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 September 30, 2000
___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.)
P.O.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 October 31,
2000.
Transitional Small Business Disclosure Format (check one): Yes No X
-- --
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
FNB BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS SEPTEMBER 30, 2000 DECEMBER 31, 1999
------
(UNAUDITED) (AUDITED)
--------- -------
<S> <C> <C>
Cash and Cash Equivalents:
Cash and due from Banks $ 1,272,412 $ 1,512,403
Federal Funds Sold 3,330,000 400,000
------------- -------------
4,602,412 1,912,403
Securities:
Securities held to maturity (estimated market
value of $2,329,468 in 2000 and $2,318,372 in
1999) 2,349,558 2,349,326
Nonmarketable equity securities 100,000 83,700
Loans Receivable 33,758,941 27,830,158
Less Allowance for loan loss ( 460,110) (429,049)
-------------- -------------
Loans, net 33,298,831 27,401,109
Premises and equipment 2,374,991 2,213,812
Accrued Interest Receivable 263,761 207,676
Other Assets 408,611 1,027,530
------------- -------------
Total Assets $ 43,398,164 $ 35,195,556
============= =============
LIABILITIES
Deposits:
Non-interest bearing transaction accounts $ 5,162,344 $ 4,565,052
Interest bearing transaction accounts 5,661,346 4,362,742
Savings 5,158,331 4,136,103
Time deposits $100,000 and over 4,419,090 3,334,148
Other time deposits 15,353,187 10,836,919
------------- -------------
35,754,298 27,234,964
Advances from the Federal Home Loan Bank 1,000,000 1,000,000
Federal Funds Purchased 0 0
Securities sold under agreements to repurchase 210,165 746,181
Accrued Interest Payable 66,212 49,745
Other Liabilities 147,354 156,844
------------- -------------
Total Liabilities 37,178,029 29,187,734
------------- -------------
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) 101,654 (110,659)
------------- --------------
Total Stockholders' equity 6,220,135 6,007,822
------------- -------------
Total Liabilities and Stockholders' equity $ 43,398,164 $ 35,195,556
============= =============
</TABLE>
See Accompanying Notes to Financial Statements
2
<PAGE>
PART I - FINANCIAL INFORMATION (CONTINUED)
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
FNB BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30
(UNAUDITED)
2000 1999
---- ----
<S> <C> <C>
INTEREST INCOME
Loans, including fees $ 842,879 $ 647,949
Investment securities, taxable 34,056 33,792
Federal funds sold 56,617 26,845
----------- -----------
Total Interest Income 933,552 708,586
----------- -----------
INTEREST EXPENSE
Time deposits $100,000 and over 56,271 47,668
Other deposits 301,584 196,063
Federal Funds Purchased 0 0
Advances from FHLB 30,836 0
Securities sold under agreement to repurchase 6,049 5,394
--------- -----------
Total Interest Expense 394,740 249,125
--------- -----------
NET INTEREST INCOME 538,812 459,461
Provision for loan loss 37,500 25,000
----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 501,312 434,461
----------- -----------
OTHER INCOME
Service charges on deposit accounts 7,655 9,069
Sold Loan Fees 3,277 5,154
NSF/Overdraft Fees 59,567 36,774
Other service charges, commissions and fees 22,021 14,600
----------- -----------
92,520 65,597
----------- -----------
OTHER EXPENSE
Salaries and employee benefits 227,048 196,526
Occupancy Expense 37,082 34,158
Furniture and equipment 39,772 37,353
Disposal of Assets 0 0
Office Supplies 8,540 10,681
Data Processing 36,107 33,927
Other operating expense 106,017 90,322
----------- -----------
454,566 402,967
----------- -----------
INCOME BEFORE TAXES 139,266 97,091
INCOME TAX EXPENSE 50,153 33,010
----------- -----------
NET INCOME $ 89,113 $ 64,081
=========== ===========
PER SHARE
Average shares outstanding 616,338 616,338
Net income .14 .10
</TABLE>
See Accompanying Notes to Financial Statements
3
<PAGE>
PART I - FINANCIAL INFORMATION (CONTINUED)
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
FNB BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30
(UNAUDITED)
2000 1999
---- ----
<S> <C> <C>
INTEREST INCOME
Loans, including fees $ 2,327,389 $ 1,737,789
Investment securities, taxable 101,593 97,772
Federal funds sold 89,464 87,993
------------ -----------
Total Interest Income 2,518,446 1,923,554
------------ -----------
INTEREST EXPENSE
Time deposits $100,000 and over 139,951 131,812
Other deposits 758,597 533,386
Federal Funds Purchased 802 0
Advances from FHLB 62,095 0
Securities sold under agreement to repurchase 19,287 16,418
------------ -----------
Total Interest Expense 980,732 681,616
------------ -----------
NET INTEREST INCOME 1,537,714 1,241,938
Provision for loan loss 112,500 111,750
------------- -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 1,425,214 1,130,188
------------- -----------
OTHER INCOME
Service charges on deposit accounts 27,183 25,435
