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, 2000
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 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 XX NO
Common stock, par value $1 per share: 786,408 shares
outstanding as of May 3, 2000
<PAGE>
FNB BANKING COMPANY AND SUBSIDIARY
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet (unaudited) at March 31, 2000 3
Consolidated Statements of Earnings (unaudited) for the Three
Months Ended March 31, 2000 and 1999 4
Consolidated Statements of Comprehensive Income (unaudited)
for the Three Months Ended March 31, 2000 and 1999 5
Consolidated Statements of Cash Flows (unaudited) for the
Three Months Ended March 31, 2000 and 1999 6
Notes to Consolidated Financial Statements 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
</TABLE>
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<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
FNB BANKING COMPANY AND SUBSIDIARY
Consolidated Balance Sheet
March 31, 2000
(Unaudited)
Assets
------
Cash and due from banks $ 13,217,897
Federal funds sold 177,714
Interest-bearing deposits with other banks 500,000
Investment securities available for sale 37,817,647
Other investments 721,600
Mortgage loans held for sale 638,900
Loans 159,036,969
Less: Unearned interest and fees (328,636)
Allowance for loan losses (2,739,374)
-----------
Loans, net 155,968,959
Premises and equipment, net 7,930,906
Accrued interest receivable and other assets 1,705,805
-----------
$ 218,679,428
===========
Liabilities and Stockholders' Equity
------------------------------------
Liabilities:
Deposits:
Noninterest-bearing $ 33,112,030
Interest-bearing 148,355,683
-----------
Total deposits 181,467,713
Securities sold under repurchase agreements 11,731,871
FHLB advances 1,093,750
Notes payable 236,112
Accrued interest payable and accrued liabilities 594,740
-----------
Total liabilities 195,124,186
-----------
Stockholders' equity:
Common stock, $1 par value; 5,000,000 shares authorized;
788,924 shares issued and outstanding 788,924
Retained earnings 22,874,057
Accumulated other comprehensive income (107,739)
-----------
Total stockholders' equity 23,555,242
-----------
$ 218,679,428
===========
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, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Interest income:
Interest and fees on loans $ 4,081,164 3,782,511
Interest on investment securities:
Tax-exempt 106,427 90,977
Taxable 511,104 351,237
Interest on federal funds sold 82,248 138,670
--------- ---------
Total interest income 4,780,943 4,363,395
--------- ---------
Interest expense:
Deposits and repurchase agreements 1,676,510 1,588,360
Federal funds purchased and FHLB advances 88,713 35,167
Notes payable 4,824 7,036
--------- ---------
Total interest expense 1,770,047 1,630,563
--------- ---------
Net interest income 3,010,896 2,732,832
Provision for loan losses 136,986 419,600
--------- ---------
Net interest income after provision for loan losses 2,873,910 2,313,232
--------- ---------
Other operating income:
Service charges on deposit accounts 416,211 362,999
Fees for trust services 30,000 30,000
Other operating income 142,098 237,346
--------- ---------
Total other operating income 588,309 630,345
--------- ---------
Other operating expense:
Salaries and employee benefits 1,341,867 1,275,199
Occupancy and equipment 430,497 392,530
Other operating expense 580,754 585,100
--------- ---------
Total other operating expense 2,353,118 2,252,829
--------- ---------
Earnings before income taxes 1,109,101 690,748
Income taxes 364,856 208,514
--------- ---------
Net earnings $ 744,245 482,234
========= =========
Net earnings per common share based on average outstanding
shares of 788,924 and 807,800 in 2000 and 1999, respectively: $ .94 .60
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
-4-
<PAGE>
FNB BANKING COMPANY AND SUBSIDIARY
Consolidated Statements of Comprehensive Income
For the Three Months Ended March 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Net earnings $ 744,245 482,234
Other comprehensive income, net of tax:
Unrealized gains (losses) on securities available for sale:
Holding gains (losses) arising during period, net of tax
of $20,555 and $131,752 (34,391) (214,963)
------- -------- ------- --------
Total other comprehensive income (loss) (34,391) (214,963)
------- --------
Comprehensive income $ 709,854 267,271
======= ========
</TABLE>
See accompanying notes to consolidated financial statements
-5-
<PAGE>
FNB BANKING COMPANY AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 744,245 482,233
