UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
--------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------------- --------------------
Commission file number 0-8144
------
F.N.B. CORPORATION
- ----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1255406
- ---------------------------- ---------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Hermitage Square, Hermitage, PA 16148
- ---------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(412) 981-6000
- ---------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not applicable
- --------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.
Yes No
--- ----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at April 30, 1997
----- -----------------------------
Common Stock, $2 Par Value 14,045,908 Shares
- -------------------------- -----------------
<PAGE>
F.N.B. CORPORATION
FORM 10-Q
March 31, 1997
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Balance Sheet 2
Consolidated Income Statement 3
Consolidated Statement of Cash Flows 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 6
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security
Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 14
<PAGE>
F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
Dollars in thousands, except par values
Unaudited
MARCH 31, DECEMBER 31,
1997 1996
----------- -------------
ASSETS
Cash and due from banks $ 79,542 $ 95,035
Interest bearing deposits with banks 2,243 1,334
Federal funds sold 22,040 6,225
Loans held for sale 5,368 9,610
Securities available for sale 302,571 301,341
Securities held to maturity (fair
value of $148,601 and $156,663) 150,047 157,659
Loans, net of unearned income of
$22,447 and $23,371 1,643,444 1,621,922
Allowance for loan losses (27,037) (26,382)
------------- ------------
NET LOANS 1,616,407 1,595,540
------------- ------------
Premises and equipment 42,373 41,057
Other assets 47,279 45,210
------------- ------------
$ 2,267,870 $ 2,253,011
============= ============
LIABILITIES
Deposits:
Non-interest bearing $ 214,922 $ 202,049
Interest bearing 1,676,399 1,655,401
------------- ------------
TOTAL DEPOSITS 1,891,321 1,857,450
Other liabilities 28,824 33,194
Short-term borrowings 115,989 143,992
Long-term debt 45,735 35,088
------------- ------------
TOTAL LIABILITIES 2,081,869 2,069,724
------------- ------------
STOCKHOLDERS' EQUITY
Preferred stock - $10 par value
Authorized - 20,000,000 shares
Outstanding - 323,268 and 352,531 shares
Aggregate liquidation value -
$8,082 and $8,813 3,233 3,525
Common stock - $2 par value
Authorized - 100,000,000 shares
Outstanding - 12,175,196 and 12,115,349 shares
24,350 24,231
Additional paid-in capital 92,608 92,376
Retained earnings 66,553 61,894
Net unrealized securities gains 721 2,748
Treasury stock - 58,301 and 62,723 shares at cost
(1,464) (1,487)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 186,001 183,287
------------ ------------
$ 2,267,870 $ 2,253,011
============ ============
See accompanying Notes to Consolidated Financial Statements
<PAGE>
F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
Dollars in thousands, except per share data
Unaudited
Three Months Ended March 31 1997 1996
---------- ----------
INTEREST INCOME
Loans, including fees $ 37,530 $ 34,963
Securities:
Taxable 5,754 5,628
Tax exempt 497 446
Dividends 262 237
Other 577 771
---------- ----------
TOTAL INTEREST INCOME 44,620 42,045
---------- ----------
INTEREST EXPENSE
Deposits 16,648 16,059
Short-term borrowings 1,418 1,209
Long-term debt 754 742
---------- ----------
TOTAL INTEREST EXPENSE 18,820 18,010
---------- ----------
NET INTEREST INCOME 25,800 24,035
Provision for loan losses 1,987 1,593
---------- ----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 23,813 22,442
---------- ----------
NON-INTEREST INCOME
Insurance commissions and fees 1,031 921
Service charges 2,600 2,445
Trust 439 384
Gain on sale of securities 493 288
Other 947 488
---------- ----------
TOTAL NON-INTEREST INCOME 5,510 4,526
---------- ----------
29,323 26,968
---------- ----------
NON-INTEREST EXPENSES
Salaries and employee benefits 10,866 9,719
Net occupancy 1,589 1,490
Amortization of intangibles 237 270
Equipment 1,390 1,334
Deposit insurance 192 309
Other 5,225 5,653
---------- ----------
TOTAL NON-INTEREST EXPENSES 19,499 18,775
---------- ----------
INCOME BEFORE INCOME TAXES 9,824 8,193
Income taxes 3,171 2,525
---------- ----------
NET INCOME $ 6,653 $ 5,668
========== ==========
NET INCOME PER COMMON SHARE:
Primary $ .50 $ .43
========== ==========
Fully Diluted $ .49 $ .41
========== ==========
CASH DIVIDENDS PER COMMON SHARE $ .15 $ .15
========== ==========
AVERAGE COMMON SHARES OUTSTANDING 12,674,891 12,484,692
