þ		Quarterly Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

o		Transition Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

(Exact name of registrant as specified in its charter)

Florida		25-1255406
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
One F.N.B. Boulevard, Hermitage, PA		16148
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 724-981-6000

(Former name, former address and former fiscal year, 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 þ   No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer   o (Do not check if a smaller reporting company)		Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o   No þ

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at July 31, 2008
Common Stock, $0.01 Par Value		86,026,592 Shares

 

 

F.N.B. CORPORATION
FORM 10-Q
June 30, 2008
INDEX

PART I — FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Balance Sheets			2
Consolidated Statements of Income			3
Consolidated Statements of Stockholders’ Equity			4
Consolidated Statements of Cash Flows			5
Notes to Consolidated Financial Statements			6
Report of Independent Registered Public Accounting Firm			25
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			26
Item 3. Quantitative and Qualitative Disclosures About Market Risk			42
Item 4. Controls and Procedures			42
PART II – OTHER INFORMATION
Item 1. Legal Proceedings			43
Item 1A. Risk Factors			43
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			43
Item 3. Defaults Upon Senior Securities			43
Item 4. Submission of Matters to a Vote of Security Holders			44
Item 5. Other Information			44
Item 6. Exhibits			45
Signatures			46
EX-15
EX-31.1
EX-31.2
EX-32.1
EX-32.2

F.N.B. CORPORATION AND SUBSIDIARIES

Dollars in thousands, except par value

		June 30,				December 31,
		2008				2007
		(Unaudited)
Assets
Cash and due from banks		$	189,334			$	130,235
Interest bearing deposits with banks			3,590				482
Federal funds sold			14,000				—
Securities available for sale			479,740				358,421
Securities held to maturity (fair value of $785,363 and $665,914)			794,684				667,553
Loans held for sale			18,011				5,637
Loans, net of unearned income of $32,529 and $25,747			5,606,409				4,344,235
Allowance for loan losses			(71,483	)			(52,806	)
Net Loans			5,534,926				4,291,429
Premises and equipment, net			119,269				80,472
Goodwill			478,733				242,120
Core deposit and other intangible assets, net			46,664				19,439
Bank owned life insurance			211,708				133,885
Other assets			205,221				158,348
Total Assets		$	8,095,880			$	6,088,021
Liabilities
Deposits:
Non-interest bearing demand		$	901,120			$	626,141
Savings and NOW			2,780,685				2,037,160
Certificates and other time deposits			2,196,859				1,734,383
Total Deposits			5,878,664				4,397,684
Other liabilities			76,045				63,760
Short-term borrowings			510,745				449,823
Long-term debt			505,244				481,366
Junior subordinated debt owed to unconsolidated subsidiary trusts			205,724				151,031
Total Liabilities			7,176,422				5,543,664
Stockholders’ Equity
Common stock – $0.01 par value
Authorized – 500,000,000 shares
Issued – 86,071,462 and 60,602,218 shares			857				602
Additional paid-in capital			899,067				508,891
Retained earnings			37,332				42,426
Accumulated other comprehensive income			(17,013	)			(6,738	)
Treasury stock – 45,620 and 47,970 shares at cost			(785	)			(824	)
Total Stockholders’ Equity			919,458				544,357
Total Liabilities and Stockholders’ Equity		$	8,095,880			$	6,088,021

See accompanying Notes to Consolidated Financial Statements

F.N.B. CORPORATION AND SUBSIDIARIES

Dollars in thousands, except per share data
Unaudited

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2008				2007				2008				2007
Interest Income
Loans, including fees		$	90,825			$	78,731			$	167,234			$	156,656
Securities:
Taxable			12,499				10,919				22,929				21,928
Nontaxable			1,580				1,438				3,186				2,818
Dividends			112				74				179				172
Other			281				458				294				533
Total Interest Income			105,297				91,620				193,822				182,107
Interest Expense
Deposits			28,219				31,329				55,811				61,575
Short-term borrowings			3,024				4,458				7,031				9,186
Long-term debt			5,436				4,745				10,658				9,625
Junior subordinated debt owed to unconsolidated subsidiary trusts			3,061				2,739				5,800				5,452
Total Interest Expense			39,740				43,271				79,300				85,838
Net Interest Income			65,557				48,349				114,522				96,269
Provision for loan losses			10,976				1,838				14,559				3,685
Net Interest Income After Provision for Loan Losses			54,581				46,511				99,963				92,584
Non-Interest Income
Service charges			14,860				10,212				25,046				19,830
Insurance commissions and fees			4,183				3,230				8,105				7,649
Securities commissions and fees			2,098				1,650				3,618				2,926
Trust fees			3,575				2,118				5,799				4,280
Gain on sale of securities			41				415				795				1,155
Impairment loss on equity securities			(456	)			(111	)			(466	)			(111	)
Gain on sale of mortgage loans			530				359				981				726
Bank owned life insurance			1,739				1,025				2,883				1,990
Other			886				1,477				2,863				2,846
Total Non-Interest Income			27,456				20,375				49,624				41,291
Non-Interest Expense
Salaries and employee benefits			32,320				21,475				57,576				43,741
Net occupancy			4,761				3,667				8,577				7,471
Equipment			4,367				3,297				7,482				6,658
Amortization of intangibles			1,219				1,103				2,292				2,206
Other			19,347				12,280				30,450				23,642
Total Non-Interest Expense			62,014				41,822				106,377				83,718
Income Before Income Taxes			20,023				25,064				43,210				50,157
Income taxes			5,518				7,442				12,214				15,165
Net Income		$	14,505			$	17,622			$	30,996			$	34,992
Net Income per Common Share
Basic		$	0.17			$	0.29			$	0.43			$	0.58
Diluted			0.17				0.29				0.42				0.58
Cash Dividends per Common Share			0.24				0.235				0.48				0.47