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Provision for loan losses 136,986 419,600
Depreciation, amortization and accretion 158,416 154,586
Gain on sale of other real estate and repossessed collateral - (87,596)
Change in assets and liabilities:
Mortgage loans held for sale 55,079 1,009,386
Interest receivable (32,336) 153,759
Interest payable 40,102 (9,813)
Other, net 425,225 290,209
---------- ----------
Net cash provided by operating activities 1,527,717 2,412,364
---------- ----------
Cash flows from investing activities:
Proceeds from maturities and paydowns of investment securities held to maturity - 481,059
Proceeds from maturities and paydowns of investment securities available for sale 582,773 3,810,695
Purchases of investment securities available for sale (7,273,451) (5,000,000)
Net change in loans (2,619,315) 978,323
Proceeds from sales of other real estate and repossessed collateral - (44,893)
Purchases of premises and equipment (83,144) (117,358)
---------- ----------
Net cash provided by (used by) investing activities (9,393,137) 107,826
---------- ----------
Cash flows from financing activities:
Net change in deposits 3,681,867 11,545,962
Net change in securities sold under repurchase agreements 2,340,795 1,388,059
Repayments of note payable (41,667) (41,667)
Repayments of FHLB advances (7,531,250) (31,250)
Payment of cash dividend (513,801) (525,070)
---------- ----------
Net cash provided by (used by) financing activities (2,064,056) 12,336,034
---------- ----------
Net change in cash and cash equivalents (9,929,476) 14,856,224
Cash and cash equivalents at beginning of period 23,325,087 13,216,634
---------- ----------
Cash and cash equivalents at end of period $ 13,395,611 28,072,858
---------- ----------
Supplemental disclosures of cash flow information:
Cash paid for interest $ 1,729,945 1,640,376
Noncash investing and financing activities:
Change in net unrealized gains (losses) on investment
securities available for sale, net of tax $ (34,391) (214,963)
Transfers of loans to other real estate $ - 236,583
Financed sales of other real estate $ - 287,769
</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.
-7-
<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, 2000 and 1999
FORWARD-LOOKING STATEMENT
This discussion contains forward-looking statements under the Private Securities
Litigation Reform Act of 1995 that involve risks and uncertainties. Although the
Company believes the assumptions underlying the forward-looking statements
contained in the discussion are reasonable, any of the assumptions could be
inaccurate, and therefore, no assurance can be made that any of the
forward-looking statements included in this discussion will be accurate. Factors
that could cause actual results to differ from results discussed in
forward-looking statements include, but are not limited to: economic conditions
(both generally and in the markets where the Company operates); competition from
other providers of financial services offered by the Company; government
regulation and legislation; changes in interest rates; material unforeseen
changes in the financial stability and liquidity of the Company's credit
customers; all of which are difficult to predict and which may be beyond the
control of the Company. The Company undertakes no obligation to revise
forward-looking statements to reflect events or changes after the date of this
discussion or to reflect the occurrence of unanticipated events.
FINANCIAL CONDITION
Total assets at March 31, 2000, were $218,679,428, representing a $1,031,495
(0.47%) decrease from December 31, 1999. Deposits increased $3,681,866 (2.07%)
from December 31, 1999. Loans (gross) increased $2,641,073 (1.69%). The
allowance for loan losses at March 31, 2000, totaled $2,739,374, representing
1.72% of total loans compared to December 31, 1999 total of $2,588,697
representing 1.66% of total loans. Cash and cash equivalents decreased
$9,929,476 from December 31, 1999.
The total of nonperforming assets which includes nonaccruing loans, repossessed
collateral and loans for which payments are more than 90 days past due totaled
$1,623,000 and remained virtually unchanged from December 31, 1999.
The Company's subsidiary bank was most recently examined by its primary
regulatory authority in June 1999. 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
For the three months ended March 31, 2000, the Company reported net income of
$744,245, or $.94 per share, compared to $482,234, or $0.60 per share, for the
same period in 1999.
