UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

þ		Quarterly Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

For the quarterly period ended September 30, 2007

o		Transition Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

For the transition period from                                          to                                     

F.N.B. CORPORATION

(Exact name of registrant as specified in its charter)

Florida		25-1255406
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One F.N.B. Boulevard, Hermitage, PA		16148
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 724-981-6000

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ     No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer þ     Accelerated Filer o     Non-accelerated Filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o     No þ

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at October 31, 2007
Common Stock, $0.01 Par Value		60,555,834 Shares

 

 

F.N.B. CORPORATION
FORM 10-Q
September 30, 2007
INDEX

				PAGE
PART I — FINANCIAL INFORMATION PAGE
Item 1.		Financial Statements
		Consolidated Balance Sheets			2
		Consolidated Statements of Income			3
		Consolidated Statements of Stockholders’ Equity			4
		Consolidated Statements of Cash Flows			5
		Notes to Consolidated Financial Statements			6
		Report of Independent Registered Public Accounting Firm			20
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			21
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			37
Item 4.		Controls and Procedures			37
PART II — OTHER INFORMATION
Item 1.		Legal Proceedings			38
Item 1A.		Risk Factors			38
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			38
Item 3.		Defaults Upon Senior Securities			38
Item 4.		Submission of Matters to a Vote of Security Holders			38
Item 5.		Other Information			38
Item 6.		Exhibits			39
Signatures					40
Exhibit 15
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Dollars in thousands, except par value

		September 30,				December 31,
		2007				2006
		(Unaudited)
Assets
Cash and due from banks		$	132,956			$	122,362
Interest bearing deposits with banks			2,553				1,472
Securities available for sale			308,009				258,279
Securities held to maturity (fair value of $717,436 and $766,295)			727,950				776,079
Mortgage loans held for sale			7,131				3,955
Loans, net of unearned income of $24,724 and $26,704			4,358,604				4,253,144
Allowance for loan losses			(52,122	)			(52,575	)
Net Loans			4,306,482				4,200,569
Premises and equipment, net			82,977				86,532
Goodwill			242,120				242,479
Core deposit and other intangible assets, net			20,543				23,859
Bank owned life insurance			133,953				131,391
Other assets			159,500				160,615
Total Assets		$	6,124,174			$	6,007,592
Liabilities
Deposits:
Non-interest bearing demand		$	659,352			$	654,617
Savings and NOW			2,090,065				1,944,707
Certificates and other time deposits			1,734,767				1,773,518
Total Deposits			4,484,184				4,372,842
Short-term borrowings			451,188				363,910
Long-term debt			433,691				519,890
Junior subordinated debt owed to unconsolidated subsidiary trusts			151,031				151,031
Other liabilities			62,487				62,547
Total Liabilities			5,582,581				5,470,220
Stockholders’ Equity
Common stock — $0.01 par value Authorized — 500,000,000 shares Issued — 60,601,818 and 60,451,533 shares			602				601
Additional paid-in capital			507,959				506,024
Retained earnings			39,986				33,321
Accumulated other comprehensive loss			(6,163	)			(1,546	)
Treasury stock — 45,984 and 57,254 shares at cost			(791	)			(1,028	)
Total Stockholders’ Equity			541,593				537,372
Total Liabilities and Stockholders’ Equity		$	6,124,174			$	6,007,592

See accompanying Notes to Consolidated Financial Statements

F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Dollars in thousands, except per share data
Unaudited

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2007				2006				2007				2006
Interest Income
Loans, including fees		$	81,392			$	76,838			$	238,048			$	210,725
Securities:
Taxable			10,971				11,690				32,899				35,943
Nontaxable			1,462				1,231				4,280				3,492
Dividends			59				114				231				426
Other			65				703				598				1,076
Total Interest Income			93,949				90,576				276,056				251,662
Interest Expense
Deposits			32,111				29,862				93,686				76,306
Short-term borrowings			5,264				4,133				14,450				11,354
Long-term debt			4,651				5,453				14,276				15,519
Junior subordinated debt owed to unconsolidated subsidiary trusts			2,765				2,761				8,217				7,604
Total Interest Expense			44,791				42,209				130,629				110,783
Net Interest Income			49,158				48,367				145,427				140,879
Provision for loan losses			3,776				2,428				7,461				7,883
Net Interest Income After Provision for Loan Losses			45,382				45,939				137,966				132,996
Non-Interest Income
Service charges			10,286				10,234				30,116				30,113
Insurance commissions and fees			3,301				3,412				10,950				10,751
Securities commissions and fees			1,595				1,329				4,521				3,584
Trust			2,109				2,013				6,389				5,716
Gain on sale (loss on impairment) of securities			(7	)			510				1,037				1,397
Gain on sale of mortgage loans			455				465				1,181				1,163
Bank owned life insurance			1,028				889				3,018				2,489
Other			915				1,159				3,761				4,766
Total Non-Interest Income			19,682				20,011				60,973				59,979
Non-Interest Expense
Salaries and employee benefits			22,030				20,991				65,771				63,450
Net occupancy			3,623				3,424				11,094				10,264
Equipment			3,244				3,462				9,902				10,055
Amortization of intangibles			1,099				1,180				3,305				3,140
Other			11,282				11,567				34,924				34,210
Total Non-Interest Expense			41,278				40,624				124,996				121,119
Income Before Income Taxes			23,786				25,326				73,943				71,856
Income taxes			6,162				7,707				21,327				21,800
Net Income		$	17,624			$	17,619			$	52,616			$	50,056
Net Income per Common Share
Basic		$	0.29			$	0.29			$	0.88			$	0.86
Diluted			0.29				0.29				0.87				0.85
Cash Dividends per Common Share			0.24				0.235				0.71				0.705

