F.N.B. Annual Report 2010

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FY2010 Annual Report · F.N.B.

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F . N . B . C O R P O R A T I O N ❙ 2 0 1 0 A N N U A L R E P O R T

Annual Report

L E T T E R T O S H A R E H O L D E R S

Dear Shareholder,

I am pleased to report that F.N.B. Corporation produced

certainly affect the cost of compliance as well as the ability

solid results in 2010. For the year ended December 31,

to garner fee income. We are monitoring developments and

2010, net income was $74.7 million or $0.65 per diluted

are confident that our team will develop effective solutions

share. This more than doubled our 2009 performance

for each challenge presented.

of net income available to common shareholders of $32.8

million or $0.32 per diluted share.

One of the first regulatory challenges encountered in

2010 was the amendment of Regulation E. This

In 2010, F.N.B. Corporation, like all financial services

amendment eliminated the charging of overdraft fees for

companies, faced a difficult operating environment. A

ATM and debit card overdrafts unless the customer opted

soft economy coupled with high

to continue overdraft coverage. We discovered that once

unemployment was one
contributing factor. In addition,
the financial reform legislation

passed by Congress introduced

the most sweeping regulatory

changes in banking since the

1930s. This legislation and its

resulting regulations will

customers understood the benefits of convenient overdraft

options, the great majority opted to maintain this

service. Our success in educating customers substantially

mitigated the loss of fee income.

Despite this challenging environment, overall, 2010 was

a year of growth for F.N.B. Corporation. We achieved

significant organic growth which we supplemented with the

January 1, 2011 acquisition of Comm Bancorp, Inc., parent

company of Community Bank & Trust Company, which

is based in the Scranton area. This acquisition creates a

natural extension of our footprint into eastern Pennsylvania,

and our business potential is enhanced because of significant

opportunities related to the Marcellus Shale gas repository.

In fact, we have been identified as the financial institution

having the second greatest potential to benefit from

Marcellus Shale opportunities.

First National Bank of Pennsylvania, our largest affiliate,

had an outstanding year. The bank showed positive

trends in key business drivers including solid loan and

deposit growth, stable fee income, controlled expenses and

Stephen J. Gurgovits

Corporate Officers

Stephen J. Gurgovits
Chief Executive Officer

Vincent J. Delie, Jr.
President

Brian F. Lilly
Vice Chairman
Chief Operating Officer

Vincent J. Calabrese
Chief Financial Officer

Timothy G. Rubritz
Senior Vice President
Corporate Controller

Scott D. Free
Vice President
Treasurer

David B. Mogle
Vice President
Corporate Secretary

James G. Orie
Vice President
Chief Legal Officer

F.N.B. Corporation
Board of Directors

William B. Campbell
Chairman
F. N. B. Corporation

Henry M. Ekker
Attorney-at-Law
Ekker, Kuster, McConnell & Epstein, LLP

Philip E. Gingerich
Retired Real Estate Appraiser and Consultant

Robert B. Goldstein
Principal
CapGen Financial Advisors, LLC

Stephen J. Gurgovits
CEO
F.N.B. Corporation

Dawne S. Hickton
Vice Chairman, President and CEO
RTI International Metals, Inc.

David J. Malone
President and CEO
Gateway Financial Group, Inc.

D. Stephen Martz
Retired Banker

Peter Mortensen
Retired Chairman
F.N.B. Corporation

Harry F. Radcliffe
Investment Manager

Arthur J. Rooney II
President
Pittsburgh Steelers Sports, Inc.

John W. Rose
Principal
CapGen Financial Advisors, LLC

Stanton R. Sheetz
CEO
Sheetz, Inc.

William J. Strimbu
President
Nick Strimbu, Inc.

Earl K. Wahl, Jr.
Retired Businessman

Corporate Headquarters
F.N.B. Corporation
One F.N.B. Boulevard
Hermitage, Pennsylvania 16148
Telephone: (888) 981-6000
Website: www.fnbcorporation.com

Transfer Agent
and Registrar
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016
Telephone: (800) 368-5948

Stock Listing
The Corporation’s common
stock is traded on the
New York Stock Exchange under
the ticker symbol “FNB.”

F . N . B . C O R P O R A T I O N ❙ 2 0 1 0 A N N U A L R E P O R T

improved asset quality. The core Pennsylvania commercial

As we look ahead to 2011, we recognize obstacles that

loan portfolio increased during each quarter of the year

could result from new financial reform. The Dodd-Frank

and as of year end has achieved seven consecutive quarters

Act is expected to pressure industry revenue and elevate

of growth while many of our competitors experienced

expense. We have teams and products in place to

declining loan balances.

Deposit growth was strong and benefited from both

higher balances and new account acquisition. Clearly,

many more households and businesses are selecting

First National Bank as their bank of choice.

F.N.B.’s success is due in large part to the dedication and

expertise of a diverse team of professionals. From the

address the reform proactively. While the reform will bring

challenges, it will also create opportunities. The increased

compliance burden has set the stage for industry consolidation,

which may offer us further expansion opportunities.

In addition to capitalizing on growth and acquisition

opportunities, our organization remains committed to
the principles that have made us strong. We stand by the
underwriting and risk management practices that have

boardroom to the front line staff, our team lives out the

served us well. We are also confident in our expert team and

values that make us a uniquely successful organization.

their passion to help customers meet their financial goals.

Our success is a direct reflection of the efforts of our

2,700 employees, and I personally thank them for their

loyal service. I also thank you, our shareholders, for your

continued trust and support of F.N.B. Corporation.

Sincerely,

Stephen J. Gurgovits
Chief Executive Officer
F.N.B. Corporation

One member of our Board of Directors, Peter Mortensen,

is a prime example of this commitment. At the end of

2010, we were advised that he would not seek re-election

when his current term expires in May. Mr. Mortensen will

retire from the Board, having dedicated over 50 years of

service to the Company. During his tenure, he served in a

variety of roles including President & CEO and Chairman

of the Board. We thank Pete for his service and leadership.

In January of 2011, the Board of Directors promoted

Vincent J. Delie, Jr. to President of F.N.B. Corporation and

CEO of First National Bank of Pennsylvania. Brian F. Lilly

was promoted to Vice Chairman of F.N.B. Corporation, and

John C. Williams was named President of First National

Bank of Pennsylvania. We can count on these experienced

bankers to provide superior leadership to our Company.

Annual Report

F . N . B . C O R P O R A T I O N ❙ 2 0 1 0 A N N U A L R E P O R T

Annual Report Form 10-K

Annual Report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2010
Commission file number 001-31940

F.N.B. CORPORATION
(Exact name of registrant as specified in its charter)

Florida
(State or other jurisdiction of incorporation or organization)

25-1255406
(I.R.S. Employer Identification No.)

