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 September 30, 1999
-------------------------------------------------
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)
One F.N.B. Boulevard, Hermitage, PA 16148
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(724) 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 October 31, 1999
----- -------------------------------
Common Stock, $2 Par Value 20,158,161 Shares
- -------------------------- -----------------
<PAGE>
F.N.B. CORPORATION
FORM 10-Q
September 30, 1999
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 9
Item 3. Quantitative and Qualitative Disclosure of Market Risk 18
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 19
Item 2. Changes in Securities 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
Signatures 20
<PAGE>
F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
Dollars in thousands, except par values
Unaudited
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
ASSETS
Cash and due from banks $ 104,568 $ 134,847
Interest bearing deposits with banks 5,285 4,192
Federal funds sold 3,247 44,706
Mortgage loans held for sale 7,664 15,947
Securities available for sale 435,108 455,082
Securities held to maturity (fair
value of $84,794 and $119,522) 85,597 118,575
Loans, net of unearned income of $43,252
and $31,014 2,677,372 2,422,884
Allowance for loan losses (33,991) (32,308)
---------- ----------
NET LOANS 2,643,381 2,390,576
---------- ----------
Premises and equipment 102,295 93,584
Other assets 153,639 146,031
---------- ----------
$3,540,784 $3,403,540
========== ==========
LIABILITIES
Deposits:
Non-interest bearing $ 394,287 $ 401,272
Interest bearing 2,418,358 2,449,770
---------- ----------
TOTAL DEPOSITS 2,812,645 2,851,042
Other liabilities 50,796 50,252
Short-term borrowings 281,122 150,981
Long-term debt 109,789 69,492
---------- ----------
TOTAL LIABILITIES 3,254,352 3,121,767
---------- ----------
STOCKHOLDERS' EQUITY
Preferred stock - $10 par value
Authorized - 20,000,000 shares
Issued - 216,929 and 237,985 shares
Aggregate liquidation value - $5,423 and $5,950 2,169 2,380
Common stock - $2 par value
Authorized - 100,000,000 shares
Issued - 20,334,580 and 19,264,231 shares 40,669 38,529
Additional paid-in capital 182,784 161,232
Retained earnings 66,536 76,408
Accumulated other comprehensive income (1,541) 6,308
Treasury stock - 160,949 and 109,285 shares at cost (4,185) (3,084)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 286,432 281,773
---------- ----------
$3,540,784 $3,403,540
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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ -------------------
1999 1998 1999 1998
-------- -------- -------- --------
INTEREST INCOME
Loans, including fees $ 56,156 $ 52,044 $162,737 $152,394
Securities:
Taxable 6,980 8,340 21,083 24,465
Nontaxable 491 622 1,700 1,838
Dividends 367 296 1,093 1,135
Other 176 891 1,219 3,598
-------- -------- -------- --------
TOTAL INTEREST INCOME 64,170 62,193 187,832 183,430
-------- -------- -------- --------
INTEREST EXPENSE
Deposits 21,995 24,619 67,156 72,417
Short-term borrowings 3,526 1,884 7,561 4,989
Long-term debt 1,112 1,131 3,047 3,477
-------- -------- -------- --------
TOTAL INTEREST EXPENSE 26,643 27,634 77,764 80,883
-------- -------- -------- --------
NET INTEREST INCOME 37,527 34,559 110,068 102,547
Provision for loan losses 2,105 1,977 6,696 5,353
-------- -------- -------- --------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 35,422 32,582 103,372 97,194
-------- -------- -------- --------
NON-INTEREST INCOME
Insurance commissions and fees 944 1,041 2,719 3,051
Service charges 5,221 4,171 14,706 11,975
Trust 975 718 2,736 2,107
Gain on sale of securities 380 173 1,286 1,135
Gain on sale of loans 473 1,046 1,908 2,473
Gain on sale of a branch 603 603
Other 1,960 1,193 5,688 3,316
-------- -------- -------- --------
TOTAL NON-INTEREST INCOME 10,556 8,342 29,646 24,057
-------- -------- -------- --------
45,978 40,924 133,018 121,251
-------- -------- -------- --------
NON-INTEREST EXPENSES
Salaries and employee benefits 17,226 14,761 50,710 44,889
Net occupancy 2,186 2,181 6,646 6,456
Equipment 2,733 2,262 7,925 6,554
Merger related 2,112 1,333 4,072
Other 9,255 7,654 26,283 23,191
-------- -------- -------- --------
TOTAL NON-INTEREST EXPENSES 31,400 28,970 92,897 85,162
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 14,578 11,954 40,121 36,089
Income taxes 4,678 3,946 12,578 12,059
-------- -------- -------- --------
NET INCOME $ 9,900 $ 8,008 $ 27,543 $ 24,030
======== ======== ======== ========
NET INCOME PER COMMON SHARE:*
Basic $.49 $.39 $1.35 $1.18
==== ==== ===== =====
Diluted $.47 $.38 $1.30 $1.13
==== ==== ===== =====
CASH DIVIDENDS PER COMMON SHARE* $.18 $.17 $ .53 $ .51
==== ==== ===== =====
* Restated to reflect a 5 percent stock dividend declared on April 26, 1999 and
paid on June 1, 1999.
