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 June 30, 2000
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: 000-24141
FNB Corporation
(Exact name of registrant as specified in its charter)
Virginia 54-1791618
(State or other jurisdiction of (I.R.S. Employer
incorporation 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
4,096,996 shares outstanding as of June 30, 2000
<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 4. Submission of Matters to a Vote of
Security Holders
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, 1999 and June 30, 2000
(unaudited);
2. Unaudited Consolidated Statements of Income for the quarter and six-
month periods ended June 30, 2000 and 1999;
3. Unaudited Consolidated Statements of Comprehensive Income for the
quarter and six-month periods ended June 30, 2000 and 1999;
4. Unaudited Consolidated Statements of Cash Flows for the six-month
periods ended June 30, 2000 and 1999; and,
5. Unaudited Consolidated Statements of Changes in Stockholders' Equity for
the six-month periods ended June 30, 2000 and 1999.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
FNB Corporation and subsidiaries
June 30, 2000
In Thousands, Except Share and Per Share Data
(Unaudited)
<S> <C>
ASSETS
Cash and due from banks $ 11,537
Federal funds sold 4,950
Securities available-for-sale, at fair value 59,058
Securities held-to-maturity, at amortized cost
(market value $31,618) 31,439
Mortgage loans held for sale 354
Loans:
Commercial 108,009
Consumer 75,012
Real estate - commercial 79,463
Real estate - construction 22,503
Real estate - mortgage 114,018
Total loans 399,005
Loans, net of unearned income 399,005
Less allowance for loan losses 5,678
Loans, net 393,327
Bank premises and equipment, net 13,447
Other real estate owned 273
Other assets 6,398
Total assets $ 520,783
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand deposits 50,207
Interest-bearing demand and savings deposits 145,927
Time deposits 172,892
Certificates of deposit of $100,000 and over 52,676
Total deposits 421,702
Securities sold under agreements to repurchase 5,916
Other borrowed funds 40,185
Other liabilities 3,080
Total liabilities 470,883
Stockholders' equity:
Common stock, $5.00 par value, Authorized 10,000,000
shares; issued and outstanding 4,096,996 shares 20,485
Surplus 25,629
Unearned ESOP shares (94,307 shares) (1,561)
Retained earnings 5,934
Accumulated other comprehensive loss (587)
Total stockholders' equity 49,900
Total liabilities and stockholders' equity $ 520,783
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
FNB Corporation and subsidiaries
December 31, 1999
In Thousands, Except Share and Per Share Data
<S> <C>
ASSETS
Cash and due from banks $ 18,363
Securities available-for-sale, at fair value 68,154
Securities held-to-maturity, at amortized cost
(market value $33,492) 33,221
Mortgage loans held for sale 73
Loans:
Commercial 113,321
Consumer 69,312
Real estate - commercial 74,113
Real estate - construction 18,772
Real estate - mortgage 106,754
Total loans 382,272
Loans, net of unearned income 382,272
Less allowance for loan losses 5,173
Loans, net 377,099
Bank premises and equipment, net 13,480
Other real estate owned 129
Other assets 6,387
Total assets $ 516,906
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand deposits 43,365
Interest-bearing demand and savings deposits 141,831
Time deposits 167,162
Certificates of deposit of $100,000 and over 46,513
Total deposits 398,871
Federal funds purchased 13,635
Securities sold under agreements to repurchase 7,031
Other borrowed funds 46,262
Other liabilities 3,528
Total liabilities 469,327
Stockholders' equity:
Common stock, $5.00 par value. Authorized 10,000,000
shares; issued and outstanding 4,093,996 shares 20,470
Surplus 25,595
Unearned ESOP shares (106,013 shares) (1,747)
Retained earnings 3,968
Accumulated other comprehensive loss (707)
Total stockholders' equity 47,579
Total liabilities and stockholders' equity $ 516,906
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
FNB Corporation and subsidiaries
Quarter and Six Months Ended June 30, 2000 and 1999
In Thousands, Except Share and Per Share Data
(Unaudited)
Quarter Ended Six Months Ended
June 30 June 30
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 9,052 7,814 17,660 15,289
Interest on securities:
Taxable 770 735 1,604 1,428
Nontaxable 535 570 1,073 1,175
Interest on federal funds sold 39 48 41 119
Total interest income 10,396 9,167 20,378 18,011
Interest expense:
Interest on interest-bearing
demand and savings deposits 1,009 778 2,032 1,464
Interest on time deposits 2,352 2,240 4,541 4,576
Interest on certificates of
deposit of $100,000 and over 802 729 1,545 1,536
Interest on federal funds purchased
and securities sold under