See accompanying Notes to Consolidated Financial Statements

F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Dollars in thousands
Unaudited

																		Accumu-
																		lated Other
																		Compre-				Deferred
		Compre-								Additional								hensive				Stock
		hensive				Common				Paid-In				Retained				Income				Compen-				Treasury
		Income				Stock				Capital				Earnings				(Loss)				sation				Stock				Total
Balance at January 1, 2007						$	601			$	506,024			$	33,321			$	(1,546	)			—			$	(1,028	)		$	537,372
Net income		$	52,616												52,616																52,616
Change in other comprehensive loss			(4,617	)															(4,617	)											(4,617	)
Comprehensive income		$	47,999
Cash dividends declared:
Common stock $0.71/share															(42,919	)															(42,919	)
Purchase of common stock																											(9,175	)			(9,175	)
Issuance of common stock							1				69				(1,858	)											9,412				7,624
Restricted stock compensation											1,284																				1,284
Tax benefit of stock-based compensation											582																				582
Cumulative effect of change in accounting for uncertainties in income taxes (FIN 48 — see the “Income Taxes” note)															(1,174	)															(1,174	)
Balance at September 30, 2007						$	602			$	507,959			$	39,986			$	(6,163	)			—			$	(791	)		$	541,593
Balance at January 1, 2006						$	575			$	454,546			$	24,376			$	3,597			$	(4,154	)		$	(1,738	)		$	477,202
Net income		$	50,056												50,056																50,056
Change in other comprehensive loss			(986	)															(986	)											(986	)
Comprehensive income		$	49,070
Cash dividends declared:
Common stock $0.705/share															(41,174	)															(41,174	)
Purchase of common stock																											(6,141	)			(6,141	)
Issuance of common stock							28				52,322				(977	)											7,387				58,760
Restricted stock compensation											882																				882
Tax benefit of stock-based compensation											369																				369
Reclassification arising from the adoption of FAS 123R							(3	)			(4,151	)											4,154								—
Balance at September 30, 2006						$	600			$	503,968			$	32,281			$	2,611			$	—			$	(492	)		$	538,968

See accompanying Notes to Consolidated Financial Statements

F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollars in thousands
Unaudited

		Nine Months Ended
		September 30,
		2007				2006
Operating Activities
Net income		$	52,616			$	50,056
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization and accretion			10,285				11,401
Provision for loan losses			7,461				7,883
Deferred taxes			2,996				479
Net gain on sale of securities			(1,037	)			(1,397	)
Gain on sale of loans			(1,181	)			(1,163	)
Proceeds from sale of loans			86,499				77,589
Loans originated for sale			(88,494	)			(75,394	)
Tax benefit of stock-based compensation			(582	)			(369	)
Net change in:
Interest receivable			(2,362	)			(4,680	)
Interest payable			(186	)			1,389
Other, net			3,735				10,028
Net cash flows provided by operating activities			69,750				75,822
Investing Activities
Net change in:
Interest bearing deposits with banks			(1,081	)			(504	)
Loans			(114,801	)			(207,214	)
Bank owned life insurance			(2,562	)			340
Securities available for sale:
Purchases			(189,343	)			(3,751	)
Sales			3,162				25,435
Maturities			133,969				5,230
Securities held to maturity:
Purchases			(51,075	)			—
Maturities			98,625				85,095
Increase in premises and equipment			(3,203	)			(3,117	)
Net cash paid for mergers and acquisitions			—				(17,079	)
Net cash flows used in investing activities			(126,309	)			(115,565	)
Financing Activities
Net change in:
Non-interest bearing deposits, savings and NOW accounts			150,094				140,181
Time deposits			(38,752	)			4,141
Short-term borrowings			87,278				(58,565	)
Proceeds from the issuance of junior subordinated debt owed to unconsolidated subsidiary trusts			—				22,165
Increase in long-term debt			112,249				23,787
Decrease in long-term debt			(198,447	)			(58,011	)
Purchase of common stock			(9,175	)			(6,141	)
Issuance of common stock			6,243				4,262
Tax benefit of stock-based compensation			582				369
Cash dividends paid			(42,919	)			(41,174	)
Net cash flows provided by financing activities			67,153				31,014
Net Increase in Cash and Due from Banks			10,594				(8,729	)
Cash and due from banks at beginning of period			122,362				131,604
Cash and Due from Banks at End of Period		$	132,956			$	122,875

See accompanying Notes to Consolidated Financial Statements

F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 2007

BUSINESS

     F.N.B. Corporation (the Corporation) is a diversified financial services company headquartered in Hermitage, Pennsylvania. Its primary businesses include commercial and retail banking, consumer finance, asset management and insurance. The Corporation operates its commercial and retail banking business through a full service branch network in Pennsylvania and Ohio and loan production offices in Florida and Tennessee. It also conducts selected consumer finance business in Pennsylvania, Ohio and Tennessee.

BASIS OF PRESENTATION

     The accompanying consolidated financial statements include the accounts of the Corporation and its subsidiaries. The Corporation owns and operates First National Bank of Pennsylvania (FNBPA), First National Trust Company, First National Investment Services Company, LLC, F.N.B. Investment Advisors, Inc., First National Insurance Agency, LLC, Regency Finance Company (Regency) and F.N.B. Capital Corporation, LLC.

