<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
Commission file number 2-94292
FNB Banking Company
(Exact name of registrant as specified in its charter)
Georgia 58-1479370
(State of Incorporation) (I.R.S. Employer Identification No.)
318 South Hill Street
Griffin, Georgia 30224
(Address of principal executive (Zip Code)
offices)
770-227-2251
(Telephone Number)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
YES XX NO
Common stock, par value $1 per share: 807,800 shares
outstanding as of July 29, 1996
<PAGE> FNB BANKING COMPANY AND SUBSIDIARY
INDEX
Page No.
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet (unaudited) at June 30, 1996 2
Consolidated Statements of Earnings (unaudited) for the Three
Months and the Six Months Ended June 30, 1996 and 1995 3
Consolidated Statements of Cash Flows (unaudited) for the Six
Months Ended June 30, 1996 and 1995 4
Notes to Consolidated Financial Statements (unaudited) 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 6-7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 2. Changes in Securities 8
Item 3. Defaults Upon Senior Securities 8
Item 4. Submission of Matters to a Vote of Security Holders 8
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 8
<PAGE> PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
FNB BANKING COMPANY AND SUBSIDIARY
Consolidated Balance Sheet
June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and due from banks $ 9,968,540
Federal funds sold 350,198
Investment securities held to maturity (approximate
market value of $13,038,214) 13,189,724
Investment securities available for sale (amortized
cost of $11,105,605) 10,894,023
Other investments 1,154,910
Mortgage loans held for sale 68,814
Loans 115,049,204
Less:Unearned income (289,770)
Allowance for loan losses (1,288,310)
Loans, net 113,471,124
Premises and equipment, net 5,872,992
Other assets 1,913,874
$ 156,884,199
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing $ 24,096,448
Interest-bearing 110,581,201
Total deposits 134,677,649
FHLB Advances 1,859,000
Notes Payable 859,255
Other liabilities 1,866,585
Total liabilities 139,262,489
Stockholders' equity:
Common stock, $1 par value; authorized
5,000,000 shares; issued and outstanding
807,800 shares 807,800
Retained earnings 16,953,198
Unrealized loss on investment securities, net of tax (139,288)
Total stockholders' equity 17,621,710
$ 156,884,199
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
FNB BANKING COMPANY AND SUBSIDIARY
Consolidated Statements of Earnings
For the Three Months and the Six Months Ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Interest income:
Loans $ 2,990,314 2,722,514 5,905,502 5,399,822
Investment securities:
Tax exempt 121,929 144,986 245,734 285,193
Taxable 259,444 287,321 551,164 568,622
Federal funds sold 92,480 19,319 181,003 26,817
Total interest income 3,464,167 3,174,140 6,883,403 6,280,454
Interest expense:
Deposits 1,161,867 1,057,165 2,299,012 2,049,688
Federal funds purchased and FHLB advances 31,607 7,471 68,337 15,086
Notes payable 15,791 20,456 32,582 40,478
Total interest expense 1,209,265 1,085,092 2,399,931 2,105,252
Net interest income 2,254,902 2,089,048 4,483,472 4,175,202
Provision for loan losses 99,000 3,500 106,100 3,500
Net interest income after provision
for loan losses 2,155,902 2,085,548 4,377,372 4,171,702
Other income:
Service charges on deposit accounts 389,953 397,217 761,008 757,352
Fees for trust services 45,000 45,000 90,000 90,000
Other operating income 102,976 139,719 201,836 200,089
Total other income 537,929 581,936 1,052,844 1,047,441
Other expense:
Salaries and other personnel expense 1,012,560 990,351 2,004,303 1,949,308
Net occupancy and equipment expense 278,811 233,635 568,948 517,939
Other operating expense 505,286 509,252 1,014,115 975,764
Total other expense 1,796,657 1,733,238 3,587,366 3,443,011
Earnings before income taxes 897,174 934,246 1,842,850 1,776,132
Income taxes 266,100 297,120 548,100 529,300
Net earnings $ 631,074 637,126 1,294,750 1,246,832
Earnings per common share based on average outstanding
shares of 807,800 in 1996 and 1995:
Net earnings per share $ .78 .79 1.60 1.54
Dividends declared per common share$ .40 .25 .40 .25
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
FNB BANKING COMPANY AND SUBSIDIARY
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net earnings $1,294,750 1,246,833
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Provision for loan losses 106,100 3,500
Writedowns and losses on sales of repossessed
collateral - 5,658
