<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, 1998
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
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(State of Incorporation) (I.R.S. Employer Identification No.)
318 South Hill Street
Griffin, Georgia 30224
- --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
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 /X/ NO / /
Common stock, par value $1 per share: 807,800 shares
outstanding as of April 23, 1998
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FNB BANKING COMPANY AND SUBSIDIARY
INDEX
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(CAPTION>
Page No.
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<S> <S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet (unaudited) at March 31, 1998 2
Consolidated Statements of Earnings (unaudited) for the Three
Months Ended March 31, 1998 and 1997 3
Consolidated Statements of Comprehensive Income (unaudited)
for the Three Months Ended March 31, 1998 and 1997 4
Consolidated Statements of Cash Flows (unaudited) for the
Three Months Ended March 31, 1998 and 1997 5
Notes to Consolidated Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7-8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
</TABLE>
<TABLE>
<CAPTION>
FNB BANKING COMPANY AND SUBSIDIARY
Consolidated Balance Sheet
March 31, 1998
(Unaudited)
Assets
<S> <C>
Cash and due from banks $ 7,994,904
Federal funds sold 9,096,451
Interest-bearing deposits with other banks 500,000
Investment securities held to maturity 8,222,504
Investment securities available for sale 18,732,531
Other investments 825,700
Mortgage loans held for sale 1,447,855
Loans 139,836,859
Less: Unearned interest and fees (318,080)
Allowance for loan losses (2,102,566)
-----------
Loans, net 137,416,213
------------
Premises and equipment, net 7,078,969
Accrued interest receivable and other assets 1,455,740
------------
$ 192,770,867
============
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing $ 28,743,088
Interest-bearing 137,975,165
------------
Total deposits 166,718,253
FHLB advances 1,428,571
Notes payable 569,446
Accounts payable and accrued liabilities 1,609,440
------------
Total liabilities 170,325,710
------------
Stockholders' equity:
Common stock, $1 par value; authorized
5,000,000 shares; issued and outstanding
807,800 shares 807,800
Retained earnings 20,528,082
Accumulated other comprehensive income 1,109,275
------------
Total stockholders' equity 22,445,157
------------
$ 192,770,867
============
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
FNB BANKING COMPANY AND SUBSIDIARY
Consolidated Statements of Earnings
For the Three Months Ended March 31, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
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<S> <C> <C>
Interest income:
Interest and fees on loans $ 3,803,825 3,483,673
Interest on investment securities:
Tax-exempt 88,579 106,013
Taxable 267,707 248,022
Interest on federal funds sold 133,191 34,577
----------- ------------
Total interest income 4,293,302 3,872,285
----------- ------------
Interest expense:
Deposits 1,518,689 1,254,041
Federal funds purchased and FHLB advances 23,671 76,334
Notes payable 10,702 13,283
----------- ------------
Total interest expense 1,553,062 1,343,658
----------- ------------
Net interest income 2,740,240 2,528,627
Provision for loan losses 143,950 135,800
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Net interest income after provision for loan losses 2,596,290 2,392,827
----------- ------------
Other operating income:
Service charges on deposit accounts 345,095 363,359
Fees for trust services 30,000 45,000
Securities gains (losses), net 2,453 (12,171)
Other operating income 141,749 110,591
----------- ------------
Total other operating income 519,297 506,779
----------- ------------
Other operating expense:
Salaries and employee benefits 1,173,681 1,020,208
Occupancy and equipment 363,124 343,102
Other operating expense 543,430 522,765
----------- ------------
Total other operating expense 2,080,235 1,886,075
----------- ------------
Earnings before income taxes 1,035,352 1,013,531
Income taxes 349,359 374,800
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Net earnings $ 685,993 638,731
=========== ============
Net earnings per common share based on average outstanding
shares of 807,800 in 1998 and 1997: $ .85 .79
=========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
FNB BANKING COMPANY AND SUBSIDIARY
Consolidated Statements of Comprehensive Income
