<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, 1997
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 April 26, 1997
<PAGE> FNB BANKING COMPANY AND SUBSIDIARY
INDEX
Page No.
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet (unaudited) at March 31, 1997 2
Consolidated Statements of Earnings (unaudited) for the
Three Months Ended March 31, 1997 and 1996 3
Consolidated Statements of Cash Flows (unaudited) for the
Three Months Ended March 31, 1997 and 1996 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
March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and due from banks $ 9,200,190
Federal funds sold 2,598,817
Investment securities held to maturity (approximate
market value of $12,587,232) 12,097,160
Investment securities available for sale (amortized
cost of $9,943,378) 9,830,142
Other investments 1,351,710
Mortgage loans held for sale 662,405
Loans 132,723,120
Less:Unearned income (317,603)
Allowance for loan losses (1,568,468)
Loans, net 130,837,049
Premises and equipment, net 6,343,873
Other assets 1,452,717
$ 174,374,063
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing $ 26,147,610
Interest-bearing 121,305,276
Total deposits 147,452,886
FHLB advances 5,714,286
Notes payable 736,112
Other liabilities 1,195,049
Total liabilities 155,098,333
Stockholders' equity:
Common stock, $1 par value; authorized
5,000,000 shares; issued and outstanding
807,800 shares 807,800
Retained earnings 18,542,665
Unrealized loss on investment securities, net of tax (74,735)
Total stockholders' equity 19,275,730
$ 174,374,063
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> FNB BANKING COMPANY AND SUBSIDIARY
Consolidated Statements of Earnings
For the Three Months Ended March 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
Interest income:
Loans $ 3,483,673 2,915,188
Investment securities:
Tax exempt 106,013 123,805
Taxable 248,022 291,720
Federal funds sold 34,577 88,523
Total interest income 3,872,285 3,419,236
Interest expense:
Deposits 1,254,041 1,137,145
Federal funds purchased and FHLB advances 76,334 36,730
Notes payable 13,283 16,791
Total interest expense 1,343,658 1,190,666
Net interest income 2,528,627 2,228,570
Provision for loan losses 135,800 7,100
Net interest income after provision for
loan losses 2,392,827 2,221,470
Other income:
Service charges on deposit accounts 363,359 371,055
Fees for trust services 45,000 45,000
Securities losses, net (12,171) -
Other operating income 110,591 98,860
Total other income 506,779 514,915
Other expense:
Salaries and other personnel expense 1,020,208 991,743
Net occupancy and equipment expense 343,102 290,137
Other operating expense 522,765 508,829
Total other expense 1,886,075 1,790,709
Earnings before income taxes 1,013,531 945,676
Income taxes 374,800 282,000
Net earnings $ 638,731 663,676
Earnings per common share based on average outstanding
shares of 807,800 in 1997 and 1996: $ .79 .82
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
FNB BANKING COMPANY AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 1997 and 1996
(Unaudited)
<TABLE>
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 638,731 663,676
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Provision for loan losses 135,800 7,100
Depreciation, amortization and accretion 116,653 52,960
Gain on sales of premises and equipment - (3,150)
Loss on sales of investment securities 12,171 -
Change in assets and liabilities:
Interest receivable 107,631 138,830
Interest payable 24,377 19,117
Other, net 436,536 247,541
Mortgage loans held for sale 309,871 (414,999)
Net cash provided by operating activities 1,781,770 711,075
Cash flows from investing activities:
Proceeds from maturities and paydowns of
investment securities held to maturity 102,392 1,208,657
Proceeds from maturities and paydowns of
investment securities available for sale 129,495 220,436
Proceeds from sales of investment securities
available for sale 1,089,000 -
Purchases of investment securities
available for sale (1,114,864) -
Net change in loans (4,694,328) (3,415,246)
Purchases of other investments (196,800) (34,400)
Purchases of premises and equipment (380,773) (152,601)
Proceeds from sales of premises and equipment - 3,150
Net cash used by investing activities (5,065,878) (2,170,004)
Cash flows from financing activities:
Net change in deposits 1,647,602 6,483,916
Repayments of long-term debt (41,667) (41,666)
Proceeds from FHLB Advances 4,000,000 -
Repayments of FHLB Advances (2,500,000) -
Dividends paid (484,680) (484,680)
Net cash provided by financing activities 2,621,255 5,957,570
Net increase (decrease) in cash and cash equivalents (662,853) 4,498,641
Cash and cash equivalents at beginning of period 12,461,860 12,633,327
Cash and cash equivalents at end of period $ 11,799,007 17,131,968
Supplemental cash flow information:
Cash paid for interest $ 1,319,281 1,171,549
</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) Recent Accounting Pronouncements
During February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
(SFAS 128). SFAS 128 simplifies current standards by eliminating the
presentation of primary earnings per share (EPS) and requiring the
presentation of basic EPS, which includes no potential common shares and
thus no dilution. The Statement also requires entities with complex capital
structures to present basic and diluted EPS on the face of the income
statement and also eliminates the modified treasury stock method of
computing potential common shares. The Statement is effective for financial
statements issued for periods ending after December 15, 1997. Early
application is not permitted. On adoption, restatement of all prior-period
EPS data presented is required. Based upon the current capital structure
of the Company, this Statement will have no effect on the EPS calculation.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
For the Three Months in the Periods Ended
March 31, 1997 and 1996
Financial Condition
Total assets at March 31, 1997 were $174,374,063, representing
a $3,597,667 (2.1%) increase from December 31, 1996. Deposits increased
$1,647,602 (1.1%) from December 31, 1996. Loans increased $4,558,528 (3.6%).
