<PAGE> 1
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, 1999
-------------------------
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
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Commission file number 0-8144
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F.N.B. CORPORATION
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(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, Pennsylvania 16148
- ---------------------------------------- ---------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 724-981-6000
---------------
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
- --------------------------------------------------------------------------------
(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
----- -----
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 February 29, 2000, 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 $445,473,947.
APPLICABLE ONLY TO CORPORATE REGISTRANTS:
----------------------------------------
As of February 29, 2000, the registrant had outstanding 20,817,673 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
-------- ------------------------------
Annual Report to Stockholders for fiscal year
ended December 31, 1999 I & II
Definitive proxy statement for the 2000 Annual
Meeting of Stockholders to be held on April 17, 2000 III
<PAGE> 3
FORM 10-K
1999
INDEX
<TABLE>
<CAPTION>
PART I PAGE
<S> <C> <C>
Item 1. Business.
General I-2
Statistical Disclosure I-8
Item 2. Properties. I-8
Item 3. Legal Proceedings. I-9
Item 4. Submission of Matters to a Vote of Security Holders. I-9
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 7A. Quantitative and Qualitative Disclosures About Market Risk. 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-4
</TABLE>
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<PAGE> 4
PART I
ITEM 1. BUSINESS
GENERAL
F.N.B. Corporation (the Corporation) was formed in 1974 as a bank
holding company. The Corporation has two reportable business segments: community
banking and insurance agencies. Refer to "Business Segments" on pages 22-23 of
the Annual Report to Shareholders for the year ended December 31, 1999, which is
incorporated herein by reference. As of December 31, 1999, the Corporation owned
and operated nine community banks and one consumer finance company in
Pennsylvania, southwestern Florida, northern and central Tennessee, eastern
Ohio, southwestern Kentucky and western New York. The Corporation also owns two
insurance agencies in northwestern Pennsylvania and southwestern Florida. In
recent years, the Corporation has expanded its market presence in southwest
Florida through affiliations with community banks located primarily between
Naples and Clearwater, Florida. During 1999, the Corporation acquired Guaranty
Bank & Trust Company, headquartered in Venice, Florida, which was merged into an
existing affiliate to form West Coast Guaranty Bank, N.A. The Corporation also
acquired its two insurance agencies: Gelvin, Jackson & Starr, Inc, located in
northwestern Pennsylvania, and Roger Bouchard Insurance, Inc., located in
Clearwater, Florida. The Corporation's consumer finance subsidiary expanded its
size and geographic scope during 1999 through the purchase of 11 consumer
finance offices in Tennessee and Kentucky. On February 23, 2000, the Corporation
completed its affiliation with L.J. Kuder, Inc., an independent insurance agency
located in Greenville, Pennsylvania.
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.
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 certain 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 legal, loan review, accounting,
investment, audit, loan operations 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 strict credit approval standards (which include independent analysis
of realizable collateral value), diversifying its loan portfolio by industry and
borrower 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 businesses within its market areas. The Corporation
does not have a significant amount of construction loans and has no highly
leveraged transaction loans.
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No material portion of the deposits of the Corporation's bank
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. The
majority of the deposits held by the Corporation's bank subsidiaries have been
generated within the respective subsidiary's market area.
Following is information as of December 31, 1999 for the Corporation's
community bank and consumer finance subsidiaries (including the year established
and location of principal office for each). All subsidiaries are wholly-owned by
the Corporation (dollars in thousands).
<TABLE>
<CAPTION>
NUMBER
TOTAL TOTAL OF
COMMUNITY BANK SUBSIDIARIES: ASSETS DEPOSITS OFFICES
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<S> <C> <C> <C>
First National Bank of Pennsylvania (Est. 1864)
Hermitage, Pennsylvania................................... $1,326,954 $1,108,847 35
First National Bank of Naples (Est. 1988)
Naples, Florida........................................... 763,509 551,655 8
Cape Coral National Bank (Est. 1994)
Cape Coral, Florida....................................... 342,991 303,044 5
First National Bank of Florida (Est. 1997)
Clearwater, Florida....................................... 337,860 258,758 11
West Coast Guaranty Bank, N.A. (Est. 1999)
Sarasota, Florida......................................... 269,641 209,751 7
Metropolitan National Bank (Est. 1922)
Youngstown, Ohio.......................................... 250,015 213,858 8
Reeves Bank (Est. 1868)
Beaver Falls, Pennsylvania................................ 160,088 145,819 8
First National Bank of Fort Myers (Est. 1989)
Fort Myers, Florida....................................... 92,341 82,684 2
First County Bank, N.A. (Est. 1987)
Chardon, Ohio............................................. 62,652 56,954 3
---------- ---------- --
$3,606,051 $2,931,370 87
========== ========== ==
CONSUMER FINANCE SUBSIDIARY:
Regency Finance Company (Est. 1927)
Hermitage, Pennsylvania........................ .......... $ 88,154 44
========== ==
</TABLE>
The Corporation's insurance agencies, Gelvin, Jackson & Starr, Inc.
(GJS) and Roger Bouchard Insurance, Inc. (RBI), have five offices and one
office, respectively. GJS is a wholly owned subsidiary of First National Bank of
Pennsylvania and RBI is a wholly owned subsidiary of First National Bank of
Florida.
The Corporation has five other subsidiaries, Penn-Ohio Life Insurance
Company, Est. 1981 (Penn-Ohio), F.N.B. Investment Corporation, Est. 1997 (F.N.B.
Investment) Customer Service Center of F.N.B., L.L.C., Est. 1996 (Customer
Service), 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. F.N.B. Investment holds equity securities and other
assets for the holding company. Customer Service provides data processing and
other services to the affiliates of the Corporation. Mortgage Service services
mortgage loans for unaffiliated financial institutions and F.N.B. Building owns
real estate that is leased to certain affiliates.
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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 and commercial, mortgage and individual
installment loans. In addition to traditional banking products, the
Corporation's bank subsidiaries offer various alternative investment products,
including mutual funds and annuities.
In addition, First National Trust Company, a subsidiary of First
National Bank of Pennsylvania, is a national trust company formed in January
1999, which provides a broad range of personal and corporate fiduciary services,
including the administration of decedent and trust estates. The Corporation's
banking affiliates, First National Bank of Florida and West Coast Guaranty Bank,
N.A., also operate full-service trust departments. As of December 31, 1999, the
market value of corporate-wide trust assets under management totaled $648.3
million.
OPERATIONS OF THE INSURANCE AGENCIES
The Corporation's insurance agencies are full-service insurance
companies offering all lines of commercial and personal insurance through major
carriers.
OPERATIONS OF THE CONSUMER FINANCE SUBSIDIARY
The Corporation's consumer finance subsidiary, Regency Finance Company
(Regency), is involved principally in making personal installment loans to
individuals and purchasing installment sales finance contracts from retail
merchants. Such activity is primarily funded through the sale of the
Corporation's subordinated notes at Regency's branch offices.
MARKET AREA AND COMPETITION
The Corporation, through its subsidiaries, currently operates 139
offices in Pennsylvania, southwestern Florida, northern and central Tennessee,
eastern Ohio, southwestern Kentucky and western New York. The economies of the
primary market areas in which the Corporation's Pennsylvania and Ohio
subsidiaries operate 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 Florida
subsidiaries operate in a four county area represented by high growth and median
family income levels. The industries served in this market include a diversified
mix of tourism, construction, services, light manufacturing, distribution and
agriculture. The market extends north to Tampa and south through Naples and is
served by Interstate 75 and U.S. Highway 41.
The Corporation's subsidiaries compete with a large number of other
financial institutions, such as commercial banks, savings banks, savings and
loan associations, credit life insurance companies, mortgage banking 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, insurance
agencies, brokerage houses and similar institutions currently provide many of
the financial services offered by the Corporation's subsidiaries.
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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.
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, Florida, Ohio and in other neighboring states. (See "Regulation
and Supervision.")
EMPLOYEES
As of February 29, 2000, the Corporation and its subsidiaries had 1,514
full-time and 407 part-time employees. Management of the Corporation considers
its relationship with its employees to be satisfactory.
MERGERS, ACQUISITIONS AND DIVESTITURE
See "Mergers, Acquisitions and Divestiture" footnote in the Notes to
Consolidated Financial Statements, which is incorporated by reference to the
Corporation's Annual Report to Stockholders.
REGULATION AND SUPERVISION
Bank holding companies, banks and consumer finance companies are
extensively regulated under both federal and state law. The following summary
information describes statutory or regulatory provisions. It is qualified 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 (FRB). As a bank holding company, the Corporation is
required to file with the FRB an annual report and such additional information
as the FRB may require pursuant to the BHCA. The FRB may also make examinations
of the Corporation.
The BHCA requires the prior approval of the FRB 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. The Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994 authorizes the FRB 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.
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In approving acquisitions by bank holding companies of banks, the FRB
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 effects, such as undue
concentration of resources, decreased or unfair competition, conflicts of
interest or unsound banking practices. The FRB is also empowered to
differentiate between new activities and activities commenced through
acquisition of a going concern.
Bank holding companies and their subsidiary banks are also subject to
the provisions of the Community Reinvestment Act of 1977 (CRA). Under the terms
of the CRA, the FRB (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 FRB 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.
The Gramm Leach-Bliley Act of 1999 (the Act) was enacted on November 12,
1999. The Act permits the creation of new financial services holding companies
that can offer a full range of financial and banking products and services. The
Act eliminates legal barriers which previously prevented affiliations among
banks and bank holding companies with securities firms, insurance companies and
other financial services companies. The Corporation is qualified under the Act
as a "Financial Holding Company" and can expand into a wide variety of products
and services that are financial in nature, provided that its depository
institution subsidiaries are well managed, well capitalized and have received a
"Satisfactory" rating on their last Community Reinvestment Act Examinations.
The Act preserves the role of the Federal Reserve Board as the umbrella
supervisor for holding companies while at the same time incorporating a system
of functional regulation designed to assure that various financial activities
will be overseen by the appropriate state or federal regulator with the
corresponding regulatory experience and expertise. Banking related activities
will be supervised by the banking regulators, securities activities will be
regulated by the Securities and Exchange Commission and state regulators, and
insurance activities by the state insurance regulators.
BANKS
The Corporation's bank subsidiaries are supervised and regularly
examined (including off-site monitoring) by the Office of the Comptroller of
Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), the FRB, and
the Pennsylvania Department of Banking. The various laws and regulations
administered by these regulatory agencies affect corporate practices, such as
payment of dividends, incurring debt, acquisition of financial institutions and
other companies, and affect business practices and operations, such as payment
of interest on deposits, the charging of interest on loans, types of business
conducted and location of offices.
I-6
<PAGE> 9
The Act permits the establishment of financial subsidiaries that may engage
in a full array of financial services. The Act creates a mechanism for
coordination between the Federal Reserve Board and the Secretary of Treasury
regarding the approval of new financial activities that may be engaged in by
financial subsidiaries. Also, the Act repeals the blanket exemption that banks
had from the definition of "broker" and "dealer" under the Securities Exchange
Act and replaces it with a set of limited exemptions that allow the continuation
of some traditional banking related transactions performed by banks. Further,
the bank exclusion under the Securities Exchange Act from the definition of
"investment advisor" was also eliminated under the Act.
The Act identifies the following as permissible financial activities for
holding companies (and financial subsidiaries of banks) and permits the Federal
Reserve Board in consultation with the Secretary of the Treasury to expand such
permitted financial activities if it is determined that the activity is
financial in nature or incidental thereto or otherwise complimentary to a
permitted financial activity and does not pose safety and soundness risks: (i)
lending, investing or safeguarding money or securities; (ii) underwriting
insurance or annuities or acting as an insurance or annuity principal, agent or
broker; (iii) providing financial or investment advice; (iv) issuing or selling
interest in pools of assets (e.g. securitizations) that a bank may hold; (v)
underwriting, dealing in or making markets in securities; (vi) engaging in
activities that the Federal Reserve Board has determined to be closely related
to banking; (vii) engage in activities permitted for bank holding companies
operating outside of the United States; (viii) merchant banking; or (ix)
insurance portfolio investing.
CONSUMER FINANCE SUBSIDIARY
The Corporation's consumer finance subsidiary is subject to regulation
under Pennsylvania, Tennessee, Ohio, Kentucky 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 Tennessee Department of Financial
Institutions, the Ohio Division of Consumer Finance, the Commonwealth of
Kentucky Department of Financial Institutions 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 compliance with such laws
and regulations. Such examinations include a review of loans and the collateral
thereof, 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.
INSURANCE AGENCIES
The Corporation's insurance agencies are subject to licensing
requirements and extensive regulation under the laws of the United States and
its various states. These laws and regulations are primarily for the benefit of
clients. In all jurisdictions, the applicable laws and regulations are subject
to amendment or interpretation by regulatory authorities. Generally, such
authorities are vested with relatively broad discretion to grant, renew and
revoke licenses and approvals, and to implement regulations. Licenses may be
denied or revoked for various reasons, including the violation of such
regulations, conviction of crimes and the like. Possible sanctions which may be
imposed for violation of regulations include the suspension of individual
employees, limitations on engaging in a particular business for a specified
period of time, revocation of licenses, censures and fines.
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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.
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 FRB 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. FRB monetary policies have had a significant effect
on the operating results of all financial institutions in the past and may
continue to do so in the future.
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
ITEM 2. PROPERTIES
The Corporation operates a six-story building in Hermitage, Pennsylvania
which serves as its northern executive offices and shares this facility with its
lead banking affiliate, First National Bank of Pennsylvania. The Corporation
also owns an eight-story building in Naples, Florida, which serves as its
Florida executive and administrative offices and shares this facility with First
National Bank of Naples.
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The banking and consumer finance subsidiaries' branch offices are
located in 23 counties in Pennsylvania, 4 counties in southwestern Florida, 10
counties in northern and central Tennessee, 6 counties in eastern Ohio, 1 county
in southwestern Kentucky and 1 county in western New York. At December 31, 1999,
the Corporation's subsidiaries owned 59 of the Corporation's 137 offices and
leased the remaining 78 offices under operating leases expiring at various dates
through the year 2020. For additional information regarding the lease
commitments, see the Premises and Equipment footnote in the Annual Report to
Shareholders.
ITEM 3. 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 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 1999.
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PART II
Information relating to Items 5, 6, 7 and 8 is provided in the
Corporation's 1999 Annual Report to Stockholders under the captions and on the
pages indicated below, and is incorporated herein by reference:
<TABLE>
<CAPTION>
PAGES IN 1999
ANNUAL REPORT
CAPTION IN 1999 ANNUAL REPORT TO STOCKHOLDERS TO STOCKHOLDERS
<S> <C>
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS 42
ITEM 6. SELECTED FINANCIAL DATA 28
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 30-41
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK 33-35
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 1-27,29
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
</TABLE>
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information relating to this item, except for Kevin C. Hale, 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 17, 2000. Such information is incorporated herein by reference. Kevin
C. Hale is Executive Vice President - Chief Operating Officer, Florida Division
of F.N.B. Corporation. Previously, he was Senior Executive Vice President, Sun
Trust Bank of South Florida (1999-2000) and President and Chief Operating
Officer of Sun Trust Bank of Southwest Florida (1994-1999).
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 17, 2000.
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 17, 2000.
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 17, 2000.
Such information is incorporated herein by reference.
III-1
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS
The following consolidated financial statements of F.N.B. Corporation
and subsidiaries and report of independent auditors, included in the
Corporation's 1999 Annual Report to Stockholders, are incorporated
herein by reference:
PAGES IN 1999
ANNUAL REPORT
TO STOCKHOLDERS
Consolidated Balance Sheet 1
Consolidated Income Statement 2
Consolidated Statement of Stockholders' Equity 3
Consolidated Statement of Cash Flows 4
Notes to Consolidated Financial Statements 5 - 27
Report of Independent Auditors 27
Quarterly Earnings Summary 29
(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-5
and are incorporated by reference.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the fourth quarter of 1999.
IV-1
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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 Chief
Executive Officer
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, Chief Executive March 13, 2000
- ---------------------------------- Officer and Director
Peter Mortensen (Principal Executive Officer)
/s/ Stephen J. Gurgovits Vice Chairman and Director March 13, 2000
- ----------------------------------
Stephen J. Gurgovits
/s/ Gary L. Tice President, Chief Operating March 13, 2000
- ---------------------------------- Officer and Director
Gary L. Tice
/s/ William J. Rundorff Executive Vice President March 13, 2000
- ----------------------------------
William J. Rundorff
/s/ John D. Waters Vice President and Chief March 13, 2000
- ---------------------------------- Financial Officer (Principal
John D. Waters Financial and Accounting
Officer)
Director
- ----------------------------------
W. Richard Blackwood
Director
- ----------------------------------
Alan C. Bomstein
/s/ William B. Campbell Director March 13, 2000
- ----------------------------------
William B. Campbell
/s/ Charles T. Cricks Director March 13, 2000
- ----------------------------------
Charles T. Cricks
</TABLE>
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<TABLE>
<S> <C> <C>
/s/ Henry M. Ekker Director March 13, 2000
- ----------------------------------
Henry M. Ekker
Director
- ----------------------------------
James S. Lindsay
/s/ Paul P. Lynch Director March 13, 2000
- ----------------------------------
Paul P. Lynch
Director
- ----------------------------------
Edward J. Mace
/s/ Robert S. Moss Director March 13, 2000
- ----------------------------------
Robert S. Moss
Director
- ----------------------------------
Richard C. Myers
Director
- ----------------------------------
William A. Quinn
Director
- ----------------------------------
George A. Seeds
/s/ William J. Strimbu Director March 13, 2000
- ----------------------------------
William J. Strimbu
/s/ Archie O. Wallace Director March 13, 2000
- ----------------------------------
Archie O. Wallace
/s/ James T. Weller Director March 13, 2000
- ----------------------------------
James T. Weller
/s/ Eric J. Werner Director March 13, 2000
- ----------------------------------
Eric J. Werner
/s/ R. Benjamin Wiley Director March 13, 2000
- ----------------------------------
R. Benjamin Wiley
/s/ Donna C. Winner Director March 13, 2000
- ----------------------------------
Donna C. Winner
</TABLE>
IV-3
<PAGE> 17
INDEX TO EXHIBITS
The following exhibits are filed or incorporated by reference as part of
this report:
3.1. Restated 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, 1996).
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 Restated Articles of Incorporation and By-laws. The Restated
Articles of Incorporation are incorporated by reference to Exhibit 3.1.
of the registrant's Form 10-K for the year ended December 31, 1996. 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. Revised and Restated Amendment No. 2 to Employment Agreement between
F.N.B. Corporation and Peter Mortensen. (incorporated by reference to
Exhibit 10.5. of the Corporation's Form 10-Q for the quarter ended
September 30, 1996). Continuation of Employment Agreement.
(incorporated by reference to Exhibit 10.4. of the Corporation's Annual
Report on Form 10-K for the year ended December 31, 1998).
10.5. Employment Agreement between F.N.B. Corporation and Stephen J.
Gurgovits. (incorporated by reference to Exhibit 10.5. of the
Corporation's Annual Report on Form 10-K for the year ended December
31, 1998).
IV-4
<PAGE> 18
10.6. 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.
(incorporated by reference to Exhibit 10.8. of the Corporation's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995).
10.7. 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).
10.8. F.N.B. Corporation 1990 Stock Option Plan as amended effective February
2, 1996. (incorporated by reference to Exhibit 10.10. of the
Corporation's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995).
10.9. 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).
10.10. Employment Agreement between F.N.B. Corporation and John D. Waters.
(incorporated by reference to Exhibit 10.13. of the Corporation's
Annual Report on Form 10-K for the fiscal year ended December 31,
1995).
10.11. F.N.B. Corporation Restricted Stock and Incentive Bonus Plan.
(incorporated by reference to Exhibit 10.13. of the Corporation's
Annual Report on Form 10-K for the fiscal year ended December 31,
1995).
10.12. F.N.B. Corporation 1996 Stock Option Plan. (incorporated by reference
to Exhibit 10.13. of the Corporation's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995).
10.13. F.N.B. Corporation Director's Compensation Plan. (incorporated by
reference to Exhibit 10.13. of the Corporation's Annual Report on Form
10-K for the fiscal year ended December 31, 1995).
10.14. F.N.B. Corporation 1998 Director's Stock Option Plan. (incorporated by
reference to Exhibit 10.14. of the Corporation's Annual Report on Form
10-K for the year ended December 31, 1998).
