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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of
1934 [Fee Required]
For the fiscal year ended December 31, 1998.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act
of 1934 [No Fee required]
For the transition period from _______ to _______.
Commission file number 33-66014
FNB FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
COMMONWEALTH OF PENNSYLVANIA 23-2466821
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
101 Lincoln Way West, McConnellsburg, PA 17233
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 717-485-3123
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate the number of shares outstanding of each of the registrant's classes
of
common stock, as of the latest practicable date.
Class Outstanding as of March 15, 1999
Common Stock, $0.63 Par Value 400,000
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of
Regulation S-K ( 229.405 of this chapter) is not contained herein, and will
not be
contained, to the best of registrant's knowledge, in definitive proxy or
information
statements incorporated by reference in Part III of this Form 10-K or any
amendment
to this Form 10-K [ ].
The aggregate market value of the voting stock held by non-affiliates of the
registrants as of March 8, 1999:
Common Stock, $0.63 Par Value - $22,800,000.00
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual shareholders report for the year ended December 31,
1998, are
incorporated by reference into Parts I, II and IV.
Portions of the proxy statement for the annual shareholders meeting to be held
April 27, 1999, are incorporated by reference into Part III.
Portions of Form SB-2 Registration Statement No. 33-66014 as filed with the
Securities and Exchange Commission on September 8, 1993, are incorporated by
reference into Part IV.
A copy of a Common Stock Certificate of FNB Financial Corporation as
filed with the Securities and Exchange Commission with Form 10-K for
the fiscal year ended December
31, 1995 is incorporated by reference into Part IV.
PART I
Item 1. Business
Description of Business
FNB Financial Corporation (the Company), a Pennsylvania
business corporation, is a bank holding company registered
with and supervised by the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board"). The Company was
incorporated on June 22, 1987, under the business corporation
law of the Commonwealth of Pennsylvania for the purpose of
becoming a bank holding company. Since commencing operations,
the Company's business has consisted primarily of managing and
supervising The First National Bank of McConnellsburg (the
Bank) and its principal source of income has been dividends
paid by the Bank. The Company has one wholly-owned
subsidiary, the Bank.
The Bank was established in 1906 as a national banking
association under the supervision of the Comptroller of the
Currency, the Comptroller. The Bank is a member of the
Federal Reserve System and customers' deposits held by the
Bank are insured by the Federal Deposit Insurance Corporation
to the maximum extent permitted by law. The Bank is engaged
in a full service commercial and consumer banking business
including the acceptance of time and demand deposits and the
making of secured and unsecured loans. The Bank provides its
services to individuals, corporations, partnerships,
associations, municipalities and other governmental bodies.
As of January 1, 1999, the Bank had three (3) offices and (1)
drive-up ATM located in Fulton County, one (1) branch
office facility located in Fort Loudon, Franklin County
Pennsylvania and one (1) branch office facility located in
Hancock, Washington County, Maryland. During 1995 the Bank
received regulatory approval from The Comptroller to purchase
and assume the deposits, real estate and building of the Fort
Loudon Branch Office of Dauphin Deposit Bank located in
Franklin
County, Pennsylvania. Due to the location of this office,
management and the Board felt the acquisition of this office
was strategically important in order to officially expand the
Bank's market area into the Franklin County, PA area and
diversity its current primary market of Fulton County, PA. It
is anticipated this office will generate new loan and deposit
demand for the Bank in the coming years. During 1996 the Bank
received regulatory approval from The Comptroller to open its
first interstate Branch office in Hancock, Maryland after
management became aware of the closing of a branch office of
First Federal Savings Bank of Western Maryland. This office is
known as "Hancock Community Bank, A Division of The First
National Bank of McConnellsburg". The location of this office
is felt to be strategically important in order to expand the
Bank's operations into Washington County, Maryland and northern
Morgan County, West Virginia. This office will also be the
Bank's first supermarket branch office. As soon as the owner
of
the adjacent supermarket completes extensive renovations, the
wall between the branch office and the supermarket will be
removed, allowing customers to enter the branch directly from
the supermarket. This office is expected to enhance demand for
the Bank's loan and deposit products as well as retain deposits
of customers in southern Fulton County, Pennsylvania.
