FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 2004
Commission file number: 33-66014
FNB Financial Corporation
-------------------------
(Exact name of registrant as specified in its charter)
Commonwealth of Pennsylvania 23-2466821
- ------------------------------------------ --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 Lincoln Way West, McConnellsburg, PA 17233
- ------------------------------------------ --------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 717/485-3123
------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
YES [X] NO [ }
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at March 31, 2004
- --------------------------------- -----------------------------
(Common stock, $0.315 par value) 800,000
Page 1
FNB FINANCIAL CORPORATION
INDEX
Page
PART I - FINANCIAL INFORMATION
Condensed consolidated balance sheets -
March 31, 2004 and December 31, 2003 4
Condensed consolidated statements of income -
Three months ended March 31, 2004 and 2003 5
Condensed consolidated statements of comprehensive
Income -
Three months ended March 31, 2004 and 2003 6
Condensed consolidated statements of cash flows -
Three months ended March 31, 2004 and 2003 7
Notes to condensed consolidated financial
Statements 8 - 9
Management's discussion and analysis of financial
condition and results of operations 10 - 13
PART II - OTHER INFORMATION 15
Signatures 16
Exhibits 21 - 23
Page 2
PART I - FINANCIAL INFORMATION
Page 3
FNB FINANCIAL CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2004 2003
(unaudited) (audited*)
ASSETS:
Cash and Due from $ 3,803,087 $ 3,495,604
Interest-bearing deposits with banks 210,382 1,518,766
Investment Securities
Held-to-maturity (Market value - 2004 317,674 326,809
$ 316,735; 2003 $ 325,957)
Available-for-sale 28,648,132 32,039,636
Federal Reserve, Atlantic Central Banker's 1,136,500
Bank and Federal Home Loan Bank Stock 1,190,800
Loans 102,282,339 102,177,917
Less: Allowance for loan losses ( 967,435) ( 892,933)
---------------- --------------
Loans, net 101,314,904 101,284,984
Bank building, equipment, furniture and 3,195,820 3,269,724
fixtures, net
Accrued interest receivable 537,826 555,760
Cash surrender value of life insurance 2,766,834 2,747,474
Other assets 1,053,291 659,758
---------------- --------------
Total Assets $ 143,038,750 $ 147,035,015
================ ==============
LIABILITIES :
Deposits:
Demand deposits $ 16,692,280 $ 15,901,219
Savings deposits 31,913,041 32,535,398
Time certificates 67,353,724 68,000,625
Other time deposits 495,384 284,667
---------------- --------------
Total deposits 116,454,429 116,721,909
Accrued interest payable & other liabilities 886,785 607,133
Deferred income taxes 61,122 33,839
Liability for other borrowed funds 10,596,330 14,680,992
Dividends payable 112,000 272,000
---------------- --------------
Total Liabilities 128,110,666 132,315,873
---------------- --------------
STOCKHOLDERS' EQUITY:
Capital stock, Common, par value $ 0.315; 252,000 252,000
6,000,000 shares authorized; 800,000
outstanding
Additional paid-in capital 1,789,833 1,789,833
Retained earnings 12,486,712 12,330,729
Accumulated other comprehensive income 399,539 346,580
---------------- --------------
Total Stockholders' Equity 14,928,084 14,719,142
---------------- --------------
Total Liabilities & Stockholders' Equity $ 143,038,750 $ 147,035,015
================ ==============
*Condensed from audited financial statements.
The accompanying notes are an integral part of these condensed financial
statements.
