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FORM 10-K-ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT of 1934.
For the fiscal year ended December 31, 1999
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: 333-2524
FNB Corporation
(Exact name of registrant as specified in its charter)
Virginia 54-1791618
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
105 Arbor Drive, Christiansburg, Virginia 24068
(Address of principal executive offices) (Zip Code)
(540)382-4951
Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since
last report.)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common stock, $5 par value
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 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. [X]
The aggregate market value of voting stock held by non-affiliates of the
registrant as of March 10, 2000, was $66,077,038.
4,093,996 shares outstanding as of March 10, 2000
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Corporation's Annual Report to Stockholders for the year ended
December 31, 1999, are incorporated into Parts I and II hereof. Portions of
the Corporation's Notice of Annual Meeting and Proxy Statement for the Annual
Meeting of May 9, 2000, are incorporated into Part III hereof.
TABLE OF CONTENTS
PART I
Item 1. Business Page
General 4
Competition 5
Loan Commitments 5
Deposit Concentrations 6
Employees 6
Securities Act Guide 3. Statistical
Disclosure by Bank Holding Companies 7
Item 2. Properties 17
Item 3. Legal Proceedings 17
Item 4. Submission of Matters to a Vote of
Security Holders 17
PART II
Item 5. Market for the Bank's Common Stock and
Related Security Holder Matters 18
Item 6. Selected Financial Data 18
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 18
Item 8. Financial Statements and Supplementary Data 19
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 19
PART III
Item 10. Directors and Executive Officers of the Bank 19
Item 11. Executive Compensation 19
Item 12. Security Ownership of Certain Beneficial Owners
and Management 20
Item 13. Certain Relationships and Related Transactions 21
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K 21
Signatures 22
Index to Consolidated Financial Statements 23
Index to Exhibits 24
PART I
Item 1. Business
General. Subsequent to December 31, 1995, The Board of Directors of First
National Bank (the ?Bank?) approved a reorganization whereby a bank holding
company (FNB Corporation) was incorporated under the laws of the Commonwealth
of Virginia. On June 11, 1996, the shareholders of the Bank approved a plan
for the holding company to exchange one share of its stock for each share of
stock of the Bank. A registration statement was filed with the Securities and
Exchange Commission (SEC) to register the stock of the holding company, and
such registration statement was subsequently declared effective by the SEC.
On July 11, 1996, the Office of the Comptroller of the Currency (OCC) approved
the plan, and the exchange was subsequently consummated. As a result, the
Bank became a wholly owned subsidiary of the holding company during the third
quarter of 1996, and the holding company began filing periodic reports under
the Securities Exchange Act of 1934. Prior to the consummation of the
exchange, the Bank filed periodic reports with the OCC. The holding company
and its subsidiaries are collectively referred to herein as the
"Corporation."
First National Bank, which was organized in 1905, does a general banking
business, serving the commercial, agricultural, and personal banking needs of
its trade territory, commonly referred to as the New River Valley, which
consists of Montgomery County, Virginia and portions of surrounding counties.
The Bank engages in and offers a full range of banking services, including
trust services; demand, savings, and time deposits used to fund the loan
demand in our trade area; commercial, farm, consumer installment, mortgage,
credit card, FHA and SBA guaranteed loans.
Under national banking law, nontraditional activities of a bank must be
operated through a corporate subsidiary of the bank. During 1992, FNB formed
a wholly-owned subsidiary in order to expand its business operations. FNB
Financial Services, Inc. is a member of the Virginia Title Center, L.L.C. and
acts as an agent in the issuance of title insurance policies. Additionally,
this subsidiary has been licensed by the Commonwealth of Virginia to offer
annuity products through First National's Trust Department. Any reference in
this report to the operations of the Corporation shall include the activities
of FNB Financial Services, Inc.
The local economy is tied primarily to the area's three largest employers -
Virginia Polytechnic Institute and State University, with a student population
in excess of 25,000; Radford University, with a student population in excess
of 8,000; and the Radford Arsenal, a large munitions plant operated under
contract to the U.S. Army by the Hercules Corporation. Other industries
include a wide variety of manufacturing concerns and agriculture-related
enterprises. The Bank's main office is located in Christiansburg, the County
Seat, with offices strategically located to take advantage of its trade area's
population mix. Of the Bank's twelve full service offices, nine are located
in Montgomery County, one in the City of Radford, one in the Town of Dublin
and one in Wythe County. One paying and receiving office is located in
Montgomery County.
Refer to the Corporation?s 1999 Annual Report to Stockholders under the
heading "Selected Consolidated Financial Information" for a five year summary
of selected consolidated financial information which is incorporated by
reference into this Form 10-K.
Construction of a new corporate headquarters facility was completed during the
first quarter of 1997.
Competition. The Corporation is the largest bank in the area, with
approximately 60 percent of those deposits held by independent banks. It is
estimated that the Corporation holds 36 percent of total deposits in its
primary trade area including the offices of those state-wide and multi-state
bank holding companies located in our trade area. Competition in the trade
area consists of state-wide and multi-state bank holding companies,
independent banks, and credit unions.
