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 September 30, 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 by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Exchange Act).
YES NO X
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 September 30,
2004
(Common stock, $0.315 par value) 800,000
FNB FINANCIAL CORPORATION
INDEX
Page
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Condensed consolidated balance sheets -
September 30, 2004 and December 31, 2003 4
Condensed consolidated statements of income -
Three months ended September 30, 2004 and 2003 5
Condensed consolidated statements of income -
Nine months ended September 30, 2004 and 2003 6
Condensed consolidated statements of comprehensive
income - Nine months ended September 30, 2004
and 2003 7
Condensed consolidated statements of cash flows -
Nine months ended September 30, 2004 and 2003 8
Notes to condensed consolidated financial
Statements 9-10
Item 2 - Management's discussion and analysis of financial
condition and results of operations 11-14
Item 3 - Quantitative and qualitative disclosures about
market risk 15
Item 4 - Controls and procedures 15
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 2. Changes in Securities 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of
Security Holders 16
Item 5. Other information 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
Exhibits 18-24
PART I - FINANCIAL INFORMATION
FNB FINANCIAL CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2004 2003
(unaudited) (audited*)
ASSETS:
Cash and Due from banks $ 4,081,126 $ 3,495,604
Interest-bearing deposits with banks 1,273,374 1,518,766
Investment Securities
Held-to-maturity (Market value - 2004
$ 266,066; 2003 $ 325,957) 266,869 326,809
Available-for-sale 41,969,945 32,039,636
Federal Reserve, Atlantic Central Banker's
Bank and Federal Home Loan Bank Stock 1,721,000 1,136,500
Loans 110,725,805 102,177,917
Less: Allowance for loan losses ( 1,033,409) ( 892,933)
--------------- ---------------
Loans, net 109,692,396 101,284,984
Bank building, equipment, furniture and
fixtures, net 3,226,371 3,269,724
Accrued interest receivable 681,003 555,760
Cash surrender value of life insurance 2,802,155 2,747,474
Other assets 1,960,933 659,758
--------------- ---------------
Total Assets $ 167,675,172 $ 147,035,015
=============== ===============
LIABILITIES :
Deposits:
Demand deposits $ 20,216,706 $ 15,901,219
Savings deposits 34,760,460 32,535,398
Time certificates 70,327,351 68,000,625
Other time deposits 747,904 284,667
--------------- ---------------
Total deposits 126,052,421 116,721,909
Accrued interest payable & other liabilities 998,536 640,972
Liability for other borrowed funds 25,356,751 14,680,992
Dividends payable 136,000 272,000
--------------- ---------------
Total Liabilities 152,543,708 132,315,873
--------------- ---------------
STOCKHOLDERS' EQUITY:
Capital stock, Common, par value $ 0.315;
6,000,000 shares authorized; 800,000
outstanding 252,000 252,000
Additional paid-in capital 1,789,833 1,789,833
Retained earnings 12,882,434 12,330,729
Accumulated other comprehensive income (loss) 207,197 346,580
--------------- ---------------
Total Stockholders' Equity 15,131,464 14,719,142
--------------- ---------------
Total Liabilities & Stockholders' Equity $ 167,675,172 $ 147,035,015
=============== ===============
*Condensed from audited financial statements.
The accompanying notes are an integral part of these
condensed financial statements.