Page 4
FNB FINANCIAL CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31, 2004 and 2003
(UNAUDITED)
2004 2003
Interest & Dividend Income
Interest & fees on loans $ 1,729,245 $ 1,775,304
Interest on investment securities:
Obligations of other U.S. Government Agencies 195,497 152,528
Obligations of State & Political Subdivisions 103,249 90,125
Interest on deposits with banks 3,425 9,812
Dividends on Equity Securities 9,492 9,307
Interest on federal funds sold 37 0
------------ ------------
Total Interest & Dividend Income 2,040,945 2,037,076
------------ ------------
Interest Expense
Interest on deposits 669,863 751,150
Interest on Other Borrowed Money 123,076 90,514
------------ ------------
Total interest expense 792,939 841,664
------------ ------------
Net interest income 1,248,006 1,195,412
Provision for loan losses 98,000 36,000
------------ ------------
Net interest income after provision for 1,150,006 1,159,412
------------ ------------
loan losses
Other income
Service charges on deposit accounts 81,144 90,837
Other service charges, collection & exchange 108,713 55,433
charges, commissions and fees
Other income 29,060 67,326
Net Securities gains/(losses) 79,417 2,198
------------ ------------
Total other income 298,334 215,794
------------ ------------
Other expenses 1,077,708 870,849
------------ ------------
Income before income taxes 370,632 504,357
Applicable income taxes 102,649 106,073
------------ ------------
Net income $ 267,983 $ 398,284
============ ============
Earnings per share of Common Stock:
Net income per share $ 0.33 $ 0.50
Cash dividend declared per share $ 0.14 $ 0.13
Weighted average number of shares outstanding 800,000 800,000
The accompanying notes are an integral part of these condensed financial
statements.
Page 5
FNB FINANCIAL CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended March 31, 2004 and 2003
(UNAUDITED)
2004 2003
Net income $ 267,983 $ 398,284
---------- ----------
Other Comprehensive income:
Gross unrealized holding gains (losses) 159,659 ( 41,189)
Reclassification adjustment for (gains) ( 79,417) ( 2,198)
---------- ----------
losses realized in net income
Net unrealized holding gains (losses)
before taxes 80,242 ( 43,387)
Tax effect ( 27,283) 14,752
---------- ----------
Other comprehensive income (loss) 52,959 ( 28,635)
---------- ----------
Comprehensive Income $ 320,942 $ 369,649
========== ==========
The accompanying notes are an integral part of these condensed financial
statements.
Page 6
FNB FINANCIAL CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 2004 and 2003
(UNAUDITED)
2004 2003
Cash flows from operating activities:
Net income $ 267,983 $ 398,284
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation & amortization 80,081 81,527
Provision for loan losses 98,000 36,000
Net (gain)/loss on sales of investments ( 79,417) ( 2,198)
(Increase) decrease in accrued interest 17,934 54,889
receivable
Increase (decrease) in accrued interest 279,652 ( 202,975)
payable and other liabilities
Increase in cash value of insurance ( 19,360) ( 24,041)
(Increase) decrease in other assets ( 393,533) 63,949
----------- -----------
Net cash provided (used)by operating activities 251,340 405,435
----------- -----------
Cash flows from investing activities:
Net (increase) decrease in interest-bearing 1,308,384 ( 143,011)
deposits with banks
Purchases of Available-for-sale securities ( 2,434,865) ( 3,904,356)
Proceeds from maturities and calls of 9,135 1,905,272
securities
Proceeds from sale of available for sale 5,986,028 0
securities
Net (increase) decrease in loans ( 127,920) ( 983,455)
Purchases of bank premises & equipment (net) ( 6,177) ( 420,736)
Proceeds from Sale of Furniture & Fixtures 0 0
Sale (purchase) of other bank stock ( 54,300) ( 261,700)
----------- -----------
Net cash provided (used) by investing activities 4,680,285 ( 3,807,986)
----------- -----------
Cash flows from financing activities:
Net increase (decrease) in deposits ( 267,480) 1,463,197
Net increase (decrease) in Other borrowings ( 4,084,662) 4,078,998
Cash dividends paid ( 272,000) ( 264,000)
----------- -----------
Net cash provided (used) by financing activities ( 4,624,142) 5,278,195
----------- -----------
Net increase (decrease) in cash & cash 307,483 1,875,644
equivalents
Cash & cash equivalents, beginning balance 3,495,604 3,650,351
----------- -----------
Cash & cash equivalents, ending balance $ 3,803,087 $ 5,525,995
=========== ===========
The accompanying notes are an integral part of these condensed financial
statements.
