**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**








**FORM
      8-K**








**CURRENT
      REPORT**




**Pursuant
      to Section 13 or 15(d) of the**


**Securities
      Exchange Act of 1934**




**Date
      of Report (Date of earliest event reported): February 26,
      2007**








**FNB
      Financial Services Corporation**


**(Exact
      name of registrant as specified in its charter)**




**Commission
      file number: 000-13086**







**North
                Carolina**
            **56-1382275****(State
                of incorporation)**
            **(I.R.S.
                Employer Identification No.)****1501
                Highwoods Boulevard, Suite 400****Greensboro,
                North Carolina**
            **27410****(Address
                of principal executive offices)**
            **(Zip
                Code)**




**(336)
      369-0900**




**(** **Registrant's** **telephone number, including area code)**




**Not
      Applicable**


**(Former
      address of principal executive offices)**





Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions (see General Instruction A.2. below):





o
            Written
                communications pursuant to Rule 425 under the Securities Act (17
                CFR
                230.425)





ý
            Soliciting
                material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
                240.14a-12)





o
            Pre-commencement
                communications pursuant to Rule 14d-2(b) under the Exchange Act (17
                CFR
                240.14d-2(b))





o
            Pre-commencement
                communications pursuant to Rule 13e-4(c) under the Exchange Act (17
                CFR
                240.13e-4(c))





**Item
      1.**  **01**  **Entry
      into a Material Definitive Agreement.**





On
      February 26, 2007, LSB Bancshares, Inc. (“LSB”) and FNB Financial Services
      Corporation (“FNB”) entered into an Agreement for a Merger of Equals (the
“Agreement”) pursuant to which FNB will merge with and into LSB (the “Merger”)
      and FNB’s wholly owned subsidiary, FNB Southeast (“FNB Bank”) will merge with
      and into LSB’s wholly owned subsidiary, Lexington State Bank (“LSB Bank”) (the
“Bank Merger”). The Boards of Directors of FNB and LSB approved the Agreement
      and the transactions contemplated therein on February 26, 2007.





On
      February 26, 2007, FNB, LSB, LSB Bank and FNB Bank entered into an Agreement
      and
      Plan of Bank Merger (the “Bank Agreement”) pursuant to which FNB Bank will merge
      with and into LSB Bank (the “Bank Merger”). The Boards of Directors of FNB, LSB,
      FNB Bank and LSB Bank approved the Bank Agreement and the transactions
      contemplated therein on February 26, 2007.





Capitalized
      terms not defined herein shall have the meaning set forth in the
      Agreement.





Upon
      the
      consummation of the Merger, each share of the Common Stock of FNB (“FNB Common
      Stock”) issued and outstanding at the effective time of the Merger (as described
      in the Agreement, the “Effective Time”) shall be converted into and exchanged
      for the right to receive 1.07 shares (the “Exchange Ratio”) of the Common Stock
      of LSB (“LSB Common Stock”).





In
      addition, at the Effective Time, all rights with respect to FNB Common Stock,
      pursuant to stock options granted by FNB under its existing stock plans, shall
      be converted into and become rights with respect to LSB Common Stock on a basis
      that reflects the Exchange Ratio.





The
      Merger is intended to constitute a tax-free reorganization under the Internal
      Revenue Code of 1986, as amended.





The
      obligations of FNB and LSB to consummate the Merger are subject to the following
      conditions: (i) approval by shareholders of FNB and LSB; (ii) the qualification
      for quotation on the Global Select Market of The NASDAQ Stock Market, LLC
      (“Nasdaq”) of the shares of LSB Common Stock to be issued in the Merger; (iii)
      the receipt of regulatory approvals (including approvals from the Federal
      Reserve Board, the Federal Deposit Insurance Corporation, and applicable state
      authorities); (iv) the effectiveness of a registration statement on Form S-4
      with respect to the offering and exchange of LSB Common Stock in connection
      with
      the Merger; (v) the absence of any injunction or similar restraint enjoining
      or
      making illegal consummation of the Merger or any of the other transactions
      contemplated by the Agreement; (vi) the receipt by the parties of a favorable
      legal opinion as to federal income tax effects of the Merger; (vii) the receipt
      by each of FNB and LSB of a Fairness Opinion from their respective advisors;
      (viii) the continuing truth and accuracy of representations and warranties
      of
      FNB and LSB in the Agreement, except as would not have a Material Adverse Effect
      (as defined in the Agreement); and (ix) the performance in all material respects
      by each of FNB and LSB of its covenants under the Agreement.