Loan Commitments.The portfolio is not concentrated within any single industry
or group of related industries, nor is there any material risk other than that
which is expected in the normal course of business of a bank in this location.
Corporation policy establishes lending limits for each officer. Loan requests
for amounts exceeding loan officer lending authority are referred to the
officer loan committee which can approve loans up to 80% of the bank's legal
lending limit. Loan requests exceeding this limit are referred to the
Executive Committee of the Board of Directors. The following table relates
outstanding loans for the dates indicated (in thousands):
December 31,
1999 1998
Commercial $ 113,321 85,536
Consumer 69,312 66,526
Real estate - commercial 74,113 65,165
Real estate - construction 18,772 16,686
Real estate - mortgage 106,754 94,686
Total loans $ 382,272 328,599
The Corporation is a party to financial instruments with off-balance-sheet
risk in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend credit
and standby letters of credit. Those instruments involve, to varying degrees,
elements of credit risk in excess of the amount recognized in the balance
sheet. The contract amounts of those instruments reflect the extent of
involvement the Corporation has in particular classes of financial
instruments.
The Corporation's exposure to credit loss in the event of nonperformance by
the other party to the financial instrument for commitments to extend credit
and standby letters of credit is represented by the contractual amount of
those instruments. The Corporation uses the same credit policies in making
commitments and conditional obligations as it does for on-balance-sheet
instruments.
Except for unused home equity lines totaling $26,872 at December 31, 1999, and
$27,008 at December 31, 1998 (included in the amounts below) the Corporation
may not require collateral or other security to support the following
financial instruments with credit risk (in thousands):
December 31,
1999 1998
Contract Amounts
Financial instruments whose contract
amounts represent credit risk:
Commitments to extend credit $ 88,046 86,583
Standby letters of credit 5,905 6,252
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments are expected
to expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. The Corporation evaluates
each customer's credit worthiness on a case-by-case basis. The amount of
collateral obtained, if deemed necessary by the Corporation upon extension of
credit, is based on management's credit evaluation of the customer.
Collateral held varies but may include securities, accounts receivable,
inventory, property, plant and equipment, and income-producing commercial
properties.
Standby letters of credit are conditional commitments issued by the
Corporation to guarantee the performance of a customer to a third party.
Those guarantees are primarily issued to support public and private borrowing
arrangements, including commercial paper, bond financing, and similar
transactions. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loans to customers.
Collateral held varies but may include securities, accounts receivable,
inventory, property, plant and equipment and income-producing commercial
properties.
Deposit Concentrations.The Corporation's deposits are obtained from a wide
range of depositors. There are no material concentrations of deposits from
any individual or organization.
Employees. The Corporation had 220 full-time equivalent employees as of
December 31, 1999, of which 63 were officers.
Securities Act Guide 3. Statistical Disclosure by Bank Holding Companies. The
following schedules are included:
Average Balance Sheets
Rate/Volume Variance
Securities Available-For-Sale at Fair Value
Securities Held-To-Maturity at Amortized Cost
Securities--Maturity/Yield Schedule
Types of Loans
Loan Maturities and Interest Sensitivity
Nonperforming Assets and Past Due Loans
Pro forma/Recorded Interest on Nonaccrual Loans
Analysis of Allowance for Loan Losses
Allocation of Allowance for Loan Losses
Deposit Maturities
Interest Sensitivity Analysis
AVERAGE BALANCE SHEET
1999
Average
Average Income/ Yield/
(thousands) Balance Expense Rate
ASSETS
Loans (Net of unearned income) (1)(2) $ 359,268 33,226 9.25%
Securities:
Taxable 51,576 3,157 6.12
Nontaxable (2) 47,414 3,414 7.20
Total securities 98,990 6,571 6.64
Federal funds sold 3,632 183 5.04
Total interest-earning assets 461,890 39,980 8.66
Allowance for loan losses (4,961)
Cash and due from banks, noninterest-
bearing 11,652
Bank premises and equipment, net 13,360
Other real estate owned 43
Other assets 5,535
Total assets $ 487,519
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits:
Demand and savings $ 126,671 3,400 2.68%
Time 167,143 8,905 5.33
Certificates of deposit of
$100,000 and over 55,093 2,931 5.32
Total interest-bearing deposits 348,907 15,236 4.37
Federal funds purchased and securities
sold under agreements to repurchase 9,231 380 4.12
Other borrowed funds 37,207 1,994 5.36
ESOP debt - - -
Total interest-bearing liabilities 395,345 17,610 4.45
Demand deposits, noninterest-bearing 42,733
Other liabilities 3,422
Stockholders' equity 46,019
Total liabilities and stockholders'
equity $ 487,519
Interest income and rate earned $ 39,980 8.66%
Interest expense and rate paid 17,610 4.45
Interest rate spread 4.21
NET INTEREST INCOME AND NET YIELD
ON AVERAGE EARNING ASSETS $ 22,370 4.84%
(1) Interest on nonaccrual loans has been included only to the extent
reflected in the statements of income. Nonaccrual loans are included in
average balances for yield computations.
