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, 1995
--------------
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 0-8144
F.N.B. CORPORATION
- - ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1255406
- - ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Hermitage Square, Hermitage, PA 16148
- - ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(412) 981-6000
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(Registrant's telephone number, including area code)
Not applicable
- - ------------------------------------------------------------------------------
(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.
Yes X No
----- -----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at April 25, 1995
----- -----------------------------
Common Stock, $2 Par Value 8,188,246 Shares
- - -------------------------- ----------------
<PAGE>
F.N.B. CORPORATION
FORM 10-Q
March 31, 1995
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Balance Sheet 2
Consolidated Income Statement 3
Consolidated Statement of Cash Flows 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 15
-1-
<PAGE>
F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
Dollars in thousands
MARCH 31, DECEMBER 31,
1995 1994
------------ ------------
(Unaudited) (Audited)
------------ ------------
ASSETS
Cash and due from banks $ 54,705 $ 60,451
Interest bearing deposits with banks 6,222 2,770
Federal funds sold 29,546 4,016
Securities available for sale 108,443 120,061
Investment securities (fair value of
$231,517 and $246,834) 237,414 257,956
Loans available for sale 5,055 5,904
Loans, net of unearned income of
$22,014 and $22,022 1,192,014 1,188,399
Allowance for loan losses (20,922) (20,295)
------------ ------------
NET LOANS 1,176,147 1,174,008
------------ ------------
Premises and equipment 22,875 22,982
Other assets 44,029 44,275
------------ ------------
$ 1,679,381 $ 1,686,519
============ ============
LIABILITIES
Deposits:
Non-interest bearing $ 162,881 $ 163,566
Interest bearing 1,270,754 1,261,839
------------ ------------
TOTAL DEPOSITS 1,433,635 1,425,405
Short-term borrowings 51,559 69,365
Other liabilities 23,804 26,142
Long-term debt 39,631 39,017
------------ ------------
TOTAL LIABILITIES 1,548,629 1,559,929
------------ ------------
MINORITY INTEREST 540
------------
STOCKHOLDERS' EQUITY
Preferred stock - $10 par value
Authorized - 20,000,000 shares
Outstanding - 456,138 and 456,288 shares
Aggregate liquidation value -
$11,403 and $11,407 4,561 4,563
Common stock - $2 par value
Authorized - 20,000,000 shares
Outstanding - 8,198,867 and 8,163,014 shares 16,432 16,364
Additional paid-in capital 52,147 51,686
Retained earnings 56,318 53,121
Net unrealized securities gains 1,579 625
Treasury stock - 17,043 and 18,974 shares at cost (285) (309)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 130,752 126,050
------------ ------------
$ 1,679,381 $ 1,686,519
============ ============
See accompanying Notes to Consolidated Financial Statements
-2-
<PAGE>
F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
Dollars in thousands, except per share data
Unaudited
Three Months Ended March 31 1995 1994
--------- ---------
INTEREST INCOME
Loans, including fees $ 27,636 $ 24,986
Securities:
Taxable 4,232 4,795
Tax exempt 375 397
Dividends 156 149
Other 236 240
--------- ---------
TOTAL INTEREST INCOME 32,635 30,567
INTEREST EXPENSE
Deposits 11,897 10,928
Short-term borrowings 849 845
Long-term debt 781 624
TOTAL INTEREST EXPENSE 13,527 12,397
--------- ---------
NET INTEREST INCOME 19,108 18,170
Provision for loan losses 1,541 2,686
--------- ---------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 17,567 15,484
--------- ---------
NON-INTEREST INCOME
Insurance commissions and fees 737 991
Service charges 1,731 1,607
Trust 406 389
Gain on sale of securities 167 424
Other 368 231
--------- ---------
TOTAL NON-INTEREST INCOME 3,409 3,642
--------- ---------
20,976 19,126
--------- ---------
NON-INTEREST EXPENSES
Salaries and employee benefits 7,464 7,094
Net occupancy 1,164 1,173
Amortization of intangibles 328 376
Equipment 945 992
Deposit insurance 934 939
Other 4,281 4,275
--------- ---------
TOTAL NON-INTEREST EXPENSES 15,116 14,849
--------- ---------
INCOME BEFORE INCOME TAXES 5,860 4,277
Income taxes 1,876 1,344
--------- ---------
