<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31,
1998; OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
______________ to ______________.
Commission file number: 0-13086
-------
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
FNB FINANCIAL SERVICES CORPORATION EMPLOYEES' SAVINGS
PLUS AND PROFIT SHARING PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
FNB FINANCIAL SERVICES CORPORATION
202 South Main Street
Reidsville, North Carolina 27320
<PAGE> 2
FNB FINANCIAL SERVICES CORPORATION
EMPLOYEES' SAVINGS PLUS AND PROFIT
SHARING PLAN
Financial Statements
for the three years ended
December 31, 1998
<PAGE> 3
FNB FINANCIAL SERVICES CORPORATION
EMPLOYEES' SAVINGS PLUS AND PROFIT
SHARING PLAN
Contents
Page
Report of Independent Accountants 2
Statements of Net Assets Available for Benefits 3
Statements of Changes in Net Assets Available for Benefits with
Fund Information 4 - 6
Notes to Financial Statements 7 - 9
<PAGE> 4
[PRICEWATERHOUSECOOPERS LLP]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
FNB Financial Services Corporation
Employees' Savings Plus and Profit Sharing Plan
In our opinion, the accompanying statement of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of FNB Financial Services Corporation Employees' Savings Plus and Profit
Sharing Plan (the "Plan") at December 31, 1998, and the changes in net assets
available for benefits for the year then ended in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Plan's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our
audit of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above. The
financial statements of the Plan as of December 31, 1997 and for each of the
two years in the period then ended were audited by other independent
accountants whose report dated May 21, 1998 expressed an unqualified opinion
on those statements.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The fund information in the statement of
net assets available for benefits as of December 31, 1998 and the statement of
changes in net assets available for benefits for the year then ended is
presented for purposes of additional analysis rather than to present the net
assets available for benefits and changes in net assets available for benefits
of each fund. This fund information is the responsibility of the Plan's
management. The fund information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
PricewaterhouseCoopers LLP
Raleigh, North Carolina
May 20, 1999
<PAGE> 5
3
FNB FINANCIAL SERVICES CORPORATION
EMPLOYEES' SAVINGS PLUS AND PROFIT SHARING PLAN
Statements of Net Assets Available for Benefits (with fund information)
December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
Assets ---------- ----------
<S> <C> <C>
Cash and cash equivalents $ 16,803 $ 24,292
Investments:
At fair value:
Shares of registered investment companies:
Capital Preferred Fund (Income Fund),
6,319 shares in 1998 63,185 --
Vanguard Wellesley Income Fund (Balanced Fund),
10,548 shares in 1998 and
9,524 shares in 1997 233,327 208,199
Fidelity Disciplined Equity Fund (Equity Fund),
31,091 shares in 1998 and
26,860 shares in 1997 911,578 694,608
T. Rowe Price International Stock Fund
(International Fund), 5,493 shares in 1998 and
5,072 shares in 1997 82,342 68,067
FNB Financial Services Corporation Common Stock
(FNB Common Stock Fund), 35,574 shares in 1998 and
26,727 shares in 1997 595,863 681,541
At contract value:
Due from Provident Mutual Investment Contract
(Income Fund) -- 55,316
---------- ----------
Total assets 1,903,098 1,732,023
Liabilities
Accrued expenses -- 1,316
---------- ----------
Net assets available for benefits $1,903,098 $1,730,707
========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 6
FNB FINANCIAL SERVICES CORPORATION
EMPLOYEES' SAVINGS PLUS AND PROFIT SHARING PLAN
Statements of Changes in Net Assets Available for
Benefits (with fund information)
Year Ended December 31, 1998
<TABLE>
<CAPTION>
Participant Directed
----------------------------------------------
Income Balanced Equity
Fund Fund Fund
-------- --------- ---------
<S> <C> <C> <C>
Additions to net assets
attributed to:
Investment income:
Net appreciation
(depreciation) in fair
value of investments $ -- $ 2,797 $ 96,914
Capital gains -- 11,536 52,925
Investment income 2,883 27,300 7,786
-------- --------- ---------
Total investment income 2,883 41,633 157,625
-------- --------- ---------
Contributions:
Participants' 6,084 23,651 73,451
Employer's -- -- --
-------- --------- ---------
Total contributions 6,084 23,651 73,451
-------- --------- ---------
Total additions 8,967 65,284 231,076
-------- --------- ---------
Deductions from net assets