(2) Income and rates on non-taxable loans and securities are computed on a tax
equivalent basis using a federal tax rate of 34% for 1999.
AVERAGE BALANCE SHEET
1998
Average
Average Income/ Yield/
(thousands) Balance Expense Rate
ASSETS
Loans (Net of unearned income) (1)(2) $ 312,369 29,980 9.60%
Securities:
Taxable 49,206 3,082 6.26
Nontaxable (2) 46,425 3,452 7.44
Total securities 95,631 6,534 6.83
Federal funds sold 9,518 507 5.33
Total interest-earning assets 417,518 37,021 8.87
Allowance for loan losses (4,401)
Cash and due from banks, noninterest-
bearing 10,415
Bank premises and equipment, net 12,642
Other real estate owned 37
Other assets 4,788
Total assets $ 440,999
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits:
Demand and savings $ 105,744 2,958 2.80%
Time 173,533 9,801 5.65
Certificates of deposit of
$100,000 and over 49,607 2,870 5.79
Total interest-bearing deposits 328,884 15,629 4.75
Federal funds purchased and securities
sold under agreements to repurchase 6,496 261 4.02
Other borrowed funds 22,612 1,283 5.67
ESOP debt 874 76 8.70
Total interest-bearing liabilities 358,866 17,249 4.81
Demand deposits, noninterest-bearing 36,239
Other liabilities 3,539
Stockholders' equity 42,355
Total liabilities and stockholders'
equity $ 440,999
Interest income and rate earned $ 37,021 8.87%
Interest expense and rate paid 17,249 4.81
Interest rate spread 4.06
NET INTEREST INCOME AND NET YIELD
ON AVERAGE EARNING ASSETS $ 19,772 4.74%
(1) Interest on nonaccrual loans has been included only to the extent
reflected in the statements of income. Nonaccrual loans are included in
average balances for yield computations.
(2) Income and rates on non-taxable loans and securities are computed on a tax
equivalent basis using a federal tax rate of 34% for 1998.
AVERAGE BALANCE SHEET
1997
Average
Average Income/ Yield/
(thousands) Balance Expense Rate
ASSETS
Loans (net of unearned income)(1)(2) $ 278,824 26,959 9.67%
Securities:
Taxable 55,721 3,641 6.53
Nontaxable(2) 46,581 3,596 7.72
Total securities 102,302 7,237 7.07
Federal funds sold 6,376 344 5.40
Total interest-earning assets 387,502 34,540 8.91
Allowance for loan losses (4,316)
Cash and due from banks, noninterest-
bearing 11,061
Bank premises and equipment, net 11,965
Other real estate owned 77
Other assets 4,719
Total assets $ 411,008
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits:
Demand and savings $ 96,485 2,823 2.93%
Time 174,225 10,071 5.78
Certificates of deposit of $100,000
and over 36,724 2,148 5.85
Total interest-bearing deposits 307,434 15,042 4.89
Federal funds purchased and securities
sold under agreements to repurchase 5,849 250 4.27
Other borrowed funds 24,469 1,385 5.66
ESOP debt 942 88 9.34
Total interest-bearing liabilities 338,694 16,765 4.95
Demand deposits, noninterest-bearing 31,358
Other liabilities 2,941
Stockholders' equity 38,015
Total liabilities and
stockholders' equity $ 411,008
Interest income and rate earned $ 34,540 8.91%
Interest expense and rate paid 16,765 4.95
Interest rate spread 3.96
NET INTEREST INCOME AND NET YIELD
ON AVERAGE EARNING ASSETS $ 17,775 4.59%
(1) Interest on nonaccrual loans has been included only to the extent
reflected in the statements of income. Nonaccrual loans are included in
average balances for yield computations.
(2) Income and rates on non-taxable loans and securities are computed on a tax
equivalent basis using a federal tax rate of 34% for 1997.
RATE/VOLUME VARIANCE
1999 Compared to 1998 1998 Compared to 1997
Due to Due to Due to Due to
(thousands) Change Volume Rate Change Volume Rate
INTEREST INCOME
Loans $ 3,246 4,419 (1,173) 3,021 3,231 (210)
Securities:
Taxable 75 147 (72) (559) (417) (142)
Nontaxable (38) 72 (110) (144) (12) (132)
Federal funds sold (324) (305) (19) 163 168 (5)
Total 2,959 4,333 (1,374) 2,481 2,970 (489)
INTEREST EXPENSE
Demand and savings 442 574 (132) 135 265 (130)
Time (896) (351) (545) (270) (40) (230)
Certificates of deposit
of $100,0000 and over 61 305 (244) 722 749 (27)
Federal funds purchased
and securities sold
under agreements to
repurchase 119 111 8 11 27 (16)
Other borrowed funds 711 805 (94) (102) (105) 3
ESOP debt (76) (38) (38) (12) (6) (6)
Total 361 1,406 (1,045) 484 890 (406)
Net interest income $ 2,598 2,927 (329) 1,997 2,080 (83)
Variances caused by changes in rate times the changes in volume are allocated
equally.
