**LSB
      BANCSHARES, INC. AND**


**FNB
      FINANCIAL SERVICES CORPORATION**


**TO
      COMBINE IN A MERGER OF EQUALS**





**Contact:
      Robert F. Lowe for LSB - 336-248-6500**


**Pressley
      A. Ridgill for FNB - 336-369-0900**








**Greensboro,
      North Carolina, February 27, 2007** .
      LSB
      Bancshares, Inc. (NASDAQ:LXBK) and FNB Financial Services Corporation
      (NASDAQ:FNBF) announced today that they have entered into a definitive agreement
      to combine in a merger of equals transaction.




Under
      the
      terms of the agreement, FNB shareholders will receive 1.07 shares of LSB
      Bancshares common stock for each of their shares of FNB common stock. The
      combined organization will have 42 full-service banking offices, total assets
      of
      approximately $2 billion and total deposits of approximately $1.6 billion.
      It
      will be headquartered in Greensboro, North Carolina and governed by a Board
      of
      Directors comprised of 20 directors, 10 from each of the combining institutions.
      Current LSB Chairman of the Board and Chief Executive Officer Robert F. Lowe
      will serve as Chairman of the Board and Chief Executive Officer of the company
      and Chairman of its subsidiary bank. Pressley A. Ridgill, current President
      and
      Chief Executive Officer of FNB, will serve as President of the company and
      President and Chief Executive Officer of the bank. Barry Z. Dodson, Chairman
      of
      FNB, will serve as Vice Chairman and lead independent director of the company.
      The merger is subject to approval by LSB’s and FNB’s shareholders and banking
      regulators and other customary conditions. The transaction, which is expected
      to
      yield approximately $5 million in near term annual cost savings, is scheduled
      to
      be completed during the third quarter of 2007.





“This
      combination will create the sixth largest bank based in North Carolina and
      will
      enable us to pursue our vision of leveraging our diverse strengths, achieving
      sustained earnings growth, expanding our branch network and ultimately seeking
      acquisition opportunities and merger partners. LSB and FNB are quality focused
      financial institutions with impressive infrastructures and traditions of
      excellent service to our customers. There are many other similarities between
      the two companies. We operate in similar North Carolina communities and have
      branches in fast growing metropolitan markets. We both have an experienced
      staff
      that is empowered to make decisions in order to meet our customers’ banking
      needs at the local level. LSB and FNB have a shared vision of the future and
      the
      integration of our institutions is a natural fit,” said Bob Lowe, Chairman and
      Chief Executive Officer of LSB. Mr. Lowe added, “I am pleased to join Pressley
      in the management of our new company. His broad experience in banking at the
      chief financial, chief operating and chief executive officer levels is an asset
      which will be critical to our company’s future.”




Mr.
      Ridgill stated, “We believe this transaction creates a beneficial situation for
      all our constituencies. Our customers will enjoy our expanded geographic
      footprint and the communities we serve will benefit from our enhanced and more
      competitive products and services. Our employees will be partnered with a
      larger, more vibrant company with more opportunities for advancement, and our
      shareholders will benefit from significant increased earnings opportunities.
      The
      combination provides the opportunity to combine the loan growth available in
      FNB’s markets with the funding provided by LSB’s strong core deposit base. We
      will have many opportunities to expand our footprint while preserving our
      historic roots in Davidson and Rockingham Counties. I look forward to working
      with Bob and benefiting from his deep knowledge of banking.”


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Mr.
      Lowe
      noted that “there is no overlap between our branch networks. As a result, we
      expect minimal staffing modifications in our primary locations of service to
      our
      customers.” Mr. Ridgill added that “the current plans for the combined company
      are to maintain our operation centers in Davidson County and Rockingham County.
      Our goal in uniting our companies is to grow our presence in all of our
      markets.”




In
      connection with the transaction, BankersBanc Capital Corporation is acting
      as
      financial advisor and has provided a fairness opinion to LSB, with FNB using
      Howe Barnes Hoefer & Arnett, Inc. Brooks, Pierce, McLendon, Humphrey &
Leonard, L.L.P., regular counsel to both companies, is acting as the legal
      counsel for the companies charged with effecting the transaction. Brinkley
      Walser, PLLC and Ward and Smith, P.A., serve as special merger counsel to LSB
      and FNB, respectfully.




*About
      the Companies*




LSB
      Bancshares, Inc. is the parent company of Lexington State Bank. Lexington State
      Bank is a community bank based in the Piedmont region of North Carolina and
      operates 25 branches in Davidson, Guilford, Forsyth, Randolph and Stokes
      Counties. It has two primary subsidiaries: LSB Investment Services, Inc., which
      provides non-deposit, non-insured investment alternatives such as mutual funds
      and annuities through a registered brokerage firm, and Peoples Finance Co.
      of
      Lexington, Inc., which offers small loans and dealer financing. The common
      stock
      of LSB Bancshares, Inc. is traded on the NASDAQ Global Select Market under
      the
      NASDAQ symbol “LXBK.”