     The accompanying consolidated financial statements include all adjustments, consisting only of normal recurring accruals that are necessary, in the opinion of management, to fairly reflect the Corporation’s financial position and results of operations. All significant intercompany balances and transactions have been eliminated. Certain prior period amounts have been reclassified to conform to the current period presentation.

     Certain information and note disclosures normally included in consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The interim operating results are not necessarily indicative of operating results for the full year. These interim statements should be read in conjunction with the audited consolidated financial statements and notes thereto, included in the Corporation’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.

     The Corporation’s consolidated financial statements include subsidiaries in which the Corporation has a controlling financial interest. Investments in companies in which the Corporation controls operating and financing decisions (principally defined as owning a voting or economic interest greater than 50%) are consolidated. Variable interest entities are consolidated if the Corporation is exposed to the majority of the variable interest entity’s expected losses and/or residual returns (i.e., the Corporation is considered to be the primary beneficiary).

USE OF ESTIMATES

     The accounting and reporting policies of the Corporation conform with U.S. generally accepted accounting principles (GAAP). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates. Material estimates that are particularly susceptible to significant changes include the allowance for loan losses.

MERGERS AND ACQUISITIONS

     On May 26, 2006, the Corporation completed its acquisition of The Legacy Bank (Legacy), a commercial bank and trust company headquartered in Harrisburg, Pennsylvania, with $375.1 million in assets, including $294.4 million in loans and $256.5 million in deposits. Consideration paid by the Corporation totaled $72.4 million comprised primarily of 2,682,053 shares of the Corporation’s common stock and $21.1 million in exchange for 3,831,505 shares of Legacy common stock. At the time of the acquisition, Legacy was merged into FNBPA. Based on the purchase price allocation, the Corporation recorded $46.4 million in goodwill and $4.3 million in core deposit intangible as a result of the acquisition. None of the goodwill is deductible for income tax purposes.

     The assets and liabilities of Legacy were recorded on the balance sheet at their estimated fair values as of the acquisition date. The Corporation’s consolidated financial statements include the results of operations of Legacy from the acquisition date.

NEW ACCOUNTING STANDARDS

The Fair Value Option for Financial Assets and Financial Liabilities

     In February 2007, the Financial Accounting Standards Board (FASB) issued Financial Accounting Standards Board Statement (FAS) 159, The Fair Value Option for Financial Assets and Financial Liabilities, which allows companies to report certain financial assets and liabilities at fair value with the changes in fair value included in earnings. In general, a company may elect the fair value option for an eligible financial asset or financial liability when it first recognizes the instrument on its balance sheet or enters into an eligible firm commitment. A company may also elect the fair value option for eligible items that exist on the effective date of FAS 159. A company’s decision to elect the fair value option for an eligible item is irrevocable. The Corporation will be required to apply the new guidance prospectively beginning January 1, 2008. The Corporation is currently evaluating the effect, if any, that the adoption of FAS 159 will have on its consolidated financial statements.

Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans

     In September 2006, the FASB issued FAS 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, which amends FAS 87 and FAS 106 to require recognition of the overfunded or underfunded status of pension and other postretirement benefit plans on the balance sheet. Under FAS 158, gains and losses, prior service costs and credits and any remaining transition amounts under FAS 87 and FAS 106 that have not yet been recognized through net periodic benefit cost are recognized in accumulated other comprehensive income, net of taxes, until they are amortized as a component of net periodic cost. The Corporation complied with the requirement under FAS 158 to measure plan assets and benefit obligations as of December 31, 2006 resulting in a $4.7 million reduction to equity within accumulated other comprehensive income, a decrease in prepaid pension asset of $9.4 million and a decrease in accrued postretirement benefit obligation of $1.5 million.

Fair Value Measurements

     In September 2006, the FASB issued FAS 157, Fair Value Measurements, which replaces the different definitions of fair value in existing accounting literature with a single definition, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements. The statement clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. The Corporation will be required to apply the new guidance prospectively beginning January 1, 2008. The Corporation is currently evaluating the effect, if any, that the adoption of FAS 157 will have on its consolidated financial statements.

Accounting for Uncertainty in Income Taxes

     In July 2006, the FASB issued FAS Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FAS 109, Accounting for Income Taxes. FIN 48 prescribes a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosures and transitions. The Corporation adopted FIN 48 effective January 1, 2007. Details relating to the adoption of FIN 48 and the impact on the Corporation’s consolidated financial statements are more fully discussed in the note under the caption “Income Taxes.”

SECURITIES

     Following is a summary of the fair value of securities available for sale (in thousands):

		September 30,				December 31,
		2007				2006
U.S. Treasury and other U.S. government agencies and corporations		$	124,561			$	143,441
Mortgage-backed securities of U.S. government agencies			75,978				27,184
States of the U.S. and political subdivisions			54,799				37,028
Corporate debt securities			47,265				40,929
Total debt securities			302,603				248,582
Equity securities			5,406				9,697
		$	308,009			$	258,279

     Following is a summary of the amortized cost of securities held to maturity (in thousands):

		September 30,				December 31,
		2007				2006
U.S. Treasury and other U.S. government agencies and corporations		$	84,537			$	89,378
Mortgage-backed securities of U.S. government agencies			531,871				559,658
States of the U.S. and political subdivisions			104,006				112,226
Corporate and other debt securities			7,536				14,817
		$	727,950			$	776,079

     The Corporation sold $2.9 million of securities at a gain of $1.0 million during the nine months ended September 30, 2007 and sold $25.4 million of securities at a gain of $1.4 million during the nine months ended September 30, 2006. During the nine months ended September 30, 2007, the Corporation also recognized a gain of $0.1 million relating to $6.6 million of called securities and a loss of $0.1 million due to the write-down to market value of an equity security of a company that was acquired. None of the security sales during 2007 or 2006 were at a loss.