SECURITIES AVAILABLE-FOR-SALE AT FAIR VALUE
December 31,
(thousands) 1999 1998 1997
U.S. Treasury $ 4,026 7,164 8,162
U.S. Government agencies and
corporations 14,824 19,624 47,020
States and political subdivisions 14,753 11,648 3,070
Other securities 34,551 18,796 4,604
Totals $ 68,154 57,232 62,856
SECURITIES HELD-TO-MATURITY AT AMORTIZED COST
December 31,
(thousands) 1999 1998 1997
U.S. Treasury $ -- -- --
U.S. Government agencies and
corporations -- -- --
States and political subdivisions 33,221 38,322 42,360
Other securities -- 30 60
Totals $ 33,221 38,352 42,420
SECURITIES--MATURITY/YIELD SCHEDULE
As of December 31, 1999
Securities Available-for-Sale
Approximate Taxable
Amortized Fair Equivalent
(thousands) Costs Values Yield(1)
U.S. Treasury:
Within 1 year $ 1,501 1,503 5.91
1 through 5 years 2,517 2,523 6.01
Total 4,018 4,026 5.97
U.S. Government
agencies and corporations:
Within 1 year 3,999 3,903 6.20
1 through 5 years 6,165 6,121 6.31
6 through 10 years 4,500 4,434 7.56
Over 10 years 371 366 6.27
Total 15,035 14,824 6.65
State and political
subdivisions:
Within 1 year 100 100 5.76
1 through 5 years 15,073 14,653 6.78
Total 15,173 14,753 6.77
Other securities:
Within 1 year 21,651 21,546 5.94
1 through 5 years 10,286 9,988 5.60
Over 10 years 3,015 3,017 7.29
Total 34,952 34,551 5.96
$ 69,178 68,154 6.29
(1) Yields on non-taxable investment securities are computed on a tax
equivalent basis using a federal tax rate of 34%.
SECURITIES--MATURITY/YIELD SCHEDULE
As of December 31, 1999
Securities Held-To-Maturity
Approximate Taxable
Amortized Fair Equivalent
(thousands) Costs Values Yield(1)
U.S. Treasury:
Within 1 year $ - - - %
1 through 5 years - - -
Total - - -
U.S. Government
agencies and corporations:
Within 1 year - - -
1 through 5 years - - -
6 through 10 years - - -
Over 10 years - - -
Total - - -
State and political subdivisions:
Within 1 year 4,432 4,460 7.65
1 through 5 years 28,789 29,032 7.48
Total 33,221 33,492 7.50
Other securities:
Within 1 year - - -
1 through 5 years - - -
Over 10 years - - -
Total - - -
$ 33,221 33,492 7.50
(1) Yields on non-taxable investment securities are computed on a tax
equivalent basis using a federal tax rate of 34%.
TYPES OF LOANS
December 31,
1999 1998 1997
% of % of % of
(thousands) Amount Total Amount Total Amount Total
Commercial $ 113,321 29.7 85,536 26.0 64,247 22.0
Consumer 69,312 18.1 66,526 20.3 66,059 22.7
Real estate - commercial 74,113 19.4 65,165 19.8 56,404 19.4
Real estate - construction 18,772 4.9 16,686 5.1 8,657 3.0
Real estate - mortgage 106,754 27.9 94,686 28.8 95,703 32.9
$ 382,272 100.0 328,599 100.0 291,070 100.0
TYPES OF LOANS
December 31,
1996 1995
% of % of
(thousands) Amount Total Amount Total
Commercial $ 56,461 20.7 52,374 20.8
Consumer 62,906 23.0 61,888 24.5
Real estate - commercial 52,232 19.1 52,075 20.6
Real estate - construction 4,926 1.8 9,600 3.8
Real estate - mortgage 96,856 35.4 76,505 30.3
$ 273,381 100.0 252,442 100.0
LOAN MATURITIES AND INTEREST SENSITIVITY
As of December 31, 1999
One
Within Through Over
(thousands) One Year Five Years Five Years Total
Commercial:
Fixed interest rates $ 9,425 26,789 26,843 63,057
Floating interest rates 49,960 - 304 50,264
Total 59,385 26,789 27,147 113,321
Real estate-commercial:
Fixed interest rates 2,904 6,253 25,180 34,337
Floating interest rates 37,582 1,369 825 39,776
Total 40,486 7,622 26,005 74,113
Real estate-construction:
Fixed interest rates 686 1,050 6,023 7,759
Floating interest rates 11,013 --- --- 11,013
Total 11,699 1,050 6,023 18,772
$ 111,570 35,461 59,175 206,206
NONPERFORMING ASSETS AND PAST DUE LOANS
December 31,
(thousands) 1999 1998 1997 1996 1995
Nonaccrual loans $ 4,517 1,109 893 573 1,769
Restructured loans -- -- -- -- --
Other real estate owned 129 30 98 185 387
Total nonperforming assets 4,646 1,139 991 758 2,156
Accruing loans past due
90 days $ 25 161 196 595 43
PRO FORMA/RECORDED INTEREST ON NONACCRUAL LOANS
(thousands) 1999 1998 1997 1996 1995
Pro forma interest-nonaccrual
loans $ 406 105 92 60 161
Recorded interest-nonaccrual
loans $ 1 1 3 3 1
Interest related to nonaccrual loans is recognized on the cash basis. Loans
are generally placed on nonaccrual status when the collection of principal or
interest is 90 days or more past due, unless the obligation is both well-
secured and in the process of collection. Pro forma interest represents the
amount of interest that would have been recorded if the loans had been current
in accordance with their original terms.
