FORM 10-Q--QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT of 1934
For the quarterly period ended March 31, 1998
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: 333-2524
FNB Corporation
(Exact name of registrant as specified in its charter)
Virginia 54-1791618
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
105 Arbor Drive, Christiansburg, Virginia 24068
(Address of principal executive offices) (Zip Code)
(540) 382-4951
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. x Yes No
3,384,015 shares outstanding as of March 31, 1998
<PAGE>
FNB CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Item 6. Exhibits and Reports on Form 8-K
Signatures
Index to Exhibits
<PAGE>
FNB CORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item l. Financial Statements
The financial statements filed as a part of Item 1 of Part I are as follows:
1. Consolidated Balance Sheets as of December 31, 1997 and March 31, 1998
(unaudited);
2. Unaudited Consolidated Statements of Income for the three-month periods
ended March 31, 1998 and 1997;
3. Unaudited Consolidated Statements of Comprehensive Income for the three-
month periods ended March 31, 1998 and 1997;
4. Unaudited Consolidated Statements of Cash Flows for the three-month
periods ended March 31, 1998 and 1997; and,
5. Unaudited Consolidated Statements of Changes in Stockholders' Equity for
the three-month periods ended March 31, 1998 and 1997.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
FNB Corporation and subsidiaries
March 31, 1998
In Thousands, Except Share and Per Share Data
(Unaudited)
<S> <C>
ASSETS
Cash and due from banks $ 14,546
Federal funds sold 8,820
Securities available-for-sale, at fair value 54,272
Securities held-to-maturity, at amortized cost
(market value $42,924) 41,815
Mortgage loans held for sale 3,184
Loans:
Commercial 66,830
Consumer 65,221
Real estate - commercial 61,221
Real estate - construction 12,843
Real estate - mortgage 93,700
Total loans 299,815
Less unearned income 7
Loans, net of unearned income 299,808
Less allowance for loan losses 4,399
Loans, net 295,409
Bank premises and equipment, net 12,668
Other real estate owned 88
Other assets 4,654
Total assets $ 435,456
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand deposits 34,325
Interest-bearing demand deposits 56,625
Savings deposits 47,894
Time deposits 175,497
Certificates of deposit of $100,000 and over 46,425
Total deposits 360,766
Federal funds purchased and securities sold under
agreements to repurchase 5,200
Other borrowed funds 22,478
Other liabilities 3,647
ESOP debt 1,975
Total liabilities 394,066
Stockholders' equity:
Common stock, $5.00 par value, Authorized 5,000,000
shares; issued and outstanding 3,384,015 shares 16,920
Surplus 11,881
Unearned ESOP shares (116,638 shares) (2,306)
Retained earnings 14,651
Accumulated other comprehensive income 244
Total stockholders' equity 41,390
Total liabilities and stockholders' equity $ 435,456
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
FNB Corporation and subsidiaries
December 31, 1997
In Thousands, Except Share and Per Share Data
<S> <C>
ASSETS
Cash and due from banks $ 14,406
Federal funds sold 3,500
Securities available-for-sale, at fair value 62,856
Securities held-to-maturity, at amortized cost
(market value $43,430) 42,420
Mortgage loans held for sale 1,159
Loans:
Commercial 64,247
Consumer 66,059
Real estate - commercial 56,404
Real estate - construction 8,657
Real estate - mortgage 95,703
Total loans 291,070
Less unearned income 12
Loans, net of unearned income 291,058
Less allowance for loan losses 4,291
Loans, net 286,767
Bank premises and equipment, net 12,518
Other real estate owned 98
Other assets 4,450
Total assets $ 428,174
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand deposits 35,279
Interest-bearing demand deposits 52,055
Savings deposits 47,668
Time deposits 174,119
Certificates of deposit of $100,000 and over 43,424
Total deposits 352,545
Securities sold under agreements to repurchase 5,460
Other borrowed funds 26,093
Other liabilities 2,962
ESOP debt 901
Total liabilities 387,961
Stockholders' equity:
Common stock, $5.00 par value. Authorized 5,000,000
shares; issued and outstanding 3,323,800 shares 16,619
Surplus 10,782
Unearned ESOP shares (77,811 shares) (1,208)
Retained earnings 13,793
Accumulated other comprehensive income 227
Total stockholders' equity 40,213
Total liabilities and stockholders' equity $ 428,174
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
FNB Corporation and subsidiaries
Three Months Ended March 31, 1998 and 1997
In Thousands, Except Share and Per Share Data
(Unaudited)
1998 1997
<S> <C> <C>
Interest income:
Interest and fees on loans $ 6,962 6,330
Interest on securities:
Taxable 895 829
Nontaxable 571 590
Interest on federal funds sold 155 26
Total interest income 8,583 7,775
Interest expense:
Interest on interest-bearing
demand deposits 368 316
Interest on savings deposits 341 376
Interest on time deposits 2,498 2,417
Interest on certificates of
deposit of $100,000 and over 736 504
Interest on federal funds purchased
and securities sold under
agreements to repurchase 52 59
Interest on other borrowed funds 327 196
Interest on ESOP debt 36 22
Total interest expense 4,358 3,890
Net interest income 4,225 3,885
Provision for loan losses 110 175
Net interest income after
provision for loan losses 4,115 3,710
Noninterest income:
Service charges on deposit accounts 265 240
Loan origination fees 70 36
Other service charges and fees 125 103
Other income 184 255
Securities gains (losses), net 25 (21)
Total noninterest income 669 613
Noninterest expense:
Salaries and employee benefits 1,642 1,548
Occupancy and equipment expense, net 509 385
Credit card expense 115 129
Supplies expense 124 86
FDIC assessment expense 11 10
Other expenses 570 554
Total noninterest expense 2,971 2,712
Income before income tax expense 1,813 1,611
Income tax expense 404 351
Net income $ 1,409 1,260
Net income per share (as restated) $ 0.43 0.39
Dividends declared per share
(as restated) $ 0.17 --
Average number of shares
outstanding (as restated) 3,265,307 3,236,178
