UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended JUNE 30, 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 0-8144 ------ F.N.B. CORPORATION - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) PENNSYLVANIA 25-1255406 - ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 2150 GOODLETTE ROAD NORTH, NAPLES, FL 34102 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (800) 262-7600 - ------------------------------------------------------------------------------- (Registrant's telephone number, including area code) - ------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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 --- --- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No --- ---- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. CLASS OUTSTANDING AT JULY 31, 2001 ----- ---------------------------- COMMON STOCK, $2 PAR VALUE 25,612,682 SHARES - -------------------------- -----------------
F.N.B. CORPORATION FORM 10-Q June 30, 2001 INDEX PART I - FINANCIAL INFORMATION PAGE Item 1. Financial Statements Consolidated Balance Sheet 2 Consolidated Income Statement 3 Consolidated Statement of Cash Flows 4 Notes to Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Item 3. Quantitative and Qualitative Disclosure of Market Risk 19 PART II - OTHER INFORMATION Item 1. Legal Proceedings 20 Item 2. Changes in Securities 20 Item 3. Defaults Upon Senior Securities 20 Item 4. Submission of Matters to a Vote of Security Holders 20 Item 5. Other Information 21 Item 6. Exhibits and Reports on Form 8-K 21 Signatures 22 1
F.N.B. CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET Dollars in thousands, except par values Unaudited JUNE 30, DECEMBER 31, 2001 2000 ------------- ------------ ASSETS Cash and due from banks $ 144,745 $ 147,530 Interest bearing deposits with banks 6,967 1,860 Federal funds sold 73,983 39,332 Mortgage loans held for sale 4,773 1,042 Securities available for sale 460,718 441,480 Securities held to maturity (fair value of $46,501 and $73,508) 45,799 73,522 Loans, net of unearned income of $52,835 and $62,270 3,072,730 3,096,833 Allowance for loan losses (39,800) (40,373) ---------- ---------- NET LOANS 3,032,930 3,056,460 ---------- ---------- Premises and equipment 113,530 113,936 Other assets 185,250 180,759 ---------- ---------- TOTAL ASSETS $4,068,695 $4,055,921 ========== ========== LIABILITIES Deposits: Non-interest bearing $ 501,752 $ 478,167 Interest bearing 2,760,205 2,769,783 ---------- ---------- TOTAL DEPOSITS 3,261,957 3,247,950 Other liabilities 75,967 65,768 Short-term borrowings 270,839 282,865 Long-term debt 107,030 119,698 ---------- ---------- TOTAL LIABILITIES 3,715,793 3,716,281 ---------- ---------- STOCKHOLDERS' EQUITY Preferred stock - $.01 and $10 par value Authorized - 20,000,000 shares Issued - 159,857 and 167,732 shares Aggregate liquidation value - $3,996 and $4,193 2 1,678 Common stock - $.01 and $2 par value Authorized - 100,000,000 shares Issued - 25,735,974 and 24,489,817 shares 257 48,980 Additional paid-in capital 295,634 216,647 Retained earnings 53,286 75,127 Accumulated other comprehensive income 6,524 2,196 Treasury stock - 119,680 and 233,741 shares at cost (2,801) (4,988) ---------- ---------- TOTAL STOCKHOLDERS' EQUITY 352,902 339,640 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,068,695 $4,055,921 ========== ========== See accompanying Notes to Consolidated Financial Statements 2
F.N.B. CORPORATION AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENT Dollars in thousands, except per share data Unaudited THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------ ------------------ 2001 2000 2001 2000 -------- -------- -------- -------- INTEREST INCOME Loans, including fees $66,878 $66,440 $134,664 $130,071 Securities: Taxable 6,579 6,557 13,513 13,183 Nontaxable 417 481 816 968 Dividends 367 428 841 854 Other 1,633 191 3,280 425 ------- ------- -------- -------- TOTAL INTEREST INCOME 75,874 74,097 153,114 145,501 ------- ------- -------- -------- INTEREST EXPENSE Deposits 28,310 27,299 59,181 53,001 Short-term borrowings 3,103 4,101 6,870 7,804 Long-term debt 1,880 1,914 3,856 3,690 ------- ------- -------- -------- TOTAL INTEREST EXPENSE 33,293 33,314 69,907 64,495 ------- ------- -------- -------- NET INTEREST INCOME 42,581 40,783 83,207 81,006 Provision for loan losses 2,652 3,061 4,893 6,119 ------- ------- -------- -------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 39,929 37,722 78,314 74,887 ------- ------- -------- -------- NON-INTEREST INCOME Insurance commissions and fees 8,481 5,642 17,056 11,592 Service charges 6,268 5,596 12,134 10,945 Trust 1,244 1,077 2,441 2,147 Gain on sale of securities 390 38 422 78 Gain on sale of loans 2,009 628 3,267 1,076 Other 1,658 1,585 3,345 3,476 ------- ------- -------- -------- TOTAL NON-INTEREST INCOME 20,050 14,566 38,665 29,314 ------- ------- -------- -------- 59,979 52,288 116,979 104,201 ------- ------- -------- -------- NON-INTEREST EXPENSES Salaries and employee benefits 22,122 20,784 46,011 41,782 Net occupancy 2,791 2,466 5,579 4,939 Equipment 3,242 3,224 6,676 6,420 Merger related 3,274 3,557 Other 12,022 10,081 29,709 19,772 ------- ------- -------- -------- TOTAL NON-INTEREST EXPENSES 43,451 36,555 91,532 72,913 ------- ------- -------- -------- INCOME BEFORE INCOME TAXES 16,528 15,733 25,447 31,288 Income taxes 5,564 4,996 8,239 9,907 ------- ------- -------- -------- NET INCOME $10,964 $10,737 $ 17,208 $ 21,381 ======= ======= ======== ======== NET INCOME PER COMMON SHARE: * Basic $.43 $.42 $.67 $.84 ==== ==== ==== ==== Diluted $.41 $.41 $.65 $.82 ==== ==== ==== ==== CASH DIVIDENDS PER COMMON SHARE * $.18 $.17 $.35 $.33 ==== ==== ==== ==== * Restated to reflect a 5 percent stock dividend declared on April 23, 2001. See accompanying Notes to Consolidated Financial Statements 3
