FNBF Fnb Financial Services Corp (MM)

FNB Financial Services Corporation (NASDAQ: FNBF)(�FNB�), parent of FNB Southeast (the �Bank�), today reported third quarter 2006 net income of $2.33 million and net income for the first nine months of $7.09 million. This represents 2006 earnings per diluted share of $0.32 and $0.98, respectively. FNB earned $2.22 million in the third quarter of 2005 and $6.40 million for the first nine months a year ago. Third quarter results rose 4.8% in 2006 and year to date earnings increased 10.9%. Interest income was $18.57 million and $16.49 million for the three months ended September 30, 2006 and 2005, respectively. On a year-to-date basis, interest income amounted to $54.48 million in 2006 and $44.93 million in 2005. Interest expense totaled $9.19 million in the 2006 third quarter, an increase of $2.50 million from one year earlier. Interest expense on deposits was $7.77 million in the current quarter, compared to $5.84 million for the same quarter a year ago. As a result of anticipated run-off of higher risk grade credits in the loan portfolio, FNB recorded no provision for credit losses in the third quarter of 2006, compared to $1.19 million for the three months ended September 30, 2005. The provision for the third quarter of 2005 included special provisions of approximately $900,000 related to the reclassification of risk grades of certain loans in the Bank�s loan portfolio. Noninterest income totaled $1.41 million in the third quarter of 2006, compared with $1.73 million for the same period a year ago. Noninterest expense totaled $7.31 million for the third quarter of 2006, compared with $6.99 million for the same period in 2005. Expense items significantly contributing to this increase include personnel expense and telecommunications expense. �We are continuing to focus on our previously disclosed credit-related issues while building toward the future,� stated Pressley A. Ridgill, President and Chief Executive Officer. �Our new branch office in the Mayfaire area of Wilmington opened for business on October 10. We are excited about the opportunities this location presents to serve both new and existing customers.� Assets as of September 30, 2006 and December 31, 2005 were $1.01 billion. Outstanding loans totaled $722.5 million at the end of the current quarter, compared to $758.0 million at December 31, 2005. Net credit losses for the third quarter of 2006 amounted to $2.58 million, or 1.40% of average outstanding loans on an annualized basis, compared to 0.22% recorded in the 2005 third quarter. Nonperforming assets were $16.3 million at September 30, 2006 and $5.6 million a year ago. The allowance for credit losses to outstanding loans was 2.17% at September 30, 2006, compared to 1.21% one year earlier. Deposits at September 30, 2006 were $834.1 million, compared with $829.8 million one year earlier. Total purchased funds were $95.5 million and $98.0 million at September 30, 2006 and 2005, respectively. Shareholders� equity totaled $73.2 million at September 30, 2006, compared to $74.6 million at September 30, 2005. During 2006, FNB repurchased 80,877 shares of its common stock at an average cost of $15.11. FNB Financial Services Corporation is a financial holding company with one subsidiary, FNB Southeast; a North Carolina chartered commercial bank. FNB Southeast currently operates 18 banking offices located in North Carolina and Virginia. FNB Southeast Mortgage Corporation and FNB Southeast Investment Services, Inc. are operating subsidiaries of FNB Southeast. Forward Looking Statements This news release contains forward looking statements with respect to the financial conditions and results of operations of FNB Financial Services Corporation (�FNB�). These forward looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward looking statements include, among others, the following possibilities: (1) projected results in connection with the implementation