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, 2001
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
incorporation or organization) Identification No.)
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 8, 2002, was $106,977,907.
There were 5,888,706 shares outstanding as of March 8, 2002.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Corporation's Annual Report to Stockholders for the year ended
December 31, 2001, 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 14, 2002, are incorporated into Part III hereof.
TABLE OF CONTENTS
PART I
Item 1. Business Page
General development of business 4
Description of business 4
Supervision and Regulation 4
Competition 4
Governmental Monetary Policies 5
Employees 5
Securities Act Guide 3. Statistical
Disclosure by Bank Holding Companies 6
Item 2. Properties 20
Item 3. Legal Proceedings 21
Item 4. Submission of Matters to a Vote of
Security Holders 21
PART II
Item 5. Market for the Bank's Common Stock and
Related Security Holder Matters 22
Item 6. Selected Financial Data 22
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 22
Item 7(A) Quantitative and Qualitative Disclosures About
Market Risks 22
Item 8. Financial Statements and Supplementary Data 23
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 23
PART III
Item 10. Directors and Executive Officers of the Bank 24
Item 11. Executive Compensation 24
Item 12. Security Ownership of Certain Beneficial Owners
and Management 25
Item 13. Certain Relationships and Related Transactions 25
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K 27
Signatures 28
Index to Consolidated Financial Statements 30
Index to Exhibits 31
PART I
Item 1. Business
General development of business. FNB Corporation, a Virginia corporation,
was organized in 1996 as a bank holding company for First National Bank, a
national banking association formed in 1905. In 2001 FNB acquired FNB
Southwest (formerly Southwest Virginia Savings Bank, F.S.B.) which was formed
in 1927 and two banking branches from First Union National Bank. Also on
December 31, 2001, FNB acquired Salem Bank and Trust, National Association,
which was incorporated in 1976. In 1992, FNB formed FNB Financial Services,
Inc., a wholly-owned subsidiary, to allow the company to participate as an
agent in the real estate title insurance business. Additionally, this
subsidiary has been licensed by the Commonwealth of Virginia to offer annuity
products through First National's Trust Division. For more information
regarding merger and acquisition activity of the Company in 2001, please read
Note 21 of the notes to consolidate financial statements included in the
Corporation's Annual Report to Stockholders for the year ended December 31,
2001 incorporated as Exhibit 13.
Description of business. FNB through its three banking subsidiaries (bank or
banks) provides a full complement of consumer and commercial banking services
to its primary service areas which include the New River Valley, consisting of
Montgomery Country, Virginia and surrounding counties, the Cities of Roanoke
and Salem, Virginia and Roanoke and contiguous counties, including Bedford and
Franklin, Virginia. With an emphasis on personal service, the Company offers
a broad range of commercial and retail banking products and services including
checking, savings and time deposits, individual retirement accounts, merchant
bankcard processing, residential and commercial mortgages, home equity loans,
credit card and consumer installment loans, agricultural loans, investment
loans, small business, agricultural, and FHA and SBA guaranteed loans,
commercial loans, lines and letters of credit as well as trust services. In
addition to its twenty-four full service banking facilities, the Company has
thirty-four ATMs located both on premises and in other strategic positions
within its primary market areas.
Supervision and Regulation. FNB Corporation is a bank holding company within
the definition of the Bank Holding Company Act of 1956, as amended, and is
supervised and examined by the Federal Reserve Bank. As national
associations, the primary supervisory authority over the banks is the Office
of the Comptroller of the Currency which regularly examines such areas as
loans and reserves, investments, management practices and other aspects of
the bank's operations. These examinations are focused primarily on the
protection of the depositors of the bank. In addition, the banks are members
of the Federal Deposit Insurance Corporation ("FDIC") which insures the
deposits of customers of the bank.
Competition. The bank not only competes with local, regional and local
offices of multi-state bank holding companies for both deposits and loans but
also with diversified providers of financial services such as brokers and
mutual funds and mortgage and finance companies. Deposits are acquired from
a highly diversified customer base that includes individuals, small and larger
businesses and municipal and other governmental entities, none of which
represent a material concentration of the bank's core deposits. The bank's
loan portfolio is not concentrated in 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. The bank does
not experience a material seasonal fluctuation in its business.
