FNBF Fnb Financial Services Corp (MM)

FNB Financial Services Corporation (NASDAQ:FNBF) ("FNB"), parent of FNB Southeast, today reported first quarter 2006 net income of $2.38 million, compared to $2.04 million for the same period a year ago, representing a 16.4% increase. On a per diluted share basis, FNB earned $0.33 in the quarter ended March 31, 2006, an increase of 13.8% over $0.29 earned in 2005. "Regaining earnings momentum, with solid results for the first quarter of 2006, is very encouraging. The dedication of our banking professionals to provide quality service to our loyal customer base enabled this achievement while management remained focused on our commitment to resolve previously disclosed asset quality issues," stated Pressley A. Ridgill, President and Chief Executive Officer. Net interest income totaled $10.10 million in the first quarter of 2006, an increase of $1.59 million or 18.7%, compared to $8.51 million in 2005. Noninterest income was $1.33 million in the first quarter of 2006, compared to $2.14 million in the first quarter of 2005. This decrease is primarily attributable to lower mortgage banking fees. Noninterest expense for the quarters ended March 31, 2005 and 2006 was $7.06 million and $6.89 million, respectively, a 2.4% increase. Assets at March 31, 2006 totaled $1.02 billion, an increase of $99.4 million, or 10.8%, over one year earlier. Outstanding loans grew $41.6 million during the past four quarters, from $713.3 million at March 31, 2005 to $754.9 million at the end of the first quarter 2006, a 5.8% increase. Net credit losses for the first quarter of 2006 amounted to $1.2 million, or 0.65% of average outstanding loans on an annualized basis, compared to $189,000, or 0.11%, for the same period a year ago. FNB recorded provisions for credit losses of $755,000 and $680,000 for the quarters ended March 31, 2006 and 2005, respectively. The quarter end allowance for credit losses to outstanding loans was 2.47% for 2006 and 1.10% for 2005. During the first quarter of 2006, FNB continued working to resolve loan portfolio issues. At March 31, 2006 nonperforming loans totaled $9.0 million, a decrease of $1.4 million, compared to $10.4 million at the prior year end. While the balance of risk grade loans classified special mention, substandard, doubtful or loss increased to $86.3 million from $78.5 million at yearend 2005, the reserve requirement for these categories of loans decreased to $11.6 million from $11.8 million. Retail loans past due 90 days or more decreased from $3.1 million at December 31, 2005 to $1.2 million at March 31, 2006. The required reserve for retail loans past due 90 days or more decreased from $787,000 to $294,000. During the past year, deposits increased $69.0 million, or 9.0%, to $836.4 million at March 31, 2006. While the net interest margin for the first quarter 2006 improved to 4.28%, the current deposit pricing environment will likely impede further margin expansion. Shareholders' equity was $68.9 million at March 31, 2006, compared to $71.4 million a year ago. FNB Financial Services Corporation is a bank holding company with one subsidiary, FNB Southeast, a North Carolina chartered commercial bank. FNB Southeast currently operates 17 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 2005 ----------- ------------------------ First Fourth Third Quarter Quarter Quarter ----------- ----------- ------------ Average Balances (Dollars in thousands) Assets $1,015,797 $1,011,103 $996,274 Loans 760,026 764,331 767,524 Investment securities 204,468 181,222 162,760 Earning assets 974,586 953,263 939,458 Noninterest-bearing deposits 87,174 89,999 87,335 Interest-bearing deposits 741,104 733,000 729,740 Interest-bearing liabilities 850,713 831,665 821,369 Shareholders' equity 68,203 74,153 73,592 Period-End Balances (Dollars in thousands) Assets $1,019,878 $1,007,406 $1,011,778 Loans 754,921 757,967 771,359 Investment securities 203,824 201,890 178,422 Earning assets 965,004 964,431 954,139 Noninterest-bearing deposits 89,996 92,884 88,809 Interest-bearing deposits 746,422 731,746 741,021 Interest-bearing liabilities 855,611 839,826 839,032 Shareholders' equity 68,986 67,233 74,605 Asset Quality Data (Dollars in thousands) Nonperforming loans $8,966 $10,386 $4,108 Other nonperforming assets 1,527 1,483 1,485 Net credit losses 1,232 3,629 422 Allowance for credit losses 18,665 19,142 9,333 Nonperforming loans to outstanding loans 1.19 % 1.37 0.53 % Annualized net credit losses to average loans 0.65 1.90 0.22 Allowance for credit losses to outstanding loans 2.47 2.53 1.21 Allowance for credit losses to nonperforming loans 208.18 X 184.31 227.19 X First 2005 Quarter ------------------------- 2006-2005 Second First Percent Quarter Quarter