Sold Loan Fees 15,093 73,087
NSF/Overdraft Fees 150,102 101,476
Other service charges, commissions and fees 79,322 46,320
------------- -----------
271,700 246,318
------------- -----------
OTHER EXPENSE
Salaries and employee benefits 669,691 582,712
Occupancy Expense 108,380 99,347
Furniture and equipment 117,628 108,540
Disposal of Assets 0 45,894
Office Supplies 35,105 34,265
Data Processing 113,856 101,476
Other operating expense 321,322 269,708
------------- -----------
1,365,982 1,241,942
------------- -----------
INCOME BEFORE TAXES 330,932 134,564
INCOME TAX EXPENSE 118,619 45,730
------------- -----------
NET INCOME $ 212,313 $ 88,834
============= ===========
PER SHARE
Average shares outstanding 616,338 616,338
Net income .34 .14
</TABLE>
See Accompanying Notes to Financial Statements
4
<PAGE>
PART I - FINANCIAL INFORMATION (CONTINUED)
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
FNB BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30
(UNAUDITED)
2000 1999
---- ----
NET INCOME $ 89,113 $ 64,081
Other comprehensive income, net of tax 0 0
Total other comprehensive income 0 0
----------- -----------
Comprehensive income $ 89,113 $ 64,081
=========== ===========
See Accompanying Notes to Financial Statements
5
<PAGE>
PART I - FINANCIAL INFORMATION (CONTINUED)
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
FNB BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30
(UNAUDITED)
2000 1999
---- ----
NET INCOME $ 212,313 $ 88,834
Other comprehensive income, net of tax 0 0
Total other comprehensive income 0 0
----------- -----------
Comprehensive income $ 212,313 $ 88,834
=========== ===========
See Accompanying Notes to Financial Statements
6
<PAGE>
PART I - FINANCIAL INFORMATION (CONTINUED)
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
FNB BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD ENDED SEPTEMBER 30, 2000
(UNAUDITED)
Common Stock Retained
------------ Capital Earnings
Shares Amount Surplus (Deficit) Total
------ ------ ------ --------- -----
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1999 616,338 $ 6,163 $ 6,112,318 $ (110,659) $ 6,007,822
Net income 0 0 0 212,313 212,313
---------- --------- ------------ ------------- -----------
BALANCE, SEPTEMBER 30, 2000 616,338 $ 6,163 $ 6,112,318 $ 101,654 $ 6,220,135
========== ========== ============ ============= ===========
</TABLE>
See Accompanying Notes to Financial Statements
7
<PAGE>
PART I - FINANCIAL INFORMATION (CONTINUED)
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
FNB BANCSHARES, INC.
UNAUDITED STATEMENTS OF CASH FLOWS
FROM DECEMBER 31 TO SEPTEMBER 30
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 212,313 $ 88,834
Adjustments to reconcile net income to net cash provided by
operating activities
Provision for loan losses 112,500 111,750
Depreciation 131,664 130,922
Accretion and premium amortization ( 232) 489
Increase in interest receivable ( 56,085) (61,220)
Increase (decrease) in interest payable 16,467 (981)
(Increase) decrease in other assets 618,919 (24,799)
Increase (decrease) in other liabilities (9,490) (27,218)
------------ --------------
Net cash provided by operating activities 1,026,056 217,777
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase securities held to maturity (16,300) ( 1,912,602)
Maturity of securities held to maturity 0 1,350,000
Maturity of Time Deposits 0 500,000
Net increase in loans made to customers (6,010,222) (7,216,341)
Net increase in premises and equipment (292,843) (513,877)
------------ --------------
Net cash used by investing activities (6,319,365) (7,792,820)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits, interest bearing 2,918,124 5,375,123
transaction accounts and savings accounts
Net increase in time deposits 5,601,210 2,706,128
Increase in FHLB Advances 0
Net increase (decrease) in Repurchase Agreements
(536,016) (660,419)
------------ --------------
Net cash provided by financing activities 7,983,318 7,420,832
------------ --------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,690,009 (154,211)
------------ --------------
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,912,403 3,367,765
------------ --------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,602,412 $ 3,213,554
============ ==============
</TABLE>
See Accompanying Notes to Financial Statements
8
<PAGE>
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, 1999 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 1999 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
September 30, 2000 compared to December 31, 1999, and the results of operations
for the three months ended September 30, 2000 compared to the three months ended
September 30, 1999 as well as the nine months ended September 30, 2000 compared
to the nine months ended September 30, 1999. 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," "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.