Governmental Monetary Policies. The policies of the Federal Reserve Board
have a direct effect on the amount of the banks loans and deposits and the
interest rates charged and paid thereon. While future economic conditions
and the policies of the Federal Reserve Board designed to deal with those
conditions cannot accurately be predicted, they can materially affect the
revenue and income of commercial banks.
Employees. The Corporation had 391 full-time equivalent employees as of
December 31, 2001.
Securities Act Guide 3. Statistical Disclosure by Bank Holding Companies.
The following schedules are included:
Average Balance Sheet and Analysis of Net Interest Earnings
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 the Allowance for Loan Losses
Allocation of Allowance for Loan Losses
Deposit Maturities
Return on Equity and Assets
Interest Sensitivity Analysis
GUIDE 3. I. DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL
A. and B. AVERAGE BALANCE SHEET AND ANALYSIS OF NET INTEREST EARNINGS.
2001
Average
Average Income/ Yield/
(thousands) Balance Expense Rate
ASSETS
Loans (Net of unearned income) (1)(2) $458,756 39,603 8.63%
Securities:
Taxable 92,921 5,829 6.27
Nontaxable (2) 38,382 2,803 7.30
Total securities 131,303 8,632 6.57
Federal funds sold 20,224 730 3.61
Total interest-earning assets 610,283 48,965 8.02
Allowance for loan losses (6,399)
Cash and due from banks, noninterest-
bearing 15,341
Bank premises and equipment, net 18,266
Other real estate owned 303
Other assets 11,817
Total assets $649,611
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits:
Demand and savings $166,065 3,683 2.22%
Time 257,988 13,601 5.27
Certificates of deposit of
$100,000 and over 71,165 4,195 5.89
Total interest-bearing deposits 495,218 21,479 4.34
Federal funds purchased and securities
sold under agreements to repurchase 8,325 271 3.26
Other borrowed funds 19,249 1,077 5.60
Total interest-bearing liabilities 522,792 22,827 4.37
Demand deposits, noninterest-bearing 62,719
Other liabilities 6,363
Stockholders' equity 57,737
Total liabilities and stockholders'
equity $649,611
Interest income and rate earned $ 48,965 8.02%
Interest expense and rate paid 22,827 4.37
Interest rate spread 3.66
NET INTEREST INCOME AND NET YIELD
ON AVERAGE EARNING ASSETS $ 26,138 4.28%
(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%.
A and B. AVERAGE BALANCE SHEET AND ANALYSIS OF NET INTEREST EARNINGS.
2000
Average
Average Income/ Yield/
(thousands) Balance Expense Rate
ASSETS
Loans (net of unearned income)(1)(2) $397,154 36,769 9.26%
Securities:
Taxable 50,307 3,186 6.33
Nontaxable(2) 43,119 3,182 7.38
Total securities 93,426 6,368 6.82
Federal funds sold 1,686 99 5.87
Total interest-earning assets 492,266 43,236 8.78
Allowance for loan losses (5,588)
Cash and due from banks, noninterest-
bearing 11,465
Bank premises and equipment, net 13,546
Other real estate owned 253
Other assets 6,159
Total assets $518,101
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits:
Demand and savings $134,661 3,966 2.95%
Time 174,097 9,915 5.70
Certificates of deposit of $100,000
and over 55,793 3,348 6.00
Total interest-bearing deposits 364,551 17,229 4.73
Federal funds purchased and securities
sold under agreements to repurchase 9,274 437 4.71
Other borrowed funds 41,735 2,436 5.84
Total interest-bearing liabilities 415,560 20,102 4.84
Demand deposits, noninterest-bearing 48,333
Other liabilities 4,573
Stockholders' equity 49,635
Total liabilities and stockholders'
equity $518,101
Interest income and rate earned $ 43,236 8.78%
Interest expense and rate paid 20,102 4.84
Interest rate spread 3.95
NET INTEREST INCOME AND NET YIELD
ON AVERAGE EARNING ASSETS $ 23,134 4.70%
(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%.