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FNB Corporation and subsidiaries
Three Months Ended March 31, 1998 and 1997
In Thousands
(unaudited)
1998 1997
<S> <C> <C>
Net Income $ 1,409 1,260
Other comprehensive income, before tax:
Unrealized holding gains (losses)
arising during period on securities 51 (604)
Less: reclassification adjustment
for (gains) losses included in
net income (25) 21
Other comprehensive income (loss) before tax 26 (583)
Income tax effect of items of other
comprehensive income (9) 198
Other comprehensive income (loss), net of tax 17 (385)
Comprehensive Income $ 1,426 875
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
FNB Corporation and subsidiaries
Three Months Ended March 31, 1998 and 1997
In Thousands
(Unadited) Three Months Ended
March 31,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,409 1,260
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 110 175
Depreciation and amortization of bank
premises and equipment 268 184
ESOP compensation 302 302
Amortization of premiums and accretion
of discounts, net 36 8
(Gain) Loss on sale of securities, net (25) 21
Net loss on sale of fixed assets and
other real estate 4 1
Net (increase) decrease in mortgage
loans held for sale (2,025) 241
Increase in other assets (204) (238)
Increase (decrease) in other liabilities 685 (647)
Net cash provided by operating activities 560 1,307
Cash flows from investing activities:
Net (increase) decrease in federal funds sold (5,320) 2,500
Proceeds from sales of securities
available-for-sale -- 3,559
Proceeds from calls and maturities of
securities available-for-sale 13,417 3,659
Proceeds from calls and maturities of
securities held-to-maturity 790 555
Purchase of securities available-for-sale (4,815) (6,489)
Purchase of securities held-to-maturity -- (1,224)
Net (increase) decrease in loans (9,025) 3,618
Proceeds from sale of other real estate owned 10 33
Recoveries on loans previously charged off 72 53
Bank premises and equipment expenditures (418) (1,555)
Net cash provided by (used in) investing
activities (5,289) 4,709
Cash flows from financing activities:
Net increase (decrease) in deposits 8,221 (7,875)
Net increase (decrease) in federal funds
purchased and securities sold under agreements
to repurchase (260) 2,431
Net increase (decrease) in other borrowed funds (3,615) 1,173
Principal payments on ESOP debt (302) (302)
Dividends paid (551) --
Dividends on unallocated ESOP shares (24) --
Proceeds from sale of shares to ESOP 1,400 --
Net cash provided by (used in) financing
activities 4,869 (4,573)
Net increase in cash and due from banks 140 1,443
Cash and due from banks at beginning of period 14,406 10,277
Cash and due from banks at end of period $ 14,546 11,720
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FNB Corporation and subsidiaries
Three Months Ended March 31, 1998 and 1997
In Thousands
(Unaudited)
1998 1997
<S> <C> <C>
Balance, beginning of period $ 40,213 35,828
Net income for period 1,409 1,260
Cash dividends (551) --
ESOP shares allocated upon loan repayment 302 302
Change in accumulated other comprehensive income 17 (384)
Balance, end of period $ 41,390 37,006
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FNB Corporation and subsidiaries
March 31, 1998 and 1997
In Thousands, Except Share Data
(Unaudited)
(1) Summary of Significant Accounting Policies
The accompanying financial statements of FNB Corporation and subsidiaries are
unaudited, however, in the opinion of management, all adjustments necessary
for a fair presentation of the financial statements have been included. All
adjustments were of a normal recurring nature, except as otherwise disclosed
herein.
Material estimates that are particularly susceptible to significant changes in
the near-term relate to the determination of the allowance for loan losses and
the valuation of other real estate owned acquired in connection with
foreclosures or in satisfaction of loans. In connection with the
determination of the allowance for loan losses and the valuation of other real
estate owned, management obtains independent appraisals for significant
properties.
Management believes that the allowance for loan losses and the valuation of
other real estate owned are adequate. While management uses available
information to recognize loan losses and write-downs of other real estate
owned, future additions to the allowance and write-downs to other real estate
owned may be necessary based on changes in economic conditions. In addition,
various regulatory agencies, as an integral part of their examination process,
periodically review the Corporation's allowance for loan losses and valuation
of other real estate owned. Such agencies may require the Corporation to
recognize additions to the allowance for loan losses and additional write-
downs of other real estate owned based on their judgments of information
available to them at the time of their examination.
The following is a description of the more significant accounting and
reporting policies which conform to general practice within the banking
industry.
(a) Consolidation
The consolidated financial statements include the accounts of FNB
Corporation (the "Registrant" or the "holding company") and its
wholly-owned subsidiaries (collectively, the "Corporation"). The
primary subsidiary is First National Bank (the "Bank"). All
significant intercompany balances and transactions have been
eliminated.
(b) Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents
include those amounts in the balance sheet caption cash and due
from banks. Generally, cash and cash equivalents are considered
to have maturities of three months or less.
<PAGE>
(c) Investment Securities
Debt securities that the Corporation has the positive intent and
ability to hold to maturity are classified as held-to-maturity
securities and reported at amortized cost. Debt and equity
securities that are bought and held principally for the purpose of
selling them in the near term are classified as trading securities
and reported at fair value, with unrealized gains and losses
included in earnings.
