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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
(AMENDMENT NO. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 31, 1999
FNB FINANCIAL SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 0-13086 56-1382275
(State or other (Commission File No.) I.R.S. Employer
jurisdiction Identification Number
of incorporation)
202 SOUTH MAIN STREET, REIDSVILLE, NORTH CAROLINA 27320
(Address of principal executive offices)
(336) 342-3346
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
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Item 7(a) and (b) are hereby replaced as follows:
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
The Statements of Financial Condition of Black Diamond as of December
31, 1998 and 1997, the Statements of Income and Comprehensive Income for the
years ended December 31, 1998 and 1997 of Black Diamond, the Statements of
Stockholders' Equity for the years ended December 31, 1998 and 1997 of Black
Diamond, the Statements of Cash Flows for the years ended December 31, 1998 and
1997 of Black Diamond, and the Notes to Financial Statements thereto, were
previously filed, within the meaning of Rule 12b-2 promulgated under the
Securities and Exchange Act of 1934, as amended, in the Registrant's
Registration Statement. The following unaudited financial statements of Black
Diamond are provided below:
(1) Statements of Financial Condition as of June 30, 1999 and 1998
(2) Statements of Income and Comprehensive Income for the six months
ended June 30, 1999 and 1998
(3) Statements of Cash Flows for the six months ended June 30, 1999 and
1998
(4) Notes to Financial Statements
(b) PRO FORMA FINANCIAL INFORMATION
The following pro forma combined condensed financial data of the
Registrant and Black Diamond are provided below:
(1) Introduction to Unaudited Pro Forma Combined Condensed Financial
Data
(2) Unaudited Pro Forma Combined Condensed Balance Sheets as of
June 30, 1999 and Notes related thereto
(3) Unaudited Pro Forma Combined Condensed Statement of Income for the
period ended June 30, 1999 and Notes related thereto
(4) Unaudited Pro Forma Combined Condensed Statement of Income for the
period ended June 30, 1998 and Notes related thereto
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Black Diamond Savings Bank, FSB
Unaudited Balance Sheet
(in thousands)
June 30, June 30,
1999 1998
--------- ---------
Asset
Cash and due from banks $ 7,995 $ 4,993
Investment securities
available for sale 9,768 17,026
Loans, net 112,644 96,150
Premises and equipment 2,006 1,852
Other assets 2,539 2,244
--------- ---------
Total assets $ 134,952 $ 122,265
========= =========
Liabilities
Noninterest bearing deposits $ 6,411 $ 4,995
Interest bearing deposits 115,325 107,666
Other borrowings 2,500 0
Other liabilities 1,293 1,156
--------- ---------
Total liabilities 125,529 113,817
Shareholders' equity
Common stock 2,088 1,898
Surplus 3,666 3,666
Retained earnings 3,842 2,865
Accumulated other
comprehensive income (173) 19
--------- ---------
Total shareholders' equity 9,423 8,448
Total liabilities and
shareholders' equity $ 134,952 $ 122,265
========= =========
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Black Diamond Savings Bank, FSB
Unaudited Condensed Statements of Income
and Comprehensive Income
For the Six Month Period ended June 30, 1999 and 1998
(in thousands)
June 30, June 30,
1999 1998
------- -------
Interest income
Loans $ 4,602 $ 4,163
Investments 297 524
Other interest earnings assets 82 103
------- -------
Total interest income 4,981 4,790
Interest expense
Deposits 2,943 2,937
Other interest bearing liabilities 60 0
------- -------
Total interest expense 3,003 2,937
Net interest income before provision
for loan losses 1,978 1,853
Provision for loan losses 5 45
------- -------
Net interest income after provision 1,973 1,808
Noninterest income 278 304
Noninterest expense 1,474 1,306
------- -------
Net income before taxes 777 806
Income taxes 209 230
------- -------
Net income 568 576
Other comprehensive income (210) (13)
------- -------
Comprehensive income $ 358 $ 563
======= =======
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Black Diamond Savings Bank, FSB
Unaudited Statements of Cash Flows
For the Six Month Period ended June 30, 1999 and 1998
(in thousands)
<TABLE>
<CAPTION>
June 30, June 30,
1999 1998
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 568 $ 576
Adjustments to reconcile net income to net cash
provided by operating activities
Provision for loan loss 5 45
Depreciation 68 64
Accretion and amortization (8) 8
(Gain) on sale of loans and securities (101) (106)
Changes in other assets (332) (39)
Changes in other liabilities 35 12
------- -------
Net cash provided by operating activities 235 560
Cash flows from investing activities:
Proceeds from sale of securities, AFS 0 249
Proceeds from call/maturity of securities, AFS 3,615 4,586
Purchase of securities, AFS (3,090) (3,691)
Capital expenditures (65) (23)
(Increase) in other real estate (97) 41
(Increase) in net loans (7,792) (6,022)
------- -------
Net cash used by investing activities (7,429) (4,860)
Cash flows for financing activities:
Increase in deposits 7,147 814
Increase in other interest bearing liabilities 1,167 0
------- -------
8,314 814
Increase in cash and cash equivalents 1,120 (3,486)
Cash and cash equivalents as of January 1 6,875 8,479
------- -------
Cash and cash equivalents as of June 30 $ 7,995 $ 4,993
======= =======
</TABLE>
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Black Diamond Savings Bank, FSB
Notes to the Financial Statements
1. The significant accounting policies followed by the Bank for interim
financial reporting are consistent with the accounting policies followed
for annual reporting. These unaudited financial statements have been
prepared in accordance with Rule 10-01 of Regulation S-X, and in
management's opinion, all adjustments necessary for a fair presentation
(all of which were of a normal recurring nature) have been included. The
accompanying financial statements do not purport to contain all the
necessary financial disclosures that might otherwise be necessary in the
circumstances and should be read in conjunction with the financial
statements and notes thereto for the period January 1, 1998 to December 31,
1998. The results of operation for the six-month period ended June 30, 1999
are not necessarily indicative of the results to be expected for the full
year.