A. and B. AVERAGE BALANCE SHEET AND ANALYSIS OF NET INTEREST EARNINGS.
1999
Average
Average Income/ Yield/
(thousands) Balance Expense Rate
ASSETS
Loans (Net of unearned income) (1)(2) $359,268 32,219 8.97%
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 38,973 8.44
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
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 $ 38,973 8.44%
Interest expense and rate paid 17,610 4.45
Interest rate spread 3.99
NET INTEREST INCOME AND NET YIELD
ON AVERAGE EARNING ASSETS $ 21,363 4.63%
(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%.
B. RATE/VOLUME VARIANCE
2001 Compared to 2000 2000 Compared to 1999
Due to Due to Due to Due to
(thousands) Change Volume Rate Change Volume Rate
INTEREST INCOME
Loans $ 2,834 5,511 (2,677) 4,550 3,453 1,097
Securities:
Taxable 2,643 2,686 (43) 29 (79) 108
Nontaxable (379) (348) (31) (232) (313) 81
Federal funds sold 631 879 (248) (84) (106) 22
Total 5,729 8,728 (2,999) 4,263 2,955 1,308
INTEREST EXPENSE
Demand and savings (283) 811 (1,094) 566 225 341
Time 3,686 4,600 (914) 1,010 383 627
Certificates of deposit
of $100,0000 and over 847 914 (67) 417 40 377
Federal funds purchased
and securities sold
under agreements to
repurchase (166) (38) (128) 57 2 55
Other borrowed funds (1 359) (1,285) (74) 442 253 189
Total 2,725 5,002 (2,277) 2,492 903 1,589
Net interest income $ 3,004 3,726 (722) 1,771 2,052 (281)
Variances caused by changes in rate times the changes in volume are allocated
equally.
GUIDE 3. II. INVESTMENT PORTFOLIO
A. SECURITIES AVAILABLE-FOR-SALE AT FAIR VALUE
December 31,
(thousands) 2001 2000 1999
U.S. Treasury $ 503 503 4,026
U.S. Government agencies and
corporations 89,640 16,152 14,824
States and political subdivisions 23,302 17,092 14,753
Corporate 32,892 31,643 31,535
Total AFS debt securities 146,337 65,390 65,138
Equity securities 5,015 3,584 3,016
Totals $ 151,352 68,974 68,154
A. SECURITIES HELD-TO-MATURITY AT AMORTIZED COST
December 31,
(thousands) 2001 2000 1999
U.S. Treasury $ - - -
U.S. Government agencies and
corporations 6,707 - -
States and political subdivisions 24,105 28,193 33,221
Totals $ 30,812 28,193 33,221
B. SECURITIES--MATURITY/YIELD SCHEDULE
As of December 31, 2001
Securities Available-for-Sale
Approximate Taxable
Amortized Fair Equivalent
(thousands) Costs Values Yield(1)
U.S. Treasury:
Within 1 year $ 500 503 6.01
Total 500 503 6.01
U.S. Government agencies and
corporations:
Within 1 year 1,479 1,519 6.26
1 through 5 years 13,381 12,781 4.25
6 through 10 years 17,954 18,046 5.84
Over 10 years 57,071 57,294 6.33
Total 89,885 89,640 5.93
States and political
subdivisions:
Within 1 year 1,100 1,120 7.03
1 through 5 years 9,280 9,453 6.11
6 through 10 years 7,688 7,675 6.17
Over 10 years 5,134 5,054 6.92
Total 23,202 23,302 6.35
Other securities:
Within 1 year 1,516 1,535 6.25
1 through 5 years 29,906 31,357 6.48
Total 31,422 32,892 6.47
$ 145,009 146,337 6.11
(1) Yields on non-taxable investment securities are computed on a tax
equivalent basis using a federal tax rate of 34%.