NET INCOME $ 3,984 $ 2,933
========= =========
NET INCOME PER COMMON SHARE:
Primary $ .46 $ .33
========= =========
Fully diluted $ .44 $ .32
========= =========
CASH DIVIDENDS PER COMMON SHARE $ .07 $ .07
========= =========
AVERAGE COMMON SHARES OUTSTANDING 8,188,728 8,163,870
========= =========
See accompanying Notes to Consolidated Financial Statements
-3-
<PAGE>
F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Dollars in thousands
Unaudited
Three Months Ended March 31 1995 1994
--------- ---------
OPERATING ACTIVITIES
Net income $ 3,984 $ 2,933
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,287 1,693
Provision for loan losses 1,541 2,686
Deferred taxes 406 (1,048)
Gain on securities available for sale (167) (424)
(Gain) loss on loan sales (4) 38
Proceeds from sale of loans 5,468 14,012
Change in:
Interest receivable 709 (1,005)
Interest payable 40 3,668
Loans available for sale 4,615 (34,799)
Other, net (3,539) (21)
--------- ---------
Net cash flows from operating activities 14,340 (12,267)
--------- ---------
INVESTING ACTIVITIES
Net change in interest bearing deposits with banks (3,452) (3,070)
Net change in federal funds sold (25,530) (7,913)
Purchase of securities available for sale (3,437) (23,317)
Purchase of investment securities (527) (10,655)
Proceeds from sale of securities available for sale 478 4,882
Proceeds from maturity of securities available for sale 16,393 24,378
Proceeds from maturity of investment securities 20,693 18,681
Net change in loans (14,311) 10,841
Increase in premises and equipment (655) (512)
--------- ---------
Net cash flows from investing activities (10,348) 13,315
--------- ---------
FINANCING ACTIVITIES
Net change in non-interest bearing deposits (685) (6,261)
Net change in interest bearing deposits 8,915 (3,038)
Net change in short-term borrowings (17,806) 2,614
Increase in long-term debt 1,117 894
Decrease in long-term debt (503) (689)
Proceeds from sale of stock 356 200
Purchase of treasury stock (345) (88)
Cash dividends paid (787) (758)
--------- ---------
Net cash flows from financing activities (9,738) (7,126)
--------- ---------
NET DECREASE IN CASH AND DUE FROM BANKS (5,746) (6,078)
Cash and due from banks at beginning of period 60,451 59,978
--------- ---------
CASH AND DUE FROM BANKS AT END OF PERIOD $ 54,705 $ 53,900
========= =========
See accompanying Notes to Consolidated Financial Statements
-4-
<PAGE>
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 1995
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the three-month
period ended March 31, 1995 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1995. For further
information, refer to the consolidated financial statements and footnotes
there to included in the Corporation's annual report on Form 10-K for the year
ended December 31, 1994.
PER SHARE AMOUNTS
Per share amounts are adjusted for common stock dividends.
Primary earnings per common share is calculated by dividing net income,
adjusted for preferred stock dividends declared, by the sum of the weighted
average number of shares of common stock outstanding and the number of shares
of common stock which would be issued assuming the exercise of stock options
during each period.
Fully diluted earnings per common share is calculated by dividing net
income, adjusted for minority interest, by the weighted average number of
shares of common stock outstanding, assuming the conversion of outstanding
convertible preferred stock from the beginning of the year or date of issuance
and the exercise of stock options.
Cash dividends per common share are based on the actual cash dividends
declared adjusted for stock dividends. Book value per common share is based
on shares outstanding at each period end adjusted retroactively for stock
dividends.
LOANS
On January 1, 1995, the Corporation adopted Statement of Financial
Accounting Standards (FAS) No. 114, "Accounting by Creditors for Impairment of
a Loan," which requires that impaired loans be identified and measured based
on the present value of expected future cash flows discounted at the loan's
effective interest rate, or at the loan's observable market price or the fair
value of the collateral if the loan is collateral dependent. FAS No. 114 had
no material effect on the Corporation's financial position or results of
operations.