     Securities are periodically reviewed for other-than-temporary impairment based upon a number of factors, including, but not limited to, length of time and extent to which the market value has been less than cost, financial condition of the underlying issuer, ability of the issuer to meet contractual obligations, likelihood of the security’s ability to recover any decline in its market value and management’s intent and ability to retain the security for a period of time sufficient to allow for recovery in market value or maturity. Among the factors that are considered in determining intent and ability is a review of the Corporation’s capital adequacy, interest rate risk position and liquidity. The assessment of a security’s ability to recover any decline in market value, the ability of the issuer to meet contractual obligations and management’s intent and ability requires considerable judgment. A decline in value that is considered to be other-than-temporary is recorded as a loss within non-interest income in the consolidated statement of income.

     Following are summaries of securities by the age of unrealized losses and the associated fair value (in thousands):

Securities available for sale:

		Less than 12 Months								Greater than 12 Months								Total
		Fair Value				Unrealized Losses				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
September 30, 2007
Mortgage-backed securities of U.S. government agencies		$	—			$	—			$	23,434			$	(402	)		$	23,434			$	(402	)
States of the U.S. and political subdivisions			34,910				(856	)			631				(2	)			35,541				(858	)
Corporate debt securities			34,412				(1,203	)			3,784				(239	)			38,196				(1,442	)
Equity securities			4,258				(246	)			17				(5	)			4,275				(251	)
		$	73,580			$	(2,305	)		$	27,866			$	(648	)		$	101,446			$	(2,953	)

		Less than 12 Months								Greater than 12 Months								Total
		Fair Value				Unrealized Losses				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
December 31, 2006
U.S. Treasury and other U.S. government agencies and corporations		$	88,537			$	(91	)		$	54,904			$	(57	)		$	143,441			$	(148	)
Mortgage-backed securities of U.S. government agencies			—				—				25,602				(296	)			25,602				(296	)
States of the U.S. and political subdivisions			12,031				(107	)			1,135				(3	)			13,166				(110	)
Corporate debt securities			6,971				(57	)			9,077				(30	)			16,048				(87	)
Equity securities			301				(9	)			152				(6	)			453				(15	)
		$	107,840			$	(264	)		$	90,870			$	(392	)		$	198,710			$	(656	)

Securities held to maturity:

		Less than 12 Months								Greater than 12 Months								Total
		Fair Value				Unrealized Losses				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
September 30, 2007
U.S. Treasury and other U.S. government agencies and corporations		$	—			$	—			$	46,433			$	(10	)		$	46,433			$	(10	)
Mortgage-backed securities of U.S. government agencies			164,099				(774	)			339,080				(8,746	)			503,179				(9,520	)
States of the U.S. and political subdivisions			14,700				(119	)			77,653				(1,035	)			92,353				(1,154	)
Corporate debt securities			—				—				296				(1	)			296				(1	)
		$	178,799			$	(893	)		$	463,462			$	(9,792	)		$	642,261			$	(10,685	)

		Less than 12 Months								Greater than 12 Months								Total
		Fair Value				Unrealized Losses				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
December 31, 2006
U.S. Treasury and other U.S. government agencies and corporations		$	87,591			$	(279	)		$	979			$	(21	)		$	88,570			$	(300	)
Mortgage-backed securities of U.S. government agencies			67,397				(122	)			410,078				(8,808	)			477,475				(8,930	)
States of the U.S. and political subdivisions			2,611				(8	)			80,232				(834	)			82,843				(842	)
Corporate debt securities			3,683				(4	)			8,614				(225	)			12,297				(229	)
		$	161,282			$	(413	)		$	499,903			$	(9,888	)		$	661,185			$	(10,301	)

     As of September 30, 2007, securities with unrealized losses for less than 12 months include 12 investments in mortgage-backed securities of U.S. government agencies, 62 investments in states of the U.S. and political subdivision securities, 16 investments in corporate debt securities and 4 investments in equity securities. As of September 30, 2007, securities with unrealized losses of greater than 12 months include 5 investments in U.S. Treasury and other U.S. government agencies and corporations securities, 78 investments in mortgage-backed securities of U.S. government agencies, 96 investments in states of the U.S. and political subdivision securities, 6 investments in corporate debt securities and 1 investment in an equity security. The Corporation has concluded that the decline in market value is due to changes in market interest rates and that it has both the intent and ability to hold these securities to maturity or for the time necessary to recover any decline in market value and as such these unrealized losses have been deemed temporary and no impairment loss has been recognized in the Corporation’s consolidated statement of income.

BORROWINGS

     Following is a summary of short-term borrowings (in thousands):

		September 30, 2007				December 31, 2006
Securities sold under repurchase agreements		$	254,156			$	252,064
Subordinated notes			117,782				108,118
Federal funds purchased			79,000				—
Other short-term borrowings			250				3,728
		$	451,188			$	363,910

     Following is a summary of long-term debt (in thousands):

		September 30, 2007				December 31, 2006
Federal Home Loan Bank advances		$	381,447			$	469,064
Subordinated notes			51,328				49,808
Convertible debt			663				705
Other long-term debt			253				313
		$	433,691			$	519,890

     The Corporation’s banking affiliate has available credit with the Federal Home Loan Bank (FHLB) of $1.9 billion, of which $381.4 million was used as of September 30, 2007. These advances are secured by loans collateralized by 1-4 family mortgages and the security portfolio and are scheduled to mature in various amounts periodically through the year 2017. Effective interest rates on these advances range from 2.79% to 5.75% at both September 30, 2007 and December 31, 2006.

