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 June 30, 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
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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: 786,408 shares outstanding as of August 3,
2000.
<PAGE>
FNB BANKING COMPANY AND SUBSIDIARY
INDEX
<TABLE>
<CAPTION>
Page No.
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PART I FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheet (Unaudited) at June 30, 2000 3
Consolidated Statements of Earnings (Unaudited) for the Three
Months and the Six Months Ended June 30, 2000 and 1999 4
Consolidated Statements of Comprehensive Income (Unaudited)
for the Three Months and the Six Months Ended June 30, 2000 and 1999 5
Consolidated Statements of Cash Flows (Unaudited) for the Six
Months Ended June 30, 2000 and 1999 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 4. Submission of Matters to a Vote of Security Holders 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
<TABLE>
<CAPTION>
June 30, 2000
(Unaudited)
Assets
------
<S> <C>
Cash and due from banks $ 12,442,426
Federal funds sold 284,631
Interest-bearing deposits with other banks 500,000
Investment securities available for sale 37,100,593
Other investments 721,600
Mortgage loans held for sale 286,374
Loans 163,517,356
Less: Unearned income 441,358
Allowance for loan losses 2,417,680
-------------
Loans, net 160,658,318
Premises and equipment, net 7,868,210
Other assets 1,705,629
-------------
$ 221,567,781
Liabilities and Stockholders' Equity
------------------------------------
Liabilities:
Deposits:
Noninterest-bearing $ 32,196,989
Interest-bearing 151,225,630
-------------
Total deposits 183,422,619
Securities sold under repurchase agreements 8,306,650
Federal funds purchased 4,250,000
FHLB advances 1,062,500
Notes payable 194,446
Other liabilities 725,971
-------------
Total liabilities 197,962,186
-------------
Stockholders' equity:
Common stock, $1 par value; authorized
5,000,000 shares; issued and outstanding
786,408 shares 786,408
Retained earnings 23,128,002
Accumulated other comprehensive income (308,815)
-------------
Total stockholders' equity 23,605,595
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$ 221,567,781
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
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<PAGE>
FNB BANKING COMPANY AND SUBSIDIARY
Consolidated Statements of Earnings
For the Three Months and the Six Months Ended June 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
2000 1999 2000 1999
---- ---- ---- ----
Interest income:
<S> <C> <C> <C> <C>
Loans $ 4,298,913 3,930,731 8,380,077 7,713,242
Investment securities:
Tax exempt 113,535 105,749 219,962 196,726
Taxable 489,225 368,323 1,000,329 719,560
Federal funds sold 47,655 97,009 129,903 235,679
--------- --------- --------- ---------
Total interest income 4,949,328 4,501,812 9,730,271 8,865,207
--------- --------- --------- ---------
Interest expense:
Deposits 1,685,371 1,574,791 3,361,881 3,163,151
Federal funds purchased and FHLB advances 78,183 28,982 166,896 64,149
Notes payable 4,318 6,490 9,142 13,526
--------- --------- --------- ---------
Total interest expense 1,767,872 1,610,263 3,537,919 3,240,826
--------- --------- --------- ---------
Net interest income 3,181,456 2,891,549 6,192,352 5,624,381
Provision for loan losses 162,600 675,268 299,586 1,094,868
--------- --------- --------- ---------
Net interest income after provision for loan losses 3,018,856 2,216,281 5,892,766 4,529,513
--------- --------- --------- ---------
Other operating income:
Service charges on deposit accounts 443,391 360,118 859,602 723,117
Fees for trust services 45,000 30,000 75,000 60,000
Other operating income 149,137 119,577 291,235 356,923
--------- --------- --------- ---------
Total other operating income 637,528 509,695 1,225,837 1,140,040
--------- --------- --------- ---------
Other operating expense:
Salaries and other personnel expense 1,314,335 1,264,236 2,656,202 2,539,435
Net occupancy and equipment expense 442,261 391,056 872,758 783,586
Other operating expense 603,158 579,383 1,183,912 1,164,483
--------- --------- --------- ---------
Total other operating expense 2,359,754 2,234,675 4,712,872 4,487,504
--------- --------- --------- ---------
Earnings before income taxes 1,296,630 491,301 2,405,731 1,182,049
Income taxes 433,396 122,063 798,252 330,577
--------- --------- --------- ---------
Net earnings $ 863,234 369,238 1,607,479 851,472
========= ========= ========= =========
Earnings per common share based on average outstanding
shares of 786,643, 798,028, 787,783 and 802,887,
respectively:
Net earnings per share $ 1.10 .46 2.04 1.06
==== === ==== ====
Dividends declared per common share $ .65 .60 .65 .60
==== === ==== ====
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