10.15. Employment Agreement between F.N.B. Corporation and Gary L. Tice.
(incorporated by reference to Exhibit 10.1. of the Corporation's Form
10-Q for the quarter ended June 30, 1999).
13 Annual Report to Stockholders. (filed herewith).
21 Subsidiaries of the Registrant. (filed herewith).
23.1 Consent of Ernst & Young LLP, Independent Auditors. (filed herewith).
23.2 Consent of Hacker, Johnson, Cohen & Grieb PA, Independent Auditors.
(filed herewith).
23.3 Consent of Bobbitt, Pittenger & Company, Independent Auditors. (filed
herewith).
27 Financial Data Schedule. (filed herewith).
IV-5
<PAGE> 19
99.1 Report of Independent Auditors, Hacker, Johnson, Cohen & Grieb PA for
the 1997 Audits of Seminole Bank. (filed herewith).
99.2 Report of Independent Auditors, Hacker, Johnson, Cohen & Grieb PA for
the 1997 Audit of Citizens Holding Corporation and Subsidiaries. (filed
herewith).
99.3 Report of Independent Auditors, Bobbitt, Pittenger & Company for the
1998 and 1997 Audits of Guaranty Bank & Trust Company. (filed
herewith).
IV-6
<PAGE> 1
EXHIBIT 13
[COVER]
[LOGO] F.N.B.
CORPORATION
........................................................................
1999 ANNUAL REPORT
o NET INCOME INCREASED 19% TO $39 MILLION
o TOTAL ASSETS GREW TO $3.7 BILLION
o F.N.B. CORPORATION IS A GROWTH COMPANY
o NOW IN BANKING, SECURITIES, INSURANCE AND TRUST
<PAGE> 2
F.N.B. CORPORATION AND SUBSIDIARIES
HIGHLIGHTS OF 1999
Dollars in thousands, except per share data
<TABLE>
<CAPTION>
1999 1998 Change
---- ---- ------
FOR THE YEAR*
<S> <C> <C> <C>
Core Operating Earnings $40,563 $37,364 +9%
Return on Average Assets 1.16% 1.16% n.c.
Return on Average Equity 14.18% 13.50% +5%
Net Income $39,295 $33,021 +19%
Return on Average Assets 1.13% 1.02% +11%
Return on Average Equity 13.74% 11.93% +15%
PER COMMON SHARE*
Core Operating Earnings
Basic $1.93 $1.78 +8%
Diluted 1.86 1.70 +9%
Earnings
Basic $1.87 $1.57 +19%
Diluted 1.80 1.51 +19%
Book Value $13.65 $13.30 +3%
AT YEAR END
Assets $3,706,184 $3,406,677 +9%
Net Loans 2,767,463 2,390,576 +16%
Deposits 2,909,434 2,850,428 +2%
</TABLE>
TOTAL ASSETS
(Dollars in billions)
[GRAPH]
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
2.6 2.8 3.1 3.4 3.7
CORE OPERATING EARNINGS
(Dollars in millions)
[GRAPH]
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
25.8 27.5 33.8 37.4 40.6
* CORE OPERATING EARNINGS EXCLUDES MERGER RELATED AND OTHER NON-RECURRING COSTS
OF $1.3 MILLION IN 1999 AND MERGER RELATED AND OTHER NON-RECURRING COSTS OF
$4.3 MILLION IN 1998, ALL ON AN AFTER-TAX BASIS.
CONTENTS
1 CONSOLIDATED FINANCIAL HIGHLIGHTS
2 CHAIRMAN'S LETTER
4 AFFILIATE PROFILES
5 MARKET AREAS
6 FINANCIAL SERVICES
9 NOTEWORTHY EVENTS
12 BOARD LEADERSHIP
13 OFFICERS AND DIRECTORS
16 SHAREHOLDER INFORMATION
F.N.B. CORPORATION 1
<PAGE> 3
F.N.B. CORPORATION AND AFFILIATES
To Our Shareholders and Friends
Good news travels fast. In this cyberspace age of seemingly instantaneous
digital information access, most of you are aware by now that the Corporation
had its strongest year ever in 1999. A growth company, F.N.B. proudly concluded
the 20th century with a record of significant accomplishment--the envy of many
peer companies.
The 1999 numbers offer a snapshot of success.
* 19% INCREASE IN NET INCOME TO $39 MILLION
* 19% INCREASE IN NET INCOME PER SHARE TO $1.80
* 5% ANNUAL STOCK DIVIDEND AND $0.71 CASH DIVIDEND
* 14.18% RETURN ON EQUITY
* 9% INCREASE IN TOTAL ASSETS TO $3.7 BILLION
* 1.16% RETURN ON ASSETS
* 137 OFFICES IN SIX STATES
Now let's take a closer look at the big picture. During 1999 F.N.B. Corporation
took several steps to position itself for continued profitable growth well into
the new century. The company brought another key Florida bank into the fold,
strategically entered the insurance field in Pennsylvania and Florida, opened a
national trust company, expanded its consumer finance company and introduced a
Dividend Reinvestment and Direct Stock Purchase Plan for shareholders and
potential investors.
All of these strategic initiatives are expected to have a lasting and positive
impact on the Corporation's primary goal of increasing its rate of earnings
growth. (Additional details regarding these NOTEWORTHY EVENTS may be found on
Pages 9-11 of this Report.)
[PHOTO]
PETER MORTENSEN
Chairman of the Board
Long-term investors will judge F.N.B. by its ability to manage and react to
change. With the dynamic moves in 1999, the Corporation is transforming itself
from a multi-bank holding company into a diversified financial services company.
Going forward, management is committed to building a company that never loses
sight of its No. 1 obligation--the creation of value for shareholders.
However, on Wall Street many 1999 bull market investors chose to overlook this
solid growth company. F.N.B. has consistently posted record earnings, prudently
managed its capital, maintained its superior asset quality and continuously
rewarded shareholders with generous cash and stock dividends.
Looking ahead, the key to future success at F.N.B. lies in its past performance
and present practice. Affiliates always will strive to differentiate themselves
from their competitors by providing unequaled professional and personal service,
while offering a broad range of quality financial services specifically
developed and designed to exceed customer expectations.
F.N.B. CORPORATION 2
<PAGE> 4
Traditional community banking will continue to drive F.N.B. profits. However,
the marketing of additional financial products and services--securities,
insurance and trust--to new and existing customers will become a significant
contributor to future revenue generation. The bottom line to investors: A
sustainable increase in the rate of earnings growth.
Before closing, a few words about the 1999 Annual Report. While its
green-and-gold appearance has not changed much from last year, the evolutionary
story of F.N.B. Corporation continues to unfold. The first of two articles
focuses on financial modernization and the transition from a traditional
multi-bank holding company to a diversified and growing financial services
Corporation. The second highlights noteworthy events of 1999, offering overviews
on the new and exciting affiliations consummated during the year. Following
these articles is an essay on Board Leadership, including photographs of your 21
elected Directors.
Two long-time Directors, Thomas W. Hodge and Joseph M. Walton, were recognized
at the Annual Meeting of Shareholders in April upon their retirement from the
Board. All of us at F.N.B. express our sincere appreciation for their dedicated
years of service.
In closing, on behalf of our Directors, management team and employees, thank you
for your continued investment in and support of F.N.B. Corporation. Our
collective future holds great promise.
Sincerely,
/s/ PETER MORTENSEN
-------------------------------
PETER MORTENSEN
Chairman of the Board
March 2, 2000
"F.N.B. has consistently posted record earnings, prudently managed its capital,
maintained its superior asset quality and continuously rewarded shareholders
with generous cash and stock dividends."
[PHOTO]
THE F.N.B. ADMINISTRATIVE COMMITTEE
(FROM LEFT) GARY L. TICE, PRESIDENT AND CHIEF OPERATING OFFICER; WILLIAM J.
RUNDORFF, EXECUTIVE VICE PRESIDENT; PETER MORTENSEN, CHAIRMAN OF THE BOARD; JOHN
D. WATERS, VICE PRESIDENT AND CHIEF FINANCIAL OFFICER; AND STEPHEN J. GURGOVITS,
VICE CHAIRMAN OF THE BOARD.
F.N.B. CORPORATION 3
<PAGE> 5
AFFILIATE PROFILES
BANKING
FIRST NATIONAL BANK OF PENNSYLVANIA
* Total assets of $1.3 billion
* 35 offices in seven counties of north western Pennsylvania
FIRST NATIONAL BANK OF NAPLES
* Total assets of $764 million
* Nine offices in Collier and Lee counties, Florida
CORAL CAPE NATIONAL BANK
* Total assets of $343 illion
* Five offices in Lee County, Florida
FIRST NATIONAL BANK OF FLORIDA
* Total assets of $337 million
* 11 offices in the Clearwater area
WEST COAST GUARANTY BANK
* Total assets of $270 million
* Seven offices in Sarasota County, Florida
METROPOLITAN NATIONAL BANK
* Total assets of $250 million
* Eight offices in eastern Ohio
REEVES BANK
* Total assets of $160 million
* Eight offices in western Pennsylvania
FIRST NATIONAL BANK OF FORT MYERS
* Total assets of $92 million
* Two offices in Lee County, Florida
FIRST COUNTY BANK
* Total assets of $63 million
* Three offices in northeastern Ohio
INSURANCE
* Roger Bouchard Insurance Inc.
(Clearwater, Florida)
* Gelvin, Jackson & Starr, Inc.
(Meadville, Pennsylvania)
* L. J. Kuder, Inc.
(Greenville, Pennsylvania)
* Penn-Ohio Life Insurance Company
(Hermitage, Pennsylvania)
TRUST
* First National Trust Company
(Hermitage and Erie, Pennsylvania;
Naples, Florida)
* First National Bank of Florida
(Clearwater, Florida)
* West Coast Guaranty Bank
(Sarasota, Florida)
CONSUMER FINANCE
* Regency Finance Company
(Pennsylvania, Ohio, New York,
Tennessee and Kentucky)
F.N.B. CORPORATION 4
<PAGE> 6
F.N.B. CORPORATION AND AFFILIATES
MARKET AREAS
[MAPS]
THE CORPORATION'S MISSION
F.N.B. Corporation is a growth company. We are an affiliation of successful
community banks and financial services companies seeking to provide high quality
financial services to individual and business customers in a manner that is
consistent with our philosophy of personal banking and our commitment to
maximizing shareholder value. To achieve this commitment we will attract and
retain a professional staff that is dedicated to exceptional customer
satisfaction and superior financial performance.
F.N.B. CORPORATION 5
<PAGE> 7
Financial Services
MODERNIZATION ACT PAVES THE WAY FOR ONE-STOP SHOPPING
FOR BANKING, SECURITIES, INSURANCE, TRUST SERVICES
In November the U.S. Congress passed and the President signed into law the most
wide-sweeping banking reform legislation in more than 60 years. Under terms of
The Financial Modernization Act of 1999, bank holding companies, including
F.N.B. Corporation, were given broad new powers to affiliate with any other
financial services companies (including insurance companies or securities
firms).
F.N.B. Corporation took several strategic steps during 1999 to position its
community banking affiliates to take advantage of Financial Modernization. It
affiliated with another successful Florida bank, purchased high-performing
insurance agencies in Pennsylvania and Florida, formed First National Trust
Company, expanded its consumer lending company into Tennessee and Kentucky and
began offering investment services and internet banking to customers. (For
additional information, see Noteworthy Events on Pages 9-11.)
F.N.B. envisions the day when customers will be able to one-stop shop at local
financial services centers for an increasing array of products. Customers
visiting a center in the 21st century will be able to make a deposit, secure a
loan, purchase or sell common stock, buy homeowner's insurance, revise a trust
agreement and sit down with their personal financial planner.
Community Banking
There is no doubt that technology will have an ever-increasing impact on the way
banks and their customers conduct business. During the year, several F.N.B.
affiliate banks began hosting informational sites on the world wide web.
Customers will soon be able to access account data securely, pay bills, apply
for loans and transfer funds--all via the internet using a personal computer.
For example, Metropolitan National Bank in Youngstown, Ohio, keeps more than
1,100 subscribing customers up to date on Bank marketing activities through
weekly internet bulletins. The service is interactive, so customers can respond
to the latest product offerings or comment on their relationship with the Bank.
Going forward, the more some things change, the more F.N.B. affiliate banks will
remain the same. On the internet, at the branch, over the phone and through the
mail, providing customers with the highest level of personal service is what
distinguishes F.N.B. community banks with its loyal customers.
[PHOTO]
MARKETING OFFICER IRENE HUCUL AND SENIOR VICE PRESIDENT LLOYD LAMM USE THE
INTERNET TO COMMUNICATE WITH 1,100 METROPOLITAN NATIONAL BANK CUSTOMERS.
F.N.B. CORPORATION 6
<PAGE> 8
[PHOTO]
SENIOR VICE PRESIDENT DARRELL WARD (RIGHT) DISCUSSES INVESTMENT OPPORTUNITIES
WITH FIRST NATIONAL BANK OF NAPLES CUSTOMERS MICHELE AND GREGORY WARDEBERG.
INVESTMENT SECURITIES
Formation of First National Trust Company is only one way in which F.N.B.
Corporation is working to meet the investment management needs of traditional
community banking customers while adding valuable non-interest income to the
Corporation's bottom line.
During the year several affiliate banks began offering mutual funds and
annuities to customers through banking offices. Once again, F.N.B. was
responding to customers who expressed a desire to conveniently conduct their
investment activities within the safe and secure environment of the bank, yet
receive the same high level of personal service they were accustomed to as
banking customers.
Teaming with investment product experts, F.N.B. affiliate banks now offer a wide
range of investment services to personal, small business and commercial
customers.
INSURANCE SERVICES
Anticipating the coming age of financial modernization, F.N.B. seized the
initiative during 1999 by acquiring three highly regarded and profitable
insurance agencies, two in northwestern Pennsylvania and one on the west coast
of Florida (additional information on these transactions is available on Pages
9-11).
Initially, the company's nine affiliate banks and the three insurance agencies
plan to cross-market services to each other's customers.
In the future, personal or business customers will be able to receive all their
financial services at one convenient location or from their home or office via
the internet. Both banking and insurance customers will be offered a full menu
of quality products and services from a staff of knowledgeable, professional
personal bankers.
F.N.B. CORPORATION 7
<PAGE> 9
FIRST NATIONAL TRUST COMPANY
Responding to the ever-increasing asset management needs of banking customers,
early in 1999 F.N.B. Corporation formally introduced First National Trust
Company with offices in Naples, Florida and Hermitage and Erie, Pennsylvania.
The new Company's goal is to provide superior personalized service to a growing
group of customers within the communities served by F.N.B. banking affiliates.
Utilizing a dedicated staff of experienced trust professionals, the Trust
Company offers customers a full menu of services, including investment
counseling, trust and investment management, estate planning and administration
and employee benefits, including 401(k) and IRA rollover services.
As working members of the baby-boomer generation continue to accumulate wealth
on their way to more leisurely retirement years, First National Trust Company
will respond to their growing asset management needs--both now and during their
retirement years.
F.N.B. has put together a seasoned management team of banking executives sharing
more than 150 years of trust experience to ensure that their special clients
receive the very finest in personal customer service.
[PHOTO]
FROM LEFT, ROBERT BUGBEE, COLIN APPLETON AND JAMES GOEHLER COMPRISE THE
EXECUTIVE MANAGEMENT TEAM AT FIRST NATIONAL TRUST COMPANY.
CONSUMER FINANCE
Regency Finance Company is recognized nationally as a premier lender in the
consumer finance field. With $125 million in gross assets managed through 44
offices in five states, Regency is F.N.B.'s top-performing affiliate with an
annual return on assets of 2.6 percent and a return on equity of 28 percent.
The success of Regency is due in part to the small-town environment in which
most offices are located. Regency lenders provide credit services to meet the
various needs of those customers.
Regency strives to have a positive, performance-oriented culture in each office,
using behind-the-scenes technology to control costs and enhance value for its
customers. The expansion of Regency into Tennessee and Kentucky positions it for
future growth in a highly profitable segment of the personal finance business.
F.N.B. CORPORATION 8
<PAGE> 10
NOTEWORTHY EVENTS
AFFILIATION OF COMMUNITY BANKS GROWING
INTO A DIVERSIFIED FINANCIAL SERVICES COMPANY
BOUCHARD AGENCY AFFILIATION MARKS
ENTRY INTO FLORIDA INSURANCE MARKET
IN DECEMBER F.N.B. completed its affiliation with Roger Bouchard Insurance Inc.,
one of the largest independent insurance agencies in Florida. Headquartered in
Clearwater, Florida, the Bouchard agency has 60 full-time employees serving the
personal insurance needs of 3,500 customers in major market areas on the west
coast of Florida. Gross revenues for 1999 topped $7 million.
In three short years, F.N.B. has established community banking affiliate offices
in Clearwater, Sarasota, Venice, Fort Myers, Cape Coral and Naples serving more
than 80,000 customers. Using that base, Bouchard is expected to play a major
role in continuing F.N.B.'s highly successful Florida growth strategy.
"Roger Bouchard Insurance is one of the top-performing independent agencies in
the country," commented John Wepler, Vice President and a Principal with
Marsh-Berry, a nationally recognized Cleveland-based management consulting firm
specializing in insurance. "With the addition of F.N.B.'s sizeable capital base,
Bouchard will become a more powerful player in the Florida insurance arena."
F.N.B. banking and Bouchard insurance customers are all expected to benefit
through the opportunity to purchase complementary financial services from either
entity. One stop shopping for banking and insurance products from companies that
place an emphasis on providing the highest level of personal customer
service--it makes sense.
CHAIRMAN MORTENSEN RECOGNIZED
FOR 40 YEARS OF SERVICE TO F.N.B.
IN APRIL at the Annual Meeting of Shareholders, Chairman Peter Mortensen was
presented with an engraved resolution and plaque in recognition of his 40
consecutive years of uninterrupted service to First National Bank of
Pennsylvania and F.N.B. Corporation.
In part, the resolution read, "That the Corporation expresses the genuine
gratitude and extraordinary esteem held by its directors, officers and employees
for Mr. Mortensen's wisdom, vision and diligence on behalf of all those
associated with F.N.B. Corporation, its affiliate banks and subsidiary
companies, and for his significant contributions to business, industry and the
community."
[PHOTO]
AN ENGRAVED RESOLUTION RECOGNIZES PETER MORTENSEN FOR HIS 40 CONSECUTIVE YEARS
OF SERVICE TO THE CORPORATION.
F.N.B. CORPORATION 9
<PAGE> 11
WEST COAST BANK AND GUARANTY BANK
COMBINE FORCES IN SARASOTA AREA
IN JANUARY West Coast Guaranty Bank was formed by the merger of Guaranty Bank &
Trust Company of Venice, Florida and F.N.B.'s existing Sarasota affiliate, West
Coast Bank. The combined institution now has seven convenient banking locations
in Sarasota County.
"As a result of the merger, West Coast Guaranty Bank now provides an expanded
menu of banking services to customers throughout Sarasota County, from the city
of Sarasota in the north to Venice in the south," according to Joseph D.
Hudgins, President and Chief Executive Officer. "And, original West Coast Bank
customers are benefitting from the addition of trust services."
By the end of 1999, the Bank's total assets had topped the $270 million mark, a
solid first year.
INSURANCE AGENCY PURCHASE
SPURS NORTHERN EXPANSION
IN AUGUST Gelvin, Jackson & Starr, Inc., one of the oldest and largest
independent insurance agencies in northwestern Pennsylvania, became a wholly
owned subsidiary of First National Bank of Pennsylvania, thus adding insurance
to F.N.B.'s expanding menu of products and services.
The agency operates six offices in western Pennsylvania, providing all lines of
commercial and personal insurance coverage through 24 carriers.
Customers of both companies benefit from the affiliation. F.N.B. banking
customers can now purchase automobile, life, health, business and homeowners
insurance, while Gelvin Jackson & Starr policy holders are being welcomed to the
Home of the Personal Bankers.
[PHOTO]
GELVIN JACKSON & STARR PRESIDENT AND CHIEF EXECUTIVE OFFICER
STEVE HUNTER (SECOND FROM LEFT), IS JOINED BY THREE KEY INSURANCE MANAGERS,
BRENDA SHARTLE (LEFT), COLM MCWILLIAMS AND STACEY JANES.
In February 2000, F.N.B. purchased L.J. Kuder, Inc., an independent insurance
agency in Greenville, Pennsylvania. Kuder, which was founded in 1933, handles
all lines of commercial and personal insurance. It will operate as a subsidiary
of Gelvin, Jackson & Starr.
