTATION. The accompanying consolidated financial statements have
been prepared in accordance with the requirements for interim financial
statements and, accordingly, they are condensed and omit disclosures which would
substantially duplicate those contained in the most recent annual report to
shareholders. The financial statements for the interim periods are unaudited
and, in the opinion of management, include all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation. The financial
information as of December 31, 1997 has been derived from audited financial
statements as of that date. For further information, refer to the financial
statements and the notes included in FNB Bancshares, Inc.'s 1997 Annual report.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
The following is a discussion of the Company's financial condition as of June
30, 1998 compared to December 31, 1997, and the results of operations for the
three months ended June 30, 1998 compared to the three months ended June 30,
1997 as well as the six months ended June 30, 1998 compared to the six months
ended June 30, 1997. The Bank completed its first full year of operations in
1997 and has grown substantially since opening in October 1996. Comparisons of
the Bank's results for the periods presented should be made with an
understanding of the Bank's short history. These comments should be read in
conjunction with the Company's condensed consolidated financial statements and
accompanying footnotes appearing in this report.
This report contains "forward-looking statements" relating to, without
limitation, future economic performance, plans and objectives of management for
future operations, and projections of revenues and other financial items that
are based on the beliefs of the Company's management, as well as assumptions
made by and information currently available to the Company's management. The
words "expect," "estimate," "anticipate," and "believe," as well as similar
expressions, are intended to identify forward-looking statements. The Company's
actual results may differ materially from the results discussed in the
forward-looking statements, and the Company's operating performance each quarter
is subject to various risks and uncertainties that are discussed in detail in
the Company's filings with the Securities and Exchange Commission, including the
"Risk Factors" section in the Company's Registration Statement on Form S-1
(Registration Number 333-1546) as filed with and declared effective by the
Securities and Exchange Commission.
RESULTS OF OPERATIONS FOR 1998 COMPARED TO 1997:
Net Interest Income
Net interest income for the three month period ended June 30, 1998 was $310,949
compared to $198,691 for the three month period ended June 30, 1997. Net
interest income for the six month period ended June 30, 1998 was $591,987
compared to $347,710 for the six month period ended June 30, 1997. The interest
rate spread was 4.87% at June 30, 1998 and 4.48% at June 30, 1997. The increased
income is primarily attributed to growth in the loan portfolio, as the amount of
total loans increased to $17.4 million at June 30, 1998 as compared to $8.9
million at June 30, 1997. The largest component of interest income was interest
on loans, which increased to $400,294 for the three months ended June 30, 1998
as compared to $190,075 for the three months ended June 30,
-9-
<PAGE> 10
1997, and $756,664 for the six months ended June 30, 1998 as compared to
$305,450 for the six months ended June 30, 1997. Interest on investment
securities also increased, to $30,047 for the three months ended June 30, 1998
as compared to $119,205 for the three months ended June 30, 1997, and $56,881
for the six months ended June 30, 1998 as compared to $31,603 for the six months
ended June 30, 1997. The increases in interest income were partially offset by
increases in interest expense, to $185,180 for the three months ended June 30,
1998 as compared to $89,635 for the three months ended June 30, 1997, and
$344,968 for the six months ended June 30, 1998 as compared to $157,512 for the
six months ended June 30, 1997 . These increases were primarily attributable to
growth in the Bank's loan portfolio.
Provision and Allowance for Loan Losses
The provision for loan losses is the charge to operating earnings that
management believes is necessary to maintain the allowance for possible loan
losses at an adequate level. For the three months ended June 30, 1998, the
provision charged to expense was $45,000, compared to $39,000 charged to expense
for the three months ended June 30, 1997. For the six months ended June 30,
1998, the provision charged to expense was $85,000 compared to $69,000 charged
to expense for the three months ended June 30, 1997. The loan loss reserve was
$235,482 as of June 30, 1998, or 1.35% of gross loans, as compared to $152,614
as of December 31, 1997, or 1.08% of gross loans. The loan portfolio is
periodically reviewed to evaluate the outstanding loans and to measure both the
performance of the portfolio and the adequacy of the allowance for loan losses.
This analysis includes a review of delinquency trends, actual losses, and
internal credit ratings. Management's judgment as to the adequacy of the
allowance is based upon a number of assumptions about future events which it
believes to be reasonable, but which may or may not be reasonable. Because of
the inherent uncertainty of assumptions made during the evaluation process,
there can be no assurance that loan losses in future periods will not exceed the
allowance for loan losses or that additional allocations will not be required.