See accompanying Notes to Consolidated Financial Statements
<PAGE>
F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Dollars in thousands
Unaudited
Nine Months Ended September 30 1999 1998
---------- ----------
OPERATING ACTIVITIES
Net income $ 27,543 $ 24,030
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 7,844 6,738
Provision for loan losses 6,696 5,353
Deferred taxes 7,565 (1,836)
Net gain on sale of securities (1,286) (1,135)
Net gain on sale of loans (1,908) (2,473)
Proceeds from sale of loans 45,858 85,613
Loans originated for sale (35,667) (82,642)
Net change in:
Interest receivable (358) (1,082)
Interest payable (151) 1,884
Other, net (5,174) 3,340
---------- ----------
Net cash flows from operating activities 50,962 37,790
INVESTING ACTIVITIES
Net change in:
Interest bearing deposits with banks (1,093) 132
Federal funds sold 41,459 16,016
Loans (262,851) (184,193)
Securities available for sale:
Purchases (148,708) (194,261)
Sales 17,258 9,664
Maturities 140,644 156,190
Securities held to maturity:
Purchases (1,012) (26,995)
Maturities 33,992 53,712
Increase in premises and equipment (13,995) (18,548)
---------- ----------
Net cash flows from investing activities (194,306) (188,283)
---------- ----------
FINANCING ACTIVITIES
Net change in:
Non-interest bearing deposits, savings and NOW (19,604) 50,753
Time deposits (18,793) 54,255
Short-term borrowings 130,141 61,729
Increase in long-term debt 62,453 15,691
Decrease in long-term debt (22,156) (16,190)
Net acquisition of treasury stock (3,996) (5,132)
Payment for purchase of affiliate, net of cash received (3,941)
Cash dividends paid (11,039) (9,379)
---------- ----------
Net cash flows from financing activities 113,065 151,727
---------- ----------
NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS (30,279) 1,234
Cash and due from banks at beginning of period 134,847 112,292
---------- ----------
CASH AND DUE FROM BANKS AT END OF PERIOD $ 104,568 $ 113,526
========== ==========
See accompanying Notes to Consolidated Financial Statements
<PAGE>
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1999
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements give
retroactive effect to the merger of Guaranty Bank & Trust (Guaranty) with and
into F.N.B. Corporation (the Corporation). The merger, which was consummated on
January 13, 1999, resulted in the Corporation issuing 1,250,994 shares of common
stock. The transaction has been accounted for as a pooling-of-interests, and
such financial statements are presented as if the merger had been consummated
for all the periods presented. 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. For further information, refer to the consolidated financial
statements for the year ended December 31, 1998 and footnotes thereto included
in the Corporation's Current Report on Form 8-K filed with the Securities and
Exchange Commission on July 2, 1999.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions that affect the amounts reported in the financial statements. The
Corporation cautions that any forward looking statements contained in this
report, in a report incorporated by reference to this report or made by
management of the Corporation, involve risks and uncertainties and are subject
to change based upon various factors. Actual results could differ materially
from those expressed or implied.
MERGERS AND ACQUISITIONS
On October 28, 1999, the Corporation announced that its affiliate, First
National Bank of Florida, will acquire Roger Bouchard Insurance Inc., one of the
largest independent insurance agencies in Florida. The transaction will be
accounted for as a pooling-of-interests.
On October 12, 1999, the Corporation announced that its affiliate, Regency
Finance Company (Regency), will expand its size and geographic scope through the
purchase of 11 consumer finance offices in Tennessee and Kentucky. Regency will
buy these offices and $34.9 million in net loans from Finance and Mortgage
Acceptance Corporation (FMAC), a subsidiary of Farmers & Merchants Bank of
Clarksville, Tennessee. The transaction will be accounted for as a purchase and
will not result in any goodwill.
On August 20, 1999, the Corporation's lead banking affiliate, First
National Bank of Pennsylvania, acquired all of the issued and outstanding stock
of Gelvin, Jackson & Starr, Inc., a northwestern Pennsylvania independent
insurance agency for $3.9 million, net of cash received. In connection with
this transaction, the Corporation repurchased 160,000 shares of its common
stock in the open market, and exchanged such shares as payment for the stock
of Gelvin, Jackson & Starr, Inc. The transaction was accounted for as a
purchase, resulting in goodwill of $3.5 million and additional assets and
liabilities of $2.1 million and $1.6 million, respectively.
<PAGE>
On January 13, 1999, the Corporation completed its affiliation with
Guaranty Bank & Trust (Guaranty), headquartered in Venice, Florida with assets
of $152.8 million. Under the terms of the merger agreement, each outstanding
share of Guaranty's common stock was converted into 1.536 shares of the
Corporation's common stock. A total of 1,250,994 shares of the Corporation's
common stock were issued. On February 12, 1999, Guaranty was merged into an
existing subsidiary of the Corporation, West Coast Bank, to form West Coast
Guaranty Bank, N.A. Results for prior years are restated to reflect this
acquisition as a pooling-of-interests. The following table sets forth separate
company financial information for the year ended December 31, 1998 (in
thousands):
F.N.B.
Corporation Guaranty
----------- --------
Net interest income $132,600 $5,313
Net income 31,872 326
The Corporation regularly evaluates the potential acquisition of, and holds
discussions with, various potential acquisition candidates and as a general rule
the Corporation publicly announces such acquisitions only after a definitive
agreement has been reached.
PER SHARE AMOUNTS
Per share amounts have been adjusted for common stock dividends, including
the 5 percent stock dividend declared on April 26, 1999 and paid on June 1,
1999.