attributed to:
Benefits paid to participants 41 23,825 14,430
Administrative expenses 729 3,715 13,368
-------- --------- ---------
Total deductions 770 27,540 27,798
-------- --------- ---------
Net increase (decrease) prior to
interfund transfers 8,197 37,744 203,278
Interfund transfers 69 (10,586) 22,748
-------- --------- ---------
Net increase (decrease) 8,266 27,158 226,026
Net assets available for benefits:
Beginning of year 55,744 209,212 697,413
-------- --------- ---------
End of year $ 64,010 $ 236,370 $ 923,439
======== ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 7
4
<TABLE>
<CAPTION>
Non-Participant
Participant Directed Directed
------------------------------ ---------------
FNB FNB
International Common Stock Common Stock
Fund Fund Fund Total
-------- -------- -------- ----------
<S> <C> <C> <C> <C>
$ 9,129 $(136,102) $(144,356) $ (171,618)
-- -- -- 64,461
3,932 3,590 3,815 49,306
-------- --------- --------- ----------
13,061 (132,512) (140,541) (57,851)
-------- --------- --------- ----------
15,648 110,429 -- 229,263
-- -- 73,702 73,702
-------- --------- --------- ----------
15,648 110,429 73,702 302,965
-------- --------- --------- ----------
28,709 (22,083) (66,839) 245,114
-------- --------- --------- ----------
462 4,616 4,954 48,328
1,356 2,503 2,724 24,395
-------- --------- --------- ----------
1,818 7,119 7,678 72,723
-------- --------- --------- ----------
26,891 (29,202) (74,517) 172,391
(12,231) -- -- --
-------- --------- --------- ----------
14,660 (29,202) (74,517) 172,391
68,756 321,544 378,038 1,730,707
-------- --------- --------- ----------
$ 83,416 $ 292,342 $ 303,521 $1,903,098
======== ========= ========= ==========
</TABLE>
<PAGE> 8
FNB FINANCIAL SERVICES CORPORATION
EMPLOYEES' SAVINGS PLUS AND PROFIT SHARING PLAN
Statements of Changes in Net Assets Available for
Benefits (with fund information)
Year Ended December 31, 1997
<TABLE>
<CAPTION>
Participant Directed
----------------------------------------------
Income Balanced Equity
Fund Fund Fund
-------- --------- ---------
<S> <C> <C> <C>
Additions to net assets
attributed to:
Investment income:
Net appreciation
(depreciation) in fair
value of investments $ 107 $ 15,791 $ 91,691
Capital gains (losses) (464) 11,398 87,700
Investment income 4,466 13,689 6,693
-------- --------- ---------
Total investment income 4,109 40,878 186,084
-------- --------- ---------
Contributions
Participants' 3,112 27,078 97,816
Employer's -- -- --
-------- --------- ---------
Total contribution 3,112 27,078 97,816
-------- --------- ---------
Total additions 7,221 67,956 283,900
-------- --------- ---------
Deductions from net assets
attributed to:
Benefits paid to participants 12,685 25,585 53,129
Administrative expenses 2,062 7,078 20,451
-------- --------- ---------
Total deductions 14,747 32,663 73,580
-------- --------- ---------
Net increase (decrease) prior to
interfund transfers (7,526) 35,293 210,320
Interfund transfers (17,135) (79,725) (240,765)
-------- --------- ---------
Net increase (decrease) (24,661) (44,432) (30,445)
Net assets available for benefits:
Beginning of year 80,405 253,644 727,858
-------- --------- ---------
End of year $ 55,744 $ 209,212 $ 697,413
======== ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 9
4
<TABLE>
<CAPTION>
Non-Participant
Participant Directed Directed
------------------------------ ---------------
FNB FNB
International Common Stock Common Stock
Fund Fund Fund Total
-------- -------- -------- ----------
<S> <C> <C> <C> <C>
$(10,918) $ 23,993 $155,400 $ 276,064
(1,092) -- -- 97,542
61 3,313 3,896 32,118
-------- -------- -------- ----------
(11,949) 27,306 159,296 405,724
-------- -------- -------- ----------
8,737 52,906 -- 189,649
-- -- 69,091 69,091
-------- -------- -------- ----------
8,737 52,906 69,091 258,740
-------- -------- -------- ----------
(3,212) 80,212 228,387 664,464
-------- -------- -------- ----------
-- 18,392 -- 109,791
1,477 4,456 3,463 38,986
-------- -------- -------- ----------
1,477 22,848 3,463 148,777
-------- -------- -------- ----------
(4,689) 57,364 224,924 515,686
73,445 264,180 -- --
-------- -------- -------- ----------
68,756 321,544 224,924 515,686
-- -- 153,114 1,215,021
-------- -------- -------- ----------
$ 68,756 $321,544 $378,038 $1,730,707
======== ======== ======== ==========
</TABLE>
<PAGE> 10
FNB FINANCIAL SERVICES CORPORATION
EMPLOYEES' SAVINGS PLUS AND PROFIT SHARING PLAN
Statements of Changes in Net Assets Available for
Benefits (with fund information)
Year Ended December 31, 1996
<TABLE>
<CAPTION>
Participant Directed
------------------------------------------------
Balanced
