SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
Date of Report: August 13, 1996
F.N.B. CORPORATION
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(Exact name of registrant as specified in its charter)
Pennsylvania 0-8144 25-1255406
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(State of Incorporation) (Commission (IRS Employer
File Number) Identification No.)
Hermitage Square, Hermitage, Pennsylvania 16148
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(Address of principal executive offices) (Zip code)
(412) 981-6000
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(Registrant's telephone number, including area code)
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 5. OTHER EVENTS
On February 2, 1996, F.N.B. Corporation (FNB) signed a definitive merger
agreement with Southwest Banks, Inc. (Southwest), a bank holding company
headquartered in Naples, Florida, with assets of approximately $400 million.
The merger agreement calls for an exchange of .819 share of FNB common stock
for each share of Southwest common stock, after giving effect to the 5% stock
dividend announced on April 24, 1996. FNB has reserved 3,276,700 shares to be
issued in conjunction with the merger.
In connection with the merger agreement, Southwest granted FNB an option
to purchase, under certain circumstances, up to 727,136 shares of Southwest
common stock at a price of $15.00 per share. The exchange ratio, number of
shares under option and the price of the options are all subject to possible
adjustment. The planned merger has recently been approved by both the Federal
Reserve Bank of Cleveland and the Shareholders of Southwest Banks, Inc. The
transaction will be accounted for as a pooling of interests, and is expected to
close in early 1997, following Florida's statutory waiting period.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The following unaudited pro forma condensed combined financial statements
combine the historical unaudited consolidated financial statements of FNB and
Southwest on the assumption that the merger had been effective January 1, 1995.
Onetime merger costs have not been included in the pro forma adjustments. The
merger of a wholly-owned subsidiary of FNB with and into Southwest will be
accounted for as a pooling of interests in accordance with Generally Accepted
Accounting Principles. These statements should be read in conjunction with the
historical consolidated financial statements of FNB and Southwest.
The pro forma statements are intended for informational purposes and may
not be indicative of the combined financial position or results of operations
that actually would have occurred had the transaction been consummated during
the period or as of the date indicated, or which will be attained in the
future. The pro forma statements should be read in conjunction with the Form
10-Q for the period ended June 30, 1996 for FNB and Southwest.
The consolidated financial statements of Southwest from their Form 10-Q
for the period ended June 30, 1996 follow the unaudited pro forma condensed
combined financial statements.
<PAGE>
PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of June 30, 1996 - Unaudited
F.N.B. Pro Forma Pro Forma
Corporation Southwest Adjustments Combined
----------- ---------- ----------- ----------
(Dollars in thousands)
Assets
Cash and due from banks $ 67,877 $ 25,305 $ 93,182
Interest bearing deposits
with banks 1,556 1,556
Federal funds sold 11,917 8,000 19,917
Securities available
for sale 202,538 59,700 $ (3,150)(2) 259,088
Securities held to
maturity 155,239 18,456 173,695
Loans held for sale 7,273 7,273
Loans, net of unearned
income 1,271,432 267,048 1,538,480
Allowance for loan losses (22,102) (1,881) (23,983)
---------- ---------- -------- ----------
Net loans 1,256,603 265,167 1,521,770
---------- ---------- -------- ----------
Premises and equipment 24,294 14,414 38,708
Other assets 39,501 7,518 663 (2) 47,682
---------- ---------- -------- ----------
$1,759,525 $ 398,560 $ (2,487) $2,155,598
========== ========== ======== ==========
Liabilities
Deposits:
Non-interest bearing $ 159,442 $ 48,497 $ 207,939
Interest bearing 1,297,693 288,829 1,586,522
---------- ---------- -------- ----------
Total deposits 1,457,135 337,326 1,794,461
Short-term borrowings 92,801 27,563 120,364
Other liabilities 27,703 2,656 30,359
Long-term debt 32,916 32,916
---------- ---------- -------- ----------
Total Liabilities 1,610,555 367,545 1,978,100
---------- ---------- -------- ----------
Stockholders' Equity
Preferred stock 4,263 4,263
Common stock 18,225 365 $ (365)(4) 23,928
5,703 (3)
Additional paid-in
capital 67,955 28,323 (28,323)(4) 89,685
64,511 (3)
(41,526)(3)
(1,255)(2)
Retained earnings 56,683 3,162 59,845
Net unrealized securities
gains 2,906 (835) (1,232)(2) 839
Treasury stock (1,062) (1,062)
---------- ---------- -------- ----------
Total Stockholders'
Equity 148,970 31,015 (2,487) 177,498
---------- ---------- -------- ----------
$1,759,525 $ 398,560 $ (2,487) $2,155,598
========== ========== ======== ==========
Common shares outstanding
at period end 9,067,869 3,654,089 (172,621)(1) 11,919,191
========== ========== ======== ==========
(1) As of 6/30/96, FNB owned 172,621 shares of Southwest Common Stock.