2. Operations
Black Diamond Savings Bank, FSB is a federally chartered savings bank
primarily engaged in the business of obtaining savings deposits and
originating single-family residential loans within its primary lending
markets. The Bank operates through its main office in Norton, Virginia and
branch offices in Richlands, Virginia, Pennington Gap, Virginia and
Harrisonburg, Virginia. The Bank is community oriented and is engaged in
general banking. The majority of the Bank's customers are individuals and
small to medium-sized businesses. The Bank's primary source of revenue is
interest earned from loans to customers and from invested cash and
securities.
3. Changes in Accounting Principles
During the year ended December 31, 1998, the Bank adopted Statement of
Financial Accounting Standards No. 130 "Reporting Comprehensive Income." As
required by SFAS 130, prior year information was modified to conform with
the new pronouncement. Comprehensive income includes net income and all
other changes to the Bank's equity, with the exception of transactions with
shareholders ("Other Comprehensive Income"). The Bank's only component of
other comprehensive income relates to unrealized gains and losses on
securities available for sale. The Bank's comprehensive income for the
six-month period ended June 30, 1999 and 1998 was $358,000 and $563,000,
respectively.
Statement of Financial Accounting Standards No. 134, "Accounting for
Mortgage-Backed Securities Retained after the Securitization of Mortgage
Loans Held for Sale by a Mortgage Banking Enterprise," was issued in
October 1998. The Statement amends existing classification and accounting
treatment of mortgage-backed securities, retained after mortgage loans
held for sale are securitized, for entities engaged in mortgage banking
activities.
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FNB FINANCIAL SERVICES CORPORATION AND BLACK DIAMOND SAVINGS BANK, FSB
INTRODUCTION TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA
Set forth below are unaudited pro forma financial data of FNB Financial Services
Corporation ("FNB") and Black Diamond Savings Bank, FSB (Black Diamond)
combined. Information for FNB and Black Diamond has been derived from the
unaudited interim financial statements as of and for the six months ended June
30, 1999 and 1998. The transaction with Black Diamond has been accounted for
under the pooling of interest method of accounting. This information is not
necessarily indicative of the results that actually would have occurred.
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FNB Financial Services Corporation and Black Diamond Savings Bank, FSB
Unaudited Pro Forma Combined Condensed Balance Sheet
June 30, 1999
(in thousands)
<TABLE>
<CAPTION>
Black Pro Forma Pro Forma
FNB Diamond Adjustments Combined
--------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Asset
Cash and due from banks $ 10,789 $ 7,995 $ -- $ 18,784
Investment securities 125,522 9,768 0 135,290
Loans, net 275,200 112,644 0 387,844
Premises and equipment 7,438 2,006 0 9,444
Other assets 5,895 2,539 (127)(1) 8,307
--------- --------- --------- ---------
Total assets $ 424,844 $ 134,952 $ (127) $ 559,669
========= ========= ========= =========
Liabilities
Noninterest bearing deposits $ 37,886 $ 6,411 $ -- $ 44,297
Interest bearing deposits 303,181 115,325 0 418,506
Other borrowings 41,406 2,500 0 43,906
Other liabilities 1,234 1,293 745 3,070
--------- --------- --------- ---------
Total liabilities 383,707 125,529 543 509,779
Shareholders' equity
Common stock 3,344 2,088 (975)(3) 4,457
Surplus 19,668 3,666 975 24,309
Retained earnings 20,178 3,842 (872)(2),(3) 23,350
Accumulated other
comprehensive income (2,053) (173) 0 (2,226)
--------- --------- --------- ---------
Total shareholders' equity 41,137 9,423 (670) 49,890
--------- --------- --------- ---------
Total liabilities and
shareholders' equity $ 424,844 $ 134,952 $ (127) $ 559,669
========= ========= ========= =========
</TABLE>
(1) Adjustment for merger related cost paid but not recognized until effective
time of merger.