One F.N.B. Boulevard, Hermitage, PA
(Address of principal executive offices)
Registrant’s telephone number, including area code:

16148
(Zip Code)
724-981-6000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Name of Exchange on which Registered

Common Stock, par value $0.01 per share

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant
No n
Act. Yes ≤

is a well-known seasoned issuer, as defined in Rule 405 of the Securities

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act. Yes n

No ≤

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 ≤

No n

Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ≤

No n

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. n

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act. (Check one):

Large accelerated filer ≤

Accelerated filer n

Non-accelerated filer n

Smaller reporting company n

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes n

No ≤

The aggregate market value of the registrant’s outstanding voting common stock held by non-affiliates on June 30, 2010, determined
using a per share closing price on that date of $8.03, as quoted on the New York Stock Exchange, was $878,173,391.

As of January 31, 2011, the registrant had outstanding 120,692,555 shares of common stock.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of F.N.B. Corporation’s definitive proxy statement to be filed pursuant to Regulation 14A for the Annual Meeting of
Stockholders to be held on May 18, 2011 are incorporated by reference into Part III, items 10, 11, 12, 13 and 14, of this Annual Report
on Form 10-K. F.N.B. Corporation will file its definitive proxy statement with the Securities and Exchange Commission on or before
April 1, 2011.

INDEX

PART I

Item 1.

Business.

Item 1A.

Risk Factors.

Item 1B.

Unresolved Staff Comments.

Item 2.

Item 3.

Item 4.

PART II

Item 5.

Item 6.

Item 7.

Properties.

Legal Proceedings.

Submission of Matters to a Vote of Security Holders.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.

Selected Financial Data.

Management’s Discussion and Analysis of Financial Condition and Results of
Operations.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk.

Item 8.

Item 9.

Item 9A.

Item 9B.

PART III

Item 10.

Item 11.

Item 12.

Item 13.

Item 14.

PART IV

Financial Statements and Supplementary Data.

Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure.

Controls and Procedures.

Other Information.

Directors, Executive Officers and Corporate Governance.

Executive Compensation.

Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.

Certain Relationships and Related Transactions, and Director Independence.

Principal Accountant Fees and Services.

Item 15.

Exhibits and Financial Statement Schedules.

Signatures

Index to Exhibits

PAGE

124

125

126

127

129

PART I

Forward-Looking Statements: From time to time F.N.B. Corporation (the Corporation) has made and may continue
to make written or oral forward-looking statements with respect to the Corporation’s outlook or expectations for
earnings, revenues, expenses, capital levels, asset quality or other future financial or business performance,
strategies or expectations, or the impact of legal, regulatory or supervisory matters on the Corporation’s business
operations or performance. This Annual Report on Form 10-K (the Report) also includes forward-looking
statements. See Cautionary Statement Regarding Forward-Looking Information in Item 7 of this Report.

ITEM 1.

BUSINESS

The Corporation was formed in 1974 as a bank holding company. During 2000, the Corporation elected to
become and remains a financial holding company under the Gramm-Leach-Bliley Act of 1999 (GLB Act). The
Corporation has four reportable business segments: Community Banking, Wealth Management, Insurance and
Consumer Finance. As of December 31, 2010,
the Corporation had 223 Community Banking offices in
Pennsylvania and Ohio and 62 Consumer Finance offices in those states as well as Tennessee and Kentucky.

The Corporation, through its subsidiaries, provides a full range of financial services, principally to
consumers and small- to medium-sized businesses in its market areas. The Corporation’s business strategy focuses
primarily on providing quality, community-based financial services adapted to the needs of each of the markets it
serves. The Corporation seeks to maintain its community orientation by providing local management with certain
autonomy in decision-making, enabling them to respond to customer requests more quickly and to concentrate on
transactions within their market areas. However, while the Corporation seeks to preserve some decision-making at a
local level, it has centralized legal, loan review and underwriting, accounting, investment, audit, loan operations and
data processing functions. The centralization of these processes enables the Corporation to maintain consistent
quality of these functions and to achieve certain economies of scale.

As of December 31, 2010, the Corporation had total assets of $9.0 billion, loans of $6.1 billion and deposits
of $6.6 billion. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of
Operations,” and Item 8, “Financial Statements and Supplementary Data,” of this Report.

On January 9, 2009, the Corporation received a $100.0 million investment as part of its voluntary
participation in the United States Treasury Department’s (UST) Capital Purchase Program (CPP) implemented
pursuant to the Emergency Economic Stabilization Act (EESA) enacted on October 3, 2008.

On September 9, 2009, the Corporation utilized a portion of the proceeds of its June 16, 2009 public
offering to redeem all of the Fixed Rate Cumulative Perpetual Preferred Stock, Series C (Series C Preferred Stock)
issued to the UST under the CPP implemented pursuant to the EESA. The Corporation paid $100.3 million to the
UST to redeem the Series C Preferred Stock issued by the Corporation in connection with its participation in the
CPP. This amount includes the original investment amount of $100.0 million plus accrued unpaid dividends of
approximately $0.3 million. In addition, as a condition of its participation in the CPP, the Corporation issued to the
UST a warrant to purchase up to 1,302,083 shares of the Corporation’s common stock. However, under the terms of
the CPP, the Corporation’s June 16, 2009 public offering automatically reduced the number of the Corporation’s
shares of common stock subject to the warrant by one-half to 651,042 shares. The warrant remains outstanding and
has an exercise price of $11.52 per share.

Business Segments

In addition to the following information relating to the Corporation’s business segments, information is
contained in the Business Segments footnote in the Notes to Consolidated Financial Statements, which is included
in Item 8 of this Report. As of December 31, 2010, the Community Banking segment consisted of a regional
community bank. The Wealth Management segment, as of that date, consisted of a trust company, a registered
investment advisor and a subsidiary that offered broker-dealer services through a third party networking arrange-
ment with a non-affiliated licensed broker-dealer entity. The Insurance segment consisted of an insurance agency
and a reinsurer as of that date. The Consumer Finance segment consisted of a multi-state consumer finance
company as of that date.

Community Banking

The Corporation’s Community Banking segment consists of First National Bank of Pennsylvania
(FNBPA), which 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 goals of Community Banking are to generate high quality, profitable revenue growth through
increased business with its current customers, attract new customer relationships through FNBPA’s current
branches and expand into new and existing markets through de novo branch openings, acquisitions and the
establishment of loan production offices. Consistent with this strategy, on January 1, 2011, the Corporation
completed its acquisition of Comm Bancorp, Inc (CBI) and during 2008, the Corporation completed acquisitions of
Iron and Glass Bancorp, Inc. (IRGB) and Omega Financial Corporation (Omega). For information pertaining to
these acquisitions, see the Mergers and Acquisitions footnote in the Notes to Consolidated Financial Statements,
which is included in Item 8 of this Report. In addition, the Corporation considers Community Banking a
fundamental source of revenue opportunity through the cross-selling of products and services offered by the
Corporation’s other business segments.

As of December 31, 2010, the Corporation operates its Community Banking business through a network of
223 branches in Pennsylvania and Ohio. Community Banking also has two commercial loan offices in Florida with
the primary focus of managing the Florida loan portfolio originated in prior years.