Depreciation, amortization and accretion 165,713 149,989
Gain on sales of premises and equipment (3,150) -
Change in assets and liabilities:
Interest receivable 15,175 (21,144)
Interest payable 12,200 55,792
Other, net 362,777 309,684
Mortgage loans held for sale (68,814) (72,307)
Net cash provided by operating activities
1,884,751 1,678,005
Cash flows from investing activities:
Proceeds from maturities and paydowns of
investment securities held to maturity 2,492,011 1,004,245
Proceeds from maturities and paydowns of
investment securities available for sale 504,836 76,304
Proceeds from sales and maturities of other investments- 9,800
Purchases of investment securities held to maturity - (198,370)
Purchases of investment securities available
for sale (4,534,031) -
Net change in loans (6,882,340) (4,333,661)
Purchases of other investments (34,400) -
Purchases of premises and equipment (216,353) (59,399)
Proceeds from sales of premises and equipment 3,150 -
Proceeds from sales of repossessed collateral - 16,342
Net cash used by investing activities (8,667,127) (3,484,739)
Cash flows from financing activities:
Net change in deposits 5,178,657 3,893,732
Net change in federal funds purchased - (1,500,000)
Repayments of long-term debt (85,190) (83,333)
Repayments of FHLB Advances (141,000) -
Dividends paid (484,680) (484,680)
Net cash provided by financing activities 4,467,787 1,825,719
Net increase (decrease) in cash and
cash equivalents (2,314,589) 18,985
Cash and cash equivalents at beginning of period 12,633,327 13,069,918
Cash and cash equivalents at end of period $10,318,738 13,088,903
Supplemental cash flow information:
Cash paid for income taxes $ 501,000 501,000
Cash paid for interest $ 2,387,731 2,049,460
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
FNB BANKING COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
(1) Basis of Presentation
The consolidated financial statements include the accounts of FNB
Banking Company (the Company) and its wholly-owned subsidiary, the
First National Bank of Griffin (Griffin). All significant intercompany
accounts and transactions have been eliminated in consolidation.
The consolidated financial information furnished herein reflects
all adjustments which are, in the opinion of management, necessary to
present a fair statement of the results of operations and financial
position for the periods covered herein. All such adjustments are of a
normal recurring nature.
(2) Change in Accounting Principle - Mortgage Servicing Rights
Effective January 1, 1996, the Company changed its method of
accounting for mortgage servicing rights and adopted Statement of
Financial Accounting Standards No. 122, "Accounting for Mortgage
Servicing Rights" (SFAS 122). SFAS No. 122 amends SFAS No. 65,
"Accounting for Certain Mortgage Banking Activities." SFAS No. 122
requires a mortgage banking enterprise to recognize as a separate
asset, the rights to service mortgage loans regardless of whether the
servicing rights are acquired through either purchase or origination.
Additionally, the new standard requires impairment analysis of
mortgage servicing rights regardless of whether purchased or
originated. The impact of the adoption of SFAS No. 122 as of January
1, 1996 is immaterial to the consolidated financial statements.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For Each of the Six Months in the Periods Ended
June 30, 1996 and 1995
Financial Condition
Total assets at June 30, 1996 were $156,884,199, representing a
$6,505,706 (4.3%) increase from December 31,1995. Deposits increased
$5,178,656 (4.0%) from December 31, 1995. Loans increased $6,794,349
(6.3%). The allowance for loan losses at June 30, 1996 totalled
$1,288,310, representing 1.1% of total loans compared to December 31,
1995 total of $1,273,267 representing 1.2% of total loans. Cash and
cash equivalents decreased $2,314,589 from December 31, 1995.
The total of nonperforming assets which includes nonaccruing
loans, repossessed collateral and loans for which payments are more
than 90 days past due increased 24.4% or $203,000 from $833,000 at
December 31, 1995 to $1,036,000 at June 30, 1996. There were no
related party loans which were considered nonperforming at June 30,
1996.
The Company's subsidiary bank was most recently examined by its
primary regulatory authority in June 1996. There were no
recommendations by the regulatory authority that in management's
opinion will have material effects on the Company's liquidity, capital
resources or operations.