FNB FINANCIAL CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended September 30, 2004 and 2003
(UNAUDITED)
2004 2003
Interest & Dividend Income
Interest & fees on loans $1,788,162 $1,858,225
Interest on investment securities:
Obligations of other U.S. Government Agencies 296,732 54,998
Obligations of State & Political Subdivisions 109,154 84,567
Interest on deposits with banks 4,336 7,941
Dividends on Equity Securities 6,503 4,140
Interest on federal funds sold 92 1,400
---------- ----------
Total Interest & Dividend Income 2,204,979 2,011,271
---------- ----------
Interest Expense
Interest on deposits 658,372 733,161
Interest on other borrowed money 172,187 108,488
---------- ----------
Total interest expense 830,559 841,649
---------- ----------
Net interest income 1,374,420 1,169,622
Provision for loan losses 54,000 36,000
---------- ----------
Net interest income after provision
for loan losses 1,320,420 1,133,622
---------- ----------
Other income
Service charges on deposit accounts 134,264 75,955
Other service charges, collection & exchange
charges, commissions and fees 131,489 68,141
Other income 25,609 29,354
Net securities gains/(losses) 0 989
---------- ----------
Total other income 291,362 174,439
---------- ----------
Other expenses 1,132,202 1,001,156
---------- ----------
Income before income taxes 479,580 306,905
Applicable income taxes 121,000 62,000
---------- ----------
Net income $ 358,580 $ 244,905
========== ==========
Earnings per share of Common Stock:
Net income per share $ 0.45 $ 0.31
Cash dividend declared per share $ 0.17 $ 0.17
Weighted average number of shares outstanding 800,000 800,000
The accompanying notes are an integral part of these
condensed financial statements.
FNB FINANCIAL CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Nine Months Ended September 30, 2004 and 2003
(UNAUDITED)
2004 2003
Interest & Dividend Income
Interest & fees on loans $ 5,255,107 $ 5,338,779
Interest on investment securities:
Obligations of other U.S. Government Agencies 679,146 458,581
Obligations of State & Political Subdivisions 325,328 263,483
Interest on deposits with banks 10,019 28,518
Dividends on Equity Securities 22,890 22,462
Interest on federal funds sold 695 6,368
------------- ------------
Total Interest & Dividend Income 6,293,185 6,118,191
------------- ------------
Interest Expense
Interest on deposits 1,956,361 2,226,061
Interest on other borrowed money 439,190 298,746
------------- ------------
Total interest expense 2,395,551 2,524,807
------------- ------------
Net interest income 3,897,634 3,593,384
Provision for loan losses 206,000 108,000
------------- ------------
Net interest income after
provision for loan losses 3,691,634 3,485,384
------------- ------------
Other income
Service charges on deposit accounts 329,766 224,411
Other service charges, collection & exchange
charges, commissions and fees 336,459 208,679
Other income 82,159 107,005
Net securities gains/(losses) 79,417 49,046
------------- ------------
Total other income 827,801 589,141
------------- ------------
Other expenses 3,265,581 2,813,911
------------- ------------
Income before income taxes 1,253,854 1,260,614
Applicable income taxes 326,149 302,968
------------- ------------
Net income $ 927,705 $ 957,646
============= ============
Earnings per share of Common Stock:
Net income per share $ 1.16 $ 1.20
Cash dividend declared per share $ 0.47 $ 0.46
Weighted average number of shares outstanding
The accompanying notes are an integral part of these
condensed financial statements.
FNB FINANCIAL CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Nine Months Ended September 30, 2004 and 2003
(UNAUDITED)
2004 2003
Net Income $ 927,705 $ 712,741
---------- ----------
Other Comprehensive:
Gross unrealized holding gains (losses) ( 131,767) 196,024
Reclassification adjustment for (gains) losses
realized in net income ( 79,417) ( 48,057)
---------- ----------
Net unrealized holding gains (losses) before taxes ( 211,184) 147,967
Tax effect 71,803 ( 50,309)
---------- ----------
Other comprehensive income (loss) ( 139,381) 97,658
---------- ----------
Comprehensive income (loss) $ 788,324 $ 810,399
========== ==========
The accompanying notes are an integral part of these
condensed financial statements.