Income Fund Fund Equity Fund
----------- --------- -----------
<S> <C> <C> <C>
Additions to net assets attributed to:
Investment income:
Net appreciation (depreciation)
in fair value of investments $ -- $ 2,684 $ (34,466)
Capital gains -- 395 78,536
Investment income 5,527 13,380 10,108
--------- -------- ---------
Total investment income 5,527 16,459 54,178
--------- -------- ---------
Contributions:
Participants' 6,909 28,277 96,708
Employer's -- -- --
--------- -------- ---------
Total contributions 6,909 28,277 96,708
--------- -------- ---------
Total additions 12,436 44,736 150,886
--------- -------- ---------
Deductions from net assets attributed to:
Benefits paid to participants 272 11,276 32,612
Administrative expenses 1,776 3,591 12,077
--------- -------- ---------
Total deductions 2,048 14,867 44,689
--------- -------- ---------
Net increase prior to interfund
transfers 10,388 29,869 106,197
Interfund transfers (30,553) 88,933 (58,380)
--------- -------- ---------
Net increase (decrease) (20,165) 118,802 47,817
Net assets available for benefits:
Beginning of year 100,570 134,842 680,041
--------- -------- ---------
End of year $ 80,405 $253,644 $ 727,858
========= ======== =========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 11
5
<TABLE>
<CAPTION>
Non-Participant Directed
------------------------------
FNB
Common Stock Contribution
Fund Account Total
-------- --------- -----------
<S> <C> <C> <C>
$ 31,177 $ -- $ (605)
417 -- 78,348
3,848 -- 32,863
-------- --------- -----------
35,442 -- 111,606
-------- --------- -----------
-- -- 131,894
48,525 -- 48,525
-------- --------- -----------
48,525 -- 180,419
-------- --------- -----------
83,967 -- 292,025
-------- --------- -----------
6,448 5,980 56,588
-- -- 17,444
-------- --------- -----------
6,448 5,980 74,032
-------- --------- -----------
77,519 (5,980) 217,993
-- -- --
-------- --------- -----------
77,519 (5,980) 217,993
75,595 5,980 997,028
-------- --------- -----------
$153,114 $ -- $ 1,215,021
======== ========= ===========
</TABLE>
<PAGE> 12
7
FNB FINANCIAL SERVICES CORPORATION
EMPLOYEES' SAVINGS PLUS AND PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 1998, 1997 and 1996
Note 1 - Description of plan
The following description of the FNB Financial Services Corporation Employees'
Savings Plus and Profit Sharing Plan (The Plan) is provided for general
information purposes only. Participants should refer to the Plan agreement for
more complete information.
General - The Plan is a defined contribution plan covering all full-time
employees of FNB Financial Services Corporation (the Company) who have one year
of service and are age twenty-one or older. It is subject to the provisions of
the Employee Retirement Income Security Act of 1974 (ERISA).
Contributions - Each year, participants may contribute up to 15 percent of
pretax annual compensation, as defined in the Plan. Participants may also
contribute amounts representing distributions from other qualified plans. The
Company makes matching contributions of 50 percent of the first 6 percent of
base compensation that a participant contributes to the Plan. Discretionary
contributions may be contributed at the option of the Company's Board of
Directors. The Company's Board of Directors has not elected to make a
discretionary contribution in any of the plan years since existence.
Contributions are subject to certain limitations.
Participant accounts - Each participant's account is credited with the
participant's contribution and allocations of (a) the Company's contribution and
(b) Plan earnings, and charged with an allocation of administrative expenses.
Allocations are based on participant earnings or account balances, as defined.
The benefit to which a participant is entitled is the benefit that can be
provided from the participant's vested account.
Vesting - Participants are immediately vested in their contributions plus actual
earnings thereon. Vesting in the Company's matching and discretionary
contribution portion of their accounts plus actual earnings thereon is based on
years of continuous service. A participant vests 20 percent per year until 100
percent vested after 5 years of credited service for both the matching and
discretionary contributions.
Investment options - Upon enrollment in the Plan, a participant may direct their
contributions in 10 percent increments in any of five investment options.
Income Fund - fund typically invested in U.S. Government obligations,
certificates of deposits, investment grade corporate bonds of reasonably
short maturity, money market investments, and in guaranteed investment
contract with an insurance company.