See accompanying Notes to Consolidated Financial Statements

F.N.B. CORPORATION AND SUBSIDIARIES

Dollars in thousands
Unaudited

																		Accumulated
																		Other
																		Compre-
		Compre-								Additional								hensive
		hensive				Common				Paid-In				Retained				Income				Treasury
		Income				Stock				Capital				Earnings				(Loss)				Stock				Total
Balance at January 1, 2008						$	602			$	508,891			$	42,426			$	(6,738	)		$	(824	)		$	544,357
Net income		$	30,996												30,996												30,996
Change in other comprehensive (loss)			(10,275	)															(10,275	)							(10,275	)
Comprehensive income		$	20,721
Cash dividends declared:
Common stock $0.48/share															(35,271	)											(35,271	)
Issuance of common stock							255				388,988				(213	)							39				389,069
Restricted stock compensation											1,236																1,236
Tax benefit of stock-based Compensation											(48	)															(48	)
Adjustment to initially apply EITF 06-04 and 06-10															(606	)											(606	)
Balance at June 30, 2008						$	857			$	899,067			$	37,332			$	(17,013	)		$	(785	)		$	919,458
Balance at January 1, 2007						$	601			$	506,024			$	33,321			$	(1,546	)		$	(1,028	)		$	537,372
Net income		$	34,992												34,992												34,992
Change in other comprehensive (loss)			(4,078	)															(4,078	)							(4,078	)
Comprehensive income		$	30,914
Cash dividends declared:
Common stock $0.47/share															(28,384	)											(28,384	)
Purchase of common stock																							(5,777	)			(5,777	)
Issuance of common stock							1				(2	)			(1,039	)							5,788				4,748
Restricted stock compensation											668																668
Tax benefit of stock-based Compensation											376																376
Cumulative effect of change in accounting for uncertainties in income taxes (FIN 48 – see the “Income Taxes” note)															(1,174	)											(1,174	)
Balance at June 30, 2007						$	602			$	507,066			$	37,716			$	(5,624	)		$	(1,017	)		$	538,743

See accompanying Notes to Consolidated Financial Statements

Dollars in thousands
Unaudited

		Six Months Ended
		June 30,
		2008				2007
Operating Activities
Net income		$	30,996			$	34,992
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization and accretion			11,364				7,093
Provision for loan losses			14,559				3,685
Deferred taxes			(1,111	)			3,530
Gain on sale of securities			(329	)			(1,044	)
Tax benefit of stock-based compensation			48				(376	)
Net change in:
Interest receivable			3,280				416
Interest payable			1,270				(953	)
Loans held for sale			(12,374	)			(4,512	)
Trading securities			185,416				—
Bank owned life insurance			(1,807	)			(1,479	)
Other, net			(15,149	)			3,592
Net cash flows provided by operating activities			216,163				44,944
Investing Activities
Net change in:
Interest bearing deposits with banks			3,176				386
Federal funds sold			(14,000	)			—
Loans			(185,929	)			(44,891	)
Securities available for sale:
Purchases			(230,775	)			(170,570	)
Sales			1,977				3,162
Maturities			140,491				129,053
Securities held to maturity:
Purchases			(186,335	)			(36,055	)
Maturities			82,519				70,081
Purchase of bank owned life insurance			(22	)			—
Increase in premises and equipment			(8,812	)			(2,535	)
Net cash received for mergers and acquisitions			50,441				—
Net cash flows used in investing activities			(347,269	)			(51,369	)
Financing Activities
Net change in:
Non-interest bearing deposits, savings and NOW accounts			234,909				124,806
Time deposits			(45,412	)			(43,080	)
Short-term borrowings			10,942				50,849
Increase in long-term debt			92,088				49,566
Decrease in long-term debt			(68,210	)			(130,012	)
Decrease in junior subordinated debt			(169	)			—
Purchase of common stock			—				(5,777	)
Issuance of common stock			1,376				3,357
Tax benefit of stock-based compensation			(48	)			376
Cash dividends paid			(35,271	)			(28,384	)
Net cash flows provided by financing activities			190,205				21,701
Net Increase in Cash and Due from Banks			59,099				15,276
Cash and due from banks at beginning of period			130,235				122,362
Cash and Due from Banks at End of Period		$	189,334			$	137,638

See accompanying Notes to Consolidated Financial Statements

F.N.B. CORPORATION AND SUBSIDIARIES

(Unaudited)
June 30, 2008

BUSINESS

     F.N.B. Corporation (the Corporation) is a diversified financial services company headquartered in Hermitage, Pennsylvania. Its primary businesses include community banking, consumer finance, wealth management and insurance. The Corporation also conducts leasing and merchant banking activities. The Corporation operates its community banking business through a full service branch network in Pennsylvania and Ohio and loan production offices in Pennsylvania, Ohio, Florida and Tennessee. The Corporation operates its wealth management and insurance businesses within the existing branch network. It also conducts selected consumer finance business in Pennsylvania, Ohio and Tennessee.

BASIS OF PRESENTATION

     The Corporation’s accompanying consolidated financial statements include subsidiaries in which the Corporation has a controlling financial interest. Companies in which the Corporation controls operating and financing decisions (principally defined as owning a voting or economic interest greater than 50%) are also consolidated. Variable interest entities are consolidated if the Corporation is exposed to the majority of the variable interest entity’s expected losses and/or residual returns (i.e., the Corporation is considered to be the primary beneficiary). The Corporation owns and operates First National Bank of Pennsylvania (FNBPA), First National Trust Company, First National Investment Services Company, LLC, F.N.B. Investment Advisors, Inc., First National Insurance Agency, LLC, Regency Finance Company, F.N.B. Capital Corporation, LLC and Bank Capital Services, and results for each of these entities are included in the accompanying consolidated financial statements.

