SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10 - Q

            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003

                         Commission File Number: 0-13086

                       FNB FINANCIAL SERVICES CORPORATION
             (Exact name of registrant as specified in its charter)

        North Carolina                                        56 - 1382275
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                            Identification Number)

202 South Main Street, Reidsville, North Carolina                 27320
     (Address of principal executive offices)                   (Zip Code)

                                 (336) 342-3346
              (Registrant's telephone number, including area code)

                                 Not Applicable
             (Former name, former address, and former fiscal years,
                          if changed since last report)

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 such 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|

4,425,312 common shares were outstanding as of April 30, 2003, with a par value
per share of $1.00.


<PAGE>


                       FNB FINANCIAL SERVICES CORPORATION

                                    FORM 10-Q

                                      INDEX

                                                                          Page
                                                                          ----

PART I      FINANCIAL INFORMATION

  Item 1    Financial Statements

            Consolidated Balance Sheets

            March 31, 2003 and December 31, 2002                            3

            Consolidated Statements of Income and Comprehensive Income
            Three months ended March 31, 2003 and 2002                      4

            Consolidated Statements of Cash Flows

            Three months ended March 31, 2003 and 2002                    5 - 6

            Notes to Consolidated Financial Statements                    7 - 11

  Item 2    Management's Discussion and Analysis of Financial Condition
            and Results of Operations                                    11 - 19

  Item 3    Quantitative and Qualitative Disclosures About Market Risk     19

  Item 4    Controls and Procedures                                        19

PART II     OTHER INFORMATION

  Item 1    Legal Proceedings                                              19

  Item 2    Changes in Securities and Use of Proceeds                      20

  Item 3    Defaults Upon Senior Securities                                20

  Item 4    Submission of Matters to a Vote of Security Holders            20

  Item 5    Other Information                                              20

  Item 6    Exhibits and Reports on Form 8 - K                           20 - 21


                                       2
<PAGE>


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

FNB Financial Services Corporation and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands except par value)

<TABLE>
<CAPTION>
                                                                March 31,    December 31,
                                                                  2003          2002
                                                               (Unaudited)    (Audited)
                                                               ------------  ------------
<S>                                                             <C>           <C>
ASSETS

Cash and due from banks                                         $   17,937    $   24,524
Investment securities:
   Securities available for sale                                   129,905       125,084
   Federal Home Loan Bank and Federal Reserve Bank Stock             3,732         3,732
Loans, net of allowance for credit losses of $7,176 at
   March 31, 2003 and $7,059 at December 31, 2002                  567,999       556,541
Premises and equipment, net                                         12,403        10,916
Accrued income and other assets                                     12,888        13,235
                                                                ----------    ----------

         Total assets                                           $  744,864    $  734,032
                                                                ==========    ==========

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:

   Noninterest bearing                                          $   65,959    $   61,651
   Interest bearing                                                540,961       543,354
                                                                ----------    ----------
         Total deposits                                            606,920       605,005

Federal funds purchased and retail repurchase agreements             9,044         8,258
Other borrowings                                                    52,500        52,500
Accrued expenses and other liabilities                              12,113         3,936
                                                                ----------    ----------

         Total liabilities                                         680,577       669,699
                                                                ----------    ----------

Shareholders' Equity:

Preferred stock no par value; authorized 10,000,000 shares;
         none issued                                                    --            --
Common stock, $1.00 par value; authorized 40,000,000 shares;
         outstanding 4,424,437 at March 31, 2003 and
         4,467,239 at December 31, 2002                              4,424         4,467
Paid-in capital                                                     23,042        23,833
Retained earnings                                                   35,678        34,549
Accumulated other comprehensive income                               1,143         1,484
                                                                ----------    ----------

         Total shareholders' equity                                 64,287        64,333
                                                                ----------    ----------

         Total liabilities and shareholders' equity             $  744,864    $  734,032
                                                                ==========    ==========
</TABLE>

            See notes to unaudited consolidated financial statements.


                                       3
<PAGE>


FNB Financial Services Corporation and Subsidiary
Consolidated Statements of Income and Comprehensive Income
(Unaudited; dollars in thousands, except per share data)

<TABLE>
<CAPTION>
                                                              Three Months Ended
                                                                  March 31,
                                                         ---------------------------
                                                             2003            2002
                                                         -----------     -----------
<S>                                                      <C>             <C>
Interest income
     Loans                                               $     9,079     $     9,024
     Federal funds sold and overnight deposits                    14              20
     Investment securities
               Taxable                                         1,262           1,531
               Tax exempt                                        147              97
     Other                                                        50              61
                                                         -----------     -----------
               Total interest income                          10,552          10,733
                                                         -----------     -----------
Interest expense
     Deposits                                                  4,117           4,898
     Federal funds purchased and other borrowings                415             304
                                                         -----------     -----------
               Total interest expense                          4,532           5,202
                                                         -----------     -----------
Net interest income                                            6,020           5,531
Provision for credit losses                                      495             285
                                                         -----------     -----------
Net interest income after provision for credit losses          5,525           5,246

Noninterest income
     Service charges on deposit accounts                         760             582
     Net gain on securities available for sale                   322              --
     Net gain on disposition of other assets                      10              10
     Income from investment services                             141              69
     Mortgage banking fees                                       463             146
     Other income                                                 98             123
                                                         -----------     -----------
               Total noninterest income                        1,794             930

Noninterest expense
     Salaries and employee benefits                            2,546           2,412
     Occupancy expense                                           282             259
     Furniture and equipment expense                             531             497
     Insurance expense, including FDIC assessment                 48              45
     Marketing expense                                            98              45
     Printing and supply expense                                 118             135
     Other expenses                                              989             938
                                                         -----------     -----------
               Total noninterest expense                       4,612           4,331

Income before income taxes                                     2,707           1,845
Income tax expense                                               957             593
                                                         -----------     -----------
Net income                                                     1,750           1,252
Other comprehensive income (loss)                               (341)         (1,060)
                                                         -----------     -----------
Comprehensive income                                     $     1,409     $       192
                                                         ===========     ===========
Per share data
     Net income, basic                                   $      0.39     $      0.27
     Net income, diluted                                 $      0.38     $      0.27
     Cash dividends                                      $      0.14     $      0.13
Weighted average shares outstanding, basic                 4,443,703       4,576,158
Weighted average shares outstanding, diluted               4,552,600       4,645,399
</TABLE>

            See notes to unaudited consolidated financial statements.