Balanced Fund - mutual fund typically invested in various instruments such as
cash equivalents, bonds, convertible securities and stocks.
Equity Fund - mutual fund typically invested in diversified portfolio of
common stock and similar equities, pooled equity funds, and money market
investments.
<PAGE> 13
8
FNB FINANCIAL SERVICES CORPORATION
EMPLOYEES' SAVINGS PLUS AND PROFIT SHARING PLAN
Notes to Financial Statements (continued)
December 31, 1998, 1997 and 1996
Note 1 - Description of plan (continued)
International Fund - mutual fund invested in diversified securities from
throughout the world, emphasizing companies in major world markets.
FNB Financial Services Corporation Common Stock Fund - funds invested
principally in FNB Financial Services Corporation common stock purchased at
current market prices.
The employer matching contribution is invested in the FNB Financial Services
Corporation Common Stock Fund. The participants may not direct or redirect
investments of employer matching contributions.
Participant loans - Participants may not borrow from the Plan.
Payment of benefits - On termination of service due to death, disability or
retirement, a participant may elect to receive either a lump-sum amount equal to
the value of the participant's vested interest in his or her account, or annual
installments over a reasonable period not to exceed the participants life
expectancy. For termination of service due to other reasons, a participant may
receive the value of the vested interest in his or her account as a lump-sum
distribution.
Forfeited accounts - Forfeited nonvested employer matching accounts will be used
to reduce future employer matching contributions. Forfeited nonvested employer
profit sharing accounts shall be reallocated to remaining eligible participants
profit sharing accounts. Forfeited nonvested accounts totaled $3,039 at December
31, 1998, $3,283 at December 31, 1997 and $1,096 at December 31, 1996.
Note 2 - Summary of accounting policies
Basis of accounting
The financial statements of the Plan are prepared using the accrual method of
accounting.
Investment valuation and income recognition
The Plan's investments are stated at fair value except for its investment
contract which is valued at contract value. Shares of registered investment
companies are valued at quoted market prices which represent the net asset value
of shares held by the Plan at year-end. The Company stock is valued at its
quoted market price.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
<PAGE> 14
9
FNB FINANCIAL SERVICES CORPORATION
EMPLOYEES' SAVINGS PLUS AND PROFIT SHARING PLAN
Notes to Financial Statements (continued)
December 31, 1998, 1997 and 1996
Note 2 - Summary of significant accounting policies (continued)
Payment of benefits
Benefits are recorded when paid.
Cash equivalents
The Plan considers highly liquid debt instruments purchased with maturity dates
of three months or less to be cash equivalents.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires the administrator to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Note 3 - Plan termination
Although it has not expressed any intent to do so, the Company has the right
under the plan to discontinue contributions at any time and to terminate the
plan subject to the provisions of ERISA. In the event of Plan termination,
participants will become 100 percent vested in their accounts.
Note 4 - Tax status
The Internal Revenue Service has determined and informed the Company by a letter
dated February 11, 1996 that the Plan and related trust are designed in
accordance with applicable sections of the Internal Revenue Code (IRC). The Plan
has been amended since receiving the determination letter. However, the Plan
administrator and the Plan's tax counsel believe that the Plan is designed and
is currently being operated in compliance with the applicable requirements of
the IRC.
<PAGE> 15
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
thereunto duly authorized.
FNB FINANCIAL SERVICES CORPORATION
EMPLOYEES' SAVINGS PLUS AND
PROFIT SHARING PLAN
Date: June 29, 1999 By: /s/ Robert F. Albright
--------------------------
<PAGE> 16
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
of FNB Financial Services Corporation on Form S-8 relating to the FNB Financial
Services Corporation Employees' Savings Plus and Profit Sharing Plan of our
report dated May 21, 1998, relating to the statement of net assets available
for benefits of the FNB Financial Services Corporation Employees' Savings Plus
and Profit Sharing Plan as of December 31, 1997, and the related statements of
changes in net assets available for benefits with fund information for each of
the years in the two-year period ended December 31, 1997, which report appears
in the 1998 Annual Report on Form 11-K of FNB Financial Services Corporation
Employees' Savings Plus and Profit Sharing Plan.
CHERRY, BEKAERT & HOLLAND, L.L.P.
Greensboro, North Carolina
June 29, 1999
<PAGE> 17
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-29679) of FNB Financial Services Corporation of
our report dated May 20, 1999 relating to the financial statements of FNB
Financial Services Corporation Employees' Savings Plus and Profit Sharing Plan,
which appears in this Form 11-K.
PricewaterhouseCoopers LLP
Raleigh, North Carolina
June 29, 1999
