Fnb Financial Services (NASDAQ:FNBF)
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FNB Financial Services Corporation (NASDAQ:FNBF)("FNB"),
parent of FNB Southeast, today reported second quarter 2006 net income
of $2.39 million and earnings for the first six months of $4.77
million. This represents earnings per diluted share of $0.33 and
$0.66, respectively. FNB earned $2.14 million in the second quarter of
2005 and $4.18 million for the first six months a year ago. Quarterly
earnings and year to date earnings for 2006 increased 11.9% and 14.1%,
respectively. FNB's second quarter 2006 results produced an annualized
return on average assets of 0.94% and an annualized return on average
equity of 14.07%, compared with prior year results of 0.90% and
11.87%, respectively.
"Overall, the results during the first half of 2006 are
encouraging. We are continuing to focus on resolving credit issues in
our loan portfolio while building upon our earnings momentum," stated
Pressley A. Ridgill, President and Chief Executive Officer. "We
appreciate the confidence placed in us by our customers and
shareholders."
Interest income was $18.02 million and $15.06 million for the
three months ended June 30, 2006 and 2005, respectively. On a
year-to-date basis, interest income amounted to $35.91 million in 2006
and $28.44 million in 2005. Interest expense totaled $8.48 million in
the 2006 second quarter, an increase of $2.50 million from the year
ago quarter. Interest expense on deposits was $6.98 million in the
current quarter, compared to $5.25 million for the same quarter a year
ago. The net interest margin for the second quarter of 2006 declined
to 4.00%, as the current interest rate environment, along with
increased competition for deposits, contributed to a negative impact
on the margins. Net interest income totaled $9.54 million in the
second quarter of 2006, an increase of $453,000, or 5.0%, compared to
$9.09 million in 2005.
Noninterest income totaled $1.31 million in the second quarter of
2006, compared with $1.82 million for the same period a year ago.
Noninterest expense totaled $6.85 million for the second quarter of
2006, compared with $7.05 million for the same period in 2005.
As of June 30, 2006 assets were $1.03 billion, a $20.4 million, or
2.0%, increase during the first six months of 2006. Outstanding loans
totaled $750.7 million at the end of the current quarter, compared to
$758.0 million at December 31, 2005. Net credit losses for the second
quarter of 2006 amounted to $791,000, or 0.42% of average outstanding
loans on an annualized basis, compared to 0.06% recorded in the 2005
second quarter. The allowance for credit losses to outstanding loans
was 2.43% at June 30, 2006, compared to 2.53% at December 31, 2005,
and 1.10% at June 30, 2005. FNB recorded provisions for credit losses
of $365,000 and $638,000 for the three months ended June 30, 2006 and
2005, respectively. The decrease in the provision resulted primarily
from the continued evaluation and analysis of the risk grades of loans
in the credit portfolio.
During the second quarter of 2006, FNB continued working to
identify and resolve credit portfolio issues. At June 30, 2006
nonperforming loans totaled $14.5 million, compared to $9.0 million at
March 31, 2006 and $10.4 million at the prior yearend. While the
balance of risk grade loans classified special mention, substandard,
doubtful or loss increased to $86.1 million from $78.5 million at
yearend 2005, the reserve requirement for these categories of loans
decreased to $11.7 million from $11.8 million. Retail loans past due
90 days or more decreased from $3.1 million at December 31, 2005 to
$1.4 million at June 30, 2006. The required reserve for retail loans
past due 90 days or more decreased from $787,000 to $355,000.
During the past year, deposits increased $35.4 million, or 4.4%,
to $846.8 million at June 30, 2006. Other borrowings were $108.1
million and $89.2 million at June 30, 2006 and 2005, respectively.
Shareholders' equity was $69.4 million at June 30, 2006, compared to
$73.4 million a year ago. During 2006, the Company repurchased 80,877
shares of its common stock at an average cost of $15.11 per share.
