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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (Fee Required)
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
For the transition period from ________________________ to
____________________________ Commission file number 0-8144
F.N.B. CORPORATION
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(Exact name of registrant as specified in its charter)
Pennsylvania 25-1255406
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Hermitage Square
Hermitage, Pennsylvania 16148
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 412-981-6000
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $2 per share
7 1/2% Cumulative Convertible Preferred Stock, Series B, par value
$10 per share
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(Title of Class)
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 pre- ceding 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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The registrant estimates that as of January 31, 1996, the aggregate market
value of the voting stock held by non-affiliates of the registrant, computed by
reference to the last sale price as reported in the NASDAQ system for such
date, was approximately $182,346,650.
APPLICABLE ONLY TO CORPORATE REGISTRANTS:
As of January 31, 1996, the registrant had outstanding 8,602,400 shares of
common stock having a par value of $2 per share.
Continued
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DOCUMENTS INCORPORATED BY REFERENCE
Part of Form 10-K into
DOCUMENT which Document is Incorporated
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Annual Report to Stockholders for fiscal year
ended December 31, 1995 I & II
Definitive proxy statement for the 1996 Annual
Meeting of Stockholders to be held on April 24, 1996 III
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FORM 10-K
1995
INDEX
<TABLE>
<CAPTION>
PART I PAGE
<S> <C>
Item 1. Business
General I-2
Statistical Disclosure I-10
Item 2. Properties I-11
Item 3. Legal Proceedings I-12
Item 4. Submission of Matters to a Vote of Security Holders I-12
Executive Officers of the Registrant I-13
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters II-1
Item 6. Selected Financial Data II-1
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations II-1
Item 8. Financial Statements and Supplementary Data II-1
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure II-1
PART III
Item 10. Directors and Executive Officers of the Registrant III-1
Item 11. Executive Compensation III-1
Item 12. Security Ownership of Certain Beneficial Owners and Management III-1
Item 13. Certain Relationships and Related Transactions III-1
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K IV-1
Signatures IV-2
Index to Exhibits IV-6
</TABLE>
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PART I
ITEM 1. BUSINESS
GENERAL
F.N.B. Corporation (the Corporation) was formed in 1974 as the holding
company of its then sole subsidiary, First National Bank of Mercer County.
Since its formation, the Corporation has acquired and currently operates four
other banks, one savings and loan and one consumer finance company in
Pennsylvania, eastern Ohio and western New York. During 1992, First National
Bank of Mercer County completed an acquisition of the fixed assets, certain
loans, deposits and related accruals of ten branches of the former The First
National Bank of Pennsylvania and three branch offices of Marine Bank. At the
same time, First National Bank of Mercer County changed its name to First
National Bank of Pennsylvania (First National).
The Corporation, through its subsidiaries, provides a full range of
financial services, principally to consumers and small- to medium-size
businesses in its market areas. The Corporation's business strategy has been
to focus primarily on providing quality, community-based financial services
adapted to the needs of each of the markets it serves. The Corporation has
emphasized its community orientation by preserving the names and local boards
of directors of its subsidiaries, by allowing its subsidiaries autonomy in
decision-making and thus enabling them to respond to customer requests more
quickly, and by concentrating on transactions within its market areas.
However, while the Corporation has sought to preserve the identities and
autonomy of its subsidiaries, it has established centralized credit analysis,
loan review, investment, audit and data processing functions. The
centralization of these processes has enabled the Corporation to maintain
consistent quality of these functions and to achieve certain economies of
scale.
The Corporation's lending philosophy is to minimize credit losses by
following uniform credit approval standards (which include independent analysis
of realizable collateral value), diversifying its loan portfolio, maintaining a
relatively modest average loan size and conducting ongoing review and
management of the loan portfolio. The Corporation is an active residential
mortgage lender, and its commercial loans are generally to established local
businesses. The Corporation does not have a significant amount of construction
loans and has no highly leveraged transaction loans or loans to foreign
countries.
No material portion of the deposits of the Corporation's bank or savings
and loan subsidiaries has been obtained from a single or small group of
customers, and the loss of any customer's deposits or a small group of
customers' deposits would not have a material adverse effect on the business of
the Corporation.
Information as of December 31, 1995 for the Corporation's bank, savings
and loan and consumer finance subsidiaries (including the year established and
location of principal office for each) is set forth below. All subsidiaries
are wholly-owned by the Corporation. In January 1995, the holders of a
minority interest in First County Bank exchanged their First County stock for
shares of the Corporation's common stock.
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<TABLE>
<CAPTION>
NUMBER OF
TOTAL ASSETS BRANCH
BANK SUBSIDIARIES: (IN THOUSANDS) OFFICES
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<S> <C> <C>
First National Bank of Pennsylvania (Est. 1864)
Hermitage, Pennsylvania.................................. $ 906,123 29
The Metropolitan Savings Bank of Ohio (Est. 1922)
Youngstown, Ohio......................................... 339,076 11
Reeves Bank (Est. 1868)
Beaver Falls, Pennsylvania............................... 132,829 9
Bucktail Bank and Trust Company (Est. 1928)
Emporium, Pennsylvania................................... 114,200 7
First County Bank (Est. 1987)
Chardon, Ohio............................................ 43,837 2
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$1,536,065 58
========== ==
SAVINGS AND LOAN SUBSIDIARY:
Dollar Savings Association (Est. 1898)
New Castle, Pennsylvania................................. $ 85,874 2
========== ==
CONSUMER FINANCE SUBSIDIARY:
Regency Finance Company (Est. 1927)
Hermitage, Pennsylvania.................................. $ 100,060 33
========== ==
</TABLE>
The Corporation has three other subsidiaries, Penn-Ohio Life Insurance
Company, Est. 1981 (Penn-Ohio), Mortgage Service Corporation, Est. 1944
(Mortgage Service), and F.N.B. Building Corporation, Est. 1987 (F.N.B.
Building). Penn-Ohio underwrites, as a reinsurer, credit life and accident and
health insurance sold by the Corporation's subsidiaries. These activities are
incidental to the Corporation's banking business. Mortgage Service services
mortgage loans for unaffiliated financial institutions and F.N.B. Building
owns real estate that is leased to certain affiliates.
OPERATIONS OF THE BANK SUBSIDIARIES
The Corporation's bank subsidiaries offer services traditionally offered
by full-service commercial banks, including commercial and individual demand
and time deposit accounts, commercial, mortgage and individual installment
loans, credit card services through correspondent banks, night depository,
automated teller services, computer services, safe deposit boxes, money order
services, travelers checks, government savings bonds, food stamp sales and
utility bill payments.
In addition, First National and Bucktail Bank and Trust Company
(Bucktail) operate trust departments which offer a broad range of personal and
corporate fiduciary services, including the administration of decedent and
trust estates. As of December 31, 1995, trust assets under management at First
National and Bucktail totaled $266.4 million.
OPERATIONS OF THE SAVINGS AND LOAN SUBSIDIARY
The Corporation's savings and loan subsidiary provides lending and
depositor services typically offered by savings and loan associations,
emphasizing residential mortgage lending while maintaining an increasing level
of activity as a commercial lender.
In December 1995, First National and Dollar Savings Association agreed
to merge, with First National being the survivor. The relevant applications
with federal and state regulatory authorities are pending and the merger
transaction is expected to be completed during the second quarter of 1996.
OPERATIONS OF THE CONSUMER FINANCE SUBSIDIARY
The Corporation's consumer finance subsidiary is involved principally in
making personal installment loans to individuals and purchasing installment
sales finance contracts from retail merchants and automobile dealerships. Such
activity is funded by advances from the Corporation which are available from
the sale of the Corporation's subordinated notes.
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REGULATION AND SUPERVISION
Bank holding companies, banks, savings and loan holding companies,
savings and loan associations and consumer finance companies are extensively
regulated under both federal and state law. To the extent that the following
information describes statutory or regulatory provisions, it is qualified in
its entirety by reference to the particular statutory and regulatory
provisions. Any change in applicable law or regulation may have a material
effect on the business and prospects of the Corporation and its subsidiaries.
The regulation and examination of the Company and its subsidiaries are
designed primarily for the protection of depositors and not the Corporation or
its stockholders.
BANK HOLDING COMPANIES
The Corporation is registered as a bank holding company under the Bank
Holding Company Act of 1956 (BHCA) and, as such, is subject to regulation by
the Federal Reserve Board. As a bank holding company, the Corporation is
required to file with the Federal Reserve Board an annual report and such
additional information as the Federal Reserve Board may require pursuant to the
BHCA. The Federal Reserve Board may also make examinations of the Corporation.
The BHCA requires the prior approval of the Federal Reserve Board in any
case where a bank holding company proposes to acquire direct or indirect
ownership or control of more than 5% of the voting shares of any bank (unless
it owns a majority of such bank's voting shares) or otherwise to control a bank
or to merge or consolidate with any other bank holding company. Effective
September 29, 1995, the Riegle-Neal Interstate Banking and Branching Efficiency
Act of 1994 authorizes the Federal Reserve Board to permit a bank holding
company that meets all applicable capital requirements to acquire control, or
substantially all of the assets, of a bank located in another state that is not
the bank holding company's home state, regardless of whether the other state
prohibits such transaction.
The BHCA also prohibits a bank holding company, with certain exceptions,
from acquiring more than 5% of the voting shares of any company that is not a
bank and from engaging in any business other than banking or managing or
controlling banks. Under the BHCA, the Federal Reserve Board is authorized to
approve the ownership of shares by a bank holding company in any company the
activities of which the Federal Reserve has determined to be so closely related
to banking or to managing or controlling banks as to be a proper incident
thereto. The Federal Reserve Board has by regulation determined that certain
activities are closely related to banking within the meaning of the BHCA.
These activities, which are listed in Regulation Y of the Federal Reserve
Board, include: operating a mortgage company, finance company, credit card
company or factoring company; performing certain data processing operations;
providing investment and finance advice; and acting as an insurance agent for
certain types of credit-related insurance.
Activities which the Federal Reserve Board has approved by order in
connection with specific applications by bank holding companies include the
operation of a credit card bank or other non-bank banks, certain expanded
student loan servicing activities, the buying and selling of gold and silver
bullion and silver coin for the account of customers and for itself, the
provision of certain financial office services, the printing and sale of checks
and similar documents, underwriting and dealing in commercial paper, certain
municipal revenue bonds and one to four family mortgage backed securities,
subject to certain conditions, and underwriting and dealing in corporate debt
or equity securities, subject to certain conditions. Bank holding companies
also are permitted to acquire savings associations subject to the applicable
requirements of the BHCA.
In approving acquisitions by bank holding companies of banks and
companies engaged in banking-related activities, the Federal Reserve Board
considers a number of factors, including the expected benefits to the public,
such as greater convenience, increased competition or gains in efficiency, as
weighed against the risks of possible adverse
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effects, such as undue concentration of resources, decreased or unfair
competition, conflicts of interest or unsound banking practices. The Federal
Reserve Board is also empowered to differentiate between new activities and
activities commenced through acquisition of a going concern.
Bank holding companies and their subsidiary banks and savings and loans
are also subject to the provisions of the Community Reinvestment Act of 1977
(CRA). Under the terms of the CRA, the Federal Reserve Board (or other
appropriate bank regulatory agency) is required, in connection with its
examination of a financial institution, to assess the financial institution's
record in meeting the credit needs of the communities served by the financial
institution, including low and moderate-income neighborhoods. Further, such
assessment is also required of any financial institution which has applied to
(i) obtain a federally-regulated financial institution charter; (ii) obtain
deposit insurance coverage for a newly chartered institution; (iii) establish a
new branch office that will accept deposits; (iv) relocate an office; or (v)
merge or consolidate with, or acquire the assets or assume the liabilities of,
a federally-regulated financial institution. In the case of a bank holding
company applying for approval to acquire a bank, savings and loan, or other
bank holding company, the Federal Reserve Board will assess the record of each
subsidiary of the applicant bank holding company, and such records may be the
basis for denying the application or imposing conditions in connection with
approval of the application.
SAVINGS AND LOAN HOLDING COMPANIES
The Corporation is also registered as a savings and loan holding company
under the Home Owner's Loan Act (HOLA). Savings and loan holding companies are
subject to regulation by the Office of Thrift Supervision (OTS). The HOLA
requires the prior approval of the OTS in any case where a savings and loan
holding company or an officer, director or 25% stockholder of a savings and
loan holding company proposes to (i) acquire control of any other savings
association or savings and loan holding company or any company controlling the
assets thereof or (ii) acquire or retain more than 5% of the voting shares of a
savings association or holding company thereof which is not a subsidiary of the
acquiror.
BANKS
The Corporation's bank subsidiaries are supervised and regularly
examined by the Office of the Comptroller of Currency (OCC), the Federal
Deposit Insurance Corporation (FDIC), the Pennsylvania Department of Banking
and the Ohio Division of Financial Institutions, which consists of the Ohio
Division of Banks and the Ohio Division of Savings Banks. The various laws and
regulations administered by the regulatory agencies affect corporate practices,
such as payment of dividends, incurring debt and acquisition of financial
institutions and other companies, and affect business practices, such as
payment of interest on deposits, the charging of interest on loans, types of
business conducted and location of offices.
SAVINGS AND LOAN ASSOCIATION
The Corporation's savings and loan association subsidiary is supervised
and regularly examined by the OTS and the Pennsylvania Department of Banking.
The various laws and regulations administered by the regulatory agencies affect
corporate practices, such as payment of dividends, incurring debt and
acquisition of financial institutions and other companies, and affect business
practices, such as payment of interest on deposits, the charging of interest on
loans, types of business conducted, types of investment and location of
offices.
CONSUMER FINANCE SUBSIDIARY
The Corporation's consumer finance subsidiary is subject to regulation
under Pennsylvania, Ohio and New York state laws which require, among other
things, that it maintain licenses for consumer finance operations in effect
for each of its offices. Representatives of the Pennsylvania Department of
Banking, the Ohio Division of Consumer Finance and the State of New York
Banking Department periodically visit the offices of the consumer finance
subsidiary and conduct extensive examinations in order to determine
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compliance with such laws and regulations. Such examinations include a review
of loans, the collateral therefor and the adequacy of reserves as well as a
check of the procedures employed for making and collecting loans.
Additionally, the consumer finance subsidiary is subject to certain federal
laws which require that certain information relating to credit terms be
disclosed to customers and afford customers in certain instances the right to
rescind transactions.
LIFE INSURANCE SUBSIDIARY
Penn-Ohio is subject to examination on a triennial basis by the Arizona
Department of Insurance. Representatives of the Department of Insurance will
periodically determine whether Penn-Ohio has maintained required reserves,
established adequate deposits under a reinsurance agreement and complied with
reporting requirements under Arizona statutes.
FDIC INSURANCE ASSESSMENTS
The Corporation's bank and savings and loan subsidiaries are subject to
FDIC deposit insurance assessments for the Bank Insurance Fund (BIF) and
Savings Association Insurance Fund (SAIF). FIRREA authorized the FDIC to set
the annual premium for banks and savings associations as high as determined to
be necessary to assure stability of the insurance funds. FDIC deposit
insurance premium rates have been determined through a risk-based assessment
which takes into consideration the capital rating (i.e. "undercapitalized",
"adequately capitalized" or "well capitalized") assigned to the institution and
the supervisory subgroup ("healthy", "supervisory concern" or "substantial
supervisory concern") to which the institution is assigned by the federal
regulators.
During 1995, the FDIC voted to lower the deposit insurance premiums for
banks, now that the BIF has been funded to the required level. Conversely,
based on Financial Institutions Reform, Recovery and Enforcement Act of 1989
requirements, the SAIF is still under-funded and therefore, deposit premiums
have not been reduced. As a result, it is argued that thrifts are at a
competitive disadvantage. Congress is currently considering legislation to
impose a one-time deposit premium charge to recapitalize the SAIF. The amount
of this premium is uncertain, however, indications have been in a range of $.80
to $.90 per $100 of deposits. At December 31, 1995, the Corporation had
approximately $454.9 million in SAIF deposits.
GOVERNMENTAL POLICIES
The operations of the Corporation and its subsidiaries are affected not
only by general economic conditions, but also by the policies of various
regulatory authorities. In particular, the Federal Reserve Board regulates
money and credit and interest rates in order to influence general economic
conditions. These policies have a significant influence on overall growth and
distribution of loans, investments and deposits and affect interest rates
charged on loans or paid for time and savings deposits. Federal Reserve Board
monetary policies have had a significant effect on the operating results of
commercial banks and savings and loans in the past and are expected to continue
to do so in the future.
FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT (FDICIA)
FDICIA was designed to bolster the deposit insurance fund, tighten bank
regulation and trim the scope of federal deposit insurance as summarized below.
FDIC FUNDING - FDICIA bolstered the bank deposit insurance fund with
$70.0 billion in borrowing authority and increased to $30.0 billion from $5.0
billion the amount the FDIC can borrow from the U.S. Treasury to cover the
costs of bank failures. The loans, plus interest, would be repaid by premiums
that banks pay on domestic deposits over the next 15 years.
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BANK REGULATION - Under FDICIA, regulatory supervision is linked to bank
capital. Regulators have set five capital levels at which insured depository
institutions will be "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized," or "critically
undercapitalized." FDICIA established a framework for supervisory actions
regarding insured institutions and their holding companies that are not well or
adequately capitalized.
FDICIA provides for increased supervision for banks not rated in one of
the two highest categories under the "CAMEL" composite bank rating system. The
FDIC is authorized to charge banks for regular and special examinations.
The federal bank regulatory agencies are required by FDICIA to adopt
uniform capital and accounting rules. The accounting rules require
supplemental disclosure in reports to the banking agencies of all assets and
liabilities, including contingent assets and liabilities and, to the extent
feasible, of the estimated fair market valuation of assets and liabilities.
As mandated by Section 132 of FDICIA, in December of 1993, the federal
bank regulatory agencies published proposed regulations which prescribe minimum
safety and soundness standards with respect to internal control, internal
audit, loan documentation, credit underwriting, interest rate exposure, asset
growth and quality, earnings, compensation arrangements and stock valuation.
Institutions failing to meet these safety and soundness standards will be
required to submit corrective plans and will be subject to sanctions for
failure to submit or comply with a plan.
The Community Development and Regulatory Improvement Act of 1994 amended
section 132 of FDICIA to permit the regulatory agencies to implement the safety
and soundness standards relative to asset quality, earnings and stock valuation
by regulation or guidelines. The agencies will now be permitted to decide
whether or not to compel institutions that fail to meet these standards to
submit a compliance plan. Finally, depository institution holding companies
are no longer covered under Section 132 of FDICIA.
FDICIA also provided for certain consumer and low and moderate income
lending and deposit programs.
The legislation also required regulators to perform annual on-site bank
examinations, placed limits on real estate lending by banks and tightened
auditing requirements.
DEPOSIT INSURANCE - The legislation also reduced the scope of federal
deposit insurance. The FDIC's ability to reimburse uninsured deposits (those
over $100,000 and foreign deposits) was sharply limited beginning January 1995.
The Federal Reserve Board's ability to finance banks with extended loans from
its discount window was restricted, beginning December 1993. In addition, only
the best capitalized banks will be able to offer insured broker deposits or to
insure accounts established under employee pension plans.
LIMITS ON DIVIDENDS AND OTHER PAYMENTS
The parent company is a legal entity separate and distinct from its
subsidiaries. Most of the parent company's revenues result from dividends paid
to the parent company by the subsidiaries. The right of the parent company,
and consequently the right of creditors and stockholders of the Corporation, to
participate in any distribution of the assets or earnings of any subsidiary
through the payment of such dividends or otherwise is necessarily subject to
the prior claims of creditors of the subsidiary, except to the extent that
claims of the parent company in its capacity as a creditor may be recognized.
Moreover, there are various legal limitations applicable to the payment of
dividends by the subsidiaries as well as by the Corporation to its
stockholders. Under federal law, the subsidiaries may not, subject to certain
limited exceptions, make loans or extensions of credit to, or investments in
the securities of, the Corporation or take securities of the Corporation as
collateral for loans to any borrower. The subsidiaries are also subject to
collateral security requirements for any loans or extensions of credit
permitted by such exceptions.
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The subsidiaries are subject to various statutory and regulatory
restrictions on their ability to pay dividends to the parent company. Under
applicable federal and state statutes and regulations, the dividends that may
be paid to the parent company by its bank and savings and loan subsidiaries
without prior regulatory approval are subject to limitations. In the case of
First National, a national bank, prior approval of the OCC is required if the
total of all dividends declared in any calendar year will exceed net profits
(as defined and interpreted by the OCC) for that year combined with retained
net profits (as defined) for the two preceding calendar years. As Pennsylvania
state-chartered institutions, Bucktail and Reeves may pay dividends only if
they are solvent and would not be rendered insolvent by the dividend payments,
and only from unrestricted and unreserved earned surplus and, under certain
circumstances, capital surplus. Each must also maintain a leverage ratio of
6.00% after paying dividends. First County and Metropolitan, both Ohio
state-chartered institutions, may not pay dividends without approval of the
superintendent of banks if the total of all dividends declared in any year will
exceed net profits (as defined by statute) for that year combined with retained
net profits (as defined) for the two preceding years. In addition, after
payment of any dividend, First County's surplus must be at least 20 percent of
its capital. As a tier 1 association, Dollar is authorized to make capital
distributions during a calendar year up to the higher of 100% of its net income
during the year plus the amount that would reduce by one-half its surplus
capital ratio at the beginning of the calendar year or 75% of its net income
over the most recent four-quarter period upon delivering to the OTS a 30-day
notice. All banking and savings and loan subsidiaries are subject to the
capital requirements described below. Dividends may not be paid by these
subsidiaries if the payment of the dividend would cause the subsidiary to fall
below these minimum capital requirements.
In addition, the OCC, in the case of First National, the FDIC, in the
case of the Corporation's other bank subsidiaries, and the OTS, in the case of
the Corporation's savings and loan subsidiary, have authority to prohibit banks
and savings and loans from engaging in unsafe and unsound banking practices.
The payment of a dividend by a bank or savings and loan could, depending on the
financial condition of such bank or savings and loan and other factors, be
considered an unsafe and unsound banking practice. The OCC and the OTS have
indicated their view that it generally would be an unsafe and unsound practice
to pay dividends except out of current operating earnings. The ability of the
subsidiaries to pay dividends is, and is expected to continue to be, influenced
by regulatory policies and capital guidelines. (See also "Stockholders'
Equity" footnote in the Notes to Consolidated Financial Statements, which is
incorporated by reference to the Corporation's Annual Report to Stockholders).
CAPITAL REQUIREMENTS
The Federal Reserve Board has adopted risk-based capital guidelines
applicable to bank holding companies. 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.
Core Capital consists of common and qualifying preferred stockholders'
equity less non-qualifying intangibles. Total Capital consists of Core
Capital, qualifying subordinated debt and a portion of the allowance for loan
losses. Risk-based capital ratios are calculated with reference to
risk-weighted assets which consist of both on- and off- balance sheet risks.
The regulatory minimums are 4.00% for the Core Capital Ratio and 8.00% for the
Total Risk-Based Capital Ratio. The Corporation's Core Capital and Total
Risk-Based Capital to risk-weighted assets ratios as of December 31, 1995 were
11.74% and 13.86%, respectively.
In addition, the Federal Reserve Board has established minimum Leverage ratio
(Core Capital to quarterly average assets less non-qualifying intangibles)
guidelines for bank holding companies. These guidelines provide for a minimum
ratio of 3.00% for bank holding companies that meet certain specified criteria,
including that they have the highest regulatory rating. All other bank holding
companies are required to maintain a leverage ratio of 3.00% plus an additional
cushion of at least 100 to 200 basis points. The Corporation's Leverage ratio
as of December 31, 1995 was 8.16%. 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.
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Each bank and savings and loan subsidiary is subject to similar capital
requirements adopted by its primary federal regulator.
Bank regulators continue to indicate their desire to raise capital
requirements applicable to banking organizations beyond their current levels.
However, management is unable to predict whether higher capital ratios would be
imposed and, if so, at what levels and on what schedule.
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.
FIRREA
As a result of the enactment of the FIRREA on August 9, 1989, a
depository institution insured by the FDIC can be held liable for any loss
incurred, or reasonably expected to be incurred, by the FDIC after August 9,
1989 in connection with (i) the default of a commonly controlled FDIC-insured
depository institution or (ii) any assistance provided by the FDIC to a
commonly controlled FDIC-insured depository institution in danger of default.
"Default" is defined generally as the appointment of a conservator or receiver
and "in danger of default" is defined generally as the existence of certain
conditions indicating that a "default" is likely to occur in the absence of
regulatory assistance. Liability of any subsidiary under this
"cross-guarantee" provision could have a material adverse effect on the
financial condition of any assessed subsidiary and the Corporation.
MARKET AREA AND COMPETITION
The Corporation, through its subsidiaries, operates 93 offices in 33
counties in Pennsylvania, eastern Ohio and western New York. The economies of
the primary market area in which the Corporation and its subsidiaries operate,
western Pennsylvania and eastern Ohio, have evolved during the past decade from
ones dominated by heavy industry to ones which have a more diversified mix of
light manufacturing, service and distribution industries. This area is served
by Interstate Routes 90, 76, 79 and 80, and is located at the approximate
midpoint between New York City and Chicago. The area is also close to the
Great Lakes shipping port of Erie and the Greater Pittsburgh International
Airport.
The Corporation's subsidiaries compete with a large number of other
financial institutions, such as commercial banks, savings and loans, insurance
companies, consumer finance companies, credit unions and commercial finance and
leasing companies, many of which have greater resources than the Corporation,
for deposits, loans and service business. Money market mutual funds, brokerage
houses and similar institutions currently provide many of the financial
services offered by the Corporation's subsidiaries.
In the consumer finance subsidiary's market areas, the active
competitors include banks, credit unions and national, regional and local
consumer finance companies, some of which have substantially greater resources
than that of the consumer finance subsidiary. The ready availability of
consumer credit through charge accounts and credit cards constitutes additional
competition. The principal methods of competition include the rates of
interest charged for loans, the rates of interest paid to obtain funds and the
availability of customer services.
I-9
<PAGE> 12
With reciprocal interstate banking, the Corporation also faces the
prospect of additional competitors entering its markets as well as additional
competition in its efforts to acquire other subsidiaries and branches
throughout Pennsylvania and in neighboring states. (See "Regulation and
Supervision.")
EMPLOYEES
As of January 31, 1996, the Corporation and its subsidiaries had 792
full-time and 229 part-time employees. Management of the Corporation considers
its relationship with its employees to be satisfactory.
MERGERS AND ACQUISITIONS
See "Mergers and Acquisitions" footnote in the Notes to Consolidated
Financial Statements, which is incorporated by reference to the Corporation's
Annual Report to Stockholders.
STATISTICAL DISCLOSURE
Statistical disclosure information regarding the Corporation is included
in the Management's Discussion and Analysis, which is incorporated by reference
to the Corporation's Annual Report to Stockholders (see Part II, Item 7 below).
The following information is contained therein:
I. Distribution of Assets, Liabilities and Stockholders' Equity;
Interest Rates and Interest Differential
II. Investment Portfolio
III. Loan Portfolio
IV. Summary of Loan Loss Experience
V. Deposits
VI. Return on Equity and Assets
VII. Short-Term Borrowings
I-10
<PAGE> 13
ITEM 2. PROPERTIES
F.N.B. CORPORATION
The Corporation owns no real property. Its operations are conducted at
Hermitage Square, Hermitage, Pennsylvania, which property is owned by First
National.
FIRST NATIONAL
First National's main office (as described in its charter) is located at
166 Main Street, Greenville, Pennsylvania. Its administrative offices and a
branch office are located at Hermitage Square, Hermitage, Pennsylvania.
First National also has 27 other branch offices in western Pennsylvania,
including offices in Erie (6), Cochranton, Conneaut Lake, Conneautville, Corry,
Farrell, Franklin, Girard, Grove City (2), Greenville, Hermitage, Jamestown,
Meadville, Sharon (2), Sharpsville, Sheakleyville, Slippery Rock, Spartansburg,
Transfer, and West Middlesex. Nine of these branch locations are leased under
operating leases expiring at various dates through 2010. Generally, these
leases provide for renewal options. Eight of the remaining locations are owned
by F.N.B. Building and leased to First National.
First National also owns two other facilities located in Hermitage,
Pennsylvania, one of which is used for equipment storage and the other of which
is used as a regional data processing facility for First National and most of
its affiliates. First National owns two parcels of land adjacent to its data
processing facility. In addition, First National has announced plans to build
three new offices. One will house First National employees as well as become
headquarters for the Corporation in Hermitage, the second is for a building in
downtown Erie to serve as a regional headquarters and the third is a branch
office on Peach Street in Erie.
BUCKTAIL
Bucktail's main office is located at 2 East Fourth Street, Emporium,
Pennsylvania. Its administrative offices are located in the Executive Plaza
building in Williamsport, Pennsylvania which also houses its Williamsport
branch office.
Bucktail has five other branch locations in western and central
Pennsylvania, including offices in Williamsport (2), Johnsonburg, Hughesville
and Montoursville. Three of Bucktail's offices are leased under operating
leases expiring at various dates through 2009, with additional renewal options.
The remaining offices, including its main office in Emporium, are owned by
Bucktail.
REEVES
The main office of Reeves is located at 1217 Seventh Avenue, Beaver
Falls, Pennsylvania. Reeves has eight other branch offices in western
Pennsylvania, including offices in Beaver Falls (2), Beaver, Baden (2), Koppel,
Coraopolis and New Brighton. Four of these branch offices (including one
office owned by F.N.B. Building) are leased under operating leases expiring at
various dates through 2000; two of these leased offices are subject to
month-to-month leases with new lease proposals under review.
FIRST COUNTY
First County's main office is located at 540 Water Street, Chardon,
Ohio. First County also has a branch office located in Chester Township, Ohio.
The main office is owned by First County, while the Chesterland branch office
is occupied under an operating lease expiring in 1999.
METROPOLITAN
Metropolitan's main office and headquarters are located at One Federal
Plaza West, Youngstown, Ohio, in the central business district and banking
center of Youngstown. Metropolitan has ten other branch offices in eastern
Ohio, including offices in Austintown, Barnesville, Boardman (2), Brookfield,
Campbell, Hubbard, Liberty, Martins Ferry and St. Clairsville. All but one of
Metropolitan's facilities (including its main office) are owned by
Metropolitan, with the remaining office leased under an operating lease (from
F.N.B. Building). Metropolitan also leases the land on which the elevators at
its main office are located under a lease expiring in 2016.
I-11
<PAGE> 14
DOLLAR
Dollar's main office is located at 32 North Mill Street, New Castle,
Pennsylvania. Dollar has one other branch office located in New Castle,
Pennsylvania. The main office is leased under an operating lease expiring in
2000, while the New Castle branch is owned by Dollar.
REGENCY
The executive office of Regency is located at Hermitage Square,
Hermitage, Pennsylvania. Regency conducts its consumer loan operations at 33
offices located in Pennsylvania, eastern Ohio and western New York, including
Pennsylvania locations in Allentown, Bethlehem, Bloomsburg, Bradford, Butler,
Corry, Danville, DuBois, Erie, Eynon, Greenville, Grove City, Hanover,
Lewisburg, Meadville, New Castle, Scranton, Selinsgrove, Somerset, St. Marys,
State College, Stroudsburg, Titusville, Uniontown, Warren, West Pittston and
Wilkes-Barre; Ohio locations in Youngstown (3), Salem, and Warren; and one
location in Jamestown, New York.