Variance -------------- ---------- ---------- Average Balances (Dollars in thousands) Assets $954,786 $899,083 13.0 % Loans 737,735 691,180 10.0 Investment securities 153,411 141,963 44.0 Earning assets 899,522 842,142 15.7 Noninterest-bearing deposits 86,656 78,685 10.8 Interest-bearing deposits 694,494 659,834 12.3 Interest-bearing liabilities 781,663 736,051 15.6 Shareholders' equity 72,154 70,820 (3.7) Period-End Balances (Dollars in thousands) Assets $979,446 $920,520 10.8 % Loans 763,255 713,310 5.8 Investment securities 155,568 144,666 40.9 Earning assets 924,506 860,575 12.1 Noninterest-bearing deposits 95,335 84,707 6.2 Interest-bearing deposits 716,031 682,792 9.3 Interest-bearing liabilities 805,184 758,375 12.8 Shareholders' equity 73,360 71,386 (3.4) Asset Quality Data (Dollars in thousands) Nonperforming loans $4,002 $2,613 Other nonperforming assets 2,554 5,357 Net credit losses 102 189 Allowance for credit losses 8,380 7,843 Nonperforming loans to outstanding loans 0.52 % 0.37 % Annualized net credit losses to average loans 0.06 0.11 Allowance for credit losses to outstanding loans 1.10 1.10 Allowance for credit losses to nonperforming loans 209.40 X 300.15 X 2006 2005 ----------- ----------------------- First Fourth Third Quarter Quarter Quarter ----------- ----------- ----------- Income Statement Data (Dollars in thousands, except share data) Interest income: Loans $15,757 $15,363 $14,917 Other 2,131 1,819 1,575 ----------- ----------- ----------- Total interest income 17,888 17,182 16,492 Interest expense 7,786 7,181 6,690 ----------- ----------- ----------- Net interest income 10,102 10,001 9,802 Provision for credit losses 755 13,627 1,187 ----------- ----------- ----------- Net interest income after provision for credit losses 9,347 (3,626) 8,615 Noninterest income 1,332 1,696 1,734 Noninterest expense 7,057 7,276 6,993 ----------- ----------- ----------- Income before income tax expense 3,622 (9,206) 3,356 Income tax expense 1,244 (3,601) 1,138 ----------- ----------- ----------- Net income $2,378 ($5,605) $2,218 =========== =========== =========== Net income per share: Basic $0.34 ($0.80) $0.32 Diluted $0.33 ($0.80) $0.31 Cash dividends per share $0.12 $0.12 $0.11 Other Data Return on average assets 0.95 % (2.20) 0.88 % Return on average equity 14.14 (29.99) 11.96 Net yield on earning assets 4.28 4.24 4.21 Efficiency 60.70 61.23 59.77 Equity to assets 6.71 7.33 7.39 Loans to assets 74.82 75.59 77.04 Loans to deposits 91.76 92.87 93.94 Noninterest - bearing deposits to total deposits 10.52 10.94 10.69 First 2005 Quarter ------------------------- 2006-2005 Second First Percent Quarter Quarter Variance -------------- ---------- ---------- Income Statement Data (Dollars in thousands, except share data) Interest income: Loans $13,630 $12,102 30.2 % Other 1,431 1,275 67.1 -------------- ---------- Total interest income 15,061 13,377 33.7 Interest expense 5,975 4,864 60.1 -------------- ---------- Net interest income 9,086 8,513 18.7 Provision for credit losses 638 680 11.0 -------------- ---------- Net interest income after provision for credit losses 8,448 7,833 19.3 Noninterest income 1,815 2,138 (37.7) Noninterest expense 7,045 6,892 2.4 -------------- ---------- Income before income tax expense 3,218 3,079 17.6 Income tax expense 1,083 1,036 20.1 -------------- ---------- Net income $2,135 $2,043 16.4 ============== ========== Net income per share: Basic $0.30 $0.30 13.3 % Diluted $0.29 $0.29 13.8 % Cash dividends per share $0.11 $0.11 9.1 % Other Data Return on average assets 0.90 % 0.92 % Return on average equity 11.87 11.71 Net yield on earning assets 4.12 4.18 Efficiency 63.67 63.73 Equity to assets 7.56 7.88 Loans to assets 77.27 76.88 Loans to deposits 94.44 93.59 Noninterest - bearing deposits to total deposits 11.09 10.65 COMMON STOCK DATA --------------------------------- 2006 2005 ----------- ------------------------ First Fourth Third Quarter Quarter Quarter ----------- ----------- ----------- Market value: End of period $16.05 $16.40 $17.58 High 16.46 17.89 18.52 Low 14.00 14.40 16.56 Book value 9.79 9.55 10.60 Dividend 0.12 0.12 0.11 Shares outstanding at period-end 7,045,335 7,038,110 7,036,148 Average shares outstanding 7,040,964 7,036,704 7,003,950 Shares traded 474,471 282,011 194,165 2005 ------------------------- Second First Quarter Quarter ------------ ------------ Market value: End of period $18.39 $18.00 High 20.25 18.74 Low 16.82 16.66 Book value 10.49 10.22 Dividend 0.11 0.11 Shares outstanding at period-end 6,995,029 6,987,821 Average shares outstanding 6,991,912 6,956,646 Shares traded 263,966 504,388 NOTE: Per share data have been adjusted for the five-for-four (5:4) stock split, effected as a 25% stock dividend, effective May 31, 2005. *T