The Corporation had no trading securities at December 31, 1997, or
March 31, 1998. Debt and equity securities not classified as
either held-to-maturity securities or trading securities are
classified as available-for-sale securities and reported at fair
value, with unrealized gains and losses excluded from earnings and
reported as a separate component of stockholders' equity.
Amortization of premiums and accretion of discounts are computed
on the level yield method. Gains and losses on sales of
investment securities are computed on the basis of specific
identification of the adjusted cost of each security upon
disposition.
(d) Loans
Loans are stated at the amount of funds disbursed plus the
applicable amount, if any, of unearned interest and deferred fees
and costs less payments received. Interest on commercial and real
estate mortgage loans is accrued based on the average loans
outstanding times the applicable interest rates. Interest on
installment loans is recognized on methods which approximate the
level yield method.
Loan origination and commitment fees and certain costs are being
deferred, and the net amount is amortized as an adjustment of the
related loan's yield over the contractual life of the related
loans.
Interest related to nonaccrual loans is recognized on the cash
basis. Loans are generally placed on nonaccrual status when the
collection of principal or interest is 90 days or more past due,
unless the obligation is both well secured and in the process of
collection.
(e) Bank Premises and Equipment, Net
Bank premises and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation and amortization are
charged to expense over the estimated useful lives of the assets,
principally on the straight-line method. Costs of maintenance and
repairs are charged to expense as incurred and improvements are
capitalized.
<PAGE>
(f) Other Real Estate Owned
Other real estate owned represents properties acquired through
foreclosure or deed taken in lieu of foreclosure. At the time of
acquisition, these properties are recorded at the lower of the
recorded investment in the loan or fair value minus estimated
costs to sell with any write-down being charged to the allowance
for loan losses. Expenses incurred in connection with operating
these properties and subsequent write-downs, if any, are charged
to expense. Gains and losses on the sales of these properties are
credited or charged to income in the year of the sale.
(g) Income Taxes
Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date.
(h) Net Income Per Share
Net income per share computations are based on the weighted
average number of shares outstanding during each year. The
weighted average shares outstanding do not include unearned shares
held by the Employee Stock Ownership Plan (ESOP). The shares held
by the ESOP are not considered outstanding for net income per
share calculations until the shares are released.
During the second quarter of 1997 the Corporation declared a stock
split effected in the form of a 100% stock dividend. The split
occurred in June 1997. As a result, the total number of shares
outstanding doubled. Par value per share did not change.
Earnings per share, dividends per share and weighted average
shares for periods prior to the split have been restated to
reflect the change in shares outstanding as though the split had
occurred at the beginning of the earliest period presented.
(I) Trust Assets
Assets held by the Corporation's trust department in a fiduciary
or agency capacity are not included in the consolidated financial
statements as they are not assets of the Corporation.
(2) Restrictions on Cash
Federal reserve regulations require the Corporation to maintain certain
average balances as cash reserves. The reserve requirements
approximated $4,527 and $4,285 at March 31, 1998 and December 31, 1997,
respectively.
<PAGE>
(3) Securities Available-for-Sale
The following sets forth the composition of securities available-for-
sale, which are reported at fair value, at March 31, 1998 and December
31, 1997:
<TABLE>
<CAPTION
Gross Gross Approx.
Amortized Unrealized Unrealized Fair
March 31, 1998 Costs Gains Losses Values
<S> <C> <C> <C> <C>
U.S. Treasury $ 7,097 67 -- 7,164
U.S. Government agencies
and corporations 39,073 251 (92) 39,232
States and political
subdivisions 3,652 117 (1) 3,768
Other securities 4,081 27 -- 4,108
Totals $ 53,903 462 (93) 54,272
</TABLE>
<TABLE>
<CAPTION>
Gross Gross Approx.
Amortized Unrealized Unrealized Fair
December 31, 1997 Costs Gains Losses Values
<S> <C> <C> <C> <C>
U.S. Treasury $ 8,109 53 -- 8,162
U.S. Government agencies
and corporations 46,864 272 (116) 47,020
States and political
subdivisions 2,962 108 -- 3,070
Other securities 4,576 28 -- 4,604
Totals $ 62,511 461 (116) 62,856
</TABLE>
The amortized costs and approximate fair values of securities available-
for-sale by contractual maturity are shown below. Expected maturities
may differ from contractual maturities because borrowers may have the
right to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
Approx.
Amortized Fair
March 31, 1998 Costs Values
<S> <C> <C>
Due in one year or less $ 6,526 6,508
Due after one year through five years 12,237 12,360
Due after five years through ten years 31,685 31,945
Due after ten years 3,455 3,459
Totals $ 53,903 54,272
</TABLE>
Gross gains of $29 and $12 and gross losses of $5 and $33 were realized
on sales and calls of securities available-for-sale through March 31,
1998, and 1997, respectively.
The carrying value of securities available-for-sale pledged to secure
public and trust deposits and securities sold under agreements to
repurchase, and for other purposes as required or permitted by law, was
$14,871 at March 31, 1998 and $16,371 at December 31, 1997.
<PAGE>
(4) Securities Held-To-Maturity
The amortized costs, gross unrealized gains and losses, and approximate
fair values of securities held-to-maturity at March 31, 1998 and
December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Gross Gross Approx.
Amortized Unrealized Unrealized Fair
March 31, 1998 Costs Gains Losses Values
<S> <C> <C> <C> <C>
States and political
subdivisions $ 41,815 1,118 (9) 42,924
Totals $ 41,815 1,118 (9) 42,924
</TABLE>
<TABLE>
<CAPTION>
Gross Gross Approx.