Attorneys $ 75,000
Accountants 18,000
Investment advisors 30,000
All other merger costs 4,000
------------
$ 127,000
(2) Adjustment for merger related cost incurred after June 30, 1999 and
recognized at effective time of merger.
Attorneys $ 145,000
Accountants 82,000
Investment advisors 150,000
Printers 41,000
Provision adjustment, net
of tax benefit 202,000
All other merger costs 125,000
-------------
$ 745,000
(3)Adjustment for cancellation of Black Diamond (par $2.50) shares, and issuance
of FNB Financial Services Corporation shares ($1.00 par).
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FNB Financial Services Corporation and Black Diamond Savings Bank, FSB
Unaudited Pro Forma Combined Condensed Statements of Income
For the Six Month Period ended June 30, 1999
(in thousands, except per share data)
<TABLE>
<CAPTION>
Black Pro Forma
FNB Diamond Combined
------- ------- -------
<S> <C> <C> <C>
Interest income
Loans $11,632 $ 4,602 $16,234
Investments 3,756 297 4,053
Other interest earnings assets 48 82 130
------- ------- -------
Total interest income 15,436 4,981 20,417
Interest expense
Deposits 6,891 2,943 9,834
Other interest bearing liabilities 784 60 844
------- ------- -------
Total interest expense 7,675 3,003 10,678
Net interest income before provision
for loan losses 7,761 1,978 9,739
Provision for loan losses 408 5 413
------- ------- -------
Net interest income after provision 7,353 1,973 9,326
Noninterest income 1,097 278 1,375
Noninterest expense 5,771 1,474 7,245
------- ------- -------
Net income before taxes 2,679 777 3,456
Income taxes 907 209 1,116
------- ------- -------
Net income $ 1,772 $ 568 $ 2,340
======= ======= =======
Earning per share, basic $ 0.53 $ (0.01) $ 0.52 (2)
======= ======= =======
Earning per share, diluted $ 0.52 $ (0.01) $ 0.51 (2)
======= ======= =======
</TABLE>
(1) The table below summarizes charges resulting from the merger. These charges
have not been reflected in the above pro forma information.
Attorneys $ 220,000
Accountants 100,000
Investment advisors 180,000
Printers 41,000
Provision adjustment, net of taxes 202,000
All other merger costs 129,000
---------
$ 872,000
(2) Adjusted for the exchange ratio of FNB common stock for each share of Black
Diamond common stock.
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FNB Financial Services Corporation and Black Diamond Savings Bank, FSB
Unaudited Pro Forma Combined Condensed Statements of Income
For the Six Month Period ended June 30, 1998
(in thousands)
<TABLE>
<CAPTION>
Black Pro Forma
FNB Diamond Combined
------- ------- -------
<S> <C> <C> <C>
Interest income
Loans $11,526 $ 4,163 $15,689
Investments 3,060 524 3,584
Other interest earnings assets 96 103 199
------- ------- -------
Total interest income 14,682 4,790 19,472
Interest expense
Deposits 6,852 2,937 9,789
Other interest bearing liabilities 780 0 780
------- ------- -------
Total interest expense 7,632 2,937 10,569
Net interest income before provision
for loan losses 7,050 1,853 8,903
Provision for loan losses 580 45 625
------- ------- -------
Net interest income after provision 6,470 1,808 8,278
Noninterest income 883 304 1,187
Noninterest expense 4,724 1,306 6,030
------- ------- -------
Net income before taxes 2,629 806 3,435
Income taxes 902 230 1,132
------- ------- -------
Net income $ 1,727 $ 576 $ 2,303
======= ======= =======
Earning per share, basic $ 0.61 $ (0.03) $ 0.58 (1)
======= ======= =======
Earning per share, diluted $ 0.57 $ (0.01) $ 0.56 (1)
======= ======= =======
</TABLE>
(1) Adjusted for the exchange ratio of FNB stock for each share of Black Diamond
stock.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FNB FINANCIAL SERVICES CORPORATION
By: /s/ Robert F. Albright
-----------------------------------------
Dated: November 15, 1999 Robert F. Albright
Executive Vice President, Chief Financial
Officer and Secretary
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