     The accompanying consolidated financial statements include all adjustments that are necessary, in the opinion of management, to fairly reflect the Corporation’s financial position and results of operations. All significant intercompany balances and transactions have been eliminated. Certain prior period amounts have been reclassified to conform to the current period presentation.

     Certain information and note disclosures normally included in consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission (Commission). The interim operating results are not necessarily indicative of operating results for the full year. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto, included in the Corporation’s Annual Report on Form 10-K, filed with the Commission on February 29, 2008.

USE OF ESTIMATES

     The accounting and reporting policies of the Corporation conform with GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates. Material estimates that are particularly susceptible to significant changes include the allowance for loan losses, securities valuation, goodwill and other intangible assets and income taxes.

MERGERS AND ACQUISITIONS

     On April 1, 2008, the Corporation completed its acquisition of Omega Financial Corporation (Omega), a diversified financial services company with $1.8 billion in assets based in State College, Pennsylvania. The all-stock transaction, valued at approximately $388.2 million, resulted in the Corporation issuing 25,362,525 shares of its common stock in exchange for 12,544,150 shares of Omega common stock. The assets and liabilities of Omega were recorded on the Corporation’s balance sheet at their fair values as of April 1, 2008, the acquisition date, and their results of operations have been included in the Corporation’s consolidated statement of income since then. Omega’s banking subsidiary, Omega Bank, was merged into FNBPA on April 1, 2008.

     The following table shows the calculation of the preliminary purchase price and the resulting goodwill (in thousands):

Fair value of stock issued and stock options assumed						$	388,176
Fair value of:
Tangible assets acquired			1,535,724
Core deposit and other intangible assets acquired			31,028
Liabilities assumed			(1,463,715	)
Net cash received in the acquisition			50,441
Fair value of net assets acquired							153,478
Goodwill recognized						$	234,698

     The Corporation has not yet finalized its determination of the fair values of certain acquired assets and liabilities and will adjust goodwill upon completion of the valuation process.

     The following table summarizes the estimated fair value of the net assets that the Corporation acquired from Omega (in thousands):

		April 1,
		2008
Assets
Cash and due from banks		$	50,441
Federal funds sold			52,400
Securities			256,837
Loans			1,090,920
Goodwill and other intangible assets			265,726
Accrued income and other assets			135,567
Total assets			1,851,891
Liabilities
Deposits			1,291,483
Borrowings			157,241
Accrued expenses and other liabilities			14,991
Total liabilities			1,463,715
Purchase price		$	388,176

     The following unaudited summary financial information presents the consolidated results of operations of the Corporation on a pro forma basis, as if the Omega acquisition had occurred at the beginning of each of the periods presented (dollars in thousands, except per share data):

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2008				2007				2008				2007
Net interest income		$	65,557			$	65,470			$	130,664			$	130,491
Provision for loan losses			10,976				2,583				17,994				5,040
Net interest income after provision for loan losses			54,581				62,887				112,670				125,451
Non-interest income			27,456				27,113				56,494				55,158
Non-interest expense			62,014				57,086				123,625				113,890
Income before taxes			20,023				32,914				45,539				66,719
Income taxes			5,518				9,473				12,495				19,469
Net income		$	14,505			$	23,441			$	33,044			$	47,250
Net income per common share
Basic		$	0.17			$	0.27			$	0.39			$	0.55
Diluted			0.17				0.27				0.39				0.55

     The pro forma results include the amortization of the fair value adjustments on loans, deposits and debt and the amortization of the newly created intangible assets and post-merger acquisition related expenses. The pro forma results for the three and six months ended June 30, 2008 also include $3.6 million pre-tax for certain non-recurring items, including personnel expense for retention bonuses and severance payments. The pro forma results do not reflect cost savings or revenue enhancements anticipated from the acquisition, and are not necessarily indicative of what actually would have occurred if the acquisition had been completed as of the beginning of the periods presented, nor are they necessarily indicative of future consolidated results.

Pending Acquisition

     On February 15, 2008, the Corporation announced the signing of a definitive merger agreement to acquire Iron and Glass Bancorp, Inc. (IRGB), a bank holding company with approximately $300.0 million in assets based in Pittsburgh, Pennsylvania. The transaction is valued at approximately $86.1 million. Under the terms of the merger agreement, IRGB shareholders will be entitled to receive either $75.00 cash or 5.00 shares of F.N.B. Corporation common stock, or a combination of cash and shares, for each share of IRGB common stock, subject to a proration of 45% cash and 55% stock, if either cash or stock is oversubscribed. The transaction is expected to be completed in the third quarter of 2008, pending regulatory approvals, the approval of shareholders of IRGB and the satisfaction of other closing conditions.

NEW ACCOUNTING STANDARDS

Disclosures about Derivative Instruments and Hedging Activities

     In March 2008, the Financial Accounting Standards Board (FASB) issued Financial Accounting Standards Board Statement (FAS) 161, Disclosures about Derivative Instruments and Hedging Activities – an Amendment of FASB Statement No. 133, which enhances disclosures about derivatives and hedging activities and thereby improves the transparency of financial reporting. FAS 161 is effective for the Corporation on January 1, 2009. The Corporation has not yet determined the impact that the adoption of FAS 161 will have on its consolidated financial statements.

Business Combinations

     In December 2007, the FASB issued FAS 141R, Business Combinations, which establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non-controlling interest in the acquiree and the goodwill acquired. FAS 141R also establishes disclosure requirements which will enable users to evaluate the nature and financial effects of the business combination. FAS 141R is effective for the Corporation for acquisitions made after January 1, 2009. The Corporation has not yet determined the impact that the adoption of FAS 141R will have on its consolidated financial statements.