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
---------------------- -------------------------------
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
----------- ----------- ---------------------- ---------
Average
Balances
(Dollars in
thousands)
Assets $1,022,267 $1,015,797 $1,011,103 $ 996,274 $954,786
Loans 759,948 760,026 764,331 767,524 737,735
Investment
securities 209,041 204,468 181,222 162,760 153,411
Earning assets 977,031 974,586 953,263 939,458 899,522
Noninterest-
bearing
deposits 89,311 87,174 89,999 87,335 86,656
Interest-
bearing
deposits 734,631 741,104 733,000 729,740 694,494
Interest-
bearing
liabilities 827,762 850,713 831,665 821,369 781,663
Shareholders'
equity 68,897 68,203 74,153 73,592 72,154
Period-End
Balances
(Dollars in
thousands)
Assets $1,027,827 $1,019,878 $1,007,406 $1,011,778 $979,446
Loans 750,725 754,921 757,967 771,359 763,255
Investment
securities 204,855 203,824 201,890 178,422 155,568
Earning assets 968,126 965,004 964,431 954,139 924,506
Noninterest-
bearing
deposits 90,116 89,996 92,884 88,809 95,335
Interest-
bearing
deposits 756,668 746,422 731,746 741,021 716,031
Interest-
bearing
liabilities 864,769 855,611 839,826 839,032 805,184
Shareholders'
equity 69,363 68,986 67,233 74,605 73,360
Asset Quality
Data
(Dollars in
thousands)
Nonperforming
loans $ 14,490 $ 8,966 $ 10,386 $ 4,108 $ 4,002
Other
nonperforming
assets 1,609 1,527 1,483 1,485 2,554
Net credit
losses 791 1,232 3,629 422 102
Allowance for
credit losses 18,239 18,665 19,142 9,333 8,380
Nonperforming
loans
to outstanding
loans 1.93 % 1.19 % 1.37 0.53 % 0.52 %
Annualized net
credit losses
to average
loans 0.42 0.65 1.90 0.22 0.06
Allowance for
credit losses
to outstanding
loans 2.43 2.47 2.53 1.21 1.10
Allowance for
credit losses
to nonperforming
loans 125.87 X 208.18 X 184.31 227.19 X 209.40 X
FINANCIAL SUMMARY
---------------------------
Second Six Months Ended
Quarter June 30
2006-2005 -------------------------------
Percent Percent
Variance 2006 2005 Variance
---------- ----------- --------- --------
Average Balances
(Dollars in thousands)
Assets 7.1 % $1,019,050 $927,089 9.9 %
Loans 3.0 759,988 714,586 6.4
Investment securities 36.3 206,767 147,719 40.0
Earning assets 8.6 975,815 870,990 12.0
Noninterest-bearing
deposits 3.1 88,248 82,693 6.7
Interest-bearing deposits 5.8 737,850 677,260 8.9
Interest-bearing
liabilities 5.9 826,358 758,983 8.9
Shareholders' equity (4.5) 68,552 71,490 (4.1)
Period-End Balances
(Dollars in thousands)
Assets 4.9 %
Loans (1.6)
Investment securities 31.7
Earning assets 4.7
Noninterest-bearing
deposits (5.5)
Interest-bearing deposits 5.7
Interest-bearing
liabilities 7.4
Shareholders' equity (5.4)
Asset Quality Data
(Dollars in thousands)
Nonperforming loans $14,490 $4,002
Other nonperforming assets 1,609 2,554
Net credit losses 2,023 291
Allowance for credit losses 18,524 8,380
Nonperforming loans
to outstanding loans 1.93 % 0.52 %
Annualized net credit
losses to average loans 0.53 0.08
Allowance for credit losses
to outstanding loans 2.43 1.10
Allowance for credit losses
to nonperforming loans 1.28 X 2.09 X
FINANCIAL SUMMARY
------------------------
2006 2005
----------------- ---------------------------
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
-------- -------- --------- -------- --------
Income Statement Data
(Dollars in thousands,
except share data)
Interest income:
Loans $15,814 $15,757 $ 15,363 $14,917 $13,630
