F.N.B. Corporation Reports Increase in Second Quarter 2007 Earnings

PRESS RELEASE

July 19, 2007 - HERMITAGE, PA

F.N.B. Corporation (NYSE: FNB), a diversified financial services company, today reported financial results for the second quarter and first half of 2007. Second quarter 2007 net income increased 5.9% to $17.6 million from $16.6 million in the second quarter of 2006.  Net income for the first quarter of 2007 equaled $17.4 million.  On a per share basis, second quarter 2007 earnings were $0.29 per diluted share, compared to $0.28 per diluted share in the second quarter of 2006 and $0.29 per diluted share in the first quarter of 2007. The Corporation’s return on tangible equity for the second quarter of 2007 was a strong 26.8%, its return on equity was 13.1%, its return on tangible assets was 1.28% and its return on assets was 1.17%.

Stephen J. Gurgovits, President and Chief Executive Officer of F.N.B. Corporation, commented, “Our second quarter 2007 results reflect good loan growth, expansion of our net interest margin, continued strong credit quality and solid control of our operating costs.”
Average commercial loans were up 4.0% annualized compared to the first quarter of 2007, reflecting solid organic growth in key Pennsylvania and Florida markets. This commercial loan growth was offset by decreased average balances of indirect auto loans. The net result was a 0.4% annualized increase in average total loans compared to the first quarter of 2007.  Based on quarter-end balances, total loans were up 3.1% annualized since March 31, 2007, with commercial loans and direct consumer loans up 5.0% and 12.4% annualized, respectively. 
“We are encouraged by the growth in our commercial and consumer lending businesses, as opportunities for high quality fundings strengthened toward the end of the quarter,” added Mr. Gurgovits.

The growth in earning assets drove a 3.9% annualized increase in fully taxable equivalent (FTE) net interest income compared to the first quarter of 2007. The Corporation’s net interest margin for both the first and second quarter of 2007 was 3.73%. However, the net interest margin for the first quarter of 2007 included a 6 basis point benefit from $0.8 million in interest income recovery on previously non-accruing loans.

Average deposits and customer repurchase agreements increased 5.7% annualized from the first quarter of 2007, providing the Corporation with solid funding for its loan growth. Contributing to the smallest increase in the cost of funds in nine quarters was a positive shift in the mix of deposits as demand deposits, savings and money market deposits grew, while higher cost time deposits declined. 

Strong organic growth in commissions from retail securities sales and a combination of organic and seasonal growth in bank service charges partially offset a seasonal decline in insurance revenue and lower gains generated from sales out of the Corporation’s bank stock portfolio. As a result, non-interest income declined 10.4% annualized compared to the prior quarter. 

When compared to the second quarter of 2006, total non-interest income increased 0.7% annualized, with growth in securities commissions and trust revenue mostly offset by lower other non-interest income. During the second quarter of 2006, the Corporation recorded a $0.9 million gain on the settlement of an impaired loan acquired in a previous merger. Total non-interest income represented 29% of net revenue for the second quarter of 2007. 

Non-interest expense was $41.8 million for the second quarter of 2007, down slightly from $41.9 million for the first quarter of 2007. Positive operating leverage was achieved compared to both the first quarter of 2007 and second quarter of 2006 as evidenced by the improvement in the efficiency ratio to 58.3% for the second quarter of 2007. 

Asset quality continued at strong levels in the second quarter of 2007. Annualized net loan charge-offs for the second quarter of 2007 were 24 basis points of average loans, a 1 basis point increase from the first quarter of 2007 and a 3 basis point improvement from the second quarter of last year. The ratio of non-performing loans to total loans was 56 basis points at June 30, 2007, an improvement from 63 and 74 basis points at March 31, 2007 and June 30, 2006, respectively. 

The Corporation’s credit quality performance resulted in a provision for loan losses of $1.8 million in the second quarter of 2007, the same as for the first quarter of 2007. At June 30, 2007, the allowance for loan losses was 1.19% of total loans and 2.1 times non-performing loans. 

Year-To-Date Results  

For the six months ended June 30, 2007, the Corporation posted net income of $35.0 million, a 7.9% increase, compared to $32.4 million for the same period of 2006. On a per share basis, year-to-date earnings were $0.58 per diluted share, compared to $0.56 per diluted share for the first half of 2006. The Corporation’s return on tangible equity for the six months ended June 30, 2007, was a strong 26.8%, its return on equity was 13.1%, its return on tangible assets was 1.28% and its return on assets was 1.17%. 

Net interest income, on an FTE basis, for the first half of 2007 was 4.4% higher than the same period of last year, reflecting growth in average loans of 9.6% and average deposits and customer repurchase agreements of 7.7%. The Corporation’s net interest margin in the first half of 2007 narrowed to 3.73% from 3.77% for the same period of last year, reflecting the Corporation’s Legacy Bank acquisition in May 2006.