The allowance for loan losses at March 31, 1997 totalled $1,568,468,
representing 1.2% of total loans compared to December 31, 1996 total of
$1,422,603 representing 1.1% of total loans. Cash and cash equivalents
decreased $662,853 from December 31, 1996.
The total of nonperforming assets which includes nonaccruing loans,
repossessed collateral and loans for which payments are more than 90 days
past due increased 247.5% or $1,938,000 from $783,000 at December 31, 1996
to $2,721,000 at March 31, 1997. The significant increase is directly
related to a loan of $1.9 million that was classified as a nonperforming
asset during 1997. There were no related party loans which were considered
nonperforming at March 31, 1997.
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 $300,057 (13.5%) in the first three months
of 1997 compared to the same period for 1996. Interest income for the first
three months of 1997 was $3,872,285, representing an increase of $453,049
(13.3%) over the same period in 1996. Interest expense for the first three
months of 1997 increased $152,992 (12.8%) compared to the same period in
1996. The increase in interest income and interest expense during the first
three months of 1997 compared to the same period in 1996 is primarily
attributable to the increase in the volume of both loans and deposits and
to the additional FHLB advances obtained during 1997.
The provision for loan losses for the three months of 1997 increased
$128,700 compared to the same period for 1996. The increase is primarily
attributable to the increase in loans during the first three months of 1997
compared to the same period in 1996 and to the significant loan that was
classified as nonperforming during 1997. It is management's belief that the
allowance for loan losses is adequate to absorb probable losses in the
portfolio.
Other expenses for the three months of 1997 increased $95,366 (5.3%)
compared to the first three months in 1996. The net increase is primarily
attributable to the Henry County branch that began operations in late 1996.
Income tax expense expressed as a percentage of earnings before income taxes
increased as a result of the provision for state taxes which had, in the
past, not been required due to carryforward state income tax credits. Prior
to 1997 management provided a valuation allowance against these credits
which were reduced as the Company was able to utilize them. Additionally,
tax exempt income relative to pre-tax earnings decreased causing the income
tax expense to increase.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS, continued
For the Three Months in the Periods Ended
March 31, 1997 and 1996
Capital
The following tables present FNB Banking Company's regulatory capital
position at March 31, 1997:
Risk-Based Capital Ratios
Tier 1 Tangible Capital, Actual 15.1%
Tier 1 Tangible Capital minimum requirement 4.0%
Excess 11.1%
Total Capital, Actual 16.3%
Total Capital minimum requirement 8.0%
Excess 8.3%
Leverage Ratio
Tier 1 Tangible Capital to adjusted total assets
("Leverage Ratio") 11.2%
Minimum leverage requirement 3.0%
Excess 8.2%
<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 27, 1997
(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
Ernest F. Carlisle, III
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 635,488
Shares voted in person in favor 80,252
Shares voted in person against -
Shares abstained from voting 727
Total shares represented 716,467
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
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:
C.A. Knowles,President and Treasurer
(Principal Executive Officer)
Date:
By:
William K. Holmes
Assistant Treasurer
(Principal Accounting Officer)
Date:
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 9,200,190
<INT-BEARING-DEPOSITS> 121,305,276
<FED-FUNDS-SOLD> 2,598,817
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 9,830,142
<INVESTMENTS-CARRYING> 12,097,160
<INVESTMENTS-MARKET> 12,587,232
<LOANS> 130,837,049
<ALLOWANCE> 1,568,468
<TOTAL-ASSETS> 174,374,063
<DEPOSITS> 147,452,886
<SHORT-TERM> 4,000,000
<LIABILITIES-OTHER> 1,195,049
<LONG-TERM> 2,450,398
0
0
<COMMON> 807,800
<OTHER-SE> 18,467,930
<TOTAL-LIABILITIES-AND-EQUITY> 174,374,063
<INTEREST-LOAN> 3,483,673
<INTEREST-INVEST> 354,035
<INTEREST-OTHER> 34,577
<INTEREST-TOTAL> 3,872,285
<INTEREST-DEPOSIT> 1,254,041
<INTEREST-EXPENSE> 1,343,658
<INTEREST-INCOME-NET> 2,528,627
<LOAN-LOSSES> 135,800
<SECURITIES-GAINS> (12,171)
<EXPENSE-OTHER> 1,886,075
<INCOME-PRETAX> 1,013,531
<INCOME-PRE-EXTRAORDINARY> 1,013,531
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 638,731
<EPS-PRIMARY> .79
<EPS-DILUTED> 0
<YIELD-ACTUAL> 6.43
<LOANS-NON> 2,393,000
<LOANS-PAST> 328,000
<LOANS-TROUBLED> 293,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,422,603
<CHARGE-OFFS> 77,142
<RECOVERIES> 87,207
<ALLOWANCE-CLOSE> 1,568,468
<ALLOWANCE-DOMESTIC> 1,568,468
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