Amortized Unrealized Unrealized Fair
December 31, 1997 Costs Gains Losses Values
<S> <C> <C> <C> <C>
States and political
subdivisions $ 42,360 1,029 (19) 43,370
Other securities 60 -- -- 60
Totals $ 42,420 1,029 (19) 43,430
</TABLE>
The amortized costs and approximate fair values of securities held-to-
maturity, by contractual maturity, are shown below. Expected maturities
may differ from contractual maturities because borrowers may have the
right to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
Approx.
Amortized Fair
March 31, 1998 Costs Values
<S> <C> <C>
Due in one year or less $ 2,508 2,517
Due after one year through five years 20,205 20,722
Due after five years through ten years 18,822 19,404
Due after ten years 280 281
Totals $ 41,815 42,924
</TABLE>
Realized gains and losses on securities held-to-maturity were not
material in 1998 and 1997.
The carrying value of securities held-to-maturity pledged to secure
public and trust deposits and securities sold under agreements to
repurchase, and for other purposes as required or permitted by law, was
$16,377 at March 31, 1998 and $16,381 at December 31, 1997.
(5) Loans
At March 31, 1998 and December 31, 1997, there were direct loans to
executive officers and directors of $3,787 and $5,595, respectively. In
addition, there were loans of $7,539 and $5,957 at March 31, 1998 and
December 31, 1997, respectively, which directors endorsed or had been
made to companies in which directors had an equity interest.
At March 31, 1998 and December 31, 1997, the Corporation had sold
without recourse, participations in various loans to financial
institutions and other customers of the Corporation in the amount of
$28,653 and $30,000, respectively.
<PAGE>
(6) Allowance for Loan Losses and Impaired Loans
A loan is considered impaired when, based on management's judgment, the
Corporation will probably not be able to collect all amounts due
according to the contractual terms of the loan. In making such
assessment, management considers the individual strength of borrowers,
the strength of particular industries, the payment history of individual
loans, the value and marketability of collateral and general economic
conditions. The Corporation's methodology for evaluating the
collectibility of a loan after it is deemed to be impaired does not
differ from the methodology used for nonimpaired loans.
A summary of the changes in the allowance for loan losses (including
allowances for impaired loans) follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
<S> <C> <C>
Balance at beginning of period $ 4,291 4,179
Provisions for loan losses 110 175
Loan recoveries 72 54
Loan charge-offs (74) (99)
Balance at end of period $ 4,399 4,309
</TABLE>
Nonperforming assets consist of the following:
<TABLE>
<CAPTION>
March 31 December 31,
1998 l997
<S> <C> <C>
Nonaccrual loans $ 795 893
Other real estate owned 88 98
Total nonperforming assets $ 883 991
</TABLE>
The following tables show the pro forma interest that would have been
earned on nonaccrual loans if they had been current in accordance with
their original terms and the recorded interest included in income on
these investments:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
<S> <C> <C>
Proforma interest - nonaccrual loans $ 20 24
Recorded interest - nonaccrual loans -- --
There were no material commitments to lend additional funds to customers
whose loans were classified as nonperforming at March 31, 1998.
<PAGE>
(7) Bank Premises and Equipment, Net
Bank premises and equipment are stated at cost less accumulated
depreciation and amortization as follows:
</TABLE>
<TABLE>
<CAPTION>
March 31 December 31,
1998 1997
<S> <C> <C>
Land $ 1,515 1,359
Buildings 9,848 9,820
Furniture and equipment 6,679 6,461
Leasehold improvements 384 383
18,426 18,023
Less accumulated depreciation
and amortization 5,758 5,505
Totals $ 12,668 12,518
</TABLE>
(8) Other Borrowed Funds
Other borrowed funds include advances from the Federal Home Loan Bank of
Atlanta totaling $21,549 and $22,600 on March 31, 1998 and December 31,
1997, respectively. The interest rates on the advances range from 5.38
to 6.65 percent and have maturity dates through June 5, 2010. The
advances are collateralized under a blanket floating lien agreement
whereby the Corporation gives a blanket pledge of residential first
mortgage loans for 1-4 units.
(9) Employee Benefit Plans
The Employee Stock Ownership Plan (ESOP) invests primarily in the
Registrant's stock. The ESOP covers substantially all employees. The
purchase of some of the shares has been financed by borrowings by the
ESOP. In February 1998, the Corporation sold 60,215 shares to the ESOP
for $23.25 per share. The ESOP borrowed $1,400 from another financial
institution to finance the purchase. The ESOP's obligation to repay
these borrowings is guaranteed by the Corporation; therefore, the unpaid
balance of the borrowings has been reflected in the accompanying balance
sheet as a liability and the amount representing unearned employee
benefits has been recorded as a reduction in stockholders' equity.
These amounts will be reduced as the ESOP debt is curtailed. The ESOP
is repaying the loan (plus interest) using employer contributions and
dividends received on the shares of common stock held by the ESOP.
In 1997 the Corporation instituted a 401(k) plan that covers
substantially all employees who work at least 1,000 hours per year.
Participants have the option to have up to 12% of their salary withheld
on a pre-tax basis to be contributed to the plan. The Corporation
matches 100% of the first 3% of the participants' contributions.
Participants may choose among several investment options comprised
primarily of mutual funds, but there is no stock of the Corporation in
the plan. Matching contributions totaled $27 for the three-month period
ended March 31, 1998.
(10) Income Taxes
The primary reason for the difference between the effective tax rates
and the statutory tax rate is a substantial amount of tax-exempt
interest income.
<PAGE>
(11) Restrictions on Payment of Dividends
Under applicable federal laws, the Comptroller of the Currency
restricts, without prior approval, the total dividend payments of the
Corporation's Bank subsidiary in any calendar year to the net profits of
that year, as defined, combined with the retained net profits for the
two preceding years. In effect, this limits total 1998 dividends of the
bank (unless prior regulatory approval is obtained) to $7,096 plus year-
to-date 1998 net profits as of the declaration date.