The Titusville office is owned by Regency, while all other offices are
leased by Regency under operating leases expiring at various dates through
2005. Generally, these leases provide for renewal options.
Regency conducts its consumer loan operations in Pennsylvania and Ohio
under the names F.N.B. Consumer Discount Company, Citizens Budget Company,
Regency Consumer Discount Company and Reliance Consumer Discount Company. In
New York, consumer loan operations are conducted by Citizens Financial Services
of New York, Inc. and Citizens Equity Corporation of New York, both wholly-
owned subsidiaries of Regency. In Ohio, loan operations are conducted by
Citizens Financial Services, Inc., a wholly-owned subsidiary of Regency.
PENN-OHIO
Penn-Ohio's operations are conducted at Hermitage Square, Hermitage,
Pennsylvania. Penn-Ohio also rents office space at 4700 East Thomas Road,
Suite 204, Phoenix, Arizona, which is Penn-Ohio's corporate address.
MORTGAGE SERVICE
The executive office of Mortgage Service is located at Hermitage Square,
Hermitage, Pennsylvania, which is also the administrative office of First
National.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders through the
solicitation of proxies or otherwise during the fourth quarter of 1995.
I-12
<PAGE> 15
EXECUTIVE OFFICERS OF THE REGISTRANT
The names, ages and positions of the executive officers of the
Corporation, as of February 15, 1996, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION HELD
<S> <C> <C>
Peter Mortensen 60 Chairman, President and Director
Stephen J. Gurgovits 52 Executive Vice President and Director
John W. Rose 46 Executive Vice President
William J. Rundorff 47 Executive Vice President
Samuel K. Sollenberger 58 Vice President and Director
John D. Waters 49 Vice President and Chief Financial Officer
</TABLE>
Officers are elected annually by the Board of Directors immediately
following the annual meeting of stockholders. The term of office for all of
the above executive officers is for the period ending with the next annual
meeting.
PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE OF EXECUTIVE OFFICERS
Mr. Peter Mortensen is Chairman of the Corporation (1987 to the
present), President of the Corporation (1974 to the present) and Chairman of
the Board of First National (1987 to the present). Since 1959, Mr. Mortensen
has held various other executive positions with First National including
President (1972 to 1988) and Chief Executive Officer (1979 to 1988).
Mr. Stephen J. Gurgovits is Executive Vice President of the Corporation
(1995 to the present), Senior Vice President of the Corporation (1986 to 1995)
and President and Chief Executive Officer of First National (1988 to the
present). Mr. Gurgovits has served in various positions with First National
since 1961 and with the Corporation since 1974 including Executive Vice
President and Senior Loan Officer of First National (1979 to 1988).
Mr. John W. Rose is Executive Vice President of the Corporation (1995 to
the present). He previously served as President of McAllen Capital Partners,
Inc. (1992 to 1995) and President of Livingston Financial Group (1988 to
1992).
Mr. William J. Rundorff is Executive Vice President of the Corporation
(1995 to the present), Vice President of the Corporation (1991 to 1995) and
Vice President of First National (1991 to the present). He previously served
as Senior Vice President, Counsel and Secretary of United Banks of Colorado,
Inc. (1986 to 1991).
Mr. Samuel K. Sollenberger is Vice President of the Corporation (1989 to
the present), Chairman of Metropolitan (1996 to the present), President of
Metropolitan (1989 to 1996) and Chief Executive Officer of Metropolitan (1990
to the present).
Mr. John D. Waters is Vice President and Chief Financial Officer of the
Corporation (1994 to the present) and Senior Vice President and Chief Financial
Officer of First National (1994 to the present). He previously served as
Executive Vice President and Chief Financial Officer of WSFS Financial
Corporation (1988 to 1993).
I-13
<PAGE> 16
PART II
Information relating to Items 5, 6, 7 and 8 is provided in the Corporation's
1995 Annual Report to Stockholders under the captions and on the pages
indicated below, and is incorporated herein by reference:
<TABLE>
<CAPTION>
PAGES IN 1995
ANNUAL REPORT
CAPTION IN 1995 ANNUAL REPORT TO STOCKHOLDERS TO STOCKHOLDERS
<S> <C> <C>
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS 51
ITEM 6. SELECTED FINANCIAL DATA 37
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 38
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 14
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
</TABLE>
II-1
<PAGE> 17
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information relating to directors of the Corporation is provided in the
Corporation's definitive proxy statement filed with the Securities and Exchange
Commission in connection with its annual meeting of stockholders to be held
April 24, 1996. Such information is incorporated herein by reference.
Information relating to executive officers of the Corporation is provided in
Part I.
ITEM 11. EXECUTIVE COMPENSATION
Information relating to this item is provided in the Corporation's
definitive proxy statement filed with the Securities and Exchange Commission in
connection with its annual meeting of stockholders to be held April 24, 1996.
Such information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information relating to this item is provided in the Corporation's
definitive proxy statement filed with the Securities and Exchange Commission in
connection with its annual meeting of stockholders to be held April 24, 1996.
Such information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information relating to this item is provided in the Corporation's
definitive proxy statement filed with the Securities and Exchange Commission in
connection with its annual meeting of stockholders to be held April 24, 1996.
Such information is incorporated herein by reference.
III-1
<PAGE> 18
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) 1. FINANCIAL STATEMENTS
The following consolidated financial statements and report of
independent auditors of F.N.B. Corporation and subsidiaries,
included in the Corporation's 1995 Annual Report to Stockholders,
are incorporated herein by reference to Item 8:
<TABLE>
<CAPTION>
PAGES IN 1995
ANNUAL REPORT
TO STOCKHOLDERS
<S> <C>
Consolidated Balance Sheet 14
Consolidated Income Statement 15
Consolidated Statement of Stockholders' Equity 16
Consolidated Statement of Cash Flows 17
Notes to Consolidated Financial Statements 18
Report of Independent Auditors 36
Quarterly Earnings Summary 37
Included in Part IV of this report:
PAGE
Report of Independent Auditors,
S.R. Snodgrass, A.C., for the 1993 audit of
Reeves Bank IV-4
Report of Independent Auditors,
S.R. Snodgrass, A.C., for the 1993 audit of
Dollar Savings Association and Subsidiary IV-5
</TABLE>
(A) 2. FINANCIAL STATEMENT SCHEDULES
All Schedules are omitted because they are not applicable.
(A) 3. EXHIBITS
The exhibits filed or incorporated by reference as a part of
this report are listed in the Index to Exhibits which
appears at page IV-6 and are incorporated by reference.
(B) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the three months ended
December 31, 1995.
IV-1
<PAGE> 19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
By /s/ PETER MORTENSEN
------------------------------------
Peter Mortensen,
Chairman and President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ PETER MORTENSEN Chairman, President and February 27, 1996
- --------------------------- Director (Principal Executive Officer)
Peter Mortensen
/s/ STEPHEN J. GURGOVITS Executive Vice President and February 27, 1996
- --------------------------- Director
Stephen J. Gurgovits
/s/ SAMUEL K. SOLLENBERGER Vice President and Director March 4, 1996
- ---------------------------
Samuel K. Sollenberger
/s/ JOHN D. WATERS Vice President and Chief Financial February 27, 1996
- --------------------------- Officer (Principal Accounting Officer)
John D. Waters
- --------------------------- Director
W. Richard Blackwood
/s/ WILLIAM B. CAMPBELL Director February 27, 1996
- ---------------------------
William B. Campbell
/s/ CHARLES T. CRICKS Director February 27, 1996
- ---------------------------
Charles T. Cricks
/s/ HENRY M. EKKER Director February 27, 1996
- ---------------------------
Henry M. Ekker
Director
- ---------------------------
Thomas C. Elliott
</TABLE>
IV-2
<PAGE> 20
<TABLE>
<S> <C> <C>
/s/ THOMAS W. HODGE Director February 27, 1996
- ---------------------------
Thomas W. Hodge
/s/ GEORGE E. LOWE Director February 27, 1996
- ---------------------------
George E. Lowe
Director
- ---------------------------
Paul P. Lynch
Director
- ---------------------------
James B. Miller
Director
- ---------------------------
Robert S. Moss
Director
- ---------------------------
John R. Perkins
/s/ WILLIAM A. QUINN Director February 27, 1996
- ---------------------------
William A. Quinn
Director
- ---------------------------
George A. Seeds
/s/ WILLIAM J. STRIMBU Director February 27, 1996
- ---------------------------
William J. Strimbu
/s/ ARCHIE O. WALLACE Director February 27, 1996
- ---------------------------
Archie O. Wallace
/s/ JOSEPH M. WALTON Director February 27, 1996
- ---------------------------
Joseph M. Walton
/s/ JAMES T. WELLER Director February 27, 1996
- ---------------------------
James T. Weller
Director
- ---------------------------
Eric J. Werner
/s/ DONNA C. WINNER Director February 27, 1996
- ---------------------------
Donna C. Winner
</TABLE>
IV-3
<PAGE> 21
LOGO
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholder
Reeves Bank
We have audited the balance sheet of Reeves Bank as of December 31, 1993 and
the related statements of income, changes in stockholder's equity and cash
flows for the year then ended. These financial statements are the
responsibility of the Bank's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Reeves Bank as of
December 31, 1993, and the results of its operations, and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
S. R. SNODGRASS, A. C.
Wexford, PA
January 14, 1994
IV-4
<PAGE> 22
LOGO
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholder
Dollar Savings Association and Subsidiary
We have audited the consolidated balance sheet of Dollar Savings Association
and Subsidiary as of December 31, 1993 and the related consolidated statements
of income, changes in stockholder's equity and cash flows for the year then
ended. These financial statements are the responsibility for the Association's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Dollar Savings
Association and Subsidiary as of December 31, 1993, and the results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
As discussed in the notes to the consolidated financial statements, in 1993 the
Association adopted the provisions of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes".
S. R. SNODGRASS, A. C.
Wexford, PA
January 14, 1994
IV-5
<PAGE> 23
INDEX TO EXHIBITS
The following exhibits are filed or incorporated by reference as part of
this report:
3.1. Articles of Incorporation of the Corporation as currently in effect
and any amendments thereto. (incorporated by reference to Exhibit
3.1. of the Corporation's Annual Report on Form 10-K for the fiscal
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).
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 10.6 of the Corporation's
Annual Report on Form 10-K for the fiscal year ended December 31,
1990). Amendment No. 2 to Employment Agreement (incorporated by
reference to Exhibit 10.5. of the Corporation's Form 10-Q for the
quarter ended June 30, 1995). Rescinding of Amendment No. 2 to
Employment Agreement (incorporated by reference to Exhibit 10.5. of
the Corporation's Form 10-Q for the quarter ended September 30,
1995).
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).
IV-6
<PAGE> 24
10.8. Employment Agreement between F.N.B. Corporation and William J.
Rundorff. (incorporated by reference to exhibit 10.9 of the
Corporation's Annual Report on Form 10-K for the fiscal year ended
December 31, 1991). Amendment No. 2 to Employment Agreement.
(filed herewith).
10.9. Basic Retirement Plan (formerly the 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 as amended effective
February 2, 1996. (filed herewith).
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).
10.12. Employment Agreement between F.N.B. Corporation and John W. Rose
(incorporated by reference to Exhibit 10.12. of the Corporation's
Form 10-Q for the quarter ended September 30, 1995). Amendment No.
1 to Employment Agreement. (filed herewith).
10.13. Employment Agreement between F.N.B. Corporation and John D. Waters.
(filed herewith).
10.14. F.N.B. Corporation Restricted Stock and Incentive Bonus Plan.
(filed herewith).
10.15. F.N.B. Corporation 1996 Stock Option Plan. (filed herewith).
11 Statement re computation of per share earnings. (filed herewith).
13 Annual Report to Stockholders. (filed herewith).
21 Subsidiaries of the Registrant. (filed herewith).
23 Consent of Ernst & Young LLP, Independent Auditors. (filed
herewith).
27 Financial Data Schedule. (filed herewith).
IV-7
<PAGE> 1
Exhibit 10.8
AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT
Entered into on and as of December 22, 1995 by and between WILLIAM J.
RUNDORFF (the "Executive"), and F.N.B. CORPORATION (the "Company").
WHEREAS, the Executive and the Company are parties to an Employment
Agreement dated as of July 19, 1991 (the "Agreement"); and
WHEREAS, the Board of Directors of the Company desires to amend the
Agreement in order to assure the Executive's continuing services under
circumstances in which there is a possible, threatened or actual change of
control of the Company and to diminish the distraction of the Executive by
virtue of personal risks and uncertainties inevitably caused by such
circumstances;
WHEREAS, the Executive and the Company desire to reaffirm all the other
terms and provisions of the Agreement;
NOW, THEREFORE, intending to be legally bound, the Executive and the
Company covenant and agree that:
1. The following section entitled "Merger or Consolidation" is hereby
added to the Agreement to read in its entirety as follows:
Section 10A. MERGER OR CONSOLIDATION.
In the event of the merger or consolidation of the Company with another
corporation, and as a result of such merger or consolidation, the
shareholders of the Company as of the day preceding such transaction will
own less than 51% of the outstanding voting securities of the surviving
corporation, or in the event that there is (in a single transaction or
series of related transactions) a sale or exchange of 80% or more of the
Common Stock of the Company for securities of another entity in which
shareholders of the Company will own less than 51% of such entity's
outstanding voting securities, or in the event of the sale by the Company
of a substantial portion of its assets to an unrelated third party, the
Executive shall have the right, at his sole option, to terminate his
employment under this Agreement upon 30 days' advance written notice,
provided such written notice shall have been delivered to the Company
during the period beginning upon public announcement of the subject
transaction and ending not more than 60 days after the effective date of
such transaction. The Executive shall thereupon be entitled to receive
from the Company a cash bonus (the "Cash Bonus") whose "present value" (as
defined in paragraph (4) of subsection (d) of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code")) on the closing date of such
transaction is equal to two hundred percent (200%) of the Executive's "base
amount" (as defined in paragraph (3) of subsection (b) of said subsection
(b) of said Section 280G). (Said present value of the Cash Bonus is
<PAGE> 2
hereinafter referred to as the "Initial Present Value".) The Cash Bonus
shall be paid as follows: an amount equal to one-third (1/3) of the
Initial Present Value shall be paid on the effective date of the
termination of his employment hereunder; an additional amount whose present
value on the said closing date under Section 280G(d)(4) was one-third of
the Initial Present Value shall be paid on the last day of the sixth month
following such effective date; and a final amount whose present value on
the said closing date under Section 280G(d)(4) was equal to one-third of
the Initial Present Value shall be paid on the last day of the twelfth
month following such effective date. If the Executive does not elect to
terminate this Agreement as aforesaid, then this Agreement shall remain in
effect and be assigned and transferred to the Company's successor in
interest as an asset of the Company, and the Company shall cause such
assignee to assume the Company's obligations hereunder; and in such event
the Executive hereby confirms his agreement to continue to perform his
duties and obligations according to the terms and conditions hereof for
such assignee or transferee of this Agreement. It is understood and
agreed, however, that the scope of the Executive's services under Section 2
of this Agreement shall be appropriately modified, at the election of such
successor, to cover the segment of such successor's enterprise represented
by the Company's assets and operations at the time of such aforementioned
transaction.
2. The parties hereby reaffirm all other terms and provisions of the
Agreement, which shall remain in full force and effect as amended hereby.
WITNESS the due execution and delivery hereof as of the date first above
written.
WITNESS: EXECUTIVE
/s/ DAVID B. MOGLE /s/ WILLIAM J. RUNDORFF
- ----------------------- ----------------------------
William J. Rundorff
ATTEST: F.N.B. CORPORATION
By /s/ DAVID B. MOGLE By /s/ JAMES T. WELLER
- ----------------------- ----------------------------
Secretary Chairman of the Compensation
Committee of the Board of
Directors
-2-
<PAGE> 1
Exhibit 10.10.
F.N.B. CORPORATION
1990 STOCK OPTION PLAN
ADOPTED JANUARY 30, 1990
AS AMENDED EFFECTIVE FEBRUARY 2, 1996
<PAGE> 2
F.N.B. CORPORATION
1990 STOCK OPTION PLAN
The purposes of the 1990 Stock Option Plan (the "Plan") are to
encourage eligible employees of F.N.B. Corporation (the "Corporation") and its
Subsidiaries, including directors and officers of the Corporation who are
employees, to increase their efforts to make the Corporation and each
Subsidiary more successful, to provide an additional inducement for such
employees to remain with the Corporation or a Subsidiary, to reward such
employees by providing an opportunity to acquire the Common Stock, par value
$2.00 per share, of the Corporation (the "Common Stock") on favorable terms and
to provide a means through which the Corporation may attract able persons to
enter the employment of the Corporation or one of its Subsidiaries. For
purposes of the Plan, the term "Subsidiary" means any corporation in an
unbroken chain of corporations beginning with the Corporation if each of the
corporations (other than the last corporation in the unbroken chain) owns stock
possessing more than fifty percent (50%) of the total combined voting power of
all classes of stock in one of the other corporations in the chain.
SECTION 1
Administration
The Plan shall be administered by a Committee (the
"Committee") appointed by the Board of Directors of the Corporation (the
"Board") and consisting of not less than two members of the Board, none of whom
has received during the one year period prior to service on the Committee, or
during such service, securities of the Corporation pursuant to the Plan or any
other plan of the Corporation or any of its affiliates (as "affiliates" is
defined in regulations of the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) (except as
permitted by subsection (c)(i)(A)-(D) of Rule 16b-3 promulgated by the
Commission under the Exchange Act) or any successor rule.
The Committee shall interpret the Plan and prescribe such
rules, regulations and procedures in connection with the operation of the Plan
as it shall deem to be necessary and advisable for the administration of the
Plan consistent with the purposes of the Plan.
The Committee shall keep records of action taken at its
meetings. A majority of the Committee shall constitute a quorum at any meeting
and the acts of a majority of the members present at any meeting at which a
quorum is present, or acts approved in writing by a majority of the Committee,
shall be the acts of the Committee.
<PAGE> 3
SECTION 2
Eligibility
Those employees of the Corporation or any Subsidiary who share
the responsibility for the management, growth or protection of the business of
the Corporation or any Subsidiary shall be eligible to receive stock options
(with or without stock appreciation rights) as described herein.
Subject to the provisions of the Plan, the Committee shall
have full and final authority, in its discretion, to grant stock options (with
or without stock appreciation rights) as described herein and to determine the
employees to whom stock options (with or without stock appreciation rights)
shall be granted and the number of shares to be covered by each stock option.
In determining the eligibility of any employee, as well as in determining the
number of shares covered by each stock option, the Committee shall consider the
position and the responsibilities of the employee being considered, the nature
and value to the Corporation or a Subsidiary of his or her services, his or her
present and/or potential contribution to the success of the Corporation or a
Subsidiary and such other factors as the Committee may deem relevant.
SECTION 3
Shares Available under the Plan
The aggregate number of shares of the Common Stock which may
be issued or delivered and as to which stock options may be granted under the
Plan is 320,000 shares. All such shares are subject to adjustment and
substitution as set forth in Section 6.
If any stock option granted under the Plan is cancelled by
mutual consent or terminates or expires for any reason without having been
exercised in full, the number of shares subject to such stock option shall
again be available for purposes of the Plan, except that to the extent that
stock appreciation rights granted in conjunction with a stock option under the
Plan are exercised and the related stock option surrendered, the number of
shares available for purposes of the Plan shall be reduced by the number of
shares, if any, of Common Stock issued or delivered upon exercise of such stock
appreciation rights.
The shares which may be issued or delivered under the Plan may
be either authorized but unissued shares or repurchased shares or partly each,
as shall be determined from time to time by the Board.
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SECTION 4
Grant of Stock Options,
Stock Appreciation Rights, and
Limited Stock Appreciation Rights
The Committee shall have authority, in its discretion, to
grant "incentive stock options" pursuant to Section 422A of the Internal
Revenue Code of 1986 (the "Code"), to grant "non-statutory stock options"
(stock options which do not qualify under such Section 422A of the Code) or to
grant both types of stock options (but not in tandem). The Committee also
shall have the authority, in its discretion, to grant stock appreciation rights
in conjunction with incentive stock options or non-statutory stock options with
the effect provided in Section 5(D). Stock appreciation rights granted in
conjunction with an incentive stock option may only be granted at the time such
incentive stock option is granted. Stock appreciation rights granted in
conjunction with a non-statutory stock option may be granted either at the time
such stock option is granted or at any time thereafter during the term of such
stock option. The Committee shall also have the authority, in its discretion,
to grant limited stock appreciation rights in accordance with the provisions
of, and subject to the terms and conditions set forth in, Section 8.
No employee shall be granted a stock option or stock options
under the Plan (disregarding cancelled, terminated or expired stock options)
for an aggregate number of shares in excess of ten percent (10%) of the total
number of shares which may be issued or delivered under the Plan. For the
purposes of this limitation, any adjustment or substitution made pursuant to
Section 6 with respect to shares which have not been issued or delivered under
the Plan upon the exercise of stock options shall also be made with respect to
shares already issued or delivered under the Plan upon the exercise of stock
options and with respect to shares which would have been issued or delivered
under the Plan but for the exercise of stock appreciation rights in lieu of the
exercise of stock options prior to such adjustment or substitution.
The aggregate fair market value, determined as set forth in
Section 5(H), on the date of grant of the shares for which an employee may be
granted incentive stock options in any calendar year under all plans of the
corporation then employing such employee, any parent or subsidiary corporations
of such corporation and any predecessor corporation of any such corporation
shall not exceed $100,000 plus any unused limit carryover under Section
422A(c)(4) of the Code which may be carried over to such calendar year.
SECTION 5
Terms and Conditions of Stock Options and
Stock Appreciation Rights
Stock options and stock appreciation rights granted under the
Plan shall be subject to the following terms and conditions:
(A) The purchase price at which each stock option may be
exercised (the "option price") shall be such price as the Committee,
in its discretion, shall determine but shall not be less than one
hundred percent (100%) of the fair market value per share of Common
Stock covered by the stock option on the date of grant, except that in
the case of an incentive stock option granted to an employee who,
immediately prior to such grant, owns stock possessing
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<PAGE> 5
more than ten percent (10%) of the total combined voting power of all
classes of stock of the Corporation or any Subsidiary (a "Ten Percent
Employee"), the option price shall not be less than 110% of such fair
market value on the date of grant. For purposes of this Section 5(A),
the fair market value of the Common Stock shall be determined as
provided in Section 5(H). Also, for purposes of this Section 5(A), an
individual (i) shall be considered as owning not only shares of the
Common Stock owned individually, but also all shares that are at the
time owned, directly or indirectly, by or for the spouse, ancestors,
lineal descendants and brothers and sisters (whether by the whole or
half blood) of such individual and (ii) shall be considered as owning
proportionately any shares owned, directly or indirectly, by or for any
corporation, partnership, estate or trust in which such individual
shall be a stockholder, partner or beneficiary.
(B) The option price shall be payable in full in any one
or more of the following ways:
(i) in cash; and/or
(ii) in shares of the Common Stock (which are
owned by the optionee free and clear of all liens and other
encumbrances and which are not subject to the restrictions set
forth in Section 7) having a fair market value on the date of
exercise of the stock option, determined as provided in
Section 5(H), equal to the option price for the shares being
purchased.
If the option price is paid in whole or in part in shares of
Common Stock, any portion of the option price representing a fraction
of a share shall be paid in cash. The date of exercise of a stock
option shall be determined under procedures established by the
Committee, and the option price shall be payable at such time or times
as the Committee, in its discretion, shall determine. No shares shall
be issued or delivered upon exercise of a stock option until full
payment of the option price has been made. When full payment of the
option price has been made and subject to the restrictions set forth
in Section 7, the optionee shall be considered for all purposes to be
the owner of the shares with respect to which payment has been made.
Payment of the option price with shares shall not increase the number
of shares of Common Stock which may be issued or delivered under the
Plan as provided in Section 3.
(C) Subject to Section 9 hereof, no stock option shall be
exercisable during the first six months of its term, except that this
limitation on exercise shall not apply (i) if the optionee dies during
such six-month period or (ii) if the optionee becomes disabled within
the meaning of Section 422A(c)(9) of the Code (a "Disabled Optionee"),
and his or her employment is voluntarily terminated with the consent
of the Corporation or a Subsidiary during such six-month period. No
incentive stock option shall be exercisable after the expiration of
ten years (five years in the case of a Ten Percent Employee) from the
date of grant. No non- statutory stock option shall be exercisable
after the expiration of ten years and six months from the date of
grant. Subject to this Section 5(C) and Sections 5(F), 5(G) and
5(H), stock options may be exercised at such times, in such amounts
and subject to such restrictions as shall be determined, in its
discretion, by the Committee.
(D) Stock appreciation rights shall be exercisable to
the extent that the related stock option is exercisable and only by
the same person or persons who are entitled to exercise the related
stock option. Stock appreciation rights shall entitle the optionee to
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<PAGE> 6
surrender the related stock option, or any portion thereof, and to
receive from the Corporation in exchange therefor that number of
shares of Common Stock having an aggregate fair market value of one
share of Common Stock on such date of exercise over the option price
per share times the number of shares covered by the stock option, or
portion thereof, which is surrendered. Stock appreciation
rights granted in conjunction with an incentive stock option shall not
be exercisable unless the then fair market value of Common Stock
exceeds the option price of the shares subject to the incentive stock
option. Cash shall be paid in lieu of any fractional shares. The
Committee shall have the authority, in its discretion, to determine
that the obligation of the Corporation shall be paid in cash or part
in cash and part in shares, except that the Corporation shall not pay
to any person who is subject to the provisions of Section 16 of the
Exchange Act at the time of exercise of stock appreciation rights any
portion of the obligation of the Corporation in cash (except cash in
lieu of a fractional share) unless such stock appreciation rights are
exercised during the period beginning on the third and ending on the
twelfth business day following the date of release for publication of
the quarterly or annual summary statements of sales and earnings of
the Corporation. The date of exercise of stock appreciation rights
shall be determined under procedures established by the Committee, and
payment under this Section 5(D) shall be made by the Corporation as
soon as practicable after the date of exercise. To the extent that a
stock option as to which stock appreciation rights have been granted
in conjunction therewith is exercised, the stock appreciation rights
shall be cancelled. For the purposes of this Section 5(D), the fair
market value of Common Stock shall be determined as provided in
Section 5(H).
(E) No stock option or stock appreciation rights shall
be transferable by an optionee other than by will, or if an optionee
dies intestate, by the laws of descent and distribution of the state
of domicile of the optionee at the time of death, and all stock
options and stock appreciation rights shall be exercisable during the
lifetime of an optionee only by the optionee.
(F) Unless otherwise determined by the Committee and set
forth in the stock option agreement referred to in Section 5(G) or an
amendment thereto:
(i) If the employment of an optionee who is not a
Disabled Optionee is voluntarily terminated with the written
consent of the Corporation or a Subsidiary or an optionee
retires under any retirement plan of the Corporation or a
Subsidiary, any then outstanding incentive stock option held
by such an optionee shall be exercisable (to the extent
exercisable on the date of termination of employment) by such
an optionee at any time prior to the expiration date of such
incentive stock option or within three months after the date
of termination of employment, whichever is the shorter period;
(ii) If the employment of an optionee who is not a
Disabled Optionee is voluntarily terminated with the written
consent of the Corporation or a Subsidiary, any then
outstanding non-statutory stock option held by such an
optionee shall be exercisable (to the extent exercisable on
the date of termination of employment) by such an optionee at
any time prior to the expiration date of such non-statutory
stock option or within one year after the date of termination
of employment, whichever is the shorter period;
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<PAGE> 7
(iii) If an optionee retires under any retirement
plan of the Corporation or a Subsidiary, any then outstanding
non-statutory stock option held by such an optionee shall be
exercisable (whether or not exercisable on the date of
termination of employment) by such an optionee at any time
prior to the expiration date of such non-statutory stock
option;
(iv) If the employment of an optionee who is a
Disabled optionee is voluntarily terminated with the written
consent of the Corporation or a Subsidiary, any then
outstanding stock option held by such optionee shall be
exercisable in full (whether or not so exercisable on the date
of termination of employment) by the optionee at any time
prior to the expiration date of such stock option or within
one year after the date of termination of employment,
whichever is the shorter period; and
(v) Following the death of an optionee during
employment, any outstanding stock option held by the optionee
at the time of death shall be exercisable in full (whether or
not so exercisable on the date of the death of the optionee)
by the person or persons entitled to do so under the will of
the optionee, or, if the optionee shall fail to make
testamentary disposition of the stock option or shall die
intestate, by the legal representative of the optionee, at any
time prior to the expiration date of such stock option or
within one year after the date of death, whichever is the
shorter period. Following the death of an optionee after
termination of employment during a period when a stock option
is exercisable as provided in clauses (i), (ii), (iii) and
(iv) above, any outstanding stock option held by the optionee
at the time of death shall be exercisable by such person or
persons entitled to do so under the Will of the optionee or by
such legal representative to the extent the stock option was
exercisable by the optionee at the time of death at any time
prior to the expiration date of such stock option or within
one year after the date of death, whichever is the shorter
period.
(vi) If the employment of an optionee terminates
for any reason other than voluntary termination with the
consent of the Corporation or a Subsidiary, retirement under
any retirement plan of the Corporation or a Subsidiary or
death, the rights of such optionee under any then outstanding
stock option shall terminate at the time of such termination
of employment. In addition, if an optionee engages in the
operation or management of a business, whether as owner,
partner, officer, director, employee or otherwise and whether
during or after termination of employment, which is in
competition with the Corporation or any of its Subsidiaries,
the Committee may in its discretion immediately terminate all
stock options held by the optionee.
Whether termination of employment is a voluntary termination with the
written consent of the Corporation or a Subsidiary, whether an
optionee is a Disabled Optionee and whether an optionee has engaged in
the operation or management of a business which is in competition with
the Corporation or any of its Subsidiaries shall be determined in each
case by the Committee and any such determination by the Committee
shall be final and binding.
(G) All stock options and stock appreciation rights shall
be confirmed by a stock option agreement, or an amendment thereto,
which shall be executed by the Chief Executive Officer, the President
(if other than the Chief Executive officer) or any Vice President on
behalf of the Corporation and by the employee to whom such stock
options and stock appreciation rights are granted.
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<PAGE> 8
(H) Fair market value of the Common Stock,
(i) so long as the Common Stock trades in the
Over-the-Counter Market, shall be as set forth in such
reliable publication as the Committee, in its discretion, may
choose to rely upon, by taking the average of the "bid" and
"ask" prices per share of the Common Stock as quoted in such
reliable publication on the nearest date before the date as of
which fair market value is to be determined [on which there
are sales], or
(ii) in the event the Common Stock ceases to
trade in the Over-the-Counter Market and is traded on another
exchange, shall be as set forth in such reliable publication
as the Committee, in its discretion, may choose to rely upon,
by taking the average of the highest and lowest price per
share of the Common Stock as quoted in such reliable
publication on the nearest date before the date as of which
fair market value is to be determined on which there are
sales.
(I) The obligation of the Corporation to issue or
deliver shares of the Common Stock under the Plan shall be subject to
(i) the effectiveness of a registration statement under the Securities
Act of 1933, as amended, with respect to such shares, if deemed
necessary or appropriate by counsel for the Corporation, (ii) the
condition that the shares shall have been listed (or authorized for
listing upon official notice of issuance) upon each stock exchange on
which such shares may then be listed and (iii) all other applicable
laws, regulations, rules and orders which may then be in effect.
Subject to the foregoing provisions of this Section 5 and the
other provisions of the Plan, any stock option or stock appreciation rights
granted under the Plan shall be subject to such other terms and conditions as
the Committee shall deem advisable.