F.N.B. CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS Dollars in thousands Unaudited SIX MONTHS ENDED JUNE 30, ----------------------- 2001 2000 --------- --------- OPERATING ACTIVITIES Net income $ 17,208 $ 21,381 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6,843 6,437 Provision for loan losses 4,893 6,119 Deferred taxes (3,471) 2,616 Net gain on sale of securities (422) (78) Net gain on sale of loans (3,267) (1,076) Proceeds from sale of loans 13,865 14,547 Loans originated for sale (14,329) (9,012) Net change in: Interest receivable 2,522 (1,006) Interest payable (1,558) 1,199 Other, net 8,153 (9,603) --------- --------- Net cash flows from operating activities 30,437 31,524 --------- --------- INVESTING ACTIVITIES Net change in: Interest bearing deposits with banks (5,107) 1,828 Federal funds sold (34,651) 3,307 Loans 17,713 (211,469) Securities available for sale: Purchases (115,643) (43,139) Sales 14,058 12,820 Maturities 89,472 40,638 Securities held to maturity: Purchases (7,861) (1,664) Maturities 35,583 7,202 Increase in premises and equipment (5,280) (8,725) Net cash paid for mergers and acquisitions (2,545) --------- --------- Net cash flows from investing activities (14,261) (199,202) --------- --------- FINANCING ACTIVITIES Net change in: Non-interest bearing deposits, savings and NOW (464) 32,671 Time deposits 14,471 111,795 Short-term borrowings (12,026) (15,417) Increase in long-term debt 3,961 45,193 Decrease in long-term debt (16,629) (33,652) Net issuance/acquisition of treasury stock 568 659 Cash dividends paid (8,842) (7,859) --------- --------- Net cash flows from financing activities (18,961) 133,390 --------- --------- NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS (2,785) (34,288) Cash and due from banks at beginning of period 147,530 178,403 --------- --------- CASH AND DUE FROM BANKS AT END OF PERIOD $ 144,745 $ 144,115 ========= ========= See accompanying Notes to Consolidated Financial Statements 4
F.N.B. CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) JUNE 30, 2001 BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements give retroactive effect to the mergers of Citizens Community Bancorp, Inc. (Citizens) and OneSource Group, Inc. (OneSource), with and into F.N.B. Corporation (the Corporation). These transactions were consummated on April 30, and January 26, 2001, respectively, and have been accounted for as a poolings-of-interests. The accompanying unaudited financial statements are presented as if the mergers had been consummated for all the periods presented. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information, refer to the consolidated financial statements for the year ended December 31, 2000 and footnotes thereto included in the Corporation's Annual Report on Form 10-K. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements. The Corporation cautions that any forward looking statements contained in this report, in a report incorporated by reference to this report or made by management of the Corporation, involve risks and uncertainties and are subject to change based upon various factors. Actual results could differ materially from those expressed or implied. MERGERS AND ACQUISITIONS On June 14, 2001, the Corporation announced the signing of a definitive merger agreement with Promistar Financial Corporation (Promistar), a bank holding company headquartered in Johnstown, Pennsylvania, with assets of more than $2.3 billion. Under the terms of the merger agreement, each outstanding share of Promistar common stock will be converted into .926 shares of the Corporation's common stock. A total of 17,570,288 shares of the Corporation's common stock are anticipated to be issued. The transaction, which will be accounted for as a pooling-of-interests, is scheduled for completion in the first quarter of 2002, pending regulatory and shareholder approval. Promistar's banking affiliate, Promistar Bank, will be merged into an existing affiliate, First National Bank of Pennsylvania. On April 30, 2001, the Corporation completed its affiliation with Citizens Community Bancorp, Inc. (Citizens), a bank holding company headquartered in Marco Island, Florida, with assets of $181.0 million. Under the terms of the merger agreement, each outstanding share of Citizens common stock was converted into .524 shares of the Corporation's common stock. A total of 1,775,244 shares of the Corporation's common stock were issued. The transaction was accounted for as a pooling- of-interests. Citizens' banking affiliate, Citizens Community Bank of Florida, operates as a division of an existing affiliate, First National Bank of Florida. The Corporation regularly evaluates the potential acquisition of, and holds discussions with, various acquisition candidates and as a general rule the Corporation publicly announces such acquisitions only after a definitive agreement has been reached. 5
REINCORPORATION F.N.B. Corporation formally completed its reincorporation in the state of Florida, effective June 1, 2001. The Corporation now legally operates from corporate headquarters located in Naples, Florida. The relocation of the Corporation's headquarters from Hermitage, Pennsylvania, to Naples, Florida, originally was announced in early March, and was overwhelmingly approved by shareholders at the Corporation's Annual Meeting of Shareholders in April. F.N.B. Corporation was incorporated in 1974 in Hermitage, Pennsylvania, and at that time substantially all of the Corporation's business was being conducted in Pennsylvania. The Corporation expanded into Florida four years ago. As a result of the dynamic growth experienced in that state and because of subsequent acquisitions, a significant portion of the Corporation's assets and shareholders now reside in Florida. By relocating to Southwest Florida, the Corporation is now closer to the long-term growth of its customer base. In connection with the reincorporation, the Corporation reduced the par value of both its common stock and preferred stock to $0.01. CHARTER CONSOLIDATION During the first quarter of 2001, the Corporation completed its charter consolidation plan which reduced the number of bank charters from eight to three. The Corporation's five Florida banks were merged under First National Bank of Florida and its two Pennsylvania banks were combined under First National Bank of Pennsylvania. The Corporation had previously consolidated its Ohio banks under a single charter, Metropolitan National Bank. In connection with these charter consolidations, the trust operations of First National Bank of Florida were consolidated into the Corporation's national trust company, First National Trust Company. The Corporation incurred pre-tax consolidation expense of $3.2 million arising from legal and accounting fees, consulting fees, data processing conversion charges, early retirement, involuntary separation and related benefit costs. Involuntary separation costs associated with 42 terminated employees totaled $1.4 million of the total consolidation expense. These separation costs have been reflected within the income statement caption salaries and employee benefits. The total amount of