EXHIBIT 99.1
[F.N.B. LOGO]
October 1, 2003
Dear Investor:
F.N.B. Corporation has recently made a strategic decision to spin off
its Florida operations to its shareholders as a new company. The spin-off will
enable each company to focus solely on its geographic market, allow the
investment community to more easily value each business, and eliminate certain
costs associated with the centralized management of businesses operating in
different geographic markets.
We are requesting your consent to amend the Indenture governing the
F.N.B. subordinated note that you hold to permit the spin-off. To provide a
consent, please take a moment to complete, sign and return the enclosed blue
Consent Form. You may return the Consent Form to us either by mail, in the
enclosed postage-paid return envelope, or by facsimile transmission to the
number shown on the Consent Form. If a sufficient amount of consents are not
received to amend the Indenture to permit the spin-off, F.N.B. plans to redeem
the notes in accordance with the terms of the Indenture.
We recommend that you carefully review the enclosed Consent
Solicitation Statement, which provides additional information about us, the
spin-off and our solicitation of consents to amend the Indenture.
If you have any questions regarding this matter, please feel free to
call Douglas J. Solock, Senior Vice President, Secretary and Treasurer of our
Regency Finance Company subsidiary, at (724) 983-3525.
Very truly yours,
/s/ Gary L. Tice
Gary L. Tice
President and Chief Executive Officer
F.N.B. Corporation
[FNB LOGO]
CONSENT SOLICITATION STATEMENT
Solicitation of Consents to
Amend the Indenture Governing the
Subordinated Notes of F.N.B. Corporation
This Consent Solicitation Statement and the accompanying Consent Form
are being furnished by F.N.B. Corporation (the "Company") to certain of the
holders of the Company's subordinated notes to solicit consents to the adoption
of a proposed amendment to the Indenture dated as of May 15, 1992 and amended as
of January 1, 1994, between the Company and J.P. Morgan Trust Company, National
Association, as trustee (the "Trustee"), pursuant to which the notes were issued
(the "Indenture").
As you may be aware, the Company is planning to spin off its Florida
operations to its shareholders through the distribution to its shareholders of a
newly formed company that will hold the Florida operations. Following the
spin-off, FNB and the newly formed company will be separate, unrelated
companies. The Company is soliciting your consent to amend the Indenture
governing the subordinated notes of the Company that you hold to permit the
spin-off (the "Amendment").
Each of the outstanding series of notes under the Indenture will vote
separately on the Amendment. Approval of the Amendment by a series requires the
consent of holders of a majority of the principal amount of such series. The
Amendment provides that the spin-off will be permitted under the Indenture so
long as the Company redeems all notes of any series that does not consent to the
Amendment by the required majority vote. Accordingly, the Company plans to
redeem all notes of any series that do not consent to the Amendment.
This document contains information regarding the proposed Amendment and
the consent solicitation. We urge you to read this document carefully.
THE COMPANY REQUESTS THAT YOU PROMPTLY COMPLETE AND RETURN THE ENCLOSED
BLUE CONSENT FORM. Consents should be sent to Regency Finance Company at the
address set forth on the back cover of this Consent Solicitation Statement. You
are not being asked to and you should not tender or deliver your notes.
This Consent Solicitation Statement is first being
mailed to noteholders on or about October 3, 2003
TABLE OF CONTENTS
Page
----
THE COMPANY...............................................................1
THE SPIN-OFF..............................................................3
THE PROPOSED AMENDMENT....................................................4
THE CONSENT SOLICITATION..................................................5
WHERE YOU CAN FIND ADDITIONAL INFORMATION.................................8
Appendix A - Form of Supplemental Indenture
Appendix B - Unaudited Pro Forma Condensed Consolidated Financial Statements
(i)
THE COMPANY
GENERAL
F.N.B. Corporation (the "Company") was formed in 1974 and is a
financial services holding company headquartered in Naples, Florida. The Company
provides a broad range of financial services to its customers through its
banking and other financial services affiliates with offices in Florida,
Pennsylvania, Ohio and Tennessee. The Company's main office is located at 2150
Goodlette Road North, Naples, Florida, 34102, and its telephone number is
1-800-262-7600. As of June 30, 2003, the Company had $8.3 billion in
consolidated assets, $6.1 billion in total deposits and 189 full-service banking
offices.
