<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 September 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 October 26, 1996
<PAGE> FNB BANKING COMPANY AND SUBSIDIARY
INDEX
Page No.
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet (unaudited) at September 30, 1996 3
Consolidated Statements of Earnings (unaudited) for the Three
Months and the Nine Months Ended September 30, 1996 and 1995 4
Consolidated Statements of Cash Flows (unaudited) for the Nine
Months Ended September 30, 1996 and 1995 5-6
Notes to Consolidated Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8-9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
<PAGE> PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
FNB BANKING COMPANY AND SUBSIDIARY
Consolidated Balance Sheet
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and due from banks $ 8,329,891
Federal funds sold 1,402,752
Investment securities held to maturity (approximate
market value of $13,038,214) 12,646,202
Investment securities available for sale (amortized
cost of $11,093,150) 10,933,713
Other investments 1,154,910
Mortgage loans held for sale 164,843
Loans 124,493,075
Less: Unearned income (307,135)
Allowance for loan losses (1,387,336)
Loans, net 122,798,604
Premises and equipment, net 5,811,863
Other assets 1,561,116
$ 164,803,894
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing $ 24,095,377
Interest-bearing 115,993,553
Total deposits 140,088,930
FHLB Advances 4,357,143
Notes Payable 819,446
Other liabilities 1,103,980
Total liabilities 146,369,499
Stockholders' equity:
Common stock, $1 par value; authorized
5,000,000 shares; issued and outstanding
807,800 shares 807,800
Retained earnings 17,731,414
Unrealized loss on investment securities, net of tax (104,819)
Total stockholders' equity 18,434,395
$ 164,803,894
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
FNB BANKING COMPANY AND SUBSIDIARY
Consolidated Statements of Earnings
For the Three Months and the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Interest income:
Loans $ 3,217,282 2,783,633 9,122,784 8,183,456
Investment securities:
Tax exempt 104,103 117,740 349,837 402,933
Taxable 285,573 275,324 836,737 843,946
Federal funds sold 40,948 55,282 221,951 82,099
Total interest income 3,647,906 3,231,979 10,531,309 9,512,434
Interest expense:
Deposits 1,194,377 1,097,708 3,493,389 3,147,396
Federal funds purchased and FHLB advances 24,260 490 92,597 15,576
Notes payable 15,047 19,310 47,629 59,788
Total interest expense 1,233,684 1,117,508 3,633,615 3,222,760
Net interest income 2,414,222 2,114,471 6,897,694 6,289,674
Provision for loan losses 132,550 22,000 238,650 25,500
Net interest income after provision
for loan losses 2,281,672 2,092,471 6,659,044 6,264,174
Other income:
Service charges on deposit accounts 370,916 418,856 1,131,924 1,176,208
Fees for trust services 45,000 45,000 135,000 135,000
Net gain (loss) on securities trans 100,683 (23,750) 100,683 (23,750)
Other operating income 83,126 61,759 284,961 261,848
Total other income 599,725 501,865 1,652,568 1,549,306
Other expense:
Salaries and other personnel expense 1,020,028 958,915 3,024,331 2,908,223
Net occupancy and equipment expense 300,686 247,171 869,635 765,110
Other operating expense 441,564 445,017 1,455,679 1,420,781
Total other expense 1,762,278 1,651,103 5,349,645 5,094,114
Earnings before income taxes 1,119,119 943,233 2,961,967 2,719,366
Income taxes 340,900 259,300 889,000 788,600
Net earnings $ 778,219 683,933 2,072,967 1,930,766
Earnings per common share based on average outstanding
shares of 807,800 in 1996 and 1995:
Net earnings per share $ .96 .85 2.56 2.39
Dividends per share $ -0- -0- .40 .25
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
FNB BANKING COMPANY AND SUBSIDIARY
Consolidated Statements of Cash Flows
NIne Months September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 2,072,967 1,930,766
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Provision for loan losses 238,650 25,500
Writedowns and losses on sales of
repossessed collateral - 8,913
Depreciation, amortization and accretion 265,575 227,618
Loss (gain) on securities transactions (100,683) 23,750
Loss (gain) on disposal of premises and
equipment (3,150) 3,374
Change in assets and liabilities:
Interest receivable 50,050 110,548
Interest payable (4,816) 69,312
Other, net 241,055 72,906
Mortgage loans held for sale (164,843) (48,312)
Net cash provided by operating activities
2,594,805 2,424,375
Cash flows from investing activities:
Proceeds from maturities and paydowns of
investment securities held to maturity 3,141,716 3,060,911
Proceeds from maturities and paydowns of
investment securities available for sale 531,401 1,096,452
Proceeds from sales of investment securities
available for sale 990,000 -
Proceeds from sales, maturities and paydowns
of other investments - 9,800
Purchases of investment securities held to maturity - (698,370)
Purchases of investment securities available
for sale (5,543,379) (1,000,000)
Purchases of other investments (34,400) -
Change in loans (16,342,370) (4,591,013)
Purchases of premises and equipment (255,888) (169,873)