separation payments paid during the first six months of 2001 was $1.0 million. The remaining separation costs will be paid in accordance with the contractual terms of the employment and compensation agreements of the terminated employees. RESERVE FOR LEGAL EXPENSES During the first quarter of 2001, the Corporation recorded a pre-tax charge of approximately $4.0 million to cover estimated legal expenses associated with five cases filed against one of the Corporation's subsidiary banks. The plaintiffs allege that a third-party independent administrator misappropriated funds from their individual retirement accounts held by the subsidiary bank. The Corporation established the reserve as a result of developments which occurred immediately prior to March 31, 2001. The Corporation believes this reserve will be sufficient for all costs associated with the litigation, including settlements and adverse judgements. NEW ACCOUNTING STANDARD Financial Accounting Standards Statement (FAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities," requires all derivatives to be recorded on the balance sheet at fair value and establishes standard accounting methodologies for hedging activities. The statement is effective for the Corporation's fiscal year ending December 31, 2001. The adoption of this statement did not have a material impact on the accompanying financial statements. 6
PER SHARE AMOUNTS Per share amounts have been adjusted for common stock dividends, including the 5 percent stock dividend declared on April 23, 2001. Basic earnings per share is calculated by dividing net income, adjusted for preferred stock dividends declared, by the sum of the weighted average number of shares of common stock outstanding. Diluted earnings per common share is calculated by dividing net income by the weighted average number of shares of common stock outstanding, assuming conversion of outstanding convertible preferred stock from the beginning of the year or date of issuance and the exercise of stock options and warrants. Such adjustments to net income and the weighted average number of shares of common stock are made only when such adjustments dilute earnings per share. EARNINGS PER SHARE The following tables set forth the computation of basic and diluted earnings per share (in thousands, except per share data): <TABLE> <CAPTION> Three Months Ended Six Months Ended June 30, June 30, ---------------------- ---------------------- 2001 2000 2001 2000 ---------- ---------- ---------- ---------- <S> <C> <C> <C> <C> BASIC Net income $ 10,964 $ 10,737 $ 17,208 $ 21,381 Less: Preferred stock dividends declared (76) (105) (153) (212) ---------- ---------- ---------- ---------- Earnings applicable to basic earnings per share $ 10,888 $ 10,632 $ 17,055 $ 21,169 ========== ========== ========== ========== Average common shares outstanding 25,564,999 25,365,570 25,538,876 25,352,882 ========== ========== ========== ========== Earnings per share $.43 $.42 $.67 $.84 ==== ==== ==== ==== </TABLE> <TABLE> <CAPTION> Three Months Ended Six Months Ended June 30, June 30, ---------------------- ---------------------- 2001 2000 2001 2000 ---------- ---------- ---------- ---------- <S> <C> <C> <C> <C> DILUTED Earnings applicable to diluted earnings per share $ 10,964 $ 10,737 $ 17,208 $ 21,381 ========== ========== ========== ========== Average common shares outstanding 25,564,999 25,365,570 25,538,876 25,352,882 Series A convertible preferred stock 18,650 26,798 18,650 26,798 Series B convertible preferred stock 374,279 432,882 378,582 448,362 Net effect of dilutive stock options and stock warrants based on the treasury stock method 636,406 343,927 541,611 378,795 ---------- ---------- ---------- ---------- 26,594,334 26,169,177 26,477,719 26,206,837 ========== ========== ========== ========== Earnings per share $.41 $.41 $.65 $.82 ==== ==== ==== ==== </TABLE> 7
CASH FLOW INFORMATION Following is a summary of supplemental cash flow information (in thousands): Six Months Ended June 30 ---------------------- 2001 2000 ---------- ---------- Cash paid for: Interest $71,465 $63,296 Taxes 3,587 3,738 Noncash Investing and Financing Activities: Acquisition of real estate in settlement of loans 1,502 769 Loans granted in the sale of other real estate 578 252 COMPREHENSIVE INCOME The components of comprehensive income, net of related tax, are as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, -------------------- --------------------- 2001 2000 2001 2000 --------- --------- --------- --------- Net income $10,964 $10,737 $17,208 $21,381 Other comprehensive income: Unrealized gains on securities: Unrealized holding gains (losses) arising during the period 1,240 733 4,400 (532) Less: reclassification adjustment for gains included in net income (197) (17) (72) (71) ------- ------- ------- ------- Other comprehensive income 1,043 716 4,328 (603) ------- ------- ------- ------- Comprehensive income $12,007 $11,453 $21,536 $20,778 ======= ======= ======= ======= BUSINESS SEGMENTS The Corporation operates in three reportable segments: community banks, insurance agencies and consumer finance. The Corporation's community bank subsidiaries offer services traditionally offered by full-service commercial banks, including commercial and individual demand and time deposit accounts and commercial, mortgage and individual installment loans. In addition to traditional banking products, the Corporation's community bank subsidiaries offer trust services as well as various alternative products, including securities brokerage and investment advisory services, mutual funds, insurance and annuities. The Corporation's insurance agencies are full-service insurance companies offering all lines of commercial and personal insurance through major carriers. The Corporation's consumer finance subsidiary is involved in making personal installment loans to individuals and purchasing installment sales finance contracts from retail merchants. This activity is funded through the sale of the Corporation's subordinated notes at the finance company's branch offices. The following tables provide financial information for these segments of the Corporation (in thousands). Other items shown in the tables below represent the parent company, other non-bank subsidiaries and eliminations, which are necessary for purposes of reconciling to the consolidated amounts. 8