The Bank received permission from the Comptroller to
expand its main office facilities in downtown McConnellsburg
to allow for larger customer service, loan department and data
processing areas. This expansion was completed on September 1,
1996, at a cost of approximately $1,700,000. The Bank
has one wholly-owned subsidiary, First Fulton County Community
Development Corporation, which is a Community Development
Corporation formed under 12USC24/2CFR24 whose primary
regulator is the Office of the Comptroller of the Currency,
The Comptroller. The First Fulton County Community Development
Corporation was incorporated with the Commonwealth of
Pennsylvania on May 30, 1995. The primary business of this
community development corporation is to provide and promote
community welfare through the establishment and offering of
low interest rate loan programs to stimulate economic
rehabilitation and development for the Borough of
McConnellsburg and the entire community of Fulton County, PA.
Competition
The Bank's primary market area includes all of Fulton County
and portions of Huntingdon, Bedford and Franklin Counties,
portions of Washington County, Maryland and portions of Morgan
County, West Virginia. The Bank's major competitor is a one
bank holding company headquartered in McConnellsburg,
Pennsylvania which has 4 branches located throughout Fulton and
Huntingdon Counties. As of December 31, 1998, the Bank was
ranked first in total deposits when compared to its major
competitor. Also, in this market area the Bank competes with
regionally-based commercial banks (all of which have greater
assets, capital and lending limits), savings banks, savings and
loan associations, money market funds, insurance companies,
stock brokerage firms, regulated small loan companies, credit
unions and with issuers of commercial paper and other
securities.
Although deregulation has allowed the Bank to become more
competitive in the market place in regard to pricing of loan
and deposit rates, there are disparities in taxing law which
give some of its nonbank competitors advantages which
commercial banks do not enjoy and many burdensome and costly
regulations with which it must comply. These challenges are
met by the Bank developing and promoting its locally-owned
community bank image; by offering friendly and professional
customer service; and by striving to maintain competitive
interest rates for both loans and deposits.
Regulation and Supervision
The operations of the Company are subject to the provisions of
the Bank Holding Company Act of 1956, as amended (the "Bank
Holding Company Act"), and to supervision by the Federal
Reserve Board. The Bank Holding Company Act requires the
Company to secure the prior approval of the Federal Reserve
Board before it owns or controls, directly or indirectly, more
than five percent (5%) of the voting shares of substantially
all of the assets of an institution, including another bank.
The Bank Holding Company Act prohibits acquisition by the
Company of more than five percent (5%) of the voting shares
of, or interest in, all or substantially all of the assets of
any bank located outside of Pennsylvania unless such
acquisition is specifically authorized by the laws of the
state in which such bank is located.
The operations of the Bank are subject to federal and state
statutes applicable to banks chartered under the banking laws
of the United States, to members of the Federal Reserve System
and to banks whose deposits are insured by the FDIC. The
operations of the Bank are also subject to regulations of the
Comptroller, the Federal Reserve Board and the FDIC. The
primary supervisory authority of the Bank is the Comptroller,
which regulates and examines the Bank. The Comptroller has
authority to prevent national banks from engaging in unsafe or
unsound practices in conducting their businesses.
Legislation and Regulatory Changes
From time to time, legislation is enacted which has the effect
of increasing the cost of doing business, limiting or
expanding permissible activities or affecting the competitive
balance between banks and other financial institutions.
Proposals to change the laws and regulations governing the
operations and taxation of banks, bank holding companies and
other financial institutions are frequently made in Congress,
and before various bank regulatory agencies. No prediction
can be made as to the likelihood of any major changes or the
impact such changes might have on the Company and its
subsidiary, the Bank. Certain changes of potential
significance to the Company which have been enacted recently
are discussed below.
The Federal Reserve Board, the FDIC and the Comptroller have
issued risk-based capital guidelines, which supplement
existing capital requirements. The guidelines require all
United States banks and bank holding companies to maintain a
minimum risk-based capital ratio of 8.0% (of which at least
3.0% must be in the form of common stockholders' equity).
Assets are assigned to five risk categories, with higher
levels of capital being required for the categories perceived
as representing greater risk. The required capital will
represent equity and (to the extent permitted) nonequity
capital as a percentage of total risk-weighted assets. On the
basis of an analysis of the rules and the projected
composition of the Company's consolidated assets, it is not
expected these rules will have a material effect on the
Company's business and capital plans. The company presently
has capital ratios exceeding all regulatory requirements.