ANALYSIS OF ALLOWANCE FOR LOAN LOSSES
(thousands) 1999 1998 1997 1996 1995
AVERAGE LOANS OUTSTANDING $ 359,268 312,369 278,824 257,571 234,904
ALLOWANCE FOR LOAN LOSSES
Balance, beginning of period $ 4,640 4,291 4,179 3,988 3,815
Provision for loan losses 1,445 1,135 550 595 300
6,085 5,426 4,729 4,583 4,115
Loans charged off:
Commercial 713 507 42 122 27
Consumer 355 441 402 402 326
Real estate - commercial 50 -- 25 21 12
Real estate - construction -- -- -- -- --
Real estate - mortgage 15 22 159 15 --
Total loans charged off 1,133 970 628 560 365
Recovery of loans previously
charged off:
Commercial 9 54 17 29 36
Consumer 178 130 134 125 142
Real estate - commercial -- -- 37 2 24
Real estate - construction -- -- 2 -- --
Real estate - mortgage 34 -- -- -- 36
Total recoveries 221 184 190 156 238
Net loans charged off 912 786 438 404 127
Balance, end of period $ 5,173 4,640 4,291 4,179 3,988
Net charge-offs to average
loans outstanding 0.25% 0.25 0.16 0.16 0.05
ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
December 31,
(thousands) 1999 1998 1997 1996 1995
Commercial $ 2,555 2,388 1,218 961 652
Consumer 839 841 792 487 391
Real estate - commercial 612 418 649 738 412
Real estate - construction 66 58 161 28 69
Real estate - mortgage 538 621 688 743 612
Unassigned portion of allowance 563 314 783 1,222 1,852
$ 5,173 4,640 4,291 4,179 3,988
Management continually reviews the loan portfolio for signs of deterioration.
In making their evaluation of the portfolio, factors considered include the
individual strength of borrowers, the strength of the individual industries,
the value and marketability of collateral, specific market strengths and
weaknesses, and general economic conditions. Management believes that the
allowance for loan losses at December 31, 1999 is adequate to cover potential
loan losses inherent in the loan portfolio.
DEPOSIT MATURITIES
As of December 31, 1999
Mature Within
Over Six
Three Over Three Months
Months Months Through Over
or Through Twelve Twelve
(thousands) Less Six Months Months Months Total
Certificates of
deposit and other
time deposits of
$100M and over $ 8,530 7,097 17,653 13,233 46,513
All other deposits 133,453 51,566 54,885 112,454 352,358
Total deposits 141,983 58,663 72,538 125,687 398,871
INTEREST SENSITIVITY ANALYSIS
As of December 31, 1999
Mature or Reprice Within
Over Three
Three Months Over One
Months Through Year To Over
or Twelve Five Five
(thousands) Less Months Years Years Total
INTEREST-EARNING ASSETS
Loans $ 136,067 90,272 93,109 58,380 377,828
Securities:
Available-for-sale,
at fair value 9,490 15,013 21,253 22,398 68,154
Held-to-maturity,
at amortized cost 1,069 3,363 21,354 7,435 33,221
Other interest-earning
assets 3,510 -- -- -- 3,510
Total interest-
earning assets $ 150,136 108,648 135,716 88,213 482,713
INTEREST-BEARING LIABILITIES
Certificates of deposit
and other time deposits
of $100M and over $ 11,767 21,613 13,133 -- 46,513
Time 47,385 72,427 47,329 21 167,162
All other deposits 90,887 21,833 29,111 -- 141,831
Federal funds purchased
and securities sold
under agreements to
repurchase 20,666 -- -- -- 20,666
Other borrowed funds 20,000 -- 25,107 1,155 46,262
Total interest-
bearing
liabilities $ 190,705 115,873 114,680 1,176 422,434
Interest sensitivity
gap per period $ (40,569) (7,225) 21,036 87,037 60,279
Cumulative interest
sensitivity gap (40,569) (47,794) (26,758) 60,279 --
Refer to the Bank's 1999 Annual Report to Stockholders under the heading
"Selected Consolidated Financial Information" for a five year summary of
financial information which includes return on equity, return on assets and
other ratios, which is incorporated by reference into this Form
10-K.