Noncontrolling Interests in Consolidated Financial Statements

     In December 2007, the FASB issued FAS 160, Noncontrolling Interests in Consolidated Financial Statements, an Amendment of Accounting Research Bulletin (ARB) No. 51. FAS 160 establishes accounting and reporting standards for ownership interest in a subsidiary and for the deconsolidation of a subsidiary. FAS 160 is effective for the Corporation on January 1, 2009. Earlier adoption is prohibited. The Corporation has not yet determined the impact that the adoption of FAS 160 will have on its consolidated financial statements.

Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards

     In June 2007, the FASB ratified the consensus reached in Emerging Issues Task Force (EITF) 06-11, Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards. EITF 06-11 applies to companies that have share-based payment arrangements that entitle employees to receive dividends or dividend equivalents on equity-classified nonvested shares when those dividends or dividend equivalents are charged to retained earnings and result in an income tax deduction. Companies that have share-based payment arrangements that fall within the scope of EITF 06-11 will be required to increase capital surplus for any realized income tax benefit associated with dividend or dividend equivalents paid to employees for equity classified nonvested equity awards. Any increase recorded to capital surplus is required to be included in a company’s pool of excess tax benefits that are available to absorb potential future tax deficiencies on share-based payment awards. The application of this guidance did not impact the Corporation’s consolidated financial statements since dividends accrued on its unvested awards are subject to forfeiture.

Accounting for Collateral Assignment Split Dollar Life Insurance

     In March 2007, the FASB ratified EITF 06-10, Accounting for Collateral Assignment Split Dollar Life Insurance. EITF 06-10 concludes that an employer should recognize a liability for the postretirement benefit related to a collateral assignment split dollar life insurance arrangement in accordance with either FAS 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions, or APB Opinion No. 12, Ominbus Opinion – 1967, if the employer has agreed to maintain a life insurance policy during the employee’s retirement or to provide the employee with a death benefit based on the substantive arrangement with the employee. EITF 06-10 also concludes that an employer should recognize and measure an asset based on the nature and substance of the collateral assignment split dollar life insurance arrangement. The determination of the nature and substance of the arrangement should involve an evaluation of all available information, including an assessment of the future cash flows to which the employer is entitled and the employee’s obligation and ability to repay the employer. The Corporation adopted EITF 06-10 on January 1, 2008 resulting in a decrease of $0.7 million in retained earnings and an increase of $0.7 million in accrued bank owned life insurance.

Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split Dollar Life Insurance Arrangements

     In September 2006, the FASB ratified EITF 06-04, Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split Dollar Life Insurance Arrangements. EITF 06-04 concludes that an employer should recognize a liability for the future benefits related to an endorsement split dollar life insurance arrangement in accordance with either FAS 106 or APB Opinion No. 12, Ominbus Opinion – 1967. The Corporation adopted EITF 06-04 on January 1, 2008 resulting in an increase of $0.1 million in retained earnings and a decrease of $0.1 million in accrued bank owned life insurance.

The Fair Value Option for Financial Assets and Financial Liabilities

     In February 2007, the FASB issued FAS 159, The Fair Value Option for Financial Assets and Financial Liabilities, which allows companies to report certain financial assets and liabilities at fair value with the changes in fair value included in earnings. In general, a company may elect the fair value option for an eligible financial asset or financial liability when it first recognizes the instrument on its balance sheet or enters into an eligible firm commitment. A company may also elect the fair value option for eligible items that exist on the effective date of FAS 159. A company’s decision to elect the fair value option for an eligible item is irrevocable. The Corporation did not elect the fair value option for eligible financial assets or financial liabilities.

Fair Value Measurements

     In September 2006, the FASB issued FAS 157, Fair Value Measurements, which replaces the different definitions of fair value in existing accounting literature with a single definition, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements. The statement clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. The Corporation adopted the provisions of FAS 157 on January 1, 2008. For additional information regarding FAS 157, see the Fair Value Measurements footnote included in this Report.

     In February 2008, the FASB issued FASB Staff Position (FSP) 157-2, which delays the effective date of FAS 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The provisions of FSP 157-2 are effective for the Corporation on January 1, 2009. The Corporation has not yet determined the impact that the adoption of FAS 157, as it pertains to nonfinancial assets and nonfinancial liabilities, will have on its consolidated financial statements.

SECURITIES

     Following is a summary of the fair value of securities available for sale (in thousands):

		June 30,				December 31,
		2008				2007
U.S. Treasury and other U.S. government agencies and corporations		$	258,571			$	162,839
Mortgage-backed securities of U.S. government agencies			108,066				72,267
States of the U.S. and political subdivisions			70,568				71,490
Corporate debt securities			36,833				46,207
Total debt securities			474,038				352,803
Equity securities			5,702				5,618
		$	479,740			$	358,421

     Following is a summary of the amortized cost of securities held to maturity (in thousands):

		June 30,				December 31,
		2008				2007
U.S. Treasury and other U.S. government agencies and corporations		$	1,006			$	11,004
Mortgage-backed securities of U.S. government agencies			686,467				547,046
States of the U.S. and political subdivisions			100,223				102,179
Corporate and other debt securities			6,988				7,324
		$	794,684			$	667,553

     The Corporation sold $1.3 million of equity securities at a gain of less than $0.1 million for the six months ended June 30, 2008 and sold $2.9 million of equity securities at a gain of $1.0 million for the six months ended June 30, 2007. Additionally, the Corporation recognized a one-time gain of $0.7 million relating to the VISA, Inc. initial public offering during the six months ended June 30, 2008. The Corporation recognized a loss of $0.5 million and $0.1 million during the six months ended June 30, 2008 and 2007, respectively, due to the write-down to market value of equity securities that were deemed to be other-than-temporarily impaired. The Corporation also recognized a gain of $0.1 million relating to $6.6 million of called securities during the six months ended June 30, 2007. None of the security sales or calls were at a loss.