Results of Operations
Net interest income increased $308,270 (7.4%) in the first six
months of 1996 compared to the same period for 1995. Interest income
for the first six months of 1996 was $6,883,403, representing an
increase of $602,949 (9.6%) over the same period in 1995. Interest
expense for the first six months of 1996 increased $294,679 (14.0%)
compared to the same period in 1995. The increase in interest income
and interest expense during the first six months of 1996 compared to
the same period in 1995 is primarily attributable to the increase in
the volume of both loans and deposits.
The provision for loan losses for the six months of 1996 increased
$102,600 compared to the same period for 1995. The increase is
primarily attributable to the significant increase in loans and net
charge-offs of $40,899 during the first six months of 1996 compared to
the same period in 1995. It is management's belief that the allowance
for loan losses is adequate to absorb probable losses in the
portfolio.
Other expenses for the six months of 1996 increased $144,355
(4.2%) compared to the first six months in 1995. The net increase is
primarily attributable to the purchase of additional office supplies
of $91,687 and additional depreciation expense of $56,850 during the
first six months of 1996 compared to the same period in 1995.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, continued
For the Six Months Ended June 30, 1996
Capital
The following tables present FNB Banking Company's regulatory capital
position at June 30, 1996:
Risk-Based Capital Ratios
Tier 1 Tangible Capital, Actual 14.7%
Tier 1 Tangible Capital minimum requirement 4.0%
Excess 10.7%
Total Capital, Actual 15.7%
Total Capital minimum requirement 8.0%
Excess 7.7%
Leverage Ratio
Tier 1 Tangible Capital to adjusted total assets
("Leverage Ratio") 11.5%
Minimum leverage requirement 3.0%
Excess 8.5%
<PAGE> PART II. OTHER INFORMATION
FNB BANKING COMPANY AND SUBSIDIARY
Item 1.Legal Proceedings
None
Item 2.Changes in Securities
None
Item 3.Defaults Upon Senior Securities
None
Item 4.Submission of Matters to a Vote of Security Holders
None
Item 5.Other Information
None
Item 6.Exhibits and Reports on Form 8-K
None
<PAGE> FNB BANKING COMPANY AND SUBSIDIARY
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned thereunto duly authorized.
FNB BANKING COMPANY
By: /s/ C.A. Knowles
C.A. Knowles, President and Treasurer
(Principal Executive Officer)
Date: August 13, 1996
By:/s/ William K. Holmes
William K. Holmes
Assistant Treasurer
(Principal Accounting Officer)
Date: August 13, 1996
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 9,968,540
<INT-BEARING-DEPOSITS> 110,581,201
<FED-FUNDS-SOLD> 350,198
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 10,894,023
<INVESTMENTS-CARRYING> 13,189,724
<INVESTMENTS-MARKET> 13,038,214
<LOANS> 113,471,124
<ALLOWANCE> 1,288,310
<TOTAL-ASSETS> 156,884,199
<DEPOSITS> 134,677,649
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,866,585
<LONG-TERM> 2,718,255
0
0
<COMMON> 807,800
<OTHER-SE> 16,813,910
<TOTAL-LIABILITIES-AND-EQUITY> 17,621,710
<INTEREST-LOAN> 5,905,502
<INTEREST-INVEST> 796,898
<INTEREST-OTHER> 181,003
<INTEREST-TOTAL> 6,883,403
<INTEREST-DEPOSIT> 2,299,012
<INTEREST-EXPENSE> 2,399,931
<INTEREST-INCOME-NET> 4,483,472
<LOAN-LOSSES> 106,100
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,587,366
<INCOME-PRETAX> 1,842,850
<INCOME-PRE-EXTRAORDINARY> 1,842,850
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,294,750
<EPS-PRIMARY> 1.60
<EPS-DILUTED> 0
<YIELD-ACTUAL> 6.50
<LOANS-NON> 810,000
<LOANS-PAST> 226,000
<LOANS-TROUBLED> 452,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,273,267
<CHARGE-OFFS> 192,500
<RECOVERIES> 100,067
<ALLOWANCE-CLOSE> 1,288,310
<ALLOWANCE-DOMESTIC> 1,288,310
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