(2) Adjust securities by Southwest Common Stock owned by FNB with a value of
$3,150,333; adjust net unrealized securities gains associated with the
stock and the related deferred taxes.
(3) Issuance of 2,851,322 shares of FNB Common Stock in exchange for all the
outstanding shares of Southwest Common Stock net of the book value of
Southwest Common Stock owned by FNB.
(4) Elimination of par value of $.10 per share of Southwest Common Stock.
<PAGE>
PRO FORMA CONDENSED COMBINED INCOME STATEMENT
For the six months ended June 30, 1996 - Unaudited
F.N.B. Pro Forma Pro Forma
Corporation Southwest Adjustments Combined
----------- ---------- ----------- ----------
(Dollars in thousands)
Interest Income
Loans, including fees $ 58,441 $ 12,020 $ 70,461
Securities:
Taxable 9,321 414 9,735
Tax exempt 800 800
Dividends 349 349
Other 647 2,408 3,055
---------- ---------- ----------- ----------
Total Interest Income 69,558 14,842 84,400
---------- ---------- ----------- ----------
Interest Expense
Deposits 26,219 5,596 31,815
Short-term borrowings 1,841 660 2,501
Long-term debt 1,387 1,387
---------- ---------- ----------- ----------
Total Interest Expense 29,447 6,256 35,703
---------- ---------- ----------- ----------
Net Interest Income 40,111 8,586 48,697
Provision for loan losses 2,806 480 3,286
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Net Interest Income
After Provision for
Loan Losses 37,305 8,106 45,411
---------- ---------- ----------- ----------
Non-Interest Income
Insurance commissions
and fees 1,891 1,891
Service charges 3,226 1,738 4,964
Trust 766 766
Gain on sale of
securities 566 17 583
Other 1,002 1,002
---------- ---------- ----------- ----------
Total Non-Interest
Income 7,451 1,755 9,206
---------- ---------- ----------- ----------
44,756 9,861 54,617
---------- ---------- ----------- ----------
Non-Interest Expenses
Salaries and employee
benefits 15,511 3,953 19,464
Net occupancy 2,420 618 3,038
Amortization of
intangibles 530 530
Equipment 1,745 978 2,723
Deposit insurance 615 615
Other 9,547 1,718 11,265
---------- ---------- ----------- ----------
Total Non-Interest
Expenses 30,368 7,267 37,635
---------- ---------- ----------- ----------
Income Before Taxes 14,388 2,594 16,982
Income taxes 4,445 894 5,339
---------- ---------- ----------- ----------
Net Income $ 9,943 $ 1,700 $ 0 $ 11,643
========== ========== =========== ==========
Net Income Per Common Share
Primary $1.04 $0.43 $0.92
===== ===== =====
Fully diluted $0.99 $0.43 $0.89
===== ===== =====
<PAGE>
PRO FORMA CONDENSED COMBINED INCOME STATEMENT
For the six months ended June 30, 1995 - Unaudited
F.N.B. Pro Forma Pro Forma
Corporation Southwest Adjustments Combined
----------- ---------- ----------- ----------
(Dollars in thousands)
Interest Income
Loans, including fees $ 56,019 $ 9,446 $ 65,465
Securities:
Taxable 8,601 405 9,006
Tax exempt 745 745
Dividends 299 299
Other 805 1,616 2,421
---------- ---------- ----------- ----------
Total Interest Income 66,469 11,467 77,936
---------- ---------- ----------- ----------
Interest Expense
Deposits 25,010 4,281 29,291
Short-term borrowings 1,670 1,120 2,790
Long-term debt 1,522 1,522
---------- ---------- ----------- ----------
Total Interest Expense 28,202 5,401 33,603
---------- ---------- ----------- ----------
Net Interest Income 38,267 6,066 44,333
