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F.N.B. Corporation Reports Net Income of $17.2 Million for First Quarter 2011

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PRESS RELEASE

- HERMITAGE, PA

F.N.B. Corporation (NYSE: FNB) today reported first quarter 2011 financial results. Net income for the first quarter of 2011 was $17.2 million, or $0.14 per diluted share, compared to $23.5 million, or $0.21 per diluted share, in the fourth quarter of 2010 and $16.0 million, or $0.14 per diluted share, in the first quarter of 2010.

The first quarter of 2011 included merger-related costs of $2.7 million (after-tax), or $0.02 per diluted share, and the fourth quarter of 2010 included a one-time credit to pension expense of $6.9 million (after-tax), or $0.06 per diluted share, related to amending the pension plan. These items reduced net income for the first quarter from $19.9 million, or $0.16 per diluted share, and increased net income for the fourth quarter from $16.7 million, or $0.15 per diluted share, respectively.

“We are very pleased with the first quarter’s results. The quarter included increased revenue, good levels of organic growth in loans, deposits and customer repurchase agreements, an expanded net interest margin and continued good credit quality results,” said Stephen J. Gurgovits, Chief Executive Officer of F.N.B. Corporation. “Results of $0.16 per diluted share, before the merger-related costs, show nice growth and are an excellent start to 2011.”

F.N.B. Corporation’s performance ratios this quarter were as follows: return on average tangible equity (non-GAAP measure) was 13.93%; return on average equity was 6.17%; return on average tangible assets (non-GAAP measure) was 0.82% and return on average assets was 0.72%. A reconciliation of GAAP measures to non-GAAP measures is included in the tables that accompany this press release.

Mr. Gurgovits continued, “We sincerely welcome the customers, employees and shareholders of Comm Bancorp, Inc. to the F.N.B. family and are pleased to have expanded our presence in northeast Pennsylvania this year.”

First Quarter Results (all comparisons refer to the prior quarter, except as noted)

Net Interest Income
Net interest income on a fully taxable equivalent basis totaled $79.2 million in the first quarter of 2011, increasing 6.3%, reflecting the benefits of 7.0% growth in average earning assets and a 4 basis point expansion of the net interest margin. The growth in average earning assets reflects the addition of Comm Bancorp, Inc. and continued organic loan growth. The net interest margin expanded to 3.81% from 3.77%, due to a combination of a lower cost of deposits driven by continued enhancements of the funding mix and pricing actions.

Average loans for the first quarter totaled $6.5 billion and increased 8.2% due to a combination of loans added in the Comm Bancorp, Inc. transaction ($413.2 million) and solid organic growth of $81.6 million or 5.5% annualized. The Pennsylvania commercial portfolio was the primary contributor to organic growth, with average loans for this portfolio growing $82.1 million, or 10.7% annualized, primarily due to continued market share gains throughout our footprint. Total consumer loans remained essentially flat on an organic basis reflecting normal seasonally lower growth in the first quarter of the year.

“The quarter’s organic loan growth demonstrates our commitment to building on our strong 2010 momentum as this quarter marks the eighth consecutive quarter of organic growth for our Pennsylvania commercial loan portfolio and the seventh consecutive quarter of organic growth for total loans,” said Mr. Gurgovits.

Average deposits and customer repurchase agreements totaled $7.9 billion and increased 8.0% in the first quarter due to a combination of deposits added in the Comm Bancorp, Inc. acquisition ($568.6 million) and organic growth of $55.1 million or 4.3% annualized in relationship-based transaction deposits and customer repurchase agreements. Partially offsetting this growth was a continued managed decline in higher-cost time deposits given FNB’s overall liquidity position. As of March 31, 2011, FNB’s total customer based-funding was 96.1% of total deposits and borrowings.

Non-Interest Income
Non-interest income totaled $28.4 million in the first quarter of 2011, compared to $29.5 million, as growth in several fee revenue categories was offset by the normal seasonal effects on service charge revenue and lower realized gains.

The first quarter of 2011 included growth of 14.8% in securities commissions due to increased financial consultant and platform activity and a 12.8% increase in trust income reflecting initiatives to grow revenue and improved market conditions. Additionally, insurance commissions and fees increased 12.7% due to seasonally higher contingent fee revenue. Offsetting these increases were reduced mortgage-related gains as first quarter originations were lower and reduced other non-interest income as a result of $0.9 million in gains recorded at F.N.B. Capital Corporation in the fourth quarter of 2010.