JUNIOR SUBORDINATED DEBT OWED TO UNCONSOLIDATED SUBSIDIARY TRUSTS

     The Corporation has two unconsolidated subsidiary trusts (collectively, the Trusts), F.N.B. Statutory Trust I (Statutory Trust I) and F.N.B. Statutory Trust II (Statutory Trust II), of which 100% of the common equity of each is owned by the Corporation. The Trusts are not consolidated because the Corporation is not the primary beneficiary, as evaluated under FIN 46. The Trusts were formed for the purpose of issuing Corporation-obligated mandatorily redeemable capital securities (trust preferred securities) to third-party investors. The proceeds from the sale of trust preferred securities and the issuance of common equity by the Trusts were invested in junior subordinated debt securities (subordinated debt) issued by the Corporation, which are the sole assets of each Trust. The Trusts pay dividends on the trust preferred securities at the same rate as the distributions paid by the Corporation on the junior subordinated debt held by the Trusts.

     Distributions on the subordinated debt issued to the Trusts are recorded as interest expense by the Corporation. The trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the subordinated debt. The subordinated debt, net of the Corporation’s investment in the Trusts, qualifies as Tier 1 capital under the Board of Governors of the Federal Reserve System (Federal Reserve Board) guidelines. The Corporation has entered into agreements which, when taken collectively, fully and unconditionally guarantee the obligations under the trust preferred securities subject to the terms of each of the guarantees.

     The trust preferred securities of Statutory Trust I bear interest at a floating rate per annum equal to the three-month London Inter-Bank Offered Rate (LIBOR) plus 325 basis points. The interest rate in effect at September 30, 2007 was 8.61%. The subordinated debt of $128.9 million issued to Statutory Trust I is first redeemable, in whole or in part, by the Corporation on or after March 31, 2008 and matures on March 31, 2033.

     The trust preferred securities of Statutory Trust II bear interest at a fixed rate per annum equal to 7.17% through June 15, 2011, at which time the issue converts to a floating rate equal to the three-month LIBOR plus 165 basis points. The subordinated debt of $22.2 million issued to Statutory Trust II is first redeemable, in whole or in part, by the Corporation on or after June 15, 2011 and matures on June 15, 2036.

INTEREST RATE SWAPS

     In February 2005, the Corporation entered into an interest rate swap with a notional amount of $125.0 million, whereby it pays a fixed rate of interest and receives a variable rate based on LIBOR. The effective date of the swap was January 3, 2006 and the maturity date of the swap is March 31, 2008. The interest rate swap is a designated cash flow hedge designed to convert the variable interest rate to a fixed rate on $125.0 million of subordinated debt. The swap is considered to be highly effective and assessment of the hedging relationship is evaluated under Derivative Implementation Group Issue No. G7 using the hypothetical derivative method. At September 30, 2007, the swap had a fair value of $0.5 million which has been recorded in other assets, and other comprehensive loss, net of tax.

     During 2006, the Corporation implemented an interest rate swap program for commercial loans. In effect, the program provides the customer with fixed rate loans while creating a variable rate asset for the Corporation. The notional amount of swaps under this program totalled $28.8 million as of September 30, 2007.

COMMITMENTS, CREDIT RISK AND CONTINGENCIES

     The Corporation has commitments to extend credit and standby letters of credit that involve certain elements of credit risk in excess of the amount stated in the consolidated balance sheet. The Corporation’s exposure to credit loss in the event of non-performance by the customer is represented by the contractual amount of those instruments. The credit risk associated with commitments to extend credit and standby letters of credit is essentially the same as that involved in extending loans to customers and is subject to normal credit policies. Since many of these commitments expire without being drawn upon, the total commitment amounts do not necessarily represent future cash flow requirements.

     Following is a summary of off-balance sheet credit risk information (in thousands):

		September 30,				December 31,
		2007				2006
Commitments to extend credit		$	913,541			$	879,707
Standby letters of credit			72,493				91,685

     At September 30, 2007, funding of approximately 79.1% of the commitments to extend credit was dependent on the financial condition of the customer. The Corporation has the ability to withdraw such commitments at its discretion. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Based on management’s credit evaluation of the customer, collateral may be deemed necessary. Collateral requirements vary and may include accounts receivable, inventory, property, plant and equipment and income-producing commercial properties.

     Standby letters of credit are conditional commitments issued by the Corporation that may require payment at a future date. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The obligations are not recorded in the Corporation’s consolidated financial statements. The Corporation’s exposure to credit loss in the event the customer does not satisfy the terms of the agreement equals the notional amount of the obligation less the value of any collateral.

     The Corporation and its subsidiaries are involved in various pending and threatened legal proceedings in which claims for monetary damages and other relief are asserted. These actions include claims brought against the Corporation and its subsidiaries where the Corporation acted as one or more of the following: a depository bank, lender, underwriter, fiduciary, financial advisor, broker or was engaged in other business activities. Although the ultimate outcome for any asserted claim cannot be predicted with certainty, the Corporation believes that it and its subsidiaries have valid defenses for all asserted claims. Reserves are established for legal claims when losses associated with the claims are judged to be probable and the amount of the loss can be reasonably estimated.