FNB FINANCIAL CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 2004 and 2003
(UNAUDITED)
2004 2003
Cash flows from operating activities:
Net income $ 927,705 $ 712,741
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation & amortization 240,707 157,388
Provision for loan losses 206,000 72,000
Increase in Cash Surrender value
of Life Insurance ( 54,681) ( 48,082)
Net (gain) on sales of investments ( 79,417) ( 48,057)
(Increase) in accrued interest
receivable ( 125,243) ( 1,183)
Increase (decrease) in accrued interest
payable and other liabilities 357,564 ( 231,771)
(Increase) decrease in other assets ( 161,315) 45,761
------------ ------------
Net cash provided by operating activities: 1,311,320 658,797
------------ ------------
Cash flows from investing activities:
Net decrease in interest-
bearing deposits with banks 245,392 64,142
Purchases of Available-for-sale securities ( 19,413,310) ( 7,004,394)
Proceeds from maturities and calls of
securities 3,425,146 4,634,317
Proceeds sale of available-for-sale
securities 5,986,028 179,094
Net (increase) decrease in loans ( 8,613,412) ( 900,723)
Purchases of bank premises & equipment (net) ( 197,354) ( 783,974)
Purchases of investment in insurance company 0 ( 33,568)
(Purchase) sale of other bank stock ( 584,500) ( 239,400)
------------ ------------
Net cash (used) by investing activities ( 19,152,010) ( 4,084,506)
------------ ------------
Cash flows from financing activities:
Net increase (decrease) in deposits ( 709,230) 2,227,420
Purchase of deposits 8,971,683 0
Net increase (decrease) in other borrowings 10,675,759 2,662,474
Cash dividends paid ( 512,000) ( 368,000)
------------ ------------
Net cash provided (used) by financing activities 18,426,212 4,521,894
------------ ------------
Net increase (decrease) in cash & cash 585,522 1,096,185
equivalents
Cash & cash equivalents, beginning balance 3,495,604 3,650,351
------------ ------------
Cash & cash equivalents, ending balance $ 4,081,126 $ 4,746,536
Supplemental schedule of non cash investing and
financing activities:
Acquisition of Deposits:
Liability assumed for deposits acquired $ 10,039,743
Acquisition premium (discount) ( 1,068,060)
------------
Cash received for deposits acquired $ 8,971,683
============
The accompanying notes are an integral part of these
condensed financial statements.
FNB FINANCIAL CORPORATION
SEPTEMBER 30, 2004
(UNAUDITED)
REVIEW OF INTERIM FINANCIAL STATEMENTS
The condensed consolidated financial statements as of and
for the three and nine month periods ended September 30,
2004 and 2003 have been reviewed by independent certified
public accountants. Their 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 nine
months ended September 30, 2004 and September 30, 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
Brokers, 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
Statement of Financial Accounting Standards No. 104, 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.
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.
FNB FINANCIAL CORPORATION
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
SUMMARY
Net income for the first nine months of 2004 was $ 927,705 compared to
$ 957,646, for the first nine months of 2003. This represents a decrease
of $ 29,941 or 3.12% from 2003. Net income on an adjusted per share basis
for the first nine months of 2004 was $ 1.16 which is a decrease of $ 0.04
from the $ 1.20 per share for the nine months ended September30, 2003.
NET INTEREST INCOME
Total interest and dividend income for the first nine months of 2004 was
$ 6,293,185 compared to $ 6,118,191 for the first nine months of 2003, a
increase of $ 174,994.
This increase was due primarily to a increase in income from Investments of
$263,911. Although loans have steadily grown at 8.34% over average
balances for the first nine months of 2003, the effective yields on loans
have declined. The result of reduced loan yield has resulted in a decrease
in interest and fees on loans of $ 83,672
Interest expense for the nine months ended September 30, 2004, was
$ 2,395,551, a decrease of $ 129,256 from the $ 2,524,807 for the same
period in 2003. This was substantially done by maturing deposits that were
renewed at lower rates. 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 yields on loans.
Due to the growth of loans during the period, the bank increased its
provision for loan losses during the first nine months of 2004 to
$ 206,000. This is an increase in the provision of $ 98,000 or 92% over
the $ 108,000 provision for the nine month period in 2003.
The net interest margin has increased 13 basis points to 3.41% for the
first nine months of 2004 from that of the first nine months of 2003 which
was 3.28%. Management will continue to competitively price its loan and
deposit products to maintain desired net interest spreads.