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<PAGE> 9
SECTION 6
Adjustment and Substitution of Shares
If a dividend or other distribution shall be declared upon the
Common Stock payable in shares of Common Stock, the number of shares of Common
Stock then subject to any outstanding stock option and the number of shares
which may be issued or delivered under the Plan but are not then subject to an
outstanding stock option shall be adjusted by adding thereto the number of
shares which would have been distributable thereon if such shares had been
outstanding on the date fixed for determining the stockholders entitled to
receive such stock dividend or distribution.
If the outstanding shares of Common Stock shall be changed
into or exchangeable for a different number or kind of shares of stock or other
securities of the Corporation or another corporation, whether through
reorganization, reclassification, recapitalization, stock split-up, combination
of shares, merger or consolidation, then there shall be substituted for each
share of Common Stock subject to any then outstanding stock option and for each
share of Common Stock which may be issued or delivered under the Plan but is
not then subject to an outstanding stock option, the number and kind of shares
of stock or other securities into which each outstanding share of Common Stock
shall be so changed or for which each such share shall be exchangeable.
In the case of any adjustment or substitution as provided for
in this Section 6, the aggregate option price for all shares subject to each
then outstanding stock option prior to such adjustment or substitution shall be
the aggregate option price for all shares of stock or other securities
(including any fraction) to which such shares shall have been adjusted or which
shall have been substituted for such shares. Any new option price per share
shall be carried to at least three decimal places with the last decimal place
rounded upwards to the nearest whole number.
No adjustment or substitution provided for in this Section 6
shall require the Corporation to issue or sell a fraction of a share or other
security. Accordingly, all fractional shares or other securities which result
from any such adjustment or substitution shall be eliminated and not carried
forward to any subsequent adjustment or substitution.
If any such adjustment or substitution provided for in this
Section 6 requires the approval of stockholders in order to enable the
Corporation to grant incentive stock options, then no such adjustment or
substitution shall be made without prior stockholder approval. Notwithstanding
the foregoing, in the case of incentive stock options, if the effect of any
such adjustment or substitution would be to cause the stock option to fail to
continue to qualify as an incentive stock option or to cause a modification,
extension or renewal of such stock option within the meaning of Section 425 of
the Code, the Committee may elect that such adjustment or substitution not be
made but rather shall use reasonable efforts to effect such other adjustment of
each then outstanding stock option as the Committee in its sole discretion
shall deem equitable and which will not result in any disqualification,
modification, extension or renewal (within the meaning of Section 425 of the
Code) of such incentive stock option.
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<PAGE> 10
SECTION 7
Restrictions on Transfer of
Certain Shares
Shares of Common Stock acquired under exercise of an (a)
option pursuant to Section 5(B)(ii) by a person then subject to the provisions
of Section 16 of the Exchange Act shall not be sold or otherwise transferred
prior to (i) the expiration of six months after the date of acquisition of
shares upon exercise of such option or (ii) the death of the optionee,
whichever may first occur or (b) incentive stock option shall not be sold or
otherwise transferred until after the expiration of any holding periods
required by Section 422A of the Code, as may be amended from time to time. The
Corporation is authorized to (i) retain the certificate(s) representing such
shares or place such certificates in the custody of its transfer agent, (ii)
place a restrictive legend on such shares, and/or (iii) issue a stop transfer
order to the transfer agent with respect to such shares in order to enforce the
transfer restrictions of this Section.
SECTION 8
Limited Stock Appreciation Rights
Limited stock appreciation rights may be granted in connection
with all or part of (i) an incentive stock option granted under this Plan at
the time of the grant of such stock option or (ii) a non-statutory option, at
the time such option is granted or at any time thereafter during the term of
the such option.
Limited stock appreciation rights shall entitle the holder of
an option in connection with which such limited stock appreciation rights are
granted, upon exercise of the limited stock appreciation rights, to surrender
the stock option, or any applicable portion thereof, and any related stock
appreciation rights, to the extent unexercised, and to receive an amount of
cash determined pursuant to this Section 8. Such option, and any related stock
appreciation rights, shall, to the extent so surrendered, thereupon cease to be
exercisable.
Limited stock appreciation rights shall be subject to the
following terms and conditions and to such other terms and conditions not
inconsistent with the Plan as shall from time to time be approved by the
Committee.
(A) Limited stock appreciation rights shall be
exercisable, subject to Section 8(B), during any one or more of the
following periods:
(i) for a period of 60 days beginning on the date
on which shares of Common Stock are first purchased pursuant
to a tender offer or exchange offer (other than such an offer
by the Corporation), whether or not such offer is approved or
opposed by the Corporation and regardless of the number of
shares of Common Stock purchased pursuant to such offer;
(ii) for a period of 60 days beginning on the date
the Corporation acquires knowledge that any person or group
deemed a person under Section 13(d)(3) of the Exchange Act
(other than any director of the Corporation on November 1,
1989, any
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<PAGE> 11
Affiliate or Associate of any such director (with
such terms having the respective meanings set forth in Rule
12b-2 under the Exchange Act as in effect on November 1,
1989), any member of the family of any such director, any
trust (including the trustees thereof) established by or for
the benefit of any such persons, or any charitable foundation,
whether a trust or a corporation (including the trustees and
directors thereof) established by or for the benefit of any
such persons), in a transaction or series of transactions
shall become the beneficial owner, directly or indirectly
(with beneficial ownership determined as provided in Rule
13d-3, or any successor rule, under the Exchange Act), of
securities of the Corporation entitling the person or group to
10% or more of all votes (without consideration of the rights
of any class of stock to elect directors by a separate class
vote) to which all shareholders of the Corporation would be
entitled if the election of Directors were an election held on
such date;
(iii) for a period of 60 days beginning on the date
of filing under the Exchange Act of a Statement on Schedule
13D, or any amendment thereto, by any person or group deemed a
person under Section 13(d)(3) of the Exchange Act, disclosing
an intention or possible intention to acquire or change
control of the Corporation;
(iv) for a period of 60 days beginning on the
date, during any period of two consecutive years, when
individuals who at the beginning of such period constitute the
Board of Directors of the Corporation cease for any reason to
constitute at least a majority thereof, unless the election,
or the nomination for election by the shareholders of the
Corporation, of each new Director was approved by a vote of at
least two-thirds of the Directors then still in office who
were Directors at the beginning of such period; and
(v) for a period of 60 days beginning on the date
of approval by the shareholders of the Corporation of an
agreement (a "reorganization agreement") providing for (a) the
merger or consolidation of the Corporation with another
corporation where the shareholders of the Corporation,
immediately prior to the merger or consolidation, do not
beneficially own, immediately after the merger or
consolidation, shares of the corporation issuing cash or
securities in the merger or consolidation entitling such
shareholders to 50% or more of all votes (without
consideration of the rights of any class of stock to elect
directors by a separate class vote) to which all shareholders
of such corporation would be entitled in the election of
Directors or where the members of the Board of Directors of
the Corporation, immediately prior to the merger or
consolidation, do not, immediately after the merger or
consolidation, constitute a majority of the Board of Directors
of the corporation issuing cash or securities in the merger or
consolidation or (b) the sale or other disposition of all or
substantially all the assets of the Corporation.
(B) Subject to Section 9 hereof, limited stock
appreciation rights shall in no event be exercisable unless and until
the holder of the limited stock appreciation rights shall have
completed at least six months of continuous service with the
Corporation or a Subsidiary, or both, immediately following the date
upon which the limited stock appreciation rights shall have been
granted.
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<PAGE> 12
(C) Upon exercise of limited stock appreciation rights,
the holder thereof shall be entitled to receive an amount of cash in
respect of each share of Common Stock subject to the related option
equal to the excess of the fair market value of such share over the
option price of such related option, and for this purpose fair market
value shall mean the highest last sale price of the Common
Stock on the Over-the-Counter Market during the period beginning on
the 90th day prior to the date on which the limited stock appreciation
rights are exercised and ending on such date, except that (a) in the
event of a tender offer or exchange offer for Common Stock, fair
market value shall mean the greater of such last sale price or the
highest price paid for Common Stock pursuant to any tender offer or
exchange offer in effect at any time beginning on the 90th day prior
to the date on which the limited stock appreciation rights are
exercised and ending on such date, (b) in the event of the acquisition
by any person or group of beneficial ownership of securities of the
Corporation entitling the person or group to 10% or more of all votes
to which all shareholders of the Corporation would be entitled in the
election of Directors or in the event of the filing of a Statement on
Schedule 13D, or any amendment thereto, disclosing an intention or
possible intention by any person or group to acquire control of the
Corporation, fair market value shall mean the greater of such last
sale price or the highest price per share paid for Common Stock shown
on the Statement on Schedule 13D, or any amendment thereto, filed by
the person or group becoming a 10% beneficial owner or disclosing an
intention or possible intention to acquire control of the Corporation
and (c) in the event of approval by shareholders of the Corporation of
a reorganization agreement, fair market value shall mean the greater
of such last sale price or the fixed or formula price specified in the
reorganization agreement if such price is determinable as of the date
of exercise of the limited stock appreciation rights. Any securities
or property which are part or all of the consideration paid for Common
Stock in a tender offer or exchange offer or under an approved
reorganization agreement shall be valued at the higher of (a) the
valuation placed on such securities or property by the person making
the tender offer or exchange offer or by the corporation other than
the Corporation issuing securities or property in the merger or
consolidation or to whom the Corporation is selling or otherwise
disposing of all or substantially all the assets of the Corporation
and (b) the valuation placed on such securities or property by the
Committee.
(D) To the extent that limited stock appreciation rights
shall be exercised, the option in connection with which such limited
stock appreciation rights shall have been granted shall be deemed to
have been exercised and any related stock appreciation rights shall be
cancelled. To the extent that the option in connection with which
limited stock appreciation rights shall have been granted or any
related stock appreciation rights shall be exercised, the limited
stock appreciation rights granted in connection with such option shall
be cancelled.
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<PAGE> 13
SECTION 9
Acceleration of the Exercise Date of
Stock Options and Related Stock Appreciation Rights
Notwithstanding any other provision of this Plan, all stock
options, stock appreciation rights and limited stock appreciation rights shall
become exercisable upon the occurrence of any of the events specified in
Section 8(A) whether or not such options are then exercisable under the
provisions of the applicable agreements relating thereto, except that if stock
appreciation rights have been granted along with limited stock appreciation
rights to the same option holder with respect to the same option, in no event
may the stock appreciation rights be exercised for cash during any of the
60-day periods provided for in Section 8.
SECTION 10
Effect of the Plan on the Rights
of Employees and Employer
Neither the adoption of the Plan nor any action of the Board
or the Committee pursuant to the Plan shall be deemed to give any employee any
right to be granted a stock option (with or without stock appreciation rights)
under the Plan and nothing in the Plan, in any stock option or stock
appreciation rights granted under the Plan or in any stock option agreement
shall confer any right to any employee to continue in the employment of the
Corporation or any Subsidiary or interfere in any way with the rights of the
Corporation or any Subsidiary to terminate the employment of any employee at
any time.
SECTION 11
Amendment
The right to alter and amend the Plan at any time and from
time to time and the right to revoke or terminate the Plan are hereby
specifically reserved to the Board; provided always that no such revocation or
termination shall terminate any outstanding stock option or stock appreciation
rights theretofore granted under the Plan; and provided further that no such
alteration or amendment of the Plan shall, without prior stockholder approval
(a) increase the total number of shares which may be issued or delivered under
the Plan, (b) increase the total number of shares which may be covered by any
stock option or stock options granted to any one optionee, (c) make any changes
in the class of eligible employees or (d) extend the period set forth in the
Plan during which stock options (with or without stock appreciation rights) may
be granted. No alteration, amendment, revocation or termination of the Plan
shall, without the written consent of the holder of a stock option or stock
appreciation rights theretofore granted under the Plan, adversely affect the
rights of such holder with respect to such stock option or stock appreciation
rights.
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<PAGE> 14
SECTION 12
Effective Date and Duration of Plan
The effective date and date of adoption of the Plan shall be
January 30, 1990 (the "Effective Date"), the date of adoption of the Plan by
the Board, provided that such adoption of the Plan by the Board is approved by
the affirmative vote of the holders of at least a majority of the outstanding
shares of Common Stock at a meeting of such holders duly called, convened and
held within one year of the Effective Date. No stock option or stock
appreciation rights granted under the Plan prior to such shareholder approval
may be exercised until after such approval. No stock option or stock
appreciation rights may be granted under the Plan subsequent to the date which
is ten (10) years following the effective date of the Plan.
- -13-
<PAGE> 1
Exhibit 10.12.
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
Entered into on and as of December 22 , 1995 by and between JOHN W. ROSE
(the "Executive"), and F.N.B. CORPORATION (the "Company").
WHEREAS, the Executive and the Company are parties to an Employment
Agreement dated as of July 27, 1995 (the "Agreement"); and
WHEREAS, the Board of Directors of the Company desires to amend the
Agreement in order to assure the Executive's continuing services under
circumstances in which there is a possible, threatened or actual change of
control of the Company and to diminish the distraction of the Executive by
virtue of personal risks and uncertainties inevitably caused by such
circumstances;
WHEREAS, the Executive and the Company desire to reaffirm all the other
terms and provisions of the Agreement;
NOW, THEREFORE, intending to be legally bound, the Executive and the
Company covenant and agree that:
1. The following section entitled "Merger or Consolidation" is hereby
added to the Agreement to read in its entirety as follows:
Section 10A. MERGER OR CONSOLIDATION.
In the event of the merger or consolidation of the Company with
another corporation, and as a result of such merger or consolidation, the
shareholders of the Company as of the day preceding such transaction will
own less than 51% of the outstanding voting securities of the surviving
corporation, or in the event that there is (in a single transaction or
series of related transactions) a sale or exchange of 80% or more of the
Common Stock of the Company for securities of another entity in which
shareholders of the Company will own less than 51% of such entity's
outstanding voting securities, or in the event of the sale by the Company
of a substantial portion of its assets to an unrelated third party, the
Executive shall have the right, at his sole option, to terminate his
employment under this Agreement upon 30 days' advance written notice,
provided such written notice shall have been delivered to the Company
during the period beginning upon public announcement of the subject
transaction and ending not more than 60 days after the effective date of
such transaction. The Executive shall thereupon be entitled to receive from
the Company a cash bonus (the "Cash Bonus") whose "present value" (as
defined in paragraph (4) of subsection (d) of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code")) on the closing date of such
transaction is equal to two hundred percent (200%) of the Executive's "base
amount" (as defined in paragraph (3) of subsection (b) of said subsection
(b) of said Section 280G). (Said present value of the Cash Bonus is
<PAGE> 2
hereinafter referred to as the "Initial Present Value".) The Cash Bonus
shall be paid as follows: an amount equal to one-third (1/3) of the
Initial Present Value shall be paid on the effective date of the
termination of his employment hereunder; an additional amount whose present
value on the said closing date under Section 280G(d)(4) was one-third of
the Initial Present Value shall be paid on the last day of the sixth month
following such effective date; and a final amount whose present value on
the said closing date under Section 280G(d)(4) was equal to one-third of
the Initial Present Value shall be paid on the last day of the twelfth
month following such effective date. If the Executive does not elect to
terminate this Agreement as aforesaid, then this Agreement shall remain in
effect and be assigned and transferred to the Company's successor in
interest as an asset of the Company, and the Company shall cause such
assignee to assume the Company's obligations hereunder; and in such event
the Executive hereby confirms his agreement to continue to perform his
duties and obligations according to the terms and conditions hereof for
such assignee or transferee of this Agreement. It is understood and
agreed, however, that the scope of the Executive's services under Section 2
of this Agreement shall be appropriately modified, at the election of such
successor, to cover the segment of such successor's enterprise represented
by the Company's assets and operations at the time of such aforementioned
transaction.
2. The parties hereby reaffirm all other terms and provisions of the
Agreement, which shall remain in full force and effect as amended hereby.
WITNESS the due execution and delivery hereof as of the date first above
written.
WITNESS: EXECUTIVE
/s/ DAVID B. MOGLE /s/ JOHN W. ROSE
- --------------------- ----------------------------
John W. Rose
ATTEST: F.N.B. CORPORATION
By /s/ DAVID B. MOGLE By /s/ JAMES T. WELLER
--------------------- ----------------------------
Secretary Chairman of the Compensation
Committee of the Board of
Directors
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<PAGE> 1
Exhibit 10.13.
EMPLOYMENT AGREEMENT
THIS AGREEMENT, entered into as of this 31st day of January, 1996, by and
between JOHN D. WATERS, an individual residing in Hermitage, Pennsylvania (the
"Executive"), and F.N.B. CORPORATION, a Pennsylvania bank holding company (the
"Company"),
WITNESSETH THAT:
WHEREAS, the Executive has been elected as Chief Financial Officer of the
Company;
WHEREAS, the Company desires to assure itself of the continued benefit of
the Executive's services and experience and the Executive desires to continue in
the employ of the Company upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and covenants herein
contained, and intending to be legally bound, the parties hereto agree as
follows:
Section 1. TERM OF EMPLOYMENT.
(a) The term of employment of the Executive under this Agreement
shall be, initially, the three year period commencing on January 1, 1996 and
ending on December 31, 1998. Said term shall be subject to automatic extension
by operation of the provisions of Section 1(b) hereof to a date not later than
December 31, 2008 (beyond which the term of employment shall not be extended
pursuant to Section 1(b) hereof).
(b) At December 31, 1996 and December 31 of each succeeding calendar
year to and including December 31, 2005, the term of employment of the Executive
under this Agreement shall be automatically extended to December 31 of the third
calendar year thereafter unless either party, acting under this Section 1(b),
shall have elected to fix the expiration date of the Executive's term of
employment hereunder. Each of the parties shall have the right, exercisable by
written notice to the other, to terminate the automatic renewal and thereby fix
the expiration of the term of employment under this Section 1, provided such
notice shall have been delivered no earlier than October 1 nor later than
December 31 in any calendar year (commencing in 1996). Notice of termination of
automatic renewal having been given as aforesaid, the term of employment of the
Executive under this Section 1 shall continue until December 31 of the third
calendar year after the year in which such notice is so given. Said term shall
not continue after December 31, 2008 whether or not such notice shall have been
given in the year 2005 as aforesaid.
(c) Notwithstanding the provisions of Sections 1(a) and (b), the
term of employment of the Executive under this Agreement shall be subject
to immediate early termination:
<PAGE> 2
(i) at the election of the Company, by dismissal of the Executive
from his employment pursuant to resolution of the Board of Directors of
the Company, or failure or refusal of the Board of Directors to re-elect
the Executive to the position of Chief Financial Officer or other office
of the Company; or
(ii) at the election of the Company, upon determination of
disability of the Executive pursuant to Section 4 hereof; or
(iii) upon death of the Executive;
provided, however, that (1) in the event of termination pursuant to paragraph
(i) above without "proper cause" (as defined in Section 5 of this Agreement),
the Company shall thereafter be and remain obligated to pay to the Executive
(or his estate) the compensation and benefits described in Section 3(a), (b)(i)
(to the extent of group life and health insurance coverages), and (c) hereof
until expiration of the term of employment established by Section 1(a) as the
same may theretofore have been extended pursuant to Section 1(b) hereof; (2) in
the event of termination pursuant to paragraph (i) above for proper cause, the
Company shall thereupon be relieved of its obligations to pay any compensation
and benefits under Section 3 hereof (except for accrued and unpaid items); (3)
in the event of termination pursuant to paragraph (ii) above, the provisions of
Section 4 hereof shall apply; and (4) in the event of termination pursuant to
paragraph (iii) above, the Company shall be obligated to pay the Executive's
estate or designated beneficiary the compensation specified in Section 3(a)
hereof until expiration of the term of employment established by Section 1(a)
as the same may theretofore have been extended pursuant to Section 1(b) hereof
or, if earlier, the end of the twelfth calendar month following his death.
Section 2. SERVICES TO BE RENDERED.
The Company hereby agrees to employ the Executive as Vice President
and Chief Financial Officer of the Company to serve at its headquarters office
located in the Hermitage, Pennsylvania area, subject to the terms, conditions
and provisions of this Agreement. The Executive hereby accepts such employment
and agrees to serve without additional compensation, if elected, in any other
senior executive position of the Company reasonably requested of him and as an
officer and/or director of any subsidiary of the Company in accordance with
Section 10 hereof. The Executive shall devote his full-time best efforts to
such employment and shall apply substantially that degree of skill and
diligence in rendering services to the Company and its subsidiaries under this
Agreement as would be applied by a person of ordinary prudence and comparable
experience under similar circumstances. In connection therewith, the Executive
shall report to and be subject to the direction of the Board of Directors, the
Chairman of the Board and the President of the Company. Notwithstanding the
foregoing, the Executive may devote a reasonable amount of his time to his
personal investments and business affairs (including service as a director of
unaffiliated companies) and to civic and charitable activities; provided,
however, the Executive shall not accept any position as a director of any
unaffiliated for-profit business organization without advance approval of the
Company's Chairman of the Board or President (which approval shall not be
unreasonably withheld).
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<PAGE> 3
Section 3. COMPENSATION.
In consideration for services rendered to the Company under this
Agreement (but excluding any directors' fees payable to the Executive), the
Company shall pay and provide to the Executive the following compensation and
benefits.
(a) SALARY. The Company shall pay the Executive a
minimum base salary at the rate of $130,000 per year during the term hereof, to
be paid in accordance with the Company's normal payroll practice, with such
minimum base salary to be adjusted from time to time to reflect (i) such merit
increases as the Board of Directors of the Company may determine are
appropriate and (ii) annual cost of living increases commensurate with those
given key executive officers of The First National Bank of Pennsylvania ("First
National").
(b) FRINGE BENEFITS. The Executive shall be entitled to
(i) vacations, retirement benefits and other fringe benefits, including but not
limited to group life and health insurance coverages, pursuant to the
compensation policies and practices of First National from time to time
prevailing (now and in the future) with respect to persons who are key
executive officers of First National, (ii) the use of office space comparable
to that which he presently occupies, and (iii) participation in any and all
benefits provided for under the January 1, 1986 Deferred Compensation Plan of
First National pursuant to the terms thereof, so long as said Plan shall remain
in effect.
(c) SUPPLEMENTAL RETIREMENT BENEFITS. The Executive
shall also be entitled to such supplemental retirement benefits, if any, as may
be provided by any plan or plans now or hereafter established by the Company
for senior executive officers of the Company and First National.
Section 4. DISABILITY.
The term of employment of the Executive under this Agreement may be
terminated at the election of the Company upon a determination by the Board of
Directors of the Company, made in its sole discretion, that the Executive will
be unable, by reason of physical or mental incapacity, to perform the
reasonably expected duties assigned to him pursuant to this Agreement for a
period longer than six consecutive months or more than nine months in any
consecutive twelve-month period. In the exercise of its discretion, the Board
of Directors shall give due consideration to, among such other factors as it
deems appropriate to the best interests of the Company, the opinion of the
Executive's personal physician or physicians and the opinion of any physician
or physicians selected by the Board of Directors for these purposes. The
Executive shall submit to examination by any physician or physicians so
selected by the Board of Directors, and shall otherwise cooperate with the
Board of Directors in making the determination contemplated hereunder (such
cooperation to include, without limitation, consenting to the release of
information by any such physician(s) to the Board of Directors). In the event
of such termination, the Company shall thereupon be relieved of its obligations
to pay compensation and benefits under Section 3 hereof (except for accrued and
unpaid items) but shall be obligated to pay or provide to the Executive until
the earlier of March 31, 2008 or his death the following:
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<PAGE> 4
(a) For the period of twelve full calendar months next
following the date (the "Disability Date") at which the Executive was unable,
by reason of physical or mental incapacity, to perform and did not perform a
substantial portion of his essential duties hereunder (such date to be
determined by the Board of Directors in its sole discretion), a monthly
disability income benefit in an amount equal to 100% of the base salary (per
month) in effect under Section 3(a) hereof on the Disability Date; and
thereafter a monthly disability income benefit in an amount equal to 60% of the
average monthly base salary paid to the Executive under Section 3(a) hereof
during the twelve full calendar months next preceding the Disability Date. The
Company shall be entitled to credit, against its obligation to pay such
disability benefits, (i) the amounts received from time to time by the
Executive pursuant to any disability income insurance policy maintained by the
Company, (ii) the amounts received from time to time by the Executive as
retirement benefits pursuant to Section 3(b) and (c) hereof, and (iii) the
amounts received from time to time by the Executive as remuneration from any
other employment.
(b) Health insurance coverage comparable to the coverage
provided from time to time for key executive officers of First National, unless
and until the Executive shall have accepted other employment in which health
insurance coverage is available to him at the cost of his new employer.
Section 5. TERMINATION FOR PROPER CAUSE. The occurrence of any of
the following events or circumstances shall constitute "proper cause" for
termination, at the election of the Board of Directors of the Company, of the
term of employment of the Executive under this Agreement, to wit:
(a) the Executive shall voluntarily resign as a director,
officer or employee of the Company or any significant subsidiary without
approval of the Board of Directors of the Company for reasons other than a
breach of this Agreement in any material respect by the Company which has not
been cured within 30 calendar days after the Company's receipt of written
notice of such breach from the Executive;
(b) the perpetration of defalcations by the Executive
involving the Company or any of its affiliates, as established by certified
public accountants employed by the Company, or willful, reckless or grossly
negligent conduct of the Executive entailing a substantial violation of any
material provision of the laws, rules, regulations or orders of any
governmental agency applicable to the Company or its subsidiaries;
(c) the repeated and deliberate failure by the Executive,
after advance written notice to him, to comply with reasonable policies or
directives of the Board of Directors; or
(d) the Executive shall breach this Agreement in any
other material respect and fail to cure such breach within 30 calendar days
after the Executive receives written notice of such breach from the Company.
-4-
<PAGE> 5
Section 6. NON-COMPETITION.
The Executive agrees that during the term of his employment hereunder
and for the Restricted Period (hereinafter defined) after his employment
hereunder terminates or is terminated, he will not in any way, directly or
indirectly, manage, operate, control, accept employment or a consulting
position with or otherwise advise or assist or be connected with, or own or
have any other interest in, or right with respect to the revenues, receipts,
profits or losses of (other than through ownership of not more than 4.9% of the
outstanding shares of a corporation's stock which is listed on a national
securities exchange or in the NASDAQ system) any Competitive Enterprise
(hereinafter defined). For purposes of this Section 6:
(a) "Restricted Period" means the greater of (i) the
period of two years next following the termination of the Executive's
employment for proper cause (which may include, without limitation, his
resignation or any other event specified in Section 5 hereof), or (ii) the
period of time during which the Executive is receiving payments from the
Company pursuant to Section 1(c) or 4 hereof (as the case may be);
(b) "Competitive Enterprise" means any person, firm or
corporation that directly or indirectly (i) is engaged in lending and depositor
services of the kinds generally offered by the Company or in commercial banking
or in any other activity which is competitive with the Company or any of the
Company's present or future subsidiaries and (ii) conducts such business or
other activities described in clause (i) above in any county in which any of
the Company's present or future subsidiaries then operates or in any county
(within or without the Commonwealth of Pennsylvania) contiguous thereto.
The foregoing to the contrary notwithstanding, the provisions of this Section 6
shall not prohibit the Executive, during the Restricted Period, from rendering
services to a Competitive Enterprise if such services are rendered during his
physical presence at a place of business located within the Counties of
Allegheny or Dauphin, Pennsylvania or Cuyahoga, Ohio.
Without limitation of the Company's rights and remedies under this
Agreement or as otherwise provided by law or in equity, it is understood and
agreed between the parties that the right of the Executive to receive and
retain any payments otherwise due to him under this Agreement shall be
suspended and canceled if and for so long as he shall be in violation of the
foregoing covenant not to compete. If and when the Executive shall have cured
such violation and shall have tendered to the Company any and all economic
benefits directly or indirectly received or receivable by him arising
therefrom, such right shall be automatically reinstated but only for the
remainder of the period during which such payments are due him.
If the employment of the Executive hereunder shall have been
terminated without proper cause pursuant to paragraph (i) of Section 1(c)
hereof or because of disability pursuant to paragraph (ii) of Section 1(c)
hereof, and if the Executive shall have duly complied with and observed the
covenants of this Section 6, the Executive may, at his election, be discharged
from the covenants of this Section 6 at any time during the Restricted Period
by filing with the Company a duly executed statement (in form and content
reasonably satisfactory to the Board of Directors of the Company) releasing the
Company (and, if applicable, its insurance carriers) from any and all
obligations it (or they) may have (under Sections 1(c), 3 and 4 or otherwise)
by reason of such termination (except for accrued and unpaid items).
-5-
<PAGE> 6
Section 7. CONFIDENTIALITY.
For purposes of this Agreement, "proprietary information" shall mean
any information relating to the business of the Company or its subsidiaries
that has not previously been publicly released by duly authorized
representatives of the Company and shall include (but shall not be limited to)
Company information encompassed in all marketing and business plans, financial
information, costs, pricing information, and all methods, concepts, or ideas in
or reasonably related to the business of the Company or its subsidiaries and
not in the public domain.
The Executive agrees to regard and preserve as confidential all
proprietary information that has been or may be developed or obtained by the
Executive in the course of his employment with the Company and its
subsidiaries, whether he has such information in his memory or in writing or
other physical form. The Executive shall not, without written authorization
from the Company to do so, use for his benefit or purposes, nor disclose to
others, either during the term of his employment hereunder or thereafter,
except as required by the conditions of his employment hereunder, any
proprietary information connected with the business or development of the
Company or its subsidiaries. This prohibition shall not apply after the
proprietary information has been voluntarily disclosed to the public,
independently developed and disclosed by others, or otherwise enters the public
domain through lawful means.
Section 8. REMOVAL OF DOCUMENTS OR OBJECTS.
The Executive agrees not to remove from the premises of the Company,
except as an employee of the Company in pursuit of the business of the Company
or any of its subsidiaries or affiliates, or except as specifically permitted
in writing by the Company, any document or object containing or reflecting any
proprietary information. The Executive recognizes that all such documents and
objects, whether developed by him or by someone else, are the exclusive
property of the Company.
Section 9. INJUNCTIVE RELIEF.
It is understood and agreed by and between the parties hereto that the
services to be rendered by the Executive hereunder are of a special, unique,
extraordinary and intellectual character, which gives them a peculiar value,
the loss of which may not be reasonably or adequately compensated in damages,
and additionally that a breach by the Executive of the covenants set out in
Sections 6, 7 and 8 of this Agreement will cause the Company great and
irreparable injury and damage. The Executive hereby expressly agrees that the
Company shall be entitled to the remedies of injunction, specific performance
and other equitable relief to prevent a breach of Sections 6, 7 and 8 of this
Agreement by the Executive. This provision shall not, however, be construed as
a waiver of any of the remedies which the Company may have for damages or
otherwise.
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<PAGE> 7
Section 10. SUBSIDIARIES.
It is understood and agreed by the parties hereto that, at the
election and direction of the Company's Board of Directors and without
modification of the terms and provisions hereof, the Executive shall also serve
as an executive officer of any one or more subsidiaries of the Company and,
when and as so determined by the Board and any such subsidiary, the rights,
duties and obligations of the Company expressed and implied in this Agreement
shall inure to the benefit of and bind any subsidiary with the same force and
effect as would obtain if the subsidiary were a party hereto jointly and
severally with the Company.
Section 11. MERGER OR CONSOLIDATION.