For the Three Months Ended March 31, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
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<S> <C> <C>
Net earnings $ 685,993 638,731
Other comprehensive income, net of tax:
Unrealized gains (losses) on securities available for sale:
Holding gains (losses) arising during period, net of tax
of $233,586 and $11,119 381,113 (48,977)
Reclassification adjustment for (gains) losses included
in net earnings, net of tax of $932 and $4,625 (1,521) 7,546
--------- -------
Total other comprehensive income (loss) 379,592 (41,431)
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Comprehensive income $ 1,065,585 597,300
========= =======
</TABLE>
See accompanying notes to consolidated financial statements
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<PAGE>
FNB BANKING COMPANY AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
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<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 685,993 638,731
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Provision for loan losses 143,950 135,800
Depreciation, amortization and accretion 130,195 116,653
Loss (gain) on sales of investment securities (2,453) 12,171
Change in assets and liabilities:
Mortgage loans held for sale (797,505) 309,871
Interest receivable 113,923 107,631
Interest payable (23,420) 24,377
Other, net 287,474 436,536
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Net cash provided by operating activities 538,157 1,781,770
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Cash flows from investing activities:
Proceeds from maturities and paydowns of
investment securities held to maturity 1,182,899 102,392
Proceeds from maturities and paydowns of
investment securities available for sale 468,319 129,495
Proceeds from sales of investment securities available for sale 1,051,333 1,089,000
Purchases of investment securities available for sale (6,977,769) (1,114,864)
Purchases of other investments - (196,800)
Net change in loans 912,042 (4,694,328)
Purchases of premises and equipment (333,463) (380,773)
----------- ----------
Net cash used by investing activities (3,696,639) (5,065,878)
----------- ----------
Cash flows from financing activities:
Net change in deposits (999,315) 1,647,602
Repayments of note payable (41,666) (41,667)
Proceeds from FHLB advances - 4,000,000
Repayments of FHLB advances - (2,500,000)
Payment of cash dividend (484,680) (484,680)
----------- ----------
Net cash (used by) provided by financing activities (1,525,661) 2,621,255
----------- ----------
Net decrease in cash and cash equivalents (4,684,143) (662,853)
Cash and cash equivalents at beginning of period 21,775,498 12,461,860
----------- ----------
Cash and cash equivalents at end of period $ 17,091,355 11,799,007
=========== ==========
Supplemental cash flow information:
Cash paid for interest $ 1,576,482 1,319,281
</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) Cash and Cash Equivalents
-------------------------
For presentation purposes in the consolidated statements, cash
and cash equivalents include cash on hand, amounts due from
banks and federal funds sold.
(3) Comprehensive Income
--------------------
In 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" ("SFAS 130"). SFAS 130
established standards for the reporting and display of
comprehensive income and its components in a full set of
general-purpose financial statements. The Company has elected
to present comprehensive income in a separate consolidated
statement of comprehensive income. Accumulated other
comprehensive income is solely related to the net of tax
effect of unrealized gains on securities available for sale.
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<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, 1998 and 1997
FINANCIAL CONDITION
Total assets at March 31, 1998 were $192,770,867,
representing a $47,716 (.02%) decrease from December 31, 1997.
Deposits decreased $999,315 (.60%) from December 31, 1997. Loans
decreased $1,055,992 (.76%). The allowance for loan losses at
March 31, 1998 totalled $2,102,566, representing 1.5% of total
loans compared to December 31, 1997 total of $2,012,795
representing 1.4% of total loans. Cash and cash equivalents
decreased $4,684,143 from December 31, 1997.
The total of nonperforming assets which includes nonaccruing
loans, repossessed collateral and loans for which payments are
more than 90 days past due decreased 18.7% or $526,000 from
$2,813,000 at December 31, 1997 to $2,287,000 at March 31, 1998.