The Financial Institution Reform, Recovery and Enforcement Act
of 1989 ("FIRREA") was enacted in August 1989. This law was
enacted primarily to improve the supervision of savings
associations by strengthening capital, accounting and other
supervisory standards. In addition, FIRREA reorganized the
FDIC by creating two deposit insurance funds to be
administered by the FDIC: the Savings Association Insurance
Fund and the Bank Insurance Fund. Customers' deposits held by
the Bank are insured under the Bank Insurance Fund. FIRREA
also regulated real estate appraisal standards and the
supervisory/enforcement powers and penalty provisions in
connection with the regulation of the Bank.
In December 1991 the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA") became law. Under FDICIA,
institutions must be classified, based on their risk-based
capital ratios into one of five defined categories (well
capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized and critically
undercapitalized) as outlined below:
Total Tier 1
Under a
Risk- Risk- Tier 1
Capital
Based Based Leverage
Order or
Ratio Ratio Ratio
Directive
CAPITAL CATEGORY
Well capitalized >10.0% >6.0% >5.0%
No
Adequately capitalized > 8.0% >4.0% >4.0%*
Undercapitalized < 8.0% <4.0% <4.0%*
Significantly
Undercapitalized < 6.0% <3.0% <3.0%
Critically undercapitalized <2.0%
*3.0% for those banks having the highest available regulatory
rating.
Under FDICIA financial institutions are subject to increased
regulatory scrutiny and must comply with certain operational,
managerial and compensation standards to be developed by
Federal Reserve Board Regulations. FDICIA also required the
regulators to issue new rules establishing certain minimum
standards to which an institution must adhere including
standards requiring a minimum ratio of classified assets to
capital, minimum earnings necessary to absorb losses and
minimum ratio of market value to book value for publicly held
institutions. Additional regulations are required to be
developed relating to internal controls, loan documentation,
credit underwriting, interest rate exposure, asset growth and
excessive compensation, fees and benefits.
Annual full-scope, on-site examinations are required for all
FDIC-insured institutions except institutions with assets
under $100 million which are well capitalized, well managed
and not subject to a recent change in control, in which case,
the examination period is every eighteen (18) months. FDICIA
also required banking agencies to reintroduce loan-to-value
("LTV") ratio regulations which were previously repealed by
the 1982 Act. LTV's will limit the amount of money a
financial institution may lend to a borrower, when the loan is
secured by real estate, to no more than a percentage to be set
by regulation of the value of the real estate.
A separate subtitle within FDICIA, called the "Bank Enterprise
Act of 1991", requires "truth-in-savings" on consumer deposit
accounts so that consumers can make meaningful comparisons
between the competing claims of banks with regard to deposit
accounts and products. Under this provision which became
effective on June 21, 1993, the Bank is required to provide
information to depositors concerning the terms and fees of
their deposit accounts and to disclose the annual percentage
yield on interest-bearing deposit accounts.
Neither the Company nor the Bank anticipate compliance with
environmental laws and regulations will have any material
effect on their respective capital, expenditures, earnings, or
competitive position.
Employees
As of December 31, 1998, the Company and the Bank employed 52
persons on a full-time equivalent basis.
Statistical Data
Computation of the Company's regulatory capital requirements
for the periods December 31, 1998, and December 31, 1997, on
page 32 of the annual shareholders report for the year ended
December 31, 1998, is incorporated herein by reference.
Loan Portfolio
The Bank makes loans to both individual consumers and
commercial entities. The types offered include auto,
personal, mortgage, home equity, school, home repair, small
business, commercial, and home construction loans. Within
these loans types, the Bank makes installment loans, which
have set payments allowing the loan to be amortized over a
fixed number of payments, demand loans, which have no fixed
payment and which are payable in full on demand and are
normally issued for a term of less than one year, and mortgage
loans, which are secured with marketable real estate and have
fixed payment amounts for a pre-established payment period.
The Bank does not assume undue risk on any loan within the
loan portfolio, and takes appropriate steps to secure all
loans as necessary.