     Based on information currently available, advice of counsel, available insurance coverage and established reserves, the Corporation does not anticipate, at the present time, that the aggregate liability, if any, arising out of such legal proceedings will have a material adverse effect on the Corporation’s consolidated financial position. However, the Corporation cannot determine whether or not any claims asserted against it will have a material adverse effect on its consolidated results of operations in any future reporting period. It is possible, in the event of unexpected future developments, that the ultimate resolution of these matters, if unfavorable, may be material to the Corporation’s consolidated results of operations for a particular period.

EARNINGS PER SHARE

     Basic earnings per common share is calculated by dividing net income by the weighted average number of shares of common stock outstanding net of unvested shares of restricted stock.

     Diluted earnings per common share is calculated by dividing net income adjusted for interest expense on convertible debt by the weighted average number of shares of common stock outstanding, adjusted for the dilutive effect of potential common shares issuable for stock options, warrants, restricted shares and convertible debt. Such adjustments to the weighted average number of shares of common stock outstanding are made only when such adjustments dilute earnings per common share.

     The following table sets forth the computation of basic and diluted earnings per share (dollars in thousands, except per share data):

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2007				2006				2007				2006
Net income — basic earnings per share		$	17,624			$	17,619			$	52,616			$	50,056
Interest expense on convertible debt			5				10				17				14
Net income after assumed conversion — diluted earnings per share		$	17,629			$	17,629			$	52,633			$	50,070
Basic weighted average common shares outstanding			60,154,574				59,923,906				60,129,145				58,456,628
Net effect of dilutive stock options, warrants, restricted stock and convertible debt			485,912				603,882				503,231				496,175
Diluted weighted average common shares outstanding			60,640,486				60,527,788				60,632,376				58,952,803
Basic earnings per share		$	0.29			$	0.29			$	0.88			$	0.86
Diluted earnings per share		$	0.29			$	0.29			$	0.87			$	0.85

STOCK INCENTIVE PLANS

Restricted Stock

     The Corporation awards restricted shares of common stock to key employees under its Incentive Compensation Plans (Plans). The grant date fair value of the restricted shares is equal to the price of the Corporation’s common stock on the grant date. The Corporation has available up to 3,024,118 shares of common stock to issue under these Plans.

     Under the Plans, approximately half of the shares awarded to management are earned if the Corporation meets or exceeds certain financial performance results when compared to its peers. These performance-related shares are expensed ratably from the date that the likelihood of meeting the performance measure is probable through the end of a four-year vesting period. The service-based shares are expensed ratably over a three-year vesting period. The Corporation also issues discretionary service-based awards to certain employees that vest over five years.

     The unvested shares of restricted stock are eligible to receive cash dividends which are used to purchase additional shares of stock. The additional shares of stock are subject to forfeiture if the requisite service period is not completed or the specified performance criteria are not met. These awards are subject to certain accelerated vesting provisions upon retirement, death, disability or in the event of a change of control as defined in the Plans.

     Share-based compensation expense recognized under FAS 123R, Share-Based Payment, related to restricted stock awards was $1.3 million and $0.9 million for the nine months ended September 30, 2007 and 2006, respectively.

     The following table summarizes certain information concerning restricted stock awards:

		Nine Months Ended September 30,
		2007								2006
						Weighted								Weighted
						Average								Average
						Grant								Grant
		Shares				Price				Shares				Price
Unvested shares outstanding at beginning of period			302,264			$	18.54				296,457			$	18.52
Granted			146,885				16.13				—				—
Vested			(54,448	)			18.56				(10,996	)			15.34
Forfeited			(4,254	)			17.97				(1,398	)			18.87
Dividend reinvestment			12,701				16.74				12,363				16.49
Unvested shares outstanding at end of period			403,148				17.61				296,426				18.55

     As of September 30, 2007, there was $3.7 million of unrecognized compensation cost related to unvested restricted stock awards granted including $1.7 million that is subject to accelerated vesting under the plan’s immediate vesting upon retirement provision for awards granted prior to the adoption of FAS 123R. The components of the restricted stock awards as of September 30, 2007 are as follows (dollars in thousands):

		Service-				Performance-
		Based				Based
		Awards				Awards				Total
Unvested shares			183,090				220,058				403,148
Unrecognized compensation expense		$	1,471			$	2,232			$	3,703
Intrinsic value		$	3,028			$	3,640			$	6,668
Weighted average remaining life (in years)			2.2				2.4				2.3

Stock Options

     There were no stock options granted during the nine months ended September 30, 2007 or 2006. All outstanding stock options have been granted at prices equal to the fair market value at the date of the grant and are primarily exercisable within ten years from the date of the grant and were fully vested as of January 1, 2006.

     The following table summarizes certain information concerning stock option awards:

		Nine Months Ended September 30,
		2007								2006
						Weighted								Weighted
						Average								Average
						Exercise								Exercise
		Shares				Price				Shares				Price
Options outstanding at beginning of period			1,450,225			$	11.69				1,622,864			$	11.54
Assumed in acquisitions			—				—				224,351				11.63
Exercised			(301,456	)			11.48				(221,769	)			10.57
Options outstanding and exercisable at end of period			1,148,769				11.75				1,625,446				11.69

     The intrinsic value of outstanding and exercisable stock options at September 30, 2007 was $5.9 million.