Basic earnings per 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.
Diluted earnings per common share is calculated by dividing net income 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 and warrants. Such
adjustments to net income and the weighted average number of shares of common
stock are made only when such adjustments dilute earnings per share.
EARNINGS PER SHARE
The following tables set forth the computation of basic and diluted
earnings per share (in thousands, except per share data):
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
BASIC
Net income $ 9,900 $ 8,008 $ 27,543 $ 24,030
Less: Preferred stock
dividends declared (102) (120) (314) (379)
---------- ---------- ---------- ----------
Earnings applicable to basic
earnings per share $ 9,798 $ 7,888 $ 27,229 $ 23,651
========== ========== ========== ==========
Average common shares
outstanding 20,150,114 20,073,609 20,149,709 19,997,293
========== ========== ========== ==========
Earnings per share $.49 $.39 $1.35 $1.18
==== ==== ===== =====
<PAGE>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
DILUTED
Earnings applicable to
diluted earnings per share $ 9,900 $ 8,008 $ 27,543 $ 24,030
========== ========== ========== ==========
Average common shares
outstanding 20,150,114 20,073,609 20,149,709 19,997,293
Series A convertible
preferred stock 19,267 18,095 19,267 18,095
Series B convertible
preferred stock 496,573 535,274 510,129 564,081
Net effect of dilutive
stock options and stock
warrants based on the
treasury stock method 466,416 522,670 444,768 552,974
---------- ---------- ---------- ----------
21,132,370 21,149,648 21,123,873 21,132,443
========== ========== ========== ==========
Earnings per share $.47 $.38 $1.30 $1.13
==== ==== ===== =====
CASH FLOW INFORMATION
Following is a summary of supplemental cash flow information (in thousands):
Nine months ended September 30 1999 1998
-------- --------
Cash paid for:
Interest $ 77,915 $ 79,261
Taxes 6,328 7,737
Noncash Investing and Financing Activities:
Acquisition of real estate in settlement of loans 3,455 2,294
Loans granted in the sale of other real estate 91 241
COMPREHENSIVE INCOME
The components of comprehensive income, net of related tax, are as follows
(in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
1999 1998 1999 1998
------- ------- ------- -------
Net income $ 9,900 $ 8,008 $27,543 $24,030
Other comprehensive income:
Unrealized gains on securities:
Unrealized holding (losses)
gains arising during the
period (564) 2,824 (7,017) 4,188
Less: reclassification
adjustment for gains
included in net income (270) (203) (832) (784)
------- ------- ------- -------
Other comprehensive income (834) 2,621 (7,849) 3,404
------- ------- ------- -------
Comprehensive income $ 9,066 $10,629 $19,694 $27,434
======= ======= ======= =======
<PAGE>
BUSINESS SEGMENTS
The Corporation operates in one reportable segment: community banking.
The Corporation's community banking subsidiaries offer services traditionally
offered by full-service commercial banks, including commercial and individual
demand and time deposit accounts and commercial, mortgage and individual
installment loans. In addition to traditional banking products, the
Corporation's community banking subsidiaries offer various alternative
products, including securities brokerage and investment advisory services,
mutual funds, insurance and annuities. The following tables provide financial
information for this segment of the Corporation (in thousands). Other items
shown in the tables below represent the parent company, other non-bank
subsidiaries and eliminations, which are necessary for purposes of reconciling
to the consolidated amounts.
At or for the three months Community All
ended September 30, 1999 Banking Other Consolidated
---------- --------- ------------
Interest income $ 60,788 $ 3,382 $ 64,170
Interest expense 25,960 683 26,643
Provision for loan losses 1,460 645 2,105
Non-interest income 8,744 1,812 10,556
Non-interest expense 27,084 3,821 30,905
Intangible amortization 483 12 495
Income tax expense 4,736 (58) 4,678
Net income 9,809 91 9,900
Core operating earnings 9,784 91 9,875
Total assets 3,460,083 80,701 3,540,784
At or for the three months Community All
ended September 30, 1998 Banking Other Consolidated
---------- --------- ------------
Interest income $ 58,075 $ 4,118 $ 62,193
Interest expense 26,655 979 27,634
Provision for loan losses 1,335 642 1,977
Non-interest income 7,066 1,276 8,342
Non-interest expense 24,930 3,737 28,667
Intangible amortization 292 11 303
Income tax expense 3,986 (40) 3,946
Net income 7,943 65 8,008
Core operating earnings * 9,164 325 9,489
Total assets 3,215,447 64,924 3,280,371
At or for the nine months Community All
ended September 30, 1999 Banking Other Consolidated
---------- --------- ------------
Interest income $ 177,222 $ 10,610 $ 187,832
Interest expense 75,575 2,189 77,764
Provision for loan losses 4,761 1,935 6,696
Non-interest income 24,749 4,897 29,646
Non-interest expense 81,297 10,161 91,458
Intangible amortization 1,406 33 1,439
Income tax expense 12,330 248 12,578
Net income 26,602 941 27,543
Core operating earnings * 27,396 941 28,337
Total assets 3,460,083 80,701 3,540,784
<PAGE>
At or for the nine months Community All
ended September 30, 1998 Banking Other Consolidated
---------- --------- ------------
Interest income $ 170,811 $ 12,619 $ 183,430
Interest expense 78,040 2,843 80,883
Provision for loan losses 3,427 1,926 5,353
Non-interest income 19,817 4,240 24,057
Non-interest expense 72,753 11,500 84,253
Intangible amortization 876 33 909
Income tax expense 11,868 191 12,059
Net income 23,664 366 24,030
Core operating earnings * 26,048 1,046 27,094
Total assets 3,215,447 64,924 3,280,371
* Core operating earnings exclude a gain on the sale of a branch of $392,000
and miscellaneous non-recurring costs of $367,000 for the quarter ended
September 30, 1999 and merger related costs of $1.5 million for the quarter
ended September 30, 1998, each on an after-tax basis. For the nine months
ended September 30, 1999, core operating earnings exclude merger related costs
of $819,000, gain on the sale of a branch of $392,000 and miscellaneous
non-recurring costs of $367,000 while core operating earnings for the nine
months ended September 30, 1998 exclude merger costs of $3.1 million, each on
an after-tax basis.
PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
FINANCIAL INFORMATION SUMMARY
Core operating income for the first nine months of 1999 increased to $28.3
million from $27.1 million for the first nine months of 1998. Core operating
income consists of net income adjusted for non-recurring items. Basic core
earnings per share were $1.39 and $1.33 for the nine months ended September 30,
1999 and 1998, respectively, while diluted core earnings per share were $1.34
and $1.28 for those same periods. Non-recurring costs incurred during the
first nine months of 1999 included $819,000 of merger related costs, $392,000
for a gain on the sale of a branch and $367,000 for miscellaneous non-recurring
costs, all net of tax. During the first nine months of 1998, merger related
costs of $3.1 million, net of tax, were incurred. Including these items, net
income was $27.5 million and $24.0 million for the first nine months of 1999
and 1998, respectively, resulting in diluted earnings per share of $1.30 and
$1.13. Highlights for the first nine months of 1999 include:
* A return on average assets of 1.10% and a return on average equity of
13.32%, both based on core operating earnings.
* Net interest income increasing by $7.5 million and was supported by a net
interest margin of 4.77%, as compared to a net interest margin of 4.70%
for the nine months ended September 30, 1998.
* An increase in non-interest income of $5.6 million, including a 25.17%
increase in service charges and a 35.79% increase in trust income.
* A 12.99% increase in average outstanding loans.
* Continued strong asset quality.
<PAGE>
FIRST NINE MONTHS OF 1999 AS COMPARED TO FIRST NINE MONTHS OF 1998:
The following table provides information regarding the average balances and
yields and rates on interest earning assets and interest bearing liabilities
(dollars in thousands):
Nine Months Ended
September 30 1999 1998
-------------------------- -------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
---------- --------- ---- ---------- -------- ----
ASSETS
Interest earning assets:
Interest bearing deposits
with banks $ 4,734 $ 175 4.93% $ 6,562 $ 265 5.38%
Federal funds sold 28,693 1,044 4.80 80,015 3,333 5.49
Securities:
Taxable 459,233 21,083 6.14 527,628 24,465 6.20
Non-taxable (1) 80,229 3,659 6.08 85,580 3,849 6.00
Loans (1) (2) 2,555,662 163,455 8.55 2,261,819 153,032 9.05
---------- -------- ---------- --------
Total interest
earning assets 3,128,551 189,416 8.09 2,961,604 184,944 8.35
---------- -------- ---------- --------
Cash and due from
banks 108,159 97,245
Allowance for loan
losses (33,712) (32,082)
Premises and equipment 97,790 84,929
Other assets 145,451 77,104
---------- ----------
$3,446,239 $3,188,800
========== ==========
LIABILITIES
Interest bearing liabilities:
Deposits:
Interest bearing
demand $ 466,226 $ 6,738 1.93 $ 508,755 $ 8,195 2.15
Savings 803,352 16,142 2.69 622,816 15,113 3.24
Other time 1,163,872 44,276 5.09 1,198,642 49,109 5.48
Short-term borrowings 221,583 7,561 4.56 128,196 4,989 5.20
Long-term debt 60,048 3,047 6.77 73,942 3,477 6.27
---------- -------- ---------- --------
Total interest
bearing liabilities 2,715,081 77,764 3.83 2,532,351 80,883 4.27
---------- -------- ---------- --------
Non-interest bearing
demand deposits 396,133 339,950
Other liabilities 50,660 42,264
---------- ----------
3,161,874 2,914,565
---------- ----------
STOCKHOLDERS' EQUITY 284,365 274,235
---------- ----------
$3,446,239 $3,188,800
========== ==========
Net interest earning
assets $ 413,470 $ 429,253
========== ==========
Net interest income $111,652 $104,061
======== ========
Net interest spread 4.26% 4.08%
==== ====
Net interest margin (3) 4.77% 4.70%
==== ====
(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 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.
(3) Net interest margin is calculated by dividing the difference between
total interest earned and total interest paid by average interest
earning assets.
<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 nine months of 1999, net interest income, on
a fully taxable equivalent basis, totaled $111.7 million, representing a 7.29%
increase over the first nine months of 1998. Net interest income consisted of
interest income of $189.4 million and interest expense of $77.8 million for
the first nine months of 1999 compared to $184.9 million and $80.9 million for
each, respectively, for the first nine months of 1998. Net interest margin
increased to 4.77% at September 30, 1999 from 4.70% at September 30, 1998.