The Bank has adopted the following loan-to-value ratios, in
accordance with standards adopted by its bank supervisory
agencies:
Loan Category Loan-to-Value Limit
Raw Land 65%
Land Development 75%
Construction:
Commercial, Multifamily, and other
Nonresidential 1 to 4 Family Residential 80%
Improved Property 85%
Owner-occupied 1 to 4 Family and Home Equity 90%
The Bank is neither dependent upon nor exposed to loan
concentrations to a single customer or to a single industry,
the loss of any one or more of which would have a material
adverse effect on the financial condition of the Bank;
however, a portion of the Bank's customers' ability to honor
their contracts is dependent upon the construction and land
development and agribusiness economic sector. As a majority
of the Bank's loan portfolio is comprised of loans to
individuals and businesses in Fulton County, PA, a significant
portion of the Bank's customers' abilities to honor their
contracts is dependent upon the general economic conditions in
South Central Pennsylvania.
Loan Portfolio composition as of December 31, 1998, and
December 31, 1997, on page 14 of the annual shareholders
report for the year ended December 31, 1998, is incorporated
herein by reference.
Maturities of loans as of December 31, 1998, on page 14 of the
annual shareholders report for the year ended December 31,
1998, is incorporated herein by reference.
Nonperforming loans consist of nonaccruing loans and loans 90
days or more past due. Nonaccruing loans are comprised of
loans that are no longer accruing interest income because of
apparent financial difficulties of the borrower. Interest on
nonaccruing loans is recorded when received only after past
due principal and interest are brought current. The general
policy of the Bank is to classify loans as nonaccrual when
they become past due in principal and interest for over 90
days and collateral is insufficient to allow continuation of
interest accrual. At that time, the accrued interest on the
nonaccrual loan is reversed from the current year earnings and
interest is not accrued until the loan has been brought
current in accordance with contractual terms. Nonaccrual loan
volume in 1997 decreased significantly from that of 1996.
This decrease in volume was attributable to the removal of two
loans from nonaccrual status in 1997 - a farming operation in
Franklin County, Pennsylvania, the amount of which was
approximately $400,000, and a personal residence in Fulton
County, Pennsylvania the amount of which is approximately
$187,000. The farm loan is collateralized by a first mortgage
position on the farm property, a 90% Farm Service Agency (an
agency of the U. S. Government) guarantee, as well as, all
machinery, equipment and livestock, of which the value of all
collateral exceeds the outstanding balance. The personal loan
is
collateralized by a residential property and 145 acres in
Fulton
County, Pennsylvania for which the value of the property
exceeds
the outstanding balance of the loan. Both of these loans were
brought current in 1997, resulting in total nonaccrual loans
decreasing over $560,000 from 1996 to 1997 in total.
Nonaccrual volume for 1998 decreased $354,805 due to a
$125,000 loan secured by a 1-4 family residential
property in the Hagerstown, MD area being moved to Other Real
Estate and sold in 1998; the amount charged-off as a result of
this movement and sale was approximately $32,000; the charge-
off
in 1998 of a $100,000 commercial loan secured by inventory; and
the charge-off of a $12,000 unsecured line of credit. The
remaining decrease in 1998 was the result of 1-4 family
mortgages classified as nonaccrual as of December 31, 1997,
being brought current.
Nonaccrual volume in 1999 is expected to increase from the
December 31, 1998, level due to a $120,000 residential
construction loan and some commercial loans which may
experience cash flow difficulties in 1999. Anticipated charge-
offs for 1999 are expected to remain approximately the same as
the total charge-offs in 1998 of $203,000 due to the potential
charge-off of the majority of the $120,000 construction loan
referenced above.
Nonaccrual, Past Due and Restructured Loans as of December 31,
1998, December 31, 1997, and December 31, 1996, on page 15 of
the annual shareholders report for the year ended December
31, 1998, are incorporated herein by reference.
Allowance for Loan Loss Analysis
The allowance for loan losses is maintained at a level to
absorb potential future loan losses contained in the loan
portfolio and is formally reviewed by Management on a
quarterly basis. The allowance is increased by provisions
charged to operating expense and reduced by net charge-offs.
Management's basis for the level of the allowance and the
annual provisions is its evaluation of the loan portfolio,
current and projected domestic economic conditions, the
historical loan loss experience, present and prospective
financial condition of the borrowers, the level of
nonperforming assets, best and worst case scenarios
of possible loan losses and other relevant factors. While
Management uses available information to make such
evaluations, future adjustments of the allowance may be
necessary if economic conditions differ substantially from the
assumptions used in making the evaluation. Loans are charged
against the allowance for loan losses when Management believes
that the collectability of the principal is unlikely.