agreements to repurchase 67 88 208 144
Interest on other borrowed funds 716 448 1,355 762
Total interest expense 4,946 4,283 9,681 8,482
Net interest income 5,450 4,884 10,697 9,529
Provision for loan losses 292 300 585 589
Net interest income after
provision for loan losses 5,158 4,584 10,112 8,940
Noninterest income:
Service charges on deposit accounts 352 275 674 600
Loan origination fees 40 87 79 189
Other service charges and fees 356 301 691 576
Other income 140 228 273 555
Securities gains (losses), net (11) -- (11) --
Total noninterest income 877 891 1,706 1,920
Noninterest expense:
Salaries and employee benefits 1,946 1,833 3,851 3,600
Occupancy and equipment expense, net 673 626 1,304 1,227
Cardholder/merchant processing 100 92 199 172
Supplies expense 97 113 194 232
Other expenses 946 812 1,776 1,555
Total noninterest expense 3,762 3,476 7,324 6,786
Income before income tax expense 2,273 1,999 4,494 4,074
Income tax expense 593 465 1,168 949
Net income $ 1,680 1,534 3,326 3,125
Basic earnings per share
(as restated) $ 0.42 0.39 0.83 0.79
Fully diluted earnings per share
(as restated) $ 0.42 0.39 0.83 0.79
Dividends declared per share
(as restated) $ 0.17 0.16 0.34 0.31
Average number of shares
outstanding (as restated) 4,000,897 3,976,633 3,999,714 3,976,371
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FNB Corporation and subsidiaries
Quarter and Six Months Ended June 30, 2000 and 1999
In Thousands
(unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Net Income $ 1,680 1,534 3,326 3,125
Other comprehensive income, before tax:
Unrealized holding gains (losses)
arising during period on
securities 184 (686) 193 (959)
Less: reclassification adjustment
for (gains) losses included in
net income 11 -- 11 --
Other comprehensive income (loss)
before tax 173 (686) 182 (959)
Income tax effect of items of other
comprehensive income (59) 233 (62) 326
Other comprehensive income (loss),
net of tax 114 (453) 120 (633)
Comprehensive Income $ 1,794 1,081 3,446 2,492
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
FNB Corporation and subsidiaries
Six Months Ended June 30, 2000 and 1999
In Thousands
(Unaudited) Six Months Ended
June 30,
2000 1999
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,326 3,125
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 585 589
Depreciation and amortization of bank
premises and equipment 650 603
ESOP compensation 186 186
Amortization of premiums and accretion
of discounts, net 228 217
Loss on sale of securities, net 11 --
Net gain on sale of fixed assets and
other real estate (13) (9)
Net (increase) decrease in mortgage
loans held for sale (281) 633
Increase in other assets (11) (777)
Decrease in other liabilities (448) (277)
Net cash provided by operating activities 4,233 4,290
Cash flows from investing activities:
Net (increase) decrease in federal funds sold (4,950) 2,200
Proceeds from sales of securities available-for-sale 3,016 --
Proceeds from calls and maturities of
securities available-for-sale 18,941 8,533
Proceeds from calls and maturities of
securities held-to-maturity 1,775 2,955
Purchase of securities available-for-sale (12,948) (19,382)
Net increase in loans (16,907) (35,340)
Proceeds from sale of other real estate owned 100 120
Recoveries on loans previously charged off 105 91
Bank premises and equipment expenditures (617) (1,113)
Net cash used in investing activities (11,485) (41,936)
Cash flows from financing activities:
Net increase in deposits 22,831 11,577
Net decrease in federal funds purchased and
securities sold under agreements to
repurchase (14,750) (550)
Net increase (decrease) in other borrowed funds (6,077) 27,755
Principal payments on ESOP debt (186) (186)
Dividends paid (1,360) (1,229)
Dividends on unallocated ESOP shares (32) (37)
Net cash provided by financing
activities 426 37,330
Net decrease in cash and due from banks (6,826) (316)
Cash and due from banks at beginning of period 18,363 11,875
Cash and due from banks at end of period $ 11,537 11,559
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FNB Corporation and subsidiaries
Six Months Ended June 30, 2000 and 1999
In Thousands
(Unaudited)
2000 1999
<S> <C> <C>
Balance, beginning of period $ 47,579 44,401
Net income for period 3,326 3,125
Cash dividends (1,360) (1,229)
ESOP shares allocated upon loan repayment 186 186
Director stock awards 54 --
Repurchase FNB Corporation Stock (5) --
Change in accumulated other comprehensive income 120 (633)
Balance, end of period $ 49,900 45,850
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FNB Corporation and subsidiaries
June 30, 2000 and 1999
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 might 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 that 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.