F.N.B. CORPORATION 10
<PAGE> 12
27 CONSECUTIVE YEARS OF DIVIDENDS
EARNS F.N.B. NATIONAL RECOGNITION
F.N.B.'s history of increasing dividend payments to shareholders each year over
the past 27 consecutive years is distinctively noteworthy, according to Moody's,
one of the nation's most-respected financial research companies.
In September the Corporation was designated a Moody's Dividend Achiever based on
its outstanding record of providing shareholders with increased dividends.
Of the more than 10,000 U.S.-based companies tracked in Moody's data base, only
334 had increased dividends for at least ten consecutive years. In a listing of
those 334 companies, F.N.B. ranked 41st in dividend performance.
During 1999, F.N.B. paid cash dividends of $0.71 per share in addition to its
traditional five percent stock dividend.
REGENCY FINANCE COMPANY EXPANDS
INTO TENNESSEE AND KENTUCKY
IN NOVEMBER Regency Finance Company expanded its size and geographic scope
through the acquisition of 11 offices and $50 million in gross loans in
Tennessee and Kentucky.
Regency, which was founded in 1927, has been associated with F.N.B. since 1975
and had grown to nearly $100 million in loans with 33 offices in Pennsylvania,
Ohio and New York. With the addition of the Tennessee and Kentucky locations,
Regency now has more than $150 million in total loans through 44 offices in five
states.
The strength of Regency is the ability to successfully meet the credit needs of
customers in small- and medium-sized towns. Regency provides direct traditional
consumer lending services, including home equity, installment and debt
consolidation loans to consumers.
Direct Stock Purchase Plan
Offered To F.N.B. Investors
IN APRIL F.N.B. introduced the Dividend Reinvestment and Direct Stock Purchase
Plan. Under terms of this convenient and economical Plan, shares of F.N.B.
common stock are available for direct purchase from the Corporation. Buying
shares directly from F.N.B. means investors pay no brokerage fees on the
transaction.
More than 60 percent of all F.N.B. shareholders participate in the Plan and
enjoy the ability to reinvest all or a portion of their cash dividends in
additional shares of F.N.B. common stock. The Plan also offers safekeeping and
features a regular quarterly statement summarizing all year-to-date activity in
the account.
[PHOTO]
F.N.B. SHAREHOLDER SERVICES MANAGER BERNIE SPONSELLER (CENTER) WORKS CLOSELY
WITH ASSISTANTS BECKY KORELSTEIN (LEFT) AND LIZ MCCREA.
F.N.B. CORPORATION 11
<PAGE> 13
BOARD LEADERSHIP
At F.N.B. Corporation, members of the Board of Directors actively contribute to
the success of the company by drawing on their individual management experience
to participate in the corporate decision-making process.
It's called Board Leadership.
Much of the Board's work is carried out by its committees including Audit,
Community Development, Compensation, Executive and Nominating which meet on a
regular basis.
The average F.N.B. Director has experience running their own business or a
public, private or civic corporation, is 56 years old and has been a member of
the Board for 11 years.
Each and every Director has a sizeable personal stake in the Corporation's
successful financial performance. The average Director owns 64,136 shares of
F.N.B. common stock.
So, the next time you think of F.N.B.'s Board of Directors, think of them as 21
shareholders elected by 6,743 other shareholders to represent actively the best
interests of all shareholders.
[LOGO]
[PHOTO]
DIRECTORS (STANDING, FROM LEFT) WILLIAM B. CAMPBELL, W. RICHARD BLACKWOOD, JAMES
S. LINDSAY AND ALAN C. BOMSTEIN; (SEATED) HENRY M. EKKER, STEPHEN J. GURGOVITS
AND CHARLES T. CRICKS.
[PHOTO]
DIRECTORS (STANDING, FROM LEFT) PAUL P. LYNCH, EDWARD J. MACE, GEORGE A. SEEDS
AND RICHARD C. MYERS; (SEATED) WILLIAM A. QUINN, PETER MORTENSEN AND ROBERT S.
MOSS.
[PHOTO]
DIRECTORS (STANDING, FROM LEFT) ARCHIE O. WALLACE, ERIC J. WERNER, WILLIAM J.
STRIMBU AND JAMES T. WELLER; (SEATED) DONNA C. WINNER, GARY L. TICE AND R.
BENJAMIN WILEY.
F.N.B. CORPORATION 12
<PAGE> 14
F.N.B. CORPORATION AND AFFILIATES
F.N.B. CORPORATION
OFFICERS
PETER MORTENSEN
Chairman & Chief Executive Officer
STEPHEN J. GURGOVITS
Vice Chairman
GARY L. TICE
President & Chief Operating Officer
WILLIAM J. RUNDORFF
Executive Vice President
JOHN D. WATERS
Vice President &
Chief Financial Officer
DAVID B. MOGLE
Secretary & Treasurer
DIRECTORS
W. RICHARD BLACKWOOD
President,
Harry Blackwood, Inc.
ALAN C. BOMSTEIN
President & Chief Executive Officer
Creative Contractors, Inc.
WILLIAM B. CAMPBELL
Retired Business Executive
CHARLES T. CRICKS
Principal,
Starboard Ventures
HENRY M. EKKER
Attorney at Law,
Partner of Ekker, Kuster & McConnell
STEPHEN J. GURGOVITS
Vice Chairman,
F.N.B. Corporation;
President & Chief Executive Officer,
First National Bank of Pennsylvania
JAMES S. LINDSAY
Licensed Real Estate Broker,
The Lindsay Company;
Managing Partner,
Dor-J's Partnership
PAUL P. LYNCH
Attorney at Law,
President & Chief Executive Officer,
Lynch Brothers Investments, Inc.
EDWARD J. MACE
Edward J. Mace,
Certified Public Accountant;
Chief Operating Officer,
Ribek Corporation
PETER MORTENSEN
Chairman & Chief Executive Officer,
F.N.B. Corporation;
Chairman,
First National Bank of Pennsylvania
ROBERT S. MOSS
Chairman,
Associated Contractors of
Conneaut Lake, Inc.
RICHARD C. MYERS
Retired Business Executive
WILLIAM A. QUINN
Retired Executive Vice President &
Cashier,
First National Bank of Pennsylvania
GEORGE A. SEEDS
Retired Business Executive
WILLIAM J. STRIMBU
President,
Nick Strimbu, Inc.
GARY L. TICE
President & Chief Operating Officer,
F.N.B. Corporation;
Chairman,
First National Bank of Naples
ARCHIE O. WALLACE
Attorney at Law,
Partner of Rowley, Wallace, Keck,
Karson & St. John
JAMES T. WELLER
Chairman,
Liberty Steel Products, Inc.
ERIC J. WERNER
Chief Administrative Officer, General
Counsel & Secretary,
Werner Co.
R. BENJAMIN WILEY
Chief Executive Officer,
Greater Erie Community Action
Committee
DONNA C. WINNER
Co-owner,
The Radisson, Tara-A Country Inn,
The Winner, Tiffany's
DIRECTORS EMERITUS
THOMAS C. ELLIOTT
CHARLES C. HAMILTON
THOMAS W. HODGE
GEORGE E. LOWE, D.D.S.
JOSEPH M. WALTON
GENERAL COUNSEL
COHEN & GRIGSBY, P.C.
2900 CNG TOWER
625 LIBERTY AVENUE
PITTSBURGH, PA
F.N.B. CORPORATION 13
<PAGE> 15
F.N.B. CORPORATION AND AFFILIATES
FIRST NATIONAL
BANK OF PENNSYLVANIA
DIRECTORS
WILLIAM B. CAMPBELL
CHARLES T. CRICKS
HENRY M. EKKER
STEPHEN J. GURGOVITS
President & Chief Executive Officer
KENNETH R. JAMES
JAMES E. KNARR, D.M.D.
PAUL P. LYNCH
PETER MORTENSEN
Chairman
ROBERT S. MOSS
GARY P. SCHNEIDER
WILLIAM J. STRIMBU
ARCHIE O. WALLACE
JOSEPH P. WALTON
JAMES T. WELLER
ERIC J. WERNER
R. BENJAMIN WILEY
DONNA C. WINNER
METROPOLITAN
NATIONAL BANK
DIRECTORS
DELORES E. CRAWFORD
RYERSON W. DALTON
SUZANNE FLEMING
C. CLARK HAMMITT
JAMES R. HARPSTER
LAWRENCE J. HESELOV
JAMES E. LEONELLI, M.D.
CARTER LEWIS
PETER MORTENSEN
JOHN M. NEWMAN
JOHN R. PERKINS
GARY J. ROBERTS
President & Chief Executive Officer
WILLIAM J. RUNDORFF
DIRECTORS EMERITUS
DAVID R. JONES
GEORGE A. SEEDS
FIRST NATIONAL
BANK OF NAPLES
DIRECTORS
WILLIAM B. CAMPBELL
C.C. COGHILL
RICHARD L. JAEGER
JAMES S. LINDSAY
EDWARD J. MACE
DONALD W. MAJOR
PETER MORTENSEN
RICHARD C. MYERS
ARLENE M. NICHOLS
JOSEPH R. PELLETIER
ANITA M. PITTMAN
DR. JAMES R. REHAK
GARRETT S. RICHTER
President & Chief Executive Officer
DAVID H. SCHAEFFER
GARY L. TICE
Chairman
MICHAEL E. WATKINS
LARRY A. WYNN
REEVES BANK
DIRECTORS
W. RICHARD BLACKWOOD
JOAN H. KLEIN
RALPH LINARELLI, SR.
ROBERT A. RIMBEY
President & Chief Executive Officer
ALLEN F. SOBOL
EDWARD S. YOUNG
DONALD W. ZAHN
DIRECTORS EMERITUS
JOHN J. KNOBLOCH
HAROLD C. KORNMAN
CAPE CORAL
NATIONAL BANK
DIRECTORS
ROBERT J. AVERY
President
ANDREW A. BARNETTE
RICHARD D. BARTON, SR.
JO ELLEN BEAUVOIS
C.C. COGHILL
JAMES L. COTTRELL
DAVID W. GOMER
Chairman & Chief Executive Officer
DR. JOSEPH HOWARD
PAUL W. SANBORN
H. FRANK SIMONDS
GARY L. TICE
FIRST NATIONAL
BANK OF FLORIDA
DIRECTORS
ROBERT J. BANKS
ALAN C. BOMSTEIN
ROGER O. BOUCHARD
JAMES M. CANTONIS
C. DAVID CARLEY, JR.
DANIEL A. ENGELHARDT
ROBERT C. GEORGE
Chairman
JAMES L. GOEHLER
WILLIAM E. HALE, M.D.
ROBERT L. HURD
DUKE L. MITCHELL
CLOYD A. PETRO
F. WALLACE POPE, JR., ESQ.
DAVID P. STONE
President & Chief Executive Officer
J. ERIC TAYLOR, JR., D.O.
GARY L. TICE
ROBERT T. TONG
O. LEE WASSON
HAROLD M. WARD, D.O.
F.N.B. CORPORATION 14
<PAGE> 16
F.N.B. CORPORATION AND AFFILIATES
FIRST NATIONAL BANK
OF FORT MYERS
DIRECTORS
J. KEITH ARNOLD
C.C. COGHILL
THOMAS R. CRONIN
Chairman
BENJAMIN C. FEW, III
JAMES L. GOEHLER
THOMAS B. HART
RANDALL P. HENDERSON, JR.
JEFFERY C. LEDWARD
MARVIN L. METHENY
JAMES B. MCMENAMY
MARK L. MORRIS
President & Chief Executive Officer
STEPHEN R. ZELLNER, M.D.
WEST COAST
GUARANTY BANK
DIRECTORS
JAMES M. BRANDT, D.V.M.
ROBERT P. BROWN
ROBERT A. DAVIDSON
PAT F. FERLISE
JAMES L. GOEHLER
WARREN S. HENDERSON
JOSEPH D. HUDGINS
President & Chief Executive Officer
JAMES H. LANIER
THOMAS E. MITCHELL
JOHN W. REEDER
EDWIN D. TAYLOR
H. MONROE WARRINGTON
FIRST COUNTY BANK
DIRECTORS
LLOYD A. LAMM
VITO A. MACHI
GREGORY S. PIKE
President & Chief Executive Officer
GARY J. ROBERTS
WILLIAM J. RUNDORFF
REGENCY
FINANCE COMPANY
DIRECTORS
ALAN F. BENNETT
STEPHEN J. GURGOVITS
Chairman
RAYMOND J. HEATH
VICTOR C. LEAP
JOHN M. NEWMAN
ROBERT T. RAWL
President & Chief Executive Officer
GARY SOBOTKA
DOUGLAS J. SOLOCK
THOMAS M. TUGGLE
F.N.B. AFFILIATE SERVICES
OFFICERS
C.C. COGHILL
Senior Vice President
JAMES L. GOEHLER
Senior Vice President
GEORGE D. HAGI
Vice President-Risk Management
JAMES G. ORIE
Vice President & Corporate Counsel
ROBERT T. REICHERT
Vice President & Controller
EDWARD H. SEHON
Manager of Public Affairs
BERNIE G. SPONSELLER
Manager of Shareholder Services
CHRISTINE E. TVAROCH
General Auditor
F.N.B. CORPORATION 15
<PAGE> 17
SHAREHOLDER INFORMATION
EXECUTIVE OFFICES
F.N.B. Corporation
One F.N.B. Boulevard
Hermitage, PA 16148
2150 Goodlette Road North
Naples, FL 34102
SHAREHOLDER RELATIONS AND STOCK TRANSFER AGENT
F.N.B. Shareholder Services
P.O. Box 11929
Naples, FL 34101-1929
Phone: (888) 441-4362
DIVIDEND REINVESTMENT
AND DIRECT STOCK PURCHASE PLAN
Shareholders as well as non-shareholders may participate in the Dividend
Reinvestment and Direct 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 upon request to Shareholder Services.
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 request to Shareholder Services.
INSTITUTIONAL INVESTMENT AND ANALYST INQUIRIES
Institutional investors, analysts or individuals desiring financial information
or reports may contact: John D. Waters, Vice President and Chief Financial
Officer, F.N.B. Corporation, One F.N.B. Boulevard, Hermitage, PA 16148. Phone:
(724) 983-3440.
NEWS MEDIA INQUIRIES
Media representatives and others seeking public information may contact: Edward
H. Sehon, Manager of Public Affairs, F.N.B. Corporation, One F.N.B. Boulevard,
Hermitage, PA 16148. Phone: (724) 983-4841.
ANNUAL MEETING
The annual meeting of shareholders will be held at 4:00 p.m. on Monday, April
17, 2000 at the Naples Beach Hotel, 851 Gulf Shore Boulevard North, Naples, FL
34102.
F.N.B. CORPORATION 16
<PAGE> 18
[COVER]
[LOGO] F.N.B.
CORPORATION
..................................................
One F.N.B. Boulevard
Hermitage, PA 16148
2150 Goodlete Road North
Naples, FL 34102
<PAGE> 19
[LOGO] F.N.B.
CORPORATION
..........................................................
1999 FINANCIAL REVIEW
[LOGO]
TABLE OF CONTENTS
1 Consolidated Balance Sheet
2 Consolidated Income Statement
3 Consolidated Statement of Stockholders' Equity
4 Consolidated Statement of Cash Flows
5 Notes to Consolidated Financial Statements
27 Report of Independent Auditors
28 Selected Financial Data
29 Quarterly Earnings Summary
30 Management's Discussion
42 Market for Common Stock and Related
Shareholder Matters
<PAGE> 20
F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
Dollars in thousands, except par values
<TABLE>
<CAPTION>
December 31 1999 1998
- ----------- ---- ----
<S> <C> <C>
ASSETS
Cash and due from banks $ 171,183 $ 134,847
Interest bearing deposits with banks 3,478 4,192
Federal funds sold 7,467 44,706
Mortgage loans held for sale 8,733 15,947
Securities available for sale 408,731 455,435
Securities held to maturity (fair value of $75,905 and $119,522) 77,359 118,575
Loans, net of unearned income of $61,976 and $31,014 2,803,774 2,422,884
Allowance for loan losses (36,311) (32,308)
---------- ----------
NET LOANS 2,767,463 2,390,576
---------- ----------
Premises and equipment 105,052 95,263
Other assets 156,718 147,136
---------- ----------
TOTAL ASSETS $3,706,184 $3,406,677
========== ==========
LIABILITIES
Deposits:
Non-interest bearing $ 424,352 $ 400,658
Interest bearing 2,485,082 2,449,770
---------- ----------
TOTAL DEPOSITS 2,909,434 2,850,428
---------- ----------
Other liabilities 56,604 52,746
Short-term borrowings 332,197 150,981
Long-term debt 117,634 70,384
---------- ----------
TOTAL LIABILITIES 3,415,869 3,124,539
---------- ----------
STOCKHOLDERS' EQUITY
Preferred stock - $10 par value
Authorized - 20,000,000 shares
Issued - 207,459 and 237,985 shares
Aggregate liquidation value - $5,186 and $5,950 2,075 2,380
Common stock - $2 par value
Authorized - 100,000,000 shares
Issued - 21,005,720 and 19,913,288 shares 42,011 39,827
Additional paid-in capital 182,834 161,232
Retained earnings 71,310 75,427
Accumulated other comprehensive (loss) income (4,803) 6,356
Treasury stock - 121,132 and 109,285 shares at cost (3,112) (3,084)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 290,315 282,138
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $3,706,184 $3,406,677
========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements
F.N.B. CORPORATION 1
<PAGE> 21
F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
Dollars in thousands, except per share data
<TABLE>
<CAPTION>
Year Ended December 31 1999 1998 1997
- ---------------------- ---- ---- ----
<S> <C> <C> <C>
INTEREST INCOME
Loans, including fees $222,043 $205,071 $187,225
Securities:
Taxable 27,655 32,458 29,210
Nontaxable 2,210 2,482 2,442
Dividends 1,482 1,682 1,252
Other 1,526 4,334 4,997
-------- -------- --------
TOTAL INTEREST INCOME 254,916 246,027 225,126
-------- -------- --------
INTEREST EXPENSE
Deposits 90,326 96,657 86,466
Short-term borrowings 11,282 6,813 6,415
Long-term debt 4,859 4,682 3,847
-------- -------- --------
TOTAL INTEREST EXPENSE 106,467 108,152 96,728
-------- -------- --------
NET INTEREST INCOME 148,449 137,875 128,398
Provision for loan losses 9,240 7,572 11,503
-------- -------- --------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 139,209 130,303 116,895
-------- -------- --------
NON-INTEREST INCOME
Insurance commissions and fees 10,589 9,935 9,724
Service charges 20,254 16,581 13,658
Trust 3,852 2,792 2,707
Gain on sale of securities 1,674 1,385 1,287
Gain on sale of loans 2,187 3,316 1,730
Other 8,372 5,296 4,172
-------- -------- --------
TOTAL NON-INTEREST INCOME 46,928 39,305 33,278
-------- -------- --------
186,137 169,608 150,173
-------- -------- --------
NON-INTEREST EXPENSE
Salaries and employee benefits 70,246 62,740 56,088
Net occupancy 9,000 8,487 8,084
Amortization of intangibles 1,934 1,321 1,584
Equipment 10,840 9,133 8,255
Merger related 1,824 5,541 2,385
Promotional 2,818 2,561 2,793
Insurance claims paid 4,162 3,964 3,579
Other 28,855 26,422 25,164
-------- -------- --------
TOTAL NON-INTEREST EXPENSE 129,679 120,169 107,932
-------- -------- --------
INCOME BEFORE INCOME TAXES AND EXTRAORDINARY ITEMS 56,458 49,439 42,241
Income taxes 17,163 16,418 13,013
-------- -------- --------
INCOME BEFORE EXTRAORDINARY ITEMS 39,295 33,021 29,228
Gain on sale of subsidiary and branches, net of tax of $4,743 8,809
-------- -------- --------
NET INCOME $ 39,295 $ 33,021 $ 38,037
======== ======== ========
EARNINGS PER COMMON SHARE BEFORE EXTRAORDINARY ITEMS
Basic $ 1.87 $ 1.57 $ 1.43
======== ======== ========
Diluted $ 1.80 $ 1.51 $ 1.37
======== ======== ========
EARNINGS PER COMMON SHARE
Basic $ 1.87 $ 1.57 $ 1.87
======== ======== ========
Diluted $ 1.80 $ 1.51 $ 1.78
======== ======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements
F.N.B. CORPORATION 2
<PAGE> 22
F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Dollars in thousands, except per share data
<TABLE>
<CAPTION>
Accumulated
Other
Compre- Additional Compre-
hensive Preferred Common Paid-In Retained hensive Treasury
Income Stock Stock Capital Earnings Income Stock
------ ----- ----- ------- -------- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1997 $3,525 $35,149 $115,449 $ 79,792 $ 2,598 $(1,487)
Net income $ 38,037 38,037
Change in accumulated other comprehensive income 2,785 2,785
--------
Comprehensive income $ 40,822
Cash dividends declared: ========
Preferred stock (588)
Common stock $.56 per share (10,526)
Purchase of common stock (7,688)
Issuance of common stock 91 228 (496) 5,547
Issuance of common stock for acquisition 1,260 2,240 4,177
Stock dividend 1,332 15,074 (16,406)
Conversion of preferred stock (650) 266 384
------ ------- -------- -------- ------- -------
Balance at December 31, 1997 2,875 38,098 133,375 93,990 5,383 (3,628)
Net income $ 33,021 33,021
Change in accumulated other comprehensive income 973 973
--------
Comprehensive income $ 33,994
========
Cash dividends declared:
Preferred stock (492)
Common stock $.67 per share (13,615)
Purchase of common stock (16,989)
Issuance (retirement) of common stock (17) (329) (8,040) 17,533
Stock dividend 1,528 27,909 (29,437)
Conversion of preferred stock (495) 218 277
------ ------- -------- -------- ------- --------
Balance at December 31, 1998 2,380 39,827 161,232 75,427 6,356 (3,084)
Net income $ 39,295 39,295
Change in accumulated other comprehensive income (11,159) (11,159)
--------
Comprehensive income $ 28,136
========
Cash dividends declared:
Preferred stock (411)
Common stock $.71 per share (16,108)
Purchase of common stock (17,709)
Issuance (retirement) of common stock 129 299 (3,840) 17,681
Stock dividend 1,916 21,137 (23,053)
Conversion of preferred stock (305) 139 166
------ ------- -------- -------- -------- --------
Balance at December 31, 1999 $2,075 $42,011 $182,834 $ 71,310 $ (4,803) $ (3,112)
====== ======= ======== ======== ======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements
F.N.B. CORPORATION 3
<PAGE> 23
F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Dollars in thousands
<TABLE>
<CAPTION>
Year Ended December 31 1999 1998 1997
- ---------------------- ---- ---- ----
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 39,295 $ 33,021 $ 38,037
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 11,312 9,173 8,410
Provision for loan losses 9,240 7,572 11,503
Provision for valuation allowance on other real
estate owned 540
Deferred taxes (9,051) (4,220) (1,247)
Gain on sale of securities (1,674) (1,385) (1,287)
Gain on sale of loans (2,187) (3,316) (1,730)
Extraordinary gains on sales of subsidiary and
branches, net of tax (8,809)
Proceeds from sale of loans 45,858 89,484 115,998
Loans originated for sale (36,457) (95,579) (110,382)
Net change in:
Interest receivable 384 82 (2,693)
Interest payable 796 684 1,783
Other, net 12,850 (55,909) 4,492
--------- --------- ---------
Net cash flows from operating activities 70,366 (20,393) 54,615
--------- --------- ---------
INVESTING ACTIVITIES
Net change in:
Interest bearing deposits with banks 714 1,389 (2,311)
Federal funds sold 37,239 1,307 (3,294)
Loans (389,843) (253,960) (210,262)
Securities available for sale:
Purchases (167,851) (218,465) (273,869)
Sales 32,053 16,630 45,059
Maturities 166,946 219,863 148,684
Securities held to maturity:
Purchases (1,021) (36,960) (16,028)
Maturities 42,240 72,722 67,158
Increase in premises and equipment (18,078) (25,161) (19,544)
Net cash (paid) received for mergers, acquisitions
and divestiture (3,941) 48,625 (50,362)
--------- --------- ---------
Net cash flows from investing activities (301,542) (174,010) (314,769)
--------- --------- ---------
FINANCING ACTIVITIES
Net change in:
Non-interest bearing deposits, savings and NOW 34,525 203,372 133,890
Time deposits 24,481 14,789 114,449
Short-term borrowings 181,216 23,795 (1,802)
Increase in long-term debt 70,489 16,543 43,929
Decrease in long-term debt (23,239) (19,592) (29,862)
Net acquisition of treasury stock (3,440) (7,842) (2,319)
Cash dividends paid (16,520) (14,107) (11,114)
--------- --------- ---------
Net cash flows from financing activities 267,512 216,958 247,171
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 36,336 22,555 (12,983)
Cash and cash equivalents at beginning of year 134,847 112,292 125,275
--------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 171,183 $ 134,847 $ 112,292
========= ========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements
F.N.B. CORPORATION 4
<PAGE> 24
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS:
The Corporation is a bank holding company headquartered in Hermitage,
Pennsylvania with administrative offices in Naples, Florida. It operates 9
community banks with 88 offices and a consumer finance company with 44 offices
in Pennsylvania, Florida, Tennessee, Ohio, Kentucky and New York. In addition,
it operates two insurance agencies with 7 offices in Pennsylvania and Florida.
