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F.N.B. Corporation Reports First Quarter 2010 Results

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PRESS RELEASE

- HERMITAGE, PA

F.N.B. Corporation (NYSE: FNB) today reported financial results for the first quarter of 2010. Net income for the first quarter of 2010 was $16.0 million or $0.14 per diluted share, compared to fourth quarter of 2009 net income of $4.6 million, or $0.04 per diluted share, and net income available to common shareholders in the first quarter of 2009 of $14.3 million, or $0.16 per diluted common share.

“We are very pleased with our first quarter results that reflect solid loan and deposit growth and stable credit quality,” said Stephen J. Gurgovits, President and Chief Executive Officer of F.N.B. Corporation. “F.N.B. successfully continued to execute its organic growth strategy during the quarter and capitalize on the momentum established during 2009.”

F.N.B. Corporation’s performance ratios this quarter were as follows: return on average tangible common equity (non-GAAP measure) was 14.43%; return on average equity was 6.19%; return on average tangible assets (non-GAAP measure) was 0.85% and return on average assets was 0.74%. A reconciliation of GAAP measures to non-GAAP measures is included in the tables that accompany this press release.

Net Interest Income

Net interest income on a fully taxable equivalent basis (non-GAAP measure) for the first quarter of 2010 totaled $70.0 million, representing a decrease of $1.3 million from the fourth quarter of 2009. The decline was mainly a result of two fewer days in the first quarter combined with a three basis point narrowing of the net interest margin. The net interest margin was 3.74% for the first quarter of 2010 compared to 3.77% in the fourth quarter of 2009, reflecting increased cash balances temporarily invested on an overnight basis due to strong growth in deposits and treasury management balances. Given the continued increase, overnight interest bearing balances held at the Federal Reserve have been reclassified from cash into short-term investments for all periods presented.

Total average loans for the first quarter of 2010 were $5.9 billion, an increase of $13.2 million or 0.9% on an annualized basis compared to the fourth quarter of 2009. Solid commercial loan growth was partially offset by a decrease in total average consumer loans during the first quarter. Average commercial loans in the first quarter increased $31.0 million, or 3.9% annualized, compared to the fourth quarter of 2009, with the average Pennsylvania commercial loan portfolio growing $46.6 million, or 6.3% annualized, and the average Florida portfolio decreasing $15.6 million.

Total average consumer loans for the first quarter of 2010 were $2.5 billion, a decline of $21.8 million compared to the fourth quarter of 2009. The decline in the consumer loan portfolio was primarily due to the effects of seasonally weaker consumer loan demand and severe weather conditions during the quarter. As a result of these factors, the indirect lending portfolio average balances decreased $17.5 million, or 13.3% annualized, and home equity lending average balances (comprised of consumer lines of credit and direct installment loans) declined by $4.9 million or 1.4% annualized during the first quarter.

Average deposits and treasury management balances totaled $7.0 billion for the first quarter of 2010, increasing $158.8 million or 9.4% annualized, compared to the fourth quarter of 2009, primarily reflecting successes in new account acquisition and higher average balances. Average transaction deposits increased $86.0 million in the first quarter, or 8.5% annualized, compared to the fourth quarter of 2009. Average treasury management balances grew $60.5 million, or 45.8% annualized, in the first quarter of 2010 compared to the fourth quarter of 2009.

“We are very pleased with the positive results of our commercial and retail teams in attracting new customer relationships and gaining market share,” said Mr. Gurgovits. “F.N.B. continues to capitalize on opportunities in the Pennsylvania markets.”

Non-Interest Income

Non-interest income increased $5.0 million to $30.3 million in the first quarter of 2010, compared to $25.3 million in the fourth quarter of 2009. During the first quarter, higher gains on the sale of securities, lower other-than-temporary impairment charges and increases in other non-interest income were partially offset by seasonally lower service charges and lower swap fee revenue.

To better position the balance sheet for the remainder of 2010, investment securities of $56 million, with a book yield of 3.96%, were sold during the quarter at a gain of $2.3 million. Offsetting these gains were $2.3 million in charges associated with the pre-payment of $59 million in borrowings with an effective rate of 3.93% (a component of other non-interest expense).