The lending philosophy of Community Banking is to establish high quality customer relationships while
minimizing credit losses by following strict credit approval standards (which include independent analysis of
realizable collateral value), diversifying its loan portfolio by industry and borrower and conducting ongoing review
and management of the loan portfolio. Commercial loans are generally made to established businesses within the
geographic market areas served by Community Banking.

No material portion of the loans or deposits of Community Banking has been obtained from a single
customer or small group of customers, and the loss of any one customer’s loans or deposits or a small group of
customers’ loans or deposits by Community Banking would not have a material adverse effect on the Community
Banking segment or on the Corporation. The substantial majority of the loans and deposits have been generated
within the geographic market areas in which Community Banking operates.

Wealth Management

The Corporation’s Wealth Management segment delivers comprehensive wealth management services to
individuals, corporations and retirement funds, as well as existing customers of Community Banking, located
primarily within the Corporation’s geographic markets.

The Corporation’s Wealth Management operations are conducted through three subsidiaries of FNBPA.
First National Trust Company (FNTC), provides a broad range of personal and corporate fiduciary services,

including the administration of decedent and trust estates. As of December 31, 2010, the fair value of trust assets
under management was approximately $2.3 billion. FNTC is required to maintain certain minimum capitalization
levels in accordance with regulatory requirements. FNTC periodically measures its capital position to ensure all
minimum capitalization levels are maintained.

The Corporation’s Wealth Management segment also includes two other subsidiaries. First National
Investment Services Company, LLC offers a broad array of investment products and services for customers of
Wealth Management through a networking relationship with a third-party licensed brokerage firm. F.N.B.
Investment Advisors, Inc. (Investment Advisors), an investment advisor registered with the Securities and
Exchange Commission (SEC), offers customers of Wealth Management comprehensive investment programs
featuring mutual funds, annuities, stocks and bonds.

No material portion of the business of Wealth Management has been obtained from a single customer or
small group of customers, and the loss of any one customer’s business or the business of a small group of customers
by Wealth Management would not have a material adverse effect on the Wealth Management segment or on the
Corporation.

Insurance

The Corporation’s Insurance segment operates principally through First National Insurance Agency, LLC
(FNIA), which is a subsidiary of the Corporation. FNIA is a full-service insurance brokerage agency offering
numerous lines of commercial and personal insurance through major carriers to businesses and individuals
primarily within the Corporation’s geographic markets. The goal of FNIA is to grow revenue through cross-
selling to existing clients of Community Banking and to gain new clients through its own channels.

The Corporation’s Insurance segment also includes a reinsurance subsidiary, Penn-Ohio Life Insurance
Company (Penn-Ohio). Penn-Ohio underwrites, as a reinsurer, credit life and accident and health insurance sold by
the Corporation’s lending subsidiaries. Additionally, FNBPA owns a direct subsidiary, First National Corporation,
which offers title insurance products.

No material portion of the business of Insurance has been obtained from a single customer or small group
of customers, and the loss of any one customer’s business or the business of a small group of customers by Insurance
would not have a material adverse effect on the Insurance segment or on the Corporation.

Consumer Finance

The Corporation’s Consumer Finance segment operates through its subsidiary, Regency Finance Company
(Regency), which is involved principally in making personal installment loans to individuals and purchasing
installment sales finance contracts from retail merchants. Such activity is primarily funded through the sale of the
Corporation’s subordinated notes at Regency’s branch offices. The Consumer Finance segment operates in
Pennsylvania, Ohio, Tennessee and Kentucky.

No material portion of the business of Consumer Finance has been obtained from a single customer or
small group of customers, and the loss of any one customer’s business or the business of a small group of customers
by Consumer Finance would not have a material adverse effect on the Consumer Finance segment or on the
Corporation.

Other

The Corporation also has seven other subsidiaries. F.N.B. Statutory Trust I, F.N.B. Statutory Trust II,
Omega Financial Capital Trust I and Sun Bancorp Statutory Trust I issue trust preferred securities (TPS) to third-
party investors. Regency Consumer Financial Services, Inc. and FNB Consumer Financial Services, Inc. are the
general partner and limited partner, respectively, of FNB Financial Services, LP, a company established to issue,

administer and repay the subordinated notes through which loans in the Consumer Finance segment are funded.
F.N.B. Capital Corporation, LLC (FNBCC), a merchant banking subsidiary, offers mezzanine financing options for
small- to medium-sized businesses that need financial assistance beyond the parameters of typical commercial bank
lending products. Additionally, Bank Capital Services, LLC, a subsidiary of FNBPA, offers commercial leasing
services to customers in need of new or used equipment. Certain financial information concerning these subsid-
iaries, along with the parent company and intercompany eliminations, are included in the “Parent and Other”
category in the Business Segments footnote in the Notes to Consolidated Financial Statements, which is included in
Item 8 of this Report.

Market Area and Competition

The Corporation primarily operates in Pennsylvania and northeastern Ohio. This area is served by several
major interstate highways and is located at the approximate midpoint between New York City and Chicago. The
primary market area served by the Corporation also extends to the Great Lakes shipping port of Erie, the
Pennsylvania state capital of Harrisburg and the Pittsburgh International Airport. The Corporation also has two
commercial loan offices in Florida. In addition to Pennsylvania and Ohio, the Corporation’s Consumer Finance
segment also operates in northern and central Tennessee and western and central Kentucky.

The Corporation’s subsidiaries compete for deposits, loans and financial services business with a large
number of other financial institutions, such as commercial banks, savings banks, savings and loan associations,
credit life insurance companies, mortgage banking companies, consumer finance companies, credit unions and
commercial finance and leasing companies, many of which have greater resources than the Corporation. In
providing wealth and asset management services, as well as insurance brokerage and merchant banking products
and services, the Corporation’s subsidiaries compete with many other financial services firms, brokerage firms,
mutual fund complexes, investment management firms, merchant and investment banking firms, trust and fiduciary
service providers and insurance agencies.

In Regency’s market areas of Pennsylvania, Ohio, Tennessee and Kentucky, its active competitors include
banks, credit unions and national, regional and local consumer finance companies, some of which have substantially
greater resources than that of Regency. The ready availability of consumer credit through charge accounts and credit
cards constitutes additional competition. In this market area, competition is based on the rates of interest charged for
loans, the rates of interest paid to obtain funds and the availability of customer services.

The ability to access and use technology is an increasingly important competitive factor in the financial
services industry. Technology is not only important with respect to delivery of financial services and protecting the
security of customer information, but also in processing information. The Corporation and each of its subsidiaries
must continually make technological investments to remain competitive in the financial services industry.

Mergers and Acquisitions

See the Mergers and Acquisitions footnote in the Notes to Consolidated Financial Statements, which is

included in Item 8 of this Report.

Employees

As of January 31, 2011, the Corporation and its subsidiaries had 2,241 full-time and 477 part-time

employees. Management of the Corporation considers its relationship with its employees to be satisfactory.