9
<PAGE>
PART I - FINANCIAL INFORMATION (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION (CONTINUED)
RESULTS OF OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 30, 2000 COMPARED TO THE
QUARTER ENDED SEPTEMBER 30, 1999:
Net Interest Income
Net interest income for the three month period ended September 30, 2000 was
$538,812, compared to $459,461 for the three month period ended September 30,
1999. Net interest income for the nine month period ended September 30, 2000 was
$1,537,714, compared to $1,241,938 for the nine month period ended September 30,
1999. The interest rate spread was 3.83% at September 30, 2000 and 4.67% at
September 30, 1999. The increased income is primarily attributed to growth in
the loan portfolio, as the amount of total loans increased to $33.8 million at
September 30, 2000 as compared to $27.8 million at September 30, 1999. The
largest component of interest income was interest on loans, which increased to
$842,879 for the three months ended September 30, 2000 as compared to $647,949
for the three months ended September 30, 1999, and $2,327,389 for the nine
months ended September 30, 2000 as compared to $1,737,789 for the nine months
ended September 30, 1999. These increases were primarily attributable to growth
in the Bank's loan portfolio. Interest on investment securities increased to
$34,056 for the three months ended September 30, 2000 as compared to $33,792 for
the three months ended September 30, 1999, and to $101,593 for the nine months
ended September 30, 2000 as compared to $97,772 for the nine months ended
September 30, 1999. This increase is due primarily to growth in the investment
portfolio from $1,799,791 at December 31, 1998 to $2,349,558 at September 30,
2000. The increases in interest income were partially offset by increases in
interest expense to $394,740 for the three months ended September 30, 2000 as
compared to $249,125 for the three months ended September 30, 1999, and to
$980,732 for the nine months ended September 30, 2000 as compared to $681,616
for the nine months ended September 30, 1999.
Provision and Allowance for Loan Losses
The provision for loan losses is the charge to operating earnings that
management feels is necessary to maintain the allowance for possible loan losses
at an adequate level. For the three months ended September 30, 2000, the
provision charged to expense was $37,500 compared to $25,000 charged to expense
for the three months ended September 30, 1999. For the nine months ended
September 30, 2000, the provision charged to expense was $112,500 compared to
$111,750 charged to expense for the nine months ended September 30, 1999. The
loan loss reserve was $460,110 as of September 30, 2000, or 1.36% of gross loans
as compared to $429,049 as of December 31, 1999, or 1.54% 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 accurate. 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 September 30, 2000 was $92,520 as
compared to $65,597 for the three months ended September 30, 1999. Non-interest
income for the nine months ended September 30, 2000 was $271,700 as compared to
$246,318 for the nine months ended September 30, 1999. Of the amount for three
months ended September 30, 2000; $7,655 was a result of deposit account service
charges, and account maintenance fees; $59,567 was a result of NSF and overdraft
fees; $22,021 was other miscellaneous service charges, and $3,277 was due to
sold loan fees. Of the amount for nine months ended September 30, 2000; $27,183
was a result of deposit account service charges, and account maintenance fees;
$150,102 was a result of NSF and overdraft fees; $79,322 was other miscellaneous
service charges, and $15,093 was due to sold loan fees. Of the sold loan fees in
1999, $44,250 was due to the sale of one
10
<PAGE>
PART I - FINANCIAL INFORMATION (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION (CONTINUED)
large commercial loan. With the exception of the large commercial loan sale in
1999, the increase in the other fees is attributed to overall growth of the
deposit portfolio.
Non-Interest Expense
Non-Interest Expense for the three month period ended September 30, 2000 was
$454,566 as compared to $402,967 for the three month period ended September 30,
1999. Salaries and employee benefits comprise $227,048 and $196,526 respectively
of this amount. Depreciation of buildings, furniture and equipment accounted for
$44,216 and $45,010 for the three month periods ended September 30, 2000 and
September 30, 1999, respectively. The decrease in depreciation is due to a
fluctuating level of the depreciable asset base which is a result of additions
as well as the removal of some original bank equipment that has reached the end
of its depreciable life during the period. Office Supplies accounted for $8,540
and $10,681 for the three month periods ended September 30, 2000 and September
30, 1999, respectively. Data Processing accounted for $36,107 and $33,927 for
the three month periods ended September 30, 2000 and September 30, 1999,
respectively. The increases in payroll, office supplies and data processing
expenses are attributed to the growth in the number of Bank customers and
customer accounts.