========== ==========
See accompanying Notes to Consolidated Financial Statements
<PAGE>
F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Dollars in thousands
Unaudited
Three Months Ended March 31 1997 1996
---------- ----------
OPERATING ACTIVITIES
Net income $ 6,653 $ 5,668
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,454 1,487
Provision for loan losses 1,987 1,593
Deferred taxes (564) 448
Net gain on sale of securities (493) (288)
Net gain (loss) on sale of loans (477) (73)
Proceeds from sale of loans 6,395 2,841
Loans originated for sale (1,676) (2,318)
Net change in:
Interest receivable (1,926) (445)
Interest payable 500 1,084
Other, net (4,269) 514
---------- ----------
Net cash flows from operating activities
7,584 10,511
---------- ----------
INVESTING ACTIVITIES
Net change in:
Interest bearing deposits with banks (909) (1,283)
Federal funds sold (15,815) 28,270
Loans (22,084) (30,957)
Securities available for sale:
Purchases (86,910) (58,136)
Sales 14,388 23,389
Maturities 68,580 25,773
Securities held to maturity:
Purchases (1,867) (25,837)
Maturities 9,471 7,899
Increase in premises and equipment (2,534) (3,076)
---------- ----------
Net cash flows from investing activities
(37,680) (33,958)
---------- ----------
FINANCING ACTIVITIES
Net change in:
Non-interest bearing deposits 12,873 (5,534)
Interest bearing deposits 20,998 35,716
Short-term borrowings (28,003) (743)
Increase in long-term debt 11,671 1,710
Decrease in long-term debt (1,024) (900)
Net acquisition of treasury stock 57 72
Cash dividends paid (1,969) (1,588)
---------- ----------
Net cash flows from financing activities
14,603 28,733
---------- ----------
NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS
(15,493) 5,286
Cash and due from banks at beginning of period
95,035 83,931
---------- ----------
CASH AND DUE FROM BANKS AT END OF PERIOD
$ 79,542 $ 89,217
========== ==========
See accompanying Notes to Consolidated Financial Statements
<PAGE>
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1997
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements give
retroactive effect to the merger of a subsidiary of F.N.B. Corporation (the
Corporation) with and into Southwest Banks, Inc. (Southwest). The merger
which was consummated on January 21, 1997 resulted in the Corporation issuing
a total of 2,851,907 shares of common stock. This transaction has been
accounted for on a pooling-of-interests basis, and the financial statements
prior to the combination have been restated to reflect the Southwest
acquisition. The financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month period ended March 31,
1997 are not necessarily indicative of the results that may be expected for
the year ended December 31, 1997. For further information, refer to the
consolidated financial statements and footnotes thereto incorporated by
reference in the Corporation's annual report on Form 10-K for the year ended
December 31, 1996.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates
and assumptions that effect the amounts reported in the financial statements.
Actual results could differ from those estimates.
PER SHARE AMOUNTS
Per share amounts are adjusted for the common stock dividends, including
the 5% stock dividend approved on April 23, 1997.
Primary earnings per common share is calculated by dividing net income,
adjusted for preferred stock dividends declared, by the sum of the weighted
average number of shares of common stock outstanding and the number of shares
of common stock which would be issued assuming the exercise of vested stock
options during each period.
Fully diluted earnings per common share is calculated by dividing net
income by the weighted average number of shares of common stock outstanding,
assuming the conversion of outstanding convertible preferred stock from the
beginning of the year or date of issuance and the exercise of vested stock
options.
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128 (FAS No. 128), "Earnings per Share," which is required to
be adopted on December 31, 1997. At that time, the Corporation will be
required to change the method currently used to compute earnings per share
and to restate all prior periods. Under the new requirements for calculating
earnings per share, the dilutive effect of stock options will be excluded.
The impact of FAS No. 128 on the calculations of primary and fully diluted
earnings per share is immaterial for the quarters ended March 31, 1997 and
1996.
Cash dividends per common share are based on the actual cash dividends
declared adjusted for stock dividends. Book value per common share is based
on shares outstanding at each period end adjusted retroactively for stock
dividends.