The Company provides a full range of financial services through its
subsidiaries, principally to consumers and small- to medium-size businesses in
its market areas. The Company's business strategy has been to focus primarily on
providing quality, community-based financial services adapted to the needs of
each of the markets it serves. The Company has emphasized its community
orientation by preserving local advisory boards of directors and by allowing
local management certain autonomy in decision-making, enabling them to respond
to customer requests more quickly and concentrate on transactions within its
market areas. While the Company has generally sought to preserve decision-making
at a local level, it has established centralized legal, loan review, accounting,
investment, audit, loan operations and data processing functions. The
centralization of these processes has enabled the Company to maintain consistent
quality of these functions and to achieve certain economies of scale.
The Company's lending philosophy is to minimize credit losses by
following strict credit approval standards (which include independent analysis
of realizable collateral value), diversifying its loan portfolio by industry and
borrower and conducting ongoing review and management of its loan portfolio. The
Company is an active residential mortgage lender, and its commercial loans are
generally to established businesses within its market area. The Company does not
have a significant amount of construction loans and it has no highly leveraged
transaction loans.
No material portion of the Company's deposits has been obtained from a
single or small group of customers, and the loss of any customer's deposits or a
small group of customers' deposits would not have a material adverse effect on
the Company's business. The majority of the deposits held by each of the
Company's bank subsidiaries have been generated within the respective
subsidiary's market area. As of June 30, 2003, the Company did not have any
brokered deposits.
In addition to community banking and consumer finance activities, the
Company offers a full range of asset management, investment services, mutual
funds, annuities and a complete line of insurance products.
As of June 30, 2003, the Company and its subsidiaries had 2,178
full-time employees and 629 part-time employees.
The following table sets forth information as of June 30, 2003 for the
Company's principal subsidiaries, including the year established and location of
principal office for each.
TOTAL TOTAL NUMBER OF
ASSETS DEPOSITS OFFICES
---------- ---------- ----------
(dollars in thousands)
COMMUNITY BANK SUBSIDIARIES:
First National Bank of Pennsylvania (Est. 1864)
Hermitage, Pennsylvania .......................... $4,428,660 $3,385,192 128
First National Bank of Florida (Est. 1988)
Naples, Florida .................................. 2,874,882 2,297,823 43
Southern Exchange Bank (Est. 1923)
Tampa, Florida ................................... 759,948 443,342 18
---------- ---------- ----------
$8,063,490 $6,126,357 189
========== ========== ==========
CONSUMER FINANCE SUBSIDIARY:
Regency Finance Company (Est. 1927)
Hermitage, Pennsylvania .......................... $ 148,408
==========
INSURANCE AGENCY SUBSIDIARY:
Roger Bouchard Insurance, Inc. (Est. 1948)
Clearwater, Florida .............................. $ 35,393
==========
TRUST SUBSIDIARY:
First National Trust Company (Est. 1934)
Naples, Florida .................................. $ 6,022
==========
At June 30, 2003, our only significant off-balance sheet arrangements
were commitments to extend credit and standby letters of credit which involve
certain elements of credit risk in excess of the amount stated in our
consolidated balance sheet. At June 30, 2003, our subsidiaries had an aggregate
of $1.1 billion and $66.8 million of unfunded commitments and standby letters of
credit, respectively.
OPERATIONS OF THE BANK SUBSIDIARIES
The Company's 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 Company's bank
subsidiaries also offer various alternative investment products including mutual
funds and annuities.
In addition, First National Trust Company provides a broad range of
personal and corporate fiduciary services, including the administration of
decedent and trust estates. As of June 30, 2003, the market value of
corporate-wide trust assets under management totaled $1.9 billion.
OPERATIONS OF THE CONSUMER FINANCE SUBSIDIARY
The Company's consumer finance subsidiary, Regency Finance Company, is
involved principally in making personal installment loans to individuals and
purchasing installment sales finance contracts from retail merchants. Regency
also acts as the paying agent and sales agent with respect to notes issued under
the Indenture.
2
OPERATIONS OF THE INSURANCE AGENCY
Roger Bouchard Insurance is a full-service agency that offers all lines
of commercial and personal insurance through major carriers.
OTHER SUBSIDIARIES
The Company has four other subsidiaries, Penn-Ohio Life Insurance
Company ("Penn-Ohio"), First National Corporation ("FNC"), First National
Management Corporation ("FNMC"), and F.N.B. Building Corporation ("F.N.B.