     Securities are periodically reviewed for other-than-temporary impairment based upon a number of factors, including, but not limited to, the length of time and extent to which the market value has been less than cost, the financial condition of the underlying issuer, the ability of the issuer to meet contractual obligations, the likelihood of the security’s ability to recover any decline in its market value and management’s intent and ability to retain the security for a period of time sufficient to allow for a recovery in market value or maturity. Among the factors that are considered in determining management’s intent and ability is a review of the Corporation’s capital adequacy, interest rate risk position and liquidity. The assessment of a security’s ability to recover any decline in market value, the ability of the issuer to meet contractual obligations and management’s intent and ability require considerable judgment. A decline in value that is considered to be other-than-temporary is recorded as a loss within non-interest income in the consolidated statement of income.

     Following are summaries of the age of unrealized losses and the associated fair value (in thousands):

Securities available for sale:

		Less than 12 Months								Greater than 12 Months								Total
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
		Value				Losses				Value				Losses				Value				Losses
June 30, 2008
U.S. Treasury and other U.S. government agencies and corporations		$	208,359			$	(2,939	)		$	—			$	—			$	208,359			$	(2,939	)
Mortgage-backed securities of U.S. government agencies			40,095				(700	)			—				—				40,095				(700	)
States of the U.S. and political Subdivisions			50,606				(1,458	)			—				—				50,606				(1,458	)
Corporate debt securities			28,273				(9,611	)			8,560				(3,877	)			36,833				(13,488	)
Equity securities			1,912				(250	)			44				(22	)			1,956				(272	)
		$	329,245			$	(14,958	)		$	8,604			$	(3,899	)		$	337,849			$	(18,857	)
December 31, 2007
Mortgage-backed securities of U.S. government agencies		$	—			$	—			$	14,673			$	(138	)		$	14,673			$	(138	)
States of the U.S. and political Subdivisions			23,806				(155	)			11,934				(200	)			35,740				(355	)
Corporate debt securities			34,407				(3,879	)			3,568				(451	)			37,975				(4,330	)
Equity securities			636				(302	)			13				(10	)			649				(312	)
		$	58,849			$	(4,336	)		$	30,188			$	(799	)		$	89,037			$	(5,135	)

Securities held to maturity:

		Less than 12 Months								Greater than 12 Months								Total
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
		Value				Losses				Value				Losses				Value				Losses
June 30, 2008
Mortgage-backed securities of U.S. government agencies		$	386,174			$	(8,581	)		$	12,385			$	(833	)		$	398,559			$	(9,414	)
States of the U.S. and political Subdivisions			60,483				(984	)			40				—				60,523				(984	)
Corporate debt securities			4,858				(576	)			100				—				4,958				(576	)
		$	451,515			$	(10,141	)		$	12,525			$	(833	)		$	464,040			$	(10,974	)
December 31, 2007
Mortgage-backed securities of U.S. government agencies		$	47,051			$	(432	)		$	280,433			$	(3,433	)		$	327,484			$	(3,865	)
States of the U.S. and political Subdivisions			1,030				—				37,206				(134	)			38,236				(134	)
Corporate debt securities			5,726				(101	)			120				—				5,846				(101	)
		$	53,807			$	(533	)		$	317,759			$	(3,567	)		$	371,566			$	(4,100	)

     As of June 30, 2008, securities with unrealized losses for less than 12 months include 17 investments in U.S. Treasury and other U.S. government agencies and corporations, 73 investments in mortgage-backed securities of U.S. government agencies, 131 investments in states of the U.S. and political subdivision securities, 24 investments in corporate debt securities and 17 investments in equity securities. As of June 30, 2008, securities with unrealized losses of greater than 12 months include 3 investments in mortgage-backed securities of U.S. government agencies, 1 investment in states of the U.S. and political subdivision securities, 5 investments in corporate debt securities and 1 investment in equity securities. The Corporation has concluded that it has both the intent and ability to hold these securities for the time necessary to recover the amortized cost or until maturity.

     As of June 30, 2008, management does not believe any unrealized loss individually or in the aggregate represents an other-than-temporary impairment. The unrealized losses at June 30, 2008 were primarily interest rate-related.

BORROWINGS

     Following is a summary of short-term borrowings (in thousands):

		June 30,				December 31,
		2008				2007
Securities sold under repurchase agreements		$	372,775			$	276,552
Federal funds purchased			20,000				60,000
Subordinated notes			117,654				112,779
Other short-term borrowings			316				492
		$	510,745			$	449,823

     Following is a summary of long-term debt (in thousands):

		June 30,				December 31,
		2008				2007
Federal Home Loan Bank advances		$	450,646			$	427,099
Subordinated notes			53,777				53,404
Convertible debt			613				658
Other long-term debt			208				205
		$	505,244			$	481,366

     The Corporation’s banking affiliate has available credit with the Federal Home Loan Bank (FHLB) of $1.9 billion, of which $450.6 million was used as of June 30, 2008. These advances are secured by loans collateralized by 1-4 family mortgages and FHLB stock and are scheduled to mature in various amounts periodically through the year 2019. Effective interest rates paid on these advances range from 2.12% to 5.75% for the six months ended June 30, 2008 and 2.79% to 5.75% for the year ended December 31, 2007.