B. SECURITIES--MATURITY/YIELD SCHEDULE
As of December 31, 2001
Securities Held-To-Maturity
Approximate Taxable
Amortized Fair Equivalent
(thousands) Costs Values Yield(1)
U.S. Treasury:
1 through 5 years $ - - -
Total - - -
U.S. Government agencies and
corporations:
Within 1 year 240 246 7.88
1 through 5 years - - -
6 through 10 years 181 191 8.00
Over 10 years 6,193 6,227 6.84
Total 6,614 6,664 6.91
States and political
subdivisions:
Within 1 year 6,346 6,429 7.09
1 through 5 years 15,835 16,359 7.14
6 through 10 years 2,017 2,074 10.58
Over 10 years - - -
Total 24,198 24,862 7.41
Other securities:
Within 1 year - - -
1 through 5 years - - -
6 through 10 years - - -
Over 10 years - - -
Total - - -
$ 30,812 31,526 7.30
(1) Yields on non-taxable investment securities are computed on a tax
equivalent basis using a federal tax rate of 34%.
GUIDE 3. III LOANS
A. TYPES OF LOANS
December 31,
2001 2000 1999
% of % of % of
(thousands) Amount Total Amount Total Amount Total
Commercial $ 75,705 11.7 76,023 18.6 76,796 20.1
Consumer 130,072 20.1 77,395 18.9 69,278 18.1
Real estate - commercial 193,575 29.9 108,338 26.4 104,608 27.4
Real estate - construction 42,404 6.5 20,326 5.0 19,449 5.1
Real estate - mortgage 206,507 31.8 127,504 31.1 112,141 29.3
$648,263 100.0 409,586 100.0 382,272 100.0
TYPES OF LOANS
December 31,
1998 1997
% of % of
(thousands) Amount Total Amount Total
Commercial $ 85,536 26.0 64,247 22.0
Consumer 66,526 20.3 66,059 22.7
Real estate - commercial 65,165 19.8 56,404 19.4
Real estate - construction 16,686 5.1 8,657 3.0
Real estate - mortgage 94,686 28.8 95,703 32.9
$328,599 100.0 291,070 100.0
B. LOAN MATURITIES AND INTEREST SENSITIVITY
As of December 31, 2001
One
Within Through Over
(thousands) One Year Five Years Five Years Total
Commercial:
Fixed interest rates $ 7,423 24,456 6,019 37,898
Floating interest rates 11,977 9,924 15,906 37,807
Total 19,400 34,380 21,925 75,705
Real estate-commercial:
Fixed interest rates 8,003 44,953 29,047 82,003
Floating interest rates 36,095 64,011 11,466 111,572
Total 44,098 108,964 40,513 193,575
Real estate-construction:
Fixed interest rates 7,593 1,539 10,370 19,502
Floating interest rates 14,905 5,977 2,020 22,902
Total 22,498 7,516 12,390 42,404
$ 85,996 150,860 74,828 311,684
C. NONPERFORMING ASSETS AND PAST DUE LOANS
December 31,
(thousands) 2001 2000 1999 1998 1997
Nonaccrual loans $ 2,815 2,391 4,517 1,109 893
Restructured loans - - - - -
Other real estate owned 1,420 281 129 30 98
Total nonperforming assets 4,235 2,672 4,646 1,139 991
Accruing loans past due
90 days $ 1,030 410 25 161 196
PRO FORMA/RECORDED INTEREST ON NONACCRUAL LOANS
(thousands) 2001 2000 1999 1998 1997
Pro forma interest-nonaccrual
loans $ 248 239 406 105 92
Recorded interest-nonaccrual
loans $ 64 - 1 1 3
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.
IV. SUMMARY OF LOAN LOSS EXPERIENCE
A. ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
(thousands)
2001 2000 1999 1998 1997
AVERAGE LOANS OUTSTANDING $ 458,756 397,154 359,268 312,369 278,824
ALLOWANCE FOR LOAN LOSSES
Balance, beginning of period $ 5,670 5,173 4,640 4,291 4,179
Provision for loan losses 1,637 1,082 1,445 1,135 550
Reserve acquired through merger 2,956 - - - -
Additional reserve for branch
loans purchased 188 - - - -
10,451 6,255 6,085 5,426 4,729
Loans charged off:
Commercial 980 377 713 507 42
Consumer 950 494 355 441 402
Real estate - commercial - - 50 - 25
Real estate - construction - - - - -
Real estate - mortgage 59 - 15 22 159
Total loans charged off 1,989 871 1,133 970 628
Recovery of loans previously
charged off:
Commercial 111 22 9 54 17
Consumer 249 249 178 130 134
Real estate - commercial - - - - 37
Real estate - construction - - - - 2
Real estate - mortgage 5 15 34 - -
Total recoveries 365 286 221 184 190
Net loans charged off 1,624 585 912 786 438
Balance, end of period $ 8,827 5,670 5,173 4,640 4,291
Net charge-offs to average
loans outstanding 0.35% 0.15 0.25 0.25 0.16
B. ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
(thousands)
December 31,
2001 2000 1999 1998 1997
Commercial $ 2,794 3,140 2,555 2,388 1,218
Consumer 1,894 837 839 841 792
Real estate - commercial 2,178 867 612 418 649
Real estate - construction 534 164 66 58 161
Real estate - mortgage 1,016 576 538 621 688
Unassigned portion of allowance 411 86 563 314 783
$ 8,827 5,670 5,173 4,640 4,291
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, 2001 is adequate to cover potential
loan losses inherent in the loan portfolio.
