F.N.B. Corporation Reports Third Quarter 2007 Earnings

PRESS RELEASE

October 18, 2007 - HERMITAGE, PA

F.N.B. Corporation (NYSE: FNB), a diversified financial services company, today reported financial results for the third quarter and first nine months of 2007. Third quarter 2007 net income was $17.6 million, or $0.29 per diluted share, the same as the second quarter of 2007 and the third quarter of 2006. The Corporation’s return on tangible equity for the third quarter of 2007 was a strong 26.3%, its return on equity was 13.0%, its return on tangible assets was 1.25% and its return on assets was 1.15%. 

Stephen J. Gurgovits, President and Chief Executive Officer of F.N.B. Corporation, commented, “We are pleased to once again report very solid returns and profitability metrics with strong commercial loan production, a stable margin and increases in key fee income business lines contributing to our results.”

Average commercial loans were up 11.0% annualized compared to the second quarter of 2007, reflecting organic growth in key Pennsylvania and Florida markets. In total, average loans increased 7.7% annualized compared to the second quarter of 2007.  The increase in average loans coupled with stable balances of investment securities drove a 3.9% annualized increase in average earning assets compared to the prior quarter.  

The growth in earning assets was the primary factor behind a 6.4% annualized increase in fully taxable equivalent (FTE) net interest income compared to the second quarter of 2007. The Corporation’s net interest margin for the third quarter of 2007 was 3.73%, which is unchanged from the second quarter of 2007 and represents the fourth consecutive quarter of a stable or expanding net interest margin. 

The acceptance of the Corporation’s innovative banking products continues to help drive increased deposits, with new business development officers in each of the five regions also contributing to these results.  Average deposits and treasury management balances increased 3.7% annualized from the second quarter of 2007 and 1.3% compared to the same period of 2006.

Non-interest income declined $0.7 million or 13.5% annualized compared to the prior quarter, primarily due to a $0.5 million loss on the pending sale of a building acquired in a prior merger and a $0.3 million reduction in gains on the sale of securities. Increased customer volume and seasonality helped banking service charges and insurance revenue increase 2.9% and 8.7% annualized, respectively, compared to the prior quarter. 

When compared to the third quarter of 2006, total non-interest income declined $0.3 million or 1.6%, reflecting the above-mentioned $0.5 million loss on the pending sale of a building, which is included in other non-interest income, and a $0.5 million reduction in gains on the sale of securities. Strong growth in securities commissions and trust revenue partially offset these items. Total non-interest income represented 28% of net revenue for the third quarter of 2007. 

Non-interest expense was $41.3 million for the third quarter of 2007, an improvement of 5.2% annualized from $41.8 million for the second quarter of 2007. Positive operating leverage was achieved compared to the second quarter of 2007, as evidenced by the improvement in the efficiency ratio to 57.4% from 58.3%.

The Corporation’s income tax expense for the third quarter of 2007 included a $0.9 million net benefit from the successful resolution of a previously uncertain tax position in the current period.

Asset quality continues to be at historically good levels for the Corporation. Annualized net loan charge-offs for the third quarter of 2007 were 27 basis points of average loans, representing a 3 basis point increase from the second quarter of 2007 and a 4 basis point rise from the third quarter of 2006. The ratio of annualized net loan charge-offs as a percentage of average loans continues to be within the range reported for the last five quarters. The ratio of non-performing loans to total loans was 57 basis points at September 30, 2007, a 1 basis point increase from 56 basis points at June 30, 2007, but a 12 basis point improvement from 69 basis points at September 30, 2006.

The Corporation increased its loan loss provision for the third quarter of 2007 as a result of the slight rise in net loan charge-offs, continued growth in commercial loans and continued softness in the Florida real estate market. The provision for loan losses was $3.8 million, representing an increase of $1.9 million over the second quarter of 2007 and $1.3 million from the third quarter of 2006. At September 30, 2007, the allowance for loan losses was 1.20% of total loans, representing a 1 basis point increase from the second quarter of 2007 and 2.1 times total non-performing loans.

“We believe our strategy of cautiously expanding in select faster growing markets, our culture of emphasizing conservative underwriting and our overall loan loss reserves of over twice our non-performing loans positions us well for the current environment,” Mr. Gurgovits added. 

Year-To-Date Results

For the nine-month period ended September 30, 2007, the Corporation posted net income of $52.6 million, a 5.1% increase, compared to $50.1 million for the same period of 2006. On a per share basis, year-to-date earnings were $0.87 per diluted share, compared to $0.85 per diluted share for the nine-month period ended September 30, 2006. The Corporation’s return on tangible equity for the nine-month period ended September 30, 2007 was a strong 26.6%, its return on equity was 13.0%, its return on tangible assets was 1.27% and its return on assets was 1.17%. 

Net interest income, on an FTE basis, for the nine-month period ended September 30, 2007 was 3.5% higher than the same period of last year, reflecting growth in average loans of 7.1% and growth in average deposits and treasury management balances of 5.4%. The Corporation’s net interest margin for the nine-month period ended September 30, 2007 remained stable at 3.73% when compared to the first nine months of 2006.

Non-interest income for the nine-month period ended September 30, 2007 increased 1.7% to $61.0 million from $60.0 million during the same period of 2006. Non-interest income was 29% of net revenue for the first nine months of 2007.

Non-interest expense for the nine-month period ended September 30, 2007 was $125.0 million, a 3.2% increase compared to $121.1 million for the same period of 2006. The efficiency ratio was essentially unchanged at 58% for the first nine months of 2007 and 2006.

Shareholders’ equity at September 30, 2007 was $541.6 million, or $8.94 per common share. Tangible book value was $4.61 per common share at the end of the third quarter of 2007. The Corporation’s leverage and tangible capital ratios were 7.43% and 4.76%, respectively, at September 30, 2007. The Corporation’s capital ratios continue to exceed federal bank regulatory agency “well capitalized” thresholds.  

Other Highlights

New CEO Announced

 On October 15, 2007, F.N.B. Corporation announced that Robert V. New, Jr. has been elected President and Chief Executive Officer effective April 1, 2008. Mr. New will join the Corporation on January 15, 2008 and succeed Stephen J. Gurgovits, the current President and CEO. As previously announced, Mr. Gurgovits will become Chairman of the Board at year-end 2007. 

Increased Cash Dividend

In September, the Corporation increased its quarterly cash dividend 2.1% to 24 cents per share for the third quarter of 2007. 

George Groves Retires

In August, George H. Groves, Chairman of the First National Bank Capital Region and member of the Board of Directors of First National Bank, retired. Mr. Groves founded The Legacy Bank, which the Corporation acquired in May 2006. He will remain a member of the First National Bank Capital Region Community Board. 

Conference Call

Management will host a quarterly conference call to discuss results for the third quarter of 2007, tomorrow, Friday, October 19, 2007, at 11:00 AM Eastern 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 (888) 204-4368 or (913) 312-0845 for international callers, and entering confirmation number 1434076.

A replay of the call will be available from 2:00 PM Eastern Time on the day of the call until midnight Eastern Time on November 2, 2007. The replay can be accessed by dialing (888) 203-1112, or (719) 457-0820 for international callers, and entering confirmation number 1434076. 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 September 30, 2007. F.N.B. is a leading provider of commercial and retail banking, wealth management, insurance, merchant banking 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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