The yield on total interest earning assets declined by 26 basis points and
the rate paid on interest bearing liabilities decreased by 44 basis points.
Strong competitive factors along with changes in Federal Reserve Bank policy
during 1998 have impacted both the yield on interest earning assets and the
rate paid on interest bearing liabilities. As a result of recent interest
rate increases by the Federal Reserve Board, the Corporation has experienced
some margin compression. In the event that the interest rates continue to
increase, there is a possibility that the compression could continue, as
further discussed within the "Liquidity and Interest Rate Sensitivity"
section of this report.
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 nine months ending
September 30, 1999 as compared to the nine months ending September 30, 1998 (in
thousands):
Volume Rate Net
-------- -------- --------
INTEREST INCOME
Interest bearing deposits with banks $ (69) $ (21) $ (90)
Federal funds sold (1,914) (375) (2,289)
Securities:
Taxable (3,111) (271) (3,382)
Non-taxable (172) (18) (190)
Loans 18,135 (7,712) 10,423
------- ------- -------
12,869 (8,397) 4,472
------- ------- -------
INTEREST EXPENSE
Deposits:
Interest bearing demand (655) (802) (1,457)
Savings 2,483 (1,454) 1,029
Other time (1,399) (3,434) (4,833)
Short-term borrowings 3,095 (523) 2,572
Long-term debt (747) 317 (430)
------- ------- -------
2,777 (5,896) (3,119)
------- ------- -------
NET CHANGE $10,092 $(2,501) $ 7,591
======= ======= =======
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 net
size of the rate and volume changes.
Interest income on loans, on a fully taxable equivalent basis, increased
6.81% from $153.0 million for the nine months ended September 30, 1998 to $163.5
million for the nine months ended September 30, 1999. This increase was the
result of an increase in average loans of 12.99% as the average yield declined
by 50 basis points over the same period last year.
<PAGE>
Although interest expense on deposits decreased $5.3 million or 7.26% for
the nine months ended September 30, 1999, compared to the nine months ended
September 30, 1998, average deposits increased 5.97% over the same nine month
period. The average balance in savings deposits increased $180.5 million,
while the average balance in interest bearing demand deposits and time deposits
decreased by $42.5 and $34.8, respectively. The average balance in
non-interest bearing demand deposits increased by $56.2 million. Interest
expense on short-term borrowings increased $2.6 million or 51.55% for these
same periods due to a $93.4 million increase in average short-term borrowings,
which was partially offset by decline in the rate paid of 64 basis points.
The provision for loan losses totaled $6.7 million for the first nine
months of 1999, as compared to $5.4 million for the first nine months of 1998.
The increase in the provision is the result of continued strong loan growth.
Non-interest income increased by 23.23% during the first nine months of
1999 as compared to the first nine months of 1998. Service charges and trust
fees increased $3.4 million over the first nine months of 1998. In addition,
the Corporation's December of 1998 investment in bank owned life insurance
provided $2.3 million of other income for the nine months ended September 30,
1999. Lastly, the Corporation recognized a gain of $603,000 resulting from
the sale of a branch.
Total non-interest expenses increased 9.08% during the first nine months of
1999, compared to the first nine months of 1998. The increase was primarily
attributable to an increase of $5.8 million in salaries and employee benefits.
This increase was due to normal annual salary adjustments and continued
escalation of certain benefit costs. In addition, salaries and benefits have
increased as the Corporation supports the expansion into fee based services and
insurance. Included in non-interest expenses during the first nine months of
1999 was $1.3 million in merger related expenses, as compared to $4.1 million in
the same period during 1998. The 1999 expenses were primarily data processing
termination and conversion costs and change in control provisions while the 1998
expenses were primarily legal and investment banking costs associated with the
structuring and completion of various mergers.
Income tax expense for the nine months ended September 30, 1999 totaled
$12.6 million, providing an effective tax rate of 31.35% compared to 33.41% for
the nine months ended September 30, 1998. The decrease in the effective tax
rate reflects the higher level of tax-free income in 1999 over 1998.
THIRD QUARTER OF 1999 AS COMPARED TO THIRD QUARTER OF 1998:
During the third quarter of 1999, net interest income increased $3.0
million or 8.59% over the third quarter of 1998. Total interest income
increased $2.0 million or 3.18%, primarily the result of an increase in loan
volume. Total interest expense decreased $1.0 million or 3.59% during the
third quarter of 1999, compared to the same period of 1998, mainly due to a
$2.6 million decrease in interest expense on deposits. Over the past twelve
months, the Corporation has emphasized low cost deposit growth.
The provision for loan losses totaled $2.1 million for the third quarter of
1999, as compared to $2.0 million for the third quarter of 1998.
<PAGE>
Non-interest income increased 26.54% during the third quarter of 1999
compared to the same period of 1998, primarily due to a $1.2 million increase in
fee based income and $789,000 of other income provided by the Corporation's
investment in bank owned life insurance. Additionally, the Corporation
recognized a gain of $603,000 resulting from the sale of a branch. Total non-
interest expenses increased 8.39% during the third quarter of 1999, compared to
the third quarter of 1998. This increase is primarily attributable to an
increase of $2.5 million in salaries and employee benefits, associated with
annual merit increases and additional support needed for the Corporation's
expansion into fee based services and insurance.