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 to the current year's presentation.
USE OF ESTIMATES:
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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), net of
income taxes, reported separately as a component of other comprehensive income.
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.
MORTGAGE LOANS HELD FOR SALE:
Mortgage loans held for sale are recorded at the lower of aggregate cost or
market value. Gain or loss on the sale of loans is included in non-interest
income.
LOANS AND THE ALLOWANCE FOR LOAN LOSSES:
Loans are reported at their outstanding principal adjusted for any charge-offs
and any deferred fees or costs on originated loans.
Interest income on loans is accrued on the principal amount outstanding. 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. While on non-accrual,
contractual interest payments are applied against principal until the loan is
restored to accrual status. 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. Loan
origination fees and related costs are deferred and recognized over the life of
the loans as an adjustment of yield.
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 economic conditions, known and inherent risks in the loan portfolio, the
estimated value of underlying collateral and changes in the composition of the
loan portfolio. 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.
F.N.B. CORPORATION 5
<PAGE> 25
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Impaired loans are identified and measured based on the present value of
expected future cash flows discounted at the loan's effective interest rate, 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 the Corporation will not be able to collect all
amounts due according to the contractual terms of the loan agreement. The
Corporation evaluates all commercial and commercial real estate loans which have
been classified for regulatory reporting purposes, including non-accrual and
restructured loans, in determining impaired loans.
PREMISES AND EQUIPMENT:
Premises and equipment are stated at cost less accumulated depreciation.
Depreciation is computed generally on the straight-line method over the asset's
estimated useful life. Useful lives are dependent upon the nature and condition
of the asset and range from 5 to 40 years.
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.
AMORTIZATION OF INTANGIBLES:
Goodwill is being amortized using the straight-line method over periods not
exceeding 20 years. Core deposit intangibles are being amortized using
accelerated methods over various lives ranging from 7-17 years. The Corporation
periodically evaluates its goodwill and core deposit intangibles for impairment.
INCOME TAXES:
Income taxes are computed utilizing the liability method. Under this method
deferred taxes are determined based on differences between financial reporting
and tax bases 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:
Earnings and cash dividends per share have been adjusted for common stock
dividends, including the 5 percent stock dividend declared on April 26, 1999.
Basic 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.
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 outstanding are made only when such adjustments dilute earnings per common
share.
CASH EQUIVALENTS:
The Corporation considers cash and due from banks as cash and cash
equivalents.
NEW ACCOUNTING STANDARDS:
Financial Accounting Standards Statement (FAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities," requires all derivatives to be
recorded on the balance sheet at fair value and establishes standard accounting
methodologies for hedging activities. The standard will result in the
recognition of offsetting changes in value or cash flows of both the hedge and
the hedged item in earnings in the same period. The statement is effective for
the Corporation's fiscal year ending December 31, 2001. Because the Corporation
has not entered into any derivative transactions, the adoption of this statement
will have no impact on the financial statements.
F.N.B. CORPORATION 6
<PAGE> 26
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MERGERS, ACQUISITIONS AND DIVESTITURES
On December 7, 1999, First National Bank of Florida completed its affiliation
with Roger Bouchard Insurance, Inc. (RBI), headquartered in Clearwater, Florida,
with assets of $4.4 million. The transaction was accounted for as a
pooling-of-interests.
On October 26, 1999, Regency Finance Company (Regency) expanded its size and
geographic scope through the purchase of 11 consumer finance offices in northern
and central Tennessee and southwestern Kentucky. Regency purchased these offices
and $33.0 million in net loans from Finance and Mortgage Acceptance Corporation,
a subsidiary of Farmers & Merchants Bank of Clarksville, Tennessee. The
transaction was accounted for as a purchase and did not result in any goodwill.
On August 20, 1999, First National Bank of Pennsylvania (FNBPA) acquired all
of the issued and outstanding stock of Gelvin, Jackson & Starr, Inc., a
northwestern Pennsylvania independent insurance agency. The transaction was
accounted for as a purchase.
On January 13, 1999, the Corporation completed its affiliation with Guaranty
Bank & Trust Company (Guaranty), a community bank 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. The transaction was accounted for as a
pooling-of-interests. 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.
The following table sets forth separate company financial information for the
year ended December 31, 1998. The F.N.B. Corporation results exclude the effects
of any mergers which occurred subsequent to December 31, 1998 (in thousands):
NET
INTEREST NET
Year Ended December 31, 1998 INCOME INCOME
------ ------
F.N.B. ........................ $132,600 $31,872
RBI............................ (39) 823
Guaranty....................... 5,314 326
During 1998, the Corporation affiliated with West Coast Bank, Sarasota,
Florida, Seminole Bank, Seminole Florida and Citizens Bank and Trust Company,
Clearwater, Florida. These affiliations added assets and deposits of $334.6
million and $285.7 million, respectively, and were accounted for as
poolings-of-interests. Also during 1998, FNBPA purchased three Lawrence County
branches, which added $48.7 million in deposits. As a result of the transaction,
FNBPA recorded $5.1 million and $1.8 million in goodwill and core deposit
intangibles, respectively.
During 1997, the Corporation affiliated with First National Bank of Naples,
Naples, Florida, Cape Coral National Bank, Cape Coral, Florida, First National
Bank of Southwest Florida, Cape Coral, Florida and Indian Rocks State Bank,
Largo, Florida. These affiliations added assets and deposits of $790.7 million
and $658.2 million, respectively, and were accounted for as
poolings-of-interests. The Corporation also acquired Mercantile Bank of
Southwest Florida (Mercantile), located in Naples, Florida. Mercantile was
merged into First National Bank of Naples and added assets and deposits of
$121.7 million and $108.2 million, respectively. The Corporation paid $13.6
million and accounted for the acquisition as a purchase.
F.N.B. CORPORATION 7
<PAGE> 27
F.N.B. Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During 1997, the Corporation disposed of its subsidiary, Bucktail Bank and
Trust Company, in exchange for 565,384 shares of Sun Bancorp, Inc. (Sun), a bank
holding company headquartered in Selinsgrove, Pennsylvania. At December 31,
1999, the Corporation's investment in Sun is accounted for using the equity
method and had a market value totaling $20.1 million and a carrying value
totaling $21.5 million. The Corporation recognized equity earnings from Sun
totaling $1.4 million, $1.3 million and $621,000, respectively, for the three
years ended December 31, 1999. At December 31, 1999, Sun had total assets of
$710.9 million and recognized net income of $8.8 million for the year then
ended. The Corporation also sold three branches of its subsidiary Metropolitan
National Bank in 1997. These sales resulted in the Corporation recognizing $8.8
million in after-tax extraordinary gains.
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
merger agreement has been reached.
SECURITIES
The amortized cost and fair value of securities are as follows (in thousands):
Securities available for sale:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
December 31, 1999 COST GAINS LOSSES VALUE
- ----------------- --------- ---------- ---------- -----
<S> <C> <C> <C> <C>
U.S. Treasury and other U.S. Government
agencies and corporations $208,693 $ 73 $ (6,377) $ 202,389
Mortgage-backed securities of
U.S. Government agencies 181,685 275 (4,518) 177,442
States of the U.S. and political subdivisions 3,091 3 (289) 2,805
Other debt securities 358 45 403
-------- ------ -------- ---------
TOTAL DEBT SECURITIES 393,827 396 (11,184) 383,039
Equity securities 22,306 3,601 (215) 25,692
-------- ------ -------- ---------
$416,133 $3,997 $(11,399) $ 408,731
======== ====== ======== =========
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
December 31, 1998 COST GAINS LOSSES VALUE
- ----------------- --------- ---------- ---------- -----
<S> <C> <C> <C> <C>
U.S. Treasury and other U.S. Government
agencies and corporations $256,740 $ 2,004 $ (168) $258,576
Mortgage-backed securities of
U.S. Government agencies 163,351 1,218 (99) 164,470
States of the U.S. and political subdivisions 3,202 38 (101) 3,139
Other debt securities 1,305 48 1,353
-------- ------- ------ --------
TOTAL DEBT SECURITIES 424,598 3,308 (368) 427,538
Equity securities 21,053 6,949 (105) 27,897
-------- ------- ------ --------
$445,651 $10,257 $ (473) $455,435
======== ======= ====== ========
</TABLE>
F.N.B. CORPORATION 8
<PAGE> 28
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
December 31, 1997 COST GAINS LOSSES VALUE
----------------- --------- ---------- ---------- -----
<S> <C> <C> <C> <C>
U.S. Treasury and other U.S. Government
agencies and corporations $314,752 $1,058 $ (260) $315,550
Mortgage-backed securities of
U.S. Government agencies 121,311 501 (147) 121,665
States of the U.S. and political subdivisions 1,486 51 1,537
Other debt securities 5,320 117 5,437
-------- ------ ------- --------
TOTAL DEBT SECURITIES 442,869 1,727 (407) 444,189
Equity securities 19,240 7,002 (14) 26,228
-------- ------ ------- --------
$462,109 $8,729 $ (421) $470,417
======== ====== ======= ========
</TABLE>
Securities held to maturity:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
December 31, 1999 COST GAINS LOSSES VALUE
----------------- --------- ---------- ---------- -----
<S> <C> <C> <C> <C>
U.S. Treasury and other U.S. Government
agencies and corporations $ 17,887 $ (723) $ 17,164
Mortgage-backed securities of
U.S. Government agencies 15,147 $ 10 (157) 15,000
States of the U.S. and political subdivisions 44,037 76 (656) 43,457
Other debt securities 288 (4) 284
-------- ------ ------- --------
$ 77,359 $ 86 $(1,540) $ 75,905
======== ====== ======= ========
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
December 31, 1998 COST GAINS LOSSES VALUE
----------------- --------- ---------- ---------- -----
<S> <C> <C> <C> <C>
U.S. Treasury and other U.S. Government
agencies and corporations $ 29,882 $ 117 $ (43) $ 29,956
Mortgage-backed securities of
U.S. Government agencies 33,909 118 (28) 33,999
States of the U.S. and political subdivisions 54,237 795 (18) 55,014
Other debt securities 547 9 (3) 553
-------- ------ ------- --------
$118,575 $1,039 $ (92) $119,522
======== ====== ======= ========
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
December 31, 1997 COST GAINS LOSSES VALUE
----------------- --------- ---------- ---------- -----
<S> <C> <C> <C> <C>
U.S. Treasury and other U.S. Government
agencies and corporations $ 34,339 $ 149 $ (48) $ 34,440
Mortgage-backed securities of
U.S. Government agencies 64,371 122 (231) 64,262
States of the U.S. and political subdivisions 54,678 430 (41) 55,067
Other debt securities 853 6 (4) 855
-------- ------ ------- --------
$154,241 $ 707 $ (324) $154,624
======== ====== ======= ========
</TABLE>
F.N.B. CORPORATION 9
<PAGE> 29
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 1999 and 1998, respectively, securities with a carrying value
of $157.3 million and $138.2 million were pledged to secure public deposits,
trust deposits and for other purposes as required by law. Securities with a
carrying value of $213.3 million and $156.6 million at December 31, 1999 and
1998, respectively, were pledged as collateral for other borrowings.
As of December 31, 1999, the Corporation had not entered into any off-balance
sheet derivative transactions.
As of December 31, 1999, the amortized cost and fair value of securities, by
contractual maturities, were as follows (in thousands):
<TABLE>
<CAPTION>
HELD TO MATURITY AVAILABLE FOR SALE
----------------------- ------------------------
AMORTIZED FAIR AMORTIZED FAIR
December 31, 1999 COST VALUE COST VALUE
- ----------------- --------- ----- --------- -----
<S> <C> <C> <C> <C>
Due in one year or less $ 9,945 $ 9,954 $ 43,399 $ 43,357
Due from one to five years 37,523 36,732 129,018 125,032
Due from five to ten years 12,811 12,380 36,849 34,609
Due after ten years 1,933 1,839 2,876 2,599
------- ------- -------- --------
62,212 60,905 212,142 205,597
Mortgage-backed securities of
U.S. Government agencies 15,147 15,000 181,685 177,442
Equity securities 22,306 25,692
------- ------- -------- --------
$77,359 $75,905 $416,133 $408,731
======= ======= ======== ========
</TABLE>
Maturities may differ from contractual terms because borrowers may have the
right to call or prepay obligations with or without penalties. Periodic payments
are received on mortgage-backed securities based on the payment patterns of the
underlying collateral.
Proceeds from sales of securities available for sale during 1999, 1998 and
1997 were $32.1 million, $16.6 million and $45.1 million, respectively. Gross
gains and gross losses were realized on those sales as follows (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31 1999 1998 1997
- ---------------------- ---- ---- ----
<S> <C> <C> <C>
Gross gains $1,734 $1,405 $1,400
Gross losses (60) (20) (113)
------ ------ ------
$1,674 $1,385 $1,287
====== ====== ======
</TABLE>
LOANS
Following is a summary of loans (in thousands):
<TABLE>
<CAPTION>
December 31 1999 1998
- ----------- ---- ----
<S> <C> <C>
Real estate:
Residential $1,059,432 $ 994,157
Commercial 747,835 632,304
Construction 119,398 103,672
Installment loans to individuals 334,810 292,418
Commercial, financial and agricultural 350,023 299,081
Lease financing 254,252 132,266
Unearned income (61,976) (31,014)
---------- ----------
$2,803,774 $2,422,884
========== ==========
</TABLE>
F.N.B. Corporation 10
<PAGE> 30
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The loan portfolio consists principally of loans to individuals and small- and
medium-sized businesses within the Corporation's primary market area of western
Pennsylvania, southwestern Florida, northern and central Tennessee, eastern
Ohio, southwestern Kentucky and western New York.
As of December 31, 1999, no concentrations of loans exceeding 10% of total
loans existed which were not disclosed as a separate category of loans.
Certain directors and executive officers of the Corporation and its
significant subsidiaries, as well as associates of such persons, were loan
customers during 1999. Such loans were made in the ordinary course of business
under normal 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):
Total loans at December 31, 1998...... $ 37,283
New loans ............................ 28,900
Repayments ........................... (26,340)
Other ................................ 14,791
--------
Total loans at December 31, 1999...... $ 54,634
========
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 1999 1998
- ----------- ---- ----
<S> <C> <C>
Non-accrual loans $ 9,321 $12,250
Restructured loans 3,560 1,770
------- -------
TOTAL NON-PERFORMING LOANS 12,881 14,020
Other real estate owned 4,801 1,370
------- -------
TOTAL NON-PERFORMING ASSETS $17,682 $15,390
======= =======
</TABLE>
For the years ended December 31, 1999, 1998 and 1997, income recognized on
non-accrual and restructured loans was $503,000, $863,000 and $477,000,
respectively. Income that would have been recognized during 1999, 1998 and 1997
on such loans if they were in accordance with their original terms was $1.4
million, $1.6 million and $1.1 million, respectively. Loans past due 90 days or
more were $5.0 million, $2.9 million and $3.2 million at December 31, 1999, 1998
and 1997, respectively.