Building"). Also, the Company's community bank subsidiaries and consumer finance
subsidiary own Customer Service Center of F.N.B., L.L.C. ("Customer Service").
Penn-Ohio underwrites, as a reinsurer, credit life and accident and health
insurance sold by the Company's subsidiaries. FNC and FNMC hold equity
securities and other assets for the Company. F.N.B. Building owns real estate
that is leased to the Company's subsidiaries, and Customer Service provides data
processing and other services to the Company's subsidiaries.
THE SPIN-OFF
On July 10, 2003, the Company announced that its Board of Directors had
approved a plan to divide the Company into two separate public companies. The
plan will be consummated by spinning off the Florida operations of the Company,
including First National Bank of Florida, to the Company's shareholders through
a tax-free distribution. The spin-off is subject to regulatory approvals.
Following the spin-off, the Company will continue to own the current
Pennsylvania operations of the Company, including First National Bank of
Pennsylvania and Regency Finance Company. The Company presently expects to
complete the spin-off during January 2004. Following the spin-off, the notes
will continue to be the obligation of the Company, and the spun off company will
have no obligation with respect to the notes.
The businesses to be spun off represented approximately 44.4% of the
Company's consolidated assets and 42.3% of the Company's consolidated net
interest income and non-interest income as of and for the six months ended June
30, 2003. For pro forma financial information of the Company reflecting the
spin-off, please see Appendix B hereto.
The spin-off is not conditioned on the receipt of any specified level
of consents to the Amendment.
3
THE PROPOSED AMENDMENT
Section 1007 of the Indenture generally prohibits the Company from
disposing of any of the Company's banking subsidiaries that has total assets in
an amount exceeding 15% of the total assets of all of the Company's banking
subsidiaries combined, unless the Company receives fair market value
consideration in connection with such disposition. In connection with the
spin-off, the Company will contribute to the company to be spun off all of the
capital stock of First National Bank of Florida, which had total assets
(including the assets of Southern Exchange Bank, which will be merged into First
National Bank of Florida prior to the spin-off) equal to 45.1% of the combined
total assets of all of the Company's banking subsidiaries as of June 30, 2003,
without receiving any consideration. Accordingly, the spin-off would constitute
a prohibited disposition of a banking subsidiary, and the Company is therefore
soliciting consents to amend the Indenture to permit the spin-off.
The Amendment will be effected through the execution by the Company and
the Trustee of a Second Supplemental Indenture. The Second Supplemental
Indenture provides that the disposition of First National Bank of Florida will
not constitute a default under the Indenture so long as there are no outstanding
securities of any Non-Consenting Series on the date of the disposition of First
National Bank of Florida. The term "Non-Consenting Series" is defined as any
series of notes outstanding on the date of the execution of the Second
Supplemental Indenture (the "Amendment Date") as to which the holders of at
least a majority of the principal amount of such series outstanding on the
Amendment Date have not consented to the Amendment.
In order to effect the spin-off without causing a default under the
Indenture, the Company plans to redeem, prior to the spin-off, all notes of any
Non-Consenting Series. As a result, if you hold notes of a security as to which
the Company does not receive the necessary consents to effect the Amendment,
your notes will be redeemed.
The foregoing description of the Second Supplemental Indenture is
qualified in its entirety by reference to the exact language of the Second
Supplemental Indenture, which is set forth in Appendix A hereto.
4
THE CONSENT SOLICITATION
The Company is soliciting consents of certain of the holders of the
notes issued under the Indenture to effect the Amendment through the execution
of a Second Supplemental Indenture in the form set forth as Appendix A hereto.
The Company may end the Consent Solicitation at any time prior to the
spin-off. The Company hopes to obtain consents to the Amendment from holders of
a majority of the principal amount (a "Majority Consent") of each series
outstanding under the Indenture (information regarding the specific series that
are outstanding appears below). If the Company obtains a Majority Consent of
each series, the Company will immediately end the consent solicitation, deliver
the consents and other required documentation to the Trustee, and execute the
Second Supplemental Indenture to effect the Amendment. In this event, the
Company may proceed with the spin-off without redeeming any notes.
The Company may, however, decide to end the consent solicitation at a
time when a Majority Consent to the Amendment has been obtained from less than
all of the series of notes outstanding under the Indenture. In this event, the
Company will deliver the consents and other required information to the Trustee
and execute the Second Supplemental Indenture, but the spin-off will only be
permitted under the amended terms of the Indenture if the Company redeems all of
the notes of each Non-Consenting Series prior to the spin-off.