                                       4
<PAGE>


FNB Financial Services Corporation and Subsidiary
Consolidated Statements of Cash Flows
(Unaudited; dollars in thousands)

<TABLE>
<CAPTION>
                                                                         Three Months Ended
                                                                              March 31,
                                                                       ---------------------
                                                                         2003         2002
                                                                       --------     --------
<S>                                                                    <C>          <C>
Cash flows from operating activities:
      Interest received                                                $  8,671     $ 11,968
      Fees and commissions received                                       1,920          542
      Interest paid                                                      (4,613)      (5,626)
      Noninterest expense paid                                           (4,221)      (4,364)
      Income taxes paid                                                     (82)        (625)
      Funding of loans held for sale                                    (22,480)      (5,566)
      Proceeds from sales of loans held for sale                         22,479        5,760
                                                                       --------     --------
           Net cash provided by operating activities                      1,674        2,089
                                                                       --------     --------

Cash flows from investing activities:
      Proceeds from sales or calls of securities available for sale      39,008       22,702
      Proceeds from maturities of securities available for sale              --           --
      Purchase of securities                                            (34,866)        (220)
      Capital expenditures                                               (1,811)        (103)
      (Increase) decrease in other real estate owned                       (312)         215
      (Increase) decrease in loans                                      (11,527)       1,646
                                                                       --------     --------
           Net cash  (used in) provided by investing activities          (9,508)      24,240
                                                                       --------     --------

Cash flows from financing activities:
      Increase (decrease) in demand, savings and interest
            checking accounts                                             9,655         (606)
      Increase (decrease) in time deposits                               (7,739)     (41,275)
      Increase (decrease) in federal funds purchased and
            retail repurchase agreements                                    786       (4,097)
      Increase (decrease) in other borrowings                                --       15,000
      Repurchase of common stock                                         (1,162)          --
      Proceeds from issuance of common stock                                327          329
      Dividends paid                                                       (620)        (597)
                                                                       --------     --------
           Net cash provided by (used in)  financing activities           1,247      (31,246)
                                                                       --------     --------
Net increase (decrease) in cash and cash equivalents                     (6,587)      (4,917)
Cash and cash equivalents, January 1                                     24,524       23,673
                                                                       --------     --------

Cash and cash equivalents, March 31                                    $ 17,937     $ 18,756
                                                                       ========     ========
Supplemental disclosure of non-cash transactions:
Non-cash transfers from loans to other real estate                     $    322     $     52
                                                                       ========     ========
</TABLE>

            See notes to unaudited consolidated financial statements.


                                       5
<PAGE>


FNB Financial Services Corporation and Subsidiary
Consolidated Statements of Cash Flows
(Unaudited; dollars in thousands)

Reconciliation of net income to net cash provided by operating activities:

<TABLE>
<CAPTION>
                                                                        Three Months Ended
                                                                             March 31,
                                                                      ---------------------
                                                                        2003         2002
                                                                      --------     --------

<S>                                                                   <C>          <C>
Net income                                                            $  1,750     $  1,252

Adjustments to reconcile net income to net cash provided by
operating activities:
     Provision for credit losses                                           495          285
     Depreciation                                                          364          326
     Accretion and amortization                                            135           53
     (Gain) loss on sale of securities available for sale                 (322)          --
     (Gain) loss on sale of other assets                                   (10)         (10)
     Funding of loans held for sale                                    (22,480)      (5,566)
     Proceeds from sales of loans held for sale                         22,479        5,760
     (Increase) decrease in accrued income and other assets                347          948
     Increase (decrease) in accrued expenses and other liabilities      (1,084)        (959)
                                                                      --------     --------
          Net cash provided by operating activities                   $  1,674     $  2,089
                                                                      ========     ========
</TABLE>

            See notes to unaudited consolidated financial statements.


                                       6
<PAGE>


FNB Financial Services Corporation and Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)

1.    Basis of Presentation

            The accompanying unaudited consolidated financial statements have
      been prepared in accordance with generally accepted accounting principles
      and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
      Accordingly, these statements do not include all of the information and
      footnotes required by generally accepted accounting principles for
      complete financial statements. In the opinion of management, all
      adjustments (consisting of normal recurring accruals) considered necessary
      for a fair presentation have been included. Operating results for the
      three-month period ended March 31, 2003 are not necessarily indicative of
      the results that may be expected for the year ending December 31, 2003.
      For further information refer to the financial statements and footnotes
      thereto included in FNB Financial Services Corporation's 2002 Annual
      Report on Form 10-K. Certain reclassifications have been made to the prior
      period'd financial statements to place them on a comparable basis with the
      current period's financial statements.

2.    Significant Activities

            FNB Financial Services Corporation (the "Company") is a North
      Carolina financial holding company. The Company's wholly owned subsidiary,
      FNB Southeast (the "Bank"), is a North Carolina chartered commercial bank.

            As of March 31, 2003, FNB Southeast operated thirteen banking
      offices in North Carolina and five banking offices in Virginia. FNB
      Southeast operates two wholly owned subsidiaries; FNB Southeast Investment
      Services, Inc., which operated two offices, and FNB Southeast Mortgage
      Corporation, which operated seven offices. The Company and the Bank are
      headquartered in Reidsville, North Carolina.

3.    Other Comprehensive Income

            The Company's other comprehensive income for the three-month periods
      ended March 31, 2003 and 2002 consists of unrealized gains and losses on
      available for sale securities, net of related income taxes, as follows:

                                                           --------------------
                                                             2003        2002
                                                           --------    --------

Unrealized gains (losses) on
    available for sale securities                          $   (238)   $ (1,738)
Reclassification adjustment for gains
included in net income                                          322          --
                                                           --------    --------
Other comprehensive income (loss) before tax                   (560)     (1,738)
Income tax  expense  (benefit)  related to other
comprehensive income                                            219         678
                                                           --------    --------
Other comprehensive income (loss)                          $   (341)   $ (1,060)
                                                           ========    ========


                                       7
<PAGE>


4.    Segment Information

            The Company follows the provisions of Statement of Financial
      Accounting Standards ("SFAS") No. 131, "Disclosure about Segments of an
      Enterprise and Related Information." SFAS 131 establishes standards for
      determining an entity's operating segments and the type and level of
      financial information to be disclosed in both annual and interim financial
      statements. It also establishes standards for related disclosures about
      products and services, geographic areas, and major customers.