CASH FLOW INFORMATION
Following is a summary of supplemental cash flow information (in
thousands):
Three months ended March 31 1995 1994
------- -------
Cash paid for:
Interest $14,211 $10,080
Income taxes 560 331
Noncash Investing and Financing Activities:
Acquisition of real estate in settlement of loans 595 127
Loans granted in the sale of other real estate 46 516
-5-
<PAGE>
PART I
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Liquidity and Interest Rate Sensitivity
The Corporation monitors its liquidity position on an ongoing basis to
assure that it is able to meet the need for funds at all times. Given the
monetary nature of its assets and liabilities and the significant source of
liquidity provided by its investment portfolio, the Corporation generally has
sufficient sources of funds available as needed to meet its routine,
operational cash needs.
In addition to normal liquidity provided from operations, the Corporation
has external sources of funds available should it desire to use them. These
include approved lines of credit with several major domestic banks, of which
$24.0 million was unused at March 31, 1995. To further meet its liquidity
needs, the Corporation also has access to the Federal Reserve System, the
Federal Home Loan Bank and other uncommitted funding sources.
Interest rate sensitivity measures the impact that future changes in
interest rates will have on net interest income. The cumulative gap reflects
a point-in-time net position of assets and liabilities repricing in specified
time periods. The gap is one measurement of risk inherent in a balance sheet
as it relates to changes in interest rates and their effect on net interest
income.
The gap analysis which follows is based on a combination of asset and
liability amortizations, maturities and repricing opportunities. Non-maturity
deposit balances have been allocated to various repricing intervals to more
accurately depict their true behavior and characteristics. This allocation
was done in accordance with Section 305 of the Federal Deposit Insurance
Corporation Improvement Act. Based on the cumulative one year gap in this
table and assuming no restructuring or modifications to asset/liability
composition, a rise in interest rates would have a negative impact on net
interest income.
Gap alone does not accurately measure the magnitude of changes in net
interest income since changes in interest rates do not affect all categories
of assets and liabilities equally or simultaneously. Recognizing that
traditional gap analyses do not measure dynamically the exposure to interest
rate changes, the Corporation also relies on computer simulation modeling to
measure the effect of upward and downward interest rate changes on net
interest income. Simulation has been in use at the Corporation's lead bank
(representing 54% of consolidated assets) and is currently being implemented
at its other subsidiaries.
Through the review of gap analyses and simulation modeling, management
continually monitors the Corporation's exposure to changing interest rates.
Management attempts to mitigate repricing mismatches through asset and
liability pricing and through matched maturity funding.
-6-
<PAGE>
Following is the gap analysis as of March 31, 1995 (in thousands):
Within 4-12 1-5 Over
3 Months Months Years 5 years Total
--------- --------- --------- --------- ----------
Interest Earning Assets
Interest bearing deposits
with banks $ 6,122 $ 100 $ 6,222
Federal funds sold 29,546 29,546
Securities:
Available for sale 8,674 27,972 $ 58,144 $ 13,653 108,443
Held for investment 11,260 39,791 176,650 9,713 237,414
Loans, net of unearned 254,769 195,482 407,591 339,227 1,197,069
--------- --------- --------- --------- ----------
310,371 263,345 642,385 362,593 1,578,694
Other assets 100,687 100,687
--------- --------- --------- --------- ----------
$ 310,371 $ 263,345 $ 642,385 $ 463,280 $1,679,381
========= ========= ========= ========= ==========
Interest Bearing Liabilities
Deposits:
Interest checking $ 7,647 $ 22,940 $ 122,345 $ 152,932
Savings 42,833 128,498 256,994 428,325
Time deposits 137,899 241,323 310,275 689,497
Short-term borrowings 17,720 16,605 17,234 51,559
Long-term debt 743 5,572 21,487 $ 11,829 39,631
--------- --------- --------- --------- ----------
206,842 414,938 728,335 11,829 1,361,944
Other liabilities 186,685 186,685
Stockholders' equity 130,752 130,752
--------- --------- --------- --------- ----------
$ 206,842 $ 414,938 $ 728,335 $ 329,266 $1,679,381
========= ========= ========= ========= ==========
Period Gap $ 103,529 $(151,593)$ (85,950)$ 134,014
========= ========= ========= =========
Cumulative Gap $ 103,529 $ (48,064)$(134,014)
========= ========= =========
Rate Sensitive Assets/Rate
Sensitive Liabilities
(Cumulative) 1.50 0.92 0.90 1.16
========= ========= ========= =========
Cumulative Gap as a Percent
of Total Assets 6.2% (2.9%) (8.0%)
========= ========= =========
Capital Resources
The assessment of capital adequacy depends on a number of factors such as
asset quality, liquidity, earnings performance and changing competitive
conditions and economic forces. The Corporation maintains a strong capital
base to support its growth and expansion activities, to provide stability to
current operations and to promote public confidence.