of our business plan are lower than expected; (2) competitive pressure among financial services companies increases significantly; (3) costs or difficulties related to the integration of acquisitions or expenses in general are greater than expected; (4) general economic conditions, in the markets in which FNB does business, are less favorable than expected; (5) risks inherent in making loans, including repayment risks and risks associated with collateral values, are greater than expected; (6) changes in the interest rate environment reduce interest margins and affect funding sources; (7) changes in market rates and prices may adversely affect the value of financial products; (8) legislation or regulatory requirements or changes thereto adversely affect the businesses in which FNB is engaged; (9) regulatory compliance cost increases are greater than expected; and (10) decisions to change the business mix of FNB. For further information and other factors which could affect the accuracy of forward looking statements, please see FNB�s reports filed with the Securities and Exchange Commission (�SEC�) pursuant to the Securities Exchange Act of 1934 which are available at the SEC�s website (www.sec.gov) or at FNB�s website (www.fnbsoutheast.com). Readers are cautioned not to place undue reliance on these forward looking statements, which reflect management�s judgments only as of the date hereof. FNB undertakes no obligation to publicly revise those forward looking statements to reflect events and circumstances that arise after the date hereof. FINANCIAL SUMMARY � � Third Quarter 2006-2005 Nine Months Ended September 30 2006� 2005� � Third Second First Fourth Third Percent Percent Quarter Quarter Quarter Quarter Quarter Variance 2006� 2005� Variance � Average Balances (Dollars in thousands) � Assets $1,031,364� $1,022,267� $1,015,797� $1,011,103� $996,274� 3.5� % $1,023,200� $950,406� 7.7� % Loans 736,365� 759,948� 760,026� 764,331� 767,524� (4.1) 752,027� 732,426� 2.7� Investment securities 212,884� 209,041� 204,468� 181,222� 162,760� 30.8� 208,829� 152,778� 36.7� Earning assets 976,797� 977,031� 974,586� 953,263� 939,458� 4.0� 976,146� 895,167� 9.0� Noninterest-bearing deposits 86,741� 89,311� 87,174� 89,999� 87,335� (0.7) 87,740� 84,257� 4.1� Interest-bearing deposits 755,221� 734,631� 741,104� 733,000� 729,740� 3.5� 743,704� 694,945� 7.0� Interest-bearing liabilities 859,476� 853,536� 850,713� 831,665� 821,369� 4.6� 854,607� 780,007� 9.6� Shareholders' equity 70,573� 68,897� 68,203� 74,153� 73,592� (4.1) 69,233� 72,199� (4.1) � Period-End Balances (Dollars in thousands) � Assets $1,013,671� $1,027,827� $1,019,878� $1,007,406� $1,011,778� 0.2� % Loans 722,494� 750,725� 754,921� 757,967� 771,359� (6.3) Investment securities 218,641� 211,871� 203,824� 201,890� 178,422� 22.5� Earning assets 954,471� 968,126� 965,004� 964,431� 954,139� 0.0� Noninterest-bearing deposits 89,204� 90,116� 89,996� 92,884� 88,809� 0.4� Interest-bearing deposits 744,924� 756,668� 746,422� 731,746� 741,021� 0.5� Interest-bearing liabilities 840,403� 864,769� 855,611� 839,826� 839,032� 0.2� Shareholders' equity 73,153� 69,363� 68,986� 67,233� 74,605� (1.9) � Asset Quality Data (Dollars in thousands) � Nonperforming loans $14,498� $14,490� $8,966� $10,386� $4,108� $14,498� $4,108� Other nonperforming assets 1,786� 1,609� 1,527� 1,483� 1,485� 1,786� 1,485� Net credit losses 2,583� 791� 1,232� 3,629� 422� 4,606� 713� Allowance for credit losses 15,656� 18,239� 18,665� 19,142� 9,333� 15,656� 9,333� Nonperforming loans to outstanding loans 2.01� % 1.93� % 1.19� % 1.37� % 0.53� % 2.01� % 0.53� % Annualized net credit losses to average loans 1.40� 0.42� 0.65� 1.90� 0.22� 0.82� 0.13� Allowance for credit losses to outstanding loans 2.17� 2.43� 2.47� 2.53� 1.21� 2.17� 1.21� Allowance for credit losses to nonperforming loans 107.99� X 125.87� X 208.18� X 184.31� X 227.19� X 1.08� X 2.27� X FINANCIAL SUMMARY � � Third Quarter 