JUNIOR SUBORDINATED DEBT OWED TO UNCONSOLIDATED SUBSIDIARY TRUSTS

     The Corporation has four unconsolidated subsidiary trusts (collectively, the Trusts), F.N.B. Statutory Trust I , F.N.B. Statutory Trust II, Omega Financial Capital Trust and Sun Bancorp Statutory Trust I, of which 100% of the common equity of each is owned by the Corporation. The Trusts are not consolidated because the Corporation is not the primary beneficiary, as evaluated under FAS Interpretation (FIN) 46, Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51. The Trusts were formed for the purpose of issuing Corporation-obligated mandatorily redeemable capital securities (trust preferred securities) to third-party investors. The proceeds from the sale of trust preferred securities and the issuance of common equity by the Trusts were invested in junior subordinated debt securities (subordinated debt) issued by the Corporation, which are the sole assets of each Trust. The Trusts pay dividends on the trust preferred securities at the same rate as the distributions paid by the Corporation on the junior subordinated debt held by the Trusts. Omega Financial Capital Trust and Sun Bancorp Statutory Trust I were acquired as a result of the Omega acquisition.

     Distributions on the subordinated debt issued to the Trusts are recorded as interest expense by the Corporation. The trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the subordinated debt. The subordinated debt, net of the Corporation’s investment in the Trusts, qualifies as Tier 1 capital under the Board of Governors of the Federal Reserve System guidelines subject to certain limitations beginning March 31, 2009. The Corporation has entered into agreements which, when taken collectively, fully and unconditionally guarantee the obligations under the trust preferred securities subject to the terms of each of the guarantees.

     The following table provides information relating to the Trusts as of June 30, 2008 (dollars in thousands):

		F.N.B.				F.N.B.								Sun Bancorp
		Statutory				Statutory				Omega Financial				Statutory
		Trust I				Trust II				Capital Trust				Trust I
Trust preferred securities		$	125,000			$	21,500			$	36,000			$	16,500
Common securities			3,866				665				1,114				511
Junior subordinated debt			128,866				22,165				35,742				18,950
Stated maturity date			3/31/33				6/15/36				10/18/34				2/22/31
Optional redemption date			3/31/08				6/15/11				10/18/09				2/22/11
Interest rate			8.08	%			7.17	%			5.98	%			10.20	%
		variable; LIBOR plus 325 basis points				fixed until 6/15/11; then LIBOR plus 165 basis points				fixed until 10/09; then LIBOR plus 219 basis points

INTEREST RATE SWAPS

     In February 2005, the Corporation entered into an interest rate swap with a notional amount of $125.0 million, whereby it paid a fixed rate of interest and received a variable rate based on the London Inter-Bank Offered Rate (LIBOR). The effective date of the swap was January 3, 2006 and the maturity date of the swap was March 31, 2008. The interest rate swap was a designated cash flow hedge designed to convert the variable interest rate to a fixed rate on $125.0 million of subordinated debentures. The swap was considered to be highly effective and assessment of the hedging relationship was evaluated under Derivative Implementation Group Issue No. G7 using the hypothetical derivative method.

     The Corporation’s interest rate swap program for commercial loans provides the customer with fixed rate loans while creating a variable rate asset for the Corporation. The notional amount of swaps under this program totalled $129.2 million as of June 30, 2008.

     The Corporation has commitments to extend credit and standby letters of credit that involve certain elements of credit risk in excess of the amount stated in the consolidated balance sheet. The Corporation’s exposure to credit loss in the event of non-performance by the customer is represented by the contractual amount of those instruments. The credit risk associated with loan commitments and standby letters of credit is essentially the same as that involved in extending loans to customers and is subject to normal credit policies. Since many of these commitments expire without being drawn upon, the total commitment amounts do not necessarily represent future cash flow requirements.

     Following is a summary of off-balance sheet credit risk information (in thousands):

		June 30,				December 31,
		2008				2007
Commitments to extend credit		$	1,288,210			$	938,277
Standby letters of credit			94,201				76,708

     At June 30, 2008, funding of approximately 76.0% of the commitments to extend credit was dependent on the financial condition of the customer. The Corporation has the ability to withdraw such commitments at its discretion. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Based on management’s credit evaluation of the customer, collateral may be deemed necessary. Collateral requirements vary and may include accounts receivable, inventory, property, plant and equipment and income-producing commercial properties.

     Standby letters of credit are conditional commitments issued by the Corporation that may require payment at a future date. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending

loans to customers. The obligations are not recorded in the Corporation’s consolidated financial statements. The Corporation’s exposure to credit loss in the event the customer does not satisfy the terms of the agreement equals the notional amount of the obligation less the value of any collateral.

     The Corporation and its subsidiaries are involved in various pending and threatened legal proceedings in which claims for monetary damages and other relief are asserted. These actions include claims brought against the Corporation and its subsidiaries where the Corporation acted as one or more of the following: a depository bank, lender, underwriter, fiduciary, financial advisor, broker or was engaged in other business activities. Although the ultimate outcome for any asserted claim cannot be predicted with certainty, the Corporation believes that it and its subsidiaries have valid defenses for all asserted claims. Reserves are established for legal claims when losses associated with the claims are judged to be probable and the amount of the loss can be reasonably estimated.

     Based on information currently available, advice of counsel, available insurance coverage and established reserves, the Corporation does not anticipate, at the present time, that the aggregate liability, if any, arising out of such legal proceedings will have a material adverse effect on the Corporation’s consolidated financial position. However, the Corporation cannot determine whether or not any claims asserted against it will have a material adverse effect on its consolidated results of operations in any future reporting period. It is possible, in the event of unexpected future developments, that the ultimate resolution of these matters, if unfavorable, may be material to the Corporation’s consolidated results of operations for a particular period.

EARNINGS PER SHARE

     Basic earnings per common share is calculated by dividing net income by the weighted average number of shares of common stock outstanding net of unvested shares of restricted stock.