<TABLE> <CAPTION> At or for the three months Community Insurance Finance All ended June 30, 2001 Banks Agencies Companies Other Consolidated ---------- ---------- ---------- --------- ------------ <S> <C> <C> <C> <C> <C> Interest income $ 69,395 $ 45 $ 6,948 $ (514) $ 75,874 Interest expense 31,421 64 2,191 (383) 33,293 Provision for loan losses 1,552 1,100 2,652 Non-interest income 12,217 6,409 447 977 20,050 Non-interest expense 32,038 5,212 3,016 2,567 42,833 Intangible amortization 389 198 31 618 Income tax expense (credit) 5,262 444 393 (535) 5,564 Net income 10,950 536 664 (1,186) 10,964 Core operating earnings 11,900 536 664 95 13,195 Total assets 3,885,402 28,936 145,585 8,772 4,068,695 </TABLE> <TABLE> <CAPTION> At or for the three months Community Insurance Finance All ended June 30, 2000 Banks Agencies Companies Other Consolidated ---------- ---------- ---------- --------- ------------ <S> <C> <C> <C> <C> <C> Interest income $ 69,479 $ 40 $ 5,991 $ (1,413) $ 74,097 Interest expense 32,617 37 1,713 (1,053) 33,314 Provision for loan losses 2,101 960 3,061 Non-interest income 9,180 4,438 403 545 14,566 Non-interest expense 28,916 3,739 2,625 786 36,066 Intangible amortization 446 32 11 489 Income tax expense 4,718 155 389 (266) 4,996 Net income 9,861 515 696 (335) 10,737 Core operating earnings 9,861 515 696 (335) 10,737 Total assets 3,853,022 15,726 125,616 (6,300) 3,988,064 </TABLE> * Core operating earnings exclude merger-related costs of $2.2 million, on an after-tax basis, for the three months ended June 30, 2001. 9
<TABLE> <CAPTION> At or for the six months Community Insurance Finance All ended June 30, 2001 Banks Agencies Company Other Consolidated ---------- ---------- ---------- --------- ------------ <S> <C> <C> <C> <C> <C> Interest income $ 140,481 $ 99 $ 13,871 $ (1,337) $ 153,114 Interest expense 66,196 147 4,522 (958) 69,907 Provision for loan losses 2,693 2,200 4,893 Non-interest income 22,247 13,405 897 2,116 38,665 Non-interest expense 68,230 10,181 5,948 5,933 90,292 Intangible amortization 783 393 64 1,240 Income tax expense (credit) 7,862 1,132 755 (1,510) 8,239 Net income 16,964 1,651 1,279 (2,686) 17,208 Core operating earnings 21,447 1,651 1,279 (140) 24,237 Total assets 3,885,402 28,936 145,585 8,772 4,068,695 </TABLE> <TABLE> <CAPTION> At or for the six months Community Insurance Finance All ended June 30, 2000 Banks Agencies Comapny Other Consolidated ---------- ---------- ---------- --------- ------------ <S> <C> <C> <C> <C> <C> Interest income $ 135,422 $ 65 $ 12,005 $(1,991) $ 145,501 Interest expense 62,642 67 3,355 (1,569) 64,495 Provision for loan losses 4,199 1,920 6,119 Non-interest income 17,736 9,417 753 1,408 29,314 Non-interest expense 58,034 7,210 5,322 1,389 71,955 Intangible amortization 888 48 22 958 Income tax expense (credit) 8,699 690 761 (243) 9,907 Net income 18,696 1,467 1,378 (160) 21,381 Core operating earnings 18,696 1,467 1,378 (160) 21,381 Total assets 3,853,022 15,726 125,616 (6,300) 3,988,064 </TABLE> * Core operating earnings exclude consolidation expenses of $2.1 million and merger-related and other non-recurring costs of $5.0 million, on an after-tax basis, for the six months ended June 30, 2001. 10
PART I ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. FINANCIAL INFORMATION SUMMARY Core operating earnings for the first six months of 2001 increased to $24.2 million from $21.4 million for the first six months of 2000. Basic core operating earnings per share were $.94 and $.84 for the six months ended June 30, 2001 and 2000, respectively, while diluted core operating earnings per share were $.92 and $.82 for those same periods. Core operating earnings consist of net income adjusted for non- recurring items. Non-recurring items incurred during the first six months of 2001 included charter consolidation expenses of $2.1 million and merger related and other non-recurring costs of $5.0 million, net of tax. Including these costs, net income was $17.2 million for the first six months of 2001, resulting in diluted earnings per share of $.65. There were no non-recurring items during the first six months of 2000. Highlights for the first six months of 2001 include: o A return on average assets of 1.19% and a return on average equity of 14.14%, both based on core operating earnings. o An increase in non-interest income of $9.4 million, including a 28.1% or $6.9 million increase in fee income, which consists of service charges, insurance commissions and trust income. o A 6.1% increase in average earning assets. o Continued strong asset quality. o Completion of affiliations with Ostrowsky & Associates, Inc., James T. Blalock, OneSource Group, Inc. and Citizens Community Bank of Florida. o Completion of consolidation of charters which is expected to increase after- tax earnings on an annualized basis by approximately $2.9 million, or $0.12 per share, by the year 2002. 11
FIRST SIX MONTHS OF 2001 AS COMPARED TO FIRST SIX MONTHS OF 2000: The following table provides information regarding the average balances and yields and rates on interest earning assets and interest bearing liabilities (dollars in thousands): <TABLE> <CAPTION> Six Months Ended June 30 2001 2000 ---------------------------- ---------------------------- Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate ---------- -------- ------ ---------- -------- ------ <S> <C> <C> <C> <C> <C> <C> ASSETS Interest earning assets: Interest bearing deposits with banks $ 4,437 $ 74 3.34% $ 3,489 $ 133 7.62% Federal funds sold 131,879 3,206 4.86 10,005 292 5.84 Securities: Taxable 457,995 14,187 6.25 441,078 13,878 6.33 Non-taxable (1) 43,570 1,418 6.51 51,185 1,630 6.37 Loans (1) (2) 3,086,096 135,336 8.84 3,003,345 130,621 8.75 ---------- -------- ---------- -------- Total interest earning assets 3,723,977 154,221 8.35 3,509,102 146,554 8.40 ---------- -------- ---------- -------- Cash and due from banks 126,218 127,679 Allowance for loan losses (40,525) (38,803) Premises and equipment 113,965 112,232 Other assets 179,351 159,396 ---------- ---------- $4,102,986 $3,869,606 ========== ========== LIABILITIES Interest bearing liabilities: Deposits: Interest bearing demand $ 560,811 $ 5,983 2.15 $ 528,362 $ 6,030 2.30 Savings 833,133 10,983 2.66 795,119 11,139 2.82 Other time 1,415,430 42,215 6.01 1,319,148 35,832 5.46 Short-term borrowings 275,220 6,870 5.03 285,374 7,804 5.50 Long-term debt 113,430 3,856 6.80 114,951 3,690 6.42 ---------- -------- ---------- ------- Total interest bearing liabilities 3,198,024 69,907 4.41 3,042,954 64,495 4.26 ---------- -------- ---------- -------- Non-interest bearing demand deposits 486,393 451,268 Other liabilities 72,937 63,147 ---------- ---------- 3,757,354 3,557,369 ---------- ---------- STOCKHOLDERS' EQUITY 345,632 312,237 ---------- ---------- $4,102,986 $3,869,606 ========== ========== Net interest earning assets $ 525,953 $ 466,148 ========== ========== Net interest income $ 84,314 $ 82,059 ======== ======== Net interest spread 3.94% 4.14% ===== ===== Net interest margin (3) 4.57% 4.70% ===== ===== </TABLE> (1) The amounts are reflected on a fully taxable equivalent basis using the federal statutory tax rate of 35% adjusted for certain federal tax preferences. (2) Average balance includes non-accrual loans. Loans consist of average total loans less average unearned income. The amount of loan fees included in interest income on loans is immaterial. (3) Net interest margin is calculated by dividing the difference between total interest earned and total interest paid by average interest earning assets. 12