Following is a summary of information pertaining to loans considered to be
impaired (in thousands):
<TABLE>
<CAPTION>
At or For the Year Ended December 31 1999 1998 1997
- ------------------------------------ ---- ---- ----
<S> <C> <C> <C>
Impaired loans with an allocated allowance $2,069 $3,366 $1,341
Impaired loans without an allocated allowance 1,762 4,998
------ ------ ------
TOTAL IMPAIRED LOANS $3,831 $8,364 $1,341
====== ====== ======
Allocated allowance on impaired loans 891 1,099 496
====== ====== ======
Portion of impaired loans on non-accrual 1,272 5,413 975
====== ====== ======
Average impaired loans 5,268 4,945 5,887
====== ====== ======
Income recognized on impaired loans 302 492 99
====== ====== ======
</TABLE>
F.N.B. CORPORATION 11
<PAGE> 31
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ALLOWANCE FOR LOAN LOSSES
Following is an analysis of changes in the allowance for loan losses (in
thousands):
<TABLE>
<CAPTION>
Year Ended December 31 1999 1998 1997
- ---------------------- ---- ---- ----
<S> <C> <C> <C>
Balance at beginning of year $32,308 $31,055 $ 31,199
Reduction due to the sale of a subsidiary and loans (3,828)
Addition due to acquisitions 2,813 1,167
Charge-offs (9,622) (7,634) (10,281)
Recoveries 1,572 1,315 1,295
------- ------- --------
NET CHARGE-OFFS (8,050) (6,319) (8,986)
Provision for loan losses 9,240 7,572 11,503
------- ------- --------
Balance at end of year $36,311 $32,308 $ 31,055
======= ======= ========
</TABLE>
PREMISES AND EQUIPMENT
Following is a summary of premises and equipment (in thousands):
<TABLE>
<CAPTION>
December 31 1999 1998
- ----------- ---- ----
<S> <C> <C>
Land $ 19,660 $ 18,537
Premises 83,487 77,802
Equipment 62,024 52,236
-------- --------
165,171 148,575
Accumulated depreciation (60,119) (53,312)
-------- --------
$105,052 $ 95,263
======== ========
</TABLE>
Depreciation expense was $9.5 million for 1999, $8.2 million for 1998 and $7.0
million for 1997.
The Corporation has operating leases extending to 2044 for certain land,
office locations and equipment. Leases that expire are generally expected to be
renewed or replaced by other leases. Rental expense was $2.9 million for 1999,
$3.6 million for 1998 and $4.0 million for 1997. Total minimum rental
commitments under such leases were $28.0 million at December 31, 1999. Following
is a summary of future minimum lease payments for years following December 31,
1999 (in thousands):
2000............................... $ 1,837
2001............................... 1,493
2002............................... 1,371
2003............................... 1,178
2004............................... 938
Later years........................ 21,143
F.N.B. CORPORATION 12
<PAGE> 32
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DEPOSITS
Following is a summary of deposits (in thousands):
<TABLE>
<CAPTION>
December 31 1999 1998
- ----------- ---- ----
<S> <C> <C>
Non-interest bearing $ 424,352 $ 400,658
Savings and NOW 1,275,610 1,264,779
Certificates of deposit and other time deposits 1,209,472 1,184,991
---------- ----------
$2,909,434 $2,850,428
========== ==========
</TABLE>
Following is a summary of the scheduled maturities of certificates of deposit
and other time deposits for each of the five years following December 31, 1999
(in thousands):
2000.................................. $865,411
2001.................................. 254,032
2002.................................. 37,497
2003.................................. 24,510
2004.................................. 27,099
Later years........................... 923
Time deposits of $100,000 or more were $263.7 million and $249.9 million at
December 31, 1999 and 1998, respectively. Following is a summary of these time
deposits by remaining maturity at December 31, 1999 (in thousands):
<TABLE>
<CAPTION>
CERTIFICATES OTHER TIME
OF DEPOSIT DEPOSITS TOTAL
------------ ---------- -----
<S> <C> <C> <C>
Three months or less $ 75,785 $ 8,461 $ 84,246
Three to six months 44,225 3,980 48,205
Six to twelve months 71,076 2,160 73,236
Over twelve months 47,589 10,386 57,975
-------- ------- --------
$238,675 $24,987 $263,662
======== ======= ========
</TABLE>
SHORT-TERM BORROWINGS
Following is a summary of short-term borrowings (in thousands):
<TABLE>
<CAPTION>
December 31 1999 1998
- ----------- ---- ----
<S> <C> <C>
Securities sold under repurchase agreements $134,808 $ 99,590
Federal funds purchased 49,691 561
Federal Home Loan Bank advances 77,000
Other short-term borrowings 19,205 1,221
Subordinated notes 51,493 49,609
-------- --------
$332,197 $150,981
======== ========
</TABLE>
Credit facilities amounting to $50.0 million at December 31, 1999 were
maintained with various banks with rates which are 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. Credit facilities amounting
to $31.0 million were unused at December 31, 1999.
F.N.B. CORPORATION 13
<PAGE> 33
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
LONG-TERM DEBT
Following is a summary of long-term debt (in thousands):
December 31 1999 1998
---- ----
Federal Home Loan Bank advances........ $ 75,911 $21,305
Other long-term debt................... 783 6,892
Subordinated notes..................... 40,940 42,187
-------- -------
$117,634 $70,384
======== =======
The Corporation has available credit with the Federal Home Loan Bank of $774.1
million, of which $152.9 million was used as of December 31, 1999. These
advances are secured by residential real estate loans and Federal Home Loan Bank
Stock and are scheduled to mature in various amounts periodically through the
year 2008. Interest rates paid on these advances range from 5.45% to 6.32% in
1999 and 5.10% to 6.20% in 1998.
Subordinated notes are unsecured and subordinated to other indebtedness of the
Corporation. The subordinated notes are scheduled to mature in various amounts
periodically through the year 2009. At December 31, 1999, $30.9 million of
long-term subordinated debt is redeemable prior to maturity at a discount equal
to three months of interest. The Corporation 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
subordinated debt was 7.31% at December 31, 1999 and 6.66% at December 31, 1998.
Scheduled annual maturities for all of the long-term debt for each of the five
years following December 31, 1999 are as follows (in thousands):
2000..................... $ 8,962
2001..................... 16,795
2002..................... 49,006
2003..................... 1,455
2004..................... 30,811
Later years.............. 10,605
COMMITMENTS AND CREDIT RISK
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.
Following is a summary of off-balance sheet credit risk information (in
thousands):
December 31 1999 1998
- ----------- ---- ----
Commitments to extend credit......... $529,901 $426,699
Standby letters of credit............ 33,258 21,417
At December 31, 1999, funding of approximately 85% of the commitments to
extend credit is 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.
STOCKHOLDERS' EQUITY
Series A - Cumulative Convertible Preferred Stock (Series A Preferred) was
issued in 1985. Holders of Series A Preferred are entitled to 5.9 votes for each
share held. The holders do not have cumulative voting
F.N.B. CORPORATION 14
<PAGE> 34
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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. During 1999, 870 shares of Series A Preferred were
converted to 871 shares of common stock. At December 31, 1999, 20,462 shares of
common stock were reserved by the Corporation for the conversion of the
remaining 19,848 outstanding shares.
Series B - Cumulative Convertible Preferred Stock (Series B Preferred) was
issued in 1992. 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 into shares of the Corporation's common
stock at a price of $10.56 per share. The Corporation has the right to require
the conversion of the balance of all outstanding shares at the conversion rate.
During 1999, 29,656 shares of Series B Preferred were converted to 68,893 shares
of common stock. At December 31, 1999, 444,203 shares of common stock were
reserved by the Corporation for the conversion of the remaining 187,611
outstanding shares.
COMPREHENSIVE INCOME
The components of comprehensive income, net of related tax, are as follows (in
thousands):
<TABLE>
<CAPTION>
Year Ended December 31 1999 1998 1997
- ---------------------- ---- ---- ----
<S> <C> <C> <C>
Net income $ 39,295 $33,021 $38,037
Other comprehensive income:
Unrealized (losses) gains on securities:
Arising during the period, net of tax (benefit)
expense of $(5,449), $960 and $1,800 (10,121) 1,783 3,342
Less: reclassification adjustment for gains included in
net income, net of tax benefit of $559, $436 and $300 (1,038) (810) (557)
-------- ------- -------
Other comprehensive (loss) income (11,159) 973 2,785
-------- ------- -------
Comprehensive income $ 28,136 $33,994 $40,822
======== ======= =======
</TABLE>
STOCK INCENTIVE PLANS
The Corporation has available up to 1,007,643 shares of common stock to be
issued under the restricted stock and incentive bonus and restricted stock bonus
plans to key employees of the Corporation. All shares of stock awarded under
these plans vest in equal installments over a five year period on each
anniversary of the date of grant. At December 31, 1999, 13,021 shares out of a
total of 59,212 shares were vested under these plans. The weighted average grant
date fair value of the restricted shares issued through December 31, 1999 was
$26.47.
The Corporation has available up to 2,599,108 shares of common stock to be
issued under both incentive and non-qualified stock option plans to key
employees of the Corporation. The options vest in equal installments over
periods ranging from three to ten years. 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. Because the exercise price of the
Corporation's stock options equals the market price of the underlying stock on
the date of grant, no compensation expense is recognized.
In accordance with FAS No. 123, pro forma information regarding net income and
earnings per share using the Black-Scholes option pricing model is as follows
(in thousands, except per share data):
F.N.B. CORPORATION 15
<PAGE> 35
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Year Ended December 31 1999 1998 1997
- ---------------------- ---- ---- ----
<S> <C> <C> <C>
Pro forma net income before extraordinary items $38,376 $32,383 $28,868
Extraordinary items, net of tax 8,809
------- ------- -------
Pro forma net income $38,376 $32,383 $37,677
======= ======= =======
Pro forma earnings per share:
Basic:
Before extraordinary items $ 1.74 $ 1.45 $ 1.32
Extraordinary items, net of tax .41
------- ------- -------
Net income $ 1.74 $ 1.45 $ 1.73
======= ======= =======
Diluted:
Before extraordinary items $ 1.76 $ 1.48 $ 1.35
Extraordinary items, net of tax .41
------- ------- -------
Net income $ 1.76 $ 1.48 $ 1.76
======= ======= =======
</TABLE>
For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period of five years.
The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferrable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Corporation's employee stock options have characteristics
significantly different from those of traded options, and changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options. The following
input assumptions were utilized:
1999 1998 1997
---- ---- ----
Risk-free interest rate . . . . . . . . . 4.72% 5.54% 6.53%
Dividend yield. . . . . . . . . . . . . . 3.20% 2.52% 1.66%
Expected stock price volatility . . . . . .23% .23% .22%
Weighted average expected life
of the options (years). . . . . . . . . 5.00 5.00 5.00
Activity in the Option Plan during the past three years was as follows:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE PRICE
1999 PER SHARE 1998 1997
---- --------- ---- ----
<S> <C> <C> <C> <C>
Outstanding, beginning of year 1,365,620 $15.21 1,390,417 1,321,012
Granted during the year 384,586 23.31 295,314 210,446
Exercised during the year (207,636) 7.38 (294,165) (87,924)
Forfeited during the year (24,996) 20.15 (25,946) (53,117)
--------- --------- ---------
Ending balance 1,517,574 18.63 1,365,620 1,390,417
========= ========= =========
</TABLE>
The following table summarizes information about the stock options outstanding
at December 31, 1999:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------- -------------------
RANGE OF WEIGHTED AVERAGE WEIGHTED WEIGHTED
EXERCISE OPTIONS REMAINING AVERAGE OPTIONS AVERAGE
PRICES OUTSTANDING CONTRACTUAL YEARS EXERCISE PRICE EXERCISABLE EXERCISE PRICE
------ ----------- ----------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$ 5.76 -$ 8.64 222,088 3.88 $ 7.05 216,897 $ 7.05
8.65 - 12.98 357,902 4.33 10.90 270,284 10.92
12.99 - 19.49 174,544 6.00 17.08 114,777 17.14
19.50 - 29.25 524,293 8.58 23.42 69,778 20.94
29.26 - 31.58 238,747 8.05 31.58 54,392 31.58
--------- -------
1,517,574 726,128
========= =======
</TABLE>
F.N.B. CORPORATION 16
<PAGE> 36
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Corporation has granted warrants to purchase common stock (at an exercise
price of $5.93 or $9.91 per share). Such warrants are exercisable and will
expire on June 19, 2001 or December 17, 2003. The Corporation has reserved
160,499 shares of common stock for issuance in connection with these warrants.
RETIREMENT AND OTHER POSTRETIREMENT BENEFIT PLANS
RETIREMENT PLANS
Following are reconciliations of the change in benefit obligation, change in
plan assets and funded status (in thousands):
<TABLE>
<CAPTION>
December 31 1999 1998
- ----------- ---- ----
<S> <C> <C>
Benefit obligation at beginning of year $30,893 $25,400
Service cost 1,604 1,310
Interest cost 2,097 1,839
Plan amendments 549
Actuarial (gain) loss (5,357) 2,522
Benefits paid (1,261) (727)
------- -------
Benefit obligation at end of year $27,976 $30,893
======= =======
<CAPTION>
December 31 1999 1998
- ----------- ---- ----
Fair value of plan assets at beginning of year $28,340 $25,228
Actual return on plan assets 2,382 3,808
Company contribution 49 31
Benefits paid (1,261) (727)
------- -------
Fair value of plan assets at end of year $29,510 $28,340
======= =======
<CAPTION>
December 31 1999 1998
- ----------- ---- ----
Funded status of plan $ 1,534 $(2,553)
Unrecognized actuarial gain (8,063) (2,573)
Unrecognized prior service cost 1,715 2,043
Unrecognized net transition obligation 37 42
------- -------
Accrued pension cost $(4,777) $(3,041)
======= =======
</TABLE>
Included in the above reconciliation is the benefit obligation and fair value
of plan assets for the Basic Retirement Plan which were $6.0 million and $0,
respectively, as of December 31, 1999, and $5.5 million and $0, respectively, as
of December 31, 1998.
The amounts recognized in the Corporation's consolidated financial statements
include the following (in thousands):
December 31 1999 1998
- ----------- ---- ----
Prepaid pension cost $ 433 $ 1,016
Accrued pension cost (5,210) (4,057)
Additional minimum liability (809) (1,475)
Intangible asset 809 1,475
------- -------
Net amount recognized on balance sheet $(4,777) $(3,041)
======= =======
F.N.B. CORPORATION 17
<PAGE> 37
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The pension expense for the defined benefit plans included the following
components (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31 1999 1998 1997
- ---------------------- ---- ---- ----
<S> <C> <C> <C>
Service costs $ 1,604 $ 1,310 $ 1,265
Interest cost 2,097 1,839 1,726
Expected return on plan assets (2,234) (1,989) (1,603)
Net amortization 319 233 293
Curtailment gain (69)
------- ------- -------
Net pension expense $ 1,786 $ 1,393 $ 1,612
======= ======= =======
<CAPTION>
Assumptions as of December 31 1999 1998 1997
- ----------------------------- ---- ---- ----
Weighted average discount rate 7.8% 6.5% 7.0%
Rates of increase in compensation levels 4.0% 4.0% 4.0%
Expected long-term rate of return on plan assets 8.0% 8.0% 8.0%
</TABLE>
At December 31, 1999, plan assets include 74,116 shares of the Corporation's
common stock, having a market value of $1.6 million. Dividends received on these
shares totaled $53,000 for 1999.
Certain subsidiaries of the Corporation participate in a qualified 401(k)
defined contribution plan for the full-time employees of the subsidiary. A
percentage of employees' contributions to the plan are matched by the
Corporation. The Corporation's contribution expense amounted to $844,000 in
1999, $734,000 in 1998 and $663,000 in 1997.
Certain subsidiaries of the Corporation participate in a Salary Savings ESOP
Plan, under which eligible employees may contribute a percentage of their
salary. The Corporation matches 50 percent of an eligible employee's
contribution on the first 6 percent that the employee defers, and may make a
discretionary contribution payable either in cash or the Corporation's common
stock based upon the Corporation's profitability. Employees are generally
eligible to participate upon completing one year of service and having attained
age 21. Employer contributions become 20 percent vested when an employee has
completed two years of service, and vest at a rate of 20 percent per year
thereafter. The Corporation recognized expense of $1.0 million in 1999, $705,000
in 1998 and $468,000 in 1997 related to the Salary Savings ESOP Plan.
OTHER POSTRETIREMENT BENEFIT PLANS
Following are reconciliations of the change in benefit obligation, change in
plan assets and funded status (in thousands):
<TABLE>
<CAPTION>
December 31 1999 1998
- ----------- ---- ----
<S> <C> <C>
Benefit obligation at beginning of year $ 965 $779
Service cost 101 77
Interest cost 74 65
Plan participants' contributions 4 3
Plan amendments 60
Actuarial loss 112 126
Benefits paid (111) (85)
------ ----
Benefit obligation at end of year $1,205 $965
====== ====
</TABLE>
F.N.B. CORPORATION 18
<PAGE> 38
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
December 31 1999 1998
- ----------- ---- ----
<S> <C> <C>
Fair value of plan assets at beginning of year $ 0 $ 0
Company contribution 107 81
Plan participants' contributions 4 4
Benefits paid (111) (85)
------- -----
Fair value of plan assets at end of year $ 0 $ 0
======= =====
<CAPTION>
December 31 1999 1998
- ----------- ---- ----
Funded status of plan $(1,205) $(965)
Unrecognized actuarial gain (60) (177)
Unrecognized prior service cost 63 5
Unrecognized net transition obligation 481 522
------- ------
Accrued postretirement benefit cost $ (721) $(615)
======= ======
</TABLE>
Net periodic postretirement benefit cost included the following components (in
thousands):
<TABLE>
<CAPTION>
Year Ended December 31 1999 1998 1997
- ---------------------- ---- ---- ----
<S> <C> <C> <C>
Service cost $101 $ 77 $ 60
Interest cost 74 65 56
Net amortization 38 34 25
---- ---- ----
Net periodic postretirement benefit cost $213 $176 $141
==== ==== ====
</TABLE>
Discount rates of 7.8%, 6.5% and 7.0% for 1999, 1998 and 1997, respectively,
were used to determine the accumulated postretirement benefit obligation.
The assumed health care cost trend rate has a significant effect on the
amounts reported. A 7.5% annual rate of increase in the per capita costs of
covered health care benefits is assumed for 2000, gradually decreasing to 5.3%
by the year 2003. A one percentage point change in the assumed health care cost
trend rate would have had the following effects on 1999 service and interest
cost and the accumulated postretirement benefit obligation at December 31, 1999
(in thousands):
<TABLE>
<CAPTION>
1% 1%
INCREASE DECREASE
-------- --------
<S> <C> <C>
Effect on service and interest components of net periodic cost $ 22 $ (19)
Effect on accumulated postretirement benefit obligation 130 (112)
</TABLE>
F.N.B. CORPORATION 19
<PAGE> 39
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
INCOME TAXES
Income tax expense consists of the following (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31 1999 1998 1997
- ---------------------- ---- ---- ----
<S> <C> <C> <C>
Current income taxes:
Federal taxes $25,269 $19,723 $13,850
State taxes 945 915 410
------- ------- -------
26,214 20,638 14,260
Deferred income taxes:
Federal taxes (9,051) (4,220) (1,247)
------- ------- -------
$17,163 $16,418 $13,013
======= ======= =======
</TABLE>
The tax effects of temporary differences giving rise to deferred tax assets and
liabilities are presented below (in thousands):
<TABLE>
<CAPTION>
December 31 1999 1998
- ----------- ---- ----
<S> <C> <C>
Deferred tax assets:
Allowance for loan losses $ 12,709 $ 11,242
Deferred compensation 2,927 2,011
Deferred benefits 2,346 1,414
Loan fees
Other 1,012 924
-------- --------
TOTAL GROSS DEFERRED TAX ASSETS 18,994 15,591
-------- --------
Deferred tax liabilities:
Depreciation (577) (230)
Deferred gain on sale of subsidiary (3,555) (3,555)
Unrealized losses (gains) on securities available for sale 2,607 (3,403)
Leasing (20,945) (9,732)
Other (2,344) (1,450)
-------- --------
TOTAL GROSS DEFERRED TAX LIABILITIES (24,814) (18,370)
-------- --------
NET DEFERRED TAX LIABILITIES $ (5,820) $ (2,779)
======== ========
</TABLE>
Following is a reconciliation between tax expense using federal statutory tax
and actual effective tax:
<TABLE>
<CAPTION>
Year Ended December 31 1999 1998 1997
- ---------------------- ---- ---- ----
<S> <C> <C> <C>
Federal statutory tax rate 35.0% 35.0% 35.0%
Effect of nontaxable interest and dividend income (4.7) (3.2) (3.5)
State taxes 1.1 1.2 .6
Goodwill .5 .5 .3
Merger related costs .3 1.1 .6
Other items (1.8) (1.4) (2.2)
---- ---- ----
Effective tax rate 30.4% 33.2% 30.8%
==== ==== ====
</TABLE>
Income tax expense related to gains on the sale of securities was $586,000,
$485,000 and $450,000 for the years ended December 31, 1999, 1998 and 1997,
respectively.