<PAGE>
CASH FLOW INFORMATION
Following is a summary of supplemental cash flow information (in thousands):
Three months ended March 31 1997 1996
-------- --------
Cash paid for:
Interest $ 18,320 $ 16,926
Noncash Investing and Financing Activities:
Acquisition of real estate in settlement of loans
64 33
Loans granted in the sale of other real estate
821 139
MERGERS AND DIVESTITURE
F.N.B. Corporation (the Corporation) completed its merger with Southwest
Banks, Inc. (Southwest), a bank holding company headquartered in Naples,
Florida, effective January 21, 1997. Under the terms of the merger
agreement, each outstanding share of Southwest's common stock was converted
into .819 share of the Corporation's common stock with cash being paid in
lieu of fractional shares. A total of 2,851,907 shares of the Corporation's
common stock were issued. Results for 1996 are restated to reflect this
acquisition as a pooling of interests.
Operating results of the Corporation and Southwest for the three months
ended March 31, 1996, prior to restatement are (in thousands):
F.N.B.
Corporation Southwest Combined
----------- ---------- ----------
Net interest income $ 19,587 $ 4,178 $ 24,035
Net income 4,867 801 5,668
The Corporation completed its merger with West Coast Bancorp, Inc.
(West Coast), a bank holding company headquartered in Cape Coral, Florida,
effective April 18, 1997. Under the terms of the merger agreement, each
outstanding share of West Coast's common stock was converted into .794 share
of the Corporation's common stock with cash being paid in lieu of fractional
shares. A total of 1,197,128 shares of the Corporation's common stock were
issued. At the time of the merger, West Coast had total assets and deposits
of $192 million and $156 million, respectively. The transaction was
accounted for as a pooling of interests.
On November 6, 1996, the Corporation announced an arrangement with
Sun Bancorp, Inc. (Sun), a bank holding company headquartered in Selinsgrove,
Pennsylvania, with assets of approximately $373 million. Under the agreement,
Sun will receive 100% of the ownership of Bucktail Bank and Trust Company, a
subsidiary of the Corporation, having total assets of approximately $120
million. The Corporation will receive Sun stock worth approximately
$18.6 million, which represents a 13.8% ownership of Sun. The transaction
is expected to close during the second quarter of 1997.
PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
LIQUIDITY AND INTEREST RATE SENSITIVITY
The Corporation monitors its liquidity position on an ongoing basis to
assure that it is able to meet the need for funds at all times. Given the
monetary nature of its assets and liabilities and the significant source of
liquidity provided by its available for sale securities portfolio, the
Corporation has sufficient sources of funds available to meet its cash needs.
<PAGE>
Additionally, 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 $17.0 million was unused at March 31,
1997. To further meet its liquidity needs, the Corporation also has access
to the Federal Home Loan Bank and the Federal Reserve System, as well as
other funding sources.
Through the review of the gap analysis and net interest income
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 matched maturity
funding.
Interest rate sensitivity estimates the impact that future changes in
interest rates will have on net interest income. The gap is one measurement
of risk inherent in the 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 the amortizations, maturities
and repricing of assets and liabilities. Non-maturity deposit balances have
been allocated to various repricing intervals to estimate their
characteristics. The cumulative gap reflects the net position of assets and
liabilities repricing in specified time periods. Based on the cumulative one
year gap and assuming no restructuring or modifications to asset/liability
composition, a rise in interest rates would result in a minimal reduction in
net interest income.