Provision for loan losses 2,934 315 3,249
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Net Interest Income
After Provision for
Loan Losses 35,333 5,751 41,084
---------- ---------- ----------- ----------
Non-Interest Income
Insurance commissions
and fees 2,338 2,338
Service charges 3,413 1,148 4,561
Trust 755 755
Gain on sale of
securities 361 361
Other 866 866
---------- ---------- ----------- ----------
Total Non-Interest
Income 7,733 1,148 8,881
---------- ---------- ----------- ----------
43,066 6,899 49,965
---------- ---------- ----------- ----------
Non-Interest Expenses
Salaries and employee
benefits 14,812 3,210 18,022
Net occupancy 2,253 477 2,730
Amortization of
intangibles 650 650
Equipment 1,921 761 2,682
Deposit insurance 1,868 1,868
Other 9,185 1,766 10,951
---------- ---------- ----------- ----------
Total Non-Interest
Expenses 30,689 6,214 36,903
---------- ---------- ----------- ----------
Income Before Taxes 12,377 685 13,062
Income taxes 4,048 212 4,260
---------- ---------- ----------- ----------
Net Income $ 8,329 $ 473 $ 0 $ 8,802
========== ========== =========== ==========
Net Income Per Common Share
Primary $0.87 $0.12 $0.69
===== ===== =====
Fully diluted $0.84 $0.12 $0.68
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<PAGE>
SOUTHWEST BANKS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, DECEMBER 31,
1996 1995
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(Unaudited)
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ASSETS
Cash and Demand Balances Due from Banks $ 25,304,619 $ 25,135,628
Federal Funds Sold 8,000,000 31,724,000
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Total Cash and Cash Equivalents 33,304,619 56,859,628
Securities Available for Sale at Fair Value
(Cost of $61,039,084 and $50,109,434) 59,700,418 50,401,563
Securities Held to Maturity at Cost
(Fair Value of $18,266,313 and $23,946,120) 18,455,820 23,834,164
Loans 267,240,680 238,509,066
Less: Allowance for loan losses (1,881,306) (1,585,285)
Unearned income & deferred loan fees (192,000) (257,550)
------------ ------------
Net Loans 265,167,374 236,666,231
Premises and Equipment 14,414,159 14,413,940
Accrued Interest Receivable 2,776,571 2,594,888
Other Assets 4,741,488 1,691,377
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TOTAL $398,560,449 $386,461,791
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $337,326,267 $324,830,614
Federal Funds Purchased and Securities
Sold Under Agreements to Repurchase 17,563,295 18,276,769
Other Short Term Borrowings 10,000,000 10,000,000
Accrued Interest Payable 1,524,580 1,714,022
Accrued Expenses and Other Liabilities 1,130,659 1,696,483
------------ ------------
Total Liabilities 367,544,801 356,517,888
Stockholders' Equity:
Common Stock, Par Value $.10, 25,000,000
Shares Authorized, 3,654,089 Shares
Issued and Outstanding 365,409 365,409
Capital Surplus 28,322,888 28,322,888
Retained Earnings 3,162,276 1,462,295
Unrealized (Loss) Gain on Securities
Available for Sale (834,925) 182,201
Employee Stock Ownership Plan Obligation 0 (388,890)
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Total Stockholders' Equity 31,015,648 29,943,903
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TOTAL $398,560,449 $386,461,791
============ ============
See notes to consolidated financial statements.