In the event of the merger or consolidation of the Company with
another corporation, and as a result of such merger or consolidation, the
shareholders of the Company as of the day preceding such transaction will own
less than 51% of the outstanding voting securities of the surviving
corporation, or in the event that there is (in a single transaction or series
of related transactions) a sale or exchange of 80% or more of the Common Stock
of the Company for securities of another entity in which shareholders of the
Company will own less than 51% of such entity's outstanding voting securities,
or in the event of the sale by the Company of a substantial portion of its
assets to an unrelated third party, the Executive shall have the right, at his
sole option, to terminate his employment under this Agreement upon 30 days'
advance written notice, provided such written notice shall have been delivered
to the Company during the period beginning upon public announcement of the
subject transaction and ending not more than 60 days after the effective date
of such transaction. The Executive shall thereupon be entitled to receive from
the Company a cash bonus (the "Cash Bonus") whose "present value" (as defined
in paragraph (4) of subsection (d) of Section 280G of the Internal Revenue Code
of 1986, as amended (the "Code")) on the closing date of such transaction is
equal to two hundred percent (200%) of the Executive's "base amount" (as
defined in paragraph (3) of subsection (b) of said subsection (b) of said
Section 280G). (Said present value of the Cash Bonus is hereinafter referred
to as the "Initial Present Value".) The Cash Bonus shall be paid as follows:
an amount equal to one-third (1/3) of the Initial Present Value shall be paid
on the effective date of the termination of his employment hereunder; an
additional amount whose present value on the said closing date under Section
280G(d)(4) was one-third of the Initial Present Value shall be paid on the last
day of the sixth month following such effective date; and a final amount whose
present value on the said closing date under Section 280G(d)(4) was equal to
one-third of the Initial Present Value shall be paid on the last day of the
twelfth month following such effective date. If the Executive does not elect
to terminate this Agreement as aforesaid, then this Agreement shall remain in
effect and be assigned and transferred to the Company's successor in interest
as an asset of the Company, and the Company shall cause such assignee to assume
the Company's obligations hereunder; and in such event the Executive hereby
confirms his agreement to continue to perform his duties and obligations
according to the terms and conditions hereof for such assignee or transferee of
this Agreement. It is understood and agreed, however, that the scope of the
Executive's services under Section 2 of this Agreement shall be appropriately
modified, at the election of such successor, to cover the segment of such
successor's enterprise represented by the Company's assets and operations at
the time of such aforementioned transaction.
-7-
<PAGE> 8
Section 12. SUCCESSORS, ASSIGNS, ETC.
This Agreement shall be binding upon, and shall inure to the benefit
of, the Executive and the Company and their respective permitted successors,
assigns, heirs, legal representatives and beneficiaries.
Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null,
void and of no effect; provided, however, that nothing in this Section 12 shall
preclude the assumption of such rights by executors, administrators or other
legal representatives of the Executive or his estate and their assigning any
rights hereunder to the person or persons entitled thereto.
Nothing in this Agreement shall preclude the Company from consolidating
or merging into or with, or transferring all or substantially all of its assets
to, another corporation which assumes this Agreement and all obligations and
undertakings of the Company hereunder. Upon such a consolidation, merger or
transfer of assets and assumption, the term, "Company," as used herein shall
mean such other corporation and this Agreement shall continue in full force and
effect.
Section 13. NOTICES.
All notices and other communications which are required or may be
given under this Agreement shall be in writing and shall be deemed to have been
given if delivered personally or sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed as follows:
(a) To the Company: F.N.B. Corporation
Hermitage Square
Hermitage, Pennsylvania
Attention: Secretary
(b) To the Employee: Mr. John D. Waters
1130 Rodeo Place
Hermitage, PA 16148
or to such other place as either party shall have specified by notice in
writing to the other. A copy of any notice or other communication given under
this Agreement shall also be sent to the Treasurer of the Company addressed to
such officer at the then principal office of the Company.
Section 14. GOVERNMENTAL REGULATION.
Nothing contained in this Agreement shall be interpreted, construed or applied
to require
-8-
<PAGE> 9
the commission of any act contrary to law and whenever there is any conflict
between any provision of this Agreement and any statute, law ordinance, order
or regulation, the latter shall prevail; but in such event any such provision
of this Agreement shall be curtailed and limited only to the extent necessary
to bring it within applicable legal requirements.
Section 15. ARBITRATION.
Any dispute or controversy as to the validity, interpretation,
construction, application or enforcement of, or otherwise arising under or in
connection with this Agreement, shall be submitted at the request of either
party hereto for resolution and settlement through arbitration in Pittsburgh,
Pennsylvania in accordance with the rules then prevailing of the American
Arbitration Association. Any award rendered therein shall be final and binding
on each of the parties hereto and their heirs, executors, administrators,
successors and assigns, and judgment may be entered thereon in any court having
jurisdiction. The foregoing provisions of this Section 15 shall not be deemed
to limit the rights and remedies reserved to the Company under and pursuant to
Section 9 hereof.
Section 16. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania.
Section 17. DIVISIBILITY.
Should a court or arbitrator declare any provision hereof to be
invalid, such declaration shall not affect the validity of the Agreement as a
whole or any part thereof, other than the specific portion declared to be
invalid.
Section 18. HEADINGS.
The headings to the Sections and paragraphs hereof are placed herein
for convenience of reference only and in case of any conflict the text of this
Agreement, rather than the headings, shall control.
Section 19. ENTIRE AGREEMENT; AMENDMENT.
This Agreement sets forth the entire understanding of the parties in
respect of the subject matter contained herein and supersedes all prior
agreements, arrangements and understandings relating to the subject matter and
may only be amended by a written agreement signed by both parties hereto or
their duly authorized representatives.
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<PAGE> 10
IN WITNESS WHEREOF, on the 31st day of January, 1996 the parties
hereto have executed this Agreement to be effective as of the date first above
written.
WITNESS: EXECUTIVE
/s/ JOANNE C. KNAPP /s/ JOHN D. WATERS
- ----------------------- ----------------------------
John D. Waters
ATTEST: F.N.B. CORPORATION
/s/ JAMES G. ORIE By: /s/ WILLIAM J. RUNDORFF
- ----------------------- -------------------------
Title: Executive Vice President
-10-
<PAGE> 1
EXHIBIT 10.14
F.N.B. CORPORATION
RESTRICTED STOCK AND INCENTIVE BONUS PLAN
ARTICLE I
ESTABLISHMENT AND PLAN OBJECTIVES
1.1 ESTABLISHMENT OF PLAN; Effective Date. F.N.B. Corporation (the
"Corporation") hereby establishes an incentive plan for key employees, as
described herein, which shall be known as the F.N.B. Corporation Restricted
Stock and Incentive Bonus Plan (hereinafter referred to as the "Plan"). The
Plan is effective as of January 1, 1996.
1.2 PLAN OBJECTIVES. The Plan is intended to further the attainment of the
Corporation's long-term profit and growth objectives by (i) offering an
incentive to key employees and key executives of the Corporation and its
subsidiaries who influence the long-term profitability of the Corporation, (ii)
to provide key employees and executives with an additional inducement to remain
in the service of the Corporation and with an increased incentive to work for
its long-range success, (iii) to encourage stock ownership by such key employees
and executives by providing them with an ownership interest in the Corporation
and (iv) to facilitate the recruiting of executive personnel in the future.
ARTICLE II
DEFINITIONS
2.1 DEFINITIONS. As used herein, the following terms shall have the
following meanings:
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) "Change of Control" shall have the meaning set forth in the F.N.B.
Corporation Basic Retirement Plan.
(c) "Committee" shall mean the Compensation Committee of the Board of
Directors of the Corporation.
(d) "Corporation" shall mean F.N.B. Corporation, its successors and
assigns.
(e) "DRP" shall mean the Corporation's Voluntary Dividend Reinvestment and
Stock Purchase Plan, as amended from time to time.
(f) "Eligible Employee" shall have the meaning set forth in Section 5.1
below.
(g) "Incentive Award Period" shall have the meaning set forth in Section
5.2 below.
(h) "Incentive Bonus Participant" shall mean an Eligible Employee
designated by the Committee as eligible to receive an award under the incentive
bonus provisions of Article V of the Plan in respect of any Incentive Award
Period.
(i) "Participant" shall mean an Incentive Bonus Participant or a Restricted
Stock Participant.
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(j) "Plan" shall mean the F.N.B. Corporation Restricted Stock and Incentive
Bonus Plan in its entirety, including any amendments, rules and regulations
adopted pursuant hereto.
(k) "Restricted Period" shall have the meaning set forth in Section 4.3
below.
(l) "Restricted Stock Participant" shall mean an employee who has been
granted Stock under the provisions of Article IV of the Plan (relating to grants
of restricted stock).
(m) "Stock" shall mean the Corporation's common stock, par value $2.00 per
share.
(n) "Vesting Period" shall have the meaning set forth in Section 4.3 below.
Other terms shall have the respective meanings given them in succeeding
sections of the Plan.
ARTICLE III
ADMINISTRATION OF THE PLAN
3.1 ADMINISTRATION. The Committee shall be responsible for the
administration of the Plan. The Committee, by majority thereof, is authorized
to interpret the Plan, to prescribe, amend, and rescind rules and regulations
relating to the Plan, provide for conditions and assurances deemed necessary or
advisable to protect the interests of the Corporation, including without
limitation all rules and regulations necessary or advisable to enable shares of
Stock granted under the Plan to be held and administered under the DRP, and to
make all other determinations necessary or advisable for the administration of
the Plan, but only to the extent not contrary to the express provisions of the
Plan. Determinations, interpretations, or other actions made or taken by the
Committee pursuant to the provisions of the Plan shall be final, binding and
conclusive for all purposes and upon all persons whomsoever.
Within the provisions of the Plan, the Committee shall have the sole, final
and conclusive authority to determine:
(a) The employees to whom awards shall be made under Article IV and/or
Article V below;
(b) The amount of any award of cash or Stock to be made to each such
employee; and
(c) The terms and conditions of each restricted stock agreement
("Restricted Stock Agreement") between the Corporation and any employee who has
received an award of restricted Stock under Article IV or Article V below.
In making such determinations, the Committee shall consider the position and
responsibilities of the eligible employees, the value of their services to the
Corporation and its subsidiaries, and such other factors as the Committee deems
pertinent. The Committee's determinations under the Plan need not be uniform
and may be made by it selectively among persons who are eligible to receive
awards under the Plan.
3.2 EMPLOYMENT OF AGENTS. In administering the Plan, the Committee may
employ accountants and counsel (who may be the independent auditors and outside
counsel for the Corporation) and other persons to assist or render advice to it,
all at the expense of the Corporation.
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3.3 ELIGIBILITY TO SERVE ON COMMITTEE. None of the members of the
Committee shall be a person who shall have been granted during the one year
prior to becoming a member of the Committee, or shall be granted during service
on the Committee, Stock or other securities pursuant to the Plan or any other
plan of the Corporation or any of its subsidiaries except to the extent
permitted by subsection (c)(2)(i) of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended, or any successor thereto.
ARTICLE IV
GRANTS OF RESTRICTED STOCK
4.1 ELIGIBILITY. Any person employed by the Corporation or any of its
subsidiaries on a full time, salaried basis shall be eligible to become a
Restricted Stock Participant and shall be eligible to receive grants of
restricted Stock pursuant to this Article IV.
4.2 GRANTS OF COMMON STOCK. Each restricted stock grant under this
Article IV shall be evidenced by a Restricted Stock Agreement, which shall be
subject to the following terms and conditions and to such other terms and
conditions as the Committee may deem appropriate in each case:
(a) Unless applicable law provides otherwise, the employee receiving a
restricted stock grant shall be responsible for compliance with all securities,
tax or other legal requirements with respect to such employee's receipt, holding
or disposition of the shares.
(b) The vesting and forfeiture restrictions contained in Section 4.3
below.
(c) The shares of Stock granted under this Article IV shall be enrolled
in the Restricted Stock Participant's name in the DRP. Such shares shall remain
in the DRP throughout the Restricted Period. On the date on which the transfer
restrictions on any shares of Stock lapse, the Corporation shall notify the DRP
Administrator as to the name of the Restricted Stock Participant and the number
of shares of Stock as to which the restrictions have lapsed. The Restricted
Stock Participant shall be entitled to exercise all rights to the unrestricted
shares of Stock, including the right to withdraw such shares from the DRP, in
accordance with the terms of the DRP.
4.3 VESTING AND FORFEITURE RESTRICTIONS. All shares of Stock granted
under this Article IV shall vest and become freely transferable by the
Restricted Stock Participant over a period of not less than one and not more
than five years commencing on the date of grant, as determined by the Committee
at the time of the grant (the "Vesting Period"), and shall be subject to
forfeiture as set forth below until vested (the period of time during which any
shares of Stock are subject to a risk of forfeiture is referred to as the
"Restricted Period"). Unless otherwise determined by the Committee, shares of
Stock shall vest in equal installments during the Vesting Period on each
anniversary of the date of grant until all shares awarded pursuant to such grant
have vested or have been forfeited.
The Committee, in its sole discretion, may impose such other restrictions
on Stock granted pursuant to this Article IV as it may deem advisable,
including, without limitation, restrictions under applicable federal laws, under
the requirements of any stock exchange upon which such shares or shares of the
same class are then listed, and under any blue sky or other securities laws
applicable to such shares. The Committee may condition the grant of any stock,
or the termination of the restrictions, upon receipt of an
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appropriate investment representation from the Restricted Stock Participant.
The Corporation may, in its discretion, postpone the granting of any stock until
completion of registration or other qualification of the shares under any state
or federal law, rule, or regulation or the receipt of any consent or approval of
any governmental body, or any other agreement or consent as the Committee may
consider appropriate. The Corporation may further require any Restricted Stock
Participant or other person receiving shares of Stock under this Article IV to
make such representations and furnish such information as it may consider
appropriate in compliance with applicable law.
4.4 VOTING AND DIVIDEND RIGHTS. Restricted Stock Participants shall
have full voting rights on the shares of Stock granted under this Article IV,
including the shares which have not yet vested, unless and until such shares are
forfeited to the Corporation.
Restricted Stock Participants awarded shares of Stock under this Article IV
shall have full cash and stock dividend rights with respect to such shares of
Stock subject to the other provisions of this Section 4.4. All such dividends
or other distributions shall be credited to the Restricted Stock Participant's
account in the DRP and, in the case of cash dividends, used to purchase shares
of Stock pursuant to the DRP. All shares credited to the Restricted Stock
Participant as a result of such cash or stock dividends shall be subject to the
same restrictions on transferability and the same risk of forfeiture as the
shares of Restricted Stock that are the basis for the dividend.
4.5 TERMINATION OF EMPLOYMENT.
(a) All restrictions placed upon shares of Stock granted hereunder or
under a Restricted Stock Agreement shall lapse immediately and such shares shall
automatically vest upon (i) termination of the Restricted Stock Participant's
employment with the Corporation (or the subsidiary of the Corporation by which
the Restricted Stock Participant is employed) if, and only if, such termination
is by reason of the Restricted Stock Participant's death, disability covered by
a disability plan of the Corporation then in effect or retirement with the
consent of the Corporation or (ii) the occurrence of a Change in Control of the
Corporation. In addition, the Committee may allow restrictions on the Stock to
lapse prior to the date specified in a Restricted Stock Agreement if, in the
judgment of the Committee, such allowance is necessary to avoid undue hardship
or unfairness to the Restricted Stock Participant.
(b) Upon the effective date of a termination for any reason not
specified in Section 4.5(a) above, all shares (together with all dividends
and/or shares of Stock purchased under the DRP on account of such shares) then
subject to a risk of forfeiture under Section 4.3 above immediately shall be
forfeited and returned to the Corporation by the plan administrator under the
DRP without consideration or further action being required of the Corporation.
For purposes of this Section 4.5 and Section 4.3, the effective date of a
Restricted Stock Participant's termination shall be the date upon which such
Restricted Stock Participant ceases to perform services as an employee of the
Corporation or any of its subsidiaries, without regard to accrued vacation,
severance or other benefits or the characterization thereof on the payroll
records of the Corporation or any of its subsidiaries.
4.6 ASSIGNMENT OR TRANSFER. No shares of Stock granted under this
Article IV or any rights or interests therein shall be assignable or
transferable during the Restricted Period by a Restricted Stock Participant
except by will or the laws of descent and distribution. Each Restricted Stock
Participant who is granted Stock pursuant to this Article IV may, from time to
time, name any beneficiary or beneficiaries to whom any benefit under this
Article IV is to be paid in case of his or her death before he or she receives
any
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or all of such benefit. Each designation will revoke all prior designations by
the same Restricted Stock Participant, shall be in a form prescribed by the
Committee and will be effective only when filed by the Restricted Stock
Participant in writing with the Committee during his or her lifetime. In the
absence of any such designation, benefits remaining unpaid at the Restricted
Stock Participant's death shall be paid to his or her estate, subject to the
terms of this Article IV and the Plan.
ARTICLE V
GRANTS OF INCENTIVE BONUSES
5.1 ELIGIBILITY. Any Eligible Employee shall be eligible to be an
Incentive Bonus Participant and receive incentive bonus awards pursuant to this
Article V. As used in this Article V, the term "Eligible Employee" shall mean
any executive officer of the Corporation or of a subsidiary of the Corporation
who is a member of a select group of management employees and who, in the
opinion of the Committee, is in a position to have a direct and significant
impact on achieving the Corporation's profit and growth objectives.
5.2 AWARD PERIODS. The duration of each "Incentive Award Period" shall
be one year corresponding to the Corporation's fiscal year.
5.3 PARTICIPATION AND PERFORMANCE ACHIEVEMENT TARGETS. No later than
the end of the first calendar quarter of each Incentive Award Period, the
Committee in its discretion shall select Eligible Employees to be Incentive
Bonus Participants and shall determine the performance achievement targets for
each Incentive Bonus Participant and the amount of awards the Incentive Bonus
Participant may earn upon achieving such targets in respect of each Incentive
Award Period based on the Committee's analysis of various factors it deems
appropriate, including similar incentive plans of comparable companies and the
relative contribution of each Incentive Bonus Participant to the overall
performance of the Corporation and its subsidiaries.
5.4 PAYMENTS OF ANNUAL BONUSES.
(a) Payout of annual bonuses under this Article V shall be made within
45 days after the receipt by the Corporation of the report of its independent
auditors on the Company's financial statements in respect of the Incentive Award
Period in respect of which the Incentive Award has been earned, as the Committee
in its discretion shall determine.
(b) Payout of annual bonuses under this Article V shall be made in cash
or in Stock or partly in each as the Committee in its discretion shall
determine. If any portion is paid in authorized but unissued shares, or
treasury shares, of Stock, the Stock shall be valued at the average of the last
quoted "bid" and "ask" prices of the Stock on the over-the-counter market on the
business day next preceding the date of payment (or, in the event the Common
Stock ceases to trade in the over-the-counter market and is traded on another
exchange or on the Nasdaq National Market, by such other reasonable method or
formula as may be determined by the Committee in its discretion). Payout of all
or part of an annual bonus under this Article V to any Incentive Bonus
Participant may also be made in Stock by the purchase thereof by the Corporation
in the open market on a date reasonably close to the date of payment. Payouts
of awards under this Article V may also be made pursuant to deferred
compensation arrangements, as the Committee may determine in its discretion.
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(c) The Corporation shall not be liable for interest upon any award
made under this Article V. Prior to the time shares of Stock are delivered to
an Incentive Bonus Participant by the Corporation pursuant to a payout of an
annual bonus under this Article V, the Incentive Bonus Participant shall not be
entitled to have any shares registered or recorded in his or her name, nor shall
such Incentive Bonus Participant have the rights of a shareholder of the
Corporation in respect of such shares.
(d) The Committee shall have the right, in its discretion, to modify
the amount of any award earned by any Incentive Bonus Participant under this
Article V in respect of any Incentive Award Period if the Committee in its sole
discretion determines that it is reasonable to do so (i) as a result of
extraordinary transactions to which the Corporation or any of its subsidiaries
was subject or material accounting changes or adjustments applicable to the
Corporation in respect of that Incentive Award Period or (ii) on the basis of
such other quantitative factors as the Committee deems appropriate.
(e) Any shares of Stock of the Corporation issued to an Incentive Bonus
Participant under this Article V shall, at the time of issuance to such
Incentive Bonus Participant, be enrolled in the Incentive Bonus Participant's
name in the DRP. The Incentive Bonus Participant shall be entitled to exercise
all rights to such shares, including the right to withdraw such shares from the
DRP, in accordance with the terms of the DRP (except as otherwise provided in
the Plan).
5.5 LIMITATIONS AND REDUCTIONS OF PAYMENTS.
(a) Any shares of Stock of the Corporation awarded to an Incentive
Bonus Participant under this Article V must be held by the Incentive Bonus
Participant for a minimum of six months prior to any disposition thereof. In
addition, the Committee in its discretion may require that any such shares of
Stock be restricted and not "vest" for a period of up to five years and be
subject to such other restrictions as are identical to those provided in Article
IV with respect to grants of Restricted Stock to Restricted Stock Participants
(including the requirement that the Incentive Bonus Participant enter into a
Restricted Stock Agreement with the Corporation), with the terms and conditions
of such restrictions and "vesting", and related forfeiture provisions, to be
determined by the Committee in its discretion, provided, that the provisions of
Section 4.5 above shall apply to any restricted Stock awarded under this Article
V, including without limitation those providing that any restrictions on such
shares of Stock shall lapse immediately and all such shares shall automatically
vest upon the occurrence of a Change of Control of the Corporation.
(b) The Committee in its sole discretion may impose such other
restrictions on any shares of Stock paid pursuant to this Article V as it may
deem advisable including, without limitation, restrictions under applicable
federal laws, under the requirements of any stock exchange upon which such share
or shares of the same class are then listed, and under any blue sky or other
securities laws applicable to such shares. The Committee may condition the
payment of any Stock under this Article V, or the delivery of share certificates
evidencing such Stock, upon receipt of an appropriate investment representation
from the Incentive Bonus Participant. The Corporation, in its discretion, may
postpone the issuance and delivery of shares of Stock pursuant to this Article V
until completion of registration or other qualification of the shares under any
state or federal law, rule, or regulation as the Corporation may consider
appropriate. The Corporation may further require any Incentive Bonus
Participant or other person receiving Stock under this Article V to make such
representations and furnish such information as it my consider appropriate in
connection with the issuance of the shares of Stock in compliance with
applicable law.
(c) Each payout of an annual bonus under this Article V that is to be
made in cash shall be from the general funds of the Corporation. No special or
separate fund shall be established or other segregation
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of assets made to assure payout of any annual bonuses. No Incentive Bonus
Participant or other person shall have under any circumstances any interest
whatever in any particular property or assets of the Corporation as a result of
the operation of this Article V.
5.6 TERMINATION OF EMPLOYMENT.
(a) Except as herein otherwise provided, the payout of an annual bonus
under this Article V to an Incentive Bonus Participant is subject to the
Incentive Bonus Participant continuing in the employ of the Corporation or a
subsidiary thereof, as the case may be, through the date the payout is made as
set forth in Section 5.4(a). In the event an Incentive Bonus Participant's
employment terminates prior to the date the payout is made as set forth in
Section 5.4(a) for reasons other than voluntary termination of employment or
termination of employment by the Corporation for cause, the Committee shall have
sole discretion to determine whether and to what extent an annual bonus under
this Article V will be paid out to the Incentive Bonus Participant or to his or
her beneficiary; provided, however, that if such termination occurs following a
Change of Control and the Incentive Bonus Participant would otherwise be
entitled to payment of an annual bonus under this Article V in respect of the
preceding Award Period, then such annual bonus shall be paid to such Incentive
Bonus Participant unless the Incentive Bonus Participant's employment was
terminated for cause (as defined in paragraph (b) below) or the Incentive Bonus
Participant voluntarily terminated his employment other than for good reason (as
defined in paragraph (c) below).
(b) As used herein "cause" shall mean the willful and continued failure
by the Incentive Bonus Participant substantially to perform his duties with the
Corporation or any subsidiary or the willful engaging by the Incentive Bonus
Participant in misconduct which is demonstrably and materially injurious to the
Corporation or any of its subsidiaries.
(c) As used herein, the term "good reason" shall mean any of (i) the
assignment to the Incentive Bonus Participant by the Corporation or any
subsidiary of duties, or to a position, constituting a material diminution in
the Incentive Bonus Participant's position or duties compared with his position
or duties with the Corporation or any subsidiary immediately prior to a Change
of Control of the Corporation, or any removal of the Incentive Bonus Participant
from or any failure to reelect the employee to any such position, except in
connection with the termination of his employment by reason of his death,
disability or retirement, for cause, or by the employee other than for good
reason, (ii) a reduction by the Corporation or any subsidiary in the Incentive
Bonus Participant's base salary as in effect on the date of the Change of
Control, (iii) any material diminution in the benefits provided to the employee
by the Corporation following a Change of Control or (iv) the Incentive Bonus
Participant's relocation by the Corporation or any subsidiary to any place other
than the location at which the Incentive Bonus Participant performed the
Incentive Bonus Participant's duties prior to a Change of Control of the
Corporation.
ARTICLE VI
CAPITAL ADJUSTMENTS
If there should occur any change in the outstanding shares of common stock
of the Corporation by reason of a stock dividend, stock split, recapitalization,
merger, consolidation, combination, or exchange of shares or other similar
corporate change, the aggregate number of shares of Stock issuable under the
Plan shall be appropriately adjusted by the Committee, whose determination shall
be conclusive, to prevent dilution or enlargement of the Participant's potential
Stock interests in relation to other holders of the Stock. In such event, the
Committee may also make such appropriate adjustment in the number and type of
shares subject to Stock grants then outstanding under the Plan.
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ARTICLE VII
MISCELLANEOUS PROVISIONS
7.1 NUMBER OF SHARES.
(a) The total number of shares of Stock of the Corporation that may be
granted to all Restricted Stock Participants under Article IV in respect of any
calendar year may not exceed one percent (1%) of the highest number of the
Corporation's issued and outstanding Stock in such calendar year calculated on a
fully diluted basis, subject to adjustment as provided in Section 6 above.
(b) The total number of shares of Stock of the Corporation that may be
granted to all Incentive Bonus Participants under Article V in respect of any
Incentive Award Period may not exceed one percent (1%) of the highest number of
the Corporation's issued and outstanding Stock in such Award Period calculated
on a fully diluted basis, subject to adjustment as provided in Section 6 above.
(c) The shares of Stock awarded under the Plan shall be either
authorized but unissued shares or shares that have been reacquired by the
Corporation. Shares that are awarded but forfeited under the Plan shall again
be available for grant under the Plan.
7.2 FUTURE EMPLOYMENT. The selection of an eligible employee as a
Participant shall not constitute a contract of employment between the
Participant and the Corporation or otherwise entitle the Participant to remain
in the employ of the Corporation or any of its subsidiaries.
7.3 AMENDMENT AND TERMINATION. The Board of Directors of the
Corporation reserves the right to amend or supplement the Plan or terminate the
Plan at any time; provided, however, that the Board shall not modify any
provision in any manner adversely affecting any grant or award previously made
under the Plan without the consent of the Participant.
7.4 WITHHOLDING. The Corporation shall have the right to deduct from
all payments under the Plan any federal, state, or local taxes required by law
to be withheld with respect to such payments. The Participant or other person
receiving payment of shares of Stock under the Plan may be required to pay to
the Corporation the amount of any such taxes that the Corporation is required to
withhold with respect to such Stock.
7.5 FEDERAL INCOME TAX ELECTIONS. The Participant or other person
receiving a payment of Stock hereunder shall report to the Corporation in
writing the time and manner in which such Participant or other person elects to
recognize income from or by virtue of such award for federal income tax
purposes, promptly after the making of such election.
7.6 INDEMNIFICATION. Each person who is or shall have been a member of
the Committee or the Board shall be indemnified and held harmless by the
Corporation from any loss, cost, liability, or expense that may be imposed upon
or reasonably incurred by him or her in connection with any claim, action, suit,
or proceeding to which he or she may be a party by reason of any action taken or
failure to act under the Plan. The foregoing right of indemnification shall not
be exclusive of any other rights of indemnification to which such persons may be
entitled under the Corporation's Articles of Incorporation or Bylaws, as a
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matter of law, by contract, or otherwise, or any power that the Corporation may
have to indemnify them or hold them harmless.
7.7 GOVERNING LAW. The Plan, and all other documents delivered
hereunder, shall be construed in accordance with and governed by the laws of the
Commonwealth of Pennsylvania, to the extent that such laws are not preempted by
the laws of the United States of America.
7.8 EXPENSES. The expenses of administering the Plan shall be borne by
the Corporation.
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EXHIBIT 10.15
F.N.B. CORPORATION
1996 STOCK OPTION PLAN
The purposes of the 1996 Stock Option Plan (the "Plan") are to encourage
eligible employees of F.N.B. Corporation (the "Corporation") and its
Subsidiaries, including directors and officers of the Corporation who are
employees, to increase their efforts to make the Corporation and each Subsidiary
more successful, to provide an additional inducement for such employees to
remain with the Corporation or a Subsidiary, to reward such employees by
providing an opportunity to acquire the Common Stock, par value $2.00 per share,
of the Corporation (the "Common Stock") on favorable terms and to provide a
means through which the Corporation may attract able persons to enter the
employment of the Corporation or one of its Subsidiaries. For purposes of the
Plan, the term "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Corporation if each of the corporations (other
than the last corporation in the unbroken chain) owns stock possessing more than
fifty percent (50%) of the total combined voting power of all classes of stock
in one of the other corporations in the chain.
SECTION 1
Administration
The Plan shall be administered by a Committee (the "Committee") appointed
by the Board of Directors of the Corporation (the "Board") and consisting of not
less than two members of the Board, none of whom has received during the one
year period prior to service on the Committee, or during such service,
securities of the Corporation pursuant to the Plan or any other plan of the
Corporation or any of its affiliates (as "affiliates" is defined in regulations
of the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (except as permitted by subsection
(c)(2)(i)(A)-(D) of Rule 16b-3 promulgated by the Commission under the Exchange
Act or any successor rule).
The Committee shall interpret the Plan and prescribe such rules,
regulations and procedures in connection with the operation of the Plan as it
shall deem to be necessary and advisable for the administration of the Plan
consistent with the purposes of the Plan.
The Committee shall keep records of action taken at its meetings. A
majority of the Committee shall constitute a quorum at any meeting and the acts
of a majority of the members present at any meeting at which a quorum is
present, or acts approved in writing by a majority of the Committee, shall be
the acts of the Committee.
SECTION 2
Eligibility
Those employees of the Corporation or any Subsidiary who share the
responsibility for the management, growth or protection of the business of the
Corporation or any Subsidiary shall be eligible to receive stock options (with
or without stock appreciation rights) as described herein.
Subject to the provisions of the Plan, the Committee shall have full and
final authority, in its discretion, to grant stock options (with or without
stock appreciation rights) as described herein and to
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determine the employees to whom stock options (with or without stock
appreciation rights) shall be granted and the number of shares to be covered by
each stock option. In determining the eligibility of any employee, as well as
in determining the number of shares covered by each stock option, the Committee
shall consider the position and the responsibilities of the employee being
considered, the nature and value to the Corporation or a Subsidiary of his or
her services, his or her present and/or potential contribution to the success of
the Corporation or a Subsidiary and such other factors as the Committee may deem
relevant.
SECTION 3
Shares Available under the Plan
The aggregate number of shares of the Common Stock which may be issued or
delivered and as to which stock options may be granted under the Plan is such
number of shares as is equal to 10% of the total issued and outstanding shares
of Common Stock at any time on a fully-diluted basis. All such shares are
subject to adjustment and substitution as set forth in Section 6.