The impairment losses recognized for the first quarter of 2010 were $1.7 million compared to $3.7 million for the fourth quarter of 2009. The current quarter impairment charges were primarily related to two pooled trust preferred securities experiencing additional collateral deterioration that accelerated faster than previously projected. The pooled trust preferred securities portfolio is comprised of 13 securities with an original cost of $41.3 million. To date, credit-related impairment charges of $17.8 million have been recognized on this portfolio, which have reduced the carrying value to $23.5 million as of March 31, 2010. The fair value of these pooled trust preferred securities was $7.1 million at quarter-end with a remaining after-tax unrealized loss of $10.1 million included in accumulated other comprehensive income.

Other non-interest income increased $1.9 million to $6.2 million for the first quarter of 2010, reflecting a $3.3 million increase in recoveries on impaired loans previously acquired through an acquisition that primarily related to one credit relationship. Additionally in the first quarter of 2010, insurance commissions and fees increased due to seasonal contingent fee revenue, while securities commissions and fees declined given the impact of low interest rates on annuity sales combined with the benefit of the fall sales campaign in the fourth quarter of 2009. Non-interest income excluding other-than-temporary impairment charges, securities gains and recoveries on impaired loans, represented 27% of revenue for the first quarter of 2010 compared to 29% for the fourth quarter of 2009.

Non-Interest Expense

Non-interest expense totaled $65.4 million in the first quarter of 2010, a 0.5% decrease compared to $65.8 million in the fourth quarter of 2009. Included in other non-interest expense for the first quarter is $2.3 million in debt pre-payment fees associated with the repayment of certain debt (described above under Non-Interest Income). These prepayment fees were offset by $2.4 million lower other real estate owned (OREO) expense and $1.0 million lower litigation settlement costs compared to the fourth quarter of 2009.

Additionally, compared to the fourth quarter of 2009, the first quarter of 2010 total personnel costs increased $1.4 million driven by normal seasonal increases in employee benefits and occupancy costs increased $0.6 million due primarily to the severe weather conditions during the first quarter.

Credit Quality

“We continue to be very pleased with the performance of our Pennsylvania and Regency loan portfolios, with Florida showing signs of stability,” remarked Mr. Gurgovits. “While there have been signs of economic recovery, continued high unemployment remains a challenge for businesses and consumers throughout the country.”

Annualized net charge-offs decreased 135 basis points to 0.48% of average loans for the first quarter of 2010, the lowest level of the past six quarters, compared to 1.83% of average loans for the fourth quarter of 2009 which reflected the higher Florida related charge-offs in the fourth quarter. Non-performing loans and OREO as a percentage of total loans and OREO at March 31, 2010 increased 20 basis points to 3.04%, compared to 2.84% at December 31, 2009, mainly driven by an increase in non-accrual and restructured loans in the Pennsylvania portfolio.

At March 31, 2010, the ratio of the allowance for loan losses to total loans equaled 1.86%, compared to 1.79% at December 31, 2009, reflecting increased reserve positions in the Pennsylvania and Florida portfolios. As a percentage of non-performing loans, the allowance for loan losses decreased slightly to 69.6% at March 31, 2010, compared to 71.9% at December 31, 2009. The provision for loan losses totaled $12.0 million for the first quarter of 2010, which was $14.0 million lower than the fourth quarter of 2009, reflecting lower charge-offs in the first quarter. The current quarter net charge-offs were $7.0 million compared to $27.2 million for the fourth quarter of 2009.

The Pennsylvania loan portfolio totaled $5.5 billion at March 31, 2010 (93.2% of the total loan portfolio) and reflects good overall credit quality metrics characterized by improved net charge-offs, lower total past due loans and higher non-performing loans. Net loan charge-offs totaled $4.5 million or 0.34% annualized of average loans for the first quarter of 2010, improving slightly compared to $5.1 million or 0.37% annualized of average loans for the fourth quarter of 2009. Total past dues and non-accrual loans improved slightly to 2.05% of total loans at March 31, 2010, compared to 2.07% at December 31, 2009. Pennsylvania non-performing loans and OREO increased to $90.8 million or 1.65% of total loans and OREO at March 31, 2010, from $76.0 million or 1.39% at December 31, 2009, primarily driven by two commercial relationships migrating to non-accrual status and a $3.7 million increase in restructured commercial and residential loans during the first quarter.