            Operating segments are components of an enterprise with separate
      financial information available for use by the chief operating decision
      maker to allocate resources and to assess performance. The Company has
      determined that it has one significant operating segment: the providing of
      general financial services to the customers of its wholly owned
      subsidiary, FNB Southeast. The various products offered by FNB Southeast
      are those generally offered by community banks, and the allocation of
      resources is based on the overall performance of the Company, rather than
      the individual performance of banking offices or products.

5.    Net Income Per Share

            Basic and diluted earnings per share amounts have been computed
      based upon net income as presented in the accompanying income statements
      divided by the weighted average number of common shares outstanding or
      assumed to be outstanding as summarized.

                                                            Three Months Ended
                                                                 March 31,
                                                         -----------------------
                                                           2003          2002
                                                         ---------     ---------

Weighted average number of shares
        used in basic EPS                                4,443,703     4,576,158
Effect of dilutive stock options                           108,897        69,241
                                                         ---------     ---------

Weighted average number of common
        shares and dilutive potential common
        shares used in dilutive EPS                      4,552,600     4,645,399
                                                         =========     =========

            As of March 31, 2003, there were 156,916 potentially dilutive share
      options not included in the weighted average calculation since the option
      exercise prices are greater than the average fair market value of the
      common shares during the quarter.


                                       8
<PAGE>


6.    Investment Securities

<TABLE>
<CAPTION>
                                            March 31, 2003           December 31, 2002
                                        ----------------------    ----------------------
(Dollars in thousands)                  Amortized      Fair       Amortized      Fair
                                          Cost         Value        Cost         Value
                                        ---------    ---------    ---------    ---------
<S>                                     <C>          <C>          <C>          <C>
Available for sale:
     U.S. Agency securities             $  81,146    $  82,189    $  97,364    $  99,024
     Mortgage backed securities            23,078       23,456       17,945       18,388
     State and municipal obligations       23,487       23,924        7,036        7,351
     Other                                    321          336          306          321
                                        ---------    ---------    ---------    ---------
        Total available for sale          128,032      129,905      122,651      125,084
Federal Reserve Bank and Federal
     Home Loan Bank stock                   3,732        3,732        3,732        3,732
                                        ---------    ---------    ---------    ---------
        Total investment securities     $ 131,764    $ 133,637    $ 126,383    $ 128,816
                                        =========    =========    =========    =========
</TABLE>

7.    Loans (net of unearned income)

(Dollars in thousands)                            March 31,        December 31,
                                                    2003              2002
                                                ------------      --------------

Loan Category:

   Real estate - commercial                       $ 169,745         $ 170,657
   Real estate - residential                        110,005           116,074
   Real estate - construction                        97,819            87,696
   Commercial, financial and agricultural            87,601            87,458
   Consumer                                         106,762            98,473
                                                  ---------         ---------

             Subtotal loans                         571,932           560,358

   Loans held for sale                                3,243             3,242
                                                  ---------         ---------

             Gross loans                          $ 575,175         $ 563,600
                                                  =========         =========


                                       9
<PAGE>


8.    Allocation of Allowance for Credit Losses

<TABLE>
<CAPTION>
                                          March 31, 2003          December 31, 2002
                                     -----------------------   ----------------------
                                                 % of Loans               % of Loans
                                                 in Each                  in Each
                                                 Category to              Category to
(Dollars in thousands)                Allowance  Total Loans   Allowance  Total Loans
                                      ---------  -----------   ---------  -----------
<S>                                    <C>             <C>      <C>             <C>
Balance at end of period
applicable to:

   Real estate - construction          $     5          17      $     7          16
   Real estate - mortgage                   81          49          180          51
   Commercial                            5,234          15        5,201          16
   Consumer                              1,856          19        1,671          17
                                       -------     -------      -------     -------
        Total allocation               $ 7,176         100%     $ 7,059         100%
                                       =======     =======      =======     =======
</TABLE>

9.    Analysis of Allowance for Credit Losses

                                                            Three Months Ended
                                                                 March 31,
                                                           --------------------
(Dollars in thousands)                                       2003         2002
                                                           -------      -------

Balance, beginning of period                               $ 7,059      $ 6,731

Charge-offs                                                    520          302
Recoveries                                                     142           28
                                                           -------      -------
Net charge-offs                                                378          274
                                                           -------      -------
Allowance charged to operations                                495          285
                                                           -------      -------
Balance, end of period                                     $ 7,176      $ 6,742
                                                           =======      =======
Ratio of annualized net charge-offs during the
     period to average loans outstanding
     during the period                                        0.27%        0.20%
                                                           =======      =======
Ratio of allowance for credit losses to
     month end loans                                          1.25%        1.26%
                                                           =======      =======


                                       10
<PAGE>


Nonperforming Assets

                                                       March 31,    December 31,
     (Dollars in thousands)                              2003           2002
                                                       ---------    ------------


Nonaccrual (1)                                          $ 6,703       $ 3,614
Past due 90 days or more and still accruing interest         71            65
Other real estate                                         1,641         1,662
Renegotiated troubled debt                                   --            --

(1)   Other than amounts listed above, there are no other loans which: (a)
      represent or result from trends or uncertainties which management
      reasonably expects will materially affect future operating results,
      liquidity, or capital resources, or (b) represent material credits about
      which management is aware of any information which causes management to
      have serious doubts as to the ability of such borrowers to comply with the
      loan repayment terms.