Government Supervision and Regulation

The following summary sets forth certain of the material elements of the regulatory framework applicable
to bank holding companies and financial holding companies and their subsidiaries and to companies engaged in
securities and insurance activities and provides certain specific information about the Corporation. The bank

regulatory framework is intended primarily for the protection of depositors through the federal deposit insurance
guarantee, and not for the protection of security holders. Numerous laws and regulations govern the operations of
financial services institutions and their holding companies. To the extent that the following information describes
statutory and regulatory provisions, it is qualified in its entirety by express reference to each of the particular
statutory and regulatory provisions. A change in applicable statutes, regulations or regulatory policy may have a
material effect on the business of the Corporation.

Many aspects of the Corporation’s business are subject to rigorous regulation by the U.S. federal and state
regulatory agencies and securities exchanges and by non-government agencies or regulatory bodies. Certain of the
Corporation’s public disclosure, internal control environment and corporate governance principles are subject to the
Sarbanes-Oxley Act of 2002 (SOX) and related regulations and rules of the SEC and the New York Stock Exchange,
Inc. (NYSE). New laws or regulations or changes to existing laws and regulations (including changes in
interpretation or enforcement) could materially adversely affect the Corporation’s financial condition or results
of operations. As a financial institution, to the extent that different regulatory systems impose overlapping or
inconsistent requirements on the conduct of the Corporation’s business, it faces increased complexity and additional
costs in its compliance efforts.

General

The Corporation is a legal entity separate and distinct from its subsidiaries. As a financial holding
company and a bank holding company, the Corporation is regulated under the Bank Holding Company Act of 1956,
as amended (BHC Act), and is subject to inspection, examination and supervision by the Board of Governors of the
Federal Reserve System (FRB). The Corporation is also subject to regulation by the SEC as a result of the
Corporation’s status as a public company and due to the nature of the business activities of certain of the
Corporation’s subsidiaries. The Corporation’s common stock is listed on the NYSE under the trading symbol
“FNB” and the Corporation is subject to the listed company rules of the NYSE.

The Corporation’s subsidiary bank (FNBPA) and trust company (FNTC) are organized as national banking
associations, which are subject to regulation, supervision and examination by the Office of the Comptroller of the
Currency (OCC), which is a bureau of the UST. FNBPA is also subject to certain regulatory requirements of the
Federal Deposit Insurance Corporation (FDIC), the FRB and other federal and state regulatory agencies, including
requirements to maintain reserves against deposits, restrictions on the types and amounts of loans that may be
granted and the interest that may be charged thereon, inter-affiliate transactions, limitations on the types of
investments that may be made, activities that may be engaged in and types of services that may be offered. In
addition to banking laws, regulations and regulatory agencies, the Corporation and its subsidiaries are subject to
various other laws and regulations and supervision and examination by other regulatory agencies, all of which
directly or indirectly affect the operations and management of the Corporation and its ability to make distributions
to its stockholders. If the Corporation fails to comply with these or other applicable laws and regulations, it may be
subject to civil monetary penalties, imposition of cease and desist orders or other written directives, removal of
management and, in certain cases, criminal penalties.

As a result of the GLB Act and subject to the restrictions and limitations imposed by the “Volcker Rule” of
the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) discussed below,
which repealed or modified a number of significant statutory provisions, including those of the Glass-Steagall Act
and the BHC Act which imposed restrictions on banking organizations’ ability to engage in certain types of business
activities, bank holding companies such as the Corporation now have broad authority to engage in activities that are
financial in nature or incidental to such financial activity, including insurance underwriting and brokerage;
merchant banking; securities underwriting, dealing and market-making; real estate development; and such
additional activities as the FRB in consultation with the Secretary of the UST determines to be financial in nature
or incidental thereto. A bank holding company may engage in these activities directly or through subsidiaries by
qualifying as a “financial holding company.” A financial holding company may engage directly or indirectly in
activities considered financial in nature, either de novo or by acquisition, provided the financial holding company
gives the FRB after-the-fact notice of the new activities. The GLB Act also permits national banks, such as FNBPA,

to engage in activities considered financial in nature through a financial subsidiary, subject to certain conditions and
limitations and with the approval of the OCC.

As a regulated financial holding company, the Corporation’s relationships and good standing with its
regulators are of fundamental importance to the continuation and growth of the Corporation’s businesses. The FRB,
OCC, FDIC and SEC have broad enforcement powers and authority to approve, deny or refuse to act upon
applications or notices of the Corporation or its subsidiaries to conduct new activities, acquire or divest businesses
or assets or reconfigure existing operations. In addition, the Corporation, FNBPA and FNTC are subject to
examination by various regulators, which results in examination reports (which are not publicly available) and
ratings that can impact the conduct and growth of the Corporation’s businesses. These examinations consider not
only safety and soundness principles, but also compliance with applicable laws and regulations, including bank
secrecy and anti-money laundering requirements, loan quality and administration, capital levels, asset quality and
risk management ability and performance, earnings, liquidity and various other factors, including, but not limited
to, community reinvestment. An examination downgrade by any of the Corporation’s federal bank regulators could
potentially result in the imposition of significant limitations on the activities and growth of the Corporation and its
subsidiaries.

The FRB is the “umbrella” regulator of a financial holding company. In addition, a financial holding
company’s operating entities, such as its subsidiary broker-dealers, investment managers, merchant banking
operations, investment companies, insurance companies and banks, are subject to the jurisdiction of various federal
and state “functional” regulators.

There are numerous laws, regulations and rules governing the activities of financial institutions and bank
holding companies. The following discussion is general in nature and seeks to highlight some of the more
significant of these regulatory requirements, but does not purport to be complete or to describe all of the laws and
regulations that apply to the Corporation and its subsidiaries.

Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

On July 21, 2010, the Dodd-Frank Act became law. The Dodd-Frank Act will have a broad impact on the
financial services industry, including significant regulatory and compliance changes including, among other things,

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enhanced authority over troubled and failing banks and their holding companies;
increased capital and liquidity requirements;
increased regulatory examination fees;
increases to the assessments banks must pay the FDIC for federal deposit insurance; and
specific provisions designed to improve supervision and oversight of, and strengthening safety and
soundness by imposing restrictions and limitations on the scope and type of banking and financial
activities.

In addition, the Dodd-Frank Act establishes a new framework for systemic risk oversight within the
financial system that will be enforced by new and existing federal regulatory agencies, including the Financial
Stability Oversight Council (FSOC), FRB, OCC, FDIC and the Consumer Financial Protection Bureau (CFPB).
The following description briefly summarizes certain impacts of the Dodd-Frank Act on the operations and
activities, both currently and prospectively, of the Corporation and its subsidiaries.

Deposit Insurance. The Dodd-Frank Act makes permanent the $250,000 deposit insurance limit for
insured deposits. Amendments to the Federal Deposit Insurance Act also revise the assessment base against which
an insured depository institution’s deposit insurance premiums paid to the FDIC’s Deposit Insurance Fund (DIF)
will be calculated. Under the amendments, the FDIC assessment base will no longer be the institution’s deposit
base, but rather its average consolidated total assets less its average equity. The Dodd-Frank Act also changes the
minimum designated reserve ratio of the DIF, increasing the minimum from 1.15% to 1.35% of the estimated
amount of total insured deposits, and eliminating the requirement that the FDIC pay dividends to depository

institutions when the reserve ratio exceeds certain thresholds by September 30, 2020. Several of these provisions
may increase the FDIC deposit insurance premiums FNBPA pays.