Non-interest income for the first half of 2007 increased 3.3% to $41.3 million from $40.0 million for the same period of 2006. Non-interest income was 30% of net revenue for the first six months of 2007. 

Non-interest expense for the first half of 2007 was $83.7 million compared to $80.5 million for the first half of 2006. This 4.0% increase is primarily attributable to the Legacy Bank acquisition and additional loan production offices in Florida. The efficiency ratio improved to 58.3% for the first six months of 2007.  

Shareholders’ equity at June 30, 2007, was $539 million, or $8.92 per common share. Tangible book value was $4.55 per common share at the end of the second quarter of 2007. The Corporation’s leverage and tangible capital ratios were 7.4% and 4.7%, respectively, at June 30, 2007. The Corporation’s capital ratios continue to exceed federal bank regulatory agency “well capitalized” thresholds. 

“We are pleased that our culture of strong credit quality continues to serve us well. Our credit costs continue to be manageable as demonstrated by low levels of non-performing assets and net charge-offs,” Mr. Gurgovits concluded. 

Other News 

In other news, the Corporation recently announced that Stephen J. Gurgovits was elected Chairman of the Board of F.N.B. Corporation effective December 31, 2007. He will continue as President and Chief Executive Officer of the Corporation. Mr. Gurgovits will replace Peter Mortensen, who has announced his decision to retire as Chairman of the Board at the end of the year. 

Conference Call

Management will host a quarterly conference call to discuss results for the second quarter of 2007, tomorrow, Friday, July 20, 2007, at 11:00 AM Eastern Daylight Time. Hosting the call will be Stephen J. Gurgovits, President and Chief Executive Officer, and Brian F. Lilly, Chief Financial Officer. The call can be accessed via telephone by dialing (800) 811-8845 or (913) 981-4905 for international callers, and entering confirmation number 8264203.

A replay of the call will be available from 2:00 PM Eastern Daylight Time until midnight Eastern Daylight Time on July 27, 2007. The replay can be accessed by dialing (888) 203-1112, or (719) 457-0820 for international callers, and entering confirmation number 8264203. A transcript of the call will be posted to the Shareholder and Investor Relations section of F.N.B. Corporation’s Web site at www.fnbcorporation.com.  

About F.N.B. Corporation 

F.N.B. Corporation, headquartered in Hermitage, PA, is a diversified financial services company with total assets of $6.1 billion at June 30, 2007. F.N.B. is a leading provider of commercial and retail banking, wealth management, insurance and consumer finance services in Pennsylvania and Ohio, where it owns and operates First National Bank of Pennsylvania, First National Trust Company, First National Investment Services Company, LLC, F.N.B. Investment Advisors, Inc., First National Insurance Agency, LLC, F.N.B. Capital Corporation, LLC, and Regency Finance Company. It also operates consumer finance offices in Tennessee and loan production offices in Tennessee and Florida.

Mergent Inc., a leading provider of business and financial information about publicly traded companies, has recognized F.N.B. Corporation as a Dividend Achiever. This annual recognition is based on the Corporation’s outstanding record of increased dividend performance. The Corporation has consistently increased dividend payments for 34 consecutive years.

The common stock of F.N.B. Corporation trades on the New York Stock Exchange under the symbol “FNB”. Investor information is available on F.N.B. Corporation’s Web site at www.fnbcorporation.com. 

Forward-looking Statements 

This press release of F.N.B. Corporation and the reports F.N.B. Corporation files with the Securities and Exchange Commission often contain “forward-looking statements” relating to present or future trends or factors affecting the banking industry and, specifically, the financial operations, markets and products of F.N.B. Corporation. These forward-looking statements involve certain risks and uncertainties. There are a number of important factors that could cause F.N.B. Corporation’s future results to differ materially from historical performance or projected performance. These factors include, but are not limited to: (1) a significant increase in competitive pressures among financial institutions; (2) changes in the interest rate environment that may reduce interest margins; (3) changes in prepayment speeds, loan sale volumes, charge-offs and loan loss provisions; (4) less favorable than expected general economic conditions; (5) legislative or regulatory changes that may adversely affect the businesses in which F.N.B. Corporation is engaged; (6) technological issues which may adversely affect F.N.B. Corporation’s financial operations or customers; (7) changes in the securities markets; or (8) risk factors mentioned in the reports and registration statements F.N.B. Corporation files with the Securities and Exchange Commission. F.N.B. Corporation undertakes no obligation to release revisions to these forward-looking statements or to reflect events or circumstances after the date of this press release. 

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