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<PAGE>
FNB BANKING COMPANY AND SUBSIDIARY
Consolidated Statements of Comprehensive Income
For the Three Months and the Six Months Ended June 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net earnings $ 863,234 369,238 1,607,479 851,472
Other comprehensive income, net of tax:
Unrealized gains on securities available for sale:
Holding gains (loss) arising during period, net of tax
of $123,240, $45,699, $144,318 and $177,451 (201,076) (74,562) (235,467) (289,525)
------- ------- --------- -------
Total other comprehensive income (loss) (201,076) (74,562) (235,467) (289,525)
------- ------- --------- -------
Comprehensive income $ 662,158 294,676 1,372,012 561,947
======= ======= ========= =======
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
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<PAGE>
FNB BANKING COMPANY AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,607,479 851,472
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Provision for loan losses 299,586 1,094,868
Gain on sale of repossessed collateral - (87,596)
Depreciation, amortization and accretion 314,016 318,684
Change in assets and liabilities:
Interest payable 50,392 (34,592)
Other, net 86,605 (164,447)
Mortgage loans held for sale 407,605 1,191,655
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Net cash provided by operating activities 2,765,683 3,170,044
---------- ----------
Cash flows from investing activities:
Proceeds from maturities and paydowns of investment securities
held to maturity - 548,795
Proceeds from maturities and paydowns of investment securities
available for sale 981,611 4,562,972
Purchases of investment securities available for sale (7,233,972) (9,151,194)
Net change in loans (7,471,274) (3,102,849)
Proceeds from sale of other investments - 104,100
Purchases of premises and equipment (182,150) (300,125)
Proceeds from sale of repossessed collateral - 19,633
---------- ----------
Net cash used by investing activities (13,905,785) (7,318,668)
---------- ----------
Cash flows from financing activities:
Net change in federal funds purchased 4,250,000 -
Net change in deposits 5,636,772 5,839,539
Net change in securities sold under repurchase agreements (1,084,426) 415,671
Repayments of long-term debt (83,333) (83,333)
FHLB advances 6,000,000 -
Repayments of FHLB advances (13,562,500) (919,643)
Purchase and retirement of common stock (100,640) (468,040)
Dividends paid (513,801) (525,070)
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Net cash provided by financing activities 542,072 4,259,124
---------- ----------
Net change in cash and cash equivalents (10,598,030) 110,500
Cash and cash equivalents at beginning of period 23,325,087 13,216,634
---------- ----------
Cash and cash equivalents at end of period $ 12,727,057 13,327,134
========== ==========
Supplemental cash flow information:
Cash paid for income taxes $ 754,000 415,000
Cash paid for interest $ 3,487,527 3,275,418
Noncash investing and financing activities:
Change in net unrealized (gains) losses on investment securities
available for sale, net of tax $ 235,467 289,525
Transfers of loans to other real estate $ - 236,583
Financed sales of other real estate $ - 332,662
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
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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) Stock Repurchase and Retirement
-------------------------------
In April 2000, the Company redeemed and retired 2,516 shares of its $1
par value common stock for a total purchase price of $100,640.
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<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For the Six Months in the Periods Ended
June 30, 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 that 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; and
material unforeseen changes in the financial stability and liquidity of the
Company's credit customers. 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 June 30, 2000, were $221,568,000 representing a
$1,890,000 (1%) increase from December 31, 1999. Deposits, including repurchase
agreements, increased $4,552,000 (2%) from December 31, 1999. Gross loans
increased $7,122,000 (5%). The allowance for loan losses at June 30, 2000,
totaled $2,417,680, representing 1.49% of total loans compared to the December
31, 1999 total of $2,589,000, representing 1.66% of total loans. Cash and cash
equivalents decreased $10,598,000 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 increased 8% or $125,000 from $1,623,000 at December 31, 1999, to $1,748,000
at June 30, 2000. The increase is the net result of three additional commercial
loans which were placed on nonaccrual status and the charge-off of one $420,000
loan. There were no related party loans which were considered nonperforming at
June 30, 2000.