The decrease is due to a partial liquidation of collateral on a
$1.9 million non-accruing loan during the first three months of
1998. There were no related party loans which were considered
nonperforming at March 31, 1998.
The Company's subsidiary bank was most recently examined by
its primary regulatory authority in January 1998. 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 $211,613 (8.4%) in the first
three months of 1998 compared to the same period for 1997.
Interest income for the first three months of 1998 was
$4,293,302, representing an increase of $421,017 (10.9%) over the
same period in 1997. Interest expense for the first three months
of 1998 increased $209,404 (15.6%) compared to the same period in
1997. The increase in interest income and interest expense during
the first three months of 1998 compared to the same period in
1997 is primarily attributable to the increase in the volume of
both loans and deposits.
The provision for loan losses for the three months of 1998
increased $8,150 compared to the same period for 1997. The
increase is primarily attributable to the increase in net charged
off loans during the first three months of 1998 compared to the
same period in 1997. It is management's belief that the
allowance for loan losses is adequate to absorb probable losses
in the portfolio.
Other operating expenses for the three months of 1998
increased $194,160 (10.3%) compared to the first three months in
1997. The net increase is primarily attributable to an increase
in employee costs due to an increase in the number of employees
necessary to handle asset growth.
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<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL ONDITION
AND RESULTS OF OPERATIONS, continued
For the Three Months in the Periods Ended
March 31, 1998 and 1997
CAPITAL
The following tables present FNB Banking Company's regulatory
capital position at March 31, 1998:
Risk-Based Capital Ratios
-------------------------
Tier 1 Tangible Capital, Actual 15.3%
Tier 1 Tangible Capital minimum requirement 4.0%
----
Excess 11.3%
====
Total Capital, Actual 16.8%
Total Capital minimum requirement 8.0%
----
Excess 8.8%
====
Leverage Ratio
Tier 1 Tangible Capital to adjusted total assets
("Leverage Ratio") 11.5%
Minimum leverage requirement 4.0%
---
Excess 7.5%
===
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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
---------------------------------------------------
None
Item 5. Other Information
-----------------
None
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
Exhibit 27 - Financial Data Schedule (for SEC use only)
Reports on Form 8-K - None
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<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
<CIK> 0000757262
<NAME> FNB BANKING COMPANY
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 7,277,179
<INT-BEARING-DEPOSITS> 1,717,725
<FED-FUNDS-SOLD> 9,096,451
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 18,732,531
<INVESTMENTS-CARRYING> 8,222,504
<INVESTMENTS-MARKET> 8,583,613
<LOANS> 137,416,213
<ALLOWANCE> 2,102,566
<TOTAL-ASSETS> 192,770,867
<DEPOSITS> 166,718,253
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,609,440
<LONG-TERM> 1,998,017
0
0
<COMMON> 807,800
<OTHER-SE> 21,637,357
<TOTAL-LIABILITIES-AND-EQUITY> 192,770,867
<INTEREST-LOAN> 3,803,825
<INTEREST-INVEST> 356,286
<INTEREST-OTHER> 133,191
<INTEREST-TOTAL> 4,293,302
<INTEREST-DEPOSIT> 1,518,689
<INTEREST-EXPENSE> 1,553,062
<INTEREST-INCOME-NET> 2,740,240
<LOAN-LOSSES> 143,950
<SECURITIES-GAINS> 2,453
<EXPENSE-OTHER> 2,080,235
<INCOME-PRETAX> 1,035,352
<INCOME-PRE-EXTRAORDINARY> 1,035,352
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 685,993
<EPS-PRIMARY> .85
<EPS-DILUTED> 0
<YIELD-ACTUAL> 6.20
<LOANS-NON> 1,813,000
<LOANS-PAST> 474,000
<LOANS-TROUBLED> 261,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,012,795
<CHARGE-OFFS> 108,867
<RECOVERIES> 54,688
<ALLOWANCE-CLOSE> 2,102,566
<ALLOWANCE-DOMESTIC> 2,102,566
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