     Diluted earnings per common share is calculated by dividing net income adjusted for interest expense on convertible debt by the weighted average number of shares of common stock outstanding, adjusted for the dilutive effect of potential common shares issuable for stock options, warrants, restricted shares and convertible debt, as calculated using the treasury stock method. Such adjustments to the weighted average number of shares of common stock outstanding are made only when such adjustments dilute earnings per common share.

     The following table sets forth the computation of basic and diluted earnings per share (dollars in thousands, except per share data):

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2008				2007				2008				2007
Net income — basic earnings per share		$	14,505			$	17,622			$	30,996			$	34,992
Interest expense on convertible debt			5				6				10				12
Net income after assumed conversion – diluted earnings per share		$	14,510			$	17,628			$	31,006			$	35,004
Basic weighted average common shares outstanding			85,632,970				60,127,296				72,926,385				60,116,221
Net effect of dilutive stock options, warrants, restricted stock and convertible debt			420,724				493,937				396,243				510,896
Diluted weighted average common shares outstanding			86,053,694				60,621,233				73,322,628				60,627,117
Basic earnings per share		$	0.17			$	0.29			$	0.43			$	0.58
Diluted earnings per share		$	0.17			$	0.29			$	.042			$	0.58

STOCK INCENTIVE PLANS

Restricted Stock

     The Corporation issues restricted stock awards, consisting of both restricted stock and restricted stock units, to key employees under its Incentive Compensation Plans (Plans). The grant date fair value of the restricted stock awards is equal to the price of the Corporation’s common stock on the grant date. For the six months ended June 30, 2008, the Corporation issued 245,255 restricted stock awards with a weighted average grant date fair value of $3.3 million. The Corporation did not issue any restricted stock awards for the six months ended June 30, 2007. The Corporation has available up to 2,998,010 shares of common stock to issue under these Plans.

     Under the Plans, more than half of the restricted stock awards granted to management are earned if the Corporation meets or exceeds certain financial performance results when compared to its peers. These performance-related awards are expensed ratably from the date that the likelihood of meeting the performance measure is probable through the end of a four-year vesting period. The service-based awards are expensed ratably over a three-year vesting period. The Corporation also issues discretionary service-based awards to certain employees that vest over five years.

     The unvested restricted stock awards are eligible to receive cash dividends which are ultimately used to purchase additional shares of stock. Any additional shares of stock ultimately received as a result of cash dividends are subject to forfeiture if the requisite service period is not completed or the specified performance criteria are not met. These awards are subject to certain accelerated vesting provisions upon retirement, death, disability or in the event of a change of control as defined in the award agreements.

     Share-based compensation expense related to restricted stock awards was $1.3 million and $0.7 million for the six months ended June 30, 2008 and 2007, the tax benefit of which was $0.5 million and $0.2 million, respectively.

     The following table summarizes certain information concerning restricted stock awards:

		Six Months Ended June 30,
		2008								2007
						Weighted								Weighted
						Average								Average
						Grant								Grant
		Awards				Price				Awards				Price
Unvested awards outstanding at beginning of period			387,064			$	17.59				302,264			$	18.54
Granted			245,255				13.51				—				—
Vested			(114,675	)			18.58				(54,448	)			18.56
Forfeited			(27,441	)			14.67				(531	)			16.46
Dividend reinvestment			18,095				14.31				6,911				16.96
Unvested awards outstanding at end of period			508,298				15.44				254,196				18.50

     The total fair value of awards vested was $1.5 million and $1.0 million for the six months ended June 30, 2008 and 2007, respectively.

     As of June 30, 2008, there was $4.5 million of unrecognized compensation cost related to unvested restricted stock awards including $0.4 million that is subject to accelerated vesting under the plan’s immediate vesting upon retirement provision for awards granted prior to the adoption of FAS 123R, Share-Based Payment, on January 1, 2006. The components of the restricted stock awards as of June 30, 2008 are as follows (dollars in thousands):

		Service-				Performance-
		Based				Based
		Awards				Awards				Total
Unvested awards			198,556				309,742				508,298
Unrecognized compensation expense		$	1,617			$	2,913			$	4,530
Intrinsic value		$	2,339			$	3,649			$	5,988
Weighted average remaining life (in years)			2.36				2.81				2.63

Stock Options

     There were no stock options granted during the six months ended June 30, 2008 or 2007. All outstanding stock options were granted at prices equal to the fair market value at the date of the grant, are primarily exercisable within ten years from the date of the grant and were fully vested as of January 1, 2006. The Corporation issues shares of treasury stock or authorized but unissued shares to satisfy stock option exercises. Shares issued upon the exercise of stock options were 54,317 and 168,850 for the six months ended June 30, 2008 and 2007, respectively.

     The following table summarizes certain information concerning stock option awards:

		Six Months Ended June 30,
		2008								2007
						Weighted								Weighted
						Average								Average
						Exercise								Exercise
		Shares				Price				Shares				Price
Options outstanding at beginning of period			1,139,845			$	11.75				1,450,225			$	11.69
Assumed in acquisition			798,371				16.49				—				—
Exercised			(54,320	)			11.87				(174,684	)			11.74
Forfeited			(55,054	)			19.02				—				—
Options outstanding and exercisable at end of period			1,828,842				13.60				1,275,541				11.69

     The intrinsic value of outstanding and exercisable stock options at June 30, 2008 was $0.

Warrants

     The Corporation assumed warrants to issue 123,394 shares of common stock at an exercise price of $10.00 in conjunction with a previous acquisition. Such warrants are exercisable and will expire on various dates in 2009. The Corporation has reserved shares of common stock for issuance in the event these warrants are exercised. As of June 30, 2008, warrants to purchase 53,559 shares of common stock remain outstanding.