The Florida loan portfolio totaled $240.4 million at March 31, 2010 (4.1% of the total loan portfolio) and delivered stable credit quality metrics compared to the fourth quarter of 2009 that continue to reflect a challenging and uncertain economic environment in Florida. Florida non-performing loans and OREO decreased slightly to $79.9 million or 31.79% of total loans and OREO at March 31, 2010, compared to December 31, 2009. Net loan charge-offs for the first quarter of 2010 totaled $0.9 million and were related to one credit, compared to $20.3 million in net loan charge-offs for the fourth quarter of 2009. The decrease in charge-offs for the first quarter of 2010 is the result of the actions taken in the fourth quarter of 2009 to reflect the decline of property values in Florida.

The Regency loan portfolio totaled $156.6 million at March 31, 2010 (2.7% of the total loan portfolio) and continues to deliver very good credit quality metrics for a consumer finance company. Regency non-performing loans and OREO totaled $8.9 million or 5.64% of total loans and OREO at March 31, 2010, compared to $8.8 million or 5.40% at December 31, 2009. Net loan charge-offs totaled $1.5 million or 3.96% annualized of average loans for the first quarter of 2010, a decrease from $1.7 million or 4.30% annualized of average loans for the fourth quarter of 2009. Total past dues and non-accrual loans improved to 4.00% of total loans at March 31, 2010, a decrease of 57 basis points compared to December 31, 2009.

Capital Position

The Corporation’s capital ratios continue to exceed federal bank regulatory agency “well capitalized” thresholds. As of March 31, 2010, the Corporation’s capital ratios remained consistent with the fourth quarter. The total risk-based capital ratio was 12.8%, the tier 1 risk-based capital ratio was 11.4% and the leverage capital ratio was 8.7%. The tangible common equity to tangible assets ratio (non-GAAP measure) equaled 5.84% at March 31, 2010 and December 31, 2009. The tangible book value per share (non-GAAP measure) increased 4 cents during the quarter to $4.21 and the dividend payout ratio for the quarter was 86%.

Conference Call

F.N.B. Corporation will host its quarterly conference call to discuss its financial results for the first quarter of 2010 on Tuesday, April 27, 2010, at 8:00 AM EDT. The call can be accessed by dialing (888) 403-8872 or (719) 785-1754 for international callers; the confirmation number is 6710049.

A replay of the call will be available from 11:00 AM EDT on the day of the call until midnight EDT on Tuesday, May 4, 2010. The replay can be accessed by dialing (888) 203-1112 or (719) 457-0820 for international callers; the confirmation number is 6710049. 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 $8.8 billion as of March 31, 2010. 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 F.N.B. Commercial Leasing. It also operates consumer finance offices in Tennessee and loan production offices in Pennsylvania and Florida.

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 net interest margins; (3) changes in prepayment speeds, loan sale volumes, charge-offs and loan loss provisions; (4) general economic conditions; (5) various monetary and fiscal policies and regulations of the U.S. Government 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 (8) risk factors mentioned in the reports and registration statements F.N.B. Corporation files with the Securities and Exchange Commission; (9) housing prices; (10) job market; (11) consumer confidence and spending habits or (12) estimates of fair value of certain F.N.B. Corporation assets and liabilities. F.N.B. Corporation Reports First Quarter 2010 Results Page 5 of 14 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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DATA SHEETS IN PDF

Media Contact

Jennifer Reel
724-983-4856
724-699-6389 (cell)
reel@fnb-corp.com

Analyst/Institutional Investor Contact
Matthew Lazzaro
724-983-4254 
412-216-2510 (cell) 
lazzaro@fnb-corp.com

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