The capital management function is a continuous process. Central to this
process is internal equity generation accomplished mainly by earnings
retention. Since
December 31, 1994, total retained earnings has increased $3.2 million as a
result of earnings retention. For the three months ended March 31, 1995, the
return on average equity was 12.56%. Total cash dividends declared
represented 19.74% of net income. Book value per share was $14.56 at March
31, 1995, compared to $14.04 at December 31, 1994.
The Corporation's capital position continues to exceed regulatory
minimums. The primary indicators relied on by the Federal Reserve Board and
other bank and thrift regulators in measuring strength of capital position are
the Core Capital, Total Risk-Based Capital and Leverage ratios. Following is
a table summarizing these ratios and the related regulatory minimums as of
March 31, 1995 and December 31, 1994, respectively (in thousands):
MARCH 31, DECEMBER 31, REGULATORY
1995 1994 MINIMUMS
------------ ------------ ----------
Capital Ratios:
Core Capital 10.95% 10.58% 4.00%
Total Risk-Based Capital 13.08 12.71 8.00
Leverage 7.56 7.25 5.00
-7-
<PAGE>
Core Capital consists of common and qualifying preferred stockholders'
equity less non-qualifying intangibles and Total Risk-Based Capital consists
of Core Capital, qualifying subordinated debt and a portion of the allowance
for loan losses both calculated with reference to risk-weighted assets
consisting of both on- and off- balance sheet risks. The Leverage ratio
consists of Core Capital divided by quarterly average assets less non-
qualifying intangibles.
Under Federal Reserve Board policy, a bank holding company is required to
serve as a source of financial and managerial strength to its subsidiary banks
and may not conduct its operations in an unsafe or unsound manner. In
addition, it is the Federal Reserve Board's policy that, in serving as a
source of strength to its subsidiary banks, a bank holding company should
stand ready to use available resources to provide adequate capital funds to
its subsidiary banks during periods of financial stress or adversity, in
circumstances where it might not do so absent such policy, and should maintain
the financial flexibility and capital-raising capacity to obtain additional
resources for assisting its subsidiary banks. The failure of a bank holding
company to serve as a source of strength to its subsidiary banks would
generally be considered by the Federal Reserve Board to be an unsafe and
unsound banking practice, a violation of Federal Reserve Board regulations, or
both.
NON-PERFORMING ASSETS AND ALLOWANCE FOR LOAN LOSSES
Non-performing assets include non-performing loans and other real estate
owned. Non-performing loans include non-accrual loans, loans 90 days or more
past due, and restructured loans. Non-accrual loans represent loans on which
interest accruals have been discontinued. When a loan is placed on non-
accrual status, unpaid interest credited to income in the current year is
reversed and unpaid interest accrued in prior years is charged against the
allowance for loan losses. Interest received on non-accrual loans is either
applied against principal or reported as interest income, according to
management's judgment as to the collectibility of principal. Loans which
reach non-accrual status may not be restored to accrual status until all
delinquent principal and interest has been paid, or the loan becomes both
secured and in the process of collection. Restructured loans are loans with
respect to which a borrower has been granted a concession on the interest rate
or the original repayment terms because of financial difficulties.
