<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 March 31, 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)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 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 April 22, 1996
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FNB BANKING COMPANY AND SUBSIDIARY
INDEX
Page No.
--------
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet (unaudited) at
March 31, 1996 2
Consolidated Statements of Earnings (unaudited) for the
Three Months Ended March 31, 1996 and 1995 3
Consolidated Statements of Cash Flows (unaudited) for
the Three Months Ended March 31, 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
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
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<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
FNB BANKING COMPANY AND SUBSIDIARY
Consolidated Balance Sheet
March 31, 1996
(Unaudited)
Assets
------
<S> <C>
Cash and due from banks $ 9,040,743
Federal funds sold 8,091,225
Investment securities held to maturity
(approximate market value of $14,060,616) 14,471,493
Investment securities available for sale
(amortized cost of $6,859,829) 6,781,911
Other investments 1,154,910
Mortgage loans held for sale 414,999
Loans 111,630,008
Less: Unearned income (287,127)
Allowance for loan losses (1,239,851)
-----------
Loans, net 110,103,030
-----------
Premises and equipment, net 5,919,183
Other assets 1,513,877
-----------
$ 157,491,371
===========
Liabilities and Stockholders' Equity
------------------------------------
Liabilities:
Deposits:
Noninterest-bearing $ 25,019,603
Interest-bearing 110,963,306
-----------
Total deposits 135,982,909
FHLB advances 2,000,000
Notes payable 902,779
Other liabilities 1,204,066
-----------
Total liabilities 140,089,754
-----------
Stockholders' equity:
Common stock, $1 par value; authorized
5,000,000 shares; issued and outstanding
807,800 shares 807,800
Retained earnings 16,645,243
Unrealized loss on investment
securities, net of tax (51,426)
-----------
Total stockholders' equity 17,401,617
$ 157,491,371
===========
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
FNB BANKING COMPANY AND SUBSIDIARY
Consolidated Statements of Earnings
Three Months Ended March 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
Interest income:
Loans $ 2,915,188 2,677,308
Investment securities:
Tax-exempt 123,805 140,207
Taxable 291,720 281,301
Federal funds sold 88,523 7,498
--------- ---------
Total interest income 3,419,236 3,106,314
--------- ---------
Interest expense:
Deposits 1,137,145 992,523
Notes payable 16,791 20,022
Other 36,730 7,615
--------- ---------
Total interest expense 1,190,666 1,020,160
--------- ---------
Net interest income 2,228,570 2,086,154
Provision for loan losses 7,100 -
Net interest income after provision
for loan losses 2,221,470 2,086,154
--------- ---------
Other income:
Service charges on deposit accounts 371,055 360,135
Fees for trust services 45,000 45,000
Other operating income 98,860 60,370
--------- --------
Total other income 514,915 465,505
--------- --------
Other expense:
Salaries and other personnel expense 991,743 958,957
Net occupancy and equipment expense 290,137 284,304
Other operating expense 508,829 466,512
--------- ---------
Total other expense 1,790,709 1,709,773
--------- ---------
Earnings before income taxes 945,676 841,886
Income taxes 282,000 232,180
--------- ---------
Net earnings $ 663,676 609,706
========= =========
Earnings per common share based on average
outstanding shares of 807,800 $ .82 .75
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
<PAGE>
<TABLE>
<CAPTION>
FNB BANKING COMPANY AND SUBSIDIARY
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1996 and 1995
(Unaudited)
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 663,676 609,706
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Provision for loan losses 7,100 -
Writedowns and losses on sales of repossessed
collateral - 5,658
Depreciation, amortization and accretion 52,960 77,932
Gains on sales of premises and equipment (3,150) -
Change in assets and liabilities:
Mortgage loans held for sale (414,999) 6,289
Interest receivable 138,830 52,059
Interest payable 19,117 50,045
Other, net 247,541 71,313
--------- ---------
Net cash provided by operating activities 711,075 873,002
--------- ---------
Cash flows from investing activities:
Proceeds from sales, maturities and paydowns of
investment securities held to maturity 1,208,657 841,085
Proceeds from sales, maturities and paydowns of
investment securities available for sale 220,436 38,624
Purchases of other investments (34,400) -
Net change in loans (3,415,246) (3,397,874)
Purchases of premises and equipment (152,601) (43,820)
Proceeds from sales of premises and equipment 3,150 -
Proceeds from sales of repossessed collateral - 16,342
--------- ---------
Net cash used by investing activities (2,170,004) (2,545,643)
--------- ---------
Cash flows from financing activities:
Net change in deposits 6,483,916 2,143,064
Net change in federal funds purchased - (1,500,000)
Repayment of long-term debt (41,666) (41,667)
Dividends paid (484,680) (484,680)
--------- ---------
Net cash provided by financing activities 5,957,570 116,717
--------- ----------
Net increase (decrease) in cash and cash equivalents 4,498,641 (1,555,924)
Cash and cash equivalents at beginning of the period 12,633,327 13,069,918
---------- ----------
Cash and cash equivalents at end of period $ 17,131,968 11,513,994
========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
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<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.