Following is the gap analysis as of March 31, 1997 (in thousands):
WITHIN 4-12 1-5 OVER
3 MONTHS MONTHS YEARS 5 YEARS TOTAL
--------- ---------- -------- ---------- ----------
INTEREST EARNING ASSETS
Interest bearing deposits
with banks $ 2,143 $ 100 $ 2,243
Federal funds sold 22,040 22,040
Loans held for sale 5,368 5,368
Securities:
Available for sale 22,227 28,406 $ 200,741 $ 51,197 302,571
Held to maturity 12,843 49,335 77,762 10,107 150,047
Loans, net of unearned 398,347 367,024 630,673 247,400 1,643,444
--------- ---------- --------- --------- ----------
462,968 444,865 909,176 308,704 2,125,713
Other assets 142,157 142,157
--------- ---------- --------- --------- ----------
$ 462,968 $ 444,865 $ 909,176 $ 450,861 $2,267,870
========= ========== ========= ========= ==========
INTEREST BEARING LIABILITIES
Deposits:
Interest checking $ 96,864 $ 178,235 $ 275,099
Savings 193,930 344,505 538,435
Time deposits 205,445 $ 366,931 $ 290,424 65 862,865
Short-term borrowings 73,627 11,673 30,689 115,989
Long-term debt 1,778 8,092 20,851 15,014 45,735
--------- ---------- --------- --------- ----------
571,644 386,696 311,275 568,508 1,838,123
Other liabilities 243,746 243,746
Stockholders' equity 186,001 186,001
--------- ---------- --------- --------- ----------
$ 571,644 $ 386,696 $ 311,275 $ 998,255 $2,267,870
========= ========== ========= ========= ==========
PERIOD GAP $(108,676) $ 58,169 $ 597,901 $(547,394)
========= ========== ========= =========
CUMULATIVE GAP $(108,676) $ (50,507)$ 547,394
========= ========== =========
CUMULATIVE GAP AS A PERCENT
OF TOTAL ASSETS (4.8%) (2.2%) (24.1%)
========= ========== =========
RATE SENSITIVE ASSETS/RATE
SENSITIVE LIABILITIES
(CUMULATIVE) 0.81 0.95 1.43 1.16
========= ========== ========= =========
<PAGE>
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 a continuous process. Central to
this process is internal equity generation accomplished by earnings
retention. Since December 31, 1996, stockholders' equity has increased $4.7
million as a result of earnings retention. For the three months ended March
31, 1997, the return on average equity was 14.44%. Total cash dividends
declared represented 29.59% of net income. Book value per share was $13.98
at March 31, 1997, compared to $13.79 at December 31, 1996.
NON-PERFORMING ASSETS AND ALLOWANCE FOR LOAN LOSSES
Non-performing assets include non-performing loans and other real estate
owned. Non-performing loans include non-accrual loans and restructured
loans. Non-accrual loans represent loans on which interest accruals have
been discontinued. 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. When a loan is placed on non-accrual status, unpaid interest
credited to income in the current year is reversed and unpaid interest
accrued in prior years is charged against the allowance for loan losses.
Non-accrual loans may not be restored to accrual status until all delinquent
principal and interest has been paid, or the loan becomes both well secured
and in the process of collection. Consumer installment loans are generally
charged off against the allowance for loan losses upon reaching 90 to 180
days past due, depending on the installment loan type. 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 assets (dollars in thousands):
MARCH 31, DECEMBER 31,
1997 1996
------------ ------------
Non-performing assets:
Non-accrual loans $ 7,591 $ 6,998
Restructured loans 2,071 2,146
------- -------
Total non-performing loans 9,662 9,144
Other real estate owned 3,027 4,518
------- -------
Total non-performing assets $12,689 $13,662
======= =======
Asset quality ratios:
Non-performing loans as percent of total loans .59% .56%
Non-performing assets as percent of total assets .56% .61%
Non-performing loans are closely monitored on an ongoing basis as part
of the Corporation's loan review process. The potential risk of loss on
these loans is evaluated by comparing the loan balance to the present value
of projected future cash flows or the value of any underlying collateral,
recognizing losses where appropriate.
Management's analysis of the allowance for loan losses includes the
evaluation of the loan portfolio based on internally generated loan review
reports and the historical loss experience of the remaining balances of the
various homogeneous loan pools which comprise the loan portfolio. Specific
factors which are evaluated include the previous loan loss experience with
the customer, the status of past due interest and principal payments on the
loan, the collateral position of the loan, the quality of financial
information supplied by the borrower and the general financial condition of
the borrower. Historical loss experience on the remaining portfolio segments
is considered in conjunction with current status of economic conditions, loan
loss trends, delinquency and non-accrual trends, credit administration and
concentrations of credit risk.
<PAGE>
Following is a summary of changes in the allowance for loan losses and
selected ratios (dollars in thousands):
THREE MONTHS ENDED
MARCH 31,
------------------
1997 1996
-------- --------
Balance at beginning of period $26,382 $23,135
Charge-offs (1,563) (1,774)
Recoveries 231 422
------- -------
Net charge-offs (1,332) (1,352)
Provision for loan losses 1,987 1,593
------- -------
Balance at end of period $27,037 $23,376
======= =======
Allowance for loan losses to:
Total loans, net of unearned income 1.65% 1.44%
Non-performing loans 279.83% 255.64%
REGULATORY MATTERS
The Corporation and its banking subsidiaries are subject to various
regulatory capital requirements administered by the federal banking agencies.