2006-2005 Nine Months Ended September 30 2006� 2005� � Third Second First Fourth Third Percent Percent Quarter Quarter Quarter Quarter Quarter Variance 2006� 2005� Variance � Income Statement Data (Dollars in thousands, except share data) � Interest income: Loans $15,972� $15,814� $15,757� $15,363� $14,917� 7.1� % $47,543� $40,649� 17.0� % Other 2,600� 2,204� 2,131� 1,819� 1,575� 65.1� 6,935� 4,282� 62.0� Total interest income 18,572� 18,018� 17,888� 17,182� 16,492� 12.6� 54,478� 44,931� 21.2� Interest expense 9,185� 8,479� 7,786� 7,181� 6,690� 37.3� 25,450� 17,529� 45.2� Net interest income 9,387� 9,539� 10,102� 10,001� 9,802� (4.2) 29,028� 27,402� 5.9� Provision for credit losses 0� 365� 755� 13,627� 1,187� (100.0) 1,120� 2,505� (55.3) Net interest income after provision for credit losses 9,387� 9,174� 9,347� (3,626) 8,615� 9.0� 27,908� 24,897� 12.1� Noninterest income 1,406� 1,311� 1,332� 1,696� 1,734� (18.9) 4,049� 5,687� (28.8) Noninterest expense 7,305� 6,846� 7,057� 7,276� 6,993� 4.5� 21,208� 20,930� 1.3� Income before income tax expense 3,488� 3,639� 3,622� (9,206) 3,356� 3.9� 10,749� 9,654� 11.3� Income tax expense 1,163� 1,249� 1,244� (3,601) 1,138� 2.2� 3,656� 3,257� 12.3� Net income $2,325� $2,390� $2,378� ($5,605) $2,218� 4.8� $7,093� $6,397� 10.9� � Net income per share: Basic $0.33� $0.34� $0.34� ($0.80) $0.32� 3.1� % $1.01� $0.92� 9.8� % Diluted $0.32� $0.33� $0.33� ($0.80) $0.31� 3.2� % $0.98� $0.89� 10.1� % Cash dividends per share $0.12� $0.12� $0.12� $0.12� $0.11� 9.1� % $0.36� $0.33� 9.1� % � Other Data � Return on average assets 0.89� % 0.94� % 0.95� % (2.20) % 0.88� % 0.93� % 0.90� % Return on average equity 13.07� 13.91� 14.14� (29.99) 11.96� 13.70� 11.85� Net yield on earning assets 3.91� 4.00� 4.28� 4.24� 4.21� 4.06� 4.16� Efficiency 66.21� 61.87� 60.70� 61.23� 59.77� 62.90� 62.33� Equity to assets 6.84� 6.74� 6.71� 7.33� 7.39� 6.77� 7.60� Loans to assets 71.40� 74.34� 74.82� 75.59� 77.04� 73.50� 77.06� Loans to deposits 87.46� 92.23� 91.76� 92.87� 93.94� 90.45� 94.00� Noninterest - bearing deposits to total deposits 10.30� 10.84� 10.52� 10.94� 10.69� 10.55� 10.81� COMMON STOCK DATA � � 2006� 2005� Third Second First Fourth Third Quarter Quarter Quarter Quarter Quarter � Market value: End of period $14.75� $15.16� $16.05� $16.40� $17.58� High 15.50� 15.67� 16.46� 17.89� 18.52� Low 13.04� 14.70� 14.00� 14.40� 16.56� Book value 10.34� 9.81� 9.79� 9.55� 10.60� Dividend 0.12� 0.12� 0.12� 0.12� 0.11� Shares outstanding at period-end 7,077,691� 7,048,976� 7,045,335� 7,038,110� 7,036,148� Average shares outstanding 7,053,509� 7,074,254� 7,040,964� 7,036,704� 7,003,950� Shares traded 493,900� 544,000� 474,471� 282,011� 194,165� FNB Financial Services Corporation (NASDAQ: FNBF)("FNB"), parent of FNB Southeast (the "Bank"), today reported third quarter 2006 net income of $2.33 million and net income for the first nine months of $7.09 million. This represents 2006 earnings per diluted share of $0.32 and $0.98, respectively. FNB earned $2.22 million in the third quarter of 2005 and $6.40 million for the first nine months a year ago. Third quarter results rose 4.8% in 2006 and year to date earnings increased 10.9%. Interest income was $18.57 million and $16.49 million for the three months ended September 30, 2006 and 2005, respectively. On a year-to-date basis, interest income amounted to $54.48 million in 2006 and $44.93 million in 2005. Interest expense totaled $9.19 million in the 2006 third quarter, an increase of $2.50 million from one year earlier. Interest expense on deposits was $7.77 million in the current quarter, compared to $5.84 million for the same quarter a year ago. As a result of anticipated run-off of higher risk grade credits in the loan portfolio, FNB recorded no provision for credit losses in the third quarter of 2006, compared to $1.19 million for the three months ended September 30, 2005. The provision for the third quarter of 2005 included special