Interest on Demand Deposits. The Dodd-Frank Act also provides that, effective one year after the date of
its enactment, depository institutions may pay interest on demand deposits. Although the Corporation has not
determined the ultimate impact of this aspect of the legislation, the Corporation expects interest costs associated
with demand deposits to increase.

Trust Preferred Securities. The Dodd-Frank Act prohibits bank holding companies from including in
their regulatory Tier 1 capital hybrid debt and equity securities issued on or after May 19, 2010. Among the hybrid
debt and equity securities included in this prohibition are TPS, which the Corporation has issued in the past in order
to raise additional Tier 1 capital and otherwise improve its regulatory capital ratios. Although the Corporation may
continue to include its existing TPS as Tier 1 capital, the prohibition on the use of these securities as Tier 1 capital
may limit the Corporation’s ability to raise capital in the future.

The Consumer Financial Protection Bureau. The Dodd-Frank Act creates a new, independent CFPB
within the FRB. The CFPB’s responsibility is to establish, implement and enforce rules and regulations under
certain federal consumer protection laws with respect to the conduct of providers of certain consumer financial
products and services. The CFPB has rulemaking authority over many of the statutes that govern products and
services banks offer to consumers. In addition, the Dodd-Frank Act permits states to adopt consumer protection
laws and regulations that are more stringent than those regulations the CFPB will promulgate and state attorneys
general will have the authority to enforce consumer protection rules the CFPB adopts against state-chartered
institutions and national banks. Compliance with any such new regulations established by the CFPB and/or states
could reduce the Corporation’s revenue, increase its cost of operations, and could limit its ability to expand into
certain products and services.

Debit Card Interchange Fees. The Dodd-Frank Act gives the FRB the authority to establish rules
regarding interchange fees charged for electronic debit transactions by payment card issuers having assets over
$10 billion and to enforce a new statutory requirement that such fees be reasonable and proportional to the actual
cost of a transaction to the issuer. While the Corporation is not subject to these rules so long as it does not have assets
in excess of $10 billion, the Corporation’s activities as a debit card issuer may nevertheless be indirectly impacted
by the change in the applicable debit card market caused by these regulations, which may lead the Corporation to
match any new lower fee structure implemented by larger financial institutions to remain competitive. Such lower
fees could impact the revenue the Corporation earns from debit interchange fees, which were equal to $15.2 million
for 2010. If the Corporation’s asset growth causes its total assets to exceed $10 billion, revenue earned from
interchange fees could decrease significantly.

Increased Capital Standards and Enhanced Supervision. The Dodd-Frank Act requires the federal
banking agencies to establish minimum leverage and risk-based capital requirements for banks and bank holding
companies. These new standards will be no less strict than existing regulatory capital and leverage standards
applicable to insured depository institutions and may, in fact, become higher once the agencies promulgate the new
standards. Compliance with heightened capital standards may reduce the Corporation’s ability to generate or
originate revenue-producing assets and thereby restrict revenue generation from banking and non-banking
operations.

Transactions with Affiliates. The Dodd-Frank Act enhances the requirements for certain transactions
with affiliates under Section 23A and 23B of the Federal Reserve Act, including an expansion of the definition of
“covered transactions,” and an increase in the amount of time for which collateral requirements regarding covered
transactions must be maintained.

Transactions with Insiders. The Dodd-Frank Act expands insider transaction limitations through the
strengthening of loan restrictions to insiders and the expansion of the types of transactions subject to the various
limits, including derivative transactions, repurchase agreements, reverse repurchase agreements and securities

lending and borrowing transactions. The Dodd-Frank Act also places restrictions on certain asset sales to and from
an insider of an institution, including requirements that such sales be on market terms and, in certain circumstances,
receive the approval of the institution’s board of directors.

Enhanced Lending Limits. The Dodd-Frank Act strengthens the existing limits on a depository
institution’s credit exposure to one borrower. Federal banking law currently limits a national bank’s ability to
extend credit to one person or group of related persons to an amount that does not exceed certain thresholds. The
Dodd-Frank Act expands the scope of these restrictions to include credit exposure arising from derivative
transactions, repurchase agreements and securities lending and borrowing transactions. It also will eventually
prohibit state-chartered banks from engaging in derivative transactions unless the state lending limit laws take into
account credit exposure to such transactions.

Corporate Governance. The Dodd-Frank Act addresses many corporate governance and executive
compensation matters that will affect most U.S. publicly traded companies, including the Corporation. The Dodd-
Frank Act:

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grants shareholders of U.S. publicly traded companies an advisory vote on executive compensation;
enhances independence requirements for compensation committee members;
requires companies listed on national securities exchanges to adopt clawback policies for incentive-
based compensation plans applicable to executive officers; and
provides the SEC with authority to adopt proxy access rules that would allow shareholders of
publicly traded companies to nominate candidates for election as directors and require such
companies to include such nominees in its proxy materials.

The Dodd-Frank Act also restricts proprietary trading by banks, bank holding companies and others, and
their acquisition and retention of ownership interests in and sponsorship of hedge funds and private equity funds.
This restriction is common referred to as the “Volcker Rule.” There is an exception in the Volcker Rule to allow a
bank to organize and offer hedge funds and private equity funds to customers if certain conditions are met. These
conditions include, among others, requirements that the bank provides bona fide investment advisory services; the
funds are organized only in connection with such services and to customers of such services; the bank does not have
more than a de minimis interest in the funds, limited to a 3% ownership interest in any single fund and an aggregated
investment in all funds of 3% of tier 1 capital; the bank does not guarantee the obligations or performance of the
funds; and no director or employee of the bank has an ownership interest in the fund unless he or she provides
services directly to the funds. Further details on the scope of the Volcker Rule and its exceptions are expected to be
defined in regulations due to be issued later in 2011.

Many of the requirements the Dodd-Frank Act authorizes will be implemented over time and most will be
subject to implementing regulations over the course of several years. While the Corporation’s current assessment is
that the Dodd-Frank Act will not have a material effect on the Corporation, given the uncertainty associated with the
manner in which the federal banking agencies may implement the provisions of the Dodd-Frank Act, the full extent
of the impact such requirements may have on the Corporation’s operations and the financial services markets is
unclear at this time. The changes resulting from the Dodd-Frank Act may impact the Corporation’s profitability,
require changes to certain of the Corporation’s business practices, including limitations on fee income opportu-
nities, impose more stringent capital, liquidity and leverage requirements upon the Corporation or otherwise
adversely affect the Corporation’s business. These changes may also require the Corporation to invest significant
management attention and resources to evaluate and make any changes necessary to comply with new statutory and
regulatory requirements. While the Corporation cannot predict what effect any presently contemplated or future
changes in the laws or regulations or their interpretations would have on the Corporation, it does not believe that
these changes will have a material adverse effect on the Corporation.