The Company plans to redeem all notes of any Non-Consenting Series so
that the spin-off may be effected without causing a default under the Indenture.
The redemption will be effected as soon as practicable following the date of the
execution of the Second Supplemental Indenture. The Company will mail a notice
of redemption to each holder of a Non-Consenting Series not later than 30 days
prior to the redemption date.
Participation in the solicitation is voluntary and Holders should
carefully consider whether to consent. The Company is not offering to pay any
consideration to noteholders in exchange for providing a consent. Holders of
Notes are urged to consult their financial advisors in making their own decision
on what action to take.
THE COMPANY REQUESTS THAT YOU CONSENT TO THE AMENDMENT BY PROMPTLY
COMPLETING AND MAILING THE ENCLOSED BLUE CONSENT FORM.
5
SERIES OF NOTES OUTSTANDING
The following table provides information as of September 15, 2003
regarding the series of notes outstanding under the Indenture:
SERIES PRINCIPAL AMOUNT OUTSTANDING(1)
------ -------------------------------
Daily Notes $106,909,533
Term Notes(2) $ 63,143,474
Term Notes Series 2003
Maturity:
3 month $ 408,348
6 month $ 2,634,646
9 month $ 722,305
12 month $ 936,470
15 month --
18 month $ 230,807
21 month --
24 month $ 204,965
27 month --
30 month $ 251,104
36 month $ 157,148
48 month --
60 month $ 53,500
84 month --
120 month $ 20,200
- ------------
(1) Includes notes that are held by affiliates of Company, which will not
be treated as outstanding for purposes of the current solicitation.
(2) Prior to June 24, 2003, all Term Notes issued under the Indenture
constituted a single series.
SOLICITATION AGENT
Regency Finance Company, a subsidiary of the Company and the sales and
paying agent for the notes, is acting as solicitation agent in connection with
the consent solicitation. You may direct inquiries concerning the consent
solicitation to Regency at the address or telephone number provided under the
heading "Where You Can Find Additional Information."
TERMINATION AND AMENDMENT
The Company may, at any time prior to the execution of the Second
Supplemental Indenture, determine in its sole discretion not to proceed with the
solicitation, in which event the Indenture would not be amended.
The Company may amend the terms of the consent solicitation at any
time, in which event the Company will provide you with a revised Consent
Solicitation Statement describing such amended terms.
6
CONSENT PROCEDURES
The Indenture provides that noteholders may take action at a meeting or
by written consent in lieu of a meeting. The Company is soliciting written
consents to approve the proposed Indenture Amendment. Noteholders who desire to
consent to the proposed Amendment should so indicate by marking the appropriate
box on, and otherwise properly completing, and signing and dating, the enclosed
blue Consent Form and delivering it to Regency Finance Company, in accordance
with the instructions contained therein. If a box is not checked on the Consent
Form but the Consent Form is signed and dated, the tendering noteholder will be
deemed to have approved the execution by the Company of the Second Supplemental
Indenture.
The giving of a consent will not affect your right to have your notes
redeemed. If you consent to the execution of the Second Supplemental Indenture,
your consent will be effective with respect to any notes purchased after the
date of your consent, subject to your right to revoke your consent at any time
prior to the Amendment being adopted.
The Consent Form must be executed by a noteholder in the same manner as
such noteholder's name appears on the Note. If a Consent Form is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or any other person acting in a fiduciary or representative
capacity, such person should so indicate when signing.
The record date for the consent solicitation will be the date the
consents are delivered to the Trustee and the Second Supplemental Indenture is
executed.
All questions as to the validity, form, eligibility, acceptance and
revocation of tendered Consent Forms will be resolved by the Company, whose
determination will be final and binding. The Company's interpretation of certain
terms and conditions of the solicitation will be final and binding. Unless
waived, any irregularities in connection with tenders of consents must be cured
within such time as the Company shall determine.
You may return the Consent Form to the Company either by mail in the
enclosed postage-paid envelope or by facsimile transmission to the number shown
on the Consent Form.
REVOCATION OF CONSENTS
Any noteholder who has consented to the adoption of the proposed
Amendment may revoke such consent by delivering written notice of revocation to
Regency Finance Company at any time prior to the execution of the Second
Supplemental Indenture. Any such notice of revocation, to be effective, must be
signed by the holder in the same manner as the original Consent Form. Any
revocation will apply to all notes held by the holder providing the revocation
notice.