Proceeds from sales of premises and equipment 3,150 -
Proceeds from sales of repossessed collateral - 16,342
Net cash used by investing activities (17,509,770) (2,275,751)
Cash flows from financing activities:
Net change in deposits 10,589,937 (4,306,255)
Net change in federal funds purchased - (1,400,000)
Proceeds from FHLB advances 2,500,000 -
Repayments of long-term debt (124,999) (125,000)
Repayments of FHLB Advances (142,857) -
Dividends paid (807,800) (686,630)
Net cash provided by financing activities 12,014,281 (6,517,885)
Net decrease in cash and cash equivalents (2,900,684) (6,369,261)
Cash and cash equivalents at beginning of period 12,633,327 13,069,918
Cash and cash equivalents at end of period $ 9,732,643 6,700,657
Supplemental cash flow information:
Cash paid for income taxes $ 781,000 716,000
Cash paid for interest $ 3,638,431 3,153,448
</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
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 Nine Months in the Periods Ended
September 30, 1996 and 1995
Financial Condition
Total assets at September 30, 1996 were $164,803,894, representing a
$14,425,401 (9.5%) increase from December 31,1995. Deposits increased
$10,589,937 (8.1%) from December 31, 1995. Loans increased $16,238,220
(14.9%). The allowance for loan losses at September 30, 1996 totalled
$1,387,336, representing 1.1% of total loans compared to December 31,
1995 totals of $1,273,267 representing 1.2% of total loans. Cash and
cash equivalents decreased $2,900,684 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 7.2% or $60,000 from $833,000 at
December 31, 1995 to $893,000 at September 30, 1996. There were no
related party loans which were considered nonperforming at September 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 $608,020 (9.6%) in the first nine
months of 1996 compared to the same period for 1995. Interest income
for the first nine months of 1996 was $10,531,309, representing an
increase of $1,018,875 (10.7%) over the same period in 1995. Interest
expense for the first nine months of 1996 increased $410,855 (12.7%)
compared to the same period in 1995.
The provision for loan losses for the first nine months of 1996
increased $213,150 compared to the same period for 1995. The increase is
primarily attributable to the significant increase in loans and net
charge-offs of $124,580 during the first nine months of 1996. It is
management's belief that the allowance for loan losses is adequate to
absorb probable losses in the portfolio.
The net gain on securities transactions includes $104,000 related
to the recovery of a security in default, that was written down in
1993. Other operating expenses for the first nine months of
1996 increased $255,530 (5.0%) compared to the first nine months in
1995. The net increase is primarily attributable to the purchase of
additional office supplies of $98,753 and additional depreciation expense
of $85,213 during the first nine months of 1996 compared to the same
period in 1995. Income tax expense expressed as a percentage of earnings
before income taxes increased primarily as a result of the decrease in
tax-exempt income as a percentage of total income.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, continued
For each of the Nine Months in the Periods Ended
September 30, 1996 and 1995
Capital
The following tables present FNB Banking Company's regulatory capital
position at September 30, 1996:
Risk-Based Capital Ratios
Tier 1 Tangible Capital, Actual 14.1%
Tier 1 Tangible Capital minimum requirement 4.0%
Excess 10.1%
Total Capital, Actual 15.2%
Total Capital minimum requirement 8.0%
Excess 7.2%
Leverage Ratio
Tier 1 Tangible Capital to adjusted total assets
("Leverage Ratio") 11.8%
Minimum leverage requirement 3.0%
Excess 8.8%
<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: November 14, 1996
By:/s/ William K. Holmes
William K. Holmes
Assistant Treasurer
(Principal Accounting Officer)
Date: November 14, 1996
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 8,329,891
<INT-BEARING-DEPOSITS> 115,993,553
<FED-FUNDS-SOLD> 1,402,752
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 12,646,202
<INVESTMENTS-CARRYING> 10,933,713
<INVESTMENTS-MARKET> 24,131,364
<LOANS> 124,493,075
<ALLOWANCE> 1,387,336
<TOTAL-ASSETS> 164,803,894
<DEPOSITS> 140,088,930
<SHORT-TERM> 2,500,000
<LIABILITIES-OTHER> 1,103,980
<LONG-TERM> 1,857,143
0
0
<COMMON> 807,800
<OTHER-SE> 17,626,595
<TOTAL-LIABILITIES-AND-EQUITY> 164,803,894
<INTEREST-LOAN> 9,122,784
<INTEREST-INVEST> 1,186,574
<INTEREST-OTHER> 221,951
<INTEREST-TOTAL> 10,531,309
<INTEREST-DEPOSIT> 3,493,389
<INTEREST-EXPENSE> 3,633,615
<INTEREST-INCOME-NET> 6,897,694
<LOAN-LOSSES> 238,650
<SECURITIES-GAINS> 100,683
<EXPENSE-OTHER> 5,349,645
<INCOME-PRETAX> 2,961,967
<INCOME-PRE-EXTRAORDINARY> 2,961,967
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,072,967
<EPS-PRIMARY> 2.56
<EPS-DILUTED> 0
<YIELD-ACTUAL> 6.17
<LOANS-NON> 769,000
<LOANS-PAST> 124,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,273,267
<CHARGE-OFFS> 275,139
<RECOVERIES> 150,558
<ALLOWANCE-CLOSE> 1,387,336
<ALLOWANCE-DOMESTIC> 1,387,336
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