Page 7
FNB FINANCIAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004
(UNAUDITED)
REVIEW OF INTERIM FINANCIAL STATEMENTS
The condensed consolidated financial statements as of and for the three
month periods ended March 31, 2004 and 2003 have been reviewed by
independent certified public accountants. The report on their review is
attached as Exhibit 99 to this 10-Q.
NOTE 1 - BASIS OF PRESENTATION
The financial information presented at and for the three months ended March
31, 2004 and March 31, 2003 is unaudited. Information presented at December
31, 2003, is condensed from audited year-end financial statements.
However, this unaudited information reflects all adjustments, consisting
solely of normal recurring adjustments, that are, in the opinion of
management, necessary for a fair presentation of the financial position,
results of operations and cash flows for the interim period.
NOTE 2 - PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
corporation and its wholly-owned subsidiaries, The First National Bank of
McConnellsburg and FNB Mortgage Broker's, Inc. All significant
intercompany transactions and accounts have been eliminated.
NOTE 3 - CASH FLOWS
For purposes of the statements of cash flows, the corporation has defined
cash and cash equivalents as those amounts included in the balance sheet
captions "cash and due from banks" and "federal funds sold". As permitted
by Generally Accepted Accounting Principles, the corporation has elected to
present the net increase or decrease in deposits in banks, loans, and
deposits in the statement of cash flows.
NOTE 4 - FEDERAL INCOME TAXES
For financial reporting purposes the provision for loan losses charged to
operating expense is based on management's judgment, whereas for federal
income tax purposes, the amount allowable under present tax law is
deducted. Additionally, certain expenses are charged to operating expense
in the period the liability is incurred for financial reporting purposes,
whereas for federal income tax purposes, these expenses are deducted when
paid. As a result of these timing differences, deferred taxes were
computed after reducing pre-tax accounting income for nontaxable municipal
and loan income.
Page 8
NOTE 5 - OTHER COMMITMENTS
In the normal course of business, the bank makes various commitments and
incurs certain contingent liabilities which are not reflected in the
accompanying financial statements. These commitments include various
guarantees and commitments to extend credit. The bank does not anticipate
any losses as a result of these transactions.
Page 9
FNB FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
SUMMARY
Net income for the first three months of 2004 was $ 267,983 compared to
$ 398,284, for the first three months of 2003. This represents a decrease of
$ 130,301 or 32.71% from 2003. Net income on an adjusted per share basis for
the first three months of 2004 was $ 0.33 which is a decrease of $ 0.17 from the
$0.50 per share for the three months ended March 31, 2003.
NET INTEREST INCOME
Total interest and dividend income for the first three months of 2004 was
$ 2,040,945 compared to $ 2,037,076 for the first three months of 2003, an
increase of $ 3,869.
This increase was due primarily to increased income from investment securities
of $ 56,093. Loan growth has stabilized and the banks loan portfolio increased
..1% over average balances for the first quarter of 2003. Effective yields on
earning assets continue to be below yields realized in the first quarter of
2003. The stabilization in the growth of earning assets and the reduced
interest margins has resulted in a decrease in interest and fees on loans of
$ 46,059.
In order to sustain desired net interest margins, deposit rates were lowered in
the end of the first quarter to decrease funding costs of the lower rates on
loans.
Interest expense for the three months ended March 31, 2004, was $ 792,939, a
decrease of $ 48,725 from the $ 841,664 for the same period in 2003. Total
deposits increased $ 5,323,000 from totals at March 31, 2003. This increase of
$7,367,000 in interest bearing NOW accounts and Money Market accounts and a
decrease in demand deposit accounts by $4,054,000 further pressured our margins.
This coupled with the aforementioned general reduction in loan rates and the
lack of growth in loans outstanding caused an increase in net interest income by
4.09% over first quarter 2003. The bank further shored up its allowance for
loan losses during the first quarter by increasing the provision by $62,000 or
172% over the $36,000 provision over the previous period in 2003. The net
interest margin has decreased 25 basis points to 3.71% for the first three
months of 2004 from that of the first three months of 2003 which was 3.96%.
Management will continue to competitively price its loan and deposit products to
maintain desired net interest spreads.