Failure to meet minimum capital requirements can initiate certain mandatory,
and possibly additional discretionary actions by regulators that, if
undertaken, could have a direct material effect on the Corporation's
financial statements. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Corporation and its banking
subsidiaries must meet specific capital guidelines that involve quantitative
measures of assets, liabilities and certain off-balance sheet items as
calculated under regulatory accounting practices. The Corporation's and
banking subsidiaries' capital amounts and classifications are also subject to
qualitative judgments by the regulators about components, risk weightings and
other factors.
Quantitative measures established by regulators to ensure capital
adequacy require the Corporation and its banking subsidiaries to maintain
minimum amounts and ratios of total and tier 1 capital (as defined in the
regulations) to risk-weighted assets (as defined) and of tier 1 capital to
average assets (as defined). Management believes, as of March 31, 1997, that
the Corporation and each of its banking subsidiaries meet all capital
adequacy requirements to which they are subject. Following are capital
ratios as of March 31, 1997 for the Corporation (dollars in thousands):
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
----------------- ------------------ ----------------
Amount Ratio Amount Ratio Amount Ratio
--------- ------- ---------- ------- --------- -------
Total Capital $213,167 13.6% $125,582 8.0% $156,977 10.0%
(to risk-weighted assets)
Tier 1 Capital 183,421 11.7% 62,791 4.0% 94,186 6.0%
(to risk-weighted assets)
Tier 1 Capital 183,421 8.1% 90,193 4.0% 112,742 5.0%
(to average assets)
As of December 31, 1996, the Corporation and each of its banking
subsidiaries have been categorized as "well capitalized" under the regulatory
framework for prompt corrective action.
FINANCIAL INFORMATION SUMMARY
Net income for the first three months of 1997 was $6.7 million compared
to $5.7 million for the first three months of 1996. Primary earnings per
share for those periods were $.50 and $.43, respectively, and $.49 and $.41
on a fully diluted basis. Highlights for the first three months of 1997
include:
* A 14.45% return on average equity and a 1.19% return on average assets.
* A net interest margin on a fully taxable equivalent basis of 5.01%.
<PAGE>
FIRST THREE MONTHS OF 1997 AS COMPARED TO FIRST THREE MONTHS OF 1996:
The following table provides information regarding the average balances
and yields and rates on interest earning assets and interest bearing
liabilities (dollars in thousands):
<TABLE>
<CAPTION>
Three Months Ended March 31 1997 1996
----------------------------- -----------------------------
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest earning assets:
Interest bearing deposits
with banks $ 1,697 $ 40 9.35% $ 3,981 $ 62 6.21%
Federal funds sold 41,581 537 5.16 52,414 710 5.42
Securities:
U.S. Treasury and other
U.S. Government agencies
and corporations 373,642 5,754 6.25 376,650 5,628 6.01
States of the U.S. and
political subdivisions(1)<F1> 48,939 723 5.91 43,100 646 6.00
Other securities(1)<F1> 21,995 290 5.28 18,133 261 5.75
Loans (1) (2)<F1><F2> 1,639,510 37,761 9.34 1,473,423 35,299 9.64
---------- -------- ---------- --------
Total interest
earning assets 2,127,364 45,105 8.59 1,967,701 42,606 8.71
---------- -------- ---------- --------
Cash and due from banks 68,004 77,421
Allowance for loan losses (26,916) (23,373)
Premises and equipment 41,905 37,281
Other assets 48,299 48,252
---------- ----------
$2,259,421 $2,107,282
========== ==========
LIABILITIES
Interest bearing liabilities:
Deposits:
Interest bearing demand $ 286,991 $ 1,524 2.15 $ 270,428 $ 1,475 2.19
Savings 518,269 3,577 2.80 443,154 2,808 2.55
Other time 864,858 11,547 5.41 852,731 11,776 5.55
Short-term borrowings 122,554 1,418 4.69 83,786 1,209 5.80
Long-term debt 39,802 754 7.58 40,138 742 7.39
--------- ------- ---------- --------
Total interest
bearing liabilities 1,832,474 18,820 4.16 1,690,237 18,010 4.28
---------- ------- ---------- --------
Non-interest bearing
demand deposits 205,985 201,020
Other liabilities 34,224 42,440
---------- ----------
2,072,683 1,933,697
---------- ----------
STOCKHOLDERS' EQUITY 186,738 173,585
---------- ----------
$2,259,421 $2,107,282
========== ==========
Excess of interest earning
assets over interest
bearing liabilities $ 294,890 $ 277,464
========== ==========
Net interest income $ 26,285 $ 24,596
======== ========
Net interest spread 4.43% 4.43%
====== =====
Net interest margin (3)<F3> 5.01% 5.01%
====== =====
<FN>
<F1>
(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.