Following is a summary of non-performing assets (in thousands):
MARCH 31, DECEMBER 31,
1995 1994
------------ ------------
Non-performing assets:
Non-accrual loans $ 8,794 $ 9,512
Loans past due 90 days or more 2,524 2,621
Restructured loans 3,234 3,157
------- -------
Total non-performing loans 14,552 15,290
Other real estate owned 3,954 3,675
------- -------
Total non-performing assets $18,506 $18,965
======= =======
Asset quality ratios:
Non-performing loans as percent of total loans 1.22% 1.28%
Non-performing assets as percent of total assets 1.10% 1.12%
Non-accrual loans totaled $8.8 million at March 31, 1995, representing a
decrease of $718,000 from $9.5 million at December 31, 1994. The ratio of
non-accrual loans to total loans decreased from .80% at December 31, 1994 to
.73% at March 31, 1995. The decrease was the result of management's continued
focus on improved asset quality.
Non-performing loans are closely monitored on an ongoing basis as part of
the Corporation's loan review process. The potential risk of loss on these
loans is evaluated by comparing the loan balance to the present value of
projected future cash flows or the value of any underlying collateral,
recognizing losses where appropriate.
-8-
<PAGE>
Management's analysis of the allowance for loan losses includes the
evaluation of the loan portfolio based on internally generated loan review
reports and the historical loss experience of the remaining balances of the
various homogeneous loan pools which comprise the loan portfolio. Specific
factors which are evaluated include the previous loan loss experience with the
customer, the status of past due interest and principal payments on the loan,
the collateral position of the loan, the quality of financial information
supplied by the borrower and the general financial condition of the borrower.
Historical loss experience on the remaining portfolio segments is considered
in conjunction with current status of economic conditions, loan loss trends,
delinquency and non-accrual trends, credit administration, concentrations of
credit and off-balance sheet risk.
Following is a summary of changes in the allowance for loan losses and
selected ratios (dollars in thousands):
At or for the
Three Months Ended
March 31,
-------------------
1995 1994
------- -------
Balance at beginning of period $20,295 $16,440
Charge-offs (1,342) (933)
Recoveries 428 526
------- -------
Net charge-offs (914) (407)
Provision for loan losses 1,541 2,686
------- -------
Balance at end of period $20,922 $18,719
======= =======
Net charge-offs as percent of average loans,
net of unearned (annualized) .31% .14%
Allowance for loan losses to:
Total loans, net of unearned income 1.75% 1.65%
Non-performing assets 113.06% 90.38%
The allowance for loan losses totaled $20.9 million at March 31, 1995,
representing an increase of $2.2 million or 11.77% compared to March 31, 1994.
The ratio of allowance for loan losses to total loans has increased from 1.65%
at March 31, 1994 to 1.75% at March 31, 1995. The ratio of allowance for loan
losses to non-performing assets increased to 113.06% at March 31, 1995,
compared to 90.38% at
March 31, 1994. The ratio of net charge-offs to average loans, net of
unearned income, outstanding (annualized) increased from .14% at March 31,
1994 to .31% at March 31, 1995, a result of slight increases in charge-offs
for commercial and consumer loans during the first three months of 1995 and
the Corporation realizing a substantial recovery in the first quarter of 1994.
FINANCIAL INFORMATION SUMMARY
Net income for the first quarter of 1995 was $4.0 million compared to
$2.9 million for the first quarter of 1994. Primary earnings per share for
those periods were $.46 and $.33, respectively, and $.44 and $.32 on a fully
diluted basis. Highlights for the first quarter of 1995 include:
* A 12.56% return on average equity and a .96% return on
average assets.
* A net interest margin on a fully taxable equivalent basis
of 5.04%.
* The provision for loan losses for the first quarter of
1995 at $1.5 million was 42.63% lower than the provision
recorded for the first quarter of 1994.