Net interest income, the Corporation's primary source of earnings, is the amount by which interest and fees generated by interest earning assets, primarily loans and securities, exceed interest expense on deposits and borrowed funds. During the first six months of 2001, net interest income, on a fully taxable equivalent basis, totaled $84.3 million, as compared to $82.1 million for the first six months of 2000. Net interest income consisted of interest income of $154.2 million and interest expense of $69.9 million for the first six months of 2001 compared to $146.6 million and $64.5 million for each, respectively, for the first six months of 2000. Net interest margin decreased from 4.70% at June 30, 2000 to 4.57% at June 30, 2001. The yield on total interest earning assets decreased by 5 basis points and the rate paid on interest bearing liabilities increased by 15 basis points. Although the Corporation has experienced margin compression, net interest income has risen as earning assets increased by 6.1%. There is a possibility that the compression could continue, as further discussed within the "Liquidity and Interest Rate Sensitivity" section of this report. The following table sets forth certain information regarding changes in net interest income attributable to changes in the volumes and rates of interest earning assets and interest bearing liabilities for the six months ending June 30, 2001 as compared to the six months ending June 30, 2000 (in thousands): Volume Rate Net ------- ------- ------- INTEREST INCOME Interest bearing deposits with banks $ 55 $ (114) $ (59) Federal funds sold 2,955 (41) 2,914 Securities: Taxable 461 (152) 309 Non-taxable (249) 37 (212) Loans 3,433 1,282 4,715 ------- ------- ------- 6,655 1,012 7,667 ------- ------- ------- INTEREST EXPENSE Deposits: Interest bearing demand 759 (806) (47) Savings 835 (991) (156) Other time 2,682 3,701 6,383 Short-term borrowings (275) (659) (934) Long-term debt (48) 214 166 ------- ------- ------- 3,953 1,459 5,412 ------- ------- ------- NET CHANGE $ 2,702 $ (447) $ 2,255 ======= ======= ======= The amount of change not solely due to rate or volume changes was allocated between the change due to rate and the change due to volume based on the net size of the rate and volume changes. Interest income on loans, on a fully taxable equivalent basis, increased 3.4% from $130.6 million for the six months ended June 30, 2000 to $135.3 million for the six months ended June 30, 2001. This increase was the result of an increase in average loans of 2.8% and an increase of 9 basis points in the average yield over the same period last year. Interest expense on deposits increased $6.2 million or 11.7% for the six months ended June 30, 2001, compared to the same period of 2000, as average interest bearing deposits rose 6.3% over this period. The average balances in time deposits, savings deposits and interest bearing demand deposits increased by $96.3 million, $38.0 million and $32.4 million, respectively. The average balance in non-interest bearing demand deposits increased by $35.1 million. Interest expense on short-term borrowings decreased $934,000, as the average balance of short-term borrowings decreased $10.2 million and the rate paid decreased by 47 basis points. Interest expense on long-term debt increased 13
$166,000 from June 30, 2000 despite a $1.5 million decrease in average long-term debt due to an increase in the rate paid of 38 basis points. The provision for loan losses charged to operations is a direct result of management's analysis of the adequacy of the allowance for loan losses which takes into consideration factors, including qualitative factors, relevant to the collectibility of the existing portfolio. The provision for loan losses was $4.9 million for the first six months of 2001, as compared to $6.1 million for the first six months of 2000. The decrease reflects the Corporation's continued strong asset quality. The allowance for loan losses as a percentage of total loans was 1.30% at June 30, 2001 and 1.28% at June 30, 2000. Non-interest income increased 31.9% from $29.3 million during the first six months of 2000 to $38.7 million during the first six months of 2001. Insurance commissions and fees, service charges and trust income increased $6.9 million or 28.1% over the first six months of 2000. These higher levels of fee income are attributable to insurance agency purchases that were consummated after June 30, 2000, increases in deposits and the Corporation's continued expansion into annuity and mutual fund sales and trust services. Additionally, gains on the sale of loans increased $2.2 million during this same period. Non-interest expenses increased 25.5% from $72.9 million during the first six months of 2000 to $91.5 million during the first six months of 2001. This increase was primarily attributable to non-recurring items during the first six months of 2001, including consolidation expenses of $3.2 million, a $4.0 million legal reserve related to a defalcation by a third party IRA administrator and merger related costs of $3.6 million (see Notes to Consolidated Financial Statements). Excluding these items, non-interest expenses totaled $80.7 million for the first six months of 2001. In addition to the previously mentioned non-recurring items, non-interest expenses increased due to insurance agency purchases that were consummated after June 30, 2000. Excluding the impact of the insurance agency purchases, non-interest expenses would have increased by $4.7 million or 6.4% on a year over year basis. The Corporation's income tax