Activity in the allowance for loan losses and a breakdown of
the allowance for loan losses as of December 31, 1998, and
December 31, 1997, on page 15 of the annual shareholders
report for the year ended December 31, 1998, are incorporated
herein by reference.
Although loans secured by 1-4 family residential mortgages
comprise approximately 53% for the entire loan portfolio,
these mortgages have historically resulted in little or no
loss. The allocation of the Allowance for Loan Losses for
these mortgages is based upon this historical fact. Due to a
more critical evaluation of the Bank's commercial, industrial,
and agricultural loan portfolio, the allocation of the
Allowance
for Loan Losses for commercial, industrial, and agriculture
loans has been accordingly increased.
Deposits
Time Certificates of Deposit of $100,000 and over as of
December 31, 1998, and December 31, 1997, totaled $11,231,000
and $10,333,000 respectively.
Maturities and rate sensitivity of total interest bearing
liabilities as of December 31, 1998, on page 31 of the annual
shareholders report for the year ended December 31, 1998, is
incorporated herein by reference.
Returns on Equity and Assets
Returns on equity and assets and other statistical data for
1998, 1997 and 1996 on page 20 of the annual shareholders
report for the year ended December 31, 1998, is incorporated
herein by reference.
Item 2. Properties
The physical properties where the Bank conducts its business
in the Commonwealth of Pennsylvania are all owned by the
Bank while the property where the Bank conducts its business
in the State of Maryland is leased. The properties owned by
the
Bank are as follows: the main office located at 101 Lincoln
Way
West, McConnellsburg, Pennsylvania, has been attached by a two
story brick and frame addition, to a building located at 111
South Second Street, McConnellsburg, Pennsylvania which houses
the Bank's loan department on the first floor and future
expansion space on the second floor; a branch office located
on Route 522 South, Needmore, Pennsylvania; a property located
at Routes 16 and 30 East, McConnellsburg, Pennsylvania which
contains a drive-up automatic teller machine and a five (5)
lane drive-up branch accessible from both Route 30 and Route
16; and a branch office located at 30 Mullen Street, Fort
Loudon, Pennsylvania, for which the Bank received regulatory
approval from the Office of the Comptroller of the Currency to
purchase effective November 13, 1995. The branch office leased
by the Bank in the state of Maryland is located in the Hancock
Shopping Center at 343 North Pennsylvania Avenue in Hancock,
Maryland next to a supermarket.
The main office located in downtown McConnellsburg is housed
in a two story brick and frame building, consisting of
approximately 28,277 square feet. It has been attached (by a
two story brick and frame addition which houses the data
processing/operations center on the first floor and executive
offices and a meeting room on the second floor) to the
building located at 111 South Second Street, a brick and frame
building situated on a one town lot which has been expanded
and renovated to house the loan department on the first floor
and future offices and rest rooms on the second floor. The
main office contains one (1) external time and temperature
sign, seven (7) internal teller stations, a customer service
office area, executive offices, one (1) drive-up teller
station,
an automatic teller machine, three (3) vaults (one containing
safe deposit boxes for customer use and one containing a fire
proof/data-secure vault in the operations center), a night
depository, a data processing center with a security controlled
computer operations center, a loan department with a large file
room, a kitchen and a 5,000 square foot basement storage
area.
The Needmore Branch Office, a brick and frame building
situated on approximately five (5) acres, consists of
approximately 3,000 square feet, of which 750 square feet is
rented as office space. The branch office houses three (3)
internal teller stations, one (1) drive-up teller station, a
customer service office area, one (1) vault which contains
safe deposit boxes for customer use, one (1) kitchen, and
storage areas.
The East End Express Banking Center, located on a property of
approximately 68,000 square feet at Routes 16 and 30, has
situated on it one (1) drive-up automatic teller machine and
one (1) night depository (both housed in a brick and frame
building of approximately 121 square feet), and a drive-up
branch office, a brick and frame building of approximately 576
square feet, which contains four (4) drive-up teller stations
with the potential for a total of five (5) drive-up teller
stations in the future.