RETIREMENT AND OTHER POSTRETIREMENT BENEFIT PLANS

     The Corporation sponsors the F.N.B. Corporation Retirement Income Plan (RIP), a qualified noncontributory defined benefit pension plan covering substantially all salaried employees. The RIP covers employees who satisfy minimum age and length of service requirements. At the end of the second quarter of 2006, the Corporation amended the RIP to provide that effective January 1, 2007, benefits are earned based on the employee’s compensation each year. The plan amendment resulted in a remeasurement that produced a net unrecognized service credit of $14.0 million, which is being amortized over the average period of future service of active employees of 13.5 years. Benefits of the RIP for service provided through December 31, 2006 are generally based on years of service and an employee’s highest compensation for five consecutive years during the employee’s last ten years of employment. The Corporation’s funding policy has been to make annual contributions to the RIP each year, if necessary, such that minimum funding requirements have been met. Based on the funded status of the plan and the 2006 plan amendment, the Corporation does not expect to make contributions to the RIP in 2007.

     The Corporation also sponsors two supplemental non-qualified retirement plans. The ERISA Excess Retirement Plan provides retirement benefits equal to the difference, if any, between the maximum benefit allowable under the Internal Revenue Code and the amount that would be provided under the RIP, if no limits were applied. The Basic Retirement Plan (BRP) is applicable to certain officers who are designated by the Board of Directors. Officers participating in the BRP receive a benefit based on a target benefit percentage based on years of service at retirement and designated tier as determined by the Board of Directors. When a participant retires, the basic benefit under the BRP is a monthly benefit equal to the target benefit percentage times the participant’s highest average monthly cash compensation during five consecutive calendar years within the last ten calendar years of employment. This monthly benefit is reduced by the monthly benefit the participant receives from Social Security and the RIP.

     The net periodic benefit cost for the defined benefit plans includes the following components (in thousands):

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2007				2006				2007				2006
Service cost		$	786			$	851			$	2,483			$	3,260
Interest cost			1,548				1,411				4,636				4,878
Expected return on plan assets			(2,141	)			(1,911	)			(6,426	)			(5,931	)
Amortization:
Unrecognized net transition asset			(23	)			(22	)			(70	)			(69	)
Unrecognized prior service (credit) cost			(272	)			(271	)			(817	)			(254	)
Unrecognized loss			222				235				653				1,038
Net periodic pension benefit cost		$	120			$	293			$	459			$	2,922

     The net periodic pension cost decreased for the nine months ended September 30, 2007, compared to the same period in 2006, due to lower service and interest costs, higher expected return on plan assets and the amortization of the unrecognized service credit primarily resulting from the RIP amendment at the end of the second quarter of 2006.

     The Corporation’s subsidiaries participate in a qualified 401(k) defined contribution plan under which eligible employees may contribute a percentage of their salary. The Corporation matches 50 percent of an eligible employee’s contribution on the first 6 percent that the employee defers. Employees are generally eligible to participate upon completing 90 days of service and having attained age 21. As an offset to the decrease in RIP benefits, beginning in the first quarter of 2007, the Corporation began making an automatic two percent contribution and may make an additional contribution of up to two percent depending on the Corporation achieving its performance goals for the plan year. As a result, the Corporation’s contribution expense of $2.3 million for the nine months ended September 30, 2007 increased by $1.1 million from $1.2 million for the nine months ended September 30, 2006.

     The Corporation sponsors a pre-Medicare eligible postretirement medical insurance plan for retirees of certain affiliates between the ages of 62 and 65. At the end of the second quarter of 2006, the Corporation amended the plan to provide that only employees who are age 60 or older as of January 1, 2007 are eligible for coverage. The postretirement plan amendment resulted in a remeasurement that produced a net unrecognized service credit of $2.7 million which is being amortized over the remaining service period of eligible employees of 1.3 years. The Corporation has no plan assets attributable to this plan and funds the benefits as claims arise. Benefit costs related to this plan are recognized in the periods in which employees provide the service for such benefits. The Corporation reserves the right to terminate the plan or make additional plan changes at any time.

     The net periodic postretirement benefit credit includes the following components (in thousands):

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2007				2006				2007				2006
Service cost		$	15			$	17			$	42			$	205
Interest cost			34				41				100				211
Amortization:
Unrecognized net transition asset			—				—				—				17
Unrecognized prior service credit			(421	)			(533	)			(1,262	)			(518	)
Net periodic postretirement benefit credit		$	(372	)		$	(475	)		$	(1,120	)		$	(85	)

     The net periodic postretirement benefit credit increased for the nine months ended September 30, 2007, compared to the same period in 2006, due to lower service and interest costs and the amortization of the unrecognized service credit resulting from the postretirement plan amendment at the end of the second quarter of 2006.

INCOME TAXES

     The Corporation adopted the provisions of FIN 48, Accounting for Uncertainty in Income Taxes, on January 1, 2007. As a result of the implementation of FIN 48, the Corporation recognized an increase of $1.2 million in the liability for unrecognized tax benefits including $0.1 million related to interest. The cumulative effect of adoption was accounted for as a decrease to the January 1, 2007 balance of retained earnings. On January 1, 2007, the Corporation’s unrecognized tax benefits totaled $3.6 million, of which $0.3 million relates to interest and $2.7 million relates to tax positions, the recognition of which would affect the Corporation’s effective income tax rate.