D. DEPOSIT MATURITIES
As of December 31, 2001
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 $ 25,020 11,177 21,801 36,937 94,935
All other deposits 237,519 59,442 110,171 304,720 711,852
Total deposits $ 262,539 70,619 131,972 341,657 806,787
GUIDE 3. VI. RETURN ON EQUITY AND ASSETS
Refer to the Bank's 2001 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.
INTEREST SENSITIVITY ANALYSIS
As of December 31, 2001
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 $ 229,733 156,195 245,806 27,640 659,374
Securities:
Available-for-sale,
at fair value 4,576 6,381 51,584 83,796 146,337
Held-to-maturity,
at amortized cost 1,189 6,178 15,834 7,611 30,812
Other interest-earning
assets 30,304 - - - 30,304
Total interest-
earning assets $ 265,802 168,754 313,224 119,047 866,827
INTEREST-BEARING LIABILITIES
Certificates of deposit
and other time deposits
of $100M and over $ 25,020 32,978 36,737 200 94,935
Time 95,474 133,682 139,311 816 369,283
All other deposits 142,045 35,931 164,213 380 342,569
Federal funds purchased
and securities sold
under agreements to
repurchase 8,463 - - - 8,463
Other borrowed funds - 14,549 356 17,913 32,818
Total interest-
bearing
liabilities $ 271,002 217,140 340,617 19,309 848,068
Interest sensitivity
gap per period $ (5,200) (48,386) (27,393) 99,738 18,759
Cumulative interest
sensitivity gap (5,200) (53,586) (80,979) 18,759 -
Item 2. Properties
FNB Corporation owns sixteen branches and one other location for its Salem
operations center, and leases eight branches and one other location for a
loan production office.
All of the Corporation's properties are listed below.
Square
Properties Owned: Location Footage
Christiansburg Office 50 North Franklin Street 9,000
Christiansburg, VA
Blacksburg Office 601 North Main Street 8,750
Blacksburg, VA
Riner Office Route 8 1,600
Riner, VA
Radford Office 50 First Street 8,000
Radford, VA
Shawsville Office 250 Alleghany Spring Road 2,712
Shawsville, VA
Dublin Office 2 Town Center Drive 2,640
Dublin, VA
FNB Center 105 Arbor Drive 72,816
Christiansburg, VA
Wytheville Office 320 West Main Street 16,932
Wytheville, VA
Wytheville Office 900 North 4th Street 3,000
Wytheville, VA
Pearisburg Office 605 Wenonah Avenue 7,350
Pearisburg, VA
Salem Operations Center 110 East Main Street 31,000
Salem, VA
Salem West Main Office 1251 West Main Street 1,350
Salem, VA
FNB Southwest Main Office 302 Second Street 28,639
Roanoke, VA
Vinton Office 1006 Hardy Road 2,328
Vinton, VA
Roanoke Office 2133 Electric Road 1,550
Roanoke, VA
Roanoke Office 1611 Hershberger Road 1,974
Roanoke, VA
Salem Office 40 West Main Street 1,974
Salem, VA
Square
Properties Leased: Location Footage
Roanoke Street Office 1340 Roanoke Street 1,200
Christiansburg, VA
Corporate Research Center 1872 Pratt Drive, Suite 1125 360
Office Blacksburg, VA
South Main Blacksburg 1206 South Main Street 1,100
Office Blacksburg, VA
Salem Main Office 220 East Main Street 5,740
Salem, VA
South Salem Office 1406 Colorado Street 940
Salem, VA
Oak Grove Office 2103 Electric Road 1,862
Roanoke, VA
Hollins Office 7337 Williamson Road 1,400
Roanoke, VA
Brandon Oaks Office 3804 Brandon Avenue 1,867
Roanoke, VA
FNB Southwest Loan Building D, Suite 101
Production Office 2847 Penn Forest Blvd. 1,715
Roanoke, VA
The majority of such space is used by the Corporation in its operations.