provisions of approximately $900,000 related to the reclassification of risk grades of certain loans in the Bank's loan portfolio. Noninterest income totaled $1.41 million in the third quarter of 2006, compared with $1.73 million for the same period a year ago. Noninterest expense totaled $7.31 million for the third quarter of 2006, compared with $6.99 million for the same period in 2005. Expense items significantly contributing to this increase include personnel expense and telecommunications expense. "We are continuing to focus on our previously disclosed credit-related issues while building toward the future," stated Pressley A. Ridgill, President and Chief Executive Officer. "Our new branch office in the Mayfaire area of Wilmington opened for business on October 10. We are excited about the opportunities this location presents to serve both new and existing customers." Assets as of September 30, 2006 and December 31, 2005 were $1.01 billion. Outstanding loans totaled $722.5 million at the end of the current quarter, compared to $758.0 million at December 31, 2005. Net credit losses for the third quarter of 2006 amounted to $2.58 million, or 1.40% of average outstanding loans on an annualized basis, compared to 0.22% recorded in the 2005 third quarter. Nonperforming assets were $16.3 million at September 30, 2006 and $5.6 million a year ago. The allowance for credit losses to outstanding loans was 2.17% at September 30, 2006, compared to 1.21% one year earlier. Deposits at September 30, 2006 were $834.1 million, compared with $829.8 million one year earlier. Total purchased funds were $95.5 million and $98.0 million at September 30, 2006 and 2005, respectively. Shareholders' equity totaled $73.2 million at September 30, 2006, compared to $74.6 million at September 30, 2005. During 2006, FNB repurchased 80,877 shares of its common stock at an average cost of $15.11. FNB Financial Services Corporation is a financial holding company with one subsidiary, FNB Southeast; a North Carolina chartered commercial bank. FNB Southeast currently operates 18 banking offices located in North Carolina and Virginia. FNB Southeast Mortgage Corporation and FNB Southeast Investment Services, Inc. are operating subsidiaries of FNB Southeast. Forward Looking Statements This news release contains forward looking statements with respect to the financial conditions and results of operations of FNB Financial Services Corporation ("FNB"). These forward looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward looking statements include, among others, the following possibilities: (1) projected results in connection with the implementation of our business plan are lower than expected; (2) competitive pressure among financial services companies increases significantly; (3) costs or difficulties related to the integration of acquisitions or expenses in general are greater than expected; (4) general economic conditions, in the markets in which FNB does business, are less favorable than expected; (5) risks inherent in making loans, including repayment risks and risks associated with collateral values, are greater than expected; (6) changes in the interest rate environment reduce interest margins and affect funding sources; (7) changes in market rates and prices may adversely affect the value of financial products; (8) legislation or regulatory requirements or changes thereto adversely affect the businesses in which FNB is engaged; (9) regulatory compliance cost increases are greater than expected; and (10) decisions to change the business mix of FNB. For further information and other factors which could affect the accuracy of forward looking statements, please see FNB's reports filed with the Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange Act of 1934 which are available at the SEC's website (www.sec.gov) or at FNB's website (www.fnbsoutheast.com). Readers are cautioned not to place undue reliance on these