<PAGE>
SOUTHWEST BANKS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Unaudited
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
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1996 1995 1996 1995
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INTEREST INCOME
Interest and Fees on Loans $6,141,018 $5,026,617 $12,019,898 $ 9,446,034
Interest on Federal Funds 111,426 154,487 414,073 404,668
Sold
Interest on Investment
Securities and Other 1,254,577 935,896 2,408,152 1,615,899
---------- ---------- ----------- -----------
Total Interest Income 7,507,021 6,117,000 14,842,123 11,466,601
INTEREST EXPENSE
Interest Expense on
Deposits 2,785,686 2,363,412 5,595,668 4,281,086
Interest on Short-Term
Borrowings 312,989 520,333 660,397 1,120,297
---------- ---------- ----------- -----------
Total Interest Expense 3,098,675 2,883,745 6,256,065 5,401,383
---------- ---------- ----------- -----------
Net Interest Income 4,408,346 3,233,255 8,586,058 6,065,218
Provision for Loan Losses 255,000 165,000 480,000 315,000
---------- ---------- ----------- -----------
Net Interest Income after
Provision for Loan Losses 4,153,346 3,068,255 8,106,058 5,750,218
OTHER INCOME
Service Charges,
Commissions and Fees 888,301 613,951 1,737,955 1,147,606
Gain on Sale of
Investment Securities 16,649 0 16,649 0
---------- ---------- ----------- -----------
Total Other Income 904,950 613,951 1,754,604 1,147,606
OTHER EXPENSE
Salaries and Benefits 1,997,669 1,644,292 3,952,531 3,209,969
Occupancy 324,647 253,682 617,550 476,880
Equipment Rental,
Depreciation and
Maintenance 495,226 405,499 978,875 760,691
General Operating 864,465 902,986 1,718,260 1,765,776
---------- ---------- ----------- -----------
Total Other Expenses 3,682,007 3,206,459 7,267,216 6,213,316
---------- ---------- ----------- -----------
Income Before Taxes 1,376,289 475,747 2,593,446 684,508
Provision for Income Taxes 477,050 157,057 893,464 211,495
---------- ---------- ----------- -----------
NET INCOME $ 899,239 $ 318,690 $ 1,699,982 $ 473,013
========== ========== =========== ===========
EARNINGS PER SHARE $0.23 $0.08 $0.43 $0.12
===== ===== ===== =====
Weighted average shares
outstanding 3,970,160 3,864,524 3,970,160 3,853,668
========= ========= ========= =========
See notes to consolidated financial statements.