The Fort Loudon Branch Office, which was expanded and
completely
renovated in 1997 at an approximate cost of $200,000, is a
brick
and frame building situated on approximately .23 acres. It
consists of approximately 1,035 square feet. The branch office
houses three (3) internal teller stations, one (1) drive-up
teller station, one (1) vault which contains safe deposit
boxes for customer use, a manager's office, one (1) kitchen,
storage areas and a basement for storage which consists of
approximately 620 square feet.
The leased office in Hancock, Maryland housing Hancock
Community
Bank is approximately 1,400 square feet and is leased from the
owner of the shopping center next to a supermarket. It
contains
two (2) offices, one (1) automated teller machine, two (2)
drive-up teller lanes, a lobby, a safe deposit box vault for
customers and three (3) teller stations.
Item 3. Legal Proceedings
In the opinion of Management, there are no proceedings pending
to which the Company or the Bank is a party or to which their
property is subject, which, if determined adversely to the
Company or the Bank, would be material in relation to the
Company's and the Bank's retained earnings or financial
condition. There are no proceedings pending other than
ordinary routine litigation incident to the business of the
Company and the Bank. In addition, no material proceedings
are known to be threatened or contemplated against the
Company or the Bank by government authorities.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters
The Company's common stock is not traded on a national
securities exchange but is traded inactively in the over-the-
counter market and is only occasionally and sporadically
traded through local and regional brokerage houses or through
the facilities of the Bank.
The Stock Market Analysis and Dividends for 1998 and 1997 on
page 33 of the annual shareholders report for the year ended
December 31, 1998, is incorporated herein by reference.
Item 6. Selected Financial Data
The Selected Five-Year Financial Data on page 20 of the annual
shareholders report for the year ended December 31, 1998, is
incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Management's discussion and analysis of financial condition
and results of Operations on pages 25 through 36 of the annual
shareholders report for the year ended December 31, 1998, is
incorporated herein by reference. This discussion includes an
extensive analysis and review of the Corporation's Year 2000
Readiness Plan.
Item 8. Financial Statements and Supplementary Data
The financial statements and supplementary data, some of which
is required under Guide 3 (Statistical Disclosures by Bank
Holding Companies) are shown on pages 6 through 24 of the
annual shareholders report for the year ended December 31,
1998,
are incorporated herein by reference.
The Summary of Quarterly Financial Data on page 21 of the
annual shareholders report for the year ended December 31,
1998, is incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
PART III
Item 10. Directors and Officers of the Registrant
The information contained on pages 3 through 15 of FNB
Financial Corporation's Proxy Statement Dated March 22, 1999,
with respect to directors and executive officers of the
Company, is incorporated herein by reference in response to
this item.
Item 11. Executive Compensation
The information contained on pages 9 through 13 of FNB
Financial Corporation's Proxy Statement Dated March 22, 1999,
with respect to executive compensation, transactions and
contracts, is incorporated herein by reference in response to
this item.
Item 12. Security Ownership of certain Beneficial Owners and
Management
The information contained on pages 3 through 5 and pages 14
and
15 of FNB Financial Corporation's Proxy Statement Dated March
22, 1999, with respect to security ownership of certain
beneficial owners and management, is incorporated herein by
reference in response to this item.
Item 13. Certain Relationships and Related Transactions
The information contained on pages 8, 13 and 14 of FNB
Financial Corporation's Proxy Statement Dated March 22, 1999,
with respect to certain relationships and related
transactions,
is incorporated herein by reference in response to this item.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports of Form
8-k.
(a) (1) - List of Financial Statements
The following consolidated financial statements of FNB
Financial Corporation and its subsidiary, included in the
annual report of the registrant to its shareholders for the
year ended December 31, 1998, are incorporated by reference
in Item 8:
Consolidated balance sheets - December 31, 1998, and 1997
Consolidated statements of income - Years ended December 31,
1998, 1997 and 1996
Consolidated statements of stockholders' equity - Years
ended December 31, 1998, 1997 and 1996
Consolidated statements of cash flows - Years ended December
31, 1998, 1997 and 1996
Notes to consolidated financial statements - December 31,
1998
(2) - List of Financial Statement Schedules
Schedule I - Marketable Securities - Other Investments
Schedule III - Condensed Financial Information of
Registrant
Schedule VIII - Valuation and Qualifying Accounts
All other schedules for which provision is made in
the applicable accounting regulation of the
Securities and Exchange Commission are not required
under the related instructions or are inapplicable
and therefore have been omitted.