If any stock option granted under the Plan is canceled by mutual consent or
terminates or expires for any reason without having been exercised in full, the
number of shares subject to such stock option shall again be available for
purposes of the Plan, except that to the extent that stock appreciation rights
granted in conjunction with a stock option under the Plan are exercised and the
related stock option surrendered, the number of shares available for purposes of
the Plan shall be reduced by the number of shares, if any, of Common Stock
issued or delivered upon exercise of such stock appreciation rights.
The shares which may be issued or delivered under the Plan may be either
authorized but unissued shares or repurchased shares or partly each.
SECTION 4
Grant of Stock Options,
Stock Appreciation Rights, and
Limited Stock Appreciation Rights
The Committee shall have authority, in its discretion, to grant "incentive
stock options" pursuant to Section 422 of the Internal Revenue Code of 1986 (the
"Code"), to grant "non-statutory stock options" (stock options which do not
qualify under Section 422 of the Code) or to grant both types of stock options
(but not in tandem). The Committee also shall have the authority, in its
discretion, to grant stock appreciation rights in conjunction with incentive
stock options or non-statutory stock options with the effect provided in Section
5(D). Stock appreciation rights granted in conjunction with an incentive stock
option may only be granted at the time such incentive stock option is granted.
Stock appreciation rights granted in conjunction with a non-statutory stock
option may be granted either at the time such stock option is granted or at any
time thereafter during the term of such stock option. The Committee shall also
have the authority, in its discretion, to grant limited stock appreciation
rights in accordance with the provisions of, and subject to the terms and
conditions set forth in, Section 8.
No employee shall be granted a stock option or stock options under the Plan
(disregarding cancelled, terminated or expired stock options) for an aggregate
number of shares in excess of ten percent (10%) of the total number of shares
which may be issued or delivered under the Plan. For the purposes of
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this limitation, any adjustment or substitution made pursuant to Section 6 with
respect to shares which have not been issued or delivered under the Plan upon
the exercise of stock options shall also be made with respect to shares already
issued or delivered under the Plan upon the exercise of stock options and with
respect to shares which would have been issued or delivered under the Plan but
for the exercise of stock appreciation rights in lieu of the exercise of stock
options prior to such adjustment or substitution.
SECTION 5
Terms and Conditions of Stock Options and
Stock Appreciation Rights
Stock options and stock appreciation rights granted under the Plan shall be
subject to the following terms and conditions:
(A) The purchase price at which each stock option may be exercised
(the "option price") shall be such price as the Committee, in its
discretion, shall determine but shall not be less than one hundred percent
(100%) of the fair market value per share of Common Stock covered by the
stock option on the date of grant, except that in the case of an incentive
stock option granted to an employee who, immediately prior to such grant,
owns stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Corporation or any Subsidiary
(a "Ten Percent Employee"), the option price shall not be less than 110% of
such fair market value on the date of grant. For purposes of this Section
5(A), the fair market value of the Common Stock shall be determined as
provided in Section 5(H). Also, for purposes of this Section 5(A), an
individual (i) shall be considered as owning not only shares of the Common
Stock owned individually, but also all shares that are at the time owned,
directly or indirectly, by or for the spouse, ancestors, lineal descendants
and brothers and sisters (whether by the whole or half blood) of such
individual and (ii) shall be considered as owning proportionately any
shares owned, directly or indirectly, by or for any corporation,
partnership, estate or trust in which such individual shall be a
stockholder, partner or beneficiary.
(B) The option price shall be payable in full in any one or more of
the following ways:
(i) in cash; and/or
(ii) in shares of Common Stock (which are owned by the optionee
free and clear of all liens and other encumbrances and which are not
subject to the restrictions set forth in Section 7) having a fair
market value on the date of exercise of the stock option, determined
as provided in Section 5(H), equal to the option price for the shares
being purchased.
If the option price is paid in whole or in part in shares of Common Stock,
any portion of the option price representing a fraction of a share shall be paid
in cash. The date of exercise of a stock option shall be determined under
procedures established by the Committee, and the option price shall be payable
at such time or times as the Committee, in its discretion, shall determine. No
shares shall be issued or delivered upon exercise of a stock option until full
payment of the option price has been made. When full payment of the option
price has been made and subject to the restrictions set forth in Section 7, the
optionee shall be considered for all purposes to be the owner of the shares with
respect to which payment has been made. Payment of the option price with shares
shall not increase the number of shares of Common Stock which may be issued or
delivered under the Plan as provided in Section 3.
3
<PAGE> 4
(C) Subject to Section 9 hereof, no stock option shall be exercisable
during the first six months of its term, except that this limitation on
exercise shall not apply (i) if the optionee dies during such six-month
period or (ii) if the optionee becomes disabled within the meaning of
Section 422(c)(6) of the Code (a "Disabled Optionee"), or if his or her
employment is voluntarily terminated with the consent of the Corporation or
a Subsidiary during such six-month period. No incentive stock option shall
be exercisable after the expiration of ten years (five years in the case of
a Ten Percent Employee) from the date of grant. No non-statutory stock
option shall be exercisable after the expiration of ten years and six
months from the date of grant. Subject to this Section 5(C) and Sections
5(F), 5(G) and 5(H), stock options may be exercised at such times, in such
amounts and subject to such restrictions as shall be determined, in its
discretion, by the Committee.
(D) Stock appreciation rights shall be exercisable to the extent that
the related stock option is exercisable and only by the same person or
persons who are entitled to exercise the related stock option. Stock
appreciation rights shall entitle the optionee to surrender the related
stock option, or any portion thereof, and to receive from the Corporation
in exchange therefor that number of shares of Common Stock having an
aggregate fair market value equal to the excess of the fair market value of
one share of Common Stock on such date of exercise over the option price
per share, multiplied by the number of shares covered by the stock option,
or portion thereof, which is surrendered. Cash shall be paid in lieu of any
fractional shares. The Committee shall have the authority, in its
discretion, to determine that the obligation of the Corporation shall be
paid in cash or part in cash and part in shares, except that the
Corporation shall not pay to any person who is subject to the provisions of
Section 16 of the Exchange Act at the time of exercise of stock
appreciation rights any portion of the obligation of the Corporation in
cash (except cash in lieu of a fractional share) unless such stock
appreciation rights are exercised during the period beginning on the third
and ending on the twelfth business day following the date of release for
publication of the quarterly or annual summary statements of sales and
earnings of the Corporation. The date of exercise of stock appreciation
rights shall be determined under procedures established by the Committee,
and payment under this Section 5(D) shall be made by the Corporation as
soon as practicable after the date of exercise. To the extent that a stock
option as to which stock appreciation rights have been granted in
conjunction therewith is exercised, the stock appreciation rights shall be
canceled. For the purposes of this Section 5(D), the fair market value of
Common Stock shall be determined as provided in Section 5(H).
(E) No stock option or stock appreciation rights shall be
transferable by an optionee other than by will, or if an optionee dies
intestate, by the laws of descent and distribution of the state of domicile
of the optionee at the time of death, and all stock options and stock
appreciation rights shall be exercisable during the lifetime of an optionee
only by the optionee.
(F) Unless otherwise determined by the Committee and set forth in the
stock option agreement referred to in Section 5(G) or an amendment thereto:
(i) If the employment of an optionee who is not a Disabled
Optionee is voluntarily terminated with the written consent of the
Corporation or a Subsidiary or an optionee retires under any
retirement plan of the Corporation or a Subsidiary, any then
outstanding incentive stock option held by such an optionee shall be
exercisable (to the
4
<PAGE> 5
extent exercisable on the date of termination of employment) by such
an optionee at any time prior to the expiration date of such incentive
stock option or within three months after the date of termination of
employment, whichever is the shorter period;
(ii) If the employment of an optionee who is not a Disabled
Optionee is voluntarily terminated with the written consent of the
Corporation or a Subsidiary, any then outstanding non-statutory stock
option held by such an optionee shall be exercisable (to the extent
exercisable on the date of termination of employment) by such an
optionee at any time prior to the expiration date of such
non-statutory stock option or within one year after the date of
termination of employment, whichever is the shorter period;
(iii) If an optionee retires under any retirement plan of the
Corporation or a Subsidiary, any then outstanding non-statutory stock
option held by such an optionee shall be exercisable (whether or not
exercisable on the date of termination of employment) by such an
optionee at any time prior to the expiration date of such
non-statutory stock option;
(iv) If the employment of an optionee who is a Disabled Optionee
is voluntarily terminated with the written consent of the Corporation
or a Subsidiary, any then outstanding stock option held by such
optionee shall be exercisable in full (whether or not so exercisable
on the date of termination of employment) by the optionee at any time
prior to the expiration date of such stock option or within one year
after the date of termination of employment, whichever is the shorter
period; and
(v) Following the death of an optionee during employment, any
outstanding stock option held by the optionee at the time of death
shall be exercisable in full (whether or not so exercisable on the
date of the death of the optionee) by such optionee's estate or by the
person or persons entitled to do so under the will of the optionee,
or, if the optionee shall fail to make testamentary disposition of the
stock option or shall die intestate, by the legal representative of
the optionee, at any time prior to the expiration date of such stock
option or within one year after the date of death, whichever is the
shorter period. Following the death of an optionee after termination
of employment but during a period when a stock option is exercisable
as provided in clauses (i), (ii), (iii) and (iv) above, any
outstanding stock option held by the optionee at the time of death
shall be exercisable by such optionee's estate or by such person or
persons entitled to do so under the Will of the optionee or by such
legal representative to the extent the stock option was exercisable by
the optionee at the time of death at any time prior to the expiration
date of such stock option or within one year after the date of death,
whichever is the shorter period.
(vi) If the employment of an optionee terminates for any reason
other than voluntary termination with the consent of the Corporation
or a Subsidiary, retirement under any retirement plan of the
Corporation or a Subsidiary, voluntary termination while a Disabled
Optionee with the consent of the Corporation or death, the rights of
such optionee under any then outstanding stock option shall terminate
at the time of such termination of employment. In addition, if an
optionee engages in the operation or management of a business, whether
as owner, partner, officer, director, employee or otherwise and
whether during or after termination of employment, which is in
competition with the Corporation or any of its Subsidiaries, the
Committee may in its discretion immediately terminate all stock
options held by the optionee.
5
<PAGE> 6
Whether termination of employment is a voluntary termination with the
written consent of the Corporation or a Subsidiary, whether an optionee is
a Disabled Optionee and whether an optionee has engaged in the operation or
management of a business which is in competition with the Corporation or
any of its Subsidiaries shall be determined in each case by the Committee
and any such determination by the Committee shall be final and binding.
(G) All stock options and stock appreciation rights shall be confirmed
by a stock option agreement, or an amendment thereto, which shall be
executed by the Chief Executive Officer, the President (if other than the
Chief Executive officer) or any Vice President on behalf of the Corporation
and by the employee to whom such stock options and stock appreciation
rights are granted.
(H) Fair market value of the Common Stock,
(i) so long as the Common Stock trades in the over-the-counter
market, shall be as set forth in such reliable publication as the
Committee, in its discretion, may choose to rely upon, by taking the
average of the "bid" and "ask" prices per share of the Common Stock as
quoted in such reliable publication on the trading date immediately
preceding the date as of which fair market value is to be determined,
or
(ii) in the event the Common Stock ceases to trade in the
over-the-counter market and is traded on another exchange, shall be as
set forth in such reliable publication as the Committee, in its
discretion, may choose to rely upon, by taking the average of the
highest and lowest price per share of the Common Stock as quoted in
such reliable publication on the nearest date before the date as of
which fair market value is to be determined or by such other
reasonable method or formula as may be determined by the Committee in
its discretion.
(I) The obligation of the Corporation to issue or deliver shares of
Common Stock under the Plan shall be subject to (i) the effectiveness of a
registration statement under the Securities Act of 1933, as amended, with
respect to such shares, if deemed necessary or appropriate by counsel for
the Corporation, (ii) the condition that the shares shall have been listed
(or authorized for listing upon official notice of issuance) upon each
stock exchange on which such shares may then be listed and (iii) all other
applicable laws, regulations, rules and orders which may then be in effect.
Subject to the foregoing provisions of this Section 5 and the other
provisions of the Plan, any stock option or stock appreciation rights granted
under the Plan shall be subject to such other terms and conditions as the
Committee shall deem advisable.
SECTION 6
Adjustment and Substitution of Shares
If a dividend or other distribution shall be declared upon the Common Stock
payable in
6
<PAGE> 7
shares of Common Stock, the number of shares of Common Stock then subject to
any outstanding stock option and the number of shares which may be issued or
delivered under the Plan but are not then subject to an outstanding stock
option shall be adjusted by adding thereto the number of shares which would
have been distributable thereon if such shares had been outstanding on the date
fixed for determining the stockholders entitled to receive such stock dividend
or distribution.
If the outstanding shares of Common Stock shall be changed into or
exchangeable for a different number or kind of shares of stock or other
securities of the Corporation or another corporation, whether through
reorganization, reclassification, recapitalization, stock split-up, combination
of shares, merger or consolidation, then there shall be substituted for each
share of Common Stock subject to any then outstanding stock option and for each
share of Common Stock which may be issued or delivered under the Plan but is not
then subject to an outstanding stock option, the number and kind of shares of
stock or other securities into which each outstanding share of Common Stock
shall be so changed or for which each such share shall be exchangeable.
In the case of any adjustment or substitution as provided for in this
Section 6, the aggregate option price for all shares subject to each then
outstanding stock option prior to such adjustment or substitution shall be the
aggregate option price for all shares of stock or other securities (including
any fraction) to which such shares shall have been adjusted or which shall have
been substituted for such shares. Any new option price per share shall be
carried to at least three decimal places with the last decimal place rounded
upwards to the nearest whole number.
No adjustment or substitution provided for in this Section 6 shall require
the Corporation to issue or sell a fraction of a share or other security.
Accordingly, all fractional shares or other securities which result from any
such adjustment or substitution shall be eliminated and not carried forward to
any subsequent adjustment or substitution.
If any such adjustment or substitution provided for in this Section 6
requires the approval of stockholders in order to enable the Corporation to
grant incentive stock options, then no such adjustment or substitution shall be
made without prior stockholder approval. Notwithstanding the foregoing, in the
case of incentive stock options, if the effect of any such adjustment or
substitution would be to cause the stock option to fail to continue to qualify
as an incentive stock option or to cause a modification, extension or renewal of
such stock option within the meaning of Section 424 of the Code, the Committee
may elect that such adjustment or substitution not be made but rather shall use
reasonable efforts to effect such other adjustment of each then outstanding
stock option as the Committee in its sole discretion shall deem equitable and
which will not result in any disqualification, modification, extension or
renewal (within the meaning of Section 424 of the Code) of such incentive stock
option.
SECTION 7
Restrictions on Transfer of
Certain Shares
Shares of Common Stock acquired under exercise of an (a) option pursuant to
Section 5(B)(ii) by a person then subject to the provisions of Section 16 of the
Exchange Act shall not be sold or otherwise transferred prior to (i) the
expiration of six months after the date of acquisition of shares upon exercise
of such option or (ii) the death of the optionee, whichever may first occur or
(b) incentive stock
7
<PAGE> 8
option shall not be sold or otherwise transferred until after the expiration of
any holding period required by Section 422 of the Code, as may be amended from
time to time. The Corporation is authorized to (i) retain the certificate(s)
representing such shares or place such certificates in the custody of its
transfer agent, (ii) place a restrictive legend on such shares, and/or (iii)
issue a stop transfer order to the transfer agent with respect to such shares
in order to enforce the transfer restrictions of this Section.
SECTION 8
Limited Stock Appreciation Rights
Limited stock appreciation rights may be granted in connection with all or
part of (i) an incentive stock option granted under the Plan at the time of the
grant of such stock option or (ii) a non-statutory option, at the time such
option is granted or at any time thereafter during the term of the such option.
Limited stock appreciation rights shall entitle the holder of an option in
connection with which such limited stock appreciation rights are granted, upon
exercise of the limited stock appreciation rights, to surrender the stock
option, or any applicable portion thereof, and any related stock appreciation
rights, to the extent unexercised, and to receive an amount of cash determined
pursuant to this Section 8. Such option, and any related stock appreciation
rights, shall, to the extent so surrendered, thereupon cease to be exercisable.
Limited stock appreciation rights shall be subject to the following terms
and conditions and to such other terms and conditions not inconsistent with the
Plan as shall from time to time be approved by the Committee.
(A) Limited stock appreciation rights shall be exercisable, subject
to Section 8(B), during any one or more of the following periods:
(i) for a period of 60 days beginning on the date on which shares
of Common Stock are first purchased pursuant to a tender offer or
exchange offer (other than such an offer by the Corporation), whether
or not such offer is approved or opposed by the Corporation and
regardless of the number of shares of Common Stock purchased pursuant
to such offer;
(ii) for a period of 60 days beginning on the date the
Corporation acquires knowledge that any person or group deemed a
person under Section 13(d)(3) of the Exchange Act (other than any
director of the Corporation on November 1, 1989, any Affiliate or
Associate of any such director (with such terms having the respective
meanings set forth in Rule 12b-2 under the Exchange Act as in effect
on November 1, 1989), any member of the family of any such director,
any trust (including the trustees thereof) established by or for the
benefit of any such persons, or any charitable foundation, whether a
trust or a corporation (including the trustees and directors thereof)
established by or for the benefit of any such persons), in a
transaction or series of transactions shall become the beneficial
owner, directly or indirectly (with beneficial ownership determined as
provided in Rule 13d-3, or any successor rule, under the Exchange
Act), of securities of the Corporation entitling the person or group
to 10% or more of all votes (without consideration
8
<PAGE> 9
of the rights of any class of stock to elect directors by a separate
class vote) to which all shareholders of the Corporation would be
entitled if the election of Directors were an election held on such
date;
(iii) for a period of 60 days beginning on the date of filing
under the Exchange Act of a Statement on Schedule 13D, or any
amendment thereto, by any person or group deemed a person under
Section 13(d)(3) of the Exchange Act, disclosing an intention or
possible intention to acquire or change control of the Corporation;
(iv) for a period of 60 days beginning on the date, during any
period of two consecutive years, when individuals who at the beginning
of such period constitute the Board of Directors of the Corporation
cease for any reason to constitute at least a majority thereof, unless
the election, or the nomination for election by the shareholders of
the Corporation, of each new Director was approved by a vote of at
least two- thirds of the Directors then still in office who were
Directors at the beginning of such period; and
(v) for a period of 60 days beginning on the date of approval by
the shareholders of the Corporation of an agreement (a "reorganization
agreement") providing for (a) the merger or consolidation of the
Corporation with another corporation where the shareholders of the
Corporation, immediately prior to the merger or consolidation, do not
or will not beneficially own, immediately after the merger or
consolidation, shares of the corporation issuing cash or securities in
the merger or consolidation entitling such shareholders to 50% or more
of all votes (without consideration of the rights of any class of
stock to elect directors by a separate class vote) to which all
shareholders of such corporation would be entitled in the election of
Directors or where the members of the Board of Directors of the
Corporation, immediately prior to the merger or consolidation, do not
or will not, immediately after the merger or consolidation, constitute
a majority of the Board of Directors of the corporation issuing cash
or securities in the merger or consolidation or (b) the sale or other
disposition of all or substantially all the assets of the Corporation.
(B) Subject to Section 9 hereof, limited stock appreciation rights
shall in no event be exercisable unless and until the holder of the limited
stock appreciation rights shall have completed at least six months of
continuous service with the Corporation or a Subsidiary, or both,
immediately following the date upon which the limited stock appreciation
rights shall have been granted.
(C) Upon exercise of limited stock appreciation rights, the holder
thereof shall be entitled to receive an amount of cash in respect of each
share of Common Stock subject to the related option equal to the excess of
the fair market value of such share over the option price of such related
option, and for this purpose fair market value shall mean the highest last
sale price of the Common Stock on the over-the-counter market during the
period beginning on the 90th day prior to the date on which the limited
stock appreciation rights are exercised and ending on such date, except
that (a) in the event of a tender offer or exchange offer for Common Stock,
fair market value shall mean the greater of such last sale price or the
highest price paid for Common Stock pursuant to any tender offer or
exchange offer in effect at any time beginning on the 90th day prior to the
date on which the limited stock appreciation rights are exercised and
ending on such date, (b) in the event of the acquisition by any person or
group of beneficial ownership of securities of the Corporation entitling
9
<PAGE> 10
the person or group to 10% or more of all votes to which all shareholders
of the Corporation would be entitled in the election of Directors or in the
event of the filing of a Statement on Schedule 13D, or any amendment
thereto, disclosing an intention or possible intention by any person or
group to acquire control of the Corporation, fair market value shall mean
the greater of such last sale price or the highest price per share paid for
Common Stock shown on the Statement on Schedule 13D, or any amendment
thereto, filed by the person or group becoming a 10% beneficial owner or
disclosing an intention or possible intention to acquire control of the
Corporation and (c) in the event of approval by shareholders of the
Corporation of a reorganization agreement, fair market value shall mean the
greater of such last sale price or the fixed or formula price specified in
the reorganization agreement if such price is determinable as of the date
of exercise of the limited stock appreciation rights. Any securities or
property which are part or all of the consideration paid for Common Stock
in a tender offer or exchange offer or under an approved reorganization
agreement shall be valued at the higher of (a) the valuation placed on such
securities or property by the person making the tender offer or exchange
offer or by the corporation other than the Corporation issuing securities
or property in the merger or consolidation or to whom the Corporation is
selling or otherwise disposing of all or substantially all the assets of
the Corporation and (b) the valuation placed on such securities or property
by the Committee.
(D) To the extent that limited stock appreciation rights shall be
exercised, the option in connection with which such limited stock
appreciation rights shall have been granted shall be deemed to have been
exercised and any related stock appreciation rights shall be canceled. To
the extent that the option in connection with which limited stock
appreciation rights shall have been granted or any related stock
appreciation rights shall be exercised, the limited stock appreciation
rights granted in connection with such option shall be canceled.
SECTION 9
Acceleration of the Exercise Date of
Stock Options and Related Stock Appreciation Rights
Notwithstanding any other provision of this Plan, all stock options and
stock appreciation rights shall become exercisable upon the occurrence of any of
the events specified in Section 8(A) whether or not such options are then
exercisable under the provisions of the applicable agreements relating thereto,
except that if stock appreciation rights have been granted along with limited
stock appreciation rights to the same option holder with respect to the same
option, in no event may the stock appreciation rights be exercised for cash
during any of the 60-day periods provided for in Section 8.
10
<PAGE> 11
SECTION 10
Effect of the Plan on the Rights
of Employees and Employer
Neither the adoption of the Plan nor any action of the Board or the
Committee pursuant to the Plan shall be deemed to give any employee any right to
be granted a stock option (with or without stock appreciation rights) under the
Plan and nothing in the Plan, in any stock option or stock appreciation rights
granted under the Plan or in any stock option agreement shall confer any right
to any employee to continue in the employment of the Corporation or any
Subsidiary or interfere in any way with the rights of the Corporation or any
Subsidiary to terminate the employment of any employee at any time.
SECTION 11
Amendment
The right to alter and amend the Plan at any time and from time to time and
the right to revoke or terminate the Plan are hereby specifically reserved to
the Board; provided always that no such revocation or termination shall
terminate any outstanding stock option or stock appreciation rights theretofore
granted under the Plan; and provided further that no such alteration or
amendment of the Plan shall, without prior stockholder approval (a) increase the
total number of shares which may be issued or delivered under the Plan, (b)
increase the total number of shares which may be covered by any stock option or
stock options granted to any one optionee, (c) make any changes in the class of
eligible employees or (d) extend the period set forth in the Plan during which
stock options (with or without stock appreciation rights) may be granted. No
alteration, amendment, revocation or termination of the Plan shall, without the
written consent of the holder of a stock option or stock appreciation rights
theretofore granted under the Plan, adversely affect the rights of such holder
with respect to such stock option or stock appreciation rights.
SECTION 12
Effective Date and Duration of Plan
The effective date and date of adoption of the Plan shall be February 2,
1996 (the "Effective Date"), the date of adoption of the Plan by the Board,
provided that such adoption of the Plan by the Board is approved by the
affirmative vote of the holders of at least a majority of the outstanding shares
of Common Stock at a meeting of such holders duly called, convened and held
within one year of the Effective Date. No stock option or stock appreciation
rights granted under the Plan prior to such shareholder approval may be
exercised until after such approval. No stock option or stock appreciation
rights may be granted under the Plan subsequent to February 2, 2006.
11
<PAGE> 1
EXHIBIT 11
F.N.B. CORPORATION
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Dollars in thousands
YEAR ENDED DECEMBER 31, 1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
PRIMARY
Net Income $ 18,083 $ 13,545 $ 10,472
Less: Preferred Stock Dividends Declared (849) (853) (857)
--------- --------- ---------
Net Income Applicable to Common Stock $ 17,234 $ 12,692 $ 9,615
========= ========= =========
Average Common Shares Outstanding 8,595,697 8,568,885 8,572,434
Net Effect of Dilutive Stock Options - Based on
the Treasury Stock Method Using Average
Market Price 40,321 16,054 12,083
--------- --------- ---------
8,636,018 8,584,939 8,584,517
========= ========= =========
Net Income per Common Share $2.00 $1.48 $1.12
===== ===== =====
FULLY DILUTED
Net Income $ 18,083 $ 13,545 $ 10,472
Plus: Minority Interest 64 49
--------- --------- ---------
Net Income Applicable to Common Stock $ 18,083 $ 13,609 $ 10,521
========= ========= =========
Average Common Shares Outstanding 8,595,697 8,568,885 8,572,434
Series A Convertible Preferred Stock 31,148 41,704 44,271
Series B Convertible Preferred Stock 838,002 801,319 801,420
Minority Interest Convertible Preferred Stock 33,620 30,054
Net Effect of Dilutive Stock Options - Based on
the Treasury Stock Method Using the Year-End
Market Price, If Higher than Average Market Price 47,865 16,054 14,709
--------- --------- ---------
9,512,712 9,461,582 9,462,888
========= ========= =========
Net Income per Common Share $1.90 $1.44 $1.11
===== ===== =====
</TABLE>
<PAGE> 1
EXHIBIT 13
1995 FINANCIAL REVIEW
[LOGO]
<TABLE>
<S> <C>
14 Consolidated Balance Sheet
15 Consolidated Income Statement
16 Consolidated Statement of Stockholders' Equity
17 Consolidated Statement of Cash Flows
18 Notes to Consolidated Financial Statements
36 Report of Independent Auditors
37 Selected and Quarterly Financial Data
38 Management's Discussion
51 Stock Prices and Dividends
52 Shareholder Services
</TABLE>
F.N.B. CORPORATION 13
<PAGE> 2
F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
Dollars in thousands, except per share data
December 31 1995 1994
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 59,795 $ 60,451
Interest bearing deposits with banks 2,603 2,770
Federal funds sold 22,335 4,016
Securities available for sale 223,479 120,061
Securities held to maturity (fair value of $136,801 and $246,834) 136,969 257,956
Loans available for sale 10,154 5,904
Loans, net of unearned income of $26,609 and $22,022 1,212,741 1,188,399
Allowance for loan losses (21,550) (20,295)
- -------------------------------------------------------------------------------------------------
NET LOANS 1,201,345 1,174,008
- -------------------------------------------------------------------------------------------------
Premises and equipment 22,504 22,982
Other assets 37,963 44,275
- -------------------------------------------------------------------------------------------------
$1,706,993 $1,686,519
=================================================================================================
LIABILITIES
Deposits:
Non-interest bearing $ 167,700 $ 163,566
Interest bearing 1,274,409 1,261,839
- -------------------------------------------------------------------------------------------------
TOTAL DEPOSITS 1,442,109 1,425,405
Short-term borrowings 55,224 69,365
Other liabilities 25,988 26,142
Long-term debt 39,755 39,017
- -------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 1,563,076 1,559,929
- -------------------------------------------------------------------------------------------------
MINORITY INTEREST 540
- -------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred stock - $10 par value
Authorized - 20,000,000 shares
Outstanding - 451,638 and 456,288 shares
Aggregate liquidation value - $11,291 and $11,407 4,516 4,563
Common stock - $2 par value
Authorized - 20,000,000 shares
Outstanding - 8,611,814 and 8,163,014 shares 17,268 16,364
Additional paid-in capital 58,631 51,686
Retained earnings 60,034 53,121
Net unrealized securities gains 3,932 625
Treasury stock - 22,340 and 18,974 shares at cost (464) (309)
- -------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 143,917 126,050
- -------------------------------------------------------------------------------------------------
$1,706,993 $1,686,519
=================================================================================================
See accompanying Notes to Consolidated Financial Statements
</TABLE>
14 F.N.B. CORPORATION
<PAGE> 3
F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
<TABLE>
<CAPTION>
Dollars in thousands, except per share data
Year Ended December 31 1995 1994 1993
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Loans, including fees $ 113,768 $ 103,210 $ 99,514
Securities:
Taxable 18,150 18,592 23,663
Tax exempt 1,452 1,546 839
Dividends 612 559 572
Other 1,374 972 924
- ---------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 135,356 124,879 125,512
- ---------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Deposits 51,589 44,251 49,550
Short-term borrowings 3,209 3,108 3,011
Long-term debt 3,258 2,869 2,778
- ---------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 58,056 50,228 55,339
- ---------------------------------------------------------------------------------------------------
NET INTEREST INCOME 77,300 74,651 70,173
Provision for loan losses 5,652 8,450 9,498
- ---------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 71,648 66,201 60,675
- ---------------------------------------------------------------------------------------------------
NON-INTEREST INCOME
Insurance commissions and fees 4,284 4,195 4,328
Service charges 7,144 6,457 6,266
Trust 1,390 1,504 1,365
Gain on sale of securities 514 1,281 514
Gain (loss) on sale of loans 272 (331) 1,851
Other 1,404 1,276 1,701
- ---------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST INCOME 15,008 14,382 16,025
- ---------------------------------------------------------------------------------------------------
86,656 80,583 76,700
- ---------------------------------------------------------------------------------------------------
NON-INTEREST EXPENSES
Salaries and employee benefits 29,108 27,688 27,860
Net occupancy 4,920 4,536 4,265
Amortization of intangibles 1,238 1,687 2,020
Equipment 3,338 3,838 3,889
Deposit insurance 2,527 3,719 3,575
Promotional 2,305 2,054 1,864
Insurance claims paid 1,738 1,820 1,802
Other 14,776 14,949 16,454
- ---------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST EXPENSES 59,950 60,291 61,729
- ---------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 26,706 20,292 14,971
Income taxes 8,623 6,747 4,499
- ---------------------------------------------------------------------------------------------------
NET INCOME $ 18,083 $ 13,545 $ 10,472
===================================================================================================
NET INCOME PER COMMON SHARE
PRIMARY $ 2.00 $ 1.48 $ 1.12
===================================================================================================
FULLY DILUTED $ 1.90 $ 1.44 $ 1.11
===================================================================================================
AVERAGE COMMON SHARES OUTSTANDING 8,595,697 8,568,885 8,572,434
===================================================================================================
See accompanying Notes to Consolidated Financial Statements
</TABLE>
F.N.B. CORPORATION 15
<PAGE> 4
F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Dollars in thousands, except per share data
NET
ADDITIONAL UNREALIZED
PREFERRED COMMON PAID-IN RETAINED SECURITIES TREASURY
STOCK STOCK CAPITAL EARNINGS GAINS STOCK
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1993 $4,605 $14,823 $41,483 $46,808 $ (40)
Net income 10,472
Cash dividends declared:
Preferred stock (857)
Common stock - $.25 per share (2,150)
Purchase of common stock
(92,539 shares) (1,286)
Issuance of common stock
(81,213 shares) 106 1,099
5% stock dividend (370,795 shares) 741 4,912 (5,653)
Conversion of preferred stock
(2,350 preferred shares;
6,044 common shares) (23) 12 40
- ----------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1993 4,582 15,576 46,541 48,620 (227)
Cumulative effect of adoption
of FAS No. 115 $ 2,335
Net income 13,545
Cash dividends declared:
Preferred stock (853)
Common stock - $.26 per share (2,257)
Purchase of common stock
(70,690 shares) (1,143)
Issuance of common stock
(66,717 shares) (37) 3 1,061
5% stock dividend (389,309 shares) 779 5,158 (5,937)
Conversion of preferred stock
(1,900 preferred shares;
4,324 common shares) (19) 9 24
Change in net unrealized
securities gains (1,710)
- ----------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1994 4,563 16,364 51,686 53,121 625 (309)
Net income 18,083
Cash dividends declared:
Preferred stock (849)
Common stock - $.37 per share (3,151)
Purchase of common stock
(78,851 shares) (1,447)
Issuance of common stock
(75,424 shares) 92 1,292
5% stock dividend (409,694 shares) 819 6,351 (7,170)
Conversion of preferred stock
(4,650 preferred shares;
42,472 common shares) (47) 85 502
Change in net unrealized
securities gains 3,307
- ----------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1995 $4,516 $17,268 $58,631 $60,034 $ 3,932 $ (464)
============================================================================================================================
See accompanying Notes to Consolidated Financial Statements
</TABLE>
16 F.N.B. CORPORATION
<PAGE> 5
F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Dollars in thousands
Year Ended December 31 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 18,083 $ 13,545 $ 10,472
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 4,704 6,184 7,688
Provision for loan losses 5,652 8,450 9,498
Deferred taxes (493) (1,325) (1,632)
Gain on securities available for sale (514) (1,281) (514)
(Gain) loss on sale of loans (272) 331 (1,851)
Proceeds from sale of loans 21,085 47,020 81,492
Loans originated for sale (25,063) (79,823) (56,851)
Change in:
Interest receivable (397) (470) 1,877
Interest payable 686 1,152 (1,242)
Other, net 3,343 7,663 954
- ----------------------------------------------------------------------------------------------------------
Net cash flows from operating activities 26,814 1,446 49,891
- ----------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Net change in interest bearing deposits with banks 167 3,322 4,288
Net change in federal funds sold (18,319) 19,643 (2,360)
Purchase of securities available for sale (66,031) (77,945) (19,918)
Purchase of securities held to maturity (38,617) (27,344) (104,574)
Proceeds from sale of securities available for sale 2,726 12,404 40,170
Proceeds from maturity of securities available for sale 57,650 81,159 53,531
Proceeds from maturity of securities held to maturity 66,786 61,065 95,760
Net change in loans (28,816) (46,148) (94,337)
Increase in premises and equipment (2,254) (2,167) (2,388)
- ----------------------------------------------------------------------------------------------------------
Net cash flows from investing activities (26,708) 23,989 (29,828)
- ----------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net change in non-interest bearing deposits 4,134 677 9,715
Net change in interest bearing deposits 12,570 (34,011) (30,923)
Net change in short-term borrowings (14,141) 3,864 (3,137)
Increase in long-term debt 8,274 18,812 42,713
Decrease in long-term debt (7,536) (11,092) (32,754)
Proceeds from sale of stock 1,384 1,041 1,234
Purchase of treasury stock (1,447) (1,143) (1,286)
Cash dividends paid (4,000) (3,110) (3,007)
- ----------------------------------------------------------------------------------------------------------
Net cash flows from financing activities (762) (24,962) (17,445)
- ----------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS (656) 473 2,618
Cash and due from banks at beginning of year 60,451 59,978 57,360
- ----------------------------------------------------------------------------------------------------------
CASH AND DUE FROM BANKS AT END OF YEAR $ 59,795 $ 60,451 $ 59,978
==========================================================================================================
See accompanying Notes to Consolidated Financial Statements
</TABLE>
F.N.B. CORPORATION 17
<PAGE> 6
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS:
F.N.B. Corporation (the Corporation) is a bank holding company
headquartered in Hermitage, Pennsylvania. It operates six banks through 60
offices and a consumer finance company through 33 offices in Pennsylvania,
eastern Ohio and southwestern New York.