Item 2. Properties
The Corporation has twelve full service offices at the following locations:
Full Service
1. Christiansburg Office, 50 North Franklin Street, Christiansburg,
Virginia, containing 9,000 square feet;
2. Blacksburg Office, 601 North Main Street, Blacksburg, Virginia,
containing 8,750 square feet;
3. Riner Office, Route 8, Riner, Virginia, containing 1,600 square
feet;
4. Hills Office, l340 Roanoke Street, Christiansburg, Virginia,
containing 1,200 square feet;
5. Radford Office, 50 First Street, Radford, Virginia, containing
8,000 square feet;
6. New River Valley Mall Office, 646 New River Road, Christiansburg,
Virginia, containing 917 square feet.
7. Corporate Research Center Office, 1872 Pratt Drive, Suite 1125,
Blacksburg, Virginia, containing 360 square feet.
8. Shawsville Office, 250 Alleghany Spring Road, Shawsville,
Virginia, containing 2,712 square feet.
9. Dublin Office, 2 Town Center Drive, Dublin, Virginia, containing
2,640 square feet.
10. FNB Center, 105 Arbor Drive, Christiansburg, Virginia, containing
72,816 square feet.
11. Wytheville Office, 280 West Main Street, Wytheville, Virginia,
containing 3,000 square feet.
12. South Main Blacksburg Office, 1206 South Main Street, Blacksburg,
Virginia, containing 1,100 square feet.
All of such space is used by the Corporation in its operations. The
Corporation owns properties 1, 2, 3, 5, 8, 9 and 10 and leases properties 4,
6, 7, 11, and 12 from independent parties on terms which management believes
are satisfactory.
Other Real Estate.
Other Real Estate is composed of one commercial and one residential property.
Item 3. Legal Proceedings
From time to time, the Corporation is a party to lawsuits arising in the
normal course of business in which claims for money damages are asserted.
Management, after consulting with legal counsel handling the respective
matters, is of the opinion that the ultimate outcome of such pending actions,
whether or not adverse to the Corporation, will not have a material effect
upon the Corporation's financial condition.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth
quarter of 1999.
PART II
Item 5. Market for the Corporation's Common Stock and Related Security
Holder Matters
The Corporation has only one (1) class of Common Stock with a Par Value of $5
per share. There were approximately 1,058 stockholders of record as of
December 31, 1999, holding 4,093,996 shares of the authorized 10,000,000
shares. The Corporation's stock began appearing on the Nasdaq Stock Market
under the symbol FNBP on July 7, 1998. Previously, the stock appeared on the
over-the-counter bulletin board under the same symbol. The recent market
prices and other related shareholder data is incorporated by reference into
this Form 10-K from the section entitled, "Market Price and Dividend Data," in
the Corporation's 1999 Annual Report to Stockholders which is filed as Exhibit
13 to this Annual Report on Form 10-K. Prior to 1997, the Corporation had
consistently paid a semi-annual dividend on its common stock. Beginning in
the second quarter of 1997, the dividend payment was changed to a quarterly
basis, which is currently anticipated to be the normal frequency for the
foreseeable future. There are no known restrictions on the retained earnings
that would affect the ability to pay further dividends other than those
imposed by regulatory agencies. See Note 12 of the notes to consolidated
financial statements in the Corporation?s 1999 Annual Report to Stockholders
under the caption Dividend Restrictions and Capital Requirements, which is
filed as Exhibit 13 to this Form 10-K and is incorporated herein by reference.
Item 6. Selected Financial Data
Selected financial data is located in the Corporation's 1999 Annual Report to
Stockholders, which is filed as Exhibit 13 to this Form 10-K, under the
caption "Selected Consolidated Financial Information," which 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 is located in the section of the Corporation's 1999 Annual Report
to Stockholders, which is filed as Exhibit 13 to this Form 10-K, under the
same heading, and is incorporated herein by reference.
Item 7(A) Quantitative and Qualitative Disclosures About Market Risk
Information regarding market risks is included in the section of the 1999
Annual Report to Stockholders entitled "Market Risks Related to Financial
Instruments," which is filed as Exhibit 13 to this Form 10-K and is
incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The following independent auditors' report, consolidated financial statements,
and supplementary financial information included in the Corporation's 1999
Annual Report to Stockholders, which is filed as Exhibit 13 to this Form 10-K,
are incorporated herein by reference:
Independent Auditors' Report
Consolidated Balance Sheets - December 31, 1999 and 1998
Consolidated Statements of Income - Years ended December 31, 1999, 1998,
and 1997
Consolidated Statements of Comprehensive Income - Years ended December
31, 1999, 1998, and 1997
Consolidated Statements of Cash Flows - Years ended December 31, 1999,
1998, and 1997
Consolidated Statements of Changes in Stockholders' Equity - Years
ended December 31, 1999, 1998, and 1997
Notes to Consolidated Financial Statements
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Corporation
Information on directors is incorporated by reference from the Corporation's
Proxy Statement for the 2000 Annual Meeting of Stockholders under the heading
"Election of Directors."