(3) Listing of Exhibits
Exhibit (3)(i) Articles of incorporation
Exhibit (3)(ii) Bylaws
Exhibit (4) Instruments defining the rights of
security holders including indentures
Exhibit (13) Annual report to security holders
Exhibit (22) Subsidiaries of the registrant
Exhibit (27) Financial data schedule
All other exhibits for which provision is made in
the applicable accounting regulation of the
Securities and Exchange Commission are not required
under the related instructions or are inapplicable
and therefore have been omitted.
(b) Reports on Form 8-K filed
The following Form 8-K filed by FNB Financial Corporation is
incorporated herein by reference:
Form 8-K dated June 11, 1998, reporting item number 5
Other Events which reported that following an Office of
the Comptroller of the Currency (OCC) examination of
The
First National Bank of McConnellsburg, the
Corporation's
primary subsidiary, which ended on June 11, 1998, the
Bank increased its Allowance for Loan losses by
$100,000.
(c) Exhibits
Exhibit (3)(i) Articles of incorporation - Exhibit 3A
of Form SB-2 Registration Statement No. 33-66014 are
incorporated herein by reference.
Exhibit (3)(ii) Bylaws - Exhibit 3B of Form SB-2
Registration Statement No. 33-66014 are incorporated
herein by reference.
Exhibit (4) Instruments defining the rights of
security holders including debentures - Document #1 of
Form 10-K for FNB Financial Corporation for fiscal year
ended December 31, 1995 is incorporated herein by
reference.
Exhibit (13) Annual report to security holders -
incorporated herein by reference.
Exhibit (22) Subsidiaries of the registrant - As of
this report, The First National Bank of
McConnellsburg is the only subsidiary of the
Registrant and is explained further within the
Business Section (Item 1) of this report.
The First National Bank of McConnellsburg has one
subsidiary as of the date of this report, First
Fulton County Community Development Corporation and
is explained further within the Business Section
(Item 1) of this report.
(d) Financial Statement Schedules
Schedule I - Marketable Securities - Other Investments
Schedules of Marketable Securities included on pages
13 and 14 of the annual report of the registrant to its
shareholders for the year ended December 31, 1998,
are incorporated herein by reference.
Schedule III - Condensed Financial Information of
Registrant
Condensed Financial Information of the Registrant
included on page 17 and 18 of the annual report of the
registrant to its shareholders for the year ended
December 31, 1998, is incorporated herein by
reference.
Schedule VIII - Valuation and Qualifying Accounts
The schedule of the Allowance for Loan losses included
on page 15 of the annual report of the registrant to
its shareholders for the year ended December 31,
1998, is incorporated herein by reference.
Signatures
Pursuant to the requirements of Section 13 or 15(d) 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 FINANCIAL CORPORATION
(Registrant)
/s/John C. Duffey 3/18/99
John C. Duffey Date
Director and President
of the Corporation
President & CEO of the Bank
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
H. Lyle Duffey Henry W. Daniels 3/24/99
H. Lyle Duffey Date Henry W. Daniels Date
Director, Chairman Director, Vice Chairman
/s/John C. Duffey 3/18/99 /s/Harry D. Johnston 3/24/99
John C. Duffey Date Harry D. Johnston, D. O. Date
Director, President Director, Vice President
/s/George S. Grissinger 3/24/99 /s/Patricia A. Carbaugh 3/24/99
George S. Grissinger Date Patricia A. Carbaugh Date
Director, Secretary Director
/s/Harvey J. Culler 3/24/99 /s/Forrest R. Mellott
Harvey J. Culler Date Forrest R. Mellott Date
Director Director
/s/Lonnie W. Palmer 3/24/99 /s/Paul T. Ott 3/24/99
Lonnie W. Palmer Date Paul T. Ott Date
Director Director
/s/D. A. Washabaugh, III 3/24/99 /s/Daniel E. Waltz 3/24/99
D. A. Washabaugh, III Date Daniel E. Waltz Date
Director Director, Treasurer
(Principal Financial and
Accounting Officer)