<PAGE>
(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.
(c) 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, 1999, or
June 30, 2000. 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 that 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.
<PAGE>
(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.
(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.
In July 1999, the Corporation declared a 10% stock dividend to
shareholders of record on August 27, 1999. As a result, all share
and per share data have been adjusted retroactively to reflect the
dividend as though it occurred at the beginning of the earliest
period presented.
<PAGE>
(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 $2,088 and $2,121 at June 30, 2000 and December 31, 1999,
respectively.
(3) Securities Available-for-Sale
The following sets forth the composition of securities available-for-
sale, which are reported at fair value, at June 30, 2000 and December
31, 1999:
<TABLE>
<CAPTION>
Gross Gross Approx.
Amortized Unrealized Unrealized Fair
June 30, 2000 Costs Gains Losses Values
<S> <C> <C> <C> <C>
U.S. Treasury $ 501 -- (3) 498
U.S. Government agencies
and corporations 16,616 21 (273) 16,364
States and political
subdivisions 16,868 39 (352) 16,555
Other securities 25,963 8 (330) 25,641
Totals $ 59,948 68 (958) 59,058
</TABLE>
<TABLE>
<CAPTION>
Gross Gross Approx.
Amortized Unrealized Unrealized Fair
December 31, 1999 Costs Gains Losses Values
<S> <C> <C> <C> <C>
U.S. Treasury $ 4,018 8 -- 4,026
U.S. Government agencies
and corporations 15,035 10 (221) 14,824
States and political
subdivisions 15,173 40 (460) 14,753
Other securities 34,952 1 (402) 34,551
Totals $ 69,178 59 (1,083) 68,154
</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.
<PAGE>
<TABLE>
<CAPTION>
Approx.
Amortized Fair
June 30, 2000 Costs Values
<S> <C> <C>
Due in one year or less $ 5,545 5,508
Due after one year through five years 36,068 35,511
Due after five years through ten years 10,624 10,385
Due after ten years 7,711 7,654
Totals $ 59,948 59,058
</TABLE>
Realized gains and losses on securities available-for-sale were not
material in 2000 or 1999.
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
$15,700 at June 30, 2000 and $49,033 at December 31, 1999.
(4) Securities Held-To-Maturity
The amortized costs, gross unrealized gains and losses, and approximate
fair values of securities held-to-maturity at June 30, 2000 and December
31, 1999 are as follows:
<TABLE>
<CAPTION>
Gross Gross Approx.
Amortized Unrealized Unrealized Fair
June 30, 2000 Costs Gains Losses Values
<S> <C> <C> <C> <C>
States and political
subdivisions $ 31,439 270 (91) 31,618
Totals $ 31,439 270 (91) 31,618
</TABLE>
<TABLE>
<CAPTION>
Gross Gross Approx.
Amortized Unrealized Unrealized Fair
December 31, 1999 Costs Gains Losses Values
<S> <C> <C> <C> <C>
States and political
subdivisions $ 33,221 367 (96) 33,492
Totals $ 33,221 367 (96) 33,492
</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.
<PAGE>
<TABLE>
<CAPTION>
Approx.
Amortized Fair
June 30, 2000 Costs Values
<S> <C> <C>
Due in one year or less $ 3,873 3,886
Due after one year through five years 20,860 21,009
Due after five years through ten years 6,553 6,570
Due after ten years 153 153
Totals $ 31,439 31,618
</TABLE>
Realized gains and losses on securities held-to-maturity were not
material in 2000 or 1999.