Income tax expense totaled $4.7 million during the quarter providing an
effective tax rate of 32.09% compared to 33.01% in 1998. The decrease in the
effective tax rate in 1999 reflects the higher level of tax-free income in 1999
over 1998, and higher levels of non-deductible merger related expenses over
those same periods.
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, the Corporation has sufficient
sources of funds available to meet its cash needs.
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 $50.0 million was unused at September
30, 1999. To further meet its liquidity needs, the Corporation and its
banking subsidiaries also have access to the Federal Home Loan Bank and the
Federal Reserve Bank, as well as other uncommitted funding sources.
The financial performance of the Corporation is subject to risk from
interest rate fluctuations. This interest rate risk arises due to differences
between the amount of interest-earning assets and the amount of interest-bearing
liabilities subject to repricing over a specified period, the amount of change
in individual interest rates and the embedded options in all financial
instruments. The principal objective of the Corporation's asset/liability
management activities is to maximize net interest income while maintaining
acceptable levels of interest rate and liquidity risk and facilitating the
funding needs of the Corporation. The Corporation uses an asset/liability model
to quantify the effects of its balance sheet strategies and their associated
risks. Net interest income simulation is the principal tool utilized for these
purposes. Gap analysis is employed as a secondary diagnostic measurement. The
Corporation attempts to mitigate interest rate risk through asset deployment,
asset and liability pricing and matched maturity funding.
If interest rates increase gradually by 300 basis points, net interest
income would decrease by 1.1% or $1.2 million for 1999 as compared to net
interest income if interest rates were unchanged during 1999. Comparatively, a
gradual 300 basis point decrease in interest rates to actual 1998 interest rates
would have decreased net interest income by 0.9% or $1.1 million in 1998. These
low levels of variation are within the Corporation's policy limits. The
simulation analyses assumed that savings and checking interest rates have a low
correlation to changes in market rates of interest and that certain asset
prepayments changed as refinancing incentives evolved. Further, in the event of
a change of such a magnitude in interest rates, actions would be taken to
further mitigate its exposure to the change. However, due to greater
uncertainty of other specific actions that would be taken, the analysis
assumed no change in the Corporation's asset/liability composition.
<PAGE>
The gap analysis which follows is based on the amortization, maturity or
repricing of the Corporation's interest-earning assets and interest-bearing
liabilities. Non-maturity deposits have been allocated to represent their lower
sensitivity to changes in market interest rates than other adjustable rate
instruments. The cumulative gap represents the difference between these assets
and liabilities over a specified time period. Based on the cumulative one year
gap and assuming no change in asset/liability composition, a decrease in
interest rates would be expected to result in slightly lower net interest
income. The gap position is within the Corporation's policy limits.
Following is the gap analysis as of September 30, 1999 (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 $ 5,285 $ 5,285
Federal funds sold 3,247 3,247
Mortgage loans held
for sale 7,664 7,664
Securities:
Available for sale 50,815 $ 128,589 $ 214,408 $ 41,296 435,108
Held to maturity 7,457 13,077 40,295 24,768 85,597
Loans, net of unearned 681,742 539,135 1,173,082 283,413 2,677,372
--------- --------- ---------- ---------- ----------
756,210 680,801 1,427,785 349,477 3,214,273
Other assets 326,511 326,511
--------- --------- ---------- ---------- ----------
$ 756,210 $ 680,801 $1,427,785 $ 675,988 $3,540,784
========= ========= ========== ========== ==========
INTEREST BEARING LIABILITIES
Deposits:
Interest checking $ 97,555 $ 362,224 $ 459,779
Savings 284,327 508,054 792,381
Time deposits 253,248 $ 568,710 $ 344,025 215 1,166,198
Short-term borrowings 266,655 14,467 281,122
Long-term debt 1,109 6,266 92,110 10,304 109,789
--------- --------- ---------- ---------- ----------
902,894 589,443 436,135 880,797 2,809,269
Other liabilities 445,083 445,083
Stockholders' equity 286,432 286,432
--------- --------- ---------- ---------- ----------
$ 902,894 $ 589,443 $ 436,135 $1,612,312 $3,540,784
========= ========= ========== ========== ==========
PERIOD GAP $(146,684) $ 91,358 $ 991,650 $ (936,324)
========= ========= ========== ==========
CUMULATIVE GAP $(146,684) $ (55,326) $ 936,324
========= ========= ==========
CUMULATIVE GAP AS A
PERCENT OF TOTAL ASSETS (4.14)% (1.56)% 26.44%
===== ===== =====
RATE SENSITIVE ASSETS/RATE
SENSITIVE LIABILITIES
(CUMULATIVE) .84 .96 1.49 1.14
===== ===== ===== =====
</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.
<PAGE>
Capital management is a continuous process. Since December 31, 1998,
stockholders' equity has increased $16.5 million as a result of earnings
retention. For the nine months ended September 30, 1999, the return on average
equity, based on core operating earnings, was 13.32%. Core operating earnings
exclude merger related costs of $819,000, gain on the sale of a branch of
$392,000 and other non-recurring costs of $367,000, each net of tax. Total
cash dividends declared represented 40.08% of net income. Book value per
common share was $13.93 at September 30, 1999, compared to $13.71 at December
31, 1998.