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 86 90
Commercial and all other 38 0
------ -----
Total charge offs 124 90
------ -----
Recoveries of loans previously charged-off:
Real estate mortgages 0 0
Installment loans 58 45
Commercial and all other 0 0
------ -----
Total recoveries 58 45
------ -----
Net loans charged-off (recovered) 66 45
Provision for loan losses charged to operations 206 108
------ -----
Allowance for loan losses, September 30 $1,033 $ 991
====== =====
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.
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 nine months of 2004 increased
$ 238,660 over totals for the first nine months of 2003. This was due
primarily to $ 231,775 in loan origination revenue produced by FNB Mortgage
Brokers, Inc. which began operations September 2003. Operating expenses
for the period ended September 30, 2004, were $ 3,265,581, a $ 451,670
increase from the operating expenses incurred for the same period in 2003
of $2,813,911. This increase was mainly the result of increased personnel
costs, supplies, assessments, and expenses associated with the acquisition
of deposits in the Hancock branch.
Our income tax provision for the first nine months of 2004 was $ 326,149 as
compared to $ 302,968 for the first nine months of 2003. We continue to
operate with a marginal tax rate of 34% during the first nine months of
2004. The effective income tax rate for the first nine months of 2004 was
26.01% compared to 24.02% for the first nine months of 2003.
BALANCE SHEET AND EQUITY CHANGES
In June, the bank acquired the deposits of F&M Trust of Hagerstown
Maryland's Hancock Office. The purchase resulted in additional deposits of
approximately $ 10 million.
Total assets as of September 30, 2004, were $ 167,675,172, an increase of
$ 19,519,304 from the period ended September 30, 2003, representing an
increase of 13.17%. This increase was primarily due to the increased
borrowings from the federal Home Loan Bank as well as the aforementioned
deposit acquisition. Borrowings as of September 30, 2004, were
$ 25,356,751 compared to $ 14,228,576 as of September 30, 2003.
Total equity as of September 30, 2004, was $ 15,131,464, 9.02% of total
assets, as compared to $ 14,615,562, 9.68% of total assets as of September
30, 2003.
The Company's risk based capital ratios continue to exceed regulatory
minimum requirements.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes to the quantitative and
qualitative disclosures made in FNB Financial Corporation's annual
report on Form 10-K for the year ended December 31, 2003.
ITEM 4 - 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 September 30, 2004. Based on such
evaluation, such officers have concluded that, as of September 30,
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 third quarter of
2004.
PART II - OTHER INFORMATION
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
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 November 2, 2004 /s/John C.Duffey
John C. Duffey, President
and Director of the Company and
President/CEO of the Bank
(Duly Authorized Officer)
Date November 2, 2004 /s/Dale M. Fleck
Dale M. Fleck
Controller of the Bank
(Principal Financial &
Accounting Officer)
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.
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: November 2, 2004 By: /s/John C. Duffey
John C. Duffey,
President/CEO
(Principal Executive
Officer)
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.
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: November 2, 2004 By: /s/Dale M. Fleck
Dale M. Fleck
Controller
(Principal Financial
Officer)
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 September 30, 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
November 2, 2004
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 September 30, 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
November 2, 2004
EXHIBIT 99
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of DirectorsFNB Financial Corporation
McConnellsburg, Pennsylvania
We have reviewed the accompanying consolidated balance sheet of FNB
Financial Corporation and Subsidiaries as of September 30, 2004 and the
related consolidated statements of income for the three and nine months
ended September 30, 2004 and 2003 and consolidated statements of
comprehensive income for the nine months ended September 30, 2004 and 2003
and consolidated statements of cash flows for the nine months ended
September 30, 2004 and 2003. These financial statements are the
responsibility of the corporation's management.
We conducted our reviews in accordance with standards of the Public
Company Accounting Oversight Board (United States). 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 the standards of the Public
Company Accounting Oversight Board, 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
November 2, 2004