Information on executive officers is incorporated by reference from the
Corporation's Proxy Statement for the 2000 Annual Meeting of Stockholders
under the heading "Executive Officers of the Corporation."
Election of Directors. A total of 3,127,488 shares of a possible 3,722,139
shares or 84.0 percent of eligible shares were voted at the May 11, 1999,
stockholders meeting. No class of voting stock withheld or cast against any
nominee for Director in aggregate five percent or more of total shares cast by
such class.
Item 11. Executive Compensation
Information on executive compensation is incorporated by reference from the
Corporation's Proxy Statement for the 2000 Annual Meeting of Stockholders
under the heading "Executive Compensation."
Employee Stock Ownership Plan. The Corporation instituted a qualified
employee stock ownership plan in 1983 which covers substantially all
employees. The Corporation makes periodic contributions to the plan that are
used to purchase the Corporation's common stock from available sources. The
shares are then allocated among plan participants based upon compensation and
years of service. Stock allocated to a particular participant (or its value)
is generally distributed upon retirement, death, disability, termination, or
(under certain circumstances) attaining a specified age. The plan is
administered by a committee appointed by the Corporation's Board of Directors.
Information on the Corporation's leveraged ESOP is included in Note 10 of
notes to consolidated financial statements, and is incorporated by reference
from the Corporation's 1999 Annual Report to Stockholders which is included as
Exhibit 13 to this Form 10-K.
Information on compensation of directors compensation committee and executive
compensation matters is incorporated by reference from the Corporation's Proxy
Statement for the 2000 Annual Meeting of Stockholders under the heading "Board
of Directors and Committees of the Board."
The Corporation's performance graph is incorporated by reference from the
Corporation's Proxy Statement under the heading "Performance Graph."
Item 12. Security Ownership of Certain Beneficial Owners and Management
Principal Security Holders. The Corporation knows of no person or group that
beneficially owned more than five percent of the outstanding shares of Common
Stock as of March 6, 2000.
Executive Officers. The persons currently serving as executive officers of
the Corporation and their security ownership, are as follows:
Percent of
Number Shares Owned Outstanding
Name (Age) Title as of 3/6/00(A)(B) Shares
J. Daniel President & Chief 49,156 1.20
Hardy, Jr. (50) Executive Officer
Daniel A. Senior Vice President &
Becker (57) Chief Financial Officer 381 .01
(A) Includes shares that may be deemed beneficially owned due to sole or
joint ownership, voting power or investment power; including shares owned by
or held for the benefit of an executive officer's spouse or another immediate
family member residing in the household of the executive officer that may be
deemed beneficially owned.
(B) Includes estimated 1999 Employee Stock Ownership Plan allocation.
Directors. Information on security ownership of directors is incorporated by
reference from the Corporation's Proxy Statement for the 2000 Annual Meeting
of Stockholders under the heading "Election of Directors."
Item 13. Certain Relationships and Related Transactions
Directors and officers of the Corporation and persons with whom they are
associated have had and expect to have in the future, banking transactions
with the Corporation in the ordinary course of their businesses. In the
opinion of management of the Corporation, all such loans and commitments for
loans were made on substantially the same terms, including interest rates,
collateral and repayment terms as those prevailing at the same time for
comparable transactions with other persons, were made in the ordinary course
of business, and do not involve more than a normal risk of collectibility or
present other unfavorable features. The aggregate amount of direct loans to
any one director, officer or principal stockholder (and related persons), does
not exceed 10 percent of the Corporation's equity capital accounts (nor 20
percent of such accounts for all such persons as a group) and did not during
the previous two fiscal years.
Information on transactions with management is incorporated herein by
reference from the Corporation's Proxy Statement for the 2000 Annual Meeting
of Stockholders under the heading "Transactions with Management."
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
a(1). Consolidated Financial Statements. See Index to Consolidated Financial
Statements.
a(2).Financial Statement Schedules. The financial statement schedules are
omitted as the required information is inapplicable or the information
is presented in the consolidated financial statements or related notes.
a(3).Exhibits.
See Index to Exhibits
b. Reports on Form 8-K.
The Corporation did not file any reports on Form 8-K during the fourth
quarter of 1999.
c. Exhibits.
Included in item 14a(3) above
d. Financial Statement Schedules.
Included in item 14a(2) above
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 Corporation
By: s/J. Daniel Hardy, Jr.