(12) Supplemental Cash Flow Information
The Corporation paid $4,355 and $3,674 for interest and it paid $325 and
$6 for income taxes for the three-month periods ended March 31, 1998 and
1997, respectively.
(13) Commitments and Contingencies
The Corporation is involved from time to time in litigation arising in
the normal course of business. Management believes that any resulting
settlements and disposition of these matters will not materially affect
consolidated results of operations or financial position.
(14) Financial Instruments with Off-Balance-Sheet Risk
The Corporation is a party to financial instruments with off-balance-
sheet risk in the normal course of business to meet the financing needs
of its customers. These financial instruments include commitments to
extend credit and standby letters of credit. Those instruments involve,
to varying degrees, elements of credit risk more than the amount
recognized in the balance sheet. The contract amounts of those
instruments reflect the extent of involvement the Corporation has in
particular classes of financial instruments.
The Corporation's exposure to credit loss in case of nonperformance by
the other party to the financial instrument for commitments to extend
credit and standby letters of credit is represented by the contractual
amount of those instruments. The Corporation uses the same credit
policies in making commitments and conditional obligations as it does
for on-balance-sheet instruments.
Except for home equity lines totaling $19,052 at March 31, 1998, and
$14,526 at December 31, 1997, the Corporation may not require collateral
or other security to support the following financial instruments with
credit risk:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
Contract Amount
<S> <C> <C>
Financial instruments whose contract amounts
represent credit risk:
Commitments to extend credit $ 69,179 63,194
Standby letters of credit and
financial guarantees written 4,118 4,300
</TABLE>
<PAGE>
Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since many commitments are
expected to expire without being drawn upon, the total commitment
amounts do not necessarily represent future cash requirements. The
Corporation evaluates each customer's credit worthiness on a case-by-
case basis. The amount of collateral obtained, if deemed necessary upon
extension of credit, is based on management's credit evaluation of the
customer. Collateral held varies but may include securities, accounts
receivable, inventory, property, plant and equipment, and income-
producing commercial properties.
Standby letters of credit are conditional commitments issued to
guarantee the performance of a customer to a third party. Those
guarantees are primarily issued to support public and private borrowing
arrangements, including commercial paper, bond financing, and similar
transactions. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loan facilities to
customers. Collateral held varies but may include securities, accounts
receivable, inventory, property, plant and equipment and income-
producing commercial properties.
Commitments to extend credit, standby letters of credit and financial
guarantees written are not reflected in the financial statements except
to the extent of fees collected, which are generally reflected in
income. The fulfillment of these commitments would normally result in
the recording of a loan at the time the funds are disbursed.
(15) Concentrations of Credit Risk
The Corporation does a general banking business, serving the commercial,
agricultural and personal banking needs of its customers in its trade
territory, commonly referred to as the New River Valley, which consists
of Montgomery County, Virginia and portions of adjacent counties.
Operating results are closely correlated with the economic trends within
this area which are, in turn, influenced by the area's three largest
employers--Virginia Polytechnic Institute and State University, Radford
University and the Radford Arsenal. Other industries include a wide
variety of manufacturing concerns and agriculture-related enterprises.
The ultimate collectibility of the loan portfolios and the recovery of
the carrying amounts of repossessed property are susceptible to changes
in the market conditions of this area. The commercial portfolio is
diversified with no significant concentrations of credit within a single
industry. The consumer loan portfolio includes approximately $47
million of the loans to individuals for household, family and other
personal expenditures. The real estate-mortgage portfolio consists
primarily of loans secured by l-4 family residential properties.
<PAGE>
(16) Recent Accounting Developments
During the first quarter of 1998 the Corporation adopted Statement of
Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive
Income." The Statement requires enterprises to display "comprehensive
income" and its components in a financial statement that is displayed
with the same prominence as other financial statements in a full set of
financial statements. "Comprehensive income" is comprised of net income
as reported in the Statement of Income as well as "other comprehensive
income," which is comprised of certain items and events that have been
reflected only in stockholders' equity without impacting the Statement
of Income. Currently the only such item included in FNB Corporation's
financial statements that is required to be reflected in other
comprehensive income is the unrealized gains and losses on securities
classified as available-for-sale under SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities."
The adoption of SFAS No. 130 resulted in the presentation of the
accompanying Consolidated Statements of Comprehensive Income for the
quarters ended March 31, 1998 and March 31, 1997. Amounts reported in
the accompanying Consolidated Statements of Income, Balance Sheets,
Statements of Cash Flows and Statements of Changes in Stockholders'
Equity as of and for the quarters ended March 31, 1998 and 1997 were not
impacted by the adoption of SFAS No. 130.
The changes in the accumulated balances of other comprehensive income
for the quarters ended March 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
Quarter Ended March 31,
1998 1997
<S> <C> <C>
Beginning balance of unrealized gains (losses)
on available-for-sale securities, net of tax $ 227 (38)
Change during the quarter 17 (385)
Ending balance of unrealized gains (losses)
on available-for-sale securities, net of tax $ 244 (423)
</TABLE>
The Financial Accounting Standards Board has also issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share," which
supersedes existing standards for calculating and disclosing earnings
per share (EPS). The new standard requires the disclosure of Basic EPS
and, where potential dilution exists, Diluted EPS. Basic EPS is
calculated using only the actual weighted average number of common
shares outstanding and the income available to common stockholders.