Capital and Operational Requirements

The FRB, OCC and FDIC issued substantially similar risk-based and leverage capital guidelines appli-
cable to U.S. banking organizations. In addition, these regulatory agencies may from time to time require that a
banking organization maintain capital above the minimum levels, due to its financial condition or actual or
anticipated growth.

The FRB’s risk-based guidelines are based on a three-tier capital framework. Tier 1 capital includes
common stockholders’ equity and qualifying preferred stock, less goodwill and other adjustments. Tier 2 capital
consists of preferred stock not qualifying as tier 1 capital, mandatory convertible debt, limited amounts of
subordinated debt, other qualifying term debt and the allowance for loan losses of up to 1.25 percent of risk-
weighted assets. Tier 3 capital includes subordinated debt that is unsecured, fully paid, has an original maturity of at
least two years, is not redeemable before maturity without prior approval by the FRB and includes a lock-in clause
precluding payment of either interest or principal if the payment would cause the issuing bank’s risk-based capital
ratio to fall or remain below the required minimum.

The Corporation, like other bank holding companies, currently is required to maintain tier 1 capital and
total capital (the sum of tier 1, tier 2 and tier 3 capital) equal to at least 4.0% and 8.0%, respectively, of its total risk-
weighted assets (including various off-balance sheet items). Risk-based capital ratios are calculated by dividing
tier 1 and total capital by risk-weighted assets. Assets and off-balance sheet exposures are assigned to one of four
categories of risk-weights, based primarily on relative credit risk. The risk-based capital standards are designed to
make regulatory capital requirements more sensitive to differences in credit and market risk profiles among banks
and financial holding companies, to account for off-balance sheet exposure, and to minimize disincentives for
holding liquid assets. Assets and off-balance sheet items are assigned to broad risk categories, each with appropriate
weights. The resulting capital ratios represent capital as a percentage of total risk-weighted assets and off-balance
sheet items. At December 31, 2010, the Corporation’s tier 1 and total capital ratios under these guidelines were
11.38% and 12.90%, respectively. At December 31, 2010, the Corporation had $199.0 million of capital securities
that qualified as tier 1 capital and $17.0 million of subordinated debt that qualified as tier 2 capital.

In addition, the FRB has established minimum leverage ratio guidelines for bank holding companies.
These guidelines currently provide for a minimum ratio of tier 1 capital to average total assets, less goodwill and
certain other intangible assets (the leverage ratio), of 3.0% for bank holding companies that meet certain specified
criteria, including the highest regulatory rating. All other bank holding companies generally are required to
maintain a leverage ratio of at least 4.0%. The guidelines also provide that bank holding companies experiencing
internal growth or making acquisitions will be expected to maintain strong capital positions substantially above the
minimum supervisory levels without significant reliance on intangible assets. Further, the FRB has indicated that it
will consider a “tangible tier 1 capital leverage ratio” (deducting all intangibles) and all other indicators of capital
strength in evaluating proposals for expansion or new activities. The Corporation’s leverage ratio at December 31,
2010 was 8.69%.

Increased Capital Standards and Enhanced Supervision.

The Dodd-Frank Act imposes a series of more onerous capital requirements on financial companies and
other companies, including swap dealers and nonbank financial companies that are determined to be of systemic
risk. Compliance with heightened capital standards may reduce the Corporation’s ability to generate or originate
revenue-producing assets and thereby restrict revenue generation from banking and non-banking operations.

The Dodd-Frank Act’s new regulatory capital requirements are intended to ensure that “financial
institutions hold sufficient capital to absorb losses during future periods of financial distress.” The Dodd-Frank
Act directs federal banking agencies to establish minimum leverage and risk-based capital requirements on a
consolidated basis for insured depository institutions, their holding companies and nonbank financial companies
that have been determined to be systemically significant by the FSOC.

The Dodd-Frank Act requires that, at a minimum, regulators apply to bank holding companies and other
systemically significant nonbank financial companies the same capital and risk standards that such regulators apply
to banks insured by the FDIC. An important consequence of this requirement is that hybrid capital instruments, such
as TPS, will no longer be included in the definition of tier 1 capital. Tier 1 capital includes common stock, retained
earnings, certain types of preferred stock and TPS. Since TPS are not currently counted as tier 1 capital for insured
banks, the effect of the Dodd-Frank Act is that such securities will no longer be included as tier 1 capital for bank
holding companies. Excluding TPS from tier 1 capital could significantly decrease regulatory capital levels of bank
holding companies that have traditionally relied on TPS to meet capital requirements. The Dodd-Frank Act capital
requirements may force bank holding companies to raise other forms of tier 1 capital, for example, by issuing
perpetual non-cumulative preferred stock. Since common stock must typically constitute at least 50 percent of tier 1
capital, many bank holding companies and systemically significant nonbank companies may also be forced to
consider dilutive follow-on offerings of common stock.

In order to ease the compliance burden associated with the new capital requirements, the Dodd-Frank Act
provides a number of exceptions and phase-in periods. For bank holding companies and systemically important
nonbank financial companies, any “regulatory capital deductions” for debt or equity issued before May 19, 2010
will be phased in incrementally from January 1, 2013 to January 1, 2016. The term “regulatory capital deductions”
refers to the exclusion of hybrid capital from Tier 1 capital. The ultimate impact of these new capital and liquidity
standards on the Corporation cannot be determined at this time and will depend on a number of factors, including
the treatment and implementation by the U.S. banking regulators.

Prompt Corrective Action

The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA), among other things,
classifies insured depository institutions into five capital categories (well-capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically undercapitalized) and requires the respective federal
regulatory agencies to implement systems for “prompt corrective action” for insured depository institutions that do
not meet minimum capital requirements within such categories. FDICIA imposes progressively more restrictive
constraints on operations, management and capital distributions, depending on the category in which an institution
is classified. Failure to meet the capital guidelines could also subject a banking institution to capital-raising
requirements, restrictions on its business and a variety of enforcement remedies, including the termination of
deposit insurance by the FDIC, and in certain circumstances the appointment of a conservator or receiver. An
“undercapitalized” bank must develop a capital restoration plan and its parent holding company must guarantee that
bank’s compliance with the plan. The liability of the parent holding company under any such guarantee is limited to
the lesser of five percent of the bank’s assets at the time it became “undercapitalized” or the amount needed to
comply with the plan. Furthermore, in the event of the bankruptcy of the parent holding company, the obligation
under such guarantee would take priority over the parent’s general unsecured creditors. In addition, FDICIA
requires the various regulatory agencies to prescribe certain non-capital standards for safety and soundness relating
generally to operations and management, asset quality and executive compensation and permits regulatory action
against a financial institution that does not meet such standards.