Net interest income is the primary source of the Company's operating income. Net
interest income increased approximately $278,064 (10.17%) in the first three
months of 2000 compared to the same period for 1999. Interest income for the
first three months of 2000 was $4,780,943, representing an increase of $417,548
(9.57%) over the same period in 1999. Interest expense for the first three
months of 2000 increased $139,484 (8.55%) compared to the same period in 1999.
The increase in net interest income during the first three months of 2000
compared to the same period in 1999 is attributable to a combination of volume
and rate increases, but is primarily attributable to rate increases in interest
bearing assets.
The provision for loan losses for the three months of 2000 decreased $282,614
compared to the same period for 1999. For the three months ended March 31, 2000,
the Bank experienced net recoveries on loans previously charged off of $13,691,
compared to net loan charge-offs of $222,331, for the same period in 1999. It is
management's belief that the allowance for loan losses is adequate to absorb
probable losses in the portfolio.
Other operating income decreased for the three months ended March 31, 2000 by
$42,036, or 6.67%, compared to the same period in 1999, primarily due to other
real estate that was sold and gains of $87,596 recognized on those sales during
the quarter ended March 31, 1999.
-8-
<PAGE>
Other operating expenses for the first three months of 2000 increased $100,289
(4.45%) compared to the first three months in 1999. The net increase is
attributable to two factors: first, an increase in depreciation expense related
to fixed assets purchased in the last three quarters of 1999 for Y2k compliance;
and second, salary increases due to merit-based raises.
Income tax expense, expressed as a percentage of earnings before income taxes,
increased from 30% in 1999 to 33% in 2000 as tax exempt income relative to
pre-tax earnings decreased.
CAPITAL
The following tables present FNB Banking Company's regulatory capital position
at March 31, 2000:
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 15.9%
Total Capital minimum requirement 8.0%
----
Excess 7.9%
====
Leverage Ratio
--------------
Tier 1 Tangible Capital to adjusted total assets
("Leverage Ratio") 11.0%
Minimum leverage requirement 3.0%
----
Excess 8.0%
====
-9-
<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
--------------------------------
(a) Exhibits:
Exhibit 27 - Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K:
None
-10-
<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: 5/12/2000
-----------------------------------
By: /s/ William K. Holmes
--------------------------------------
William K. Holmes
Assistant Treasurer
(Principal Accounting Officer)
Date: 5/12/2000
-----------------------------------
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description
- ----------- -----------
27 Financial Data Schedule (for SEC use only)
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 13,217,897
<INT-BEARING-DEPOSITS> 148,355,683
<FED-FUNDS-SOLD> 177,714
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 37,817,647
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 155,968,959
<ALLOWANCE> 2,739,374
<TOTAL-ASSETS> 218,679,428
<DEPOSITS> 181,467,713
<SHORT-TERM> 0
<LIABILITIES-OTHER> 636,171
<LONG-TERM> 1,329,862
0
0
<COMMON> 788,924
<OTHER-SE> 22,766,318
<TOTAL-LIABILITIES-AND-EQUITY> 218,679,428
<INTEREST-LOAN> 4,081,164
<INTEREST-INVEST> 617,531
<INTEREST-OTHER> 82,248
<INTEREST-TOTAL> 4,780,943
<INTEREST-DEPOSIT> 1,676,510
<INTEREST-EXPENSE> 1,770,047
<INTEREST-INCOME-NET> 3,010,896
<LOAN-LOSSES> 136,986
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,353,118
<INCOME-PRETAX> 1,109,101
<INCOME-PRE-EXTRAORDINARY> 1,109,101
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 744,245
<EPS-BASIC> 0.94
<EPS-DILUTED> 0
<YIELD-ACTUAL> 6.21
<LOANS-NON> 1,419,000
<LOANS-PAST> 204,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,588,697
<CHARGE-OFFS> 63,669
<RECOVERIES> 77,360
<ALLOWANCE-CLOSE> 2,739,374
<ALLOWANCE-DOMESTIC> 2,739,374
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
