Fnb Financial Services (NASDAQ:FNBF)
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FNB Financial Services Corporation (NASDAQ: FNBF) today
announced that its banking subsidiary, FNB Southeast ("Bank"),
recorded an aggregate provision for credit losses of $13.6 million
during the fourth quarter of the year ended December 31, 2005. This
provision is primarily attributable to the following components:
-- Through an internal investigation and reviews by independent
consultants, the Bank has identified a significant number of
loans in its Harrisonburg, Virginia region which are believed
to have questionable appraisals and/or collateral value or
which were incorrectly graded for credit risk based on the
financial strength of the borrower and other factors. As a
result of these loans, the Bank increased its allowance for
credit losses by $8.2 million.
-- The Bank has reclassified loans made to two separate borrowers
outside of its Harrisonburg, Virginia region as a consequence,
in each case, of the borrower's deteriorating financial
condition and the Bank's discovery of a significant reduction
in the collateral base supporting the loans. As a result of
these loans, the Bank has increased its allowance for credit
losses by $4.4 million.
A significant portion of the loans described above involve
violations of the Bank's policies and/or applicable banking
regulations. The Bank has discussed these issues and other related
matters with its federal and state banking regulators in the course of
the Bank's continuing annual safety and soundness examination. The
Bank has taken steps to prevent similar violations in the future and
to correct deficiencies in its credit approval and credit
administration procedures.
Management of the Corporation believes that the provision for
credit losses noted above will reduce the Corporation's earnings for
the year ended December 31, 2005 by approximately $8.5 million (net of
the estimated tax effect), with the result that the Corporation's
projected net income for the year will be approximately $800,000
($0.11 per basic share and $0.11 per diluted share).
FNB Financial Services Corporation has 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. 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 the Corporation 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 the Corporation is engaged; (9)
regulatory compliance cost increases are greater than expected; and
(10) decisions to change the business mix of the Corporation. For
further information and other factors which could affect the accuracy
of forward looking statements, please see the Corporation's reports
filed with the SEC pursuant to the Securities Exchange Act of 1934
which are available at the SEC's website (www.sec.gov) or at the
Corporation'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. The
Corporation undertakes no obligation to publicly revise those forward
looking statements to reflect events and circumstances that arise
after the date hereof.