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
$16,182 at June 30, 2000 and $18,073 at December 31, 1999.
(5) Loans
At June 30, 2000 and December 31, 1999, there were direct loans to
executive officers and directors of $2,685 and $3,672, respectively. In
addition, there were loans of $3,728 and $3,423 at June 30, 2000 and
December 31, 1999, respectively, which directors endorsed or had been
made to companies in which directors had an equity interest.
At June 30, 2000 and December 31, 1999, the Corporation had sold without
recourse, participations in various loans to financial institutions and
other customers of the Corporation in the amount of $41,110 and $39,969,
respectively.
(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>
Quarter Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Balance at beginning of period $ 5,463 4,936 5,173 4,640
Provisions for loan losses 292 300 585 589
Loan recoveries 49 54 105 91
Loan charge-offs (126) (309) (185) (339)
Balance at end of period $ 5,678 4,981 5,678 4,981
</TABLE>
<PAGE>
Nonperforming assets consist of the following:
<TABLE>
<CAPTION>
June 30 December 31,
2000 l999
<S> <C> <C>
Nonaccrual loans $ 4,357 4,517
Other real estate owned 273 129
Total nonperforming assets $ 4,630 4,646
</TABLE>
There were no material commitments to lend additional funds to customers
whose loans were classified as nonperforming at June 30, 2000.
(7) Bank Premises and Equipment, Net
Bank premises and equipment are stated at cost less accumulated
depreciation and amortization as follows:
<TABLE>
<CAPTION>
June 30 December 31,
2000 1999
<S> <C> <C>
Land $ 1,768 1,515
Buildings 10,598 10,450
Furniture and equipment 8,496 8,354
Leasehold improvements 535 507
21,397 20,826
Less accumulated depreciation
and amortization 7,950 7,346
Totals $ 13,447 13,480
</TABLE>
(8) Other Borrowed Funds
Other borrowed funds include advances from the Federal Home Loan Bank of
Atlanta totaling $40,185 and $46,300 on June 30, 2000 and December 31,
1999, respectively. The interest rates on the advances range from 5.33
to 7.40 percent and have maturity dates through June 7, 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. First National Bank holds all ESOP loans. Consequently, in the
consolidated balance sheets the loans and the related liability have
been eliminated. The amounts representing unearned employee benefits
have been recorded as reductions 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.
<PAGE>
The Corporation sponsors 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 participant's 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 $77 and $73 for the six-month periods ended June
30, 2000 and 1999, respectively.
(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.
(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 2000 dividends of the
bank (unless prior regulatory approval is obtained) to $2,100 plus year-
to-date 2000 net profits as of the declaration date.
(12) Supplemental Cash Flow Information
The Corporation paid $9,619 and $8,572 for interest and it paid $1,441
and $1,129 for income taxes for the six-month periods ended June 30,
2000 and 1999, 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.
<PAGE>
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 $26,374 at June 30, 2000, and
$26,872 at December 31, 1999, the Corporation may not require collateral
or other security to support the following financial instruments with
credit risk:
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
Contract Amount
<S> <C> <C>
Financial instruments whose contract amounts
represent credit risk:
Commitments to extend credit $ 82,529 88,046
Standby letters of credit and
financial guarantees written 5,314 5,905
</TABLE>
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.
<PAGE>
(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 $53
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.
(16) Stock Option Plan
During the second quarter of 2000 the Corporation's stockholders
approved the FNB Corporation 2000 Incentive Stock Plan (the "Plan"),
as previously adopted by the Board of Directors. The Plan makes
available up to 400,000 shares of common stock for awards to key
employees and non-employee directors of the Corporation and its
subsidiaries in the form of stock options, stock appreciation rights,
and stock awards. The purpose of the Plan is to provide incentives to
key employees and non-employee directors that promote the identification
of their personal interest with the long-term financial success of the
Corporation and with growth in shareholder value. In addition, awards
to non-employee directors are intended to increase the directors'
proprietary interest in the Corporation through the grant of stock
options and stock awards as part of their compensation for service as
directors. The Plan will expire in 2010, unless sooner terminated by
the Board.