expense was $8.2 million for the first six months of 2001 compared to $9.9 million for the same period of 2000. The effective tax rate of 32.4% for the six months ended June 30, 2001 was lower than the 35.0% federal statutory tax rate due to the tax benefits resulting from tax-exempt instruments and excludable dividend income. SECOND QUARTER OF 2001 AS COMPARED TO SECOND QUARTER OF 2000: During the second quarter of 2001, net interest income increased $1.8 million or 4.4% over the second quarter of 2000. Total interest income increased $1.8 million, or 2.4%, accounting for the entire increase in net interest income. This increase was primarily the result of an increase in interest income on federal funds sold. Total interest expense remained constant at $33.3 million. However, interest expense on deposits increased $1.0 million or 3.7% due to increases in the level of deposits, while interest expense on borrowings decreased $1.0 million or 17.2%, due to a decrease in short-term borrowings. The provision for loan losses totaled $2.7 million for the second quarter of 2001, as compared to $3.1 million for the second quarter of 2000. 14
Non-interest income increased 37.6% during the second quarter of 2001 compared to the same period of 2000, primarily due to a $3.7 million or 29.9% increase in insurance commissions and fees, service charges and trust income. These higher levels of fee income are attributable to growth in insurance, increases in deposits and the Corporation's continued expansion into annuity and mutual fund sales and trust services. Additionally, gains on the sale of loans increased $1.4 million during this same period. Non-interest expenses increased 18.8% during the second quarter of 2001, compared to the second quarter of 2000, primarily due to non-recurring merger related costs of $3.3 million during the second quarter of 2001. Excluding these items, non- interest expenses totaled $40.2 million for the second quarter of 2001. In addition to the previously mentioned non-recurring item, non-interest expenses increased by $1.6 million from insurance agency purchases. LIQUIDITY AND INTEREST RATE SENSITIVITY The Corporation monitors its liquidity position on an ongoing basis to assure that it is able to meet the need for funds at all times. Given the monetary nature of its assets and liabilities and the source of liquidity provided by the available for sale securities portfolio, the Corporation has sufficient sources of funds available as needed to meet its routine, operational cash needs. Additionally, the Corporation has external sources of funds available should it desire to use them. These include approved lines of credit with several major domestic banks, of which $78.0 million was unused at June 30, 2001. To further meet its liquidity needs, the Corporation also has access to the Federal Home Loan Bank and the Federal Reserve Bank, as well as other funding sources. The financial performance of the Corporation is at risk from interest rate fluctuations. This interest rate risk arises due to differences between the amount of interest-earning assets and interest-bearing liabilities subject to repricing over a period of time, the difference between the change in various interest rates and the embedded options in certain financial instruments. The Board of Directors has established an Asset/Liability Policy in order to achieve and maintain earnings performance consistent with long-term goals while maintaining acceptable levels of interest rate risk, a "well-capitalized" balance sheet and adequate levels of liquidity. This policy designates the Asset/Liability Committee (ALCO) as the body responsible for meeting this objective. The Corporation utilizes an asset/liability model to support its balance sheet strategies. The Corporation uses gap analysis, net interest income simulations and the economic value of equity to measure its interest rate risk. The gap analysis which follows measures the interest rate risk of the Corporation by comparing the difference between the amount of interest-earning assets and interest- bearing liabilities subject to repricing over a period of time. The cumulative one-year gap ratio was 1.05 at June 30, 2001, as compared to .88 at June 31, 2000. A ratio of more than one indicates a net-asset repricing position and, conversely, a ratio of less that one indicates a net-liability repricing position during the subsequent twelve months. 15
Following is the gap analysis as of June 30, 2001 (in thousands): <TABLE> <CAPTION> Within 4-12 1-5 Over 3 Months Months Years 5 Years Total ---------- --------- ---------- ----------- ---------- <S> <C> <C> <C> <C> <C> INTEREST EARNING ASSETS Interest bearing deposits with banks $ 5,016 $ 1,824 $ 127 $ 6,967 Federal funds sold 73,983 73,983 Securities 70,974 99,811 $ 266,579 69,153 506,517 Loans, net of unearned 902,706 691,476 1,245,717 237,604 3,077,503 ---------- --------- ---------- ----------- ---------- 1,052,679 793,111 1,512,296 306,884 3,664,970 Other assets 403,725 403,725 ---------- --------- ---------- ----------- ---------- $1,052,679 $ 793,111 $1,512,296 $ 710,609 $4,068,695 ========== ========= ========== =========== ========== INTEREST BEARING LIABILITIES Deposits: Interest checking $ 124,817 $ 431,734 $ 556,551 Savings 350,905 467,620 818,525 Time deposits 364,542 $ 668,395 $ 352,192 1,385,129 Borrowings 227,315 29,174 42,675 78,705 377,869 ---------- --------- ---------- ----------- ---------- 1,067,579 697,569 394,867 978,059 3,138,074 Other liabilities 577,719 577,719 Stockholders' equity 352,902 352,902 ---------- --------- ---------- ----------- ---------- $1,067,579 $ 697,569 394,867 $ 1,908,680 $4,068,695 ========== ========= ========== =========== ========== PERIOD GAP $ (14,900) $ 95,542 $1,117,429 $(1,198,071) ========== ========= ========== =========== CUMULATIVE GAP $ (14,900) $ 80,642 $1,198,071 ========== ========= ========== CUMULATIVE GAP AS A PERCENT OF TOTAL ASSETS (.37)% 1.98% 29.45% ========== ========= ========== RATE SENSITIVE ASSETS/RATE SENSITIVE LIABILITIES (CUMULATIVE) .99 1.05 1.55 1.17 ========== ========= ========== ========== </TABLE> Net interest income simulations measure the exposure to short-term earnings from changes in market rates of interest in a more rigorous and explicit fashion. The Corporation's current financial position is combined with assumptions regarding future business to calculate net interest income under varying hypothetical interest rate scenarios. The economic value of equity (EVE) measures the Corporation's long-term earnings exposure from changes in market rates of interest. EVE is defined as the present value of assets minus the present value of liabilities at a point in time. A decrease in EVE due to a specified rate change indicates a decline in the long-term earnings capacity of the balance sheet assuming that the rate change remains in effect over the life of the balance sheet. Both net interest income simulations and EVE capture balance sheet risks (such as changing embedded options) that a single gap analysis fails to expose. The following table presents an analysis of the potential sensitivity of the Corporation's annual net interest income and EVE to sudden and sustained 200 basis point changes in market rates: 16
