Fla. loans reduce F.N.B.’s earnings

By Don Shilling

The bank is setting aside $5.4 million to cover potential loan losses in Florida.

HERMITAGE, Pa. — F.N.B. Corp. reported lower second-quarter earnings as it set aside more money to cover construction loans that may not be repaid in Florida.

The parent of First National Bank of Pennsylvania earned $14.5 million, or 17 cents a share, last quarter, compared with $17.6 million, or 29 cents a share, in the same quarter of last year.

Bob New, F.N.B. president and chief executive, said in a conference call with analysts Tuesday that he was disappointed with money being set aside to cover Florida loans and hoped that it didn’t overshadow the progress the Hermitage-based company is making.

F.N.B. stock rose 54 cents Tuesday and closed at $11.95. It has traded between $9.30 and $18.24 in the past year.

The second-quarter figures included $11.9 million in accounting charges to cover the additional provision for loan losses, costs for a recently completed merger, costs associated with the retirement of Gary Roberts and the lower value of bank stock.

Of that amount, $6.4 million was related to money set aside for loan losses. Banks record accounting charges so they can set aside money when it looks like loans may not be repaid.

New said $1 million of that amount was related to the merger with Omega Financial Corp., which closed April 1. F.N.B. uses a more conservative formula for assessing loans, he said.

The rest of the loan-loss provision — $5.4 million — was related to Florida and included $2.2 million for a new development of luxury condominiums in Naples, Fla.

Nonperforming assets, which include loans that have not produced a payment in 90 days, rose $29 million in the second quarter to $62 million, with just over half of the increase coming from two condo projects in Florida. The rest of the increase came from the addition of Omega’s nonperforming loans.

New noted that only 5 percent of the company’s total loan portfolio is in Florida, and he described F.N.B.’s overall credit quality as good. He said loan-loss amounts in Ohio and Pennsylvania are unchanged from a year ago.

He also said that loans and deposits are growing. He added that F.N.B. should benefit from the addition of Omega, which is based in State College, Pa., because central Pennsylvania’s economy has been more robust than some other areas of the state.

Brian Lilly, F.N.B. chief financial officer, said he expects earnings in the second half of the year to range from 54 cents to 58 cents a share. Earnings in the first half of this year were 42 cents, down from 58 cents in the same period last year.

Roberts retired July 1 as president and chief executive of First National Bank. New took over those duties, as well as his corporate duties, and then expanded the senior management team.

F.N.B. said in a document filed with the Securities and Exchange Commission that Roberts will receive pay and benefits under his employment contract. They include salary and health-care coverage until Dec. 31, 2009, retirement benefits as if he had worked to that date and a $91,884 payment instead of annual bonuses.

Roberts received $350,000 in salary but no bonus in 2007.

shilling@vindy.com