Diluted EPS adjusts the income and number of shares to reflect the
potential effects of stock options, warrants, convertible debt, and
other potentially dilutive securities. The Statement was adopted in the
fourth quarter of 1997. It did not have an impact on earnings per share
for any periods presented. Based on the current capital structure,
management does not expect SFAS No. 128 to materially impact earnings
per share in the future because there are currently no potentially
dilutive securities.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of factors that significantly affected the
financial condition and results of operations of FNB Corporation and
subsidiaries. This discussion should be read in connection with the
consolidated financial statements, statistical disclosures and other financial
information presented herein. All amounts presented are denoted in thousands
except per share and percentage data.
1998 Compared to 1997
Net Interest Income
The principal source of earnings for the Corporation is net interest income.
Net interest income is the net amount of interest earned on interest bearing
assets, less the amount of interest paid on deposits and other interest-
bearing liabilities. Net interest income before provision for loan losses was
$4,225 for the three months ended March 31, 1998, an increase of $340 from the
same period in 1997. The increase in net interest income in the first three
months was primarily the result of growth in average earning assets, partially
offset by growth in interest bearing liabilities. Average earning asset
growth totaled $36,798 (9.93%) for the first three months of 1998 over the
respective prior year period. The largest component of the increase in
earning assets was average loans, reflecting an increase of $23,990 (8.87%)
for the first three months of 1998. Growth in the loan portfolio was
concentrated primarily in real estate loans and commercial loans reflecting
increases of $10,874 and $8,821, respectively, for the first three months of
1998. Average securities increased $3,656 (3.73%) and average Federal Funds
sold increased $9,152 (437.06%), for the first three months of 1998.
Securities and Federal Funds sold were used as alternative investments for
funds in excess of loan demand.
Average interest-bearing liabilities increased $29,266 (9.13%) for the first
three months of 1998 over the respective prior year period. The largest
component of interest-bearing liabilities was average deposits, reflecting an
increase of $20,461 for the first three months of 1998. Growth in the deposit
portfolio was concentrated in certificates of deposit of $100 and over with an
increase of $15,453, in time deposits with an increase of $6,679 and in demand
deposits with an increase of $3,062 for the first three months of 1998.
Successful deposit promotions and more aggressive bidding for deposits
accounted for the increase. Average other borrowed funds increased $8,959
for the first three months of 1998. The primary reason for the change was an
increase in advances from the Federal Home Loan Bank of Atlanta, as the
Corporation increasingly utilized this source of funds.
Net interest yield decreased to 4.48% for the first three months of 1998 from
4.58% for the comparable prior year period. The yield on average earning
assets decreased 2 basis points, to 8.76% from 8.78% for the first three
months of 1998 from the comparable prior year period. The cost of interest-
bearing liabilities increased 13 basis points, to 4.99% from 4.86% for the
first three months of 1998. Overall, 92.7% of the net interest income
increase, for the first three months of 1998 was attributable to changes in
the volume of net interest-earning assets and interest-bearing liabilities.
The remaining portion of the change in net interest income for the first three
months of 1998 was due to a change in average rates.
<PAGE>
Provision for Loan Losses
The provision for loan losses was $110 and $175, respectively, for the first
three months ended March 31, 1998, and 1997. Net charge-offs amounted to $2
and $46, respectively, for the first three months ended March 31, 1998 and
1997. The allowance for loan losses was $4,399, 1.47% of outstanding loans,
at March 31, 1998, and $4,291, 1.47% of outstanding loans, at December 31,
1997. The decrease in net charge-offs in the first three months of 1998, was
due to an increase in recoveries of loans previously charged off. Although
the provision for loan losses decreased, the allowance for loan losses
increased because the 1998 provision exceeded net charge offs. Management
believes the allowance for loan losses as a percentage of outstanding loans
remains at a prudent level.
Noninterest Income
Noninterest income, including service charges on deposit accounts, loan
origination fees, other service charges, other income and net securities gains
(losses), was $669 and $613, respectively, for the first three months ended
March 31, 1998, and 1997. The increase in noninterest income resulted
primarily from an increase in loan origination fees, net gains on the sale of
securities, trust fees, and automated teller machine usage fees. These
increases were partially offset by reductions in other areas, most notably in
fees on loans sold.
Noninterest Expense
Noninterest expense, consisting of salaries and employee benefits, occupancy
costs, credit cards, supplies, FDIC assessment and other expenses was $2,971
and $2,712, respectively, for the three months ended March 31, 1998 and 1997.
The net increase in noninterest expense resulted from increases in several
categories, primarily personnel costs and occupancy and equipment expense.
Personnel costs increased primarily as the result of merit increases,
contributions to a new 401-K plan and additional personnel. The increases in
occupancy and equipment expense resulted from an increase in depreciation
expense for buildings and furniture and fixtures, which was related to the new
corporate office facility.
Income Taxes
Income tax expense as a percentage of pre-tax income was 22.3% and 21.8%,
respectively, for the three months ended March 31, 1998 and 1997.
The increase in the rate was due to a small decrease in nontaxable investment
securities.
Balance Sheet
Total assets of the Corporation at March 31, 1998, were $435,456, compared to
$428,174 at December 31, 1997. Total loans were $299,815 at March 31, 1998,
an increase of $8,745 from December 31, 1997. Loan growth was concentrated in
the commercial, real estate-commercial and construction portfolios and
amounted to $11,586. The consumer and real estate-mortgage portfolios
experienced decreases amounting to $2,841. The decline in the real estate-
mortgage portfolio resulted from an increase in the refinancing of home
mortgage loans and their subsequent sale on the secondary market. The
increase in bank premises and equipment of $150 resulted primarily from an
increase in new equipment. Federal Funds sold increased $5,320 and was funded
primarily by sales and maturities of securities which decreased $9,189.