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Information set forth below contains various forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, which statements represent the Company's
judgment concerning the future and are subject to risks and uncertainties that
could cause the Company's actual operating results to differ materially. Such
forward-looking statements can be identified by the use of forward-looking
terminology, such as "may", "will", "expect", "anticipate", "estimate",
"believe", or "continue", or the negative thereof or other variations thereof or
comparable terminology. The Company cautions that such forward-looking
statements are further qualified by important factors that could cause the
Company's actual operating results to differ materially from those in the
forward-looking statements.

Application of Critical Accounting Policies

      The Company's accounting policies are fundamental to understanding
management's discussion and analysis of results of operations and financial
condition. The Company's significant accounting policies are discussed in detail
in Note 1 of the consolidated financial statements included in the Company's
2002 Annual Report. The following is a summary of the allowance for credit
losses, one of the most complex and judgmental accounting policies of the
Company.

      The allowance for credit losses, which is utilized to absorb actual losses
in the loan portfolio, is maintained at a level consistent with management's
best estimate of probable credit losses incurred as of the balance sheet date.
The Company's allowance for credit losses is also analyzed quarterly by
management. This analysis includes a methodology that separates the total loan
portfolio into homogeneous loan classifications for purposes of evaluating risk.
The required allowance is calculated by applying a risk adjusted reserve
requirement to the dollar volume of loans within a homogenous group. Major loan
portfolio subgroups include: risk graded commercial loans, mortgage loans, home
equity loans, retail loans and retail credit lines. Management also analyzes the
loan portfolio on an ongoing basis to evaluate current risk levels, and risk
grades are adjusted accordingly. While management uses the best information to
make evaluations, future adjustments may be necessary, if economic or other
conditions differ substantially from the assumptions used.


                                       11
<PAGE>

Summary

      On January 27, 2003 the Company completed the acquisition of the
Harrisonburg, Virginia branch of another financial institution. The Company
acquired approximately $5.4 million in loans and $11.0 million in deposits.

      Assets at March 31, 2003 were $744.9 million, an increase of $10.8 million
since December 31, 2002. The increase in assets is primarily due to an increase
in loans of $11.6 million and an increase in investment securities available for
sale of $5.0 million, combined with a $5.8 decrease in other earning assets,
over the first three months of 2003. Over the past three months, deposits have
increased $1.9 million.

      Net income for the quarter ended March 31, 2003, of $1.8 million was
$498,000 or 39.8%, higher than the amount earned in the first quarter last year.
Diluted earnings per share for the current quarter was $0.38 per share compared
to $0.27 per share last year.

Interest Income and Interest Expense

      First quarter total interest income was $10.6 million, a decrease of 1.7%
over the same quarter last year. Average earning assets for the quarter were
$708.6 million, compared to $658.8 million for the year ago period. Interest
income from loans was $9.1 million, compared to $9.0 million in the first
quarter of 2002. The prime lending rate was 50 basis points lower during first
quarter 2003 than during first quarter 2002. Average loans for the first quarter
of 2003 were $570.4 million, $34.7 million, or 6.5%, higher than the $535.7
million last year. For the first quarter, the average yield on loans was 6.46%
in 2003 compared to 6.83% in 2002.

      Interest income on investments totaled $1.5 million for the current
quarter, down 13.9% from $1.7 million for the year ago quarter. The change is
primarily attributable to a decrease of $263,000 in interest income on U.S.
Agency securities.

      First quarter total interest expense was $4.5 million compared to $5.2
million from the first quarter of last year, a 12.9% decrease. Average interest
bearing liabilities for the first quarter 2003 increased 7.6% to $609.0 million
from $566.0 million for the first quarter of 2002. Overall cost of funds for the
first quarter was 2.74% and 3.73% for 2003 and 2002, respectively.

      Interest expense on deposits for the first quarter 2003 was $4.1 million,
compared to $4.9 million in the same period a year ago. A 6.4% increase in
average interest bearing deposits, from $511.1 million in first quarter 2002 to
$543.7 million during first quarter 2003, offset by a decrease in the average
rate for the quarter on interest-bearing deposits to 3.07% from 3.89% one year
earlier, yielded this decrease in interest expense on deposits.

      Interest expense on federal funds purchased and other borrowings was
$415,000 for the current quarter, an increase of 36.5%, from $304,000 in the
first quarter of 2002. The increase is primarily attributable to an increase in
average federal funds purchased and other borrowings from $54.8 million in the
first quarter of 2002 to $65.4 million in the first quarter of 2003.

Comparable net interest margins are as follows:

                                         Liability
Time Period            Asset Yield          Rate           Interest Rate Spread
-----------           -------------     -----------       ----------------------
First Quarter, 2003       6.09%      -      2.74%     =           3.35%
First Quarter, 2002       6.64%      -      3.73%     =           2.91%


                                       12
<PAGE>


Provision for Credit Losses

      A provision for credit losses is charged against earnings in order to
maintain the allowance for credit losses at a level that reflects management'
evaluation of the incurred losses inherent in the portfolio. The amount of the
provision is based on continuing assessments of nonperforming and "watch list"
loans, analytical reviews of loan loss experience in relation to outstanding
loans, loan charge-offs, nonperforming asset trends and management's judgment
with respect to current and expected economic conditions and their impact on the
existing credit portfolio.

      The provision for credit losses in the first quarter of 2003 was $495,000
compared to $285,000 in 2002. The allowance for credit losses as a percentage of
gross loans outstanding was 1.25% at March 31, 2003, compared to 1.26% at March
31, 2002. At March 31, 2003 and 2002, the allowance, as a percentage of
nonaccrual loans, was 107.1% and 186.6%, respectively.

Noninterest Income and Expense

      Noninterest income in the first quarter this year increased 92.9%, to $1.8
million from $930,000 in the same period last year. For the current quarter,
$322,000 in net gains from sales of investment securities was recognized.
Deposit service charges of $760,000 for the first quarter of 2003 increased
30.6% from the $582,000 in the first quarter of 2002. Mortgage banking fees
increased from $146,000 in the first quarter of 2002 to $463,000 in the current
quarter and investment service fees in the first quarter of 2003 were $141,000,
compared to $69,000 for the same period last year, a 104.4% increase.