Page 10
PROVISION AND ALLOWANCE FOR LOAN LOSSES
Activity in the allowance for loan losses is summarized as follows:
2004 2003
(000 Omitted)
Allowance for loan losses beginning of the year $ 893 $ 928
Loans charged-off during the year
Real estate mortgages 0 0
Installment loans 35 48
Commercial and all other 0 0
----- -----
Total charge offs 35 48
----- -----
Recoveries of loans previously charged-off:
Real estate mortgages 0 0
Installment loans 11 13
Commercial and all other 0 0
----- -----
Total recoveries 11 13
Net loans charged-off (recovered) 24 35
Provision for loan losses charged to operations 98 36
----- -----
Allowance for loan losses, March 31 $ 967 $ 929
===== =====
We utilize a comprehensive systematic review of our loan portfolio on a
quarterly basis in order to determine the adequacy of the Allowance for Loan
losses. Each quarter the loan portfolio is categorized into various Pools as
follows:
POOL #1 Specific allowances for any individually identified
trouble loans
POOL #2 Commercial and Industrial
POOL #3 Commercial and Industrial - Real Estate Secured
POOL #4 Consumer Demand and Installment
POOL #5 Consumer Mortgage and Home Equity
Lines of credit and non-secured commercial loans with balances of $ 100,000 and
over are individually reviewed. Also, loans that are 90 days or more past due
or have been previously classified as substandard are individually reviewed.
Allocations to the Allowance for Loan Losses are based upon classifications
assigned to those loans.
Loan classifications utilized are consistent with OCC regulatory guidelines and
are as follows:
Allowance Factors
-----------------
Loss Charge-off
Doubtful 20% - 50%
Substandard 10% - 20%
Special Mention 5% - 10%
Watch 1% - 5%
The remaining portion of the Pools are evaluated as groups with allocations made
to the Allowance based on historical loss experience, current and anticipated
trends in delinquencies, and general economic conditions within the bank's
trading area.
Page 11
In addition to the aforementioned internal loan review, the Bank engaged an
outside Firm to conduct an independent loan review during the first quarter of
2004 in order to validate the methodologies used internally and to independently
test the adequacy of the Allowance for Loan Losses.
Delinquencies are well below peer group averages and management is not aware of
any problem loans that are indicative of trends, events, or uncertainties that
would significantly impact operations, liquidity or capital.
NON-INTEREST INCOME AND EXPENSES
Total noninterest income for the first three months of 2004 increased $ 82,510
over totals for the first quarter of 2003. This was due primarily to $ 66,034 in
loan origination revenue produced by Money Marketing Inc. This company was
purchased by the Corporation in September 2003. Operating expenses for the
period ended March 31, 2004, were $ 1,077,708, a $ 206,859 increase from the
operating expenses incurred for the same period in 2003 of $ 870,849. This
increase was mainly the result of expenses associated with Money Marketing Inc.
Our income tax provision for the first three months of 2004 was $ 102,649 as
compared to $ 106,073 for the first three months of 2003. We continue to operate
with a marginal tax rate of 34% during the first quarter of 2004. The effective
income tax rate for the first three months of 2004 was 27.63% compared to 21.03%
for the first three months of 2003.
BALANCE SHEET AND EQUITY CHANGES
Total assets as of March 31, 2004, were $ 143,038,750, an increase of
$ 4,228,476 from the period ended March 31, 2003, representing an increase of
3.0%. This increase was primarily due to the growth in the investment
portfolio. As loan growth flattened, loans as of March 31, 2004, were
$ 102,282,339 compared to $ 102,403,378 as of March 31, 2003.
Total equity as of March 31, 2004, was $ 14,928,084, 10.43% of total assets, as
compared to $ 14,442,472, 10.40% of total assets as of March 31, 2003.
The Company's risk based capital ratios continue to exceed regulatory minimum
requirements.
Page 12
CONTROLS AND PROCEDURES
The company's Chief Executive Officer and Chief Financial Officer have evaluated
the effectiveness of the company's disclosure controls and procedures (as such
term is defined in Rules 13a-14(c) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) as of March 31, 2004. Based on such evaluation,
such officers have concluded that, as of March 31, 2004, the company's
disclosure controls and procedures are effective in alerting them on a timely
basis to material information relating to the company (including its
consolidated subsidiaries) required to be included in the company's periodic
filings under the Exchange Act.