Any option terms not specified in the Plan such as exercise prices,
expiration dates, and vesting provisions are set forth in an agreement
governing each grant. A stock option may be either an incentive stock
option within the meaning of Section 422 of the Internal Revenue Code or
a non-qualified stock option.
In order to reflect such events as stock dividends, stock splits,
recapitalizations, mergers, consolidations, or reorganizations by the
Corporation, the number of shares subject to each outstanding grant, the
exercise price, and the aggregate number of shares from which grants or
awards may be made may be adjusted.
<PAGE>
In 1995 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-
Based Compensation." That standard sets forth compensation recognition
principles that are based on a fair value model. The Corporation has
elected another alternative provided for under SFAS No. 123, which is to
account for the activity under the Plan using the accounting prescribed
by Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees." Under Opinion No. 25, compensation cost is not
recognized except to the extent of the excess, if any, of the market
price of the underlying stock over the exercise price of the stock
option at the date of grant. The Corporation has not issued any options
requiring compensation cost to be recognized.
Compensation cost for awards of stock requiring no payment by the
grantee is recorded at the effective date of the award and is measured
by the market price of the stock awarded as of that date. Such cost is
amortized to expense over the period of service to which the award
relates.
During the second quarter of 2000, the Corporation issued 35,000
nonqualified stock options to non-employee directors with an exercise
price of $16.50 per share. Since this is equal to the market value on
the date of grant, no compensation cost was recorded. The options expire
in 10 years, and they vest in terms of exercisability at a rate of 25%
per year on each of the first four anniversary dates from grant. The
total fair value (as defined by SFAS No. 123 above) at grant date for
the options was $166 (pre-tax). Had the fair value method of accounting
prescribed by SFAS No. 123 been followed, earnings per share would not
have changed, and the effect on net income for the first half and second
quarter of 2000 would have been negligible.
Significant assumptions used to estimate the fair values of the options
under the SFAS No. 123 methodology are as follows:
Risk-free interest rate 6.0 %
Expected life 9.0 years
Expected dividends 4.1 %
Expected volatility 20.0 %
Additionally during the second quarter, 3300 shares of common stock were
awarded to non-employee directors at a fair value of $16.50 per share.
The total fair value of $54 is attributable to a 12-month service period
and, accordingly, is being amortized to expense over that period.
(17) Merger Agreements
Subsequent to the end of the second quarter of 2000, FNB Corporation and
CNB Holdings, Inc. ("CNB"), parent company of Community National Bank
headquartered in Pulaski, Virginia, entered into an Agreement and Plan
of Merger to merge CNB into FNB Corporation ("FNB"). Under the terms
of the proposed transaction, shareholders of CNB will receive
consideration valued at $10.60 for each share of CNB common stock, in
<PAGE>
the form of cash, stock of FNB, or a combination of cash and stock, at
each CNB shareholder's election. The cash and FNB stock portion of the
consideration, however, will each be limited to 50 percent of the total
consideration paid.
The transaction will be structured as a tax-free reorganization to the
extent of the shares exchanged. For financial reporting purposes, the
merger will be accounted for under the purchase method of accounting.
The merger is subject to approval by the shareholders of CNB as well as
bank regulatory agencies.
Subsequent to the end of the second quarter of 2000, FNB Corporation and
SWVA Bancshares, Inc. ("SWVA"), parent company of Southwest Virginia
Savings Bank headquartered in Roanoke, Virginia, entered into an
Agreement and Plan of Merger to merge SWVA into FNB Corporation
("FNB"). Under the terms of the proposed transaction, shareholders of
SWVA will receive consideration valued at $20.25 for each share of SWVA
common stock, in the form of cash, stock of FNB, or a combination of
cash and stock, at each SWVA shareholder's election. The cash portion
of the consideration, however, will be limited to 20 percent of the
total consideration paid.
The transaction will be structured as a tax-free reorganization to the
extent of the shares exchanged. For financial reporting purposes, the
merger will be accounted for under the purchase method of accounting.
The merger is subject to approval by the shareholders of SWVA as well as
bank regulatory agencies.
<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.
2000 Compared to 1999
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
$10,697 for the six months ended June 30, 2000, an increase of $1,168 from the
same period in 1999. Net interest income before provision for loan losses was
$5,450 for the quarter ended June 30, 2000, an increase of $566 from the same
period in 1999. The increase in net interest income in both the second
quarter and first six months was primarily the result of growth in average
earning assets, partially offset by growth in interest bearing liabilities.