<F2>
(2) Average balance 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.
<F3>
(3) Net interest margin is calculated by dividing the difference between
total interest earned and total interest paid by total interest earning
assets.
</FN>
</TABLE>
<PAGE>
Net interest income, the Corporation's primary source of earnings, is
the amount by which interest and fees generated by interest earning assets,
primarily loans and securities, exceed interest expense on deposits and
borrowed funds. During the first three months of 1997, net interest income,
on a fully taxable equivalent basis, totaled $26.3 million, representing a
6.87% increase over the first three months of 1996. Net interest income
consisted of interest income of $45.1 million and interest expense of $18.8
million for the first three months of 1997 compared to $42.6 million and
$18.0 million for each, respectively, for the first three months of 1996.
Net interest margin fell to 5.01% at March 31, 1997 from 5.03% at March 31,
1996.
The following table sets forth certain information regarding changes in
net interest income attributable to changes in the volumes and rates of
interest earning assets and interest bearing liabilities for the three months
ending March 31, 1997 as compared to the three months ending March 31, 1996
(in thousands):
VOLUME RATE NET
------- ------- -------
INTEREST INCOME
Interest bearing deposits with banks $ (51) $ 29 $ (22)
Federal funds sold (130) (43) (173)
Securities:
U.S. Treasury and other U.S.
Government agencies and corporations (45) 171 126
States of the U.S. and political subdivisions 83 (6) 77
Other securities 47 (18) 29
Loans 3,713 (1,251) 2,462
------- ------- ------
3,617 (1,118) 2,499
------- ------- ------
INTEREST EXPENSE
Deposits:
Interest bearing demand 86 (37) 49
Savings 529 240 769
Other time 164 (393) (229)
Short-term borrowings 394 (185) 209
Long-term debt (6) 18 12
------- ------- ------
1,167 (357) 810
------- ------- ------
NET CHANGE $ 2,450 $ (761) $ 1,689
======= ======= =======
The amount of change not solely due to rate or volume changes was
allocated between the change due to rate and the change due to volume based
on the relative size of the rate and volume changes.
Interest income on loans, on a fully taxable equivalent basis, increased
6.84% from $35.3 million for the three months ended March 31, 1996 to $37.8
million for the three months ended March 31, 1997. This increase was the
result of an increase in average loans of 11.27% over this same period last
year.
Interest expense on deposits increased $589,000 or 3.67% for the three
months ended March 31, 1997, compared to the three months ended March 31,
1996. This increase was the result of an increase in average deposits of
6.63% over this same three month period. Interest expense on short-term
borrowings increased $209,000 or 17.29% for these same periods due to an
increase in average short-term borrowings of 46.27%.
The provision for loan losses totaled $2.0 million for the first three
months of 1997, as compared to $1.6 million for the first three months of
1996. The increase in the provision for loan losses is a result of an
increase in loan originations and management's analysis of the adequacy of
the allowance for loan losses which takes into consideration factors relevant
to the collectibility of the portfolio.
Total non-interest income increased 21.85% during the first three months
of 1997 compared to the same period of 1996. This increase was attributable
to increases recognized on the sale of equity securities.
<PAGE>
Total non-interest expenses increased 3.88% during the first three months
of 1997, compared to the first three months of 1996. This increase was
attributable to normal increases in compensation and the opening of
additional offices since the first three months of 1996.
Income before taxes was $9.8 million for the first three months of 1997,
representing an increase of $1.6 million or 19.91% over the same period of
1996. Income taxes increased $646,000 or 25.58% over the same periods.
Consolidated net income was $6.7 million for the first three months of
1997, representing a $985,000 or 17.38% increase over the first three months
of 1996. The Corporation's return on average assets was 1.19% and 1.08% for
the three months ended March 31, 1997 and 1996, while the return on average
equity was 14.45% and 13.13% for those same periods, respectively.
