F.N.B. Corporation Reports Third Quarter 2008 Earnings

PRESS RELEASE

October 23, 2008 - HERMITAGE, PA

F.N.B. Corporation (NYSE: FNB), a diversified financial services company, today reported financial results for the third quarter of 2008. Net income increased to $23.5 million, or $0.27 per diluted share, compared to $14.5 million, or $0.17 per diluted share, in the second quarter of 2008. Net income for the third quarter of 2007 totaled $17.6 million, or $0.29 per diluted share. For the third quarter of 2008, the Corporation’s return on average tangible equity was a strong 25.7%, its return on average equity was 10.0%, its return on average tangible assets was 1.28% and its return on average assets was 1.13%.

“We are pleased to deliver a solid quarter in this period of economic stress. Our results reflect the successful balancing of our growth initiatives with our strong risk management practices,” said Bob New, President and Chief Executive Officer of F.N.B. Corporation. “The strong organic growth we experienced in loans, deposits and treasury management balances demonstrates that we continue to win in the marketplace. We have benefited from a flight to quality given the disruption in the banking industry and amongst some key competitors in our markets.”

Bob New added, “We are particularly proud to have achieved record levels of assets at $8.5 billion and shareholders’ equity at $1.0 billion. These levels further demonstrate the strength of our company and businesses.”

Third Quarter 2008 Results 

During the third quarter, F.N.B. Corporation completed the acquisition of Iron and Glass Bancorp, Inc., which bolstered the Corporation’s existing presence in Pittsburgh. The transaction added a $167 million loan portfolio, $254 million in deposits and total assets of $310 million as of August 16, 2008. 

Average loans increased 3.1%, or 12.2% on an annualized basis, compared to the second quarter of 2008. Excluding the effects of the Iron and Glass acquisition, average loan balances would have increased 1.6%, or 6.6% on an annualized basis, compared to the second quarter. Organic loan growth was primarily driven by increases in commercial, indirect auto and home equity lending. Commercial and consumer lending growth reflect the continued execution of our strategies. The increase in the indirect loan portfolio reflects the benefit from a weakening of competitors in the automobile finance market that provided the Corporation with an opportunity to increase balances with improved pricing, while maintaining strong underwriting standards. 

Average deposits and treasury management balances increased 4.2%, or 16.9% on an annualized basis, compared to the second quarter of 2008. Excluding the effects of the Iron and Glass acquisition, the growth rate would have been 2.1%, or 8.6% on an annualized basis, compared to the second quarter. Organic growth occurred across all categories with business accounts and treasury management leading the way.

Net interest income totaled $70.5 million for the third quarter of 2008 and increased 4.9%, or 19.6% annualized, from the prior quarter. In addition to the growth in loans and deposits, the net interest margin improved to 3.97%, compared to 3.92% in the second quarter of 2008 and 3.73% in the third quarter of 2007. The wider margin reflects slightly better pricing during the quarter and a 3 basis point benefit from returning certain previously non-accruing loans to accrual status based on sustained payment performance. 

Non-interest income totaled $28.2 million for the third quarter of 2008 and increased 2.8%, or 11.3% annualized, compared to the prior quarter. In addition to Omega merger impacts in the second quarter, the largest difference between the two quarters was $1.1 million related to investments in bank stocks. The second quarter of 2008 included a net loss of $0.4 million on securities and the quarter comparison benefited from a $0.7 million mark-to-market improvement in a limited partnership that invests in bank stocks. Non-interest income represented 29% of net revenue for the third quarter of 2008. 

Non-interest expense totaled $57.9 million for the third quarter of 2008 and decreased 6.6%, or 26.3% on an annualized basis, compared to the prior quarter. The comparison benefited from continued strong expense control and efficiencies from the Omega acquisition. The third quarter expenses included approximately $1.6 million in merger and Iron and Glass related operating expenses, while the second quarter included $3.6 million in Omega merger costs. The efficiency ratio improved to 56.5% in the third quarter of 2008, compared to 64.3% in the second quarter of 2008 and 57.4% in the third quarter of 2007. 

The Corporation recorded a provision for loan losses of $6.5 million in the third quarter of 2008, representing an improvement of $4.5 million, or 40.7%, from the prior quarter. The current quarter’s provision for loan losses covered annualized net charge-offs of 30 basis points, good loan growth and changes in credit quality. The annualized net charge-off ratio was stable with the second quarter and the ending allowance for loan losses to total loans was 1.27%, representing a 1 basis point decrease compared to the second quarter. 