      Noninterest expense for the first quarter of 2003 was $4.6 million, a 6.5%
increase over the $4.3 million expense in the first quarter of 2002. Salaries
and employee benefits increased $135,000 based on higher insurance and
retirement costs, occupancy expense increased $23,000, and equipment expense was
$57,000 higher, compared to the same period a year ago. Other expense increased
$51,000, or 5.4%, in the first quarter of 2003, compared to the first quarter of
2002. Items contributing to this overall net increase were: increases in staff
development expenses, marketing expense, telephone expense, loan filing, credit
report and appraisal fees, franchise taxes, contracted services, and
professional fees, combined with decreases in legal fees, postage, printing and
supplies, and OREO expenses.

Income Taxes

      The effective income tax rate of 35.4% for the first three months of 2003
was higher than the 32.1% rate for the same quarter of 2002. The lower effective
tax rate for 2002 was primarily due to the reduced amount of current expense
required to provide adequate income tax provision during the first quarter of
2002. The Company anticipates the effective tax rate for the 2003 full year will
be similar to the results of the first quarter of 2003.

Financial Condition

      The Company's total assets at March 31, 2003 and 2002 were $744.9 million
and $672.8 million, respectively, representing a $72.1 million, or 10.7%,
increase over the balance a year ago. Since December 31, 2002, assets have
increased $10.8 million. Average earning assets for the 2003 first quarter were
$708.6 million, or 7.6% higher than the $658.8 million average in the same
quarter last year.

      Loans at March 31, 2003 totaled $575.2 million compared to $533.5 million
one year earlier, an increase of 7.8%. Loans have increased 2.1% from $563.6
million at December 31, 2002. Average loans for the first quarter of 2002 were
$570.4 million, or 6.5% higher than the $535.7 million average in this same
period one year ago. The Company added approximately $5.4 million in outstanding
loans through the branch acquisition completed in January 2003.


                                       13
<PAGE>

      Investment securities of $133.6 million at March 31, 2003 were 29.2%
higher than the $103.4 million held one year earlier. Average investment
securities were $131.8 million and $119.2 million for the first quarter of 2003
and 2002, respectively. The increase in the investment portfolio was due to
increased levels of mortgage-backed securities and tax-exempt securities.

The Company added approximately $11.0 million in deposits through the branch
acquisition completed in January 2003. Deposits totaled $606.9 million at March
31, 2003, an 11.4% increase versus $544.9 million one year ago, and a 0.3%
increase from the $605.0 million recorded at December 31, 2002. At March 31,
2003, noninterest bearing deposits were $66.0 million, or 10.9% of total
deposits. The increase in deposits funded increased amounts of loans and
investment securities. At March 31, 2003 and December 31, 2002, borrowings at
the Federal Home Loan Bank of Atlanta (FHLB) totaled $52.5 million

      Shareholders' equity remained steady at $64.3 million from December 21,
2002 to March 31, 2003. The Company paid dividends of $0.14 per share during the
current quarter, compared to $0.13 per share in the first quarter of 2002.

Asset Quality

      The credit loss allowance ratio at March 31, 2003 stood at 1.25% of gross
loans outstanding, compared to 1.25% at December 31, 2002 and 1.26% at March 31,
2002. For the first quarter of 2003, provision charges against earnings totaled
$495,000 compared to $285,000 in the first quarter one year earlier. Net credit
losses for the 2003 first quarter totaled $378,000, or a 0.27% annualized loss
ratio based on average loans outstanding. This compares to net credit losses of
$274,000, or 0.20% annualized loss ratio for the 2002 first quarter.

      The Company's allowance for credit is analyzed quarterly by management.
This analysis includes a methodology that segments the loan portfolio by
selected types and considers the current status of the portfolio, historical
charge-off experience, current levels of delinquent, impaired and non-performing
loans, as well as economic and other risk factors. It is also subject to
regulatory examinations and determinations as to adequacy, which may take into
account such factors as the methodology employed and other analytical measures
in comparison to a group of peer banks. Management believes the allowance for
loan losses is sufficient to absorb known risk in the portfolio. No assurances
can be given that future economic conditions will not adversely affect borrowers
and result in increased losses.

      Other real estate owned decreased to $1.6 million at March 31, 2003,
compared to $1.7 million at December 31, 2002. Approximately $332,000 has been
transferred from loans into other real estate and approximately $361,000 of such
assets have been disposed of during the first quarter of 2003. A net loss of
$31,000 has been recorded on disposition of other real estate in the current
year.

Capital Resources

      Banks and financial holding companies, as regulated institutions, must
meet required levels of capital. The Office of the Commissioner of Banks in
North Carolina and the Board of Governors of the Federal Reserve, which are the
primary regulatory agencies for FNB Southeast and the Company, respectively,
have adopted minimum capital regulations or guidelines that categorize
components and the level of risk associated with various types of assets.
Financial institutions are required to maintain a level of capital commensurate
with the risk profile assigned to their assets in accordance with the
guidelines.

      As shown in the following table, the Company and its wholly-owned banking
subsidiary have capital levels exceeding the minimum levels for "well
capitalized" banks and financial holding companies as of March 31, 2003.


                                       14
<PAGE>


                              Regulatory Guidelines
                          ----------------------------
                               Well       Adequately                     FNB
     Ratio                 Capitalized    Capitalized     Company     Southeast
     -----                -------------  -------------   ---------   -----------

     Total Capital            10.0%           8.0%         12.04%       11.96%
     Tier 1 Capital            6.0            4.0          10.80        10.71
     Leverage Capital          5.0            4.0           8.39         8.35

New Accounting Pronouncements

      In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." SFAS 143 requires that obligations associated with the
retirement of a tangible long-lived asset to be recorded as a liability when
those obligations are incurred, with the amount of the liability initially
measured at fair value. SFAS 143 will be effective for financial statements
issued for fiscal years beginning after June 15, 2002 (early application is
encouraged).