PART II
ITEM 1. LEGAL PROCEEDINGS
No material pending legal proceedings exist to which the Corporation or
any of its subsidiaries is a party, or of which any of their property is the
subject, except ordinary routine proceedings which are incidental to the
ordinary conduct of business. In the opinion of management, pending legal
proceedings will not have a material adverse effect on the consolidated
financial position of the Corporation and its subsidiaries.
ITEM 2. CHANGES IN SECURITIES
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
<PAGE>
11. F.N.B. Corporation
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
Dollars in thousands
THREE MONTHS ENDED
MARCH 31,
-----------------------
1997 1996
---------- ----------
PRIMARY
Net Income $ 6,653 $ 5,668
Less: Preferred Stock
Dividends Declared (160) (210)
---------- ----------
Net Income Applicable to Common Stock $ 6,493 $ 5,458
========== ==========
Average Common Shares Outstanding 12,674,891 12,484,692
Net Effect of Dilutive Stock Options
and Stock Warrants - Based on the
Treasury Stock Method Using Average
Market Price 322,836 226,434
---------- ----------
12,997,727 12,711,126
========== ==========
Net Income per Common Share $.50 $.43
==== ====
FULLY DILUTED
Net Income Applicable to Common Stock $ 6,653 $ 5,668
========== ==========
Average Common Shares Outstanding 12,674,891 12,484,692
Series A Convertible Preferred Stock 24,479 32,353
Series B Convertible Preferred Stock 674,499 916,577
Net Effect of Dilutive Stock Options
and Stock Warrants - Based on the
Treasury Stock Method Using the
Period-End Market Price, If Higher
than Average Market Price 325,234 241,256
---------- ----------
13,699,103 13,674,878
========== ==========
Net Income per Common Share $.49 $.41
==== ====
27. Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K
A report on Form 8-K, dated January 24, 1997, was filed by the
Corporation. The Form 8-K disclosed information relating to the consummation
of the merger with Southwest Banks, Inc.
A report on Form 8-K, dated March 5, 1997, was filed by the Corporation.
The Form 8-K included Audited Supplemental Consolidated Financial Statements
for the years ended December 31, 1995, 1994 and 1993 with Report of
Independent Auditors and Management's Discussion and Analysis.
A report on Form 8-K, dated April 21, 1997, was filed by the
Corporation. The Form 8-K disclosed information relating to the consummation
of the merger with West Coast Bancorp, Inc.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
F.N.B. Corporation
------------------------------
(Registrant)
Dated: May 14, 1997 /s/Peter Mortensen
------------------------------ ------------------------------
Peter Mortensen
Chairman and President
(Principal Executive Officer)
Dated: May 14, 1997 /s/John D. Waters
------------------------------ ------------------------------
John D. Waters
Vice President and Chief Financial
Officer (Principal Financial Officer)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 79,542
<INT-BEARING-DEPOSITS> 2,243
<FED-FUNDS-SOLD> 22,040
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 302,571
<INVESTMENTS-CARRYING> 150,047
<INVESTMENTS-MARKET> 148,601
<LOANS> 1,643,444
<ALLOWANCE> 27,037
<TOTAL-ASSETS> 2,267,870
<DEPOSITS> 1,891,321
<SHORT-TERM> 115,989
<LIABILITIES-OTHER> 28,824
<LONG-TERM> 45,735
0
3,233
<COMMON> 24,350
<OTHER-SE> 158,418
<TOTAL-LIABILITIES-AND-EQUITY> 2,267,870
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<INTEREST-INVEST> 6,513
<INTEREST-OTHER> 577
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<INTEREST-DEPOSIT> 16,648
<INTEREST-EXPENSE> 18,820
<INTEREST-INCOME-NET> 25,800
<LOAN-LOSSES> 1,987
<SECURITIES-GAINS> 493
<EXPENSE-OTHER> 19,499
<INCOME-PRETAX> 9,824
<INCOME-PRE-EXTRAORDINARY> 9,824
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,653
<EPS-PRIMARY> .50
<EPS-DILUTED> .49
<YIELD-ACTUAL> 8.59
<LOANS-NON> 7,591
<LOANS-PAST> 2,796
<LOANS-TROUBLED> 2,071
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<ALLOWANCE-OPEN> 26,382
<CHARGE-OFFS> 1,563
<RECOVERIES> 231
<ALLOWANCE-CLOSE> 27,037
<ALLOWANCE-DOMESTIC> 27,037
<ALLOWANCE-FOREIGN> 0
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