<PAGE>
SOUTHWEST BANKS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
Six Months Ended June 30 1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,699,982 $ 473,013
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Depreciation and Amortization 870,395 625,319
Accretion of discounts and deferred
loan fees, net 35,362 (196,939)
Provision for loan losses 480,000 315,000
(Increase) decrease in other assets (3,050,111) 317
Increase (decrease) in accrued expenses
and other liabilities (176,935) 104,291
(Increase) decrease in accrued interest
receivable (181,683) (358,621)
Increase (decrease) in accrued interest
payable (189,442) 288,520
----------- -----------
Cash provided by (used in)
operating activities (512,432) 1,250,900
NET CASH FLOWS FROM INVESTING ACTIVITIES
Net increase in loans (28,486,318) (31,990,646)
Gross loan participations sold 0 0
Loan participations purchased (510,573) (2,232,834)
Purchase of held-to-maturity-securities 0 (2,208,179)
Proceeds from maturing held-to-maturity
securities 5,358,730 3,243,237
Purchases of available-for-sale securities (22,296,434) (19,045,615)
Proceeds from available-for-sale securities 11,980,453 5,387,015
Purchases of premises and equipment (870,614) (3,438,474)
----------- -----------
Cash used in investing activities (34,824,756) (50,285,496)
NET CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits 12,495,653 61,942,384
Net increase (decrease) in securities
sold under agreement to repurchase (713,474) 10,217,177
Net increase (decrease) in federal funds
purchased and other short-term borrowings 0 (4,500,000)
Net proceeds from sale of common stock 0 243,414
----------- -----------
Cash provided by financing activities 11,782,179 67,902,975
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (23,555,009) 18,868,379
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 56,859,628 14,934,854
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $33,304,619 $33,803,233
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION - Cash paid during period for:
Interest $ 6,445,507 $ 5,112,863
=========== ===========
Taxes $ 1,037,000 $ 353,500
=========== ===========
See notes to consolidated financial statements.
<PAGE>
SOUTHWEST BANKS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1: Basis of Presentation
The Consolidated Balance Sheets for Southwest Banks, Inc. and Subsidiaries (the
Company) as of June 30, 1996 and December 31, 1995, the Consolidated Statements
of Income for the three month and six month periods ended June 30, 1996 and
1995, and the Consolidated Statements of Cash Flows for the six month periods
ended June 30, 1996 and 1995 included in this form 10-Q have been prepared by
the Company which is responsible for their integrity and objectivity pursuant
to the rules and regulations of the Securities and Exchange Commission. The
statements are unaudited except for the Balance Sheet as of December 31, 1995
and have not been compiled, reviewed or audited by outside accountants.
The accounting policies followed for interim financial reporting are set forth
in Note A of the Company's latest Annual Report to Shareholders, which is
incorporated by reference in the Company's Annual Report on Form 10-K filed
with the Securities and Exchange Commission.
The Company maintains a system of internal accounting control designed to
provide reasonable assurance that assets are safeguarded and the transactions
are properly executed, recorded and summarized to produce reliable records and
reports.
To the best of management's knowledge and belief, the statements and related
information were prepared in conformity with generally accepted accounting
principles and are based on recorded transactions and management's best
estimates and judgments. The interim results of operations are not necessarily
indicative of the results which may be expected for the full year.
The consolidated financial statements included herein include, in the opinion
of management, all adjustments (which include only normal recurring
adjustments) necessary for a fair presentation of the financial condition and
results of operations of the Company for the periods indicated.
Note 2: Pending Merger Transaction
In February, 1996, the Company entered into an Agreement and Plan of Merger
with F.N.B. Corporation ("FNB"), Hermitage, Pennsylvania, which provides for
the merger of the Company into FNB. Upon effectiveness of the merger, the
Company's shareholders will become entitled to receive, 0.819 shares of FNB
common stock in exchange for each share of common stock of the Company then
held by them. In connection with this agreement, the Company has granted FNB
an option to purchase 727,163 shares of the Company's common stock for $15 per
share, which becomes exercisable upon the occurrence of certain events, as
defined.
The proposed merger is expected to be treated as a tax-free reorganization
under Section 368(a) of the Internal Revenue Code and shall be treated as a
pooling-of-interests for accounting purposes.
In this connection, the Company is deferring expenses associated with the
merger until such time as all conditions precedent to the merger are met or the
merger agreement is otherwise terminated. Costs incurred in connection with
the merger aggregate approximately $235,295. The merger is expected to be
completed in January, 1997.
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereto duly authorized.
F.N.B. CORPORATION
(Registrant)
By: /s/John D. Waters
---------------------------
Name: John D. Waters
Title: Vice President and
Chief Financial Officer
Dated: August 12, 1996
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