The various regulatory agencies have adopted substantially similar regulations that define the five capital
categories identified by FDICIA, using the total risk-based capital, tier 1 risk-based capital and leverage capital
ratios as the relevant capital measures. Such regulations establish various degrees of corrective action to be taken
when an institution is considered undercapitalized. Under the regulations, a “well-capitalized” institution must have
a tier 1 risk-based capital ratio of at least 6.0%, a total risk-based capital ratio of at least 10.0% and a leverage ratio
of at least 5.0% and not be subject to a capital directive order. Under these guidelines, FNBPA was considered well-
capitalized as of December 31, 2010.

When determining the adequacy of an institution’s capital, federal regulators must also take into
consideration (a) concentrations of credit risk; (b) interest rate risk (when the interest rate sensitivity of an
institution’s assets does not match the sensitivity of its liabilities or its off-balance sheet position) and (c) risks from
non-traditional activities, as well as an institution’s ability to manage those risks. This evaluation is made as part of

the institution’s regular safety and soundness examination. In addition, the Corporation, and any bank with
significant trading activity, must incorporate a measure for market risk in their regulatory capital calculations.

Expanded FDIC Powers Upon Insolvency of Insured Depository Institutions

The Dodd-Frank Act provides a mechanism for appointing the FDIC as receiver for a financial company
like the Corporation if the failure of the company and its liquidation under the Bankruptcy Code or other insolvency
procedures would pose a significant risk to the financial stability of the U.S.

If appointed as receiver for a failing systemic financial company, the FDIC has broad authority under the
Dodd-Frank Act and the Orderly Liquidation Authority it created to operate or liquidate the business, sell the assets,
and resolve the liabilities of the company immediately after its appointment as receiver or as soon as conditions
make this appropriate. This authority will enable the FDIC to act immediately to sell assets of the company to
another entity or, if that is not possible, to create a bridge financial company to maintain critical functions as the
entity is wound down. In receiverships of insured depository institutions, the ability to act quickly and decisively has
been found to reduce losses to creditors while maintaining key banking services for depositors and businesses. The
FDIC will similarly be able to act quickly in resolving non-bank financial companies under the Dodd-Frank Act.

On August 10, 2010, the FDIC created the new Office of Complex Financial Institutions to help implement
its expanded responsibilities. The FDIC is in the process of developing rules for the implementation of its new
receivership authority.

Subject to these new rules, if the FDIC is appointed the conservator or receiver of an insured depository

institution upon its insolvency or in certain other events, the FDIC has the power to:

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transfer any of the depository institution’s assets and liabilities to a new obligor without the approval
of the depository institution’s creditors;
enforce the terms of the depository institution’s contracts pursuant to their terms; and
repudiate or disaffirm any contract or lease to which the depository institution is a party, the
performance of which is determined by the FDIC to be burdensome and the disaffirmation or
repudiation of which is determined by the FDIC to promote the orderly administration of the
depository institution. Also, under applicable law, the claims of a receiver of an insured depository
institution for administrative expense and claims of holders of U.S. deposit liabilities (including the
FDIC, as subrogee of the depositors) have priority over the claims of other unsecured creditors of the
institution in the event of the liquidation or other resolution of the institution. As a result, whether or
not the FDIC would ever seek to repudiate any obligations held by public note holders, such persons
would be treated differently from, and could receive, if anything, substantially less than the
depositors of FNBPA.

Interstate Banking

Under the BHC Act, bank holding companies, including those that are also financial holding companies,
are required to obtain the prior approval of the FRB before acquiring more than five percent of any class of voting
stock of any non-affiliated bank. Pursuant to the Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994 (Interstate Banking Act), a bank holding company may acquire banks located in states other than its home
state without regard to the permissibility of such acquisitions under state law, but subject to any state requirement
that the bank has been organized and operating for a minimum period of time, not to exceed five years, and the
requirement that the bank holding company, after the proposed acquisition, controls no more than 10 percent of the
total amount of deposits of insured depository institutions in the U.S. and no more than 30 percent or such lesser or
greater amount set by state law of such deposits in that state.

The Dodd-Frank Act confers on state and national banks the ability to branch de novo into any state,
provided that the law of that state permits a bank chartered establishment in that state to establish a branch at that
same location.

Community Reinvestment Act

The Community Reinvestment Act of 1977 (CRA) requires depository institutions to assist in meeting the
credit needs of their market areas consistent with safe and sound banking practices. Under the CRA, each depository
institution is required to help meet the credit needs of its market areas by, among other things, providing credit to
low- and moderate-income individuals and communities. Depository institutions are periodically examined for
compliance with the CRA and are assigned ratings. In order for a financial holding company to commence any new
activity permitted by the BHC Act, or to acquire any company engaged in any new activity permitted by the
BHC Act, each insured depository institution subsidiary of the financial holding company must have received a
rating of at least “satisfactory” in its most recent examination under the CRA. Furthermore, banking regulators take
into account CRA ratings when considering approval of a proposed transaction.

Financial Privacy

In accordance with the GLB Act, federal banking regulators adopted rules that limit the ability of banks
and other financial institutions to disclose non-public information about consumers to nonaffiliated third parties.
These limitations require disclosure of privacy policies to consumers and, in some circumstances, allow consumers
to prevent disclosure of certain personal information to a nonaffiliated third party. The privacy provisions of the
GLB Act affect how consumer information is transmitted through diversified financial companies and conveyed to
outside vendors.

Anti-Money Laundering Initiatives and the USA Patriot Act

A major focus of governmental policy on financial institutions in recent years has been aimed at combating
money laundering and terrorist financing. The USA Patriot Act of 2001 (USA Patriot Act) substantially broadened
the scope of U.S. anti-money laundering laws and regulations by imposing significant new compliance and due
diligence obligations, creating new crimes and penalties and expanding the extra-territorial jurisdiction of the
U.S. The UST has issued a number of regulations that apply various requirements of the USA Patriot Act to
financial institutions such as FNBPA. These regulations require financial institutions to maintain appropriate
policies, procedures and controls to detect, prevent and report money laundering and terrorist financing and to
verify the identity of their customers. Failure of a financial institution to maintain and implement adequate
programs to combat money laundering and terrorist financing, or to comply with all of the relevant laws or
regulations, could have serious legal and reputational consequences for the institution.

Office of Foreign Assets Control Regulation

The U.S. has instituted economic sanctions which affect transactions with designated foreign countries,
nationals and others. These are typically known as the “OFAC rules” because they are administered by the
UST Office of Foreign Assets Control (OFAC). The OFAC-administered sanctions target countries in various ways.
Generally, however, they contain one or more of the following elements: (i) restrictions on trade with or investment
in a sanctioned country, including prohibitions against direct or indirect imports from and exports to a sanctioned
country, and prohibitions on “U.S. persons” engaging in financial transactions which relate to investments in, or
providing investment-related advice or assistance to, a sanctioned country; and (ii) a blocking of assets in which the
government or specially designated nationals of the sanctioned country have an interest, by prohibiting transfers of
property subject to U.S. jurisdiction (including property in the possession or control of U.S. persons). Blocked
assets (e.g., property and bank deposits) cannot be paid out, withdrawn, set off or transferred in any manner without
a license from OFAC. Failure to comply with these sanctions could have serious legal and reputational conse-
quences for the institution.