forward looking statements, which reflect management's judgments only as of the date hereof. FNB undertakes no obligation to publicly revise those forward looking statements to reflect events and circumstances that arise after the date hereof. -0- *T FINANCIAL SUMMARY ----------------------------------------------------- 2006 ----------------------------------- Third Second First Quarter Quarter Quarter ----------- ----------- ----------- Average Balances (Dollars in thousands) Assets $1,031,364 $1,022,267 $1,015,797 Loans 736,365 759,948 760,026 Investment securities 212,884 209,041 204,468 Earning assets 976,797 977,031 974,586 Noninterest-bearing deposits 86,741 89,311 87,174 Interest-bearing deposits 755,221 734,631 741,104 Interest-bearing liabilities 859,476 853,536 850,713 Shareholders' equity 70,573 68,897 68,203 Period-End Balances (Dollars in thousands) Assets $1,013,671 $1,027,827 $1,019,878 Loans 722,494 750,725 754,921 Investment securities 218,641 211,871 203,824 Earning assets 954,471 968,126 965,004 Noninterest-bearing deposits 89,204 90,116 89,996 Interest-bearing deposits 744,924 756,668 746,422 Interest-bearing liabilities 840,403 864,769 855,611 Shareholders' equity 73,153 69,363 68,986 Asset Quality Data (Dollars in thousands) Nonperforming loans $14,498 $14,490 $8,966 Other nonperforming assets 1,786 1,609 1,527 Net credit losses 2,583 791 1,232 Allowance for credit losses 15,656 18,239 18,665 Nonperforming loans to outstanding loans 2.01 % 1.93 % 1.19 % Annualized net credit losses to average loans 1.40 0.42 0.65 Allowance for credit losses to outstanding loans 2.17 2.43 2.47 Allowance for credit losses to nonperforming loans 107.99 X 125.87 X 208.18 X Third Quarter 2005 2006-2005 ------------------------ Fourth Third Percent Quarter Quarter Variance ----------- ----------- ------------- Average Balances (Dollars in thousands) Assets $1,011,103 $996,274 3.5 % Loans 764,331 767,524 (4.1) Investment securities 181,222 162,760 30.8 Earning assets 953,263 939,458 4.0 Noninterest-bearing deposits 89,999 87,335 (0.7) Interest-bearing deposits 733,000 729,740 3.5 Interest-bearing liabilities 831,665 821,369 4.6 Shareholders' equity 74,153 73,592 (4.1) Period-End Balances (Dollars in thousands) Assets $1,007,406 $1,011,778 0.2 % Loans 757,967 771,359 (6.3) Investment securities 201,890 178,422 22.5 Earning assets 964,431 954,139 0.0 Noninterest-bearing deposits 92,884 88,809 0.4 Interest-bearing deposits 731,746 741,021 0.5 Interest-bearing liabilities 839,826 839,032 0.2 Shareholders' equity 67,233 74,605 (1.9) Asset Quality Data (Dollars in thousands) Nonperforming loans $10,386 $4,108 Other nonperforming assets 1,483 1,485 Net credit losses 3,629 422 Allowance for credit losses 19,142 9,333 Nonperforming loans to outstanding loans 1.37 % 0.53 % Annualized net credit losses to average loans 1.90 0.22 Allowance for credit losses to outstanding loans 2.53 1.21 Allowance for credit losses to nonperforming loans 184.31 X 227.19 X Nine Months Ended September 30 ------------------------------ Percent 2006 2005 Variance ----------- --------- -------- Average Balances (Dollars in thousands) Assets $1,023,200 $950,406 7.7 % Loans 752,027 732,426 2.7 Investment securities 208,829 152,778 36.7 Earning assets 976,146 895,167 9.0 Noninterest-bearing deposits 87,740 84,257 4.1 Interest-bearing deposits 743,704 694,945 7.0 Interest-bearing liabilities 854,607 780,007 9.6 Shareholders' equity 69,233 72,199 (4.1) Period-End Balances (Dollars in thousands) Assets Loans Investment securities Earning assets Noninterest-bearing deposits Interest-bearing deposits Interest-bearing liabilities Shareholders' equity Asset Quality Data (Dollars in thousands) Nonperforming loans $14,498 $4,108 Other nonperforming assets 1,786 1,485 Net credit losses 4,606 713 Allowance for credit losses 15,656 9,333 Nonperforming loans to outstanding loans 2.01 % 0.53 % Annualized net credit losses to average loans 0.82 