LOANS
Following is a summary of loans (dollars in thousands):
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
Real estate:
Residential $1,022,430 $ 994,157
Commercial 710,555 632,304
Construction 105,836 103,672
Installment loans to individuals 305,889 292,418
Commercial, financial and agricultural 354,213 299,081
Lease financing 221,701 132,266
Unearned income (43,252) (31,014)
---------- ----------
$2,677,372 $2,422,884
========== ==========
NON-PERFORMING ASSETS
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, all unpaid interest is reversed. 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):
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
Non-performing assets:
Non-accrual loans $12,199 $12,250
Restructured loans 1,731 1,770
------- -------
Total non-performing loans 13,930 14,020
Other real estate owned 3,584 1,370
------- -------
Total non-performing assets $17,514 $15,390
======= =======
Asset quality ratios:
Non-performing loans as percent of total loans .52% .58%
Non-performing assets as percent of total assets .49% .45%
<PAGE>
Non-performing loans are closely monitored on an ongoing basis as part of
the Corporation's loan review and work-out process. The potential risk of loss
on these loans is evaluated by comparing the loan balance to the fair value of
any underlying collateral or the present value of projected future cash flows.
Losses are recognized where appropriate.
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 and
concentrations of credit risk.
Following is a summary of changes in the allowance for loan losses and
selected ratios (dollars in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1999 1998 1999 1998
------- ------- ------- -------
Balance at beginning of period $34,429 $32,203 $32,308 $31,055
Charge-offs (2,868) (1,724) (6,133) (4,779)
Recoveries 325 221 1,120 1,048
------- ------- ------- -------
Net charge-offs (2,543) (1,503) (5,013) (3,731)
Provision for loan losses 2,105 1,977 6,696 5,353
------- ------- ------- -------
Balance at end of period $33,991 $32,677 $33,991 $32,677
======= ======= ======= =======
Allowance for loan losses to:
Total loans, net of unearned income 1.27% 1.39%
Non-performing loans 244.01% 265.90%
REGULATORY MATTERS
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 September 30, 1999, that the Corporation
and each of its banking subsidiaries are all "well capitalized".
<PAGE>
As of June 30, 1999, the Corporation and each of its banking subsidiaries
have been categorized as "well capitalized" under the regulatory framework for
prompt corrective action. Following are capital ratios as of September 30, 1999
for the Corporation (dollars in thousands):
Well Capitalized Minimum Capital
Actual Requirements Requirements
---------------- ---------------- ----------------
Amount Ratio Amount Ratio Amount Ratio
-------- ----- -------- ----- -------- -----
Total Capital $315,424 12.0% $262,971 10.0% $210,377 8.0%
(to risk-weighted assets)
Tier 1 Capital 270,604 10.3% 157,783 6.0% 105,188 4.0%
(to risk-weighted assets)
Tier 1 Capital 270,604 7.9% 171,304 5.0% 137,044 4.0%
(to average assets)
The Corporation and its banking subsidiaries are subject to various
regulatory capital requirements administered by federal and state banking
agencies. Failure to meet minimum capital requirements can initiate certain
mandatory, and 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.
YEAR 2000 READINESS
The Year 2000 (Y2K) Issue is the result of computer programs being written
using year fields consisting of only two digits rather than four. Computer
programs that have time-sensitive software may recognize "00" as the year 1900
rather than year 2000. If such programs were in use and not corrected, it could
result in system failures and temporary interruptions in the processing of
transactions. The Corporation's core processing systems were written with four
digit year fields.
The Y2K Issue is not only an internal issue but also affects third parties
including customers, counter parties, service providers and vendors. Because
the Y2K Issue poses an unprecedented and profound enterprise wide challenge
for every organization, the Corporation formed a Y2K Committee. The Y2K
Committee developed a Year 2000 Enterprise Wide Project Plan (Y2K Plan),
which addresses both internal and external technology.
In accordance with the Y2K Plan, the Corporation has completed its
inventory and assessment of all internal technologies, including both software
and hardware. Each system was assigned a significance rating as to the degree
of criticality. Formal detailed tests for systems with significance ratings
of a critical nature have been completed. Such systems include core processing
and ancillary systems required to sustain operations.
During the second quarter of 1998, the Corporation made the strategic
decision to convert each of the Florida banking affiliates to a new core
processing system. The decision to convert was based in part on the number of
different systems being utilized by the Florida banking affiliates and the
expiration of the Corporation's primary Florida core processing contract. Each
of the Florida banking affiliates have been converted. The Corporation's
northern banking affiliates will continue to process transactions on their
existing core processing system.
<PAGE>
The Corporation has received written representation from both vendors that
each system is Y2K compliant as well as third party certification of the
vendors' compliance methodology. The Corporation has completed test
verifications of each core system. This testing confirmed the vendor
representations that both core systems are Y2K compliant.
The Corporation has developed a Corporate Business Resumption Contingency
Plan (BRC Plan) which identifies the level of customer service management
desires in the event of a system failure. The BRC Plan is the model for all
financial affiliates use in the development of their specific BRC Plan. The
BRC Plan hasalso identified resources and tools to be used for implementation
along with a method of plan validation, testing, trigger dates for
implementation and training of the personnel who will be exercising the plan.
During July of 1998, the Corporation's consumer finance subsidiary, Regency
Finance Company (Regency), selected a third party vendor to support all of its
future core application requirements. These core applications included loans,
insurance and the Corporation's subordinated note program. Regency's decision
to select a new system was based upon the system's ability to support new
lending products as well as the operating efficiencies resulting from real-time
centralized processing. The vendor has provided a written warranty to Regency
that it is Y2K compliant. The system was tested for Y2K readiness during the
fourth quarter of 1998 and installation was completed on February 28, 1999.