Average earning asset growth totaled $33,898 (7.44%) and $41,424 (9.26%),
respectively, for the second quarter and first six months of 2000 over the
respective prior year periods. The largest component of the increase in
earning assets was average loans, reflecting increases of $39,192 (11.04%) and
$43,818 (12.63%), respectively, for the second quarter and first six months of
2000. Growth in the loan portfolio was concentrated primarily in loans
secured by real estate reflecting increases of $31,181 and $30,288,
respectively, for the second quarter and first six months of 2000. Commercial
loans increased $6,502 and $11,081, respectively, for the second quarter and
first six months of 2000. Average securities decreased $3,476 and $63,
respectively, for the second quarter and first six months of 2000. Average
Federal Funds sold decreased $1,818 and $2,331 for the second quarter and
first six months of 2000. Securities and Federal Funds sold were used as a
source of funds to partially fund loan growth.
Average interest-bearing liabilities increased $23,931 (6.15%) and $31,504
(8.24%), respectively, for the second quarter and first six months of 2000
over the respective prior year periods. The largest component of interest-
bearing liabilities was average deposits, reflecting an increase of $14,796
and $12,247, respectively, for the second quarter and first six months of
2000. Growth in the deposit portfolio was concentrated in demand and savings
deposits with an increase of $14,429 and $19,948 for the second quarter and
first six months of 2000. Increased market penetration in new markets and a
concerted effort to obtain business deposit accounts from our business loan
customers accounted for the increase. This increase was partially offset by
decreases of $4,622 in certificates of deposit of $100,000 and over and $3,079
in time deposits over the respective prior year period. The decreases can be
attributed to less competitive bidding for this type of deposit. Average
<PAGE>
other borrowed funds increased $11,436 and $17,725, respectively, for the
second quarter and first six months of 2000. 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 liquidity to fund loan
growth.
Net interest yield increased to 4.70% from 4.61% for the second quarter and
increased to 4.63% from 4.59% for the first six months of 2000 from the
comparable prior year periods. The yield on average earning assets increased
38 basis points, to 8.75% from 8.37% for the second quarter and increased 21
basis points, to 8.59% from 8.38% for the first six months of 2000 from the
comparable prior year periods. The cost of interest-bearing liabilities
increased 38 basis points, to 4.79% from 4.41% for the second quarter and 24
basis points to 4.68% from 4.44% for the first six months of 2000. Overall,
108.7% and 122.4% of the net interest income increase, respectively, for the
second quarter and first six months of 2000 was attributable to changes in the
volume of net interest-earning assets and interest-bearing liabilities. The
remaining portions of the change in net interest income for the second quarter
and first six months of 2000 were due to a change in average rates.
Provision for Loan Losses
The provision for loan losses was $292 and $585, respectively, for the quarter
and six months ended June 30, 2000, and $300 and $589, respectively, for the
quarter and six months ended June 30, 1999. Net charge-offs amounted to $77
and $80, respectively, for the quarter and six months ended June 30, 2000 and
$254 and $248, respectively, for the quarter and six months ended June 30,
1999. The allowance for loan losses was $5,678, 1.42% of outstanding loans,
at June 30, 2000, and $5,173, 1.35% of outstanding loans, at December 31,
1999. The six-month provision for loan losses was down slightly from the same
period in 1999 while net charge offs decreased $168. As a result, the
allowance for loan losses reflected a corresponding increase. 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 $877 and $1,706, respectively, for the quarter and six months
ended June 30, 2000, and $891 and $1,920, respectively, for the quarter and
six months ended June 30, 1999. The year to date decrease in noninterest
income resulted primarily from a decrease in mortgage loan origination fees
resulting from a decrease in the volume of loans refinanced, which reflected
the upward trend in mortgage rates. Additionally, appraisal fees declined as
a result of the elimination of this previously in-house function.
<PAGE>
Noninterest Expense
Noninterest expense, consisting of salaries and employee benefits, occupancy
costs, credit card processing, supplies, and other expenses was $3,762 and
$7,324, respectively, for the quarter and six months ended June 30, 2000, and
$3,476 and $6,786, respectively, for the quarter and six months ended June 30,
1999. The net increase in noninterest expense resulted from increases in
several categories, primarily personnel costs, occupancy and equipment
expense, cardholder/merchant processing, postage and telephone expense.