0.13 Allowance for credit losses to outstanding loans 2.17 1.21 Allowance for credit losses to nonperforming loans 1.08 X 2.27 X *T -0- *T FINANCIAL SUMMARY ------------------------------------------------------- 2006 2005 -------------------------- ------------------ Third Second First Fourth Third Quarter Quarter Quarter Quarter Quarter -------- -------- -------- -------- -------- Income Statement Data (Dollars in thousands, except share data) Interest income: Loans $15,972 $15,814 $15,757 $15,363 $14,917 Other 2,600 2,204 2,131 1,819 1,575 -------- -------- -------- -------- -------- Total interest income 18,572 18,018 17,888 17,182 16,492 Interest expense 9,185 8,479 7,786 7,181 6,690 -------- -------- -------- -------- -------- Net interest income 9,387 9,539 10,102 10,001 9,802 Provision for credit losses 0 365 755 13,627 1,187 -------- -------- -------- -------- -------- Net interest income after provision for credit losses 9,387 9,174 9,347 (3,626) 8,615 Noninterest income 1,406 1,311 1,332 1,696 1,734 Noninterest expense 7,305 6,846 7,057 7,276 6,993 -------- -------- -------- -------- -------- Income before income tax expense 3,488 3,639 3,622 (9,206) 3,356 Income tax expense 1,163 1,249 1,244 (3,601) 1,138 -------- -------- -------- -------- -------- Net income $2,325 $2,390 $2,378 ($5,605) $2,218 ======== ======== ======== ======== ======== Net income per share: Basic $0.33 $0.34 $0.34 ($0.80) $0.32 Diluted $0.32 $0.33 $0.33 ($0.80) $0.31 Cash dividends per share $0.12 $0.12 $0.12 $0.12 $0.11 Other Data Return on average assets 0.89 % 0.94 % 0.95 % (2.20)% 0.88 % Return on average equity 13.07 13.91 14.14 (29.99) 11.96 Net yield on earning assets 3.91 4.00 4.28 4.24 4.21 Efficiency 66.21 61.87 60.70 61.23 59.77 Equity to assets 6.84 6.74 6.71 7.33 7.39 Loans to assets 71.40 74.34 74.82 75.59 77.04 Loans to deposits 87.46 92.23 91.76 92.87 93.94 Noninterest - bearing deposits to total deposits 10.30 10.84 10.52 10.94 10.69 Third Quarter Nine Months Ended 2006-2005 September 30 -------------------------- Percent Percent Variance 2006 2005 Variance ------------ -------- -------- -------- Income Statement Data (Dollars in thousands, except share data) Interest income: Loans 7.1 %$47,543 $40,649 17.0 % Other 65.1 6,935 4,282 62.0 -------- -------- Total interest income 12.6 54,478 44,931 21.2 Interest expense 37.3 25,450 17,529 45.2 -------- -------- Net interest income (4.2) 29,028 27,402 5.9 Provision for credit losses (100.0) 1,120 2,505 (55.3) -------- -------- Net interest income after provision for credit losses 9.0 27,908 24,897 12.1 Noninterest income (18.9) 4,049 5,687 (28.8) Noninterest expense 4.5 21,208 20,930 1.3 -------- -------- Income before income tax expense 3.9 10,749 9,654 11.3 Income tax expense 2.2 3,656 3,257 12.3 -------- -------- Net income 4.8 $7,093 $6,397 10.9 ======== ======== Net income per share: Basic 3.1 % $1.01 $0.92 9.8 % Diluted 3.2 % $0.98 $0.89 10.1 % Cash dividends per share 9.1 % $0.36 $0.33 9.1 % Other Data Return on average assets 0.93 % 0.90 % Return on average equity 13.70 11.85 Net yield on earning assets 4.06 4.16 Efficiency 62.90 62.33 Equity to assets 6.77 7.60 Loans to assets 73.50 77.06 Loans to deposits 90.45 94.00 Noninterest - bearing deposits to total deposits 10.55 10.81 *T -0- *T COMMON STOCK DATA -------------------------- 2006 2005 -------------------------------- --------------------- Third Second First Fourth Third Quarter Quarter Quarter Quarter Quarter ---------- ---------- ---------- ---------- ---------- Market value: End of period $14.75 $15.16 $16.05 $16.40 $17.58 High 15.50 15.67 16.46 17.89 18.52 Low 13.04 14.70 14.00 14.40 16.56 Book value 10.34 9.81 9.79 9.55 10.60 Dividend 0.12 0.12 0.12 0.12 0.11 Shares outstanding at period-end 7,077,691 7,048,976 7,045,335 7,038,110 7,036,148 Average shares outstanding 7,053,509 7,074,254 7,040,964 7,036,704 7,003,950 Shares traded 493,900 544,000 474,471 282,011 194,165 *T