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<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For Each of the Three Months in the Periods Ended
March 31, 1996 and 1995
FINANCIAL CONDITION
Total assets at March 31, 1996 were $157,491,371,
representing a $7,112,878 (4.7%) increase from December 31, 1995.
Deposits increased $6,483,916 (5.0%) from December 31, 1995.
Loans increased $3,375,153 (3.1%). The allowance for loan losses
at March 31, 1996 totalled $1,239,851, 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
increased $4,498,641 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 38% or $317,000 from
$833,000 at December 31, 1995 to $1,150,000 at March 31, 1996.
There were no related party loans which were considered
nonperforming at March 31, 1996.
The Company's subsidiary bank was most recently examined by
its primary regulatory authority in November 1994. 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 $142,416 (6.8%) in the first
three months of 1996 compared to the same period for 1995.
Interest income for the first three months of 1996 was
$3,419,236, representing a increase of $312,922 (10.1%) over the
same period in 1995. Interest expense for the first three months
of 1996 increased $170,506 (16.7%) compared to the same period in
1995.
The provision for loan losses for the first three months of
1996 increased $7,100 compared to the same period for 1995. A
provision of $7,100 was made during the first three months of
1996 compared to no provision for 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 first three months of 1996 increased
$80,936 (4.7%) compared to the first three months in 1995. The
increase is primarily attributable to the purchase of additional
office supplies of $40,000 during the first three months of 1996.
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.
-6-<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, continued
For the Three Months Ended March 31, 1996
Capital
The following tables present FNB Banking Company's regulatory
capital position at March 31, 1996:
Risk-Based Capital Ratios
Tier 1 Tangible Capital, Actual 15.0%
Tier 1 Tangible Capital minimum requirement 4.0%
----
Excess 11.0%
====
Total Capital, Actual 16.0%
Total Capital minimum requirement 8.0%
----
Excess 8.0%
====
Leverage Ratio
Tier 1 Tangible Capital to adjusted total assets
("Leverage Ratio") 11.3%
Minimum leverage requirement 3.0%
----
Excess 8.3%
====
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<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
---------------------------------------------------
(a) FNB Banking Company's annual meeting of
stockholders was held on March 28, 1996
(b) The following is a summary of matters submitted to
a vote of security holders:
1. The election of the following directors to serve
the current year term:
C.A. Knowles
James A. Mankin
W. Cameron Mitchell
John T. Newton, Jr.
John T. Newton, Sr.
David G. Newton
J. Henry Cheatham, III
A tabulation of votes concerning the above issues is as
follows:
Director
Election
--------
Shares voted by proxy in favor 659,270
Shares voted in person in favor 31,170
Shares voted in person against -
Shares abstained from voting -
-------
Total shares represented 690,440
=======
Total shares outstanding 807,800
=======
* - Directors were elected by slate, not individually.
Vote tabulation is therefore by slate.
Item 5. Other Information
-----------------
None
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits.
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K - None
-8-
<PAGE>
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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: May 12, 1996
By: /s/ William K. Holmes
William K. Holmes
Assistant Treasurer
(Principal Accounting Officer)
Date: May 12, 1996
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<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000757262
<NAME> FNB BANKING COMPANY
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-01-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 9,040,743
<INT-BEARING-DEPOSITS> 110,963,306
<FED-FUNDS-SOLD> 8,091,225
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 6,781,911
<INVESTMENTS-CARRYING> 14,471,493
<INVESTMENTS-MARKET> 14,060,616
<LOANS> 110,103,030
<ALLOWANCE> 1,239,851
<TOTAL-ASSETS> 157,491,371
<DEPOSITS> 135,982,909
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,204,066
<LONG-TERM> 2,902,779
0
0
<COMMON> 807,800
<OTHER-SE> 16,593,817
<TOTAL-LIABILITIES-AND-EQUITY> 157,491,371
<INTEREST-LOAN> 2,915,188
<INTEREST-INVEST> 415,525
<INTEREST-OTHER> 88,523
<INTEREST-TOTAL> 3,419,236
<INTEREST-DEPOSIT> 1,137,145
<INTEREST-EXPENSE> 1,190,666
<INTEREST-INCOME-NET> 2,228,570
<LOAN-LOSSES> 7,100
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,790,709
<INCOME-PRETAX> 945,676
<INCOME-PRE-EXTRAORDINARY> 945,676
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 663,676
<EPS-PRIMARY> 0.82
<EPS-DILUTED> 0
<YIELD-ACTUAL> 6.32
<LOANS-NON> 828,000
<LOANS-PAST> 322,000
<LOANS-TROUBLED> 459,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,273,267
<CHARGE-OFFS> 83,919
<RECOVERIES> 43,403
<ALLOWANCE-CLOSE> 1,239,851
<ALLOWANCE-DOMESTIC> 1,239,851
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