JUNE 30, -------------------- 2001 2000 --------- --------- Net interest income change (12 months): - 200 basis points (3.2)% 2.3 % + 200 basis points (0.3)% (4.5)% Economic value of equity: - 200 basis points (5.8)% (0.5)% + 200 basis points (2.7)% (6.1)% The preceding measurements assumed no change in asset/liability composition. The disclosed measures are well within the limits set forth in the Corporation's Asset/Liability Policy. As such, the measures do not necessarily reflect the actions the ALCO may undertake in response to certain changes in interest rates. The computation of the prospective effects of hypothetical interest rate changes requires numerous assumptions regarding characteristics of new business and the behavior of existing positions. These business assumptions are based upon the Corporation's experience, business plans and published industry experience. Key assumptions employed in the model include asset prepayment speeds, the relative price sensitivity of certain assets and liabilities and the expected life of non-maturity deposits. Because these assumptions are inherently uncertain, actual results will differ from simulated results. CAPITAL RESOURCES The assessment of capital adequacy depends on a number of factors such as asset quality, liquidity, earnings performance, changing competitive conditions and economic forces. The Corporation seeks to maintain a strong capital base to support its growth and expansion activities, to provide stability to current operations and to promote public confidence. Capital adequacy is further discussed in the "Regulatory Matters" section of this report. Capital management is a continuous process. Since December 31, 2000, stockholders' equity has increased $8.4 million as a result of earnings retention. For the six months ended June 30, 2001, the return on average equity was 14.14% and the dividend payout ratio was 36.08%, both based on core operating earnings. Book value per common share was $13.62 at June 30, 2001, compared to $12.42 at June 30, 2000. LOANS Following is a summary of loans (dollars in thousands): JUNE 30, DECEMBER 31, 2001 2000 ---------- ------------ Real estate: Residential $1,154,764 $1,162,568 Commercial 886,452 845,136 Construction 215,479 204,267 Installment loans to individuals 304,884 341,436 Commercial, financial and agricultural 398,664 401,983 Lease financing 165,322 204,187 Unearned income (52,835) (62,744) ---------- ---------- $3,072,730 $3,096,833 ========== ========== 17
NON-PERFORMING ASSETS Non-performing assets include non-performing loans and other real estate owned. Non-performing loans include non-accrual loans and restructured loans. Non-accrual loans represent loans on which interest accruals have been discontinued. It is the Corporation's policy to discontinue interest accruals when principal or interest is due and has remained unpaid for 90 days or more unless the loan is both well secured and in the process of collection. When a loan is placed on non-accrual status, all unpaid interest is reversed. Non-accrual loans may not be restored to accrual status until all delinquent principal and interest has been paid or the loan becomes both well secured and in the process of collection. Consumer installment loans are generally charged off against the allowance for loan losses upon reaching 90 to 180 days past due, depending on the installment loan type. Restructured loans are loans in which the borrower has been granted a concession on the interest rate or the original repayment terms due to financial distress. Non-performing loans are closely monitored on an ongoing basis as part of the Corporation's loan review and work-out process. The potential risk of loss on these loans is evaluated by comparing the loan balance to the fair value of any underlying collateral or the present value of projected future cash flows. Losses are recognized where appropriate. Following is a summary of non-performing assets (dollars in thousands): JUNE 30, DECEMBER 31, 2001 2000 ------------ ------------ Non-performing assets: Non-accrual loans $11,827 $10,392 Restructured loans 3,205 2,810 ------- ------- Total non-performing loans 15,032 13,202 Other real estate owned 4,914 4,786 ------- ------- Total non-performing assets $19,946 $17,988 ======= ======= Asset quality ratios: Non-performing loans as percent of total loans .49% .43% Non-performing assets as percent of total assets .49% .44% ALLOWANCE FOR LOAN LOSSES Management's analysis of the allowance for loan losses includes the evaluation of the loan portfolio based on internally generated loan review reports and the historical loss experience of the remaining balances of the various homogeneous loan pools which comprise the loan portfolio. Specific factors which are evaluated include the previous loan loss experience with the customer, the status of past due interest and principal payments on the loan, the collateral position of the loan, the quality of financial information supplied by the borrower and the general financial condition of the borrower. Historical loss experience on the remaining portfolio segments is considered in conjunction with the current status of economic conditions, loan loss trends, delinquency and non-accrual trends, credit administration and concentrations of credit risk. 18