     Income tax expense and the effective tax rate for the three- and nine-month periods ended September 30, 2007 was favorably impacted by $0.9 million due to the successful resolution of a previously uncertain tax position in the current period. The lower effective tax rate for the three- and nine-month periods ended September 30, 2007 also reflected increases in tax-exempt investments and loans and excludable dividend income on bank owned life insurance.

     As of September 30, 2007, the liability for unrecognized tax benefits totaled $2.6 million, of which $0.2 million relates to interest and $1.9 million relates to tax positions, the recognition of which would affect the Corporation’s effective income tax rate. The Corporation recognizes potential accrued interest and penalties related to unrecognized tax benefits in income tax expense. To the extent interest is not assessed with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision.

     The Corporation files numerous consolidated and separate income tax returns in the United States federal jurisdiction and in several state jurisdictions. The Corporation is no longer subject to U.S. federal income tax examinations for years prior to 2004. However, the Corporation’s 2004 and 2005 federal tax returns are presently under examination. With limited exception, the Corporation is no longer subject to state income tax examinations for years prior to 2003 and state income tax returns for 2003 through 2006 are currently subject to examination. Management does not anticipate that federal or state examinations will result in an unfavorable material change to its financial position or results of operations. However, it is reasonably possible that a reduction in the unrecognized tax benefit of up to $0.4 million may occur in the next twelve months from the outcome of examinations and/or the expiration of statutes of limitations which would result in a reduction in income taxes.

COMPREHENSIVE INCOME

     The components of comprehensive income, net of related tax, are as follows (in thousands):

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2007				2006				2007				2006
Net income		$	17,624			$	17,619			$	52,616			$	50,056
Other comprehensive loss:
Unrealized gains (losses) on securities:
Arising during the period			409				759				(2,048	)			(162	)
Less: reclassification adjustment for gains included in net income			—				(332	)			(674	)			(908	)
Unrealized (loss) gain on swap			(342	)			(756	)			(637	)			84
Pension and postretirement amortization			(606	)			—				(1,258	)			—
Minimum pension liability adjustment			—				42				—				—
Other comprehensive loss			(539	)			(287	)			(4,617	)			(986	)
Comprehensive income		$	17,085			$	17,332			$	47,999			$	49,070

     The accumulated balances related to each component of other comprehensive income (loss) are as follows (in thousands):

September 30		2007				2006
Unrealized (losses) gains on securities		$	(99	)		$	2,426
Unrealized gain on swap			336				1,056
Unrecognized pension and postretirement obligations			(6,400	)			—
Minimum pension liability adjustment			—				(871	)
Accumulated other comprehensive (loss) income		$	(6,163	)		$	2,611

CASH FLOW INFORMATION

     Following is a summary of supplemental cash flow information (in thousands):

Nine Months Ended September 30		2007				2006
Interest paid on deposits and other borrowings		$	130,815			$	108,993
Income taxes paid			18,282				13,500
Transfers of loans to other real estate owned			2,150				3,231
Transfers of other real estate owned to loans			109				199
Summary of business acquisitions:
Fair value of tangible assets acquired			—			$	356,838
Fair value of core deposit and other intangible assets acquired			—				5,559
Fair value of liabilities assumed			—				(336,944	)
Fair value of stock issued and stock options and warrants assumed			—				(51,227	)
Net cash paid in the acquisition			—				(17,079	)
Goodwill recognized			—			$	(42,853	)

BUSINESS SEGMENTS

          The Corporation operates in four reportable business segments: Community Banking, Wealth Management, Insurance and Consumer Finance.

	•		The Community Banking segment offers services traditionally offered by full-service commercial banks, including commercial and individual demand, savings and time deposit accounts and commercial, mortgage and individual installment loans.
	•		The Wealth Management segment provides a broad range of personal and corporate fiduciary services including the administration of decedent and trust estates. In addition, it offers various alternative products, including securities brokerage and investment advisory services, mutual funds and annuities.
	•		The Insurance segment includes a full-service insurance agency offering a broad range of commercial and personal insurance through major carriers. The Insurance segment also includes a reinsurer.
	•		The Consumer Finance segment is primarily involved in making installment loans to individuals and purchasing installment sales finance contracts from retail merchants. The Consumer Finance segment activity is funded through the sale of the Corporation’s subordinated notes at Regency’s branch offices.

          The following tables provide financial information for the segments of the Corporation (in thousands). The information provided under the caption “Parent and Other” represents operations not considered to be reportable segments and/or general operating expenses of the Corporation, and includes the parent company, other non-bank subsidiaries, eliminations and adjustments which are necessary for purposes of reconciling to the consolidated amounts.

		Community				Wealth								Consumer				Parent
		Banking				Management				Insurance				Finance				and Other				Consolidated
At or for the Three Months Ended September 30, 2007
Interest income		$	86,429			$	30			$	111			$	7,967			$	(588	)		$	93,949
Interest expense			40,874				2				—				1,635				2,280				44,791
Net interest income			45,555				28				111				6,332				(2,868	)			49,158
Provision for loan losses			2,554				—				—				1,222				—				3,776
Non-interest income			13,623				3,941				2,816				495				(1,193	)			19,682
Non-interest expense			31,398				2,928				2,513				3,700				(360	)			40,179
Intangible amortization			983				6				110				—				—				1,099
Income tax expense (benefit)			6,359				371				116				687				(1,371	)			6,162
Net income (loss)			17,884				664				188				1,218				(2,330	)			17,624
Total assets			5,954,731				6,753				23,352				160,088				(20,750	)			6,124,174
Total intangibles			248,605				1,258				10,991				1,809				—				262,663