      The FASB has issued SFAS 145 "Rescission of FASB Statements No. 4, 44, and
64, Amendment of FASB Statement No. 13, and Technical Corrections" (SFAS 145).
This Statement rescinds SFAS No.4,"Reporting Gains and Losses from
Extinguishment of Debt," and an amendment of that Statement, SFAS 64,
"Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements." This
Statement also rescinds SFAS 44,"Accounting for Intangible Assets of Motor
Carriers." This Statement amends SFAS 13,"Accounting for Leases," to eliminate
an inconsistency between the required accounting for sale-leaseback transactions
and the required accounting for certain lease modifications that have economic
effects that are similar to sale-leaseback transactions. SFAS 145 also amends
other existing authoritative pronouncements to make various technical
corrections, clarify meanings, or describe their applicability under changed
conditions. The provisions of SFAS 145 related to the rescission of SFAS 4 shall
be applied in fiscal years beginning after May 15, 2002. Any gain or loss on
extinguishment of debt that was classified as an extraordinary item in prior
periods presented that does not meet the criteria in Opinion 30 for
classification as an extraordinary item shall be reclassified. Early application
of the provisions of this Statement related to the rescission of SFAS 4 is
encouraged. The provisions in paragraphs 8 and 9(c) of SFAS 145 related to SFAS
13 shall be effective for transactions occurring after May 15, 2002, with early
application encouraged. All other provisions of SFAS 145 shall be effective for
financial statements issued on or after May 15, 2002, with early application
encouraged. Management does not anticipate the implementation of this Statement
to have a material impact on the Company's consolidated financial statements.

      In June 2002 the FASB issued SFAS 146 "Accounting for Costs Associated
with Exit or Disposal Activities." This Statement addresses financial accounting
and reporting for costs associated with exit or disposal activities and
nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)." The provisions
of this Statement are effective for exit or disposal activities that are
initiated after December 31, 2002, with early application encouraged. Management
does not anticipate the implementation of this Statement to have a material
impact on the Company's financial statement.

      The FASB has issued SFAS 147,"Acquisitions of Certain Financial
Institutions, an amendment of FASB Statements No. 72 and 144 and FASB
Interpretation No. 9" (SFAS 147). FASB Statement No. 72,"Accounting for Certain
Acquisitions of Banking or Thrift Institutions," and FASB Interpretation No.
9,"Applying APB Opinions No. 16 and 17 When a Savings and Loan Association or a
Similar Institution Is Acquired in a Business Combination Accounted for by the
Purchase Method," provided interpretive guidance on the application of the
purchase method to acquisitions of financial institutions. Except for


                                       15
<PAGE>


transactions between two or more mutual enterprises, SFAS 147 removes
acquisitions of financial institutions from the scope of both Statement 72 and
Interpretation 9 and requires that those transactions be accounted for in
accordance with FASB Statements No. 141,"Business Combinations," and No.
142,"Goodwill and Other Intangible Assets." Thus, the requirement in paragraph 5
of Statement 72 to recognize (and subsequently amortize) any excess of the fair
value of liabilities assumed over the fair value of tangible and identifiable
intangible assets acquired as an unidentifiable intangible asset no longer
applies to acquisitions within the scope of SFAS 147.

      In addition, SFAS 147 amends FASB Statement No. 144,"Accounting for the
Impairment or Disposal of Long-Lived Assets," to include in its scope long-term
customer-relationship intangible assets of financial institutions such as
depositor- and borrower-relationship intangible assets and credit cardholder
intangible assets. Consequently, those intangible assets are subject to the same
undiscounted cash flow recoverability test and impairment loss recognition and
measurement provisions that SFAS 144 requires for other long-lived assets that
are held and used. Paragraph 5 of SFAS 147, which relates to the application of
the purchase method of accounting, is effective for acquisitions for which the
date of acquisition is on or after October 1, 2002.The provisions in paragraph 6
related to accounting for the impairment or disposal of certain long-term
customer-relationship intangible assets are effective on October 1, 2002.
Transition provisions for previously recognized unidentifiable intangible assets
in paragraphs 8-14 are effective on October 1, 2002, with earlier application
permitted. Management does not anticipate the implementation of this Statement
to have a material impact on the Company's financial statements.

      In December 2002, the FASB issued FASB Statement No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure" (SFAS 148), which amends
FASB Statement No. 123, "Accounting for Stock Based Compensation" (SFAS 123), to
provide alternative methods of transition for an entity that voluntarily changes
to the fair value based method of accounting for stock-based employee
compensation. The provisions of the statement were effective December 31, 2002.
Management currently intends to continue to account for stock-based compensation
under the intrinsic value method set forth in Accounting Principles Board
("APB") Opinion 25 and related interpretations. For this reason, the transition
guidance of SFAS 148 does not have an impact on the Company's consolidated
balance sheet or consolidated statements of income and comprehensive income. The
Statement does amend existing guidance with respect to required disclosures,
regardless of the method of accounting used. The revised disclosure requirements
are presented herein.

      The pro forma impact on net income and net income per share as if the fair
value of stock-based compensation plans had been recorded as a component of
compensation expense in the consolidated financial statements as of the date of
grant of awards related to such plans, pursuant to the provisions of SFAS 123
and SFAS 148, is disclosed as follows.

                                                        March 31,      March 31,
(Dollars in thousands, except per share data)             2003           2002
---------------------------------------------             ----           ----
Net income, as reported                                 $ 1,750        $ 1,252
Less: Stock based compensation as calculated per
fair value method, net of tax effect                       (174)           (87)
                                                        -------        -------
Pro forma net income                                    $ 1,576        $ 1,165

Earnings per share:
Basic - as reported                                     $   .39        $   .27
Basic - pro forma                                       $   .35        $   .25
Diluted - as reported                                   $   .38        $   .27
Diluted - pro forma                                     $   .35        $   .25

      The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted average
assumptions used in 2003 and 2002: dividend yield of 3.26% and 3.30%; expected
volatility of 4.58% and 16.0%; risk free interest rates of 3.50% and 3.47%, and
expected lives of seven years for both periods.


                                       16
<PAGE>

      These plans provide that shares granted come from the Company's authorized
but unissued or reacquired common stock. The price of the options granted
pursuant to these plans will not be less than 100 percent of the fair market
value of the shares on the date of grant. The options granted in 1989, 1992, and
1995 vest ratably over a five year period, and the options granted in 1996 and
thereafter vest ratably over a four year period. No option will be exercisable
after ten years from the date granted.