With respect to external technology, the Y2K Plan provides for the
evaluation and assessment of all significant funds takers, including large
borrowing customers and bond issuers, and funds providers, including contingency
lines of credit and deposit accounts. All project plans for funds takers and
providers have been substantially completed with continued monitoring to occur.
An integral part of the Corporation's funds provider project plan includes a
Customer Awareness Program. This program was developed to assure customer
confidence and mitigate reputation and liquidity risk. The program was not only
developed to educate the Corporation's customers, but also its employees in
responding to customer inquiries.
The Y2K Plan includes due diligence procedures as it relates to the
fiduciary responsibilities of the Corporation's investment and trust functions,
including such activities as settlement transactions, remittance of bond
payments and transactions related to mutual funds and other securities. In
performing its fiduciary responsibilities, the Corporation assessed the Y2K
readiness of its safekeeping agents and broker/dealers.
The Corporation's current assessment of cost associated with the completion
of its Y2K Plan is not considered by management to be material to the
Corporation's future operations. The cost of completing the Corporation's Y2K
Plan and the dates on which all procedures will be completed are based on
management's best estimates. These estimates were derived utilizing various
assumptions about future events, including the continued availability of
resources, external technology modification plans and other significant
factors. However, there can be no guarantee that these estimates will be
achieved and actual results could differ materially from those anticipated.
The Corporation believes that modifications to existing systems, conversion
to new systems and vendor compliance upgrades will be resolved on a timely basis
and related costs will not have a material impact on its results of operations
or financial condition.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK.
The information called for by this item is provided under the caption
"Liquidity and Interest Rate Sensitivity" under Item 2 - Management's Discussion
and Analysis of Financial Condition and Results of Operations.
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS
The Corporation and persons to whom the Corporation may have
indemnification obligations, in the normal course of business are
subject to various pending and threatened lawsuits in which claims
for monetary damages are asserted. Management, after consultation
with legal counsel, does not at the present time anticipate the
ultimate aggregate liability, if any arising out of such lawsuits
will have a material adverse effect on the Corporation's financial
position. At the present time, management is not in a position to
determine whether any pending or threatened litigation will have a
material adverse effect on the Corporation's results of operation
in any future reporting period.
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
On January 25, 1999, the Corporation adopted an amendment to its By-laws
providing that no proposal submitted by a shareholder of the Corporation
for consideration at the Annual Meeting of Shareholders will be considered
at any such meeting unless the Secretary of the Corporation has received
written notice of the matter proposed to be presented from the shareholder
on or prior to the date which is 120 days prior to the date on which the
Corporation first mailed its proxy materials for the prior year's Annual
Meeting of Shareholders. Accordingly, any shareholder proposal must be
submitted to the Corporation by November 26, 1999 to be considered at the
2000 Annual Meeting of Shareholders.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27. Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K
A report on Form 8-K, dated July 3, 1999, was filed by the Corporation.
The Form 8-K included Audited Consolidated Financial Statements for the
three years ended December 31, 1998, 1997 and 1996 with Report of
Independent Auditors and Management's Discussion and Analysis giving
effect to the merger of the Corporation and Guaranty Bank & Trust on a
pooling-of-interests basis.
<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: November 4, 1999 /s/Peter Mortensen
__________________________ ________________________________________
Peter Mortensen
Chairman and Chief Executive Officer
(Principal Executive Officer)
Dated: November 4, 1999 /s/John D. Waters
__________________________ __________________________________________
John D. Waters
Vice President and Chief Financial Officer
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 104,568
<INT-BEARING-DEPOSITS> 5,285
<FED-FUNDS-SOLD> 3,247
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 435,108
<INVESTMENTS-CARRYING> 85,597
<INVESTMENTS-MARKET> 84,794
<LOANS> 2,677,372
<ALLOWANCE> 33,991
<TOTAL-ASSETS> 3,540,784
<DEPOSITS> 2,812,645
<SHORT-TERM> 281,122
<LIABILITIES-OTHER> 50,796
<LONG-TERM> 109,789
0
2,169
<COMMON> 40,669
<OTHER-SE> 243,594
<TOTAL-LIABILITIES-AND-EQUITY> 3,540,784
<INTEREST-LOAN> 56,156
<INTEREST-INVEST> 7,838
<INTEREST-OTHER> 176
<INTEREST-TOTAL> 64,170
<INTEREST-DEPOSIT> 21,995
<INTEREST-EXPENSE> 26,643
<INTEREST-INCOME-NET> 37,527
<LOAN-LOSSES> 2,105
<SECURITIES-GAINS> 380
<EXPENSE-OTHER> 31,400
<INCOME-PRETAX> 14,578
<INCOME-PRE-EXTRAORDINARY> 9,900
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,900
<EPS-BASIC> .49
<EPS-DILUTED> .47
<YIELD-ACTUAL> 4.77
<LOANS-NON> 12,199
<LOANS-PAST> 3,211
<LOANS-TROUBLED> 1,731
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 34,429
<CHARGE-OFFS> 2,868
<RECOVERIES> 325
<ALLOWANCE-CLOSE> 33,991
<ALLOWANCE-DOMESTIC> 33,991
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