The leased properties are from independent parties on terms which
management believes are reasonable in relationship to other available
properties in similar markets.
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
On November 20, 2001, a special meeting of the stockholders of FNB Corporation
was held. At the special meeting, stockholders of FNB Corporation voted upon
the approval and adoption of the Agreement and Plan of Merger dated August 7,
2001 as amended, between Salem Community Bankshares, Inc. and FNB Corporation.
A total of 3,256,169 shares of a possible 4,294,261 shares or 75.8 percent of
eligible shares were voted. Of the shares voted, 3,187,230 or 74.2 percent
voted for the approval and adoption of the Agreement and Plan of Merger with
48,949 shares voting against the proposal, and 19,990 shares abstaining.
PART II
Item 5. Market for the Corporation's Common Stock and Related Security
Holder Matters
The Corporation has one class of Common Stock with a Par Value of $5 per
share. There were approximately 1,545 stockholders of record as of December
31, 2001, after giving consideration to the 375 added as a result with Salem
Bank & Trust Company acquisition, holding 5,543,117 shares of the authorized
10,000,000 shares of common stock. The Corporation's stock began appearing
on the Nasdaq Stock Market? under the symbol FNBP on July 7, 1998.
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 2001 Annual Report to Stockholders which
is filed as Exhibit 13 to this Annual Report on Form 10-K.
Beginning in the second quarter of 1997, the Corporation changed its policy
and began paying dividends on a quarterly basis, which is currently
anticipated to be the normal frequency for the foreseeable future. There are
no known restrictions on 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
2001 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 presented in the Corporation's 2001 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 included in the section of the Corporation's 2001 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 2001
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 2001
Annual Report to Stockholders, which is filed as Exhibit 13 to this Form 10-K,
are incorporated herein by reference:
Independent Auditor's Report
Consolidated Balance Sheets - December 31, 2001 and 2000
Consolidated Statements of Income and Comprehensive Income - Years
ended December 31, 2001, 2000,and 1999
Consolidated Statements of Cash Flows - Years ended December 31,
2001, 2000, and 1999
Consolidated Statements of Changes in Stockholders' Equity - Years
ended December 31, 2001, 2000, and 1999
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 2001 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 2001 Annual Meeting of
Stockholders under the heading "Executive Officers of the Corporation."
Item 11. Executive Compensation
Information on executive compensation is incorporated by reference to the
Corporation's Proxy Statement for the 2001 Annual Meeting of Stockholders
under the heading "Executive Compensation."
Information on compensation of directors, the directors compensation
committee and the report on executive compensation is incorporated by
reference to the Corporation's Proxy Statement for the 2001 Annual Meeting
of Stockholders under the heading "Board of Directors and Committees of the
Board."
The Corporation's performance graph is incorporated by reference to 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, 2002.
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 3/8/02(A)(B) Shares
J. Daniel President & Chief 64,600 1.1
Hardy, Jr. (52) Executive Officer
Litz H. Van Executive Vice President 8,612 *
Dyke (38)
Peter A. Seitz Executive Vice President/
(39) General Counsel 5,114 *
Daniel A. Senior Vice President &
Becker (59) Chief Financial Officer 2,085 *
* Less than one percent.
(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 2001 Employee Stock Ownership Plan allocation.