RETIREMENT AND OTHER POSTRETIREMENT BENEFIT PLANS

     The Corporation sponsors the F.N.B. Corporation Retirement Income Plan (RIP), a qualified noncontributory defined benefit pension plan covering substantially all salaried employees hired prior to January 1, 2008. The RIP covers employees who satisfy minimum age and length of service requirements. During 2006, the Corporation amended the RIP such that effective January 1, 2007, benefits are earned based on the employee’s compensation each year. The plan amendment resulted in a remeasurement that produced a net unrecognized service credit of $14.0 million, which is being amortized over the average period of future service of active employees of 13.5 years. Benefits of the RIP for service provided prior to December 31, 2006 are generally based on years of service and the employee’s highest compensation for five consecutive years during their last ten years of employment. During 2007, the Corporation amended the RIP such that it is closed to new participants who commence employment with the Corporation on or after January 1, 2008. The Corporation’s funding guideline has been to make annual contributions to the RIP each year, if necessary, such that minimum funding requirements have been met. Based on the funded status of the plan, the Corporation does not expect to make a contribution to the RIP in 2008.

     The Corporation also sponsors two supplemental non-qualified retirement plans. The ERISA Excess Retirement Plan provides retirement benefits equal to the difference, if any, between the maximum benefit allowable under the Internal Revenue Code and the amount that would be provided under the RIP, if no limits were applied. The Basic Retirement Plan (BRP) is applicable to certain officers who are designated by the Board of Directors. Officers participating in the BRP receive a benefit based on a target benefit percentage based on years of service at retirement and a designated tier as determined by the Board of Directors. When a participant retires, the basic benefit under the BRP is a monthly benefit equal to the target benefit percentage times the participant’s highest average monthly cash compensation during five consecutive calendar years within the last ten calendar years of employment. This monthly benefit is reduced by the monthly benefit the participant receives from Social Security, the qualified RIP, the ERISA Excess Retirement Plan and the annuity equivalent of the two percent automatic contributions to the qualified 401(k) defined contribution plan and the ERISA Excess Lost Match Plan.

     The net periodic benefit cost for the defined benefit plans includes the following components (in thousands):

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2008				2007				2008				2007
Service cost		$	792			$	849			$	1,584			$	1,698
Interest cost			1,648				1,544				3,296				3,088
Expected return on plan assets			(2,186	)			(2,143	)			(4,372	)			(4,286	)
Amortization:
Unrecognized net transition asset			(23	)			(23	)			(46	)			(46	)
Unrecognized prior service (credit) cost			(273	)			(272	)			(546	)			(544	)
Unrecognized loss			184				215				368				430
Net periodic pension benefit cost		$	142			$	170			$	284			$	340

     The Corporation’s subsidiaries participate in a qualified 401(k) defined contribution plan under which eligible employees may contribute a percentage of their salary. The Corporation matches 50 percent of an eligible employee’s contribution on the first 6 percent that the employee defers. Employees are generally eligible to participate upon completing 90 days of service and having attained age 21. As an offset to the decrease in RIP benefits, beginning with 2007, the Corporation began making an automatic two percent contribution and may make an additional contribution of up to two percent depending on the Corporation achieving its performance goals for the plan year. Effective January 1, 2008, the automatic contribution for substantially all new full-time employees was increased from two percent to four percent. The Corporation’s contribution expense was $2.0 million and $1.6 million for the six months ended June 30, 2008 and 2007, respectively.

     The Corporation also sponsors an ERISA Excess Lost Match Plan for certain officers. This plan provides retirement benefits equal to the difference, if any, between the maximum benefit allowable under the Internal Revenue Code and the amount that would have been provided under the qualified 401(k) defined contribution plan, if no limits were applied.

     The Corporation sponsors a pre-Medicare eligible postretirement medical insurance plan for retirees of certain affiliates between the ages of 62 and 65. During 2006, the Corporation amended the plan such that only employees who are age 60 or older as of January 1, 2007 are eligible for employer paid coverage. The postretirement plan amendment resulted in a remeasurement that produced a net unrecognized service credit of $2.7 million, which has been amortized over the remaining service period of eligible employees of 1.3 years and was fully recognized during 2007. The Corporation has no plan assets attributable to this plan and funds the benefits as claims arise. Benefit costs related to this plan are recognized in the periods in which employees provide the service for such benefits. The Corporation reserves the right to terminate the plan or make plan changes at any time.

     The net periodic postretirement benefit cost includes the following components (in thousands):

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2008				2007				2008				2007
Service cost		$	15			$	14			$	30			$	28
Interest cost			28				33				56				66
Amortization:
Unrecognized prior service credit			—				(421	)			—				(842	)
Unrecognized net transition asset			1				—				2				—
Net periodic postretirement benefit cost		$	44			$	(374	)		$	88			$	(748	)

     The net periodic postretirement benefit cost increased for the six months ended June 30, 2008 compared to the same period in 2007 due to the unrecognized service credit resulting from the postretirement plan amendment effective January 1, 2007 being fully amortized in 2007.

COMPREHENSIVE INCOME

     The components of comprehensive income, net of related tax, are as follows (in thousands):

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2008				2007				2008				2007
Net income		$	14,505			$	17,622			$	30,996			$	34,992
Other comprehensive (loss) income:
Unrealized (losses) gains on securities:
Arising during the period			(8,199	)			(2,031	)			(9,780	)			(2,452	)
Less: reclassification adjustment for losses (gains) included in net income			265				(198	)			(219	)			(679	)
Unrealized (loss) gain on swap			—				(69	)			(128	)			(295	)
Pension and postretirement amortization			(72	)			(326	)			(148	)			(652	)
Other comprehensive (loss) income			(8,006	)			(2,624	)			(10,275	)			(4,078	)
Comprehensive income		$	6,499			$	14,998			$	20,721			$	30,914