All questions as to the validity of notices of revocation will be
determined by the Company, whose determination will be final and binding.
Neither the Company, the trustee nor any other person will be under any duty to
give notification of any defects or irregularities in any notice of revocation
or incur any liability for failure to give any such notification.
7
WHERE YOU CAN FIND ADDITIONAL INFORMATION
ADDITIONAL INFORMATION ABOUT THE COMPANY AND THE SPIN-OFF
The Company files annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any report,
statement or other information the Company has filed with the SEC at the SEC's
public reference rooms in Washington, D.C., New York, New York, or Chicago,
Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. The Company's SEC filings are also available to the
public from commercial document retrieval services, at the website maintained by
the SEC at www.sec.gov and at the Company's website at www.fnbcorporation.com.
ADDITIONAL INFORMATION ABOUT THE CONSENT SOLICITATION
If you have any questions regarding this consent solicitation, you may
contact Regency Finance Company, the sales and paying agent with respect to the
notes and the solicitation agent with respect to the consent solicitation, at
the following address or telephone number:
Regency Finance Company
P.O. Box 1150
Hermitage, PA 16148
Attn: Douglas J. Solock, Senior Vice President
(724) 983-3525
8
APPENDIX A
FORM OF
SECOND SUPPLEMENTAL INDENTURE
THIS SECOND SUPPLEMENTAL INDENTURE, dated as of _______________,
between F.N.B. CORPORATION, a Florida corporation (the "Company"), and J.P.
MORGAN TRUST COMPANY, NATIONAL ASSOCIATION, as trustee (the "Trustee").
WITNESSETH:
WHEREAS, the Company and the Trustee are parties to that certain
Indenture, dated as of May 15, 1992 and amended by that certain First
Supplemental Indenture dated as of January 1, 1994, providing for the issuance
of an unlimited amount of unsecured indebtedness of the Company (as amended, the
"Indenture");
WHEREAS, pursuant to Section 902 of the Indenture, the Holders of not
less than 50% in aggregate principal amount of Outstanding Securities in each
Outstanding series of Securities issued pursuant to the Indenture (other than
any Non-Consenting Series, as defined herein below) have consented to the
execution and delivery by the Company and the Trustee of this Second
Supplemental Indenture to amend the provisions of Section 1007 of the Indenture,
and such consents have been delivered to the Company and the Trustee; and
WHEREAS, the execution and delivery of this Second Supplemental
Indenture has been authorized by a Board Resolution and all acts, conditions and
requirements necessary to make this Second Supplemental Indenture a valid and
binding agreement in accordance with its terms and for the purposes herein set
forth have been done and taken, and the execution and delivery of this Second
Supplemental Indenture has been in all respects duly authorized.
NOW, THEREFORE, intending to be legally bound hereby, each of the
Company and the Trustee has executed and delivered this Second Supplemental
Indenture.
ARTICLE I
AMENDMENT
Section 1.1. The following text is hereby inserted following subsection
(b) of Section 1007 of the Indenture:
"(c) Notwithstanding anything to the contrary contained
herein, beginning on the Second Amendment Date, Section 1007(a) shall not
prohibit the Company from effecting, on or prior to June 30, 2004, the
distribution (the "Distribution") to the Company's shareholders of all of the
common stock of a corporation holding all or substantially all of the capital
stock of the Company's Subsidiary, First National Bank of Florida, if, on the
effective date of the Distribution, no Securities of any Non-Consenting Series
are Outstanding. As used in this Section 1007: (i) the term "Non-Consenting
Series" shall mean any series of Securities Outstanding on the Second Amendment
Date as to which the Holders of at least a majority of the principal amount of
such series Outstanding on the Second Amendment Date have not consented,
pursuant to Section 902 of the Indenture, to the
A-1
amendment of Section 1007 of the Indenture to add thereto this subsection (c);
and (ii) "Second Amendment Date" shall mean the date as of which the Company and
the Trustee have entered into and executed the Second Supplemental Indenture to
this Indenture.
(d) Following the redemption by the Company on or after the Second
Amendment Date of all the Outstanding Securities of any Non-Consenting Series,
the Company shall not be authorized to issue any new Securities of such
Non-Consenting Series."
ARTICLE II
MISCELLANEOUS PROVISIONS
Section 2.1. Except as otherwise defined or unless the context
otherwise requires, capitalized terms used in this Second Supplemental Indenture
and defined in the Indenture shall have the meanings specified in the Indenture.