Non-Interest Income
Non-interest income for the three months ended June 30, 1998 was $47,436, as
compared to $28,393 for the three months ended June 30, 1997. Non-interest
income for the six months ended June 30, 1998 was $80,818, as compared to
$51,812 for the six months ended June 30, 1997. The largest components of
non-interest income for the three months ended June 30, 1998 included $28,994
for deposit account service charges, account maintenance fees, NSF and overdraft
fees and $18,442 for other miscellaneous service charges. The largest components
of non-interest income for the six months ended June 30, 1998 included $50,743
for deposit account service charges, account maintenance fees, NSF and overdraft
fees and $30,075 for other miscellaneous service charges. This increase in fees
is attributed to overall growth of the deposit portfolio.
Non-Interest Expense
Non-interest expense for the three month period ended June 30, 1998 was
$293,492, as compared to $270,519 for the three month period ended June 30,
1997. Salaries and employee benefits comprised $147,649 and $149,990,
respectively, of this amount. The decrease in salaries is primarily due to a
restructuring/reduction in full time staff. Depreciation of buildings, furniture
and equipment accounted for $22,791 and $21,556 for the three month periods
ended June 30, 1998 and June 30, 1997, respectively.
Non-interest expense for the six month period ended June 30, 1998 was $580,543,
as compared to $551,909 for the six month period ended June 30, 1997. Salaries
and employee benefits comprised $292,808 and $311,152, respectively, of this
amount. The decrease in salaries is primarily due to the restructuring/reduction
in full time staff as well as the prior year amount including the fourth quarter
1996 payroll taxes. Depreciation of buildings, furniture and equipment accounted
for $45,111 and $42,457 for the six month periods ended June 30, 1998 and June
30, 1997, respectively.
ASSETS AND LIABILITIES
During the first six months of 1998, total assets increased $5,381,085, or 27%,
when compared to December 31, 1997. The primary growth in assets was in Federal
Funds with an increase of 155% since December 31, 1997. Loans have increased
$3,135,804, or 22%, since December 31, 1997. Total liabilities increased
$5,373,823, or 38%, when compared to December 31, 1997. Within the deposit area,
savings accounts, which include money market accounts, increased 51%, interest
bearing transaction accounts increased 19%, non-interest bearing transaction
accounts increased 24%, and time deposits increased 50%. However, this growth
rate is a reflection
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<PAGE> 11
of the fact that the Bank is relatively young, as it opened for business on
October 18, 1996, and the Company does not expect to maintain or duplicate this
growth rate. The Company's management closely monitors and seeks to maintain
appropriate levels of interest earning assets and interest bearing liabilities
so that maturities of assets are such that adequate funds are provided to meet
customer withdrawals and demand. Management expects asset and liability growth
to continue at a rapid pace during the coming months, with the growth tapering
off to a slower, more deliberate and controllable pace over the longer term, and
believes capital should continue to be adequate for the near-term.
Loans
Balances within the major loan categories as of June 30, 1998 and December 31,
1997 are as follows:
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
------------- -----------------
<S> <C> <C>
Commercial and Industrial $ 5,102,273 $ 3,227,562
Real Estate - Construction 405,103 206,531
Real Estate - Other 7,828,090 6,724,721
Installment and consumer credit lines 4,052,038 4,010,018
----------- -----------
$17,387,504 $14,168,832
Allowance for loan loss, December 31, 1997 $ 152,614
Provision 85,000
Charge-offs 2,132
Allowance for loan loss, June 30, 1998 $ 235,482
Gross loans outstanding, December 31, 1997 $14,168,832
Gross loans outstanding, June 30, 1998 $17,387,504
Allowance for loan losses to loans outstanding,
December 31, 1997 1.08%
Allowance for loan losses to loans outstanding,
June 30, 1998 1.35%
----
</TABLE>
Deposits
Balances within the major deposit categories as of June 30, 1998 and December
31, 1997 are as follows:
<TABLE>
<CAPTION>
June 30,1998 December 31, 1997
------------ -----------------
<S> <C> <C>
Non-interest bearing demand deposits $ 3,070,385 $ 2,478,018
Interest bearing demand deposits 3,000,655 2,532,105
Savings deposits 2,052,770 1,358,378
Time deposit $100,000 and over 3,215,140 2,141,145
Other Time Deposits 7,573,623 5,050,222
$18,912,573 $13,559,868
</TABLE>
Liquidity
Liquidity needs are met by the Company through scheduled maturities of loans and
investments on the asset side and through pricing policies on the liabilities
side for interest-bearing deposit accounts. The level of liquidity is measured
by the loan-to-total borrowed funds ratio which was 89% at June 30, 1998 and
101% at December 31, 1997.
Capital Resources
Total shareholders' equity increased $7,262 to $5,716,443 at June 30, 1998. The
increase is attributable to income for the period.