J. Daniel Hardy, Jr.
President & Chief Executive Officer
By: s/Daniel A. Becker
Daniel A. Becker
Senior Vice President &
Chief Financial Officer
Date: March 23, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following directors on behalf of the
registrant and in that capacity and on the dates indicated.
Signature Date
s/Kendall O. Clay March 23, 2000
Kendall O. Clay
s/Dr. Douglas Covington March 23, 2000
Dr. Douglas Covington
s/Daniel D. Hamrick March 23, 2000
Daniel D. Hamrick
s/J. Daniel Hardy, Jr. March 23, 2000
J. Daniel Hardy, Jr.
s/Joan H. Munford March 23, 2000
Joan H. Munford
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
The following independent auditors' report and consolidated financial
statements of the Corporation are incorporated by reference from the
Corporation's 1999 Annual Report to Stockholders included within this document
as an Exhibit:
Independent Auditors' Report
Consolidated Balance Sheets --
December 31, 1999 and 1998
Consolidated Statements of Income -- Years
Ended December 31, 1999, 1998, and 1997
Consolidated Statements of Comprehensive Income -- Years
Ended December 31, 1999, 1998, and 1997
Consolidated Statements of Cash Flows -
Years Ended December 31, 1999, 1998, and 1997
Consolidated Statements of Changes in
Stockholders' Equity -- Years Ended
December 31, 1999, 1998, and 1997
Notes to Consolidated Financial Statements
All schedules are omitted as the required information is inapplicable or the
information is presented in the consolidated financial statements or related
notes.
INDEX TO EXHIBITS
Exhibit # Description
(2) Plan of Reorganization
Agreement and Plan of Reorganization dated as of February 1, 1996,
between the Registrant, First National Bank, and FNB Bank, filed
as Exhibit 2 to the Registration Statement on Form S-4 filed by
FNB Corporation with the Securities and Exchange Commission May 3,
1996 (Registration number 333-2524) is incorporated herein by
reference.
(3)(i) Articles of Incorporation
Registrant's Articles of Incorporation, filed with the Commission
as Exhibit 3.1 to the Annual Report on Form 10-K for the year
ended December 31, 1996, is incorporated herein by reference.
(3)(ii) Registrant's Bylaws
Registrant's Bylaws, filed with the Commission as Exhibit 3.2 to
the Annual Report on Form 10-K for the year ended December 31,
1997, is incorporated herein by reference.
(10) Material Contracts
(10)A Consulting and Noncompetition Agreement With Put Option dated
January 15, 1999, between Samuel H. Tollison and Registrant, filed
with the Commission as Exhibit (10) D on Form 10-K for the year
ended December 31, 1998, is incorporated herein by reference.
(10)B First Amendment to Consulting and Noncompetition Agreement dated
December 23, 1999, between Samuel H. Tollison and Registrant.
(10)C Employment agreement dated September 11, 1997 between Julian D.
Hardy, Jr., First National Bank, and Registrant, filed with the
Commission as Exhibit (10)B on Form 10-Q for the quarter ended
September 30, 1997, is incorporated herein by reference.
(10)D Change in control agreements with seven senior officers of First
National Bank and one senior officer of Registrant. All
agreements have identical terms and, as such, only a sample copy
of the agreements was filed with the Commission as Exhibit (10)C
on Form 10-Q for the quarter ended September 30, 1997, and is
incorporated herein by reference. The officers covered by the
agreements are as follows:
(1) Daniel A. Becker, Senior Vice President, Chief Financial
Officer, dated April 1, 1999
(2) Keith J. Houghton, Senior Vice President, Manager Commercial
Banking, dated April 1, 1999
(3) Darlene S. Lancaster, Senior Vice President, Manager,
Mortgage Loan Department, dated August 25, 1997
(4) R. Bruce Munro, Senior Vice President, Chief Credit
Administration Officer, dated August 25, 1997
(5) Woody B. Nester, Senior Vice President, Cashier, dated
August 25, 1997
(6) Peter A. Seitz, Executive Vice President, dated August 25,
1997
(7) Perry D. Taylor, Senior Vice President, Comptroller, dated
August 25, 1997
(8) Litz H. Van Dyke, Executive Vice President, dated August 25,
1997
The agreements with Mr. Seitz and Mr. Van Dyke were terminated
under the terms of the Employment Agreement referred to in Exhibit
(10) E below.
(10)E Employment agreement dated March 23, 1999 with two executive
officers of First National Bank. Both agreements have identical
terms, and as such, only a sample copy of the agreement was filed
with the Commission as Exhibit (10) E on Form 10-Q for the quarter
ended March 31, 1999, and is incorporated herein by reference.
The officers covered by this agreement are:
(1) Peter A. Seitz, Executive Vice President
(2) Litz H. Van Dyke, Executive Vice President
(13) 1999 Annual Report to Stockholders
(21) Subsidiaries of the Registrant
(27) Financial Data Schedule