Non-Interest Expense for the nine month period ended September 30, 2000 was
$1,365,982 as compared to $1,241,942 for the nine month period ended September
30, 1999. Salaries and employee benefits comprise $669,691 and $582,712
respectively of this amount. Depreciation of buildings, furniture and equipment
accounted for $131,664 and $130,922 for the nine month periods ended September
30, 2000 and September 30, 1999, respectively. The slight increase in
depreciation is due to a fluctuating level of the depreciable asset base which
is a result of additions as well as the removal of some original bank equipment
that has reached the end of its depreciable life during the period. Office
Supplies accounted for $35,105 and $34,265 for the nine month periods ended
September 30, 2000 and September 30, 1999, respectively. Data Processing
accounted for $113,856 and $101,476 for the nine month periods ended September
30, 2000 and September 30, 1999, respectively. The increases in payroll, office
supplies and data processing expenses are attributed to the growth in the number
of Bank customers and customer accounts. Other operating expenses in 1999
included a one time charge of $45,894 for asset disposal related to moving from
the old main office facility to the new facility in January 1999.
Income Taxes
The income tax provision for the nine months ended September 30, 2000 was
$118,619 as compared to $45,730 for the same period in 1999. The effective tax
rate was 35.8% at September 30, 2000 and 34.0% at September 30, 1999. The
effective tax rate was 36.0% for the quarter ended September 30, 2000 and 34.0%
September 30, 1999.
Assets and Liabilities
During the first nine months of 2000, total assets increased $8,202,608 or 23.3%
when compared to December 31, 1999. The primary growth in assets was in loans
with an increase of $5,928,783 or 21.3% since December 31, 1999. Federal funds
sold increased $2,930,000 or 733% since December 31, 1999. This increase is
attributed to an increase in deposits in relation to loans. Total liabilities
increased $7,990,295 or 27.4% when compared to December 31, 1999. Within the
deposit area, savings accounts, which include money market accounts, increased
24.7%, interest bearing transaction accounts increased 29.8%, non-interest
bearing transaction accounts increased 13.1%, and time deposits increased 39.5%.
However, this significant growth rate is a reflection of the fact that the Bank
is relatively young, 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 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 next 12 months.
11
<PAGE>
PART I - FINANCIAL INFORMATION (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION (CONTINUED)
<TABLE>
<CAPTION>
Loans
Balances within the major loan categories as of September 30, 2000 and December
31, 1999 are as follows:
September 30, December 31,
2000 1999
---- ----
<S> <C> <C>
Commercial and Industrial $ 6,416,190 $ 5,830,787
Real Estate - Construction 1,079,119 404,305
Real Estate - Other 19,930,039 15,971,529
Installment and consumer credit lines 6,333,593 5,623,537
------------- ------------
$ 33,758,941 $27,830,158
============= ============
Allowance for loan loss, December 31, 1999 $ 429,049
Provision 112,500
Recoveries 8,461
Charge-offs 89,900
Allowance for loan loss, September 30, 2000 $ 460,110
------------
Gross loans outstanding, December 31, 1999 $ 27,830,158
------------
Gross loans outstanding, September 30, 2000 $ 33,758,941
------------
Nonaccrual Loans, September 30, 2000 $274,294
Allowance for loan losses to loans outstanding, December 31, 1999 1.54%
-----
Allowance for loan losses to loans outstanding, September 30, 2000 1.36%
-----
</TABLE>
Deposits
Balances within the major deposit categories as of September 30, 2000 and
December 31, 1999 are as follows:
September 30, 2000 December 31, 1999
----------------- -----------------
Non-interest bearing demand deposits $ 5,162,344 $ 4,565,052
Interest bearing demand deposits 5,661,346 4,362,742
Savings deposits 5,158,331 4,136,103
Time deposit $100,000 and over 4,419,090 3,334,148
Other Time Deposits 15,353,187 10,836,919
----------- -----------
$ 35,754,298 $ 27,234,964
=========== ===========
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 91% at September 30, 2000
and 96% at December 31, 1999.
Capital Resources
Total shareholders' equity increased $212,313 to $6,220,135 at September 30,
2000. The increase is attributable to income for the period.
12
<PAGE>
PART I - FINANCIAL INFORMATION (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION (CONTINUED)
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 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 September 30,
2000 (in thousands):
Shareholders' equity $ 6,220
Less: intangibles 19
-----
Tier 1 capital $ 6,201
Plus: allowance for loan losses (1) 415
-----
Total Capital $ 6,616
Risk-Weighted assets $33,185
Risk based capital ratios
Tier 1 18.68
Total capital 19.93
Leverage ratio 14.37
(1) limited to 1.25% of risk-weighted assets
Management believes that capital should continue to be adequate for the next 12
months.
13
<PAGE>
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
There were no matters to be voted upon by the security holders during the third
quarter ended September 30, 2000.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORT ON FORM 8-K
(a) Exhibits - None.
(b) Reports on Form 8-K - No reports on Form 8-K were filed during the
quarter ended September 30, 2000.
14
<PAGE>
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: November 6, 2000 By: /s/ V. Stephen Moss
-----------------------------------
V. Stephen Moss
President and Chief Executive Officer
By: /s/ John W. Hobbs
----------------------------------
John W. Hobbs
Principal Accounting and Chief
Financial Officer
15
