FNB Financial Services Corporation Announces Record Earnings for 2006.

GREENSBORO, N.C. -- FNB Financial Services Corporation (NASDAQ: FNBF) ("FNB"), parent of FNB Southeast (the "Bank"), reported record net income for 2006 of $9.11 million, compared to 2005 results of $792,000. On a per diluted share basis, FNB earned $1.26 in 2006 and $0.11 in 2005. Net income for the fourth quarter of 2006 totaled $2.02 million, or $0.28 per diluted share, compared to a net loss of $5.61 million, or ($0.80) per diluted share, in 2005. The loss in 2005 was primarily attributable to a special provision for credit losses of $13.6 million.

"We are very pleased to achieve record earnings of $9.11 million in 2006. These results reflect a great deal of hard work by our employees, who persevered in a difficult time in the bank's history," stated Pressley A. Ridgill, President and Chief Executive Officer. "Last year at this time, we predicted that FNB would regain earnings momentum and we met that expectation. A critical result of the dedication of our Board, management, and employees is that the memorandum of understanding entered into with our banking regulators in the first quarter of 2006 was terminated as of December 31, 2006. We look forward in 2007 to continued success in creating enhanced economic value for our shareholders."

Interest income totaled $72.93 million for the full year of 2006, compared to $62.11 million in 2005; fourth quarter interest income was $18.46 million and $17.18 million for 2006 and 2005, respectively. Total interest expense was $34.54 million in 2006, compared to $24.71 million in 2005, an increase of 39.8%. Interest expense on deposits was $29.04 million, an increase of $7.55 million from the prior year. Fourth quarter interest expense on deposits totaled $7.77 million in 2006, an increase of $1.66 million from one year earlier

Noninterest income totaled $5.51 million in 2006, a 25.4% decrease from the $7.38 million recorded in 2005. For the fourth quarter, noninterest income declined 14.0%, from $1.70 million in 2005 to $1.46 million in 2006.

Assets at December 31, 2006 and 2005 totaled $1.01 billion. Loans amounted to $707.1 million at December 31, 2006, a decrease of $50.8 million, or 6.7%, from the previous yearend balance of $758.0 million. Net credit charge-offs for the fourth quarter of 2006 amounted to $2.78 million, or 1.56% of average outstanding loans on an annualized basis. Annual net credit losses to average outstanding loans are 0.99% for 2006, compared to 0.59% for 2005. FNB recorded a provision for credit losses of $1.44 million for the full year of 2006, compared to $16.13 million in 2005. The yearend allowance for credit losses to outstanding loans was 1.87% for 2006 and 2.53% for 2005.

Deposits decreased $6.1 million, or 0.7%, to $818.6 million at December 31, 2006. Shareholders' equity increased 8.1%, to $72.7 million and FNB increased its annual cash dividends by 8.9% to $0.49 per share in 2006. During 2006, FNB repurchased 123,073 shares of its common stock at an average cost of $15.03.

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 may contain 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.

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