BASIS OF PRESENTATION:
The consolidated financial statements include the accounts of the
Corporation and its subsidiaries. All significant intercompany balances and
transactions have been eliminated. Certain reclassifications have been made to
the prior years' financial statements to conform them to the current year's
presentation.
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
SECURITIES:
Debt securities are classified as held to maturity when management has the
positive intent and ability to hold securities to maturity. Securities held to
maturity are carried at amortized cost.
Debt securities not classified as held to maturity and marketable equity
securities are classified as available for sale. Securities available for sale
are carried at fair value with net unrealized securities gains (losses) reported
separately through stockholders' equity, net of tax.
Amortization of premiums and accretion of discounts are recorded as
interest Income from securities. Realized gains and losses are recorded as net
securities gains (losses). The adjusted cost of specific securities sold is used
to compute gains or losses on sales.
Presently, the Corporation has no intention of establishing a trading
securities classification.
LOANS AVAILABLE FOR SALE:
Loans available for sale are recorded at the lower of aggregate cost or
market value. Premium or discount recorded at the time of the sale is amortized
over the estimated lives of the loans using the level yield method.
In May of 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (FAS) No. 122, "Accounting for Mortgage
Servicing Rights," an amendment of FAS No. 65. This Statement, which is required
to be adopted by the first quarter of 1996, allows enterprises engaging in
mortgage banking activities to recognize as separate assets rights to service
mortgage loans originated for sale. Additionally, the Corporation must
periodically assess its capitalized mortgage servicing rights for impairment
based on the fair value of those rights. The impact of this Statement is not
anticipated to have a material impact on the Corporation's results of operations
or financial position.
LOANS AND RELATED FEES AND COSTS:
Interest income on loans is accrued on the principal amount outstanding.
Generally, it is the Corporation's policy to discontinue interest accruals when
principal or interest is due and has remained unpaid for 90 days or more unless
the loan is both well secured and in the process of collection. Loans which
reach non-accrual status may not be restored to accrual status until all
delinquent principal and interest have been paid, or the loan becomes both well
secured and in the process of collection. Loan origination fees and related
costs are deferred and recognized over the lives of the loans as an adjustment
of yield.
On January 1, 1995, the Corporation adopted FAS No. 114, "Accounting by
Creditors for impairment of a Loan," as amended by FAS No. 118 "Accounting by
Creditors for Impairment of a
18 F.N.B. CORPORATION
<PAGE> 7
Loan - Income Recognition and Disclosures." These standards require 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 at the fair value of the collateral if the
loan is collateral dependent. If the recorded investment in the loan exceeds the
measure of fair value, a valuation allowance is established as a component of
the allowance for loan losses. Impaired loans consist of non-homogeneous loans,
which based on the evaluation of current information and events, management has
determined that it is probable that the Corporation will not be able to collect
all amounts due on these loans according to the contractual terms of the loan
agreements. The Corporation evaluates all commercial and commercial real estate
loans which have been classified for regulatory reporting purposes, including
nonaccrual and restructured loans, in determining impaired loans. The adoption
of these accounting standards did not have a material impact on the overall
allowance for loan losses and did not affect the Corporation's charge-off or
income recognition policies.
PREMISES AND EQUIPMENT:
Premises and equipment are stated at cost less accumulated depreciation.
Depreciation is computed generally on the straight-line method.
OTHER REAL ESTATE OWNED:
Assets acquired in settlement of indebtedness are included in other assets
at the lower of fair value minus estimated costs to sell or at the carrying
amount of the indebtedness. Subsequent write-downs and net direct operating
expenses attributable to such assets are included in other expenses.
ALLOWANCE FOR LOAN LOSSES:
The allowance for loan losses is based on management's evaluation of
potential losses in the loan portfolio, which includes an assessment of past
experience, current and estimated future economic conditions, known and inherent
risks in the loan portfolio, the estimated value of underlying collateral and
industry standards. Additions are made to the allowance through periodic
provisions charged to income and recovery of principal on loans previously
charged off. Losses of principal are charged to the allowance when the loss
actually occurs or when a determination is made that a loss is probable.
AMORTIZATION OF INTANGIBLES:
Core deposit intangibles acquired after June 30, 1985 are being amortized
on accelerated methods over various lives ranging from 5-17 years.
ACCOUNTING FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS:
The Corporation recognizes the projected future cost of providing
postretirement benefits, such as health care and life insurance, as an expense
as employees render service.
INCOME TAXES:
Deferred taxes are determined based on differences between financial
reporting and tax basis of assets and liabilities and are measured using the
enacted tax rates and laws that will be in effect when the differences are
expected to reverse.
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
F.N.B. CORPORATION 19
<PAGE> 8
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PER SHARE AMOUNTS (CONTINUED):
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 conversion of outstanding convertible
preferred stock from the beginning of the year or date of issuance and the
exercise of stock options. Such adjustments to net income and the weighted
average number of shares of common stock outstanding are made only when such
adjustments dilute earnings per common share.
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 year-end adjusted retroactively for stock dividends.
CASH EQUIVALENTS:
The Corporation considers cash and due from banks as cash and cash
equivalents.
NEW ACCOUNTING STANDARDS:
FAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," which becomes effective for the
Corporation in 1996, requires impairment losses to be recorded on long-lived
assets used in operations when indicators of impairment are present. The
undiscounted cash flows estimated to be generated by those assets are less than
the assets' carrying amount. Adoption of this Statement in the first quarter of
1996 is not expected to have a material effect on the Corporation's financial
position or results of operations.
FAS No. 123, "Accounting for Stock-Based Compensation," which becomes
effective for the Corporation in 1996, defines a fair value based method of
accounting for stock-based employee compensation plans. Under the fair value
based method, compensation cost is measured at the grant date based upon the
value of the award and is recognized over the service period. However, FAS No.
123 also allows an entity to continue to measure compensation costs for its
plans as prescribed in APB Opinion No. 25 "Accounting for Stock Issued to
Employees." At this time, management expects to continue its accounting in
accordance with APB Opinion No. 25. Disclosure requirements of FAS No. 123 will
be adopted as required for financial statements beginning in 1996.
20 F.N.B. CORPORATION
<PAGE> 9
SECURITIES
Following is a summary of the maturity distribution and weighted average
yield for each range of maturities of securities available for sale (dollars in
thousands):
<TABLE>
<CAPTION>
FAIR WEIGHTED
December 31,1995 VALUE AVERAGE YIELD
- --------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Treasury and Other U.S. Government
Agencies and Corporations:
Maturing within one year $104,457 5.54%
Maturing after one year but within five years 103,210 6.11
- --------------------------------------------------------------------------------------
TOTAL U.S. TREASURY AND OTHER U.S.
GOVERNMENT AGENCIES AND CORPORATIONS $207,667 5.86
======================================================================================
Mortgage-Backed Securities:
Maturing after one year but within five years $ 17 7.98%
Maturing after five years but within ten years 351 6.79
- --------------------------------------------------------------------------------------
TOTAL MORTGAGE-BACKED SECURITIES $ 368 6.84
- --------------------------------------------------------------------------------------
EQUITY SECURITIES $ 15,444 4.87%
======================================================================================
</TABLE>
Following is a summary of the maturity distribution and weighted average
yield for each range of maturities of securities held to maturity (dollars in
thousands):
<TABLE>
<CAPTION>
AMORTIZED WEIGHTED
December 31,1995 COST AVERAGE YIELD
- --------------------------------------------------------------------------------------
<S> <C> <C>
States of the U.S. and Political Subdivisions:
Maturing within one year $ 1,275 10.78%
Maturing after one year but within five years 30,490 5.75
Maturing after five years but within ten years 2,264 6.24
- --------------------------------------------------------------------------------------
TOTAL STATES OF THE U.S. AND POLITICAL SUBDIVISIONS $ 34,029 5.94
======================================================================================
Mortgage-Backed Securities:
Maturing within one year $ 2,078 7.62%
Maturing after one year but within five years 99,451 6.00
Maturing after five years but within ten years 1,355 5.32
- --------------------------------------------------------------------------------------
TOTAL MORTGAGE-BACKED SECURITIES $102,884 6.03
======================================================================================
Other Securities:
Maturing within one year $ 12 5.44%
Maturing after one year but within five years 24 5.54
Maturing after five years but within ten years 10 5.50
Maturing after ten years 10 2.80
- --------------------------------------------------------------------------------------
TOTAL OTHER SECURITIES $ 56 5.03
======================================================================================
</TABLE>
Maturities may differ from contractual terms because borrowers may have the
right to call or prepay obligations with or without penalties. Tax-exempt
securities have been adjusted to a taxable equivalent basis using a federal
income tax rate of 35 percent.
Proceeds from sales of securities during 1995, 1994 and 1993 were $2.7
million, $12.4 million and $40.2 million, respectively. Gross gains and gross
losses were realized on those sales as follows (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31 1995 1994 1993
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Gross gains $515 $1,329 $726
Gross losses 1 48 212
All sales were from the securities available for sale category.
</TABLE>
F.N.B. CORPORATION 21
<PAGE> 10
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SECURITIES (CONTINUED)
Following is a summary of securities available for sale (in thousands):
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
December 31, 1995 COST GAINS LOSSES VALUE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury and other U.S. Government
agencies and corporations $206,169 $1,552 $ (54) $207,667
Mortgage-backed securities 363 5 368
- ------------------------------------------------------------------------------------------------------------
TOTAL DEBT SECURITIES 206,532 1,557 (54) 208,035
Equity securities 10,898 4,546 15,444
- ------------------------------------------------------------------------------------------------------------
$217,430 $6,103 $ (54) $223,479
============================================================================================================
December 31, 1994
U.S. Treasury and other U.S. Government
agencies and corporations $107,619 $(1,825) $105,794
Mortgage-backed securities 459 (32) 427
- ------------------------------------------------------------------------------------------------------------
TOTAL DEBT SECURITIES 108,078 (1,857) 106,221
Equity securities 11,021 $2,819 13,840
- ------------------------------------------------------------------------------------------------------------
$119,099 $2,819 $(1,857) $120,061
============================================================================================================
December 31,1993
U.S. Treasury and other U.S. Government
agencies and corporations $122,115 $1,071 $ (5) $123,181
Mortgage-backed securities 567 12 579
Other debt securities 16 16
- ------------------------------------------------------------------------------------------------------------
TOTAL DEBT SECURITIES 122,698 1,083 (5) 123,776
Equity securities 4,653 2,596 (81) 7,168
- ------------------------------------------------------------------------------------------------------------
$127,351 $3,679 $ (86) $130,944
============================================================================================================
</TABLE>
Following is a summary of securities held to maturity (in thousands):
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
December 31, 1995 COST GAINS LOSSES VALUE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
States of the U.S. and political subdivisions $ 34,029 $ 70 $ (236) $ 33,863
Mortgage-backed securities 102,884 424 (421) 102,887
Other debt securities 56 (5) 51
- ------------------------------------------------------------------------------------------------------------
$136,969 $ 494 $ (662) $136,801
============================================================================================================
December 31,1994
U.S. Treasury and other U.S. Government
agencies and corporations $141,097 $ (3,884) $137,213
States of the U.S. and political subdivisions 35,334 $ 63 (2,325) 33,072
Mortgage-backed securities 81,464 1 (4,969) 76,496
Other debt securities 61 (8) 53
- ------------------------------------------------------------------------------------------------------------
$257,956 $ 64 $(11,186) $246,834
============================================================================================================
December 31, 1993
U.S. Treasury and other U.S. Government
agencies and corporations $163,051 $1,980 $ (47) $164,984
States of the U.S. and political subdivisions 36,335 345 (313) 36,367
Mortgage-backed securities 93,306 1,293 (43) 94,556
Other debt securities 65 65
- ------------------------------------------------------------------------------------------------------------
TOTAL DEBT SECURITIES 292,757 3,618 (403) 295,972
Equity securities 6,276 6,276
- ------------------------------------------------------------------------------------------------------------
$299,033 $3,618 $ (403) $302,248
============================================================================================================
</TABLE>
22 F.N.B. CORPORATION
<PAGE> 11
On December 21, 1995, the Corporation transferred $92.0 million of debt
securities from the held to maturity category to the available for sale category
in accordance with recently issued implementation guidance on FAS No. 115. At
the time of transfer, the market value of the securities totaled $92.3 million,
and the unrealized gain, net of taxes, of $161,000 was recorded as an increase
to stockholders' equity.
At December 31, 1995 and 1994, respectively, securities available for sale
with a fair value of $74.8 million and $13.1 million and securities held to
maturity with an amortized cost of $34.3 million and $98.6 million were pledged
to secure public deposits, trust deposits and for other purposes as required by
law.
At December 31, 1995, there were no securities of a single issuer, other
than U.S. Treasury and other U.S. Government agencies and corporations, which
exceeded 10% of stockholders' equity.
FAS No. 119. "Disclosure about Derivative Financial Instruments and Fair
Value of Financial Instruments," established disclosures about derivatives and
other financial instruments. Derivatives are various instruments used to
construct a transaction that is derived from and reflects the underlying value
of assets, other instruments or various indices. The primary purpose of
derivatives, which include such items as forward contracts, interest swap
contracts, options and futures, is to transfer price risk associated with the
fluctuations in asset values rather than to borrow or lend funds. As of
December 31, 1995, the Corporation had not entered into any such transactions.
LOANS
Following is a summary of loans (in thousands):
<TABLE>
<CAPTION>
December 31 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
Commercial, financial and agricultural $ 120,093 $ 156,848
Real estate - construction 7,993 28,193
Real estate - mortgage 784,492 707,813
Installment loans to individuals 326,772 317,567
Unearned income (26,609) (22,022)
- -------------------------------------------------------------------------------
1,212,741 1,188,399
- -------------------------------------------------------------------------------
Loans available for sale:
Real estate-mortgage 7,919 5,071
Installment loans to individuals 2,235 833
- -------------------------------------------------------------------------------
10,154 5,904
- -------------------------------------------------------------------------------
$1,222,895 $1,194,303
===============================================================================
</TABLE>
During 1995, the Corporation converted its data processing system. The new
system allows for the separate classification of commercial real estate loans.
The 1995 balances reflect commercial real estate loans within the real estate -
mortgage category. Such loans were previously classified within the commercial,
financial and agricultural category.
Loans past due 90 days or more were $3.8 million, $2.6 million and $3.4
million at December 31, 1995, 1994 and 1993, respectively.
During 1994, the Corporation reclassified $119.9 million of residential
mortgages and indirect installment loans from an available for sale category
into its permanent loan portfolio. This action was taken to more clearly reflect
management's intent relative to portfolio lending activities by specifically
defining certain loan originations that would be sold in the secondary market.
At the time of this reclassification, the book value of those loans closely
approximated their market value.
Certain directors and executive officers of the Corporation and its
significant subsidiaries, as well as associates of such persons, were loan
customers during 1995. Such loans were made in the ordinary course of business
under normal
F.N.B. CORPORATION 23
<PAGE> 12
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
LOANS (CONTINUED)
credit terms and do not represent more than a normal risk of collection.
Following is a summary of the amount of loans in which the aggregate of the
loans to any such persons exceeded $60,000 during the year (in thousands):
<TABLE>
<S> <C>
Total loans at December 31, 1994 $ 25,483
New loans 11,235
Repayments (13,608)
Other 933
----------------------------------------------------------
Total loans at December 31, 1995 $ 24,043
==========================================================
</TABLE>
Other represents the net change in loan balances resulting from changes in
related parties during the year.
NON-PERFORMING ASSETS
Following is a summary of non-performing assets (in thousands):
<TABLE>
<CAPTION>
December 31 1995 1994 1993
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Non-accrual loans $ 5,605 $ 9,512 $ 10,262
Restructured loans 3,075 3,157 3,236
- ------------------------------------------------------------------------------
TOTAL NON-PERFORMING LOANS 8,680 12,669 13,498
Other real estate owned 2,742 3,675 3,016
- ------------------------------------------------------------------------------
TOTAL NON-PERFORMING ASSETS $11,422 $ 16,344 $ 16,514
==============================================================================
</TABLE>
For the years ended December 31, 1995, 1994 and 1993, income recognized on
non-accrual and restructured loans was $540,000, $621,000 and $671,000,
respectively. Income that would have been recognized during 1995, 1994 and 1993
on such loans if they were in accordance with their original terms was $1.0
million, $1.7 million and $1.7 million, respectively.
At December 31, 1995, the recorded investment in loans that were considered
to be impaired under FAS No. 114 was $10.4 million (of which $2.5 million were
on a non-accrual basis). Included in this amount was $3.7 million of impaired
loans that as a result of write-downs did not have an allocated allowance for
credit losses. The allocated allowance on the remaining $6.7 million of impaired
loans totaled $1.1 million at December 31, 1995. The average recorded investment
in impaired loans during the year ended December 31, 1995 was approximately
$13.4 million. For the year ended December 31, 1995, the Corporation recognized
interest income on those impaired loans of $867,000 which did not include any
interest income recognized using the cash basis method of income recognition.
ALLOWANCE FOR LOAN LOSSES
Following is an analysis of changes in the allowance for loan losses (in
thousands):
<TABLE>
<CAPTION>
Year Ended December 31 1995 1994 1993
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at beginning of year $20,295 $16,440 $ 14,737
Loss reserves transferred (893)
Charge-offs (6,136) (6,311) (8,275)
Recoveries 1,739 1,716 1,373
- ------------------------------------------------------------------------------
NET CHARGE-OFFS (4,397) (4,595) (6,902)
- ------------------------------------------------------------------------------
Provision for loan losses 5,652 8,450 9,498
- ------------------------------------------------------------------------------
Balance at end of year $21,550 $20,295 $ 16,440
==============================================================================
</TABLE>
24 F.N.B. CORPORATION
<PAGE> 13
PREMISES AND EQUIPMENT
Following is a summary of premises and equipment (in thousands):
<TABLE>
<CAPTION>
December 31 1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C>
Land $ 2,421 $ 2,415
Premises 26,288 26,442
Equipment 21,051 18,788
- -----------------------------------------------------------------------------
49,760 47,645
Accumulated depreciation (27,256) (24,663)
- -----------------------------------------------------------------------------
$ 22,504 $ 22,982
=============================================================================
</TABLE>
Depreciation expense was $2.7 million for 1995, $3.1 million for 1994 and
$3.1 million for 1993. The Corporation has announced plans to construct a new
multi-story building in Hermitage as well as two new branches in Erie.
Preliminary construction, equipment and furnishing costs are projected to be
approximately $12.9 million.
DEPOSITS
Following is a summary of deposits (in thousands):
<TABLE>
<CAPTION>
December 31 1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C>
Non-interest bearing $ 167,700 $ 163,566
Savings and NOW 549,497 620,212
Certificates of deposit and
other time deposits 724,912 641,627
- -----------------------------------------------------------------------------
$1,442,109 $1,425,405
=============================================================================
</TABLE>
Following is a summary of time deposits of $100,000 or more by remaining
maturities (in thousands):
<TABLE>
<CAPTION>
CERTIFICATES OTHER TIME
December 31, 1995 OF DEPOSIT DEPOSITS TOTAL
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Three months or less $ 29,937 $ 3,250 $ 33,187
Three to six months 21,057 2,879 23,936
Six to twelve months 15,755 4,345 20,100
Over twelve months 18,713 15,979 34,692
- -----------------------------------------------------------------------------
$ 85,462 $26,453 $111,915
=============================================================================
</TABLE>
SHORT-TERM BORROWINGS
Following is a summary of short-term borrowings (in thousands):
<TABLE>
<CAPTION>
December 31 1995 1994
- -----------------------------------------------------------------------------
<S> <C> <C>
Securities sold under repurchase agreements $ 2,990 $ 2,535
Other short-term borrowings 4,872 18,745
Subordinated notes 47,362 48,085
- -----------------------------------------------------------------------------
$55,224 $69,365
=============================================================================
</TABLE>
F.N.B. CORPORATION 25
<PAGE> 14
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SHORT-TERM BORROWINGS (CONTINUED)
Credit facilities amounting to $25.0 million at December 31, 1995 and
December 31, 1994 were maintained with various banks with rates at or below
prime rate. The facilities and their terms are periodically reviewed by the
banks and are generally subject to withdrawal at their discretion. The amount
of these credit facilities which were unused amounted to $22.0 million and $21.0
million at December 31, 1995 and 1994, respectively.
In addition, certain subsidiaries have access to short-term credit
facilities at the Federal Home Loan Bank, which totaled $109.7 million at
December 31, 1995, and if used would require collateralization. No amounts were
used as of December 31, 1995.
LONG-TERM DEBT
Following is a summary of long-term debt (in thousands):
<TABLE>
<CAPTION>
December 31 1995 1994
- -----------------------------------------------------------------------------
<S> <C> <C>
Real estate mortgages payable $ 284 $ 452
Federal Home Loan Bank advances 2,077 2,112
Subordinated notes 37,394 36,453
- -----------------------------------------------------------------------------
$39,755 $39,017
=============================================================================
</TABLE>
The Federal Home Loan Bank advances are secured by residential real estate
loans and are scheduled to mature in various amounts annually from 1996 through
the year 1999. Subordinated notes are unsecured and subordinated to other
indebtedness of the Corporation. The subordinated notes are scheduled to mature
in various amounts annually from 1996 through the year 2005.
At December 31, 1995, $29.5 million of long-term debt is redeemable prior
to maturity. Of this total, $27.2 million is redeemable by the holder at a
discount equal to three months of interest. The issuer may require the holder to
give 30 days prior written notice. No sinking fund is required and none has been
established to retire the debt. The weighted average interest rate on long-term
debt was 7.85% at December 31, 1995 and 8.02% at December 31, 1994. Scheduled
annual maturities for each of the five years following December 31, 1995 are as
follows (in thousands):
<TABLE>
<S> <C>
1996 $17,948
1997 5,320
1998 2,278
1999 898
2000 959
</TABLE>
COMMITMENTS AND CREDIT RISK
The Corporation has operating leases extending to 2016 for certain land,
office locations and equipment. Leases that expire are generally expected to be
renewed or replaced by other leases. Rental expense was $2.2 million for 1995,
$1.7 million for 1994 and $1.3 million for 1993. Total minimum rental
commitments under such leases were $7.0 million at December 31, 1995. Following
is a summary of future minimum lease payments for years following December 31,
1995 (in thousands):
<TABLE>
<S> <C>
1996 $1,334
1997 1,240
1998 1,058
1999 656
2000 475
Later years 2,259
</TABLE>
The Corporation's banking subsidiaries were required to maintain aggregate
reserves amounting to $17.2 million at December 31, 1995 to satisfy federal
regulatory requirements. The Corporation also maintains deposits for various
services such as check clearing.
The Corporation has commitments to extend credit and standby letters of
credit which involve certain elements of credit risk in excess of the amount
stated in the consolidated balance sheet. The Corporation's exposure to credit
loss in the event of non-performance by the customer is represented by the
contractual amount of those instruments. Consistent credit policies are used by
the Corporation for both on- and off-balance sheet items.
26 F.N.B. CORPORATION
<PAGE> 15
Following is a summary of off-balance sheet credit risk information (in
thousands):
<TABLE>
<CAPTION>
December 31 1995 1994
- -------------------------------------------------------------------------------
CREDIT CARRYING Credit Carrying
AMOUNT AMOUNT Amount Amount
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Off-balance sheet credit risk:
Commitments to extend credit $172,431 $215 $149,204 $ 63
Standby letters of credit 9,300 67 14,273 102
</TABLE>
At December 31, 1995, funding of approximately 70 percent of the
commitments to extend credit was dependent on the financial condition of the
customer. The Corporation has the ability to withdraw such commitments at its
discretion. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of the
commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements. Based
on management's credit evaluation of the customer, collateral may be deemed
necessary. Collateral requirements vary and may include accounts receivable,
inventory, property, plant and equipment and income-producing commercial
properties.
Standby letters of credit are conditional commitments issued by the
Corporation which may require payment at a future date. The credit risk involved
in issuing letters of credit is essentially the same as that involved in
extending loans to customers.
The amounts under "carrying amount" represent accruals or deferred fee
income arising from these unrecognized financial instruments.
STOCKHOLDERS' EQUITY
Series A - Cumulative Convertible Preferred Stock (Series A Preferred) was
created for the purpose of acquiring Reeves Bank. Holders of Series A Preferred
are entitled to 4.9 votes for each share held. The holders do not have
cumulative voting rights in the election of directors. Dividends are cumulative
from the date of issue and are payable at $.42 per share each quarter. Series A
Preferred is convertible at the option of the holder into shares of the
Corporation's common stock having a market value of $25.00 at time of
conversion. The Corporation has the right to require the conversion of the
balance of all outstanding shares at the conversion rate at any time after 50%
of the 49,512 shares issued are no longer outstanding. During 1995, 450 shares
of Series A Preferred were converted to 617 shares of common stock. At December
31,1995, 31,148 shares of common stock were reserved by the Corporation for the
conversion of the remaining 24,838 outstanding shares.
Series B - Cumulative Convertible Preferred Stock (Series B Preferred) was
issued during 1992 for the purpose of raising capital for an acquisition.
Holders of Series B Preferred have no voting rights. Dividends are cumulative
from the date of issue and are payable at $.46875 per share each quarter. Series
B Preferred has a stated value of $25.00 per share and is convertible at the
option of the holder at any time into shares of the Corporation's common stock
at a price of $12.83 per share. The Corporation has the right to redeem the
Series B Preferred Stock for cash on or after May 15, 1996, as set forth in the
prospectus relating to the offering of Series B Preferred Stock dated May 8,
1992. During 1995, 4,200 shares of Series B Preferred were converted to 8,179
shares of common stock. At December 31, 1995, 831,362 shares of common stock
were reserved by the Corporation for the conversion of the remaining 426,800
outstanding shares.
Series A Preferred of First County was issued in connection with the
initial capitalization of a subsidiary, First County Bank, and recognized as
minority interest. The Corporation required the conversion of the outstanding
shares during the first quarter of 1995. This conversion resulted in the
Corporation issuing an additional 33,676 shares of common stock.
Certain limitations exist under applicable law and regulations by
regulatory agencies regarding dividend payments to a parent by its subsidiaries.
As of December 31, 1995, the subsidiaries had
F.N.B. CORPORATION 27
<PAGE> 16
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
STOCKHOLDERS' EQUITY (CONTINUED)
$19.9 million of retained earnings available for distribution as dividends
without prior regulatory approval.
Under current Federal Reserve regulations, the Corporation's banking
subsidiaries are limited in the amount they may lend to non-bank affiliates,
including the Corporation. Such loans must be secured by specified collateral.
In addition, any such loans to a single non-bank affiliate may not exceed 10% of
any banking subsidiary's capital and surplus and the aggregate of loans to all
such affiliates may not exceed 20%. The maximum amount that may be borrowed by
the parent company under these provisions approximated $12.7 million at December
31, 1995.
STOCK INCENTIVE PLANS
The Corporation has a restricted stock bonus plan which provides for the
issuance of up to 352,800 shares of common stock to key employees of the
Corporation. All shares of stock awarded under the plan vest in equal
installments over a five year period on each anniversary of the date of grant.
Participants have full voting rights on all shares regardless of vesting unless
forfeited. The shares of stock awarded under the plan are held in the
participant's name and are enrolled in the Voluntary Dividend Reinvestment and
Stock Purchase Plan. During 1995, the Corporation awarded 2,901 shares, 20% of
which became vested in January 1996.