F.N.B. CORPORATION 20
<PAGE> 40
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
EARNINGS PER SHARE
The following tables set forth the computation of basic and diluted earnings
per share (in thousands, except per share data):
<TABLE>
<CAPTION>
Year Ended December 31 1999 1998 1997
- ---------------------- ---- ---- ----
<S> <C> <C> <C>
BASIC
Income before extraordinary items $ 39,295 $ 33,021 $ 29,228
Less: Preferred stock dividends declared (411) (492) (588)
----------- ----------- -----------
Income before extraordinary items applicable to basic common shares 38,884 32,529 28,640
Extraordinary items, net of tax 8,809
----------- ----------- -----------
Net income applicable to basic common shares $ 38,884 $ 32,529 $ 37,449
=========== =========== ===========
Average common shares outstanding 20,813,386 20,691,157 20,064,562
=========== =========== ===========
Income before extraordinary items $ 1.87 $ 1.57 $ 1.43
Extraordinary items, net of tax .44
----------- ----------- -----------
Earnings per share $ 1.87 $ 1.57 $ 1.87
=========== =========== ===========
DILUTED
Income before extraordinary items $ 39,295 $ 33,021 $ 29,228
Extraordinary items, net of tax 8,809
----------- ----------- -----------
Net income applicable to diluted common shares $ 39,295 $ 33,021 $ 38,037
=========== =========== ===========
Average common shares outstanding 20,813,386 20,691,157 20,064,562
Convertible preferred stock 521,469 595,875 695,819
Net effect of dilutive stock options based on the
treasury stock method using the average market price 440,499 639,233 640,856
----------- ----------- -----------
Diluted average common shares outstanding 21,775,354 21,926,265 21,401,237
=========== =========== ===========
Income before extraordinary items $ 1.80 $ 1.51 $ 1.37
Extraordinary items, net of tax .41
----------- ----------- -----------
Earnings per share $ 1.80 $ 1.51 $ 1.78
=========== =========== ===========
</TABLE>
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 December 31, 1999, that the Corporation and
each of its banking subsidiaries meet all capital adequacy requirements to which
they are subject.
As of December 31, 1999, the Corporation and each of its banking subsidiaries
have been categorized by the various regulators as "well capitalized" under the
regulatory framework for prompt corrective action.
F.N.B. CORPORATION 21
<PAGE> 41
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Following are the capital ratios as of December 31, 1999 for the Corporation
and its significant subsidiaries, First National Bank of Pennsylvania and First
National Bank of Naples (dollars in thousands):
<TABLE>
<CAPTION>
WELL CAPITALIZED MINIMUM CAPITAL
ACTUAL REQUIREMENTS REQUIREMENTS
-------------------- ----------------------- ---------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
TOTAL CAPITAL (TO RISK-WEIGHTED ASSETS):
F.N.B. Corporation $318,116 11.5% $275,695 10.0% $220,556 8.0%
First National Bank of Pennsylvania 99,578 10.8 92,467 10.0 73,974 8.0
First National Bank of Naples 60,208 10.4 58,120 10.0 46,496 8.0
TIER 1 CAPITAL (TO RISK-WEIGHTED ASSETS):
F.N.B. Corporation $278,107 10.1% $165,417 6.0% $110,278 4.0%
First National Bank of Pennsylvania 88,005 9.5 55,480 6.0 36,987 4.0
First National Bank of Naples 55,289 9.5 34,872 6.0 23,248 4.0
TIER 1 CAPITAL (TO AVERAGE ASSETS):
F.N.B. Corporation $278,107 7.7 $180,092 5.0 $144,073 4.0
First National Bank of Pennsylvania 88,005 6.9 63,965 5.0 51,172 4.0
First National Bank of Naples 55,289 7.4 37,400 5.0 29,920 4.0
</TABLE>
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.
The Corporation's banking subsidiaries were required to maintain aggregate
cash reserves with the Federal Reserve Bank amounting to $37.0 million at
December 31, 1999. The Corporation also maintains deposits for various services
such as check clearing.
Certain limitations exist under applicable law and regulations by regulatory
agencies regarding dividend payments to a parent by its subsidiaries. As of
December 31, 1999, the subsidiaries had $49.4 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 $35.3 million at December
31, 1999.
BUSINESS SEGMENTS
The Corporation operates in two reportable segments: community banks and
insurance agencies. The Corporation's community bank 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 bank subsidiaries offer various alternative investment products,
including mutual funds
F.N.B. CORPORATION 22
<PAGE> 42
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
and annuities. The Corporation's insurance agencies are full-service insurance
companies offering all lines of commercial and personal insurance through major
carriers. The following tables provide financial information for these segments
of the Corporation (in thousands). Other items shown in the table below
represent the parent company, other non-bank subsidiaries and eliminations,
which are necessary for purposes of reconciling to the consolidated amounts.
<TABLE>
<CAPTION>
COMMUNITY INSURANCE ALL
At or for the Year Ended December 31, 1999 BANKS AGENCIES OTHER CONSOLIDATED
- ------------------------------------------ --------- --------- ----- ------------
<S> <C> <C> <C> <C>
Interest income $ 239,501 $ 61 $15,354 $ 254,916
Interest expense 103,221 110 3,136 106,467
Non-interest income 32,461 7,978 6,489 46,928
Non-interest expense 107,789 6,436 13,520 127,745
Intangible amortization 1,891 43 1,934
Income tax expense (credit) 16,746 (359) 776 17,163
Core operating income* 36,202 1,852 2,509 40,563
Non-recurring items, net of tax* (428) (840) (1,268)
Net income 35,774 1,852 1,669 39,295
Total assets 3,600,090 6,453 99,641 3,706,184
</TABLE>
<TABLE>
<CAPTION>
COMMUNITY INSURANCE ALL
At or for the Year Ended December 31, 1998 BANKS AGENCIES OTHER CONSOLIDATED
- ------------------------------------------ --------- --------- ----- ------------
<S> <C> <C> <C> <C>
Interest income $ 228,780 $ 53 $17,194 $ 246,027
Interest expense 104,414 92 3,646 108,152
Non-interest income 28,366 5,895 5,044 39,305
Non-interest expense 97,770 5,033 16,045 118,848
Intangible amortization 1,277 44 1,321
Income tax expense (credit) 16,607 (189) 16,418
Core operating income* 35,298 823 1,243 37,364
Non-recurring items, net of tax* (3,225) (1,118) (4,343)
Net income 32,073 823 125 33,021
Total assets 3,319,678 3,751 83,248 3,406,677
</TABLE>
<TABLE>
<CAPTION>
COMMUNITY INSURANCE ALL
At or for the Year Ended December 31, 1999 BANKS AGENCIES OTHER CONSOLIDATED
- ------------------------------------------ --------- --------- ----- ------------
<S> <C> <C> <C> <C>
Interest income $ 206,638 $ 67 $18,421 $ 225,126
Interest expense 92,213 101 4,414 96,728
Non-interest income 31,446 5,799 (3,967) 33,278
Non-interest expense 90,141 4,611 11,596 106,348
Intangible amortization 1,474 110 1,584
Income tax expense (credit) 15,293 (2,280) 13,013
Core operating income* 31,047 1,154 1,592 33,793
Non-recurring items, net of tax* 737 3,507 4,244
Net income 31,784 1,154 5,099 38,037
Total assets 3,006,101 4,610 87,746 3,098,457
</TABLE>
* Core operating earnings exclude merger related and other non-recurring
costs of $1.3 million in 1999, merger related and other non-recurring costs
$4.3 million in 1998 and extraordinary gains on the sale of a subsidiary
and branches of $8.8 million and merger related and other non-recurring
costs of $4.6 million in 1997, all on an after-tax basis. Such presentation
is provided in order to eliminate all items deemed by management to be of a
non-recurring nature.
F.N.B. CORPORATION 23
<PAGE> 43
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CASH FLOW INFORMATION
Following is a summary of supplemental cash flow information (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31 1999 1998 1997
- ---------------------- ---- ---- ----
<S> <C> <C> <C>
Cash paid during year for:
Interest $105,671 $107,292 $94,471
Income taxes 7,773 9,642 11,620
Non-cash investing and financing activities:
Acquisition of real estate in settlement of loans $ 3,929 $ 3,037 $ 3,336
Loans granted in the sale of other real estate 176 2,396 1,557
</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 1999 1998
- ----------- ---- ----
<S> <C> <C>
ASSETS
Cash $ 740 $ 467
Short-term investments 3,827 14,945
Advances to subsidiaries 1,621
Premises and equipment 1,192
Other assets 14,468 10,248
Investment in bank subsidiaries 262,019 245,262
Investment in non-bank subsidiaries 135,070 114,943
-------- --------
TOTAL ASSETS $417,316 $387,486
======== ========
LIABILITIES
Other liabilities $ 15,568 $ 7,552
Short-term borrowings 70,493 49,609
Long-term debt 40,940 48,187
-------- --------
TOTAL LIABILITIES 127,001 105,348
-------- --------
STOCKHOLDERS' EQUITY 290,315 282,138
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $417,316 $387,486
======== ========
</TABLE>
F.N.B. CORPORATION 24
<PAGE> 44
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
INCOME STATEMENT (in thousands)
Year Ended December 31 1999 1998 1997
- ---------------------- ---- ---- ----
<S> <C> <C> <C>
INCOME
Dividend income from subsidiaries:
Bank $22,875 $29,401 $31,373
Non-bank 1,565 2,148 4,660
------- ------- -------
24,440 31,549 36,033
------- ------- -------
Gain on sale of securities 1,296
Interest income 667 452 5,423
Income from equity investment 621
Service fee income 8,663 7,776
Other income 21 98 95
------- ------- -------
TOTAL INCOME 33,791 39,875 43,468
------- ------- -------
EXPENSES
Interest expense 5,846 6,136 6,280
Salaries and personnel expense 8,278 8,264
Service fees 319 985 970
Other expenses 4,730 4,090 3,248
------- ------- -------
TOTAL EXPENSES 19,173 19,475 10,498
------- ------- -------
INCOME BEFORE TAXES AND EQUITY IN
UNDISTRIBUTED INCOME OF SUBSIDIARIES 14,618 20,400 32,970
Income tax benefit 3,248 3,880 1,156
------- ------- -------
17,866 24,280 34,126
------- ------- -------
Equity in undistributed income of subsidiaries:
Bank 14,752 3,337 802
Non-bank 6,677 5,404 (2,118)
------- ------- -------
21,429 8,741 (1,316)
------- ------- -------
INCOME BEFORE EXTRAORDINARY ITEM 39,295 33,021 32,810
------- ------- -------
Gain on sale of subsidiary, net of tax 5,227
NET INCOME $39,295 $33,021 $38,037
======= ======= =======
</TABLE>
F.N.B. CORPORATION 25
<PAGE> 45
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS (in thousands)
- --------------------------------------
Year Ended December 31 1999 1998 1997
- ---------------------- ---- ---- ----
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 39,295 $ 33,021 $ 38,037
Adjustments to reconcile net income to net
cash flows from operating activities:
Gain on sale of securities (1,296)
Undistributed earnings of subsidiaries (21,429) (8,741) 1,316
Extraordinary gain on sale of subsidiaries (5,227)
Other, net 13,715 (3,386) (2,745)
-------- -------- --------
Net cash flows from operating activities 31,581 20,894 30,085
-------- -------- --------
INVESTING ACTIVITIES
Net change in short-term investments (12,493) 2,362
Purchase of securities (1,704)
Proceeds from sale of securities 1,828
Advances from (to) subsidiaries 1,621 1,501 (2,735)
Cash paid upon acquisition of subsidiaries (13,586)
Investment in subsidiaries (26,607) 6,845 (11,700)
-------- -------- --------
Net cash flows from investing activities (24,986) (4,147) (25,535)
-------- -------- --------
FINANCING ACTIVITIES
Net increase in due to non-bank subsidiary 2,950
Net increase (decrease) in short-term borrowings 20,884 (322) (5,270)
Decrease in long-term debt (17,736) (6,510) (6,680)
Increase in long-term debt 10,489 10,837 16,550
Net acquisition of treasury stock (3,439) (7,572) (2,535)
Cash dividends paid (16,520) (12,719) (9,578)
-------- -------- --------
Net cash flows from financing activities (6,322) (16,286) (4,563)
-------- -------- --------
NET INCREASE (DECREASE) IN CASH 273 461 (13)
Cash at beginning of year 467 6 19
-------- -------- --------
CASH AT END OF YEAR $ 740 $ 467 $ 6
======== ======== ========
CASH PAID
Interest $ 5,933 $ 6,049 $ 6,181
======== ======== ========
</TABLE>
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of
each financial instrument:
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 fixed rate 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. The fair
value of adjustable rate loans approximate the carrying amount.
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.
F.N.B. CORPORATION 26
<PAGE> 46
F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
The estimated fair values of the Corporation's financial instruments are as
follows (in thousands):
<TABLE>
<CAPTION>
1999 1998
------------------------------ ----------------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- ----- -------- -----
<S> <C> <C> <C> <C>
FINANCIAL ASSETS
Cash and short-term investments $ 182,128 $ 182,128 $ 183,745 $ 183,745
Securities available for sale 408,731 408,731 455,435 455,435
Securities held to maturity 77,359 75,905 118,575 119,522
Net loans, including loans held for sale 2,776,196 2,765,002 2,406,523 2,449,270
FINANCIAL LIABILITIES
Deposits $2,909,434 $2,907,673 $2,850,428 $2,860,374
Short-term borrowings 332,197 332,197 150,981 150,981
Long-term debt 117,634 117,368 70,384 72,340
</TABLE>
REPORT OF INDEPENDENT AUDITORS
Stockholders and Board of Directors
F.N.B. Corporation
We have audited the accompanying consolidated balance sheet of F.N.B.
Corporation and Subsidiaries (F.N.B. Corporation) as of December 31, 1999 and
1998, and the related consolidated statements of income, stockholders' equity
and cash flows for each of the three years in the period ended December 31,
1999. These consolidated financial statements are the responsibility of
management of F.N.B. Corporation. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits. We did not audit
the financial statements of Guaranty Bank and Trust Company, which statements
reflect total assets and net income constituting approximately 4% and 1% for
1998 of the related consolidated financial statement totals. We did not audit
the financial statements of Seminole Bank, Citizens Holding Corporation and
subsidiaries or Guaranty Bank and Trust Company, which statements reflect net
income constituting approximately 8% for 1997 of the related consolidated
financial statement totals. 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 Seminole Bank, Citizens Holding Corporation and
subsidiaries and Guaranty Bank and Trust Company, is based solely on the reports
of the other auditors.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of F.N.B. Corporation at
December 31, 1999 and 1998, and the consolidated results of their operations and
their cash flows for each of the three years in the period ended December 31,
1999 in conformity with accounting principles generally accepted in the United
States.
/s/ Ernst & Young LLP
Pittsburgh, Pennsylvania
January 31, 2000
F.N.B. CORPORATION 27
<PAGE> 47
F.N.B. CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA
F.N.B. CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA (Dollars in thousands, except per share data)
The mergers between F.N.B. Corporation and Guaranty Bank & Trust Company and
Roger Bouchard Insurance, Inc. were completed on January 13, 1999 and December
7, 1999, respectively, and accounted for as poolings-of-interests. Accordingly,
all financial information has been restated as if the companies were combined
for all periods presented.
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31
Total interest income $ 254,916 $ 246,027 $ 225,126 $ 209,761 $ 197,337
Total interest expense 106,467 108,152 96,728 88,063 84,419
Net interest income 148,449 137,875 128,398 121,698 112,918
Provision for loan losses 9,240 7,572 11,503 10,063 7,416
Total non-interest income 46,928 39,305 33,278 28,626 27,080
Total non-interest expenses 129,679 120,169 107,932 105,727 94,215
Net income before extraordinary items 39,295 33,021 29,228 23,327 25,795
Extraordinary items, net of tax 8,809
Net income 39,295 33,021 38,037 23,327 25,795
Core operating earnings * 40,563 37,364 33,793 27,470 25,795
AT YEAR-END
Total assets $3,706,184 $3,406,677 $3,098,453 $2,796,926 $2,584,367
Net loans 2,767,463 2,390,576 2,144,734 1,939,818 1,738,316
Deposits 2,909,434 2,850,428 2,583,586 2,344,312 2,200,288
Long-term debt 117,634 70,384 73,434 59,448 52,109
Preferred stock 2,075 2,380 2,875 3,525 4,516
Total stockholders' equity 290,315 282,138 270,440 235,025 220,978
PER COMMON SHARE
Core operating earnings *
Basic $ 1.93 $ 1.78 $ 1.65 $ 1.34 $ 1.22
Diluted 1.86 1.70 1.58 1.29 1.22
Net income
Basic 1.87 1.57 1.87 1.13 1.22
Diluted 1.80 1.51 1.78 1.10 1.22
Cash dividends .71 .67 .56 .55 .30
Book value 13.65 13.28 12.65 11.22 10.67
RATIOS
Return on average assets, based
on core operating earnings * 1.16% 1.16% 1.18% 1.03% 1.03%
Return on average assets 1.13 1.02 1.32 .88 1.03
Return on average equity, based
on core operating earnings * 14.18 13.50 13.64 11.97 12.34
Return on average equity 13.74 11.93 15.36 10.16 12.34
Dividend payout ratio 41.43 41.85 28.11 29.26 15.67
Average equity to average assets 8.19 8.57 8.62 8.62 8.35
</TABLE>
* Core operating earnings exclude merger related and other non-recurring
costs of $1.3 million in 1999, merger related and other non-recurring costs
of $4.3 million in 1998, extraordinary gains on the sale of a subsidiary
and branches of $8.8 million and merger related and other non-recurring
costs of $4.6 million in 1997, and a one-time assessment of $2.1 million
legislated by Congress to recapitalize the Savings Association Insurance
Fund and merger related and other non-recurring costs of $2.1 million in
1996, all on an after-tax basis. Such presentation is provided in order to
eliminate all items deemed by management to be of a non-recurring nature.
F.N.B. CORPORATION 28
<PAGE> 48
F.N.B. CORPORATION AND SUBSIDIARIES
QUARTERLY EARNINGS SUMMARY
F.N.B. CORPORATION AND SUBSIDIARIES
QUARTERLY EARNINGS SUMMARY (Dollars in thousands, except per share data)
The mergers between F.N.B. Corporation and Guaranty Bank & Trust Company and
Roger Bouchard Insurance, Inc. were completed on January 13, 1999 and December
7, 1999, respectively, and accounted for as poolings-of-interests. Accordingly,
the unaudited quarterly financial data has been restated as if the companies
were combined for all periods presented.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
QUARTER ENDED 1999 MAR. 31 JUNE 30 SEPT. 30 DEC. 31
- ------------------ ------- ------- -------- -------
Total interest income $61,262 $62,422 $64,185 $67,047
Total interest expense 25,615 25,548 26,664 28,640
Net interest income 35,647 36,874 37,521 38,407
Provision for loan losses 2,051 2,540 2,105 2,544
Total non-interest income 11,265 11,431 12,284 11,948
Total non-interest expenses 32,342 31,747 32,677 32,913
Net income 8,841 9,796 10,345 10,313
Core operating earnings * 9,660 9,796 10,320 10,787
PER COMMON SHARE
Core operating earnings *
Basic $ .46 $ .47 $ .50 $ .50
Diluted .44 .45 .47 .50
Net income
Basic .42 .47 .49 .49
Diluted .41 .45 .47 .47
Cash dividends .17 .18 .18 .18
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
QUARTER ENDED 1998 MAR. 31 JUNE 30 SEPT. 30 DEC. 31
- ------------------ ------- ------- -------- -------
Total interest income $59,976 $61,289 $62,207 $62,555
Total interest expense 26,289 27,006 27,657 27,200
Net interest income 33,687 34,283 34,550 35,355
Provision for loan losses 1,761 1,615 1,977 2,219
Total non-interest income 9,265 9,397 9,816 10,827
Total non-interest expenses 28,786 29,753 30,144 31,486
Net income 8,579 8,025 8,299 8,118
Core operating earnings ** 8,749 9,438 9,780 9,397
PER COMMON SHARE
Core operating earnings **
Basic $ .42 $ .45 $ .47 $ .44
Diluted .40 .43 .44 .43
Net income
Basic .41 .38 .39 .39
Diluted .39 .37 .38 .37
Cash dividends .16 .17 .17 .17
</TABLE>
* Core operating earnings exclude merger related costs of $819,000 recognized
during the first quarter of 1999, gain on the sale of a branch of $392,000
and non-recurring costs of $367,000 recognized during the third quarter of
1999 and merger related costs of $474,000 recognized during the fourth
quarter of 1999, all on an after-tax basis.