Following is a summary of changes in the allowance for loan losses and selected ratios (dollars in thousands): Three Months Ended Six Months Ended June 30, June 30, ------------------- ----------------- 2001 2000 2001 2000 -------- -------- -------- -------- Balance at beginning of period $40,318 $38,719 $40,373 $37,197 Charge-offs (3,615) (2,547) (6,446) (4,506) Recoveries 445 439 980 862 ------- ------- ------- ------- Net charge-offs (3,170) (2,108) (5,466) (3,644) Provision for loan losses 2,652 3,061 4,893 6,119 ------- ------- ------- ------- Balance at end of period $39,800 $39,672 $39,800 $39,672 ======= ======= ======= ======= Allowance for loan losses to: Total loans, net of unearned income 1.30% 1.28% Non-performing loans 264.77% 357.47% REGULATORY MATTERS Quantitative measures established by regulators to ensure capital adequacy require the Corporation and its banking subsidiaries to maintain minimum amounts and ratios of total and tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and of tier 1 capital to average assets (as defined). As of March 31, 2001, the Corporation and each of its banking subsidiaries have been categorized as "well capitalized" under the regulatory framework for prompt corrective action. Management believes, as of June 30, 2001, that the Corporation and each of its banking subsidiaries are all "well capitalized". Following are capital ratios as of June 30, 2001 for the Corporation (dollars in thousands): <TABLE> <CAPTION> Well Capitalized Minimum Capital Actual Requirements Requirements ----------------- ----------------- ----------------- Amount Ratio Amount Ratio Amount Ratio --------- ------- --------- ------- --------- ------- <S> <C> <C> <C> <C> <C> <C> Total Capital $358,053 11.7% $307,394 10.0% $245,916 8.0% (to risk-weighted assets) Tier 1 Capital 318,270 10.4% 184,437 6.0% 122,958 4.0% (to risk-weighted assets) Tier 1 Capital 318,270 7.8% 204,082 5.0% 163,266 4.0% (to average assets) </TABLE> The Corporation and its banking subsidiaries are subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and discretionary actions by regulators that, if undertaken, could have a direct material effect on the Corporation's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation and its banking subsidiaries must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Corporation's and banking subsidiaries' capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK. The information called for by this item is provided under the caption "Liquidity and Interest Rate Sensitivity" under Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations. 19
PART II ITEM 1. LEGAL PROCEEDINGS During the first quarter of 2001, the Corporation established a legal reserve of approximately $4.0 million associated with individual retirement accounts at one of its banking subsidiaries. Various cases have been filed in the 20th Judicial Circuit and for Lee County, Florida, naming the subsidiary of the Corporation as a co-defendant. The plaintiffs allege that a third-party independent administrator misappropriated funds from their individual retirement accounts held with the banking subsidiary (see Notes to Consolidated Financial Statements). The Corporation and persons to whom the Corporation may have indemnification obligations, in the normal course of business, are subject to various pending and threatened lawsuits in which claims for monetary damages are asserted. Management, after consultation with outside legal counsel, does not at the present time anticipate the ultimate aggregate liability, arising out of such pending and threatened lawsuits will have a material adverse effect on the Corporation's financial position. At the present time, management is not in a position to determine whether any pending or threatened litigation will have a material adverse effect on the Corporation's results of operation in any future reporting period. ITEM 2. CHANGES IN SECURITIES Not applicable ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of Shareholders of F.N.B. Corporation was held on April 23, 2001. Proxies were solicited pursuant to Section 14(a) of the Securities and Exchange Act of 1934 and there was no solicitation in opposition to the Corporation's solicitations. The Corporation's 2001 Incentive Plan was approved with 12,607,196 shares voted for, 3,040,417 shares voted against and 347,586 abstentions. The Corporation's Agreement and Plan of Merger to reincorporate in the state of Florida was approved with 14,360,726 shares voted for, 837,912 shares voted against and 191,424 abstentions. All of the Corporation's nominees for directors as listed in the proxy statement were elected with the following vote: Shares Voted Shares "For" "Withhold" ------------ -------------- Alan C. Bomstein 17,781,727 543,534 Charles T. Cricks 17,778,543 547,717 Henry M. Ekker 17,777,460 548,801 James S. Lindsay 17,781,314 544,947 Paul P. Lynch 17,776,009 550,251 20
ITEM 5. OTHER INFORMATION The Secretary of the Corporation must receive written notice of any proposal submitted by a shareholder of the Corporation for consideration at the Annual Meeting of Shareholders on or prior to the date which is 120 days prior to the date on which the Corporation first mailed its proxy materials for the prior year's Annual Meeting of Shareholders. Accordingly, any shareholder proposal must be submitted to the Corporation by November 19, 2001 to be considered at the 2002 Annual Meeting of Shareholders. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 3.1 Articles of Incorporation of the Corporation as currently in effect. (incorporated by reference to Exhibit 4.1 of the Corporation's Form 8-K filed on June 1, 2001). 3.2 By-Laws of the Corporation as currently in effect. (incorporated by reference to Exhibit 4.2 of the Corporation's Form 8-K filed on June 1, 2001). 10.15 Employment agreement between F.N.B. Corporation and Gary L. Tice. (filed herewith). (b) Reports on Form 8-K A report on Form 8-K, dated June 1, 2001, was filed by the Corporation to announce that the reincorporation from the Commonwealth of Pennsylvania to the State of Florida was effective June 1, 2001. The Form 8-K also included the Articles of Incorporation and By-laws for the Corporation. A report on Form 8-K, dated June 14, 2001, was filed by the Corporation to announce the Agreement and Plan of Merger entered into with Promistar Financial Corporation on June 13, 2001. 21
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. F.N.B. CORPORATION ------------------------------------------ (Registrant) Dated: August 13, 2001 /s/Gary L. Tice --------------------------- ------------------------------------------ Gary L. Tice President and Chief Executive Officer (Principal Executive Officer) Dated: August 13, 2001 /s/John D. Waters --------------------------- ------------------------------------------ John D. Waters Vice President and Chief Financial Officer (Principal Financial Officer) 22