2





The
      Agreement may be terminated, before or after shareholder approval, in certain
      circumstances: (i) upon the mutual consent of FNB and LSB; (ii) by either FNB
      or
      LSB if there is any nonappealable denial of a required regulatory approval
      or
      nonappealable order prohibiting the Merger or the Bank Merger or if approval
      has
      been granted on terms reasonably believed to be unduly onerous, unless the
      failure to receive such regulatory approval or the imposition of unduly onerous
      terms shall be due to the fault of the party seeking to terminate the Agreement
      or the Bank Agreement to perform or observe the covenants and agreements of
      such
      party set forth in the Agreement; (iii) by either FNB or LSB if the Merger
      is
      not consummated within one year of February 26, 2007, unless the failure to
      consummate is due to a violation of the Agreement by the party seeking to
      terminate; or (iv) by either FNB or LSB if there is a breach of the other
      party’s representations, warranties, or covenants that is not cured within 45
      days or curable prior to the Closing Date and that, individually or together
      with any other such breaches, would (if occurring on the Closing Date) relieve
      the party seeking to terminate of its obligations to consummate the
      Merger.





If
      the Merger
      fails to be consummated because of the wrongful termination of the Agreement
      or
      a willful or grossly negligence breach by LSB or by FNB of any representation,
      warranty, covenant, undertaking, term, agreement or restriction contained in
      the
      Agreement that results in a Materially Adverse Effect, then the party wrongfully
      terminating or breaching the Agreement shall pay the other party $9,000,000
      as
      liquidated damages in full compensation of all Expenses, damages, costs and
      other harm suffered by such party as a result thereof.  The
      provision for such a termination fee may substantially increase the cost to
      a
      third party of acquiring one of the parties.




The
      Agreement and the Merger will be submitted for approval to the shareholders
      of
      each of FNB and LSB. Prior to either meeting of shareholders, LSB will file
      a
      registration statement with the Securities and Exchange Commission registering,
      under the Securities Act of 1933, as amended, the offering of the shares of
      LSB
      Common Stock to be issued in exchange for the outstanding shares of FNB Common
      Stock. Such shares of LSB Common Stock will be offered to FNB’s shareholders
      pursuant to a prospectus that will also serve as a joint proxy statement for
      separate meetings of the shareholders of FNB and LSB.





For
      additional information regarding the Agreement and the Bank Agreement, reference
      is made to the copies of those documents which are incorporated herein by
      reference and included as Exhibits to this Current Report on Form 8-K. The
      foregoing discussion is qualified in its entirety by reference to such
      documents. These documents include representations and warranties each party
      has
      made to the other. The assertions embodied in the representations and warranties
      are qualified by information in confidential disclosure schedules the parties
      delivered to each other when they executed the Agreement and the Bank Agreement.
      Certain representations and warranties were made as of a specific date, may
      be
      subject to a contractual standard of materiality different from those generally
      applicable to shareholders and investors, or may have been used for purposes
      of
      allocating risk between the respective parties rather than establishing matters
      as facts. Accordingly, investors should not rely on the representations and
      warranties as characterizations of the actual state of facts at the time they
      were made or otherwise, and investors should not rely on the representations
      and
      warranties for any other purpose. Information about FNB Financial Services
      Corporation is available in the public filings


3


FNB
      Financial Services Corporation makes with the Securities and Exchange
      Commission, which are available without charge at www.sec.gov.




A
      press
      release describing this event was issued by FNB on February 27, 2007, as
      evidenced by Exhibit 99.1 to this Form 8-K.





**Item 9.01.
      Financial Statements and Exhibits.**




(d)
              Exhibits
 
 2.1
              Agreement
                  and Plan of Merger, dated as of February 26, 2007, by and between
                  LSB
                  Bancshares, Inc. and FNB Financial Services Corporation.
 
 2.2
              Agreement
                  and Plan of Bank Merger, dated as of February 26, 2007, by and
                  between LSB
                  Bancshares, Inc., FNB Financial Services Corporation, Lexington
                  State Bank
                  and FNB Southeast.
 
 99.1
              Press
                  Release, dated February 27, 2007, issued by FNB Financial Services
                  Corporation.


**SIGNATURE**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed by the undersigned hereunto duly
      authorized.





FNB
                FINANCIAL SERVICES CORPORATION(Registrant)Dated:
                February 27, 2007By:
            /s/
                Pressley A. RidgillPressley
                A. RidgillChairman,
                President andChief
                Executive Officer





4


**INDEX
      TO EXHIBITS**





Exhibit
            
            Sequential
                Page No.2.1
            Agreement
                and Plan of Merger, dated as of February 26, 2007,
                by and between LSB Bancshares, Inc. and FNB Financial
                Services Corporation.
            62.2
            Agreement
                and Plan of Bank Merger, dated as of February 26, 2007,
                by and between LSB Bancshares, Inc., FNB Financial
                Services Corporation, Lexington State Bank and FNB
                Southeast.
            6099.1
            Press
                Release, dated February 27, 2007, issued by FNB Financial
                Services Corporation
            67







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