<PAGE>
Total deposits at March 31, 1998, were $360,766, an increase of $8,221 from
December 31, 1997. Time deposits increased $1,378, interest-bearing demand
deposits increased $4,570, and certificates of deposit of $100 and over
increased $3,001 since year end. These increases were partially offset by a
decrease of $954 in noninterest-bearing demand deposits since year end 1997.
Depositors continue to shift funds among the various types of deposit
instruments seeking the most advantageous return while maintaining an
acceptable level of liquidity. Competition for deposits among local financial
institutions continues to be strong.
Other borrowed funds at March 31, 1998, were $22,478, a decrease of $3,615
from December 31, 1997. Other borrowed funds is composed primarily of
advances from the Federal Home Loan Bank of Atlanta and is used to provide
partial funding for earning asset growth.
The Employee Stock Ownership Plan (ESOP) Debt at March 31, 1998 was $1,975, an
increase of $1,074 from December 31, 1997. The increase was the net result of
the issuance of $1,400 in new ESOP debt and a first quarter principal
curtailment. The new debt financed the purchase by the ESOP of $1,400 of
newly issued stock of the Corporation.
Stockholders' Equity
Stockholders' equity was $41,390 at March 31, 1998, compared to $40,213 at
December 31, 1997. This increase of $1,177 was the net result of earnings
retention, an increase of $17 in net unrealized gains (net of tax) on
securities available-for-sale, a decrease of $302 in unearned ESOP shares
resulting from principal repayments on ESOP debt, and dividends paid to
shareholders.
All financial institutions are required to maintain minimum levels of
regulatory capital. The Federal Reserve and the Office of Comptroller of the
Currency (OCC) have established substantially similar risk-based and leveraged
capital standards for financial institutions they regulate. Under the risk-
based capital requirements of these regulatory agencies, the Corporation is
required to maintain a minimum ratio of total capital to risk-weighted assets
of at least 8%. At least half of the total capital is required to be "Tier 1
capital," which consists principally of common and certain qualifying
preferred shareholders' equity, less certain intangibles and other
adjustments. The remainder, "Tier 2 capital," consists of a limited amount of
subordinated and other qualifying debt and a limited amount of the general
loan loss reserve.
In addition, the federal regulatory agencies have established a minimum
leveraged capital ratio (Tier 1 capital to tangible assets). These guidelines
provide for a minimum leveraged capital ratio of 3% for banks and their
respective holding companies that meet certain specified criteria, including
that they have the highest regulatory examination rating and are not
contemplating significant growth or expansion. All other institutions are
expected to maintain a leverage ratio of at least 100 to 200 basis points
above that minimum. The guidelines also provide that banking organizations
experiencing internal growth or making acquisitions will be expected to
maintain strong capital positions substantially above the minimum supervisory
levels, without significant reliance on intangible assets.
<PAGE>
At March 31, 1998, the Bank's Tier 1 ratio, total capital ratio, and leverage
ratio, exceeded the minimum ratios required by the regulations.
Past Due Loans and Nonperforming Assets
Loans past due 90 days and over at March 31, 1998, totaled $211 compared to
$196 at December 31, 1997. In addition, nonaccrual loans and other real
estate owned totaled $883 at March 31, 1998, compared to $991 at December 31,
1997. The New River Valley economy continues to improve, and such improvement
has been reflected in a declining trend of nonperforming assets in recent
years.
Liquidity
Liquidity is the ability to provide sufficient cash flow to meet financial
commitments and to fund additional loan demand or withdrawal of existing
deposits. Liquidity remains sufficient, as assets are maintained on a short-
term basis to meet the liquidity demands anticipated by management. Funding
sources primarily include customer-based core deposits and cash generated by
operations. Another source of liquidity is additional borrowings from the
Federal Home Loan bank of Atlanta; in excess of $10,000 of the Corporation's
borrowing capacity under an existing agreement with the FHLB remains unused as
of March 31, 1998, based on the level of qualifying portfolio mortgage loans
available for securitization. Secondary sources of liquidity are available
should the need arise, including approximately $35,000 in unused Federal Funds
lines of credit and the ability to liquidate assets held for sale, especially
investment securities.
The only significant source of cash for the holding company is transfers from
its bank subsidiary in the form of dividends, loans, or advances. The most
restrictive regulatory limitation placed on the amount of funds that may be
transferred from the Bank to the holding company is that placed on dividends.
Specifically, the maximum amount of dividends that may be paid by the Bank in
any calendar year without prior regulatory approval is the net profits of that
year, as defined, combined with the retained net profits for the two preceding
years. In effect, this limits total 1998 dividends of the bank (unless prior
regulatory approval is obtained) to $7,096 plus year-to-date 1998 net profits
as of the declaration date. This limitation is not expected to have any
material impact on the liquidity of the holding company in 1998. During the
first three months of 1998 the bank paid $665 in dividends to the holding
company.
Recent Developments
During the first quarter of 1998 the Corporation adopted Statement of
Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive
Income." The Statement requires enterprises to display "comprehensive income"
and its components in a financial statement that is displayed with the same
prominence as other financial statements in a full set of financial
statements. "Comprehensive income" is comprised of net income as reported in
the Statement of Income as well as "other comprehensive income," which is
comprised of certain items and events that have been reflected only in
stockholders' equity without impacting the Statement of Income. Currently the
only such item included in FNB Corporation's financial statements that is
required to be reflected in other comprehensive income is the unrealized gains
and losses on securities classified as available-for-sale under SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities."
The adoption of SFAS No. 130 resulted in the presentation of the accompanying
Consolidated Statements of Comprehensive Income for the quarters ended March
31, 1998 and March 31, 1997. Amounts reported in the accompanying
Consolidated Statements of Income, Balance Sheets, Statements of Cash Flows
and Statements of Changes in Stockholders' Equity as of and for the quarters
ended March 31, 1998 and 1997 were not impacted by the adoption of SFAS No.