Non-Interest Expense
Non-interest expense totaled $74.6 million in the first quarter of 2011 compared to $58.3 million. The first quarter of 2011 included $4.1 million in merger-related costs and the fourth quarter of 2010 included a $10.5 million one-time credit to pension expense due to a plan amendment. Adjusting for these items, non-interest expense would have increased in the first quarter by $1.5 million, or 9.1% annualized, primarily driven by Comm Bancorp, Inc.-related operating costs and seasonally higher personnel and occupancy costs.

Credit Quality
“We are pleased with the credit quality results for the first quarter, with the Pennsylvania and Regency loan portfolios both continuing to perform very well. The Florida portfolio, the focus of which remains the land-related portfolio, performed within our expectations as we continued to reduce our exposure,” remarked Mr. Gurgovits.

Credit metrics for the first quarter have been influenced by the closing of the Comm Bancorp, Inc. acquisition on January 1, 2011. The impact to overall credit quality results is consistent with management’s initial estimates derived in the due diligence process.

The provision for loan losses equaled $8.2 million for the first quarter of 2011, a $2.6 million reduction with improvements seen in all portfolios. Net loan charge-offs for the first quarter improved to 0.42% annualized of average loans, the lowest level since the third quarter of 2008. At March 31, 2011, the ratio of the allowance for loan losses to total loans was 1.64% and the entire 10 basis point decrease was due to the accounting treatment required for loans acquired in connection with the Comm Bancorp, Inc. acquisition. Absent the acquisition, the ratio of the allowance for loan losses to total loans would have remained unchanged at 1.74%. The ratio of non-performing loans and other real estate owned (OREO) to total non-performing loans and OREO improved 20 basis points to 2.54% at March 31, 2011.

The Pennsylvania loan portfolio‘s credit quality metrics for the first quarter of 2011 reflect continued solid performance. The Pennsylvania loan portfolio totaled $6.2 billion at March 31, 2011, representing 95% of the total loan portfolio. Charge-off performance continues to be very good, with net charge-offs for the first quarter totaling $4.1 million or 0.27% annualized of average loans, compared to 0.36% for the full year of 2010. The portfolio continues to be well reserved, with a 1.34% ratio of the allowance for loan losses to total loans. With the acquisition of Comm Bancorp, Inc., the ratio of the allowance for loan losses plus the recorded credit mark for the acquired portfolio to total loans plus the credit mark equaled 1.76% at March 31, 2011 (non-GAAP measure).

The Florida loan portfolio totaled $185.1 million at March 31, 2011 (2.8% of the total loan portfolio) and performed within our expectations. During the first quarter, a $3.4 condominium project held in OREO was sold for a slight recovery, and was the primary contributor of the $4.9 million decrease in Florida non-performing loans and OREO (charge-offs of $1.1 million and payments received contributed to the remainder of the decrease).

Capital Position
The Corporation’s capital ratios continue to exceed federal bank regulatory agency “well capitalized” thresholds. The slightly lower levels compared to the prior quarter are a result of the acquisition completed on January 1, 2011 and are consistent with management’s initial estimates. The acquisition resulted in total consideration of $75.5 million and a preliminary addition to goodwill of $36.4 million to record Comm Bancorp, Inc. during the first quarter of 2011. At March 31, 2011, the estimated total risk-based capital ratio was 12.39%, the estimated tier 1 risk-based capital ratio was 10.87% and the leverage ratio was 8.36%. The tangible common equity to tangible assets ratio (non-GAAP measure) was 5.76% and the tangible book value per share (non-GAAP measure) was $4.36 at March 31, 2011. The dividend payout ratio for the quarter was 84% including the impact of the merger-related costs.

Conference Call
F.N.B. Corporation will host its quarterly conference call to discuss first quarter of 2011 financial results on Tuesday, April 26, 2011, at 8:00 AM EDT. Participating callers may access the call by dialing (800) 967-7185 or (719) 325-2392 for international callers; the confirmation number is 2152369. The listen-only audio Webcast may be accessed through the “Shareholder and Investor Relations” section of the Corporation’s Web site at www.fnbcorporation.com.

A replay of the call will be available from 11:00 AM EDT the day of the call until midnight EDT on Tuesday, May 3, 2011. The replay is accessible by dialing (877) 870-5176 or (858) 384-5517 for international callers; the confirmation number is 2152369. The call transcript and Webcast will be available on 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 $9.8 billion. 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 Kentucky and Tennessee.

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” within the meaning of the Private Securities Litigation Reform Act, 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. Forward-looking statements are typically identified by words such as “believe”, “plan”, “expect”, “anticipate”, “intend”, “outlook”, “estimate”, “forecast”, “will”, “should”, “project”, “goal”, and other similar words and expressions. 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 which are on file with the SEC, and are available on our shareholder and investor relations website at www.fnbcorporation.com and on the SEC website at www.sec.gov; (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. All information provided in this release and in the attachments is based on information presently available and 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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