Section 2.2. Except as specifically amended and supplemented by this
Second Supplemental Indenture, the Indenture shall remain in full force and
effect and is hereby ratified and confirmed.
Section 2.3. This Second Supplemental Indenture shall be governed by
and construed in accordance with the laws of the Commonwealth of Pennsylvania,
as applied to contracts made and performed within the Commonwealth of
Pennsylvania, without regard to principles of conflicts of law.
Section 2.4. All agreements of the Company in this Second Supplemental
Indenture shall bind its successor. All agreements of the Trustee in this Second
Supplemental Indenture shall bind its successor.
Section 2.5. The Trustee accepts the modification of the Indenture as
hereby effected but only upon the terms and conditions set forth in the
Indenture, as amended and supplemented by this Second Supplemental Indenture.
Section 2.6. This Second Supplemental Indenture may be executed in
counterparts. Each signed copy or counterpart shall be an original, but all of
them together represent the same agreement.
[SIGNATURE PAGE FOLLOWS]
A-2
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed as of the date first written above.
F.N.B. CORPORATION
By:
-----------------------------------------
Gary L. Tice
Chief Executive Officer
By:
-----------------------------------------
Thomas E. Fahey
Chief Financial Officer
J.P. MORGAN TRUST COMPANY,
NATIONAL ASSOCIATION
By:
-----------------------------------------
Name:
Title:
A-3
APPENDIX B
PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
The Pro Forma Condensed Consolidated Financial Statements of the
Company should be read in conjunction with the historical consolidated financial
statements and the notes thereto of the Company, which are incorporated herein
by reference to the Company's Annual Report on Form 10-K/A for the year ended
December 31, 2002 and Quarterly Reports on Form 10-Q for the quarterly periods
ended March 31, 2003 and June 30, 2003. These reports are available via the
Internet as described under the caption "Where You Can Find Additional
Information." The pro forma consolidated income statements assume that the
spin-off of First National Bankshares of Florida, Inc., the Company's newly
formed subsidiary to which the Company will transfer its Florida operations,
occurred on January 1, 2002, and the pro forma consolidated balance sheet
assumes that the spin-off occurred on June 30, 2003.
The pro forma condensed consolidated financial statements are presented
for informational purposes only and do not reflect the historical results of
operations or financial position of the Company or First National Bankshares of
Florida, Inc. The pro forma data also do not purport to project the financial
position or results of operations of the Company or First National Bankshares of
Florida, Inc. as of any future date or for any future period. Earnings per share
data is shown on a pro forma basis based upon an assumed distribution of one
share of First National Bankshares of Florida, Inc. common stock for every one
share of the Company's common stock outstanding.
The pro forma adjustments to the historical condensed consolidated
statements of income and consolidated balance sheets are set forth below.
B-1
PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME
Year Ended December 31, 2002
(In thousands, except per share data)
UNAUDITED
First National
Bankshares of F.N.B.
F.N.B. Corporation Florida, Inc. Corporation
Historical Historical Adjustments Pro Forma
------------------ -------------- -------------- -----------
Total interest income $ 426,784 $ 150,931 $ 1,913 (A) $ 277,766
Total interest expense 145,671 47,299 (204)(A) 98,168
Net interest income 281,113 103,632 2,117 179,598
Provision for loan losses 19,094 5,470 13,624
Net interest income after provision
for loan losses 262,019 98,162 2,117 165,974
Total non-interest income 120,873 54,728 66,145
Merger related expenses 42,365 404 41,961
Total other non-interest expenses 247,079 104,037 143,042
Income before income taxes 93,448 48,449 2,117 47,116
Income taxes 30,113 16,385 741 (F) 14,469
Net income $ 63,335 $ 32,064 $ 1,376 $ 32,647
Earnings per share*:
Basic $ 1.37 $ 0.71
Diluted $ 1.35 $ 0.69
Average shares outstanding*:
Basic 46,012,908 46,012,908
Diluted 47,073,785 47,073,785
Ratio of earnings to fixed charges:
Excluding interest expense
on deposits 3.82 2.73
Including interest expense
on deposits 1.63 1.47
- --------------
* Per share amounts and average shares outstanding have been restated to reflect
the 5 percent stock dividend declared on April 28, 2003.