** Core operating earnings exclude merger related costs and other
non-recurring costs of approximately $170,000, $1.4 million, $1.5 million
and $1.3 million recognized during the first through fourth quarters of
1998, respectively, all on an after-tax basis.
F.N.B. CORPORATION 29
<PAGE> 49
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 combined financial condition and results
of operations giving retroactive effect to the mergers of Guaranty Bank & Trust
Company (Guaranty) and Roger Bouchard Insurance, Inc. (RBI) with and into F.N.B.
Corporation (the Corporation), and is intended to be read in conjunction with
the Consolidated Financial Statements and accompanying Notes to those
statements. The merger of the Corporation and Guaranty was consummated on
January 13, 1999 and resulted in the Corporation issuing 1,250,994 shares of
common stock. The merger with the Corporation and RBI was consummated on
December 7, 1999. The mergers have been accounted for as poolings-of-interests.
This financial review is presented as if the mergers had been consummated for
all periods presented.
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
Core operating earnings increased 8.6% to $40.6 million in 1999 from $37.4
million in 1998. Basic core operating earnings per share were $1.93 and $1.78
for 1999 and 1998, while diluted core operating earnings per share were $1.86
and $1.70, respectively, for those same periods. The results for 1999 exclude
merger related and other non-recurring costs of $1.3 million while the results
for 1998 exclude merger related and other non-recurring costs of $4.3 million,
both net of tax. Including these items, net income was $39.3 million in 1999
versus $33.0 million in 1998, resulting in diluted earnings per share of $1.80
and $1.51, for those same periods.
Net interest income, on a fully taxable equivalent basis, increased by 7.6% as
net average interest earning assets increased by $174.9 million. These factors
are further detailed in the discussion which follows.
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 1.16% for both 1999 and 1998, while the Corporation's return
on average equity was 14.18% for 1999 and 13.50% for 1998, each calculated on a
core operating earnings basis. Including the non-recurring items, the
Corporation had a return on average assets of 1.13% and 1.02% for 1999 and 1998,
respectively, and a return on average equity of 13.74% and 11.93% for those same
periods.
DILUTED CORE OPERATING EARNINGS PER SHARE
1995 1996 1997 1998 1999
- ---- ---- ---- ---- ----
$1.22 $1.29 $1.58 $1.70 $1.86
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 $150.6 million in
1999 versus $139.9 million in 1998. Net interest income consisted of interest
income of $257.0 million and interest expense of $106.5 million in 1999,
compared to $248.1 million and $108.2 million for each, respectively, in 1998.
Net interest margin increased to 4.76% in 1999 compared to 4.68% in 1998.
F.N.B. CORPORATION 30
<PAGE> 50
F.N.B. CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION
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, 1999 1998 1997
------------------------- -------------------------- --------------------------
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 $ 5,077 $ 307 6.05% $ 3,765 $ 181 4.81% $ 4,312 $ 255 5.91%
Federal funds sold 24,653 1,219 4.94 76,247 4,153 5.45 89,061 4,742 5.32
Taxable investment securities (1) 451,367 27,655 6.13 525,905 32,458 6.17 469,520 29,210 6.22
Non-taxable investment securities (2) 78,206 4,808 6.15 87,312 5,362 6.14 80,597 4,823 5.98
Loans (2)(3) 2,603,347 223,033 8.57 2,294,506 205,933 8.98 2,035,521 188,187 9.25
---------- -------- ---------- -------- ---------- -------
TOTAL INTEREST EARNING ASSETS 3,162,650 257,022 8.13 2,987,735 248,087 8.30 2,679,011 227,217 8.48
---------- -------- ---------- -------- ---------- -------
Cash and due from banks 114,865 99,758 90,194
Allowance for loan losses (34,330) (32,193) (31,809)
Premises and equipment 100,797 88,443 67,886
Other assets 148,000 86,627 67,900
---------- ---------- ----------
$3,491,982 $3,230,370 $2,873,182
========== ========== ==========
LIABILITIES
Interest bearing liabilities:
Deposits:
Interest bearing demand $ 469,429 9,185 1.96 $ 490,169 10,034 2.05 $ 388,861 9,327 2.40
Savings 798,718 21,528 2.70 658,351 21,113 3.21 615,244 16,887 2.74
Other time 1,169,679 59,613 5.10 1,201,560 65,510 5.45 1,100,901 60,252 5.47
Short-term borrowings 237,919 11,282 4.74 134,789 6,813 5.05 135,089 6,415 4.75
Long-term debt 73,968 4,859 6.57 74,451 4,682 6.29 52,374 3,847 7.35
---------- -------- ---------- -------- ---------- -------
TOTAL INTEREST BEARING
LIABILITIES 2,749,713 106,467 3.87 2,559,320 108,152 4.23 2,292,469 96,728 4.22
---------- -------- ---------- -------- ---------- -------
Non-interest bearing demand deposits 400,047 346,479 293,174
Other liabilities 56,158 47,716 39,854
---------- ---------- ----------
3,205,918 2,953,515 2,625,497
---------- ---------- ----------
STOCKHOLDERS' EQUITY 286,064 276,855 247,685
---------- ---------- ----------
$3,491,982 $3,230,370 $2,873,182
========== ========== ==========
Excess of interest earning assets
over interest bearing liabilities $ 412,937 $ 428,415 $ 386,542
========== ========== ==========
Net interest income $150,555 $139,935 $130,489
======== ======== ========
Net interest spread 4.26% 4.07% 4.26%
==== ==== ====
Net interest margin (4) 4.76% 4.68% 4.87%
==== ==== ====
</TABLE>
(1) The average balances and yields earned on securities are based on
historical cost.
(2) The amounts are reflected on a fully taxable equivalent basis using the
federal statutory tax rate of 35%, adjusted for certain federal tax
preferences.
(3) Average balances include 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.
(4) Net interest margin is calculated by dividing the difference between total
interest earned and total interest paid by total interest earning assets.
F.N.B. CORPORATION 31
<PAGE> 51
F.N.B. CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION
The yield on total interest earning assets declined by 17 basis points and the
yield on interest bearing liabilities decreased by 36 basis points. With a
higher interest rate environment during the latter part of 1999, 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.
Interest income on loans, on a fully taxable equivalent basis, increased 8.3%
from $205.9 million in 1998 to $223.0 million in 1999. This increase was the
result of an increase in average loans of 13.5% as the average yield declined by
41 basis points.
Although interest expense on deposits decreased $6.3 million or 6.5% in 1999,
average deposits increased 3.7%. The average balance in savings deposits
increased $140.4 million, while the average balance in interest bearing demand
deposits and time deposits decreased by $20.7 and $31.9, respectively. The
average balance in non-interest bearing demand deposits increased by $53.6
million. Interest expense on short-term borrowings increased $4.5 million or
65.6% in 1999 due to a $103.1 million increase in average short-term borrowings,
which was partially offset by a decline in the rate paid of 31 basis points.
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, 1999 1998
----------------------------------- -----------------------------------
VOLUME RATE NET VOLUME RATE NET
------ ---- --- ------ ---- ---
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Interest bearing deposits with banks $ 72 $ 54 $ 126 $ (30) $ (44) $ (74)
Federal funds sold (2,578) (356) (2,934) (709) 120 (589)
Securities (5,156) (201) (5,357) 3,889 (102) 3,787
Loans 25,878 (8,778) 17,100 23,029 (5,283) 17,746
-------- -------- -------- -------- -------- --------
18,216 (9,281) 8,935 26,179 (5,309) 20,870
-------- -------- -------- -------- -------- --------
INTEREST EXPENSE
Deposits:
Interest bearing (417) (432) (849) 1,606 (899) 707
Savings 1,629 (1,214) 415 1,226 3,000 4,226
Other time (1,724) (4,173) (5,897) 5,477 (219) 5,258
Short-term borrowings 4,859 (390) 4,469 (15) 413 398
Long-term debt (30) 207 177 1,269 (434) 835
-------- -------- -------- -------- -------- --------
4,317 (6,002) (1,685) 9,563 1,861 11,424
-------- -------- -------- -------- -------- --------
NET CHANGE $ 13,899 $ (3,279) $ 10,620 $ 16,616 $ (7,170) $ 9,446
======== ======== ======== ======== ======== ========
</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 net
size of the rate and volume changes.
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 factors, including qualitative factors, relevant to the
collectibility of the existing portfolio. The provision for loan losses
increased 22.0% to $9.2 million in 1999. This increase reflects the
Corporation's continued strong loan growth. (See "Non-Performing Loans and
Allowance for Loan Losses" section of this report).
F.N.B. CORPORATION 32
<PAGE> 52
F.N.B. CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION
NON-INTEREST INCOME
Total non-interest income increased 19.4% from $39.3 million in 1998 to $46.9
million in 1999. This increase was attributable to increases in service charges,
income from bank owned life insurance, trust fees and other non-interest income.
Service charges and trust fees increased 24.4% from $19.4 million in 1998 to
$24.1 million in 1999. Revenue was recognized as a result of increases in the
level of deposits. In addition, the Corporation's December of 1998 investment in
bank owned life insurance provided $3.1 million of other income. Also during
1999, the Corporation recognized $1.4 million in income from its equity
investment in Sun Bancorp, Inc. compared to $1.3 million in 1998. Lastly, the
Corporation recognized a gain of $603,000 resulting from the sale of a branch.
NON-INTEREST EXPENSE
Total non-interest expense increased from $120.2 million in 1998 to $129.7
million in 1999. The increase was primarily attributable to an increase of $7.5
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.
The Corporation recognized $1.8 million in 1999 and $5.5 million in 1998 in
merger related costs. The 1999 expenses were primarily data processing
termination and conversion costs and change in control provisions while the 1998
expenses were principally legal and investment banking costs associated with the
completion of various mergers. During 1999, the Corporation recorded a net
insurance recovery of $883,000.
INCOME TAXES
The Corporation's income tax expense was $17.2 million for 1999 compared to
$16.4 million for 1998. The 1999 effective tax rate of 30.4% was lower than the
35.0% federal statutory tax rate due to the tax benefits resulting from
tax-exempt instruments and excludable dividend income. Additional information
relating to 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 at all times. Given the monetary
nature of its assets and liabilities and the significant source of liquidity
provided by the available for sale securities portfolio, the Corporation
generally has sufficient sources of funds available as needed to meet its
routine, operational cash needs. Excluding mortgage-backed securities, debt
securities due to mature within one year, which will provide a source of
short-term liquidity, amounted to $53.3 million or 11.0% of the securities
portfolio.
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 $31.0 million was unused at the end of 1999. 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.
The financial performance of the Corporation is at risk from interest rate
fluctuations. This interest rate risk arises due to differences between the
amount of interest-earning assets and interest-bearing liabilities subject to
pricing over a period of time, the difference between the change in various
interest rates and the embedded options in certain financial instruments. The
Board of Directors has established an Asset/Liability Policy in order to achieve
and maintain earnings performance consistent with long-term goals while
maintaining acceptable levels of interest rate risk, a "well-capitalized"
balance sheet and adequate levels of liquidity. This policy designates the
Asset/Liability Committee (ALCO) as the body responsible for meeting this
objective. The Corporation utilizes an asset/liability model to support its
balance sheet strategies. The Corporation uses gap analysis, net interest income
simulations and the economic value of equity to measure its interest rate risk.
The gap analysis below measures the interest rate risk of the Corporation by
comparing the difference between the
F.N.B. CORPORATION 33
<PAGE> 53
F.N.B. CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION
amount of interest-earning assets and interest-bearing liabilities subject to
repricing over a period of time. The cumulative one-year gap ratio was .85 at
December 31, 1999 as compared to .97 at December 31, 1998. A ratio of less than
one indicates an excess of repricing liabilities over repricing assets. Based on
the cumulative one-year gap and assuming no change in asset/liability
composition, an increase in interest rates is expected to result in a reduction
in net interest income over the next twelve months.
Net interest income simulations measure the exposure to short-term earnings
from changes in market rates of interest in a more rigorous and explicit
fashion. The Corporation's current financial position is combined with
assumptions regarding future business to calculate net interest income under
varying hypothetical rate scenarios. An immediate 300 basis point increase in
rates is estimated to reduce net interest income by 8.2% or $12.2 million in
2000. Comparatively, a 300 basis point increase in rates was estimated to
decrease net interest income by 2.2% or $3.0 million in 1999.
The economic value of equity (EVE) measures the Corporation's long-term
earnings exposure from changes in market rates of interest. EVE is defined as
the present value of assets minus the present value of liabilities at a point in
time. A decrease in EVE due to a specified rate change indicates a decline in
the long-term earnings capacity of the balance sheet assuming that the rate
change remains in effect over the life of the balance sheet. A 300 basis point
increase in rates is estimated to cause a 7.8% decline in EVE.
Following is the gap analysis as of December 31, 1999 (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 $ 3,289 $ 100 $ 89 $ 3,478
Federal funds sold 7,467 7,467
Securities:
Available for sale 45,374 103,663 241,882 $ 17,812 408,731
Held to maturity 6,849 10,495 30,476 29,539 77,359
Loans, net of unearned income 667,252 573,865 1,326,674 244,716 2,812,507
---------- --------- ---------- ---------- ----------
730,231 688,123 1,599,121 292,067 3,309,542
Other assets 396,642 396,642
---------- --------- ---------- ---------- ----------
$ 730,231 $ 688,123 $1,599,121 $ 688,709 $3,706,184
========== ========= ========== ========== ==========
INTEREST BEARING LIABILITIES
Deposits:
Interest checking $ 153,149 $ 356,482 $ 509,631
Savings 256,776 509,203 765,979
Time deposits 261,936 $ 603,475 $ 343,138 923 1,209,472
Short-term borrowings 313,078 19,119 332,197
Long-term debt 31,865 37,097 38,067 10,605 117,634
---------- --------- ---------- ---------- ----------
1,016,804 659,691 381,205 877,213 2,934,913
Other liabilities 480,956 480,956
Stockholders' equity 290,315 290,315
---------- --------- ---------- ---------- ----------
$1,016,804 $ 659,691 $ 381,205 $1,648,484 $3,706,184
========== ========= ========== ========== ==========
PERIOD GAP $ (286,573) $ 28,432 $1,217,916 $ (959,775)
========== ========= ========== ==========
CUMULATIVE GAP $ (286,573) $(258,141) $ 959,775
========== ========= ==========
CUMULATIVE GAP AS A PERCENT
OF TOTAL ASSETS (7.73)% (6.97)% 25.90%
========== ========= ==========
RATE SENSITIVE ASSETS/
RATE SENSITIVE LIABILITIES (CUMULATIVE) .72 .85 1.47 1.13
========== ========= ========== ==========
</TABLE>
F.N.B. CORPORATION 34
<PAGE> 54
F.N.B. CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION
The preceding measures indicate that the Corporation's earnings are
susceptible to an increase in interest rates. In general, the increased
susceptibility to rising rates can be attributed to a greater proportion of
rate-sensitive liabilities on the balance sheet at December 31, 1999. However,
the disclosed measures are within the limits set forth in the Corporation's
Asset/Liability Policy. Furthermore, the computations do not contemplate any
actions the ALCO could undertake in response to an increase in interest rates
such as the promotion of core non-maturity deposits or longer-term certificates
of deposit and the purchase of adjustable-rate investment securities. Thus, the
measurements assumed no change in asset/liability composition.
The computation of the prospective effects of hypothetical interest changes
are based on numerous assumptions including asset/liability prepayments and the
relative price sensitivity of certain assets and liabilities. The analysis
assumed that certain core non-maturity deposit rates had a low correlation to
changes in market rates of interest. For economic value purposes, core
non-maturity deposits were decayed over a period of five to eight years and were
discounted using short-term market rates to reflect the economic value they add
relative to more costly alternate sources of funds.
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
The Corporation's core operating earnings increased 10.6% to $37.4 million in
1998 from $33.8 million in 1997. Basic core operating earnings per share were
$1.78 and $1.65 for 1998 and 1997, while diluted core operating earnings per
share were $1.70 and $1.58, respectively, for those same periods. The results
for 1998 exclude merger related and other non-recurring costs of $4.3 million,
net of tax, while the results for 1997 exclude $8.8 million in gains relating to
the sales of a subsidiary and branches and merger related and other
non-recurring costs of $4.6 million, both net of tax. Including these items, net
income was $33.0 million in 1998 versus $38.0 million in 1997. Based upon core
operating earnings, the Corporation's return on average assets was 1.16% for
1998 compared to 1.18% for 1997, while the Corporation's return on average
equity was 13.50% for 1998 compared to 13.64% for 1997.
Net interest income, on a fully taxable equivalent basis, increased from
$130.5 million in 1997 to $139.9 million in 1998. Net interest income consisted
of interest income of $248.1 million and interest expense of $108.2 million in
1998, compared to $227.2 million and $96.7 million for each, respectively, in
1997. Net margin fell to 4.68% from 4.87% in 1997. Interest income on loans, on
a fully taxable equivalent basis, increased 9.4% from $188.2 million in 1997 to
$205.9 million in 1998. This increase is the result of loan growth. Average
loans increased 12.7% from 1997. Interest expense on deposits increased 11.8% to
$96.7 million in 1998. This increase was attributable to an increase in average
interest-bearing deposits of 11.6% over the same period. The average balance in
interest-bearing demand and time deposits increased by $101.3 million and $100.7
million, respectively. The average balance in non-interest bearing demand
deposits increased by $53.3 million over this same period.
The provision for loan losses was $7.6 million and represented a decrease of
34.2% from 1997. This decrease reflects the Corporation's continued strong asset
quality as well as an increase in the provision during 1997 resulting from
applying the Corporation's allowance for loan loss policy and methodology for
evaluating the adequacy of the allowance for loan losses to acquired affiliates.
Total non-interest income increased 18.1% from $33.3 million in 1997 to $39.3
million in 1998. This increase was attributable to increases in service charges
and gains on the sale of loans, primarily residential mortgages. Service charges
and trust fees increased 18.4% from $16.4 million in 1997 to $19.4 million in
1998 as a result of increases in the level of deposits and growth in trust
assets under management. Net gains on the sale of loans increased 91.7% as the
Corporation took advantage of the strong market for mortgage refinancings. Other
non-interest income included $1.3 million in income from the Corporation's
equity investment in Sun Bancorp, Inc. as compared to $621,000 during 1997.
Total non-interest expense increased from $107.9 million in 1997 to $120.2
million in 1998. The increase was attributable to a full year of operating
expenses associated with acquisitions during 1997. The Corporation recognized
$5.5 million in 1998 and $2.4 million in 1997 in
F.N.B. CORPORATION 35
<PAGE> 55
F.N.B. CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION
merger related costs. The expenses were primarily legal and investment banking
costs associated with the completion of various mergers.
Income tax expense was $16.4 million for 1998 compared to $13.0 million for
1997. The 1998 effective tax rate of 33.2% was below the 35% statutory tax rate
due to the tax benefits resulting from tax-exempt instruments and excludable
dividend income.
FINANCIAL CONDITION
LENDING ACTIVITY
Following is a summary of loans (in thousands):
<TABLE>
<CAPTION>
December 31 1999 1998 1997 1996 1995
- ----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Real estate:
Residential $1,059,432 $ 994,157 $ 949,716 $ 788,874 $ 700,726
Commercial 747,835 632,304 542,251 493,990 447,638
Construction 119,398 103,672 70,093 48,070 40,635
Installment loans to individuals 334,810 292,418 301,911 417,300 404,261
Commercial, financial and agricultural 350,023 299,081 272,609 225,447 196,516
Lease financing 254,252 132,266 59,852 21,538 5,037
Unearned income (61,976) (31,014) (20,643) (24,202) (28,726)
---------- ---------- ---------- ---------- ----------
$2,803,774 $2,422,884 $2,175,789 $1,971,017 $1,766,087
========== ========== ========== ========== ==========
</TABLE>
The Corporation strives to minimize credit losses by utilizing credit approval
standards, diversifying its loan portfolio by industry and borrower and
conducting ongoing review and management of the loan portfolio.