Other 2,204 2,131 1,819 1,575 1,431
------- ------- -------- ------- -------
Total interest
income 18,018 17,888 17,182 16,492 15,061
Interest expense 8,479 7,786 7,181 6,690 5,975
------- ------- -------- ------- -------
Net interest income 9,539 10,102 10,001 9,802 9,086
Provision for credit
losses 365 755 13,627 1,187 638
------- ------- -------- ------- -------
Net interest income
after provision
for credit losses 9,174 9,347 (3,626) 8,615 8,448
Noninterest income 1,311 1,332 1,696 1,734 1,815
Noninterest expense 6,846 7,057 7,276 6,993 7,045
------- ------- -------- ------- -------
Income before income tax
expense 3,639 3,622 (9,206) 3,356 3,218
Income tax expense 1,249 1,244 (3,601) 1,138 1,083
------- ------- -------- ------- -------
Net income $ 2,390 $ 2,378 ($5,605) $ 2,218 $ 2,135
======= ======= ======== ======= =======
Net income per share:
Basic $ 0.34 $ 0.34 ($0.80) $ 0.32 $ 0.30
Diluted $ 0.33 $ 0.33 ($0.80) $ 0.31 $ 0.29
Cash dividends per
share $ 0.12 $ 0.12 $ 0.12 $ 0.11 $ 0.11
Other Data
Return on average assets 0.94 % 0.95 % (2.20) 0.88 % 0.90 %
Return on average equity 14.07 14.14 (29.99) 11.96 11.87
Net yield on earning
assets 4.00 4.28 4.24 4.21 4.12
Efficiency 61.87 60.70 61.23 59.77 63.67
Equity to assets 6.74 6.71 7.33 7.39 7.56
Loans to assets 74.34 74.82 75.59 77.04 77.27
Loans to deposits 92.23 91.76 92.87 93.94 94.44
Noninterest - bearing
deposits to total
deposits 10.84 10.52 10.94 10.69 11.09
FINANCIAL SUMMARY
-------------------------------
Second Six Months Ended
Quarter June 30
2006-2005 --------------------------
Percent Percent
Variance 2006 2005 Variance
---------- ------- ------- --------
Income Statement Data
(Dollars in thousands, except
share data)
Interest income:
Loans 16.0 % $31,571 $25,732 22.7 %
Other 54.0 4,335 2,706 60.2
------- -------
Total interest income 19.6 35,906 28,438 26.3
Interest expense 41.9 16,265 10,839 50.1
------- -------
Net interest income 5.0 19,641 17,599 11.6
Provision for credit losses (42.8) 1,120 1,318 (15.0)
------- -------
Net interest income after
provision for credit losses 8.6 18,521 16,281 13.8
Noninterest income (27.8) 2,643 3,953 (33.1)
Noninterest expense (2.8) 13,903 13,937 (0.2)
------- -------
Income before income tax
expense 13.1 7,261 6,297 15.3
Income tax expense 15.3 2,493 2,119 17.6
------- -------
Net income 11.9 $ 4,768 $ 4,178 14.1
======= =======
Net income per share:
Basic 13.3 % $ 0.68 $ 0.60 13.3 %
Diluted 13.8 % $ 0.66 $ 0.58 13.8 %
Cash dividends per share 9.1 % $ 0.24 $ 0.22 9.1 %
Other Data
Return on average assets 0.94 % 0.91 %
Return on average equity 14.03 11.79
Net yield on earning assets 4.14 4.15
Efficiency 61.29 63.70
Equity to assets 6.73 7.71
Loans to assets 74.58 77.08
Loans to deposits 92.00 94.03
Noninterest - bearing deposits
to total deposits 10.68 10.88
COMMON STOCK DATA
------------------
2006 2005
--------------------- --------------------------------
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
---------- ---------- ---------- ---------- ----------
Market value:
End of period $15.16 $16.05 $16.40 $17.58 $18.39
High 15.67 16.46 17.89 18.52 20.25
Low 14.70 14.00 14.40 16.56 16.82
Book value 9.81 9.79 9.55 10.60 10.49
Dividend 0.12 0.12 0.12 0.11 0.11
Shares
outstanding at
period-end 7,048,976 7,045,335 7,038,110 7,036,148 6,995,029
Average shares
outstanding 7,074,254 7,040,964 7,036,704 7,003,950 6,991,912
Shares traded 544,000 474,471 282,011 194,165 263,966
*T