The Corporation has a stock option plan (Option Plan) which provides for
the issuance of up to 428,831 stock options and stock appreciation rights to key
employees of the Corporation. The options are granted at a price equal to the
fair market value at the date of the grant and are exercisable within ten years
from the date of the grant.
At December 31, 1995, options for 77,355 shares of common stock were
exercisable at prices ranging from $8.64 to $13.61 per share.
Activity in the Option Plan during the past three years was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding shares,
beginning of year 195,630 142,486 74,601
Granted during the year 82,687 62,816 72,938
Exercised during the year
(at prices ranging from
$8.64 to $13.61
per share) (1,819) (1,837)
Forfeited during the year (10,759) (7,835) (5,053)
- -------------------------------------------------------------------------------
Outstanding shares,
end of year 265,739 195,630 142,486
===============================================================================
</TABLE>
RETIREMENT PLANS
The Corporation's subsidiaries have several retirement plans covering
substantially all of their employees. Expense associated with these plans was
$1.7 million in 1995, $1.6 million in 1994 and $931,000 in 1993.
The defined benefit plans provide benefits based on years of credited
service and compensation (as defined), subject to ERISA limitations.
Contributions to the tax-qualified plans are made in amounts not less than the
minimum-required contribution under ERISA nor more than the maximum-deductible
contribution under the Internal Revenue Code.
28 F.N.B. CORPORATION
<PAGE> 17
Following is the estimated funded status (in thousands):
<TABLE>
<CAPTION>
December 31 1995 1994
- --------------------------------------------------------------------------------------------------------------------------------
PLANS WHOSE PLANS WHOSE Plans Whose Plans Whose
ASSETS EXCEED ACCUMULATED Assets Exceed Accumulated
ACCUMULATED BENEFITS Accumulated Benefits
BENEFITS EXCEED ASSETS Benefits Exceed Assets
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation $ 13,406 $ 2,439 $ 10,282 $ 1,236
================================================================================================================================
Accumulated benefit obligation $ 13,625 $ 3,169 $ 10,506 $ 1,629
================================================================================================================================
Projected benefit obligation
for services rendered to date $(17,114) $(3,720) $(12,909) $(1,972)
Plan assets at fair value, primarily
U.S. Government securities and
common stocks 17,881 14,673
- --------------------------------------------------------------------------------------------------------------------------------
Plan assets in excess of or
(less than) projected benefit
obligation 767 (3,720) 1,764 (1,972)
Unrecognized net (gain) loss 21 (33) (1,313) (434)
Unrecognized net obligation 58 63
Unrecognized prior service cost 162 2,185 179 1,484
Additional liability (707)
- --------------------------------------------------------------------------------------------------------------------------------
Prepaid (accrued) pension costs $ 1,008 $(1,568) $ 693 $ (1,629)
================================================================================================================================
</TABLE>
The pension expense for the defined benefit plans included the following
components (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service costs - benefits earned during the period $ 854 $ 1,072 $ 771
Interest cost on projected benefit obligation 1,375 1,237 815
Actual return on plan assets (3,014) 330 (757)
Net amortization 2,115 (1,293) (212)
- ---------------------------------------------------------------------------------------------------------------------------------
Net pension expense $ 1,330 $ 1,346 $ 617
=================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Assumptions as of December 31 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Weighted average discount rate 7.0% 8.5% 7.3%
Rates of increase in compensation levels 4.0% 4.0% 4.0%
Expected long-term rate of return on assets 8.0% 8.0% 8.0%
</TABLE>
At December 31, 1995 and 1994, respectively, plan assets included $745,000
and $519,000 of the Corporation's common stock and $193,000 and $172,000 of the
Corporation's subordinated debt.
The Corporation's subsidiaries also have a qualified 401(k) deferred
compensation, defined contribution plan for its full-time employees. A
percentage of employees' contributions to the plan are matched by the
Corporation up to a maximum of 6 percent of the employee's salary. The 401(k)
pension expense amounted to $340,000 in 1995, $297,000 in 1994 and $314,000 in
1993. Plan assets included $2.7 million and $1.4 million in the Corporation's
common stock at December 31, 1995 and 1994, respectively.
F.N.B. CORPORATION 29
<PAGE> 18
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
POSTRETIREMENT PLANS
In addition to the Corporation's retirement plans, the Corporation has
various unfunded postretirement plans which provide medical benefits and life
insurance benefits to its retirees. The postretirement health care plans vary,
the most stringent of which are contributory and contain other cost-sharing
features such as deductibles and co-insurance. The life insurance plans are
noncontributory.
The amounts recognized in the Corporation's consolidated financial
statements are as follows (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31 1995 1994
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Accumulated Postretirement Benefit Obligation:
Current retirees $ 186 $ 247
Fully eligible actives 50 83
Other actives 594 702
- -------------------------------------------------------------------------------------------------------
Total Accumulated Postretirement
Benefit Obligation 830 1,032
Unrecognized net transition obligation (760) (809)
Unrecognized net gain 255 19
Unrecognized prior service cost (9) (22)
- -------------------------------------------------------------------------------------------------------
Accrued postretirement benefit liability $ 316 $ 220
=======================================================================================================
</TABLE>
Net periodic postretirement benefit cost included the following components
(in thousands):
<TABLE>
<CAPTION>
Year Ended December 31 1995 1994 1993
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 60 $ 75 $ 69
Interest cost 68 73 58
Amortization of transition obligation 38 49 50
- --------------------------------------------------------------------------------------------------------
Net periodic postretirement benefit cost $166 $197 $177
========================================================================================================
</TABLE>
A 7.50 percent annual rate of increase in the per capita costs of covered
health care benefits is assumed for 1996, gradually decreasing to 4.75 percent
by the year 2001. Increasing the assumed health care cost trend rates by one
percentage point in each year would increase the accumulated postretirement
benefit obligation as of December 31, 1995 by $74,000 and increase the aggregate
of the service and interest cost component of net periodic postretirement
benefit cost for 1995 by $15,000. A discount rate of 7.00 percent was used to
determine the accumulated postretirement benefit obligation.
INCOME TAXES
Deferred tax assets and liabilities are recognized for the expected future
tax consequence of events that have been recognized in the Corporation's
consolidated financial statements or tax returns and are measured using the
enacted tax rates and laws that will be in effect when the differences are
expected to reverse.
Income tax expense consists of the following (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current income taxes:
Federal taxes $8,892 $ 7,852 $ 5,788
State taxes 224 220 343
- -----------------------------------------------------------------------------------------------------------
9,116 8,072 6,131
Deferred income taxes:
Federal taxes (493) (1,325) (1,641)
State taxes 9
- -----------------------------------------------------------------------------------------------------------
$8,623 $ 6,747 $ 4,499
===========================================================================================================
</TABLE>
30 F.N.B. CORPORATION
<PAGE> 19
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are presented
below (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31 1995 1994
- ---------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Allowance for loan losses $ 6,760 $ 6,355
Compensated absences 46 191
Loans available for sale (285) (48)
Deferred compensation 234 213
Loan fees 145 338
Other 2,640 2,037
- ---------------------------------------------------------------------------------
TOTAL GROSS DEFERRED TAX ASSETS 9,540 9,086
- ---------------------------------------------------------------------------------
Deferred tax liabilities:
Depreciation (897) (905)
Dealer reserve participation (957) (957)
Unrealized gains on securities available for sale (2,117) (337)
Securitization of indirect automobile loans (291) (237)
Other (2,033) (1,921)
- ---------------------------------------------------------------------------------
TOTAL GROSS DEFERRED TAX LIABILITIES (6,295) (4,357)
- ---------------------------------------------------------------------------------
3,245 4,729
Less valuation allowance 197
- ---------------------------------------------------------------------------------
NET DEFERRED TAX ASSETS $ 3,245 $ 4,532
=================================================================================
</TABLE>
The valuation allowance for deferred taxes related to state tax benefits.
Following is a reconciliation between federal statutory tax and actual
effective tax:
<TABLE>
<CAPTION>
Year Ended December 31 1995 1994 1993
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal statutory tax 35.0% 35.0% 35.0%
Effect of nontaxable interest and dividend income (4.5) (6.2) (6.9)
State taxes .5 .7 1.5
Goodwill .5 .7
Other items .8 3.1 .4
- ---------------------------------------------------------------------------------
Actual effective tax 32.3% 33.3% 30.0%
=================================================================================
</TABLE>
A banking subsidiary has been allowed a special thrift bad debt deduction
of 8% of otherwise taxable income, subject to certain limitations based on
aggregate loan and savings account balances at the end of each year.
The Corporation has not recognized a deferred tax liability of approximately
$1.3 million. If amounts that qualify as deductions for federal income tax
purposes are later used for purposes other than for bad debt losses, they will
be subject to federal income tax at the then current corporate rate. Retained
earnings at December 31, 1995 include $3.8 million for which federal income
tax has not been provided.
Included in loan income was interest on tax-free loans of $2.4 million,
$2.5 million and $2.6 million for 1995, 1994 and 1993, respectively. The
related income tax expense on securities gains amounting to $180,000, $449,000
and $180,000 for 1995, 1994 and 1993, respectively, was included in income
taxes.
MERGERS AND ACQUISITIONS
On February 2, 1996, the Corporation signed a definitive merger agreement
with Southwest Banks, Inc. (Southwest), a bank holding company headquartered in
Naples, Florida with assets of approximately $386 million. The merger agreement
calls for an exchange of .78 share of F.N.B. Corporation common stock for each
share of Southwest common stock. Approximately
F.N.B. CORPORATION 31
<PAGE> 20
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MERGERS AND ACQUISITIONS (CONTINUED)
2,715,545 shares of F.N.B. Corporation common stock are expected to be issued
in conjunction with the merger.
In connection with the merger agreement, Southwest granted the Corporation
an option to purchase, under certain circumstances, up to 727,163 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 transaction will be accounted for as a pooling of
interests, and is expected to close in early 1997, subject to approval by
certain regulatory authorities and Southwest's shareholders.
CASH FLOW INFORMATION
Following is a summary of supplemental cash flow information
(in thousands):
<TABLE>
<CAPTION>
Year Ended December 31 1995 1994 1993
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash paid during year for:
Interest $ 57,370 $ 51,270 $ 56,549
Income taxes 8,948 7,318 5,812
Noncash Investing and Financing Activities:
Acquisition of real estate in settlement of loans $ 1,855 $ 3,210 $ 2,535
Loans granted in the sale of other real estate 321 1,267 4,704
Transfers and reclassifications of securities held to
maturity to securities available for sale 91,982 6,227
Loans reclassified from available for sale 119,858
</TABLE>
PARENT COMPANY FINANCIAL STATEMENTS
Below is condensed financial information of F.N.B. Corporation (parent
company only). In this information, the parent's investments in subsidiaries are
stated at cost plus equity in undistributed earnings of subsidiaries since
acquisition. This information should be read in conjunction with the
consolidated financial statements.
<TABLE>
<CAPTION>
BALANCE SHEET (in thousands):
December 31 1995 1994
- --------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash $ 16 $ 13
Short-term investments 2,928 2,722
Advances to subsidiaries 74,849 70,742
Receivables 6,761 3,087
Securities available for sale 9,180 7,564
Investment in bank subsidiaries 121,584 113,681
Investment in non-bank subsidiaries 20,869 19,691
- --------------------------------------------------------------------------
$236,187 $217,500
==========================================================================
LIABILITIES
Short-term borrowings $ 3,000 $ 4,000
Other liabilities 4,514 2,911
Subordinated notes 84,756 84,539
- --------------------------------------------------------------------------
TOTAL LIABILITIES 92,270 91,450
- --------------------------------------------------------------------------
STOCKHOLDERS' EQUITY 143,917 126,050
- --------------------------------------------------------------------------
$236,187 $217,500
==========================================================================
</TABLE>
32 F.N.B. CORPORATION
<PAGE> 21
INCOME STATEMENT (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31 1995 1994 1993
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME
Dividends from subsidiaries:
Bank $ 8,942 $ 6,849 $ 6,478
Non-bank 3,706 3,596 2,902
- ----------------------------------------------------------------------------------
12,648 10,445 9,380
Gain on sale of securities 512 1,287 403
Interest 4,924 4,062 193
Other 206 190 189
- ----------------------------------------------------------------------------------
TOTAL INCOME 18,290 15,984 10,165
- ----------------------------------------------------------------------------------
EXPENSES
Interest 5,972 5,465 1,967
Service fees 609 559 461
Other 1,297 1,239 620
- ----------------------------------------------------------------------------------
TOTAL EXPENSES 7,878 7,263 3,048
- ----------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND
EQUITY IN UNDISTRIBUTED INCOME
OF SUBSIDIARIES 10,412 8,721 7,117
Income tax benefit 700 430 846
- ----------------------------------------------------------------------------------
11,112 9,151 7,963
- ----------------------------------------------------------------------------------
EQUITY IN UNDISTRIBUTED INCOME
OF SUBSIDIARIES
Bank 5,972 4,226 (4)
Non-bank 999 168 2,513
- ----------------------------------------------------------------------------------
6,971 4,394 2,509
- ----------------------------------------------------------------------------------
NET INCOME $ 18,083 $ 13,545 $ 10,472
==================================================================================
</TABLE>
F.N.B. CORPORATION 33
<PAGE> 22
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PARENT COMPANY FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF CASH FLOWS (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31 1995 1994 1993
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $18,083 $13,545 $10,472
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on sale of securities (512) (1,287) (403)
Undistributed earnings of subsidiaries (6,971) (4,394) (2,509)
Other, net (882) (1,417) (1,760)
- -----------------------------------------------------------------------------------------
Net cash flows from operating activities 9,718 6,447 5,800
- -----------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchase of securities (383) (1,151) (320)
Proceeds from sale of securities 1,006 2,346 975
Advances from (to) subsidiaries (6,107) (4,779) 688
Investment in subsidiaries (1,996)
- -----------------------------------------------------------------------------------------
Net cash flows from investing activities (5,484) (5,580) 1,343
- -----------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net decrease in due to non-bank subsidiary (4,295) (3,020)
Net decrease in short-term debt (1,723) (1,210) (1,000)
Decrease in subordinated notes (5,334) (7,400) (35)
Increase in subordinated notes 6,274 15,275
Purchase of common stock (1,447) (1,143) (1,285)
Sale of common stock 1,999 1,027 1,205
Cash dividends paid (4,000) (3,110) (3,007)
- -----------------------------------------------------------------------------------------
Net cash flows from financing activities (4,231) (856) (7,142)
- -----------------------------------------------------------------------------------------
NET INCREASE IN CASH 3 11 1
Cash at beginning of year 13 2 1
- -----------------------------------------------------------------------------------------
CASH AT END OF YEAR $ 16 $ 13 $ 2
=========================================================================================
CASH PAID
Interest $ 5,009 $ 4,433 $ 1,908
Income taxes 39 295
</TABLE>
Subordinated notes are unsecured and subordinated to other indebtedness
of the Corporation. At December 31 1995, $74.6 million principal amount of
such notes was redeemable prior to maturity by the holder at a discount equal
to one month of interest on short term notes or three months of interest on
long-term notes. The issuer may require the holder to give 30 days prior
written notice. No sinking fund has been established to retire the notes.
The weighted average interest rate was 6.63% at December 31, 1995 and 6.40% at
December 31, 1994. The subordinated notes are scheduled to mature in various
amounts annually from 1996 through the year 2005.
Following is a summary of the combined aggregate scheduled annual
maturities for each year following December 31, 1995 (in thousands):
<TABLE>
<S> <C>
1996 $ 63,139
1997 5,222
1998 2,254
1999 874
2000 943
Later years 12,324
</TABLE>
34 F.N.B. CORPORATION
<PAGE> 23
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions are used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:
CASH AND DUE FROM BANKS:
For these short-term instruments, the carrying amount is a reasonable
estimate of fair value.
SECURITIES:
For both securities available for sale and securities held to maturity,
fair value equals quoted market price, if available. If a quoted market price
is not available, fair value is estimated using quoted market prices for
similar securities.
LOANS:
The fair value of loans is estimated by discounting the future cash flows
using the current rates at which similar loans would be made to borrowers with
similar credit ratings and for the same remaining maturities.
DEPOSITS:
The fair value of demand deposits, savings accounts and certain money
market deposits is the amount payable on demand at the reporting date.
The fair value of fixed-maturity deposits is estimated by discounting future
cash flows using rates currently offered for deposits of similar remaining
maturities. The fair value estimates do not include the benefits that result
from low-cost funding provided by the deposit liabilities compared to the cost
of alternate sources of funds.
SHORT-TERM BORROWINGS:
The carrying amounts for short-term borrowings approximate fair value for
amounts that mature in 90 days or less. The fair value of subordinated notes is
estimated by discounting future cash flows using rates currently offered.
LONG-TERM DEBT:
The fair value of long-term debt is estimated by discounting future cash
flows based on the market prices for the same or similar issues or on the
current rates offered to the Corporation for debt of the same remaining
maturities.
OFF-BALANCE SHEET CREDIT RISK:
The fair value of commitments is estimated using the fees currently
charged to enter into similar agreements, taking into account the remaining
terms of the agreements and the present creditworthiness of the customer.
For fixed-rate loan commitments, fair value also considers the difference
between current levels of interest rates and the committed rates. The fair
value of letters of credit is based on fees currently charged for similar
agreements or on the estimated cost to terminate them or otherwise settle the
obligations with the counterparties at the reporting date.
The estimated fair values of the Corporation's financial instruments
are as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994
- -----------------------------------------------------------------------------------------------
CARRYING FAIR Carrying Fair
AMOUNT VALUE Amount Value
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FINANCIAL ASSETS
Cash and short-term investments $ 84,733 $ 84,733 $ 67,237 $ 67,237
Securities available for sale 223,479 223,479 120,061 120,061
Securities held to maturity 136,969 136,801 257,956 246,834
Net loans 1,201,345 1,203,131 1,174,008 1,156,191
FINANCIAL LIABILITIES
Deposits $1,442,109 $1,446,678 $1,425,405 $1,420,719
Short-term borrowings 55,224 55,224 69,365 69,365
Long-term debt 39,755 40,504 39,017 38,778
OFF-BALANCE SHEET CREDIT RISK
Commitments to extend credit $ 215 $ 215 $ 63 $ 63
Standby letters of credit 67 68 102 10
</TABLE>
F.N.B. CORPORATION 35
<PAGE> 24
F.N.B. CORPORATION AND SUBSIDIARIES
REPORT OF INDEPENDENT AUDITORS
ERNST & YOUNG LLP One Oxford Centre Phone: 412 644 7800
Pittsburgh, Pennsylvania 15219
REPORT OF INDEPENDENT AUDITORS
The Stockholders and Board of Directors
F.N.B. Corporation
We have audited the accompanying consolidated balance sheet of F.N.B.
Corporation and subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of income, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the 1993 financial statements of two wholly-owned
subsidiaries which reflect net income of $754,000 included in consolidated net
income for the year ended December 31, 1993. Those statements were audited by
other auditors whose reports have been furnished to us, and our opinion,
insofar as it relates to data included for those subsidiaries, is based solely
on the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits and the reports of other
auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material
respects, the consolidated financial position of F.N.B. Corporation and
subsidiaries as of December 31, 1995 and 1994, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
February 5, 1996
Ernst & Young LLP is a member of Ernst & Young International, Ltd.
36 F.N.B. CORPORATION
<PAGE> 25
F.N.B. CORPORATION AND SUBSIDIARIES
SELECTED AND QUARTERLY FINANCIAL DATA
SELECTED FINANCIAL DATA (Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31 1995 1994 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total interest income $ 135,356 $ 124,879 $ 125,512 $ 125,825 $ 124,118
Total interest expense 58,056 50,228 55,339 62,533 72,752
Net interest income 77,300 74,651 70,173 63,292 51,366
Provision for loan losses 5,652 8,450 9,498 15,107 5,399
Total non-interest income 15,008 14,382 16,025 13,439 10,892
Total non-interest expenses 59,950 60,291 61,729 51,867 43,261
Net income 18,083 13,545 10,472 6,770 10,005
AT YEAR-END
Total assets $1,706,993 $1,686,519 $1,690,150 $1,698,608 $1,378,740
Deposits 1,442,109 1,425,405 1,458,739 1,479 947 1,178 226
Net loans 1,201,345 1,174,008 1,105,876 1,041,979 988,672
Long-term debt 39,755 39,017 31,297 32,823 18,520
Preferred stock 4,516 4,563 4,582 4,605 292
Total stockholders equity 143,917 126,050 115,092 107,679 93,280
PER COMMON SHARE
Net income
Primary $ 2.00 $ 1.48 $ 1.12 $ .73 $ 1.16
Fully diluted 1.90 1.44 1.11 .73 1.16
Cash dividends .37 .26 .25 .24 .22
Book value 15.40 13.38 12.09 11.21 10.81
RATIOS
Return on average assets 1.07% .80% .62% .45% .75%
Return on average equity 13.37 11 12 9.39 6.59 11.23
Dividend payout ratio 18.50 17.57 22.32 32.88 18.97
Average equity to average assets 8.00 7.20 6.61 6.76 6.71
</TABLE>
QUARTERLY EARNINGS SUMMARY (Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
QUARTER ENDED 1995 MAR. 31 JUNE 30 SEPT. 30 DEC. 31
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total interest income $ 32,635 $ 33,834 $ 34,572 $ 34,315
Total interest expense 13,527 14,675 14,988 14,866
Net interest income 19,108 19,159 19,584 19,449
Provision for loan losses 1,541 1,393 1,366 1,352
Total non-interest income 3,409 4,324 3,546 3,729
Total non-interest expenses 15,116 15,573 14,631 14,630
Net income 3,984 4,345 4,856 4,898
PER COMMON SHARE
Net income
Primary $ .44 $ .48 $ .54 $ .54
Fully diluted .42 .46 .51 .51
Cash dividends .07 .07 .10 .13
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED 1994 MAR. 31 JUNE 30 SEPT. 30 DEC. 31
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total interest income $ 30,567 $ 30,888 $ 31,331 $ 32,093
Total interest expense 12,397 12,254 12,681 12,896
Net interest income 18,170 18,634 18,650 19,197
Provision for loan losses 2,686 2,145 1,854 1,765
Total non-interest income 3,642 3,643 3,208 3,889
Total non-interest expenses 14,849 15,272 14,569 15,601
Net income 2,933 3,287 3,520 3,805
PER COMMON SHARE
Net income
Primary $ .32 $ .36 $ .38 $ .42
Fully diluted .32 .35 .37 .40
Cash dividends .06 .06 .07 .07
</TABLE>
F.N.B. CORPORATION 37
<PAGE> 26
F.N.B CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THIS FINANCIAL REVIEW SUMMARIZES THE CORPORATION'S FINANCIAL CONDITION AND
RESULTS OF OPERATIONS AND IS INTENDED TO BE READ IN CONJUNCTION WITH THE
CONSOLIDATED FINANCIAL STATEMENTS AND ACCOMPANYING NOTES TO THOSE STATEMENTS.
RESULTS OF OPERATIONS
Net income increased 33.5% from $13.5 million in 1994 to $18.1 million in
1995. Primary earnings per share were $2.00 and $1.48 for 1995 and 1994, while
fully diluted earnings per share were $1.90 and $1.44. respectively, for those
same periods. The key factors to the increase were improved credit quality,
which allowed for lower loan loss provisions, an increase in higher yielding
assets and continuing efforts to reduce non-interest expense. These factors are
further detailed in the discussion which follows.
The Corporation's asset quality has improved steadily as indicated by
several key credit ratios. At December 31, 1995, non-performing assets
decreased to .67% of total assets compared to .97% at December 31, 1994.
The allowance for loan losses improved to 1.76% of total loans compared to
1.70% a year ago. The ratio of net charge-offs to average loans outstanding
decreased in 1995 to .37% compared to a 1994 ratio of .40%.
Common comparative ratios for results of operations include the return
on average assets and the return on average equity. The Corporation's return
on average assets was 1.07% for 1995 compared to .80% for 1994, while the
Corporation's return on average equity was 13.37% for 1995 compared to
11.12% for 1994.
NET INCOME
(DOLLARS IN MILLIONS)
1991 10.0
1992 6.8
1993 10.5
1994 13.5
1995 18.1
38 F.N.B. CORPORATION
<PAGE> 27
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>
Year Ended December 31 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
AVERAGE YIELD/ Average Yield/ Average Yield/
BALANCE INTEREST RATE Balance Interest Rate Balance Interest Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Interest earning assets:
Interest bearing deposits
with banks $ 3,973 $ 252 6.33% $ 6,267 $ 221 3.53% $ 8,531 $ 165 1.93%
Federal funds sold 18,844 1,122 5.95 19,587 751 3.83 23,407 759 3.24
Securities:
U.S. Treasury and other U.S.
Government agencies and
corporations 321,792 18,150 5.64 357,874 18,592 5.20 426,794 23,663 5.54
States of the U.S. and political
subdivisions (1) 34,675 2,217 6.39 35,889 2,304 6.42 17,739 1,257 7.09
Other securities (1) 14,400 691 4.81 13,750 714 5.19 10,933 574 5.25
Loans (1) (2) 1,202,036 115,018 9.57 1,153,087 104,529 9.07 1,094,473 100,816 9.21
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest earning assets 1,595,720 137,450 8.61 1,586,454 127,111 8.01 1,581,877 127,234 8.04
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and due from banks 53,161 54,013 50,238
Allowance for loan losses (21,187) (19,327) (16,670)
Premises and equipment 22,920 23,336 24,545
Other assets 40,968 46,712 48,955
- -----------------------------------------------------------------------------------------------------------------------------------
$1,691,582 $1,691,188 $1,688,945
===================================================================================================================================
LIABILITIES
Interest bearing liabilities:
Deposits:
Interest bearing demand $ 155,170 $ 2,648 1.71% $ 167,324 $ 3,110 1.86% $ 168,807 $ 3,960 2.35%
Savings 417,291 10,418 2.50 495,455 12,173 2.46 511,633 14,617 2.86
Other time 699,497 38,523 5.51 620,562 28,968 4.67 633,670 30,973 4.89
Short-term borrowings 55,772 3,209 5.75 65,171 3,108 4.77 64,329 3,011 4.68
Long-term debt 39,856 3,258 8.18 33,000 2,869 8.69 31,484 2,778 8.82
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest bearing
liabilities 1,367,586 58,056 4.25 1,381,512 50,228 3.64 1,409,923 55,339 3.92
Non-interest bearing demand
deposits 159,610 159,034 142,452
Other liabilities 29,135 28,297 24,507
- -----------------------------------------------------------------------------------------------------------------------------------
1,556,331 1,568,843 1,576,882
- -----------------------------------------------------------------------------------------------------------------------------------
MINORITY INTEREST 528 505
- -----------------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY 135,251 121,817 111,558
- -----------------------------------------------------------------------------------------------------------------------------------
$1,691,582 $1,691,188 $1,688,945
===================================================================================================================================
Excess of interest earning
assets over interest bearing
liabilities $ 228,134 $ 204,942 $ 171,954
===================================================================================================================================
Net interest income $ 79,394 $ 76,883 $ 71,895
===================================================================================================================================
Net interest spread 4.36% 4.37% 4.12%
===================================================================================================================================
Net interest margin (3) 4.98% 4.85% 4.54%
===================================================================================================================================
<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>
F.N.B. CORPORATION 39
<PAGE> 28
F.N.B. CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION
NET INTEREST INCOME
Net interest income, the Corporation's primary source of earnings, is the
amount by which interest and fees generated by earning assets, primarily loans
and securities, exceed interest expense on deposits and borrowed funds. Net
interest income, on a fully taxable equivalent basis, totaled $79.4 million in
1995 versus $76.9 million in 1994. Net interest income consisted of interest
income of $ 137.5 million and interest expense of $58.1 million in 1995,
compared to $127.1 million and $50.2 million for each, respectively, in 1994.
Net interest income as a percentage of average earning assets (commonly
referred to as the margin) rose to 4.98% in 1995 compared to 4.85% in 1994.
NET INTEREST MARGIN
1991 4.25
1992 4.47
1993 4.54
1994 4.85
1995 4.98
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
periods indicated (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31 1995 1994
VOLUME RATE NET Volume Rate Net
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Interest bearing deposits
with banks $ (101) $ 132 $ 31 $ (53) $ 109 $ 56
Federal funds sold (29) 400 371 (135) 127 (8)
Securities:
U.S. Treasury and other
U.S. Government Agencies
and corporations (1,959) 1,517 (442) (3,647) (1,424) (5,071)
States of the U.S. and
political subdivisions (77) (10) (87) 1,175 (128) 1,047
Other securities (56) 33 (23) 147 (7) 140
Loans 4,544 5,945 10,489 5,334 (1,621) 3,713
- -----------------------------------------------------------------------------------------------------
2,322 8,017 10,339 2,821 (2,944) (123)
- -----------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Deposits:
Interest bearing demand (217) (245) (462) (34) (816) (850)
Savings (1,949) 194 (1,755) (450) (1,994) (2,444)
Other time 3,959 5,596 9,555 (632) (1,373) (2,005)
Short-term borrowings (486) 587 101 (8) 105 97
Long-term debt 568 (179) 389 132 (41) 91
- -----------------------------------------------------------------------------------------------------
1,875 5,953 7,828 (992) (4,119) (5,111)
- -----------------------------------------------------------------------------------------------------
NET CHANGE $ 447 $ 2,064 $ 2,511 $ 3,813 $ 1,175 $ 4,988
=====================================================================================================
</TABLE>
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
absolute relative size of the rate and volume changes.
40 F.N.B. CORPORATION
<PAGE> 29
Interest income on loans increased 10.0% from $ 104.5 million in 1994 to
$115.0 million in 1995. This increase was the result of greater loan demand and
higher interest rates throughout most of 1995 compared to 1994. Average loans
increased 4.2% from 1994. Interest on federal funds sold increased 49.4% to
$1.1 million in 1995. This increase was the result of the rising market
interest rates.
Interest expense on deposits increased 16.6% to $51.6 million in 1995,
due to a change in interest expense on time deposits from $29.0 million in
1994 to $38.5 million in 1995. This was primarily the result of increased
market rates of interest and the shift in the deposit mix from transaction
and savings accounts into higher paying certificate accounts.
The Corporation monitors interest rate sensitivity by measuring the
impact that future changes in interest rates will have on net interest income.
Through its asset/liability management and pricing policies, management
strives to optimize net interest income while minimizing the effects of
inflation . (See "Liquidity and Interest Rate Sensitivity" discussion).
PROVISION FOR LOAN LOSSES
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. The provision for loan losses decreased 33.1% to $5.7
million in 1995. The decrease in the provision for loan losses was a direct
result of the continued improvement in asset quality. (See "Allowance for Loan
Losses" discussion).
NON-INTEREST INCOME
Total non-interest income increased 4.4% from $14.4 million in 1994 to
$15.0 million in 1995. This increase was attributable to increases in service
charges and gains on the sale of loans, offset by a decrease in gains on
the sale of securities.
Service charges increased 10.6% from $6.5 million in 1994 to $7.1 million
in 1995. Revenue was recognized as a result of certain increases in retail
fees charged to customers, as well as increases in both total loans and
total deposits.
Gains on the sale of loans increased 182.2% in 1995. Gains in 1994 were
negatively impacted by a $200,000 adjustment to the amortization of excess
servicing on securitized loans. The remaining difference reflects rapidly
rising rates in 1994 which made it difficult to sell at or above par value
and more stable rates in 1995 which allowed, in many cases, sales at a premium.
Gains on the sale of securities decreased 59.9% because of fewer security
sales during 1995. The market value on the securities available for sale
increased in 1995, contributing to an increase in net unrealized gains to
$3.9 million.