      On November 25, 2002, the FASB issued FASB Interpretation No. 45 ("FIN
45"),"Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others (an interpretation of
FASB Statements No. 5, 57, and 107 and rescission of FASB Interpretation No.
34)." FIN 45 clarifies the requirements of FASB Statement No. 5 (SFAS
5),"Accounting for Contingencies," relating to a guarantor's accounting for, and
disclosure of, the issuance of certain types of guarantees. For guarantees that
fall within the scope of FIN 45, the Interpretation requires that guarantors
recognize a liability equal to the fair value of the guarantee upon its
issuance. The Corporation's primary guarantees included within the scope of FIN
45 relates to financial standby letters of credit issued to commercial
customers. FIN 45 requires the liability recognized in standalone arm's-length
transactions to be the premium received or receivable by the guarantor.
Management does not anticipate the implementation of this interpretation to have
a material impact on the Company's financial statements.

      In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN
46"),"Consolidation of Variable Interest Entities (an interpretation of ARB
No.51)." FIN 46 addresses the consolidation by business enterprises of certain
variable interest entities. Management does not anticipate the implementation of
this interpretation to have a material impact on the Company's financial
statements.

      In April 2003, the FASB issued Statement of Financial Accounting Standards
No. 149 "Amendment of Statement 133 on Derivative Instruments and Hedging
Activities." FSAB Statements No. 133 "Accounting for Derivative Instruments and
Hedging Activities" and No. 138 "Accounting for Certain Derivative Instruments
and Certain Hedging Activities," establish accounting and reporting standards
for derivative instruments including derivatives embedded in other contracts
(collectively referred to as derivatives) and for hedging activities. This
Statement 149 amends Statement 133 for certain decisions made by the Board as
part of the Derivatives Implementation Group (DIG) process. This Statement
contains amendments relating to FASB Concepts Statement No. 7, "Using Cash Flow
Information and Present Value in Accounting Measurements," and FASB Statements
No. 65, "Accounting for Certain Mortgage Banking Activities," No. 91 "Accounting
for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans
and Initial Direct Costs of Leases," No. 95, "Statement of Cash Flows," and No.
126, "Exemption from Certain Required Disclosures about Financial Instruments
for Certain Nonpublic Entities." The Company is presently evaluating the effect
of this pronouncement.

      Based on the Company's operations as of March 31, 2003, none of these
standards are expected to have a material effect on the Company's financial
statements.

Sarbanes-Oxley Act of 2002

      On July 30, 2002, the Sarbanes-Oxley Act of 2002 was signed into law and
became some of the most sweeping federal legislation addressing accounting,
corporate governance and disclosure issues. The impact of the Sarbanes-Oxley Act
is wide-ranging as it applies to all public companies and imposes significant
new requirements for public company governance and disclosure requirements. Some
of the provisions of the Sarbanes-Oxley Act became effective immediately while
others will be implemented over the coming months.

      In general, the Sarbanes-Oxley Act mandates important new corporate
governance and financial reporting requirements intended to enhance the accuracy
and transparency of public companies' reported financial results. It establishes
new responsibilities for corporate chief executive officers, chief financial
officers and audit committees in the financial reporting process and creates a
new regulatory body to oversee auditors of public companies. It backs these
requirements with new SEC enforcement tools,


                                       17
<PAGE>


increases criminal penalties for federal mail, wire and securities fraud, and
creates new criminal penalties for document and record destruction in connection
with federal investigations. It also increases the opportunity for more private
litigation by lengthening the statute of limitations for securities fraud claims
and providing new federal corporate whistleblower protection.

      The full impact of the Sarbanes-Oxley Act cannot be fully measured until
the SEC acts to implement the numerous provisions for which Congress has
delegated implementation authority. The economic and operational effects of this
new legislation on public companies, including the Bank, will be significant in
terms of the time, resources and costs associated with complying with the new
law. Because the Sarbanes-Oxley Act, for the most part, applies equally to
larger and smaller public companies, the Bank will be presented with additional
challenges as a smaller, community-oriented financial institution seeking to
compete with larger financial institutions in its market.

Liquidity Management

      Liquidity management refers to the ability to meet day-to-day cash flow
requirements based primarily on activity in loan and deposit accounts of the
Company's customers. Deposit withdrawals, loan funding and general corporate
activity create a need for liquidity for the Company. Liquidity is derived from
sources such as deposit growth; maturity, calls, or sales of investment
securities; principal and interest payments on loans; access to borrowed funds
or lines of credit; and profits.

      During the first quarter of 2003 the Company had net cash provided by
operating activities of $1.7 million. This is a reduction from $2.1 million of
net cash provided by operating activities in the first quarter of 2002. The
decline is primarily attributable to the decline of $3.3 million in interest
received and a decrease in interest expense paid of $1.0 million.

      Net cash used in investing activities in the first quarter 2003 totaled
$9.5 million primarily based on the purchase of $34.9 million in investment
securities and an $11.5 million funding increase in gross loans, offset by the
proceeds from the sale of securities available for sale totaling $39.0 million.
This compares to the first quarter of 2002 when proceeds from the sale of
securities available for sale, totaling $22.7 million, resulted in net cash
provided by investing activities of $24.2 million. A decrease in gross loans
outstanding also provided $1.6 million in cash during 2002.

      Financing activities in the 2003 first quarter provided $1.2 million,
based primarily on a net $1.9 million increase in deposits. During the 2002
first quarter, financing activities used $31.2 million. Time deposits used $41.3
million of cash during the 2002 quarter, which was somewhat offset by a net
increase in federal funds purchased and other borrowings of $10.9 million.

      Overall cash and cash equivalents totaled $17.9 million at March 31, 2003
compared to $24.5 million at December 31, 2001 and $18.8 million at March 31,
2002.

      Liquidity is further enhanced by an approximately $115 million line of
credit with the FHLB collateralized by FHLB stock, investment securities and
qualifying 1 to 4 family residential mortgage loans. The Company provides
various reports to the FHLB on a regular basis throughout the year to maintain
the availability of the credit line. Each borrowing request to the FHLB is
initiated through an advance application that is subject to approval by the FHLB
before funds are advanced under the credit agreement.