130.
Other Matters
The "Year 2000 Issue" results from the inability of most computers to process
year-date data accurately beyond the year 1999 unless programmed to do so.
The Corporation has undertaken substantial measures to identify hardware and
software in its own systems that are not year-2000 compliant, and some
replacements have been effected. Some systems, however, are still not year-
2000 compliant, and management intends and expects to continue its efforts to
achieve full year-2000 compliance in all of its significant systems to avoid
any systems failures or malfunctions. Because a large portion of the
Corporation's software and hardware has been purchased relatively recently,
and because the software for most of the Corporation's major systems is
maintained and updated periodically by outside vendors, management does not
anticipate the year-2000 compliance process to require expenditures that would
be material to the financial statements. These costs are being expensed as
incurred in accordance with generally accepted accounting principles.
Part II OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
In February 1998, the Registrant sold 60,215 shares of $5 par
value common stock to the FNB Corporation Employee Stock Ownership
Plan (ESOP). The total proceeds from the sale were $1,400,000, or
$23.25 per share. The ESOP financed the acquisition of the stock
by borrowing the full amount of the purchase price from an
independent financial institution. The ESOP's obligation to repay
the new borrowing is secured by the stock purchased and guaranteed
by the Registrant. This sale of stock was not registered under
the Securities Act of 1933 (the "Act") because it was exempt from
registration under Section 4(6) of the Act. That section exempts
from registration transactions involving no more than $5 million
to one or more accredited investors (as that term is defined by
Section 2(a) of the Act), as long as there is no advertising or
public solicitation in connection with the transaction. The sale
referred to above meets these criteria for exemption.
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits:
See index to exhibits
(B) Reports on Form 8-K:
None
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FNB Corporation
Date May 13, 1998 By: s/Samuel H. Tollison
Samuel H. Tollison
President & CEO
Date May 13, 1998 By: s/Perry D. Taylor
Perry D. Taylor
Chief Financial Officer
<PAGE>
INDEX TO EXHIBITS
Exhibit #
(3)(I) Articles of Incorporation
Registrant's Articles of Incorporation, filed with the
Commission as exhibit 3.1 to the Annual Report on Form 10-K
for the year ended December 31, 1996, is incorporated herein
by reference.
(3)(ii) Bylaws
Registrant's Bylaws, filed with the Commission as exhibit
3.2 to the Annual Report on Form 10-K for the year ended
December 31, 1997, is incorporated herein by reference.
(10) Material Contracts
(10)A Employment agreement dated September 11, 1997 between Samuel H.
Tollison, First National Bank, and Registrant, filed with the
Commission as Exhibit (10)A on Form 10-Q for the quarter ended
September 30, 1997, is incorporated herein by reference.
(10)B Employment agreement dated September 11, 1997 between Julian D.
Hardy, Jr., First National Bank, and Registrant, filed with the
Commission as Exhibit (10)B on Form 10-Q for the quarter ended
September 30, 1997, is incorporated herein by reference.
(10)C Change in control agreements with seven senior officers of First
National Bank. All agreements have identical terms and, as such,
only a sample copy of the agreements was filed with the Commission
as Exhibit (10)C on Form 10-Q for the quarter ended September 30,
1997, and is incorporated herein by reference. The officers
covered by the agreements are as follows:
(1) Darlene S. Lancaster, Senior Vice President, Manager,
Mortgage Loan Department, dated August 25, 1997
(2) R. Bruce Munro, Senior Vice President, Chief Credit
Administration Officer, dated August 25, 1997
(3) Woody B. Nester, Senior Vice President, Cashier, dated
August 25, 1997
(4) Fred L. Newhouse, Jr., Senior Vice President, Branch
Administrator, dated August 25, 1997
(5) Peter A. Seitz, Senior Vice President, General Counsel,
dated August 25, 1997
(6) Perry D. Taylor, Senior Vice President, Chief Financial
Officer, dated August 25, 1997
(7) Litz H. Van Dyke, Senior Vice President, Manager, Commercial
Banking Department, dated August 25, 1997
(27) Financial Data Schedule
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 14,546
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 8,820
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 54,272
<INVESTMENTS-CARRYING> 41,815
<INVESTMENTS-MARKET> 42,924
<LOANS> 299,815
<ALLOWANCE> 4,399
<TOTAL-ASSETS> 435,456
<DEPOSITS> 360,766
<SHORT-TERM> 6,129
<LIABILITIES-OTHER> 3,647
<LONG-TERM> 23,524
0
0
<COMMON> 16,920
<OTHER-SE> 24,470
<TOTAL-LIABILITIES-AND-EQUITY> 435,456
<INTEREST-LOAN> 6,962
<INTEREST-INVEST> 1,466
<INTEREST-OTHER> 155
<INTEREST-TOTAL> 8,583
<INTEREST-DEPOSIT> 3,943
<INTEREST-EXPENSE> 4,358
<INTEREST-INCOME-NET> 4,225
<LOAN-LOSSES> 110
<SECURITIES-GAINS> 25
<EXPENSE-OTHER> 2,971
<INCOME-PRETAX> 1,813
<INCOME-PRE-EXTRAORDINARY> 1,813
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,409
<EPS-PRIMARY> 0.43
<EPS-DILUTED> 0.43
<YIELD-ACTUAL> 4.48
<LOANS-NON> 795
<LOANS-PAST> 211
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,291
<CHARGE-OFFS> 74
<RECOVERIES> 72
<ALLOWANCE-CLOSE> 4,399
<ALLOWANCE-DOMESTIC> 3,772
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 627
</TABLE>
