Like many Americans, we here at footnoted like to know what’s happening with our tax dollars. As a result, we tend to look a little closer at financial companies that got checks from Uncle Sam in the aftermath of the recent financial crisis.
One of those companies was F.N.B. Corp. (FNB), a Hermitage, Penn., banking and financial-services company that got $100 million of bailout money on Jan. 9, 2009. FNB repaid the money on Sept. 9 — so for three quarters of the year benefitted from taxpayer assistance. The funds, the bank in March told the U.S. Treasury’s Special Inspector General, Neil M. Barofsky, “helped to strengthen our capital ratios.”
Unfortunately, given the amount that has been redacted from FNB’s 10-page letter (pdf) to Treasury last March, it’s hard to get a good grip on just how that $100 million was used. But ultimately, money is fungible, and the proxy FNB filed on Friday tells us something about some of its spending last year.
For example, FNB paid some $135,000 to an entity called “PSSI Stadium Corp.” with ties to Pittsburgh Steelers Sports Inc., which it says is, in turn, is co-owned by FNB director Arthur J. Rooney II, a local attorney. Why? FNB isn’t explicit, except to say the funds were doled out “in connection with a Heinz Field Suite Licensing Agreement pursuant to which [FNB] entertains clients at sporting and entertainment events.” So presumably it went to rent a suite at the stadium; the company reported that $368 in perks to at least one executive represented “the cost of tickets to sporting events.”
Rooney’s ties to the Steelers are hardly incidental to his seat on the board. FNB boasts that Rooney’s legal chops and “involvement in significant NFL matters” — he was “principally responsible” for designing, developing and financing Heinz Field, and he’s a member of “the Board of NFL Films, the NFL Super Bowl Site Committee and the NFL Management Council” — has provided him the “requisite experience to help our Board strategically address complex operational and financial challenges.”
It’s not the only business deal FNB has struck with entities related to a board member. Also last year, the company shelled out $100,000 for “fleet, courier and business related travel” to a company co-owned by Stanton R. Sheetz, head of a Mid-Atlantic convenience-store chain, and paid another $114,000 to lease the premises of a branch “from an immediate family member of Mr. Sheetz.” Presumably FNB had trouble finding other fleet services or landlords to rent from (or other qualified director candidates with whom they weren’t already doing business).
Other banks taking the federal dime have also found themselves in business with their own directors as well. One, Fulton Financial Corp. (FULT) of Lancaster, Penn., paid more than $218,000 in legal fees to the Albertson Law Office of West Deptford, N.J., of which one partner is longtime director Jeffrey G. Albertson, “with more than a ten percent interest in the law firm.” The company also rented two branch facilities from entities tied to director Donald M. Bowman Jr., to the tune of $242,743 in 2009, its proxy noted. U.S. Treasury reports show Fulton Financial got $376 million in federal bank-bailout funds in December 2008, and there’s no indication that they have been paid back yet.
Fulton goes into some detail about how it navigates such situations, noting that:
“Fulton does not have a separate policy specific to related person transactions. Under Fulton’s Code of Conduct (Code), however, employees and directors are expected to recognize and avoid those situations where personal or financial interests or relationships might influence, or appear to influence, the judgment of the employee or director on matters affecting Fulton. The Code also requires thoughtful attention to the problem of conflicts and the exercise of the highest degree of good judgment.”
In concluding the section on related-party transactions, Fulton’s proxy adds: “The Audit Committee also conducted a review of all other related person transactions for any potential conflict of interest situations with the directors of Fulton and the Executives, and concluded that there were no conflicts present, and ratified and approved all the transactions reviewed.”
All of which, we hope, is reassuring to the company’s other shareholders.