Directors. Information on security ownership of directors is incorporated
by reference to the Corporation's Proxy Statement for the 2001 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 2001 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. The following independent
auditors' report and consolidated financial statements of the Corporation are
incorporated by reference from the Corporation's 2001 Annual Report to
Stockholders included within this document as an Exhibit:
Independent Auditor's Report
Consolidated Balance Sheets --
December 31, 2001 and 2000
Consolidated Statements of Income and Comprehensive Income --
Years Ended December 31, 2001, 2000, and 1999
Consolidated Statements of Cash Flows --
Years Ended December 31, 2001, 2000, and 1999
Consolidated Statements of Changes in Stockholders' Equity --
Years Ended December 31, 2001, 2000, and 1999
Notes 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 2001.
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 28, 2002
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 28, 2002
Kendall O. Clay
s/Douglas Covington March 28, 2002
Douglas Covington
s/Daniel D. Hamrick March 28, 2002
Daniel D. Hamrick
s/J. Daniel Hardy, Jr. March 28, 2002
J. Daniel Hardy, Jr.
____s/F. Courtney Hoge___________ March 28, 2002
F. Courtney Hoge
____s/Walter A. Hunt ____________ March 28, 2002
Walter A. Hunt
s/James L. Hutton March 28, 2002
James L. Hutton
____s/Steven D. Irvin __________ March 28, 2002
Steven D. Irvin
____s/Clark Owen, Jr.____________ March 28, 2002
Clark Owen, Jr.
____s/B.L. Rakes ____________ March 28, 2002
B.L. Rakes
s/Charles W. Steger March 28, 2002
Charles W. Steger
____s/Carl E. Tarpley, Jr._______ March 28, 2002
Carl E. Tarpley, Jr.
____s/Jon T. Wyatt ____________ March 28, 2002
Jon T. Wyatt
INDEX TO EXHIBITS
Exhibit # Description
(2) Plan of Merger
(2)A Merger agreement dated July 10, 2000 between FNB Corporation
and CNB Holdings, Inc. filed with the Commission as exhibit
(2)A on Form 10-Q for the quarter ended June 30, 2000, is
incorporated herein by reference.
(2)B Merger agreement dated August 7, 2000 between FNB
Corporation and SWVA Bancshares, Inc. filed with the
Commission as exhibit (2)B on Form 10-Q for the quarter
ended June 30, 2000, is incorporated herein by reference.
(2)C Purchase and assumption agreement dated September 18, 2000
between FNB Corporation and First Union National Bank filed
with the Commission as exhibit (2)C on Form 10-Q for the
quarter ended September 30, 2000, is incorporated herein by
reference.
(2)D Merger agreement dated July 31, 2001 between FNB Corporation
and Salem Community Bankshares, Inc. filed with the
Commission as Exhibit (2)D on Form 10-Q for the quarter
ended June 30, 2001, is incorporated herein by reference.
(2)E Amendment to merger agreement dated August 7, 2001 between
FNB Corporation and Salem Community Bankshares, Inc. filed
with the Commission as exhibit (2)E on Form 10-Q for the
quarter ended June 30, 2001, 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) Articles of Amendment to Articles of Incorporation,
incorporated herein by reference to Exhibit 3.3 of
Registrant's Registration Statement on Form S-4 dated
September 13, 2000.
(3)(iii) Registrant's Amended Bylaws, filed with the Commission as
exhibit (3)(iii) on Form 10-Q for the quarter ended June 30,
2001, is incorporated herein by reference.
(10) Material Contracts
(10)A First Amendment to Consulting and Noncompetition Agreement
dated December 23, 1999, between Samuel H. Tollison and
Registrant, filed with the Commission as Exhibit (10)B on
Form 10-K for the year ended December 31, 1999, is
incorporated herein by reference.
(10)B Change in control agreement dated March 15, 2000 between
Joseph W. Beury and First National Bank. The agreement was
filed with the Commission as Exhibit (10)C on Form 10-Q for
the quarter ended March 31, 2000, and is incorporated herein
by reference.
(13) 2001 Annual Report to Stockholders
(21) Subsidiaries of the Registrant
Name of Subsidiary Incorporation
First National Bank United States
FNB Financial Services, Inc. Virginia
FNBO Co., Inc. Virginia
FNB Southwest, N.A. United States
Salem Bank and Trust, N.A. United States
(23) Consent of Independent Accountants