During the quarter the Corporation placed two larger credits on non-accrual and transferred one non-accruing loan to OREO. These actions resulted in a $21.1 million net increase in non-performing assets to $92.2 million at quarter’s end. Non-performing assets to loans and OREO was 1.57% at the end of the third quarter, representing an increase from 1.27% at the end of the second quarter. Overall asset quality conditions in the Corporation’s Pennsylvania and Ohio markets continue to be good with non-performing assets less than 1% of those loans and OREO. The economic environment in Florida continues to be weak. While the Florida loan portfolio represents only 5% of total loans, Florida’s non-performing assets represent 38%, or $35.0 million, of the Corporation’s total non-performing assets. 

The Corporation’s capital ratios continue to exceed federal bank regulatory agency “well capitalized” thresholds. The merger with Iron and Glass, completed in the third quarter, included cash in the consideration and resulted in a planned 20 basis point decrease to a 7.97% leverage ratio and 21 basis point decrease to a 5.00% tangible equity ratio. Both of these ratios have improved over the December 31, 2007 levels of 7.47% for the leverage ratio and 4.85% for the tangible equity ratio. Shareholders’ equity totaled $971.1 million at September 30, 2008, or $10.83 per common share, compared to $919.5 million, or $10.69 per common share, at June 30, 2008. Tangible book value was $4.39 per common share as of September 30, 2008, compared to $4.58 per common share at June 30, 2008.

Year-to-Date Results 

For the nine months ended September 30, 2008, F.N.B. Corporation’s net income totaled $54.5 million, or $0.70 per diluted share, compared to $52.6 million, or $0.87 per diluted share for the same period of 2007. On a year-to-date basis, the Corporation’s return on tangible equity totaled 20.9%, its return on equity was 9.0%, its return on tangible assets was 1.09% and its return on assets was 0.98%. 

Net interest income, on a fully taxable equivalent basis, increased 26.2% over the same period of 2007, reflecting 22.7% growth in average loans resulting from organic growth and the acquisitions of Omega and Iron and Glass. Average deposits and treasury management balances grew 22.8% over the same period of 2007. Net interest margin for the nine months ended September 30, 2008 increased to 3.88%, up 15 basis points compared to the same period a year ago. 

Non-interest income increased 27.7% for the first nine months of 2008, compared to the same period last year. Non-interest income was 29% of net revenue for the nine months ended September 30, 2008. Non-interest expense increased 31.4% compared to the first nine months of 2007. 

The efficiency ratio totaled 60.2% for the nine months ended September 30, 2008, compared to 58.0% for the same period of 2007. The increase reflects the negative impact of $4.5 million in merger-related costs incurred this year. Excluding these costs, the efficiency ratio would have been 58.4% for the first nine months of 2008, up slightly from 58.0% for the same period last year. 

The provision for loan losses increased $13.6 million compared to the year-ago period, largely reflecting additional provisions for the Florida loan portfolio and the effect of organic growth in the Corporation’s total loan portfolio. 

Conference Call

F.N.B. Corporation will host its regularly scheduled quarterly conference call to discuss results for the third quarter of 2008 on Friday, October 24, at 8:00 A.M. Eastern Time. Hosting the call will be Bob New, President and Chief Executive Officer, and Brian Lilly, Chief Financial Officer.

The call can be accessed via the telephone by dialing (866) 575-6537 or (913) 312-0865 for international callers; the confirmation number is 5054046.

A replay of the call will be available from 11:00 A.M. Eastern Time on the day of the call until midnight Eastern Time on Friday, October 31, 2008. The replay can be accessed by dialing (888) 203-1112 or (719) 457-0820 for international callers; the confirmation number is 5054046. 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 $8.5 billion as of September 30, 2008. F.N.B. Corporation is a leading provider of commercial and retail banking, leasing, 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, Regency Finance Company and Bank Capital Services. It also operates consumer finance offices in Tennessee and loan production offices in Pennsylvania, Ohio, 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 F.N.B. Corporation’s outstanding record of increased dividend performance. F.N.B. Corporation has consistently increased dividend payments for 35 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) 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 revise these forward-looking statements or to reflect events or circumstances after the date of this press release. 

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