The Company's subsidiary bank was most recently examined by its primary
regulatory authority in July 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 six months ended June 30, 2000, the Company reported net earnings
of $1,607,000 or $2.04 per share, compared to $851,000, or $1.06 per share, for
the same period in 1999. Net earnings for the three months ended June 30, 2000,
increased $494,000 or 134%, compared to the same period in 1999. The increase in
the net earnings for the three months ended June 30, 2000, resulted primarily
from the decrease in the provision of loan losses of $513,000, compared to the
same period in 1999.
Net interest income increased $568,000 (10%) in the first six months of
2000 compared to the same period for 1999. Interest income for the first six
months of 2000 was $9,730,000, representing an increase of $865,000 (10%) over
the same period in 1999. Interest expense for the first six months of 2000
increased $297,000 (9%) compared to the same period in 1999. The increase in
interest income and interest expense during the first six months of 2000
compared to the same period in 1999 is primarily attributable to the increase in
the volume of both loans and deposits.
The provision for loan losses for the six months of 2000 decreased
$795,000 compared to the same period for 1999. The decrease is primarily
attributable to a large provision in 1999 surrounding a commercial loan
relationship which was resolved in late 1999. Net loan charge-offs for the six
months ended June 30, 2000, were $471,000, compared to $408,000, 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.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, continued
For the Six Months in the Periods Ended
June 30, 2000 and 1999
Other operating income increased for the six months ended June 30, 2000,
by $85,800 or 8%, compared to the same period in 1999, primarily due to an
increase in service charges linked to an increase in the number of deposit
accounts.
Other operating expenses for the six months of 2000 increased $225,000
(5%) compared to the first six months in 1999. The net increase is primarily
attributable to an increase in employee costs of $117,000, due to merit
increases for the existing workforce and $89,000 increase in building repairs,
maintenance, and utilities expense.
CAPITAL
The following tables present the Company's regulatory capital position at June
30, 2000:
Risk-Based Capital Ratios
-------------------------
Tier 1 Tangible Capital, actual 14.51%
Tier 1 Tangible Capital, minimum requirement 4.00%
-----
Excess 10.51%
=====
Total Capital, actual 15.76%
Total Capital, minimum requirement 8.00%
-----
Excess 7.76%
=====
Leverage Ratio
--------------
Tier 1 Tangible Capital to adjusted total assets
("Leverage Ratio") 10.94%
Minimum leverage requirement 3.00%
-----
Excess 7.94%
=====
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<PAGE>
PART II. OTHER INFORMATION
FNB BANKING COMPANY AND SUBSIDIARY
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
(a) FNB Banking Company's annual meeting of stockholders was held on
April 13, 2000.
(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(1):
C.A. Knowles
James A. Mankin
John T. Newton, Jr.
David G. Newton
J. Henry Cheatham, III
Gilliam Cheatham
A tabulation of votes concerning the above issues is as follows:
Director
Election
--------
Shares voted by proxy in favor 600,871
Shares voted in person in favor 97,307
Shares voted in person against -
Shares abstained from voting -
-------
Total shares represented 698,178
=======
Total shares outstanding 788,924
=======
(1) - Directors were elected by slate, not individually. Vote
tabulation is therefore by slate.
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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: /s/ C.A. Knowles
--------------------------------------
C.A. Knowles, President and Treasurer
(Principal Executive Officer)
Date: August 10, 2000
------------------------------------
By: /s/ Robin W. Nance
--------------------------------------
Robin W. Nance
Assistant Secretary
(Principal Accounting Officer)
Date: August 10, 2000
------------------------------------
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<PAGE>
EXHIBIT INDEX
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Exhibit No. Description
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27 Financial Data Schedule - for SEC use only