Personnel costs increased primarily as the result of merit increases, and
additional branch personnel necessitated by the new South Main office in
Blacksburg, which opened in April 1999. The increases in occupancy and
equipment expense resulted primarily from an increase in depreciation expense
for buildings and furniture and fixtures, which was related to the occupancy
of an additional floor in the headquarters building. Cardholder/merchant
processing expense was up due to volume. The increase in postage expense
resulted primarily from timing. Telephone expense was up due to expanded
facilities. These increases were partially offset by reductions in other
areas.
Income Taxes
Income tax expense as a percentage of pre-tax income was 26.1% and 26.0% for
the quarter and six months ended June 30, 2000, and 23.3% for both the quarter
and six months ended June 30, 1999. The increase in the rate was due primarily
to a decline in nontaxable interest as a percent of pre-tax income.
Balance Sheet
Total assets of the Corporation at June 30, 2000, were $520,783, compared to
$516,906 at December 31, 1999. Total loans were $399,005 at June 30, 2000, an
increase of $16,733 from December 31, 1999. Loan growth was concentrated in
the consumer, real estate-commercial, construction and mortgage portfolios and
amounted to $22,045. Federal Funds sold increased $4,950. Securities
decreased $10,878 primarily in the available-for-sale portfolio and was used
to partially fund loan growth.
Total deposits at June 30, 2000, were $421,702, an increase of $22,831 from
December 31, 1999. All deposit categories reflected increases with
noninterest-bearing demand deposits experiencing both the largest amount and
percent increase. New interest bearing demand and savings deposits account
for approximately $13,094 (57.4%) of the increase. New noninterest-bearing
demand deposits account for approximately $3,262 (14.3%) of the increase.
Competition for deposits among local financial institutions continues to be
strong.
Borrowed funds at June 30, 2000, were $46,101, a decrease of $20,827 from
December 31, 1999. These borrowings consist of advances from the Federal Home
Loan Bank of Atlanta, purchases of federal funds and securities sold under
agreements to repurchase. The decrease in purchased funds resulted primarily
from an increase in cash flow generated by maturing securities and increased
deposits. Such borrowings were used to provide partial funding for earning
asset growth.
<PAGE>
Stockholders' Equity
Stockholders' equity was $49,900 at June 30, 2000, compared to $47,579 at
December 31, 1999. This increase of $2,321 was the net result of earnings
retention, an increase of $120 in net unrealized gains (net of tax) on
securities available-for-sale, a decrease of $186 in unearned ESOP shares
resulting from principal repayments on ESOP debt, director stock awards of
$54, the repurchase of FNB Corporation stock of $5, 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.
At June 30, 2000, 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 June 30, 2000, totaled $588 compared to $25
at December 31, 1999. In addition, nonaccrual loans and other real estate
owned totaled $4,630 at June 30, 2000, compared to $4,646 at December 31,
1999. One commercial customer continues to account for the largest portion of
nonaccrual loans. Management considers the credit to be adequately secured
and no loss is anticipated. The New River Valley economy remains strong.
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
<PAGE>
operations. Another source of liquidity is additional borrowings from the
Federal Home Loan Bank of Atlanta; approximately $18,000 of the Corporation's
borrowing capacity under an existing agreement with the FHLB remains unused as
of June 30, 2000, based on the level of qualifying portfolio mortgage loans
available for securitization. Secondary sources of liquidity are available
should the need arise, including approximately $38,500 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 2000 dividends of the bank (unless prior
regulatory approval is obtained) to $2,100 plus year-to-date 2000 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 2000. During the
first six months of 2000 the bank paid $1,496 in dividends to the holding
company.
Year 2000 (Y2K) Readiness Disclosure
The Corporation encountered no problems relating to Y2K. Even though
considerable resources were expended to ensure that FNB's automated systems
would be ready, the investment in much of the new technology will result in
more efficient processing, and the contingency plans developed and tested for
potential Y2K problems are in place to be used in the event of other emergency
situations.