      The Company also has unsecured overnight borrowing lines totaling $19
million available through four financial institutions. These lines are used to
manage the day-to-day, short-term liquidity needs of the Company. Each Federal
funds line has a requirement to repay the line in full on a frequent basis,
typically within five to ten business days.


                                       18
<PAGE>


Effects of Inflation

      Inflation affects financial institutions in ways that are different from
most commercial and industrial companies, which have significant investments in
fixed assets and inventories. The effect of inflation on interest rates can
materially impact bank operations, which rely on net interest margins as a major
source of earnings. Non-interest expenses, such as salaries and wages, occupancy
and equipment cost are also negatively impacted by inflation.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

      Market risk is the possible chance of loss from unfavorable changes in
market prices and rates. These changes may result in a reduction of current and
future period net interest income, which is the favorable spread earned from the
excess of interest income on interest-earning assets, over interest expense on
interest-bearing liabilities.

      The Company considers interest rate risk to be its most significant market
risk, which could potentially have the greatest impact on operating earnings.
The Company is asset sensitive, which means that falling interest rates could
result in a reduced amount of net interest income. The monitoring of interest
rate risk is part of the Company's overall asset/liability management process.
The primary oversight of asset/liability management rests with the Company's
Asset and Liability Committee. The Committee meets on a regular basis to review
asset/liability activities and to monitor compliance with established policies.

      The Company has not experienced any substantive changes in portfolio risk
during the three months ended March 31, 2003.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures

      Within 90 days prior to the date of this report, the Company's Chief
Executive Officer and the Chief Financial Officer evaluated the effectiveness of
the Company's disclosure controls and procedures in accordance with Rule 13a-14
under the Exchange Act. Based on their evaluation, the Chief Executive Officer
and the Chief Financial Officer concluded that the Company's disclosure controls
and procedures enable the Company to record, process, summarize and report in a
timely manner the information that the Company is required to disclose in its
Exchange Act reports.

Changes in internal controls

      There were no significant changes in the Company's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of the evaluation referred to above.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

      None.


                                       19
<PAGE>


Item 2. Changes in Securities and Use of Proceeds

      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 No.      Description
 -----------      -----------

 3.01   Amended and Restated Articles of Incorporation.
 3.02   Bylaws of Company, as amended.
 4.01   Specimen Common Stock Certificate.
10.01   Stock Compensation Plan of the Registrant
        approved April 11, 1989, by the
        shareholders of the Registrant, with forms
        of stock option and stock bonus agreements
        attached.
10.02   Omnibus Equity Compensation Plan of the Registrant.
10.03   Severance Policy for Senior Officers of the Registrant (employed for
        five years or more).
10.04   Revised Severance Plan for Senior Officers of the Registrant (employed
        for five years or more).
10.05   Severance Policy for Senior Officers of the Registrant (employed for
        less than five years).
10.07   Benefit Equivalency Plan of the Registrant effective January 1, 1994.
10.08   Annual Management Incentive Plan of the Registrant.
10.09   Long Term Incentive Plan of the Registrant.
10.10   Long Term Incentive Plan of the Registrant for certain Senior Management
        employees.
10.11   Employment Agreement dated May 18, 1995, between the Registrant, as
        employer, and Ernest J. Sewell, President and Chief Executive Officer of
        the Registrant.
10.12   Amendment to Employment Agreement between the Registrant, as employer,
        and Ernest J. Sewell, President and Chief Executive Officer of the
        Registrant dated May 16, 2002.
10.13   Split-Dollar Agreement dated January 27, 1995, between the Registrant
        and Ernest J. Sewell.
10.14   Lease, dated January 31, 1997, between the Registrant and Landmark
        Commercial, Inc., relating to the Wilmington branch office.
10.15   Amendment to Benefit Equivalency Plan of the Registrant effective
          January 1, 1998.





                                       20
<PAGE>


      (b)   Reports on Form 8-K

            None.


                                       21
<PAGE>


                                   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.

                                       FNB FINANCIAL SERVICES CORPORATION
                                       (Registrant)

May 12, 2003                           /s/ Michael W. Shelton
                                       -----------------------------------------
                                                   Michael W. Shelton
                                       (Vice President, Secretary and Treasurer)


                                       22
<PAGE>


                       FNB FINANCIAL SERVICES CORPORATION

                   Certification of Periodic Financial Report
                       Pursuant to 18 U.S.C. Section 1350

      Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, the undersigned officers of FNB Financial
Services Corporation (the "Company") certify that the Quarterly Report on Form
10-Q for the quarter ended March 31, 2003 fully complies with the requirements
of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934
and information contained in that Form 10-Q fairly presents, in all material
respects, the financial condition and results of operations of the Company.

Dated: May 12, 2003                          /s/ Ernest J. Sewell
                                             -----------------------------------
                                             Ernest J. Sewell
                                             Chief Executive Officer


Dated: May 12, 2003                          /s/ Michael W. Shelton
                                             -----------------------------------
                                             Michael W. Shelton
                                             Chief Financial Officer

* This certification is made solely for the purpose of 18 U.S.C. Section 1350,
subject to the knowledge standard contained therein, and not for any other
purpose.


                                       23
<PAGE>


                                 CERTIFICATIONS

I, Ernest J. Sewell, certify that:

      1. I have reviewed this quarterly report on Form 10-Q of FNB Financial
Services Corporation;

      2. Based on my knowledge, this 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 officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

            a) designed such disclosure controls and procedures 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 as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and

            c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

      5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, 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 in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

            b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and

      Z 6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 12, 2003
                                         /s/ Ernest J. Sewell
                                         ---------------------------------------
                                         Ernest J. Sewell
                                         Chief Executive Officer


                                       24
<PAGE>


                                 CERTIFICATIONS

I, Michael W. Shelton, certify that:

      1. I have reviewed this quarterly report on Form 10-Q of FNB Financial
Services Corporation;

      2. Based on my knowledge, this 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 officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

            a) designed such disclosure controls and procedures 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 as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and

            c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

      5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, 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 in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

            b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and

      6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 12, 2003
                                         /s/ Michael W. Shelton
                                         ---------------------------------------
                                         Michael W. Shelton
                                         Chief Financial Officer


                                       25