-9-
<PAGE>
First Three Months of 1995 as Compared to First Three Months of 1994:
The following table provides information regarding the average balances
and yields and rates on interest earning assets and interest bearing
liabilities (dollars in thousands):
<TABLE>
<CAPTION>
Three Months Ended March 31 1995 1994
-------------------------------- --------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
---------- ---------- ------ ---------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest earning assets:
Interest bearing deposits
with banks $ 3,996 $ 48 4.79% $ 10,861 $ 36 1.33%
Federal funds sold 12,601 188 5.97 20,682 204 3.95
Securities:
U.S. Treasury and other
U.S. Government agencies
and corporations 315,417 4,232 5.44 371,552 4,795 5.23
States of the U.S. and
political subdivisions (1) 35,246 548 6.22 36,410 600 6.59
Other securities (1) 14,043 179 5.09 10,808 191 7.07
Loans (1) (2) 1,195,994 27,951 9.48 1,132,566 25,313 9.06
---------- -------- ---------- --------
Total interest
earning assets 1,577,297 33,146 8.52 1,582,879 31,139 7.97
---------- -------- ---------- --------
Cash and due from banks 52,309 49,408
Allowance for loan losses (20,779) (17,395)
Premises and equipment 22,987 23,962
Other assets 45,672 48,573
---------- ----------
$1,677,486 $1,687,427
========== ==========
Liabilities
Interest bearing liabilities:
Deposits:
Interest bearing demand $ 156,380 686 1.78 $ 169,168 821 1.97
Savings 444,599 2,730 2.49 510,925 3,178 2.52
Other time 665,163 8,481 5.17 611,750 6,929 4.59
Short-term borrowings 59,698 849 5.75 66,289 845 5.16
Long-term debt 39,053 781 8.00 31,394 624 7.95
---------- -------- ---------- --------
Total interest
bearing liabilities 1,364,893 13,527 4.02 1,389,526 12,397 3.62
Non-interest bearing
demand deposits 155,292 152,320
Other liabilities 28,658 28,355
---------- ----------
1,548,843 1,570,201
---------- ----------
Minority Interest 520
----------
Stockholders' Equity
Preferred stock 4,562 4,581
Common stock 16,415 15,577
Additional paid-in capital 52,035 46,540
Retained earnings 54,902 48,232
Net unrealized securities
gains 1,033 1,980
Treasury stock (304) (204)
---------- ----------
Total stockholders' equity 128,643 116,706
---------- ----------
$1,677,486 $1,687,427
========== ==========
Excess of interest earning
assets over interest
bearing liabilities $ 212,404 $ 193,353
========== ==========
Net interest income $ 19,619 $ 18,742
======== ========
Net interest spread 4.50% 4.35%
===== =====
Net interest margin (3) 5.04% 4.80%
===== =====
<FN>
(1) The amounts are reflected on a fully taxable equivalent basis using
the federal statutory tax rate of 35% adjusted for certain federal tax
preferences.
(2) Average outstanding includes non-accrual loans. Loans consist of
average total loans less average unearned income. The amount of loan
fees included in interest income on loans is immaterial.
(3) Net interest margin is calculated by dividing the difference between
total interest earned and total interest paid by total interest
earning assets.
</TABLE>
-10-
<PAGE>
Net interest income, the Corporation's primary source of earnings, is the
amount by which interest and fees generated by interest earning assets,
primarily loans and securities, exceed interest expense on deposits and
borrowed funds. During the first three months of 1995, net interest income,
on a fully taxable equivalent basis, totaled $19.6 million, representing a
4.68% increase over the first three months of 1994. Net interest income as a
percentage of average earning assets (commonly referred to as the margin) rose
to 5.04% at March 31, 1995 from 4.80% at March 31, 1994.
Net interest income can be analyzed in terms of the impact of changing
volumes of interest earning assets and interest bearing liabilities. The
following table sets forth certain information regarding changes in net
interest income attributable to changes in the volumes of interest earning
assets and interest bearing liabilities and changes in the rates for the three
months ending March 31, 1995 as compared to the three months ending March 31,
1994 (in thousands):
Volume Rate Net
------- ------- -------
Interest Income
Interest bearing deposits with banks $ (137) $ 149 $ 12
Federal funds sold (389) 373 (16)
Securities:
U.S. Treasury and other U.S.
Government agencies and corporations (3,030) 2,467 (563)
States of the U.S. and political subdivisions (75) 23 (52)
Other securities 196 (208) (12)
Loans 5,895 (3,257) 2,638
------- ------- -------
2,460 (453) 2,007
------- ------- -------
Interest Expense
Deposits:
Interest bearing demand (241) 106 (135)
Savings (1,654) 1,206 (448)
Other time 2,580 (1,028) 1,552
Short-term borrowings (98) 102 4
Long-term debt 613 (456) 157
------- ------- -------
1,200 (70) 1,130
------- ------- -------
Net Change $ 1,260 $ (383) $ 877
======= ======= =======
The amount of change not solely due to rate or volume changes was
allocated between the change due to rate and the change due to volume based on
the relative size of the rate and volume changes.