Part II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of shareholders of FNB Corporation was held at
Custom Catering, Inc., 902 Patrick Henry Drive, Blacksburg,
Virginia on May 9, 2000, at 2:00 p.m., for the following purposes:
(1) To elect two (2) Directors of the Corporation to fill the
vacancy created by the expiration of terms of the Directors of
Class I;
A total of 3,644,786 shares of a possible 4,093,996 shares or 89.0
percent of eligible shares were voted. The following information
is provided to disclose the number of votes for, against or
withheld, and abstentions for each director:
No. of Shares
No. of Shares Voted Against Number of
Director Voted For or Withheld Abstentions
Daniel D Hamrick 3,559,221 85,565 --
Joan H. Munford 3,538,628 106,158 --
(2) To ratify the selection by the Audit/Compliance Committee of
the Board of Directors of McLeod & Company, independent certified
public accountants, as auditors of the Corporation for 2000.
No. of Shares
No. of Shares Votes Against Number of
Voted For or Withheld Abstentions
3,584,564 27,199 33,023
(3) To approve the FNB Corporation 2000 Incentive Stock Plan and
the reservation of 400,000 shares of the Corporation's stock for
issuance thereunder:
No. of Shares
No. of Shares Voted Against Number of
Voted for or Withheld Abstentions
3,089,652 375,250 179,884
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits:
See index to exhibits
<PAGE>
(B) Reports on Form 8-K:
A report on Form 8-K was filed on April 25, 2000 (with a Date
of Report of April 21, 2000) disclosing under Item 5 a press
release announcing FNB Corporation's first quarter financial
results, its quarterly dividend and that the board of
directors of the Corporation has authorized management to buy
up to 10% of the Corporation's common stock. The stock will
be purchased in the open market and/or by privately
negotiated transactions as management and the board of
directors determine prudent.
<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 August 8, 2000 by: s/J. Daniel Hardy, Jr.
J. Daniel Hardy, Jr.
President & Chief Executive Officer
Date August 8, 2000 by: s/Daniel A. Becker
Daniel A. Becker
Senior Vice President & Chief Financial Officer
<PAGE>
INDEX TO EXHIBITS
Exhibit # Description
(2) Plan of Merger
(2)A Merger agreement dated July 10, 2000 between FNB Corporation and
CNB Holdings, Inc.
(2)B Merger agreement dated August 7, 2000 between FNB Corporation and
SWVA Bancshares, Inc.
(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) Registrant's 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 Change in control agreements with eight senior officers of First
National Bank and one senior officer of Registrant. 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) Daniel A. Becker, Senior Vice President, Chief Financial
Officer, dated April 1, 1999
(2) Keith J. Houghton, Senior Vice President, Manager,
Commercial Banking, dated April 1, 1999
(3) Darlene S. Lancaster, Senior Vice President, Manager,
Mortgage Loan Department, dated August 25, 1997
(4) Kay O. McCoy, Senior Vice President, Manager Retail Banking,
dated April 7, 2000
(5) R. Bruce Munro, Senior Vice President, Chief Credit
Administration Officer, dated August 25, 1997
(6) Woody B. Nester, Senior Vice President, Cashier, dated
August 25, 1997
(7) Peter A. Seitz, Executive Vice President, dated August 25,
1997
(8) Perry D. Taylor, Senior Vice President, Comptroller, dated
August 25, 1997
(9) Litz H. Van Dyke, Executive Vice President, dated August 25,
1997
The agreements with Mr. Seitz and Mr. Van Dyke were terminated
under the terms of the Employment Agreement referred to in Exhibit
(10) B below.
<PAGE>
(10)B Employment agreement dated March 23, 1999 with two executive
officers of First National Bank. Both agreements have identical
terms, and as such, only a sample copy of the agreement was filed
with the Commission as Exhibit (10 E on Form 10-Q for the quarter
ended March 31, 1999, and is incorporated herein by reference.
The officers covered by this agreement are:
(1) Peter A. Seitz, Executive Vice President
(2) Litz H. Van Dyke, Executive Vice President
(10)C Change in control agreement dated March 15, 2000 between Joseph
W.Beury and First National Bank. The agreement was filed with the
Commission as Exhibit (10)C on Form 10-Q for the quarter ended
March 31, 2000, and is incorporated herein by reference.
(27) Financial Data Schedule