During 1999, 1998 and 1997, the Corporation sold $49.8 million, $50.8 million
and $23.9 million, respectively, in fixed rate residential mortgages to the
Federal National Mortgage Association (FNMA). These sales allowed the
Corporation to avoid the potential 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 markets it serves.
The loan portfolio consists principally of loans to individuals and small- and
medium-sized businesses within the Corporation's primary market area of western
Pennsylvania, southwestern Florida, northern and central Tennessee, eastern
Ohio, southwestern Kentucky and western New York.
As of December 31, 1999, no concentrations of loans exceeding 10% of total
loans existed which were not disclosed as a separate category of loans.
Following is a summary of the maturity distribution of certain loan categories
based on remaining scheduled repayments of principal (in thousands):
<TABLE>
<CAPTION>
WITHIN ONE TO AFTER
December 31, 1999 ONE YEAR FIVE YEARS FIVE YEARS TOTAL
- ----------------- -------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Commercial, financial and agricultural $162,251 $157,897 $29,875 $350,023
Real estate - construction 66,695 41,807 10,896 119,398
-------- -------- ------- --------
Total $228,946 $199,704 $40,771 $469,421
======== ======== ======= ========
</TABLE>
The total amount of loans due after one year includes $96.8 million with
floating or adjustable rates of interest and $143.7 million with fixed rates of
interest.
F.N.B. CORPORATION 36
<PAGE> 56
F.N.B. CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION
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 1999 1998 1997 1996 1995
- ----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Non-accrual loans $ 9,321 $12,250 $8,365 $10,363 $10,066
Restructured loans 3,560 1,770 1,345 2,709 3,629
------- ------- ------ ------- -------
$12,881 $14,020 $9,710 $13,072 $13,695
======= ======= ====== ======= =======
Non-performing loans as a
percentage of total loans .46% .58% .45% .66% .78%
</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 1999 1998 1997 1996 1995
- ---------------------- ---- ---- ---- ---- ----
<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 $1,445 $1,563 $1,068 $1,473 $1,343
Interest income recorded during the year 503 863 477 798 694
</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 1999 1998 1997 1996 1995
- ----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Loans 90 days or more past due $4,863 $2,943 $3,220 $3,092 $4,090
Loans 90 days or more past due as a
percentage of total loans .17% .12% .15% .16% .23%
</TABLE>
ALLOWANCE FOR LOAN LOSSES
Management's analysis of the allocated portion 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.
The unallocated portion of the allowance is determined based on management's
assessment of historical loss on the remaining portfolio segments in conjunction
with the current status of economic conditions, loan loss trends, delinquency
and non-accrual trends, credit administration, portfolio growth, concentrations
of credit risk and other factors, including regulatory guidance. This
determination inherently involves a higher degree of uncertainty and considers
current risk factors that may not have yet manifested themselves in the
Corporation's historical loss factors used to determine the allocated component
of the allowance, and it recognizes that knowledge of the portfolio may be
incomplete.
F.N.B. CORPORATION 37
<PAGE> 57
F.N.B. CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION
Following is a summary of changes in the allowance for loan losses (dollars
in thousands):
<TABLE>
<CAPTION>
Year Ended December 31 1999 1998 1997 1996 1995
- ---------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Balance at beginning of year $32,308 $31,055 $ 31,199 $27,771 $25,551
Reduction due to the sale of a subsidiary and loans (3,828)
Addition due to acquisitions 2,813 1,167
Charge-offs:
Real estate - mortgage (964) (322) (888) (482) (736)
Installment loans to individuals (5,509) (5,893) (6,978) (6,190) (5,537)
Lease financing (632) (300) (106) (12)
Commercial, financial and agricultural (2,517) (1,119) (2,309) (1,621) (1,273)
------- ------- -------- ------- -------
(9,622) (7,634) (10,281) (8,305) (7,546)
------- ------- -------- ------- -------
Recoveries:
Real estate - mortgage 50 43 100 136 279
Installment loans to individuals 1,108 914 804 1,057 1,198
Lease financing 80 38 32 6
Commercial, financial and agricultural 334 320 359 471 873
------- ------- -------- ------- -------
1,572 1,315 1,295 1,670 2,350
------- ------- -------- ------- -------
Net charge-offs (8,050) (6,319) (8,986) (6,635) (5,196)
Provision for loan losses 9,240 7,572 11,503 10,063 7,416
------- ------- -------- ------- -------
Balance at end of year $36,311 $32,308 $ 31,055 $31,199 $27,771
======= ======= ======== ======= =======
Net charge-offs as a percent of
average loans, net of unearned income .31% .28% .44% .35% .30%
Allowance for loan losses as a percent of
total loans, net of unearned income 1.30 1.33 1.43 1.58 1.57
Allowance for loan losses as a
percent of non-performing loans 281.90 230.44 319.82 238.67 202.78
</TABLE>
The increase in the level of charge-offs and the provision for loan losses in
1997 resulted primarily from the consistent application of the Corporation's
charge-off policy and methodology for determining the adequacy of the allowance
for loan losses to acquired affiliates.
Following shows the allocation of the allowance for loan losses (dollars in
thousands):
<TABLE>
<CAPTION>
% OF % OF % OF % OF % OF
LOANS LOANS LOANS LOANS LOANS
IN EACH IN EACH IN EACH IN EACH IN EACH
CATEGORY CATEGORY CATEGORY CATEGORY CATEGORY
TO TOTAL TO TOTAL TO TOTAL TO TOTAL TO TOTAL
Year Ended December 31 1999 LOANS 1998 LOANS 1997 LOANS 1996 LOANS 1995 LOANS
- ---------------------- ---- -------- ---- -------- ---- -------- ---- -------- ---- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial, financial and
agricultural $ 6,969 39% $ 6,018 38% $ 5,617 37% $ 7,725 37% $ 7,040 36%
Real estate - construction 475 4 271 4 284 3 132 2 88 2
Real estate - mortgage 8,662 38 6,534 41 6,263 44 4,749 40 4,261 40
Installment loans to
individuals 8,635 19 8,384 17 5,597 16 7,771 21 6,781 22
Unallocated portion 11,570 11,101 13,294 10,822 9,601
------- --- ------- --- ------- --- ------- --- ------- ---
$36,311 100% $32,308 100% $31,055 100% $31,199 100% $27,771 100%
======= === ======= === ======= === ======= === ======= ===
</TABLE>
F.N.B. CORPORATION 38
<PAGE> 58
F.N.B. CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION
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 above. Management's
allocation considers amounts necessary for concentrations and changes in
portfolio mix and volume. 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.
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. All other
securities are categorized as securities available for sale and must be marked
to market. 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.
During 1999, securities available for sale decreased 10.3%, and securities
held to maturity decreased 34.8%, from December 31, 1998. The majority of this
decrease was used to fund loan growth.
The following table indicates the respective maturities and weighted average
yields of securities as of December 31, 1999 (dollars in thousands):
<TABLE>
<CAPTION>
WEIGHTED
AMOUNT AVERAGE YIELD
------ -------------
<S> <C> <C>
U.S. Treasury and other U.S. Government agencies and corporations:
Maturing within one year $ 42,953 5.84%
Maturing after one year within five years 141,919 5.92%
Maturing after five years within ten years 35,404 6.05%
States of the U.S. and political subdivisions:
Maturing within one year 9,761 5.98%
Maturing after one year within five years 20,543 6.41%
Maturing after five years within ten years 12,016 6.39%
Maturing after ten years 4,522 6.90%
Other debt securities:
Maturing within one year 588 6.56%
Maturing after one year within five years 93 6.49%
Maturing after ten years 10 2.80%
Mortgage-backed securities of U.S. Government agencies 192,589 6.25%
Equity securities 25,692 6.85%
-------- ----
TOTAL $486,090 6.15%
======== ====
</TABLE>
The weighted average yields for tax exempt securities are computed on a tax
equivalent basis.
F.N.B. CORPORATION 39
<PAGE> 59
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 subsidiaries.
Total deposits increased 2.1% to $2.9 billion in 1999. This increase was due
to a $24.5 million or 2.1% increase in time deposits and a $23.7 million or 5.9%
increase in non-interest bearing deposits.
Short-term borrowings, made up of repurchase agreements, federal funds
purchased, Federal Home Loan Bank advances, subordinated notes and other
short-term borrowings, increased by $181.2 million in 1999 to $332.2 million.
The primary reasons for the higher level of borrowings were increases in federal
funds purchased and Federal Home Loan Bank advances of $49.1 million and $77.0
million, respectively, used to support loan growth.
Repurchase agreements are the largest component of short-term borrowings. At
December 31, 1999, repurchase agreements represented 40.6% of total short-term
borrowings. Following is a summary of selected information on repurchase
agreements (dollars in thousands):
<TABLE>
<CAPTION>
December 31 1999 1998 1997
----------- ---- ---- ----
<S> <C> <C> <C>
Balance at end of year $134,808 $99,590 $59,136
Maximum month-end balance 134,808 99,590 59,136
Average balance during the year 120,698 79,593 43,823
Weighted average interest rates:
At end of year 4.16% 4.24% 4.33%
During the year 4.17% 4.27% 4.22%
</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.
Capital management is a continuous process. Since December 31, 1998,
stockholders' equity has increased $22.8 million as a result of earnings
retention. Total cash dividends declared represented 42.0% of net income for
1999 compared to 42.7% for 1998. Book value per share was $13.65 at December 31,
1999, compared to $13.28 at December 31, 1998.
RETURN ON AVERAGE EQUITY
(based on core operating earnings)
1995 1996 1997 1998 1999
- ---- ---- ---- ---- ----
12.3% 12.0% 13.6% 13.5% 14.2%
F.N.B. CORPORATION 40
<PAGE> 60
F.N.B. CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION
YEAR 2000 DISCLOSURE
During 1999, management completed the process of preparing for the Year 2000
date change. This process involved identifying and remediating problems in
computer systems, software and other operating equipment, working with third
parties to address their Year 2000 issues and developing contingency plans to
address potential risks in the event of Year 2000 failures. To date, the
Corporation has successfully managed the transition.
As a result of the Corporation's efforts, management has a high level of
confidence that the core business processes will continue to provide
uninterrupted service into the twenty-first century. Should the worldwide
experience continue, management does not expect any disruptions to services
provided or delivered. Management will continue to monitor all business
processes, including interaction with the Corporation's customers, vendors and
other third parties, throughout 2000 to address any issues and ensure all
processes continue to function properly.
F.N.B. CORPORATION 41
<PAGE> 61
F.N.B. CORPORATION AND SUBSIDIARIES
MARKET FOR COMMON STOCK AND RELATED SHAREHOLDER MATTERS
INFORMATION AS TO STOCK PRICES AND DIVIDENDS
The Corporation's common stock trades on 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 declared on April 26, 1999 and April 9, 1998. As of January 31, 2000,
there were 6,764 holders of record of common stock.
Quarter Ended 1999 LOW HIGH DIVIDENDS
----------------------------
March 31.................... $21 $27 3/4 $.17
June 30..................... 23 27 1/4 .18
September 30................ 24 1/8 27 1/8 .18
December 31................. 22 28 .18
Quarter Ended 1998 LOW HIGH DIVIDENDS
--- ---- ---------
March 31.................... $28 3/4 $35 3/8 $.15
June 30..................... 30 1/4 37 3/8 .15
September 30................ 25 3/4 33 5/8 .15
December 31................. 22 7/8 27 3/4 .15
CASH DIVIDENDS PAID PER COMMON SHARE
1995 1996 1997 1998 1999
- ---- ---- ---- ---- ----
$.30 $.55 $.56 $.67 $.71
The Corporation has paid cash dividends every quarter since it was
incorporated in 1974. 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.
F.N.B. CORPORATION 42
<PAGE> 62
[LOGO]
F.N.B.
CORPORATION
........................................................
ONE F.N.B. BOULEVARD
HERMITAGE, PA 16148
2150 GOODLETTE ROAD NORTH
NAPLES, FL 34102
<PAGE> 1
LIST OF SUBSIDIARIES EXHIBIT 21
Following lists the significant subsidiaries of the registrant together
with their wholly-owned subsidiaries and the state or jurisdiction of
incorporation of each:
NAME INCORPORATED
1) First National Bank of Pennsylvania United States
2) Reeves Bank Pennsylvania
3) First County Bank, N.A. United States
4) Metropolitan National Bank United States
5) First National Bank of Naples United States
6) Cape Coral National Bank United States
7) First National Bank of Fort Myers United States
8) First National Bank of Florida United States
9) West Coast Guaranty Bank, N.A. United States
10) Regency Finance Company Pennsylvania
Regency Finance Company conducts business under six names. Business is
conducted at the fifteen offices in Butler, Clearfield, Crawford, Elk, Erie,
Fayette, Lawrence, McKean, Mercer, Somerset and Warren counties in Pennsylvania
under the name of F.N.B. Consumer Discount Company. Business is conducted in
Chautauqua county in New York under the names of Citizens Financial Services of
New York, Inc. and Citizens Equity Corporation of New York. Business is
conducted in the six offices in Columbiana, Mahoning, Lake, Summit and Trumbull
counties in Ohio under the name Citizens Financial Services, Inc. Business is
conducted in the eleven offices in Centre, Columbia, Hanover, Lackawanna,
Lehigh, Monroe, Snyder, and Union counties in Pennsylvania under the name of
Regency Finance Company. Business is conducted in eleven offices in Kentucky and
Tennessee under the name of Finance and Mortgage Acceptance Corporation in the
county of Christian in Kentucky and the counties of Dickson, Dyer, Franklin,
Henry, Humphreys, Marshall, Montgomery, Robertson, Rutherford and Warren
counties in Tennessee.
The other subsidiaries conduct business under the names as shown
above.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Regarding:
1) Registration Statement on Form S-8 relating to F.N.B. Corporation 1990
Stock Option Plan (File #33-78114).
2) Registration Statement on Form S-8 relating to F.N.B. Corporation
Restricted Stock Bonus Plan (File #33-78134).
3) Registration Statement on Form S-8 relating to F.N.B. Corporation 1996
Stock Option Plan (File #333-03489).
4) Registration Statement on Form S-8 relating to F.N.B. Corporation
Restricted Stock and Incentive Bonus Plan (File #333-03493).
5) Registration Statement on Form S-8 relating to F.N.B. Corporation
Directors Compensation Plan (File #333-03495).
6) Registration Statement on Form S-8 relating to F.N.B. Corporation
401(k) Plan (File #333-03503).
7) Post-Effective Amendment No. 1 on Form S-8 to Registration Statement
on Form S-4 (File #333-01997).
8) Post-Effective Amendment No. 1 on Form S-8 to Registration Statement
on Form S-4 (File #333-22909).
9) Registration Statement on Form S-3 relating to the F.N.B. Corporation
Subordinated Notes and Daily Cash Accounts (File #333-74737).
10) Post-Effective Amendment No. 1 to Form S-3 relating to the F.N.B.
Corporation Dividend Reinvestment and Direct Stock Purchase Plan (File
#333-46581).
11) Registration Statement on Form S-8 relating to stock options assumed
in the acquisition of Mercantile Bank of Southwest Florida (File
#333-42333).
12) Post-Effective Amendment No. 1 on Form S-8 to Registration Statement
on Form S-4 (File #333-58727).
13) Registration Statement on Form S-3 relating to stock warrants assumed
in the acquisitions of Southwest Banks, Inc. and West Coast Bancorp,
Inc. (File #333-31124).
We consent to the incorporation by reference in the above listed
Registration Statements of our report dated January 31, 2000, 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, 1999.
/s/ ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
March 13, 2000
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
F.N.B. Corporation on Forms S-3 (Registration Nos. 333-74737, 333-46581 and
333-31124) and Forms S-8 (Registration Nos. 33-78114, 33-78134, 333-03489,
333-03493, 333-03495, 333-03503, 333-01997, 333-22909, 333-42333 and 333-58727)
and to the use in this Annual Report of F.N.B. Corporation on Form 10-K of our
report dated January 9, 1998 and on our audits of the financial statements of
Seminole Bank at December 31, 1997 and for the year ended December 31, 1997 and
of our report dated January 9, 1998 except for Note 18, as to which the date is
April 6, 1998 on our audits of the financial statements of Citizens Holding
Corporation and subsidiaries at December 31, 1997 and for the year ended
December 31, 1997 which reports are included as exhibits in F.N.B. Corporation's
Annual Report on Form 10-K.
/s/ HACKER, JOHNSON, COHEN & GRIEB PA
Tampa, Florida
March 14, 2000
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
F.N.B. Corporation on Forms S-3 (Registration Nos. 333-74737, 333-46581 and
333-31124) and Forms S-8 (Registration Nos. 33-78114, 33-78134, 333-03489,
333-03493, 333-03495, 333-03503, 333-01997, 333-22909, 333-42333 and 333-58727)
of our report dated April 23, 1999 on our audits of the financial statements of
Guaranty Bank & Trust Company for the years ended December 31, 1998 and 1997,
which report is included as an exhibit in F.N.B. Corporation's Annual Report on
Form 10-K.
BOBBITT, PITTENGER & COMPANY, P.A.
Sarasota, Florida
March 10, 2000
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> OCT-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 171,183
<INT-BEARING-DEPOSITS> 3,478
<FED-FUNDS-SOLD> 7,467
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 408,731
<INVESTMENTS-CARRYING> 77,359
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<LOANS> 2,803,774
<ALLOWANCE> 36,311
<TOTAL-ASSETS> 3,706,184
<DEPOSITS> 2,909,434
<SHORT-TERM> 332,197
<LIABILITIES-OTHER> 56,604
<LONG-TERM> 117,634
0
2,075
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<TOTAL-LIABILITIES-AND-EQUITY> 3,706,184
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<INTEREST-EXPENSE> 28,640
<INTEREST-INCOME-NET> 38,407
<LOAN-LOSSES> 2,544
<SECURITIES-GAINS> 388
<EXPENSE-OTHER> 32,913
<INCOME-PRETAX> 14,898
<INCOME-PRE-EXTRAORDINARY> 10,313
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,343
<EPS-BASIC> 0.49
<EPS-DILUTED> 0.47
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<LOANS-NON> 9,321
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<PAGE> 1
EXHIBIT 99.1
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Seminole Bank
Seminole, Florida:
We have audited the balance sheets of Seminole Bank (the "Bank") at December 31,
1997 and 1996, and the related statements of earnings, stockholders' equity and
cash flows for each of the years in the three-year period ended December 31,
1997. 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 audits.
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 provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Bank at December 31, 1997
and 1996, and the results of its operations and cash flows for the each of the
years in the three-year period ended December 31, 1997, in conformity with
generally accepted accounting principles.
/s/HACKER, JOHNSON, COHEN & GRIEB PA
Tampa, Florida
January 9, 1998
<PAGE> 1
EXHIBIT 99.2
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Citizens Holding Corporation
Clearwater, Florida:
We have audited the accompanying consolidated balance sheets of Citizens Holding
Corporation and Subsidiaries (the "Company") at December 31, 1997 and 1996, and
the related statements of earnings, comprehensive income, stockholders' equity
and cash flows for each of the years in the three-year period ended December 31,
1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
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 provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company at December 31,
1997 and 1996, and the results of its operations and cash flows for the each of
the years in the three-year period ended December 31, 1997, in conformity with
generally accepted accounting principles.
/s/ HACKER, JOHNSON, COHEN & GRIEB PA
Tampa, Florida
January 9, 1998, except for Note 18, as to which
the date is April 6, 1998
<PAGE> 1
EXHIBIT 99.3
April 23, 1999
Board of Directors
Guaranty Bank & Trust Company
Venice, Florida
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have audited the accompanying statements of financial condition of Guaranty
Bank & Trust Company as of December 31, 1998 and 1997, and the related
statements of income, comprehensive income, changes in shareholders' equity and
cash flows for the years ended December 31, 1998, 1997 and 1996. 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 audits.
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 provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Guaranty Bank & Trust Company
as of December 31, 1998 and 1997 and the results of its operations and cash
flows for the years ended December 31, 1998, 1997 and 1996 in conformity with
generally accepted accounting principles.
BOBBITT, PITTENGER & COMPANY, P.A.
Sarasota, Florida