B-2
PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME
Six months ended June 30, 2003
(In thousands, except per share data)
UNAUDITED
First National
F.N.B. Bankshares of F.N.B.
Corporation Florida, Inc. Corporation
Historical Historical Adjustments Pro Forma
----------- -------------- -------------- -----------
Total interest income $ 213,501 $ 82,102 $ 946 (A) $ 132,345
Total interest expense 66,516 22,047 (110)(A) 44,359
Net interest income 146,985 60,055 1,056 87,986
Provision for loan losses 11,590 3,560 8,030
Net interest income after provision
for loan losses 135,395 56,495 1,056 79,956
Total non-interest income 67,396 30,589 36,807
Merger related expenses 1,014 1,014
Total other non-interest expenses 132,367 58,766 73,601
Income before income taxes 69,410 27,304 1,056 43,162
Income taxes 21,426 9,079 370 (F) 12,717
Net income $ 47,984 $ 18,225 686 $ 30,445
Earnings per share:
Basic $ 1.04 $ 0.66
Diluted $ 1.02 $ 0.65
Average shares outstanding
Basic 46,052,374 46,052,374
Diluted 46,888,288 46,888,288
Ratio of earnings to fixed charges:
Excluding interest expense
on deposits 4.72 3.79
Including interest expense
on deposits 2.03 1.95
B-3
PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
June 30, 2003
(In thousands)
UNAUDITED
First National
F.N.B. Bankshares of F.N.B.
Corporation Florida, Inc. Corporation
Historical Historical Adjustments Pro Forma
----------- --------------- --------------- ------------
ASSETS
Cash and due from banks $ 250,532 $ 118,985 $ 73,000 (B)
(73,000) (C)
(29,627) (E) $ 101,920
Interest bearing deposits with banks
and other short term investments 9,802 4,917 4,885
Mortgage loans held for sale 55,039 28,883 26,156
Securities available for sale 1,717,881 808,911 33,000 (C) 941,970
Securities held to maturity 44,359 13,671 30,688
Loans, net of unearned income 5,516,648 2,296,770 16,500 (D) 3,236,378
Allowance for loan losses (72,076) (25,746) (46,330)
Goodwill 190,304 165,399 (1,051) (E) 23,854
Other assets 553,907 254,785 (1,394) (E) 297,728
Total assets $ 8,266,396 $ 3,666,575 $ 17,428 $ 4,617,249
LIABILITIES
Deposits
Non-interest bearing $ 1,043,443 $ 460,852 $ 582,591
Interest bearing 5,071,602 2,280,312 2,791,290
Short-term borrowings 713,401 260,988 $ (40,000) (C)
16,500 (D) 428,913
Long-term debt 591,183 191,855 399,328
Mandatorily redeemable capital
securities of subsidiary trusts 125,000 125,000
Other liabilities 90,892 36,290 (2,702) (E) 51,900
Total stockholders' equity 630,875 436,278 73,000 (B)
(29,370) (E) 238,227
Total liabilities and stockholders' equity $ 8,266,396 $ 3,666,575 $ 17,428 $ 4,617,249
B-4
Notes to unaudited pro forma condensed consolidated financial statements:
(A) To record inter-company interest income and interest expense which was
previously eliminated in consolidation and to record interest income
and reduction in interest expense through utilization of excess funds
received in connection with the spin-off.
(B) To record anticipated dividends of $25.0 million and $8.0 million from
First National Bank of Florida and Roger Bouchard Insurance, Inc. to
the Company. To record $40.0 million of cash proceeds from First
National Bankshares of Florida, Inc. in connection with the transfer of
all of the Florida operations of the Company to First National
Bankshares of Florida, Inc.
(C) To record payoff of short-term borrowings with $40.0 million of
proceeds received from First National Bankshares of Florida, Inc. and
to record the purchase of $33.0 million of additional securities
available for sale.
(D) To record inter-company loans and borrowings which were previously
eliminated in consolidation.
(E) To record the balance sheet effect of $22.3 million of restructuring
charges related to the spin-off transaction. Such charges include
employee severance and benefits, third party fees, asset write downs
and miscellaneous expenses. Also in connection with the spin-off, the
Company incurred a prepayment penalty of $20.7 million on the
restructuring of borrowings with the Federal Home Loan Bank. The after
tax effect of all of these items was $29.4 million.
(F) To record tax effect of Item (A) above, at the federal statutory tax
rate of 35%.
B-5