Bank holding companies and their banking subsidiaries are required by banking
regulators to meet certain minimum levels of capital adequacy which are
expressed in the form of certain ratios. Capital is separated into Tier 1
capital (essentially common shareholders' equity less intangible assets) and
Tier 2 capital (essentially the allowance for loan losses limited to 1.25% of
risk weighted assets). The first two ratios, which are based on the
-11-
<PAGE> 12
degree of credit risk in the Company's assets, require the weighting of assets
based on assigned risk factors and include off-balance sheet items such as loan
commitments and stand-by letters of credit. The ratio of Tier 1 capital to
risk-weighted assets must be at least 4% and the ratio of total capital (Tier 1
capital plus Tier 2) to risk-weighted assets must be at least 8%. The capital
leverage ratio supplements the risk-based capital guidelines. The leverage ratio
is Tier 1 capital divided by the adjusted quarterly average total assets. Banks
and bank holding companies are required to maintain a minimum leverage ratio of
3.0%.
The following table summarizes the Company's risk-based capital at June 30,
1998:
(amounts in thousands)
<TABLE>
<S> <C>
Shareholders' equity $ 5,716
Less: intangibles 296
-------
Tier 1 capital $ 5,420
Plus: allowance for loan losses (1) 226
-------
Total Capital $ 5,646
Risk-Weighted assets $18,087
Risk based capital ratios
Tier 1 29.97%
Total capital 31.22%
Leverage ratio 22.15%
</TABLE>
(1) limited to 1.25% of risk-weighted assets
-12-
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable
ITEM 2. CHANGES IN SECURITIES
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Several issues were voted upon at the Annual Meeting of Shareholders held on
April 28, 1998.
1. The Company's Bylaws provides that the Board of Directors shall be
divided into three classes with each class to be as nearly equal in
number as possible. The Bylaws also provide that the three classes of
directors are to have staggered terms, so that the terms of only
approximately one-third of the Board members will expire at each annual
meeting of shareholders. The current Class I directors are Barry L.
Hamrick and Harold D. Pennington, Jr. The current Class II directors
are Richard D. Gardner, Harold D. Pennington, Sr., and Heyward W.
Porter. The current Class III directors are Haskell D. Mallory, Bill H.
Mason, and V. Stephen Moss. The current terms of the Class III
directors expired at this year's annual meeting held April 28, 1998
therefore leaving the Class III directors up for reelection. 376,270
votes were for the reelection of the Class III directors. There were
12,100 withheld. The terms of the Class I directors will expire at the
1999 Annual Shareholders Meeting, and the terms of the Class II
directors will expire at the 2000 Annual Shareholders Meeting.
2. On March 25, 1997, the Board of Directors of the Company adopted the
1997 FNB Bancshares Stock Option Plan (the "Plan"). The shareholders of
the Company approved the Plan at the 1997 Annual Shareholders Meeting.
At the 1998 Annual Shareholders Meeting the Board proposed to amend the
Plan to increase the number of shares available for issuance under the
Plan from 92,450 shares to 152,450 shares, all of which may be issued
as incentive stock options. No other changes were being made at this
time. A total of 352,870 votes were for the amendment to the Plan,
while 31,700 voted against the amendment.
ITEM 5. OTHER INFORMATION
Not Applicable
ITEM 6. EXHIBITS AND REPORT ON FORM 8-K
(a) Exhibits - 27.1 Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K - No reports on Form 8-K were filed
during the quarter ended June 30, 1998.
-13-
<PAGE> 14
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
FNB BANCSHARES, INC.
(Registrant)
Date: August 10, 1998 By: /s/ V. Stephen Moss
--------------------------------------
V. Stephen Moss
President and Chief Executive Officer
-14-
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,093,530
<INT-BEARING-DEPOSITS> 500,000
<FED-FUNDS-SOLD> 3,640,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 1,550,608
<LOANS> 17,387,504
<ALLOWANCE> 235,482
<TOTAL-ASSETS> 25,301,393
<DEPOSITS> 18,912,573
<SHORT-TERM> 0
<LIABILITIES-OTHER> 672,377
<LONG-TERM> 0
0
0
<COMMON> 6,163
<OTHER-SE> 5,710,280
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<INTEREST-INVEST> 180,291
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 936,955
<INTEREST-DEPOSIT> 332,668
<INTEREST-EXPENSE> 344,968
<INTEREST-INCOME-NET> 591,987
<LOAN-LOSSES> 85,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 580,543
<INCOME-PRETAX> (7,262)
<INCOME-PRE-EXTRAORDINARY> (7,262)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,262)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
<YIELD-ACTUAL> 8.51
<LOANS-NON> 2,930
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<LOANS-TROUBLED> 0
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<ALLOWANCE-OPEN> 152,614
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<RECOVERIES> 0
<ALLOWANCE-CLOSE> 235,482
<ALLOWANCE-DOMESTIC> 235,482
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