Total interest income on a fully taxable equivalent basis increased $2.0
million or 6.45% for the first three months of 1995, compared to the first
three months of 1994. Interest income on taxable securities decreased by
$563,000 or 11.74% over these same periods primarily as a result of maturities
of taxable securities being used to fund loan demand. The greater loan demand
resulted in an increase of $2.6 million in interest income on loans, including
fees, on a fully taxable equivalent basis.
Total interest expense increased $1.1 million or 9.12% for the three
months ended March 31, 1995, compared to the three months ended March 31,
1994. Interest expense on deposits accounted for the majority of this
increase, $969,000, as a result of the increasing interest rate environment
and the change in the deposit mix from savings accounts to higher paying
certificate accounts.
The provision for loan losses totaled $1.5 million for the first three
months of 1995, representing a decrease of $1.1 million or 42.63% from the
first three months of 1994, a direct result of the improvement in asset
quality at the Corporation. The provision for loan losses charged to
operations is a direct result of management's analysis of the adequacy of the
allowance for loan losses which takes into consideration all factors relevant
to the collectibility of the existing portfolio.
-11-
<PAGE>
Total non-interest income decreased slightly during the first three
months of 1995, compared to the same period of 1994 due to a decrease in the
gain on sale of securities.
Total non-interest expenses increased $267,000 or 1.80% during the first
three months of 1995, compared to the first three months of 1994. Salaries
and employee benefits accounted for the majority of this increase.
Income before taxes was $5.9 million for the first three months of 1995,
representing an increase of $1.6 million or 37.01% over the same period of
1994. Income taxes increased $532,000 or 39.58% over the same periods due to
more taxable income being generated by the Corporation.
Consolidated net income was $4.0 million for the first three months of
1995, representing a $1.1 million or 35.83% increase over the first three
months of 1994. The Corporation's return on average assets was .96% and .70%
for the first three months of 1995 and 1994, respectively, while the return on
average equity was 12.56% and 10.19% for those same periods.
PART II
Item 1. Legal Proceedings
No material pending legal proceedings exist to which the Corporation or
any of its subsidiaries is a party, or of which any of their property is the
subject, except ordinary routine proceedings which are incidental to the
ordinary conduct of business. In the opinion of management, pending legal
proceedings will not have a material adverse effect on the consolidated
financial position of the Corporation and its subsidiaries.
Item 2. Changes in Securities
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
3.1. Articles of Incorporation as currently in effect and any amendments
thereto. (Incorporated by reference to Exhibit 3.1. of the
Corporation's Form 10-K for the year ended December 31, 1992).
3.2. By-laws of the Corporation as currently in effect (incorporated by
reference to Exhibit 4 of the Corporation's Form 10-Q for the
quarter ended June 30, 1994).
-12-
<PAGE>
4 The rights of holders of equity securities are defined in portions
of the Articles of Incorporation and By-laws. The Articles of
Incorporation are incorporated by reference to Exhibit 3.1. of the
registrant's Form 10-K for the year ended December 31, 1992. The
By-laws are incorporated by reference to Exhibit 4 of the
registrant's Form 10-Q for the quarter ended June 30, 1994. A
designation statement defining the rights of F.N.B. Corporation
Series A - Cumulative Convertible Preferred Stock is incorporated
by reference to Form S-14, Registration Statement of F.N.B.
Corporation, File No. 2-96404. A designation statement defining
the rights of F.N.B. Corporation Series B - Cumulative Convertible
Preferred Stock is incorporated by reference to Exhibit 4 of the
registrant's Form 10-Q for the quarter ended June 30, 1992. The
Corporation agrees to furnish to the Commission upon request
copies of all instruments not filed herewith defining the rights
of holders of long-term debt of the Corporation and its
subsidiaries.
10.1. Form of agreement regarding deferred payment of directors' fees by
First National Bank of Pennsylvania. (Incorporated by reference
to Exhibit 10.1. of the Corporation's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993).