NON-INTEREST EXPENSES
Total non-interest expense decreased slightly from $60.3 million in 1994
to $60.0 million in 1995. The decrease was attributable to expense control
throughout the Corporation and a reduction in premiums charged for deposit
insurance.
Salaries and personnel expense increased 5.1% in 1995. This increase was
primarily due to an increase of $ 1.0 million for incentive compensation. The
Corporation's incentive plan allows for additional compensation to be paid to
employees based on the Corporation achieving various goals.
Deposit insurance decreased 32.1% in 1995. This was the result of the
Federal Deposit Insurance Corporation (FDIC) lowering the insurance premiums
for banks, now that the Bank Insurance Fund (BIF) has been funded to the
required level. Conversely, based on Financial Institutions Reform, Recovery
and Enforcement Act of 1989 requirements, the Savings Association Insurance
Fund (SAIF) is still under-funded and therefore, deposit premiums have not
been reduced. As a result, it is argued that thrifts are at a competitive
disadvantage. Congress is currently considering legislation to impose a
one-time deposit premium charge to recapitalize the SAIF. The amount of this
premium is uncertain, however, indications have been in a range of $.80 to
$.90 per $100 of deposits. At December 31,1995, the Corporation had
approximately $454.9 million in SAIF deposits.
INCOME TAXES
The Corporation recognized income tax expense of $8.6 million for 1995
compared to $6.7 million
F.N.B. CORPORATION 41
<PAGE> 30
F.N.B. CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION
INCOME TAXES (CONTINUED)
for 1994 primarily due to the fact that the Corporation had more taxable income
in 1995. The 1995 effective tax rate of 32.3% was below the 35% federal
statutory tax rate due to the tax benefits resulting from income on tax-exempt
instruments and excludable dividend income. A complete analysis of income taxes
is furnished in the Notes to Consolidated Financial Statements.
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. Given the monetary nature of
its assets and liabilities and the significant source of liquidity provided
by its securities portfolio, the Corporation generally has sufficient sources
of funds available as needed to meet its routine, operational cash needs.
Securities due to mature within one year, which will provide a source of
short-term liquidity, amounted to $107.8 million or 29.9% of the securities
portfolio.
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
$22.0 million was unused at the end of 1995. To further meet its liquidity
needs, the Corporation also has access to the Federal Home Loan Bank and the
Federal Reserve Bank, as well as 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
the 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 FDIC guidance. 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 slightly negative impact on
net interest income.
Gap analyses alone do 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 is currently in use at all of the
Corporation's banking affiliates.
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.
42 F.N.B. CORPORATION
<PAGE> 31
Following is the gap analysis as of December 31, 1995 (dollars
in thousands):
<TABLE>
<CAPTION>
WITHIN 4-12 1 -5 OVER
3 MONTHS MONTHS YEARS 5 YEARS TOTAL
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INTEREST EARNING ASSETS
Interest bearing deposits with banks $ 2,503 $ 100 $ 2,603
Federal funds sold 22,335 22,335
Securities:
Available for sale 25,517 78,940 $103,227 $ 15,795 223,479
Held to maturity 80 3,285 129,965 3,639 136,969
Loans, net of unearned income 270,354 252,456 460,242 239,843 1,222,895
- ----------------------------------------------------------------------------------------------------------------------------
320,789 334,781 693,434 259,277 1,608,281
Other assets 98,712 98,712
- ----------------------------------------------------------------------------------------------------------------------------
$320,789 $ 334,781 $693,434 $357,989 $1,706,993
============================================================================================================================
INTEREST BEARING LIABILITIES
Deposits:
Interest checking $ 7,770 $ 23,310 $124,321 $ 155,401
Savings 39,410 118,229 236,457 394,096
Time deposits 142,033 309,253 271,274 $ 2,352 724,912
Short-term borrowings 22,276 15,983 16,965 55,224
Long-term debt 819 17,130 8,544 13,262 39,755
- ----------------------------------------------------------------------------------------------------------------------------
212,308 483,905 657,561 15,614 1,369,388
Other liabilities 193,688 193,688
Stockholders' equity 143,917 143,917
- ----------------------------------------------------------------------------------------------------------------------------
$212,308 $ 483,905 $657,561 $353,219 $1,706,993
============================================================================================================================
PERIOD GAP $108,481 $(149,124) $ 35,873 $ 4,770
============================================================================================================================
CUMULATIVE GAP $108,481 $ (40,643) $ (4,770)
============================================================================================================================
RATE SENSITIVE ASSETS/RATE
SENSITIVE LIABILITIES (CUMULATIVE) 1.51 .94 1.00 1.17
============================================================================================================================
CUMULATIVE GAP AS A PERCENT OF TOTAL ASSETS 6.4% (2.4)% (0.3)%
============================================================================================================================
</TABLE>
Following is a summary of the maturity distribution of certain loan
categories based on remaining scheduled repayments of principal as of December
31, 1995 (in thousands):
<TABLE>
<CAPTION>
WITHIN 1 -5 OVER
1 YEAR YEARS 5 YEARS TOTAL
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial, financial and agricultural $ 73,356 $ 33,380 $ 13,357 $ 120,093
Real estate - construction 5,966 1,182 845 7,993
- -----------------------------------------------------------------------------------------------------------------------------
Total loans (excluding Real estate - mortgage
and Installment loans to individuals) $ 79,322 $ 34,562 $ 14,202 $ 128,086
=============================================================================================================================
</TABLE>
The total amount of loans listed above due after one year includes
$12.3 million with floating or adjustable rates of interest and $36.5 million
with fixed rates of interest.
F.N.B. CORPORATION 43
<PAGE> 32
F.N.B. CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION
FINANCIAL CONDITION
LOAN PORTFOLIO
Following is a summary of loans (dollars in thousands):
<TABLE>
<CAPTION>
% OF % of % of % of % of
December 31 1995 TOTAL 1994 Total 1993 Total 1992 Total 1991 Total
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial, financial
and agricultural $ 120,093 10% $ 156,848 13% $ 169,403 15% $ 177,513 17% $ 170,508 17%
Real estate - construction 7,993 1 28,193 2 21,120 2 20,146 2 20,305 2
Real estate - mortgage 784,492 64 707,813 59 616,713 55 600,205 57 565,237 57
Installment loans to
individuals 326,772 26 317,567 27 241,281 22 241,574 23 270,011 27
Unearned income (26,609) (2) (22,022) (2) (22,179) (2) (21,849) (2) (25,459) (3)
- ---------------------------------------------------------------------------------------------------------------------------------
1,212,741 99 1,188,399 99 1,026,338 92 1,017,589 97 1,000,602 100
Loans available for sale:
Real estate - mortgage 7,919 1 5,071 1 68,175 6 3,116
Installment loans to
individuals 2,235 833 27,803 2 36,011 3
- ---------------------------------------------------------------------------------------------------------------------------------
10,154 1 5,904 1 95,978 8 39,127 3
- ---------------------------------------------------------------------------------------------------------------------------------
$1,222,895 100% $1,194,303 100% $1,122,316 100% $1,056,716 100% $1,000,602 100%
=================================================================================================================================
</TABLE>
Following is a summary of loans 90 days or more past due, on which interest
accruals continue (dollars in thousands):
<TABLE>
<CAPTION>
December 31 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Loans 90 days or more past due $ 3,785 $ 2,621 $ 3,422 $ 4,254 $ 7,433
Loans 90 days or more past due
as a percentage of total loans .31% .22% .30% .40% .74%
</TABLE>
The Corporation's lending philosophy is to minimize credit losses by
utilizing credit approval standards, diversifying its loan portfolio,
maintaining a relatively modest average loan size and conducting ongoing review
and management of the loan portfolio.
Loans increased 2.4% from 1994. The ratio of loans to deposits at the end
of 1995 was 84.8%, up from a ratio of 83.8% at the end of 1994. The slight
increase in the ratio was a result of moderate loan growth which more than
offset a slight increase in deposits.
During 1995, the Corporation converted its data processing system. The new
system allows for the separate classification of commercial real estate loans.
The 1995 balances reflect commercial real estate loans within the real estate -
mortgage category. Such loans were previously classified within the commercial,
financial and agricultural category.
During 1995, the Corporation sold $16.1 million in fixed rate residential
mortgages to the Federal National Mortgage Association (FNMA). The sales allowed
the Corporation to avoid the potential
LOANS (NET OF UNEARNED INCOME)
(DOLLARS IN MILLIONS)
1991 1,001
1992 1,057
1993 1,122
1994 1,194
1995 1,223
44 F.N.B. CORPORATION
<PAGE> 33
interest rate risk of those fixed rate loans in a rising rate environment.
Additionally, it created liquidity for the Corporation to continue to offer
credit availability to the market it serves. All of the mortgages were sold
with the servicing retained by the Corporation.
In May of 1995, the Financial Accounting Standards Board issued FAS No.
122, "Accounting for Mortgage Servicing Rights," an amendment of FAS No. 65.
This Statement, which is required to be adopted during the first quarter of
1996, allows enterprises engaging in mortgage banking activities to recognize as
separate assets rights to service mortgage loans for loans originated for sale
by the enterprise. As the Corporation does not significantly engage in the sale
of mortgage loans, the impact of this Statement is not expected to have a
material effect on the Corporation's results of operations or financial
position.
In 1995, total installment loans to individuals increased 3.3% to $329.0
million. The growth reflects a continuation of strong demand for indirect
automobile loans as well as revolving lines of credit. Through its consumer
finance subsidiary, the Corporation has initiated a sub-prime used motor vehicle
program, purchasing loans from various dealers in its market area. These
sub-prime loans totaled $24.9 million at December 31, 1995.
The commercial loan portfolio consists principally of loans to small- and
medium-sized businesses within the Corporation's primary market area of western
Pennsylvania and eastern Ohio. The Corporation generally avoids making
significant loans to any single borrower in order to minimize credit risk.
During 1994, the Corporation reclassified $119.9 million of residential
mortgages and indirect installment loans from an available for sale category
into its permanent loan portfolio. This action was taken to more clearly reflect
management's intent relative to portfolio lending activities by specifically
defining certain loan originations that would be sold in the secondary market.
At the time of this reclassification, the book value of those loans approximated
their market value.
As of December 31, 1995, 1994 and 1993, no concentrations of loans
exceeding 10% of total loans existed which were not disclosed as a separate
category of loans.
NON-PERFORMING LOANS
Non-performing loans include non-accrual loans and restructured loans.
Non-accrual loans represent loans on which interest accruals have been
discontinued. Restructured loans are loans in which the borrower has been
granted a concession on the interest rate or the original repayment terms due to
financial distress.
Following is a summary of non-performing loans (dollars in thousands):
<TABLE>
<CAPTION>
December 31 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Non-accrual loans $5,605 $ 9,512 $10,262 $ 8,658 $ 15,017
Restructured loans 3,075 3,157 3,236 1,388 1,448
- ------------------------------------------------------------------------------------------------
$8,680 $ 12,669 $13,498 $10,046 $16,465
================================================================================================
Non-performing loans
as a percentage
of total loans .71% 1.06% 1.20% .95% 1.65%
</TABLE>
Following is a table showing the amounts of contractual interest income and
actual interest income recorded on non-accrual and restructured loans (in
thousands):
<TABLE>
<CAPTION>
Year Ended December 31 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gross interest income that would have been
recorded if the loans had been current
and in accordance with their original terms $1,038 $1,659 $1,738 $1,555 $1,724
Interest income included in income on the loans 540 621 671 883 940
</TABLE>
As of December 31, 1995, management is not aware of any other loans where
there are serious doubts as to the ability of such borrowers to comply with the
present repayment terms.
F.N.B. CORPORATION 45
<PAGE> 34
F.N.B. CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION
ALLOWANCE FOR LOAN LOSSES
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 the current status of economic conditions, loan loss trends,
delinquency and non-accrual trends, credit administration, concentrations of
credit and off-balance sheet risk.
ALLOWANCE FOR LOAN LOSSES AS A PERCENT OF TOTAL LOANS
1991 1.19
1992 1.39
1993 1.46
1994 1.70
1995 1.76
Following is a summary of changes in the allowance for loan losses
(dollars in thousands):
<TABLE>
<CAPTION>
Year Ended December 31 1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at beginning of year $20,295 $16,440 $14,737 $11,930 $10,140
Addition arising in purchase transactions 376 1,197
Loss reserves transferred on loans sold (893) (685) (408)
CHARGE-OFFS:
Commercial, financial and agricultural (648) (1,253) (3,869) (6,828) (1,583)
Real estate-mortgage (539) (1,454) (549) (2,170) (1,103)
Installment loans to individuals (4,949) (3,604) (3,857) (3,937) (2,621)
- -------------------------------------------------------------------------------------------------------------------
(6,136) (6,311) (8,275) (12,935) (5,307)
- -------------------------------------------------------------------------------------------------------------------
RECOVERIES:
Commercial, financial and agricultural 541 689 431 42 106
Real estate-mortgage 189 98 173 208 196
Installment loans to individuals 1,009 929 769 694 607
- -------------------------------------------------------------------------------------------------------------------
1,739 1,716 1,373 944 909
- -------------------------------------------------------------------------------------------------------------------
Net charge-offs (4,397) (4,595) (6,902) (11,991) (4,398)
Provision for loan losses 5,652 8,450 9,498 15,107 5,399
- -------------------------------------------------------------------------------------------------------------------
Balance at end of year $21,550 $20,295 $16,440 $14,737 $11,930
===================================================================================================================
Net charge-offs as a percent of
average loans, net of unearned income .37% .40% .63% 1.17% .46%
Allowance for loan losses as a percent
of total loans, net of unearned income 1.76% 1.70% 1.46% 1.39% 1.19%
Allowance for loan losses as a
percent of non-performing loans 248.27% 160.19% 121.80% 146.70% 72.46%
</TABLE>
46 F.N.B. CORPORATION
<PAGE> 35
The Corporation has allocated the allowance according to the amount deemed
to be reasonably necessary to provide for the possibility of losses being
incurred within each of the categories of loans shown in the table below. The
allocation of the allowance should not be interpreted as an indication that loan
losses in future years will occur in the same proportions or that the allocation
indicates future loan loss trends. Furthermore, the portion allocated to each
loan category is not the sole amount available for future losses within such
categories since the total allowance is a general allowance applicable to the
entire portfolio.
ALLOWANCE FOR LOAN LOSSES
(DOLLARS IN MILLIONS)
1991 11.9
1992 14.7
1993 16.4
1994 20.3
1995 21.6
Following shows the allocation of the allowance for loan losses (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial, financial and agricultural $ 4,540 $ 6,926 $ 6,420 $ 5,632 $ 3,521
Real estate - construction 55 178 458 455 45
Real estate - mortgage 3,035 3,358 2,440 2,261 2,989
Installment loans to individuals 5,728 4,523 4,106 3,981 4,056
Unallocated portion 8,192 5,310 3,016 2,408 1,319
- ---------------------------------------------------------------------------------------------------------------
$21,550 $20,295 $16,440 $14,737 $11,930
===============================================================================================================
</TABLE>
INVESTMENT ACTIVITY
Investment activities serve to enhance overall yield on earning assets
while supporting interest rate sensitivity and liquidity positions. Securities
purchased with the intent and ability to retain until maturity are categorized
as securities held to maturity and carried at amortized cost. Instruments that
may be sold under certain rate sensitivity, liquidity, economic and market
conditions are categorized as securities available for sale and must be marked
to market.
Under the guidelines of FAS 115, institutions that sell securities out of
the securities held to maturity portfolio risk being forced to mark to market
the remaining securities in the portfolio since they have not demonstrated their
intent to hold these securities to maturity. The Financial Accounting Standards
Board (FASB) approved an amnesty period during which institutions had the
opportunity to redesignate securities under FAS 115. The FASB provided that
securities may be reclassified from mid-November to December 31, 1995. During
this period, the Corporation took advantage of this opportunity to reclass $92.0
million of securities held to maturity to securities available for sale. This
movement allows the Corporation greater flexibility in managing its portfolio to
take advantage of market conditions and will also provide an opportunity to
better manage interest rate risk.
The relatively short average maturity of all securities provides a source
of liquidity to the Corporation and reduces the overall market risk of the
portfolio.
Excluding the effect of the reclassification, securities available for sale
increased 9.5% while securities held to maturity decreased 11.2%, due to
maturing securities being used to fund loan demand and support modest deposit
growth throughout the year.
F.N.B. CORPORATION 47
<PAGE> 36
F.N.B. CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION
DEPOSITS AND SHORT-TERM BORROWINGS
As a commercial bank holding company, the Corporation's primary source of
funds is its deposits. Those deposits are provided by businesses and individuals
located within the markets served by the Corporation's subsidiary banks and
savings institutions.
At both December 31, 1995 and 1994, total deposits were $1.4 billion.
However, the composition of deposits changed in 1995 with an increase in total
time deposits offset by a decrease in savings and NOW accounts. The increase in
time deposits was a direct result of the higher interest rate environment.
Customers chose to invest their money in higher-yielding certificates rather
than lower-yielding transaction and savings accounts.
Short-term borrowings, made up of repurchase agreements, federal funds
purchased, notes payable and subordinated notes decreased 20.4% in 1995 to $55.2
million. The primary reason for this decrease was a lower level of federal funds
purchased in 1995.
Subordinated notes are the largest component of short-term borrowings. At
December 31, 1995, subordinated notes represented 85.8% of total short-term
borrowings. Following is a summary of selected information on short-term
subordinated notes (dollars in thousands):
<TABLE>
<CAPTION>
December 31 1995 1994 1993
- -----------------------------------------------------------------
<S> <C> <C> <C>
Balance at end of year $47,362 $48,085 $50,295
Maximum month end balance 47,675 56,126 50,295
Average balance during the year 45,912 52,830 45,341
Weighted average interest rates:
At end of year 5.69% 5.21% 5.07%
During the year 5.54 5.06 5.09
</TABLE>
CAPITAL RESOURCES
The assessment of capital adequacy depends on a number of factors such as
asset quality, liquidity, earnings performance, changing competitive conditions
and economic forces. The Corporation seeks to maintain 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 an ongoing process. Central to this
process is internal equity generation accomplished by earnings retention.
During 1995, total stockholders' equity increased $14.6 million as a result of
earnings retention versus $10.3 million in 1994. Total cash dividends declared
represented 22.12% of net income for 1995 compared to 22.96% for 1994. Book
value per share was $15.40 at December 31, 1995, compared to $13.38 at December
31, 1994.
TOTAL STOCKHOLDERS' EQUITY
(DOLLARS IN MILLIONS)
1991 93
1992 108
1993 115
1994 126
1995 144
48 F.N.B. CORPORATION
<PAGE> 37
BOOK VALUE PER SHARE
1991 10.81
1992 11.21
1993 12.09
1994 13.38
1995 15.40
The Corporation's capital position continues to exceed regulatory minimums.
The primary indicators relied on by the Federal Reserve Board in measuring
strength of capital position are the Core Capital, Total Risk-Based Capital and
Leverage ratios. Core Capital consists of common and qualifying preferred
stockholders' equity less non-qualifying intangibles. Total Risk-Based Capital
consists of Core Capital, qualifying subordinated debt and a portion of the
allowance for loan losses. Both are calculated with reference to risk-weighted
assets consisting of on- and off-balance sheet risks. The Leverage ratio
consists of Core Capital divided by quarterly average assets less non-qualifying
intangibles. Following is a table summarizing these ratios and the related
regulatory minimums:
<TABLE>
<CAPTION>
Regulatory
December 31 1995 1994 Minimums
- ---------------------------------------------------------------
<S> <C> <C> <C>
Capital Ratios:
Core Capital 11.74% 10.58% 4.00%
Total Risk-Based Capital 13.86 12.71 8.00
Leverage 8.16 7.25 5.00
</TABLE>
The Corporation has announced plans to construct a new multi-story building
to house employees of First National Bank of Pennsylvania (First National) as
well as become headquarters for F.N.B. Corporation. Ground breaking is
anticipated in Spring of 1996. A 14-month construction period would lead to a
late Summer 1997 opening. Preliminary construction, equipment and furnishing
costs are projected to be approximately $7.5 million. In addition, First
National also announced plans to construct a new building in downtown Erie to
serve as headquarters for the Erie region and the construction of a new office
on Peach Street, also in Erie. Preliminary construction, equipment and
furnishing costs are projected to be approximately $5.4 million.
F.N.B. CORPORATION 49
<PAGE> 38
F.N.B. CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION
1994 VERSUS 1993
The Corporation's net income was $13.5 million for 1994 versus $10.5
million for 1993. Primary earnings per share were $1.48 and $1.12 for 1994 and
1993, while fully diluted earnings per share were $1.44 and $1.11,
respectively, for those same periods. This improved performance was primarily a
result of an increase in net interest income and the Corporation's continued
focus on expense control. Increases in both the return on average equity from
9.39% in 1993 to 11.12% in 1994 and the return on average assets from .62% in
1993 to .80% in 1994 reflect the improved performance of the Corporation.
Net interest income, on a fully taxable equivalent basis, increased from
$71.9 million in 1993 to $76.9 million in 1994, an increase of 6.9%. Net
interest margin rose to 4.85% from 4.54% in 1993. Average loans increased
slightly in 1994, which contributed to the improvement in interest income, while
the cost of funds continued to decline due to lower interest rates during the
first part of 1994.
The provision for loan losses was $8.5 million and represented a decrease
of 11.0% from 1993, when a provision of $9.5 million was charged to operations.
The decrease in the provision was a direct result of improvement in asset
quality.
Non-interest income decreased 10.3%. Total non-interest income decreased
from $16.0 million in 1993 to $14.4 million in 1994, primarily the result of a
$1.5 million gain realized from an indirect automobile loan securitization
completed in June of 1993. Offsetting this gain was an increase in service
charges from $6.3 million in 1993 to $6.5 million in 1994, as a result of
certain new retail fees charged to customers. In addition, the gain on sale of
securities increased 149.2% to $1.3 million in 1994 as the Corporation took
advantage of certain market conditions and sold various equity securities during
the year.
Non-interest expenses fell from $61.7 million in 1993 to $60.3 million in
1994, a decrease of 2.3%. This decrease was the result of expense control
throughout the Corporation. Personnel expense decreased slightly from $27.9
million in 1993 to $27.7 million in 1994. This decrease was the result of
several items. Reductions of $1.1 million in salaries and $588,000 in employee
insurance expense due to a smaller work force were offset, in part, by increases
of $712,000 in pension expense and $366,000 for incentive compensation. The
amortization of intangibles decreased 16.5% to $1.7 million in 1994 compared to
$2.0 million in 1993. The expense in 1993 was higher due to a full-year effect
of a 1992 acquisition. Other non-interest expense also decreased in 1994 due to
a number of items. Expenses relating to problem loan work-outs and foreclosed
real estate were high in 1993. Also included in 1993 expenses were costs
associated with the Corporation's efforts to consolidate the data processing and
certain other operational functions of its subsidiaries. Promotional expenses
rose to $2.1 million in 1994 compared to $1.9 million in 1993, representing an
increase of 10.2%. This increase was the result of management's increased
efforts to market its personal banking services.
Income tax expenses increased 50.0% to $6.7 million for 1994 as a result of
the Corporation generating more taxable income. The 1994 effective tax rate of
33.3% was below the 35% statutory tax rate due to the tax benefits resulting
from tax-exempt securities income and excludable dividend income.
50 F.N.B. CORPORATION
<PAGE> 39
F.N.B. CORPORATION AND SUBSIDIARIES
STOCK PRICES AND DIVIDENDS
INFORMATION AS TO STOCK PRICES AND DIVIDENDS
The Corporation's common stock trades on The Nasdaq SmallCap Market tier of
The Nasdaq Stock Market under the symbol "FBAN." The accompanying table shows
the range of the high and low bid prices per share of the common stock as
reported by Nasdaq. Also included in the table are dividends per share paid on
the outstanding common stock.
Stock prices and dividend figures have been adjusted to reflect the 5%
stock dividends on April 26, 1995 and April 27, 1994. As of January 31, 1996,
there were 3,735 holders of record of common stock.
<TABLE>
<CAPTION>
QUARTER ENDED 1995 LOW HIGH DIVIDENDS
- ----------------------------------------------------------------
<S> <C> <C> <C>
March 31 $14 $16 1/4 $ .07
June 30 15 1/4 19 .07
September 30 18 21 1/4 .10
December 31 19 3/4 21 3/4 .13
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED 1994 LOW HIGH DIVIDENDS
- ----------------------------------------------------------------
<S> <C> <C> <C>
March 31 $11 3/4 $13 3/4 $ .06
June 30 12 14 1/2 .06
September 30 14 1/2 16 5/8 .07
December 31 14 15 1/4 .07
</TABLE>
The Corporation has historically paid cash dividends on a quarterly basis
at the discretion of the Board of Directors. During 1995, the Board increased
cash dividends 42 percent. Further, the Board has increased cash dividends for
the first quarter of 1996 to $.16 per share. The payment and amount of future
dividends on the common stock will be determined by the Board of Directors and
will depend on, among other things, earnings, financial condition and cash
requirements of the Corporation at the time such payment is considered, and on
the ability of the Corporation to receive dividends from its subsidiaries, the
amount of which is subject to regulatory limitations.
CASH DIVIDENDS PAID PER COMMON SHARE
1991 .22
1992 .24
1993 .25
1994 .26
1995 .37
1st Qtr. 1996 Annualized .64
F.N.B. CORPORATION 51
<PAGE> 40
F.N.B. CORPORATION AND SUBSIDIARIES
SHAREHOLDER SERVICES
STOCK TRANSFER AGENT AND SHAREHOLDER ASSISTANCE
Chemical Mellon Shareholder Services
Recordkeeping Services
P.O. Box 590
Ridgefield Park, New Jersey 07660
Phone: 800-756-3353
or
Shareholder Relations
F.N.B. Corporation
Hermitage Square
Hermitage, Pennsylvania 16148
Phone: 800-490-3951
FORM 10-K AND 10-Q AVAILABILITY
Copies of the Corporation's Annual Report on Form 10-K and Quarterly
Reports on Form 10-Q filed with the Securities and Exchange Commission will be
furnished to any shareholder, free of charge, upon written request to
Shareholder Relations at the preceding address.
VOLUNTARY DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
Shareholders may participate in the Voluntary Dividend Reinvestment and
Stock Purchase Plan. The plan provides that additional shares of common stock
may be purchased with reinvested dividends and voluntary cash payments without
broker fees. A prospectus and an enrollment card may be obtained by writing to:
Chemical Bank, Plan Administrator
Investment Product Services
P.O. Box 750
Pittsburgh, Pennsylvania 15230-9625
52 F.N.B. CORPORATION
<PAGE> 1
LIST OF SUBSIDIARIES EXHIBIT 21
Following lists the subsidiaries of the registrant together with their
wholly-owned subsidiaries and the state or jurisdiction of incorporation of
each:
<TABLE>
<CAPTION>
NAME INCORPORATED
<S> <C> <C>
1) First National Bank of Pennsylvania United States
First National Building Corp. Pennsylvania
2) Bucktail Bank and Trust Company Pennsylvania
3) Reeves Bank Pennsylvania
4) First County Bank Ohio
5) The Metropolitan Savings Bank of Ohio Ohio
6) Dollar Savings Association Pennsylvania
DSA Serv Corp Pennsylvania
Aloma Holdings, Inc. Florida
7) Regency Finance Company Pennsylvania
Citizens Financial Services of New York, Inc. New York
Citizens Equity Corporation of New York, Inc. New York
Citizens Financial Services, Inc. Ohio
Regency Investment Company, Inc. Delaware
8) Penn-Ohio Life Insurance Company Arizona
9) Mortgage Service Corporation Pennsylvania
10) F.N.B. Building Corporation Pennsylvania
</TABLE>
Regency Finance Company conducts business under four names. Business
is conducted at the fifteen offices in Butler, Clearfield, Crawford, Elk, Erie,
Fayette, Lawrence, McKean, Mercer, Somerset and Warren counties in Pennsylvania
and Chatauqua county in New York under the name of F.N.B. Consumer Discount
Company. Business is conducted in the five offices in Columbiana, Mahoning,
and Trumbull counties in Ohio under the name of Citizens Budget Company.
Business is conducted in the twelve offices in Centre, Columbia, Lackawanna,
Lehigh, Monroe, Montour, Northampton, Snyder, and Union counties in
Pennsylvania under the name of Regency Consumer Discount Company. Business is
conducted at the office in Hanover County, Pennsylvania under the name of
Reliance Consumer Discount Company.
The other subsidiaries conduct business under the names as shown
above.
<PAGE> 1
EXHIBIT 23
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Regarding:
1) Registration Statement on Form S-3 relating to the F.N.B.
Corporation Subordinated Notes and Daily Cash Accounts (File
#33-61367).
2) Registration Statement on Form S-3 relating to the Dividend
Reinvestment Plan (File #33-72532).
3) Registration Statement on Form S-8 relating to the F.N.B.
Corporation Voluntary Dividend Reinvestment and Stock Purchase
Plan (File #333-943).
4) Registration Statement on Form S-8 relating to the F.N.B.
Corporation 401K Plan (File #33-50780).
5) Registration Statement on Form S-8 relating to F.N.B.
Corporation 1990 Stock Option Plan (File #33-78114).
6) Registration Statement on Form S-8 relating to F.N.B.
Corporation Restricted Stock Bonus Plan (File #33-78134).
7) Post-Effective Amendment No. 1 to the Registration Statement
on Form S-3 relating to the F.N.B. Corporation Voluntary
Dividend Reinvestment and Stock Purchase Plan (File
#33-72532).
We consent to the incorporation by reference in the above listed
Registration Statements of our report dated February 5, 1996, with respect to
the consolidated financial statements of F.N.B. Corporation and subsidiaries
incorporated by reference in this Annual Report (Form 10-K) for the year ended
December 31, 1995.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
March 18, 1996
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000037808
<NAME> F.N.B. CORP
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 59,795
<INT-BEARING-DEPOSITS> 2,603
<FED-FUNDS-SOLD> 22,335
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 223,479
<INVESTMENTS-CARRYING> 136,969
<INVESTMENTS-MARKET> 136,801
<LOANS> 1,222,895
<ALLOWANCE> 21,550
<TOTAL-ASSETS> 1,706,993
<DEPOSITS> 1,442,109
<SHORT-TERM> 55,224
<LIABILITIES-OTHER> 25,988
<LONG-TERM> 39,775
<COMMON> 17,268
0
4,516
<OTHER-SE> 122,133
<TOTAL-LIABILITIES-AND-EQUITY> 1,706,993
<INTEREST-LOAN> 28,852
<INTEREST-INVEST> 5,251
<INTEREST-OTHER> 212
<INTEREST-TOTAL> 34,315
<INTEREST-DEPOSIT> 13,229
<INTEREST-EXPENSE> 14,866
<INTEREST-INCOME-NET> 19,449
<LOAN-LOSSES> 1,352
<SECURITIES-GAINS> 91
<EXPENSE-OTHER> 14,630
<INCOME-PRETAX> 7,196
<INCOME-PRE-EXTRAORDINARY> 4,898
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,898
<EPS-PRIMARY> 0.54
<EPS-DILUTED> 0.51
<YIELD-ACTUAL> 8.61
<LOANS-NON> 5,605
<LOANS-PAST> 3,785
<LOANS-TROUBLED> 3,075
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 21,052
<CHARGE-OFFS> 1,548
<RECOVERIES> 694
<ALLOWANCE-CLOSE> 21,550
<ALLOWANCE-DOMESTIC> 21,550
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