CHANGES IN INTERNAL CONTROLS
There have not been any significant changes in the company's internal control
over financial reporting or in other factors that could significantly affect
such control during the first quarter of 2004.
Page 13
PART II - OTHER INFORMATION
Page 14
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
None
Item 3 - Defaults Upon Senior Securities
Not Applicable
Item 4 - Submission of Matters to a Vote of Security Holders
None
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
a. Exhibits:
Exhibit Number Referred to
Item 601 of Regulation S-K: Description of Exhibit:
31.1 Certification of Chief Executive Officer
pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
31.2 Certification of Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
32.1 Certification of Chief Executive Officer
pursuant to 18 U.S.C. Section 1350.
32.2 Certification of Chief Financial Officer
pursuant to 18 U.S.C. Section 1350.
99 Report of Independent
Accountant's on interim
financial statements.
b. Reports on Form 8-K - None
Page 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date May 11, 2004 /s/John C. Duffey
------------ -------------------------------------
John C. Duffey, President
and Director of the Company and
President/CEO of the Bank
(Duly Authorized Officer)
Date May 11, 2004 /s/Dale M. Fleck
------------ -------------------------------------
Dale M. Fleck
Controller of the Bank
(Principal Financial &
Accounting Officer)
Page 16
Exhibit 31.1
CERTIFICATION
I, John C. Duffey, President/CEO, certify, that:
1. I have reviewed this quarterly report on Form 10-Q of FNB Financial
Corporation.
2. Based on my knowledge, the quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report.
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report.
4. The registrant's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and we have:
(a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during
the period in which this quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this quarterly report
our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by
this quarterly report based on such evaluation; and
(c) disclosed in this quarterly report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Page 17
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
function):
(a) all significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial
information; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: May 11, 2004 By: /s/John C. Duffey
------------ --------------------------------
John C. Duffey,
President/CEO
(Principal Executive
Officer)
Page 18
Exhibit 31.2
CERTIFICATION
I, Dale M. Fleck, Controller, certify, that:
1. I have reviewed this quarterly report on Form 10-Q of FNB Financial
Corporation.
2. Based on my knowledge, the quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report.
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report.
4. The registrant's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and we have:
(a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during
the period in which this quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this quarterly report
our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by
this quarterly report based on such evaluation; and
(c) disclosed in this quarterly report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Page 19
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
function):
(a) all significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial
information; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: May 11, 2004 By: /s/Dale M. Fleck
------------ --------------------------------
Dale M. Fleck
Controller
(Principal Financial
Officer)
Page 20
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of FNB Financial Corporation (the
"Company") on Form 10-Q for the period ending March 31, 2004 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, John C.
Duffey, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C.
section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of
2002, that:
1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/ John C. Duffey
----------------------------
Chief Executive Officer
May 11, 2004
Page 21
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of FNB Financial Corporation (the
"Company") on Form 10-Q for the period ending March 31, 2004 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Dale M.
Fleck, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C.
section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/ Dale M. Fleck
----------------------------
Chief Financial Officer
May 11, 2004
Page 22
Exhibit 99
INDEPENDENT ACCOUNTANT'S REPORT
Board of DirectorsFNB Financial Corporation
McConnellsburg, Pennsylvania
We have reviewed the accompanying consolidated balance sheet of FNB
Financial Corporation and Subsidiaries as of March 31, 2004 and the related
consolidated statements of income for the three months ended March 31, 2004 and
2003 and consolidated statements of comprehensive income for the three months
ended March 31, 2004 and 2003 and consolidated statements of cash flows for the
three months ended March 31, 2004 and 2003. These financial statements are the
responsibility of the corporation's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the consolidated financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying consolidated financial statements for them to
be in conformity with generally accepted accounting principles.
/s/ Smith Elliott Kearns & Company, LLC
SMITH ELLIOTT KEARNS & COMPANY, LLC
Chambersburg, Pennsylvania
May 11, 2004
Page 23