10.2. Form of agreement regarding deferred payment of directors' fees by
F.N.B. Corporation. (Incorporated by reference to Exhibit 10.2.
of the Corporation's Annual Report on Form 10-K for the fiscal
year ended December 31, 1993).
10.3. Form of Deferred Compensation Agreement by and between First
National Bank of Pennsylvania and four of its executive officers.
(Incorporated by reference to Exhibit 10.3. of the Corporation's
Annual Report on Form 10-K for the fiscal year ended December 31,
1993).
10.4. Employment Agreement between The Metropolitan Savings Bank of
Youngstown and Samuel K. Sollenberger. (Incorporated by reference
to Exhibit 10.4. of the Corporation's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993).
10.5. Employment Agreement between F.N.B. Corporation and Peter
Mortensen. (Incorporated by reference to Exhibit 10.5. of the
Corporation's Annual Report on Form 10-K for the fiscal year ended
December 31, 1990).
10.6. Employment Agreement between F.N.B. Corporation and Stephen J.
Gurgovits. (Incorporated by reference to Exhibit 10.6. of the
Corporation's Annual Report on Form 10-K for the fiscal year ended
December 31, 1990).
10.7. Employment Agreement between F.N.B. Corporation and Samuel K.
Sollenberger. (incorporated by reference to Exhibit 10.7. of the
Corporation's Form 10-Q for the quarter ended March 31, 1994).
10.8. Employment Agreement between F.N.B. Corporation and William J.
Rundorff. (Incorporated by reference to Exhibit 10.8. of the
Corporation's Annual Report on Form 10-K for the fiscal year ended
December 31, 1991).
10.9. Supplemental Executive Retirement Plan of F.N.B. Corporation
effective January 1, 1992. (Incorporated by reference to Exhibit
10.9. of the Corporation's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993).
10.10. F.N.B. Corporation 1990 Stock Option Plan. (Incorporated by
reference to Exhibit 10.10. of the Corporation's Annual Report on
Form 10-K for the fiscal year ended December 31, 1993).
10.11. F.N.B. Corporation Restricted Stock Bonus Plan dated January 1,
1994. (Incorporated by reference to Exhibit 10.11. of the
Corporation's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993).
-13-
<PAGE>
11 F.N.B. Corporation
Statement re Computation of Per Share Earnings
Dollars in thousands
Three Months Ended March 31 1995 1994
--------- ---------
Primary
Net Income $ 3,984 $ 2,933
Less: Preferred Stock Dividends Declared (213) (214)
--------- ---------
Net Income Applicable to Common Stock $ 3,771 $ 2,719
========= =========
Average Common Shares Outstanding 8,188,728 8,163,870
Net Effect of Dilutive Stock Options -
Based on the Treasury Stock Method Using
Average Market Price 29,846 13,685
--------- ---------
8,218,574 8,177,555
========= =========
Net Income per Common Share $0.46 $0.33
===== =====
Fully Diluted
Net Income $ 3,984 $ 2,933
Plus: Minority Interest 12
--------- ---------
Net Income Applicable to Common Stock $ 3,984 $ 2,945
========= =========
Average Common Shares Outstanding 8,188,728 8,163,870
Series A Convertible Preferred Stock 38,322 61,393
Series B Convertible Preferred Stock 799,565 801,420
Minority Interest Convertible Preferred
Stock 32,713
Net Effect of Dilutive Stock Options -
Based on the Treasury Stock Method
Using the Year-End Market Price, If
Higher than Average Market Price 32,081 13,685
--------- ---------
9,058,696 9,073,081
========= =========
Net Income per Common Share $0.44 $0.32
===== =====
(b) Reports on Form 8-K
No reports on Form 8-K were filed for the three months ended
March 31, 1995.
-14-
<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.
F.N.B. Corporation
_____________________________________
(Registrant)
Dated: May 10, 1995 Peter Mortensen
_________________________ _____________________________________
Peter Mortensen
Chairman and President
(Principal Executive Officer)
Dated: May 10, 1995 John D. Waters
_________________________ _____________________________________
John D. Waters
Vice President and Chief Financial
Officer
(Principal Financial Officer)
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