FNB
      Financial Services Corporation is the parent company of FNB Southeast, which
      is
      a full service community bank headquartered in Greensboro, North Carolina and
      providing services through 17 branches throughout its four regions in North
      Carolina and Virginia. The


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Greensboro
      region serves Guilford and the surrounding North Carolina counties. The Coastal
      region serves the North Carolina counties of New Hanover, Brunswick and Pender.
      The Rockingham region serves Rockingham and surrounding counties. The Shenandoah
      region, headquartered in Harrisonburg, Virginia, serves Rockingham County,
      Virginia. The Bank provides mortgage services through its subsidiary, FNB
      Southeast Mortgage Corporation. Securities brokerage services are provided
      by
      FNB Southeast Investment Services, Inc. through a registered brokerage firm.
      The
      common stock of FNB Financial Services Corporation is traded on NASDAQ Global
      Market under the symbol “FNBF.”




*Additional
      Information About The Companies and This Transaction*




In
      connection with the merger, LSB will file a registration statement, which will
      include a joint proxy statement/prospectus to be sent to each company’s
      stockholders, and each of LSB and FNB may file other relevant documents
      concerning the merger with the Securities and Exchange Commission (the “SEC”).
      Stockholders are urged to read the registration statement and the joint proxy
      statement/prospectus regarding the merger when they become available and any
      other relevant documents filed with the SEC, as well as any amendments or
      supplements to those documents, because they will contain important
      information.




You
      will
      be able to obtain a free copy of the joint proxy statement/prospectus, as well
      as other filings containing information about LSB and FNB, at the SEC’s website
      ( http://www.sec.gov ).
      (You
      will also be able to obtain these documents, free of charge, by accessing LSB’s
      website ( http://www.lsbnc.com ),
      or by
      accessing FNB’s website ( http://www.fnbsoutheast.com) .)




LSB
      and
      FNB and their respective directors and executive officers may be deemed to
      be
      participants in the solicitation of proxies from the stockholders of LSB and/or
      FNB in connection


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with
      the
      merger. Information about the directors and executive officers of LSB is set
      forth in the proxy statement for LSB’s 2006 annual meeting of stockholders, as
      filed with the SEC on March 15, 2006. Information about the directors and
      executive officers of FNB is set forth in the proxy statement for FNB’s 2006
      annual meeting of stockholders, as filed with the SEC on March 23, 2006.
      Additional information regarding the interests of those participants and other
      persons who may be deemed participants in the transaction may be obtained by
      reading the joint proxy statement/prospectus regarding the merger when it
      becomes available. You may obtain free copies of these documents as described
      above.




*Safe
      Harbor Statement Under the Private Securities Litigation Reform Act of
      1995*




This
      release contains certain forward-looking statements within the meaning of
      Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
      Securities Act of 1934 as amended. These include statements as to the benefits
      of the merger, including future financial and operating results, cost savings,
      enhanced revenues and the accretion/dilution to reported earnings that may
      be
      realized from the merger as well as other statements of expectations regarding
      the merger and any other statements regarding future results or expectations.
      Each of LSB and FNB intends such forward-looking statements to be covered by
      the
      safe harbor provisions for forward-looking statements contained in the Private
      Securities Litigation Reform Act of 1995 and is including this statement for
      purposes of these safe harbor provisions. Forward-looking statements, which
      are
      based on certain assumptions and describe future plans, strategies, and
      expectations of each of LSB and FNB, are generally identified by the use of
      words such as “believe,” “expect,” “intend,” “anticipate,” “estimate,” or
“project” or similar expressions. The companies’ respective ability to predict
      results, or the actual effect of future plans or strategies, is inherently
      uncertain. Factors which could have a material adverse effect
      on


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the
      operations and future prospects of each of LSB and FNB and their respective
      subsidiaries include, but are not limited to: the risk that the businesses
      of
      LSB and/or FNB will not be integrated successfully or such integration may
      be
      more difficult, time-consuming or costly than expected; expected revenue
      synergies and cost savings from the merger may not be fully realized or realized
      within the expected time frame; revenues following the merger may be lower
      than
      expected; customer and employee relationships and business operations may be
      disrupted by the merger; the ability to obtain required governmental and
      stockholder approvals, and the ability to complete the merger on the expected
      timeframe; changes in interest rates, general economic conditions,
      legislative/regulatory changes, monetary and fiscal policies of the U.S.
      government, including policies of the U.S. Treasury and the Federal Reserve
      Board; the quality and composition of the loan and securities portfolios; demand
      for loan products; deposit flows; competition; demand for financial services
      in
      the companies’ respective market areas; their implementation of new
      technologies; their ability to develop and maintain secure and reliable
      electronic systems; and accounting principles, policies, and guidelines. These
      risks and uncertainties should be considered in evaluating forward-looking
      statements and undue reliance should not be placed on such
      statements.




This
      communication shall not constitute an offer to sell or the solicitation of
      an
      offer to buy securities, nor shall there be any sale of securities in any
      jurisdiction in which such solicitation or sale would be unlawful prior to
      the
      registration or qualification under the securities laws of such
      jurisdiction.







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