Consumer Protection Statutes and Regulations

In addition to the consumer regulations that may be issued by the CFPB pursuant to its authority under the
Dodd-Frank Act, FNBPA is subject to various federal consumer protection statutes and regulations including the
Truth in Lending Act, Truth in Savings Act, Equal Credit Opportunity Act, Fair Housing Act, Real Estate
Settlement Procedures Act and Home Mortgage Disclosure Act. Among other things, these acts:

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require banks to disclose credit terms in meaningful and consistent ways;
prohibit discrimination against an applicant in any consumer or business credit transaction;
prohibit discrimination in housing-related lending activities;
require banks to collect and report applicant and borrower data regarding loans for home purchases
or improvement projects;
require lenders to provide borrowers with information regarding the nature and cost of real estate
settlements;
prohibit certain lending practices and limit escrow account amounts with respect to real estate
transactions; and
prescribe possible penalties for violations of the requirements of consumer protection statutes and
regulations.

On November 17, 2009, the FRB published a final rule amending Regulation E, which implements the
Electronic Fund Transfer Act. The final rule limits the ability of a financial institution to assess an overdraft fee for
paying automated teller machine transactions and one-time debit card transactions that overdraw a customer’s
account, unless the customer affirmatively consents, or opts in, to the institution’s payment of overdrafts for these
transactions.

Dividend Restrictions

The Corporation’s primary source of funds for cash distributions to its stockholders, and funds used to pay
principal and interest on its indebtedness, is dividends received from FNBPA. FNBPA is subject to federal laws and
regulations governing its ability to pay dividends to the Corporation. FNBPA is subject to various regulatory
policies and requirements relating to the payment of dividends, including requirements to maintain capital above
regulatory minimums. Additionally, FNBPA requires prior approval of the OCC for the payment of a dividend if the
total of all dividends declared in a calendar year would exceed the total of its net income for the year combined with
its retained net income for the two preceding years. The appropriate federal regulatory agency may determine under
certain circumstances that the payment of dividends would be an unsafe or unsound practice and prohibit payment
thereof. In addition to dividends from FNBPA, other sources of parent company liquidity for the Corporation
include cash and short-term investments, as well as dividends and loan repayments from other subsidiaries.

In addition, the ability of the Corporation and FNBPA to pay dividends may be affected by the various
minimum capital requirements and the capital and non-capital standards established under FDICIA, as described
above. The right of the Corporation, its stockholders and its creditors to participate in any distribution of the assets
or earnings of the Corporation’s subsidiaries is further subject to the prior claims of creditors of the respective
subsidiaries.

Source of Strength

According to the Dodd-Frank Act and FRB policy, a financial or bank holding company is expected to act
as a source of financial strength to each of its subsidiary banks and to commit resources to support each such
subsidiary. Consistent with the “source of strength” policy, the FRB has stated that, as a matter of prudent banking, a
bank holding company generally should not maintain a rate of cash dividends unless its net income has been
sufficient to fully fund the dividends and the prospective rate of earnings retention appears to be consistent with the
Corporation’s capital needs, asset quality and overall financial condition. This support may be required at times
when a bank holding company may not be able to provide such support. Similarly, under the cross-guarantee

provisions of the Federal Deposit Insurance Act, in the event of a loss suffered or anticipated by the FDIC either as a
result of default of a banking subsidiary or related to FDIC assistance provided to a subsidiary in danger of default,
the other banks that are members of the FDIC may be assessed for the FDIC’s loss, subject to certain exceptions.

In addition, if FNBPA was no longer “well-capitalized” and “well-managed” within the meaning of the
BHC Act and FRB rules (which take into consideration capital ratios, examination ratings and other factors), the
expedited processing of certain types of FRB applications would not be available to the Corporation. Moreover,
examination ratings of “3” or lower, “unsatisfactory” ratings, capital ratios below well-capitalized levels, regulatory
concerns regarding management, controls, assets, operations or other factors can all potentially result in the loss of
financial holding company status, practical limitations on the ability of a bank or bank holding company to engage
in new activities, grow, acquire new businesses, repurchase its stock or pay dividends or continue to conduct
existing activities.

Financial Holding Companies Status and Activities

Under the BHC Act, an eligible bank holding company may elect to be a “financial holding company” and
thereafter may engage in a range of activities that are financial in nature and that were not previously permissible for
banks and bank holding companies. The financial holding company may engage directly or through a subsidiary in
certain statutorily authorized activities (subject to certain restrictions and limitations imposed by the Dodd-Frank
Act). A financial holding company may also engage in any activity that has been determined by rule or order to be
financial in nature, incidental to such financial activity, or (with prior FRB approval) complementary to a financial
activity and that does not pose substantial risk to the safety and soundness of an institution or to the financial system
generally. In addition to these activities, a financial holding company may engage in those activities permissible for
a bank holding company that has not elected to be treated as a financial holding company.

For a bank holding company to be eligible for financial holding company status, all of its subsidiary
U.S. depository institutions must be “well-capitalized” and “well-managed.” The FRB generally must deny
expanded authority to any bank holding company with a subsidiary insured depository institution that received less
than a satisfactory rating on its most recent CRA review as of the time it submits its request for financial holding
company status. If, after becoming a financial holding company and undertaking activities not permissible for a
bank holding company under the BHC Act, the company fails to continue to meet any of the requirements for
financial holding company status, the company must enter into an agreement with the FRB to comply with all
applicable capital and management requirements. If the company does not return to compliance within 180 days,
the FRB may order the company to divest its subsidiary banks or the company may discontinue or divest
investments in companies engaged in activities permissible only for a bank holding company that has elected to be
treated as a financial holding company.

Activities and Acquisitions

The BHC Act requires a bank holding company to obtain the prior approval of the FRB before it:

(cid:129) may acquire direct or indirect ownership or control of any voting shares of any bank or savings and
loan association, if after such acquisition the bank holding company will directly or indirectly own or
control more than five percent of any class of voting securities of the institution;
or any of its subsidiaries, other than a bank, may acquire all or substantially all of the assets of any
bank or savings and loan association; or

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(cid:129) may merge or consolidate with any other bank holding company.

The Interstate Banking Act generally permits bank holding companies to acquire banks in any state, and
preempts all state laws restricting the ownership by a bank holding company of banks in more than one state. The
Interstate Banking Act also permits:

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a bank to merge with an out-of-state bank and convert any offices into branches of the resulting bank;

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a bank to acquire branches from an out-of-state bank; and
banks to establish and operate de novo interstate branches whenever the host state permits de novo
branching.

Bank holding companies and banks seeking to engage in transactions authorized by the Interstate Banking

Act must be adequately capitalized and managed.

The Change in Bank Control Act prohibits a person, entity or group of persons or entities acting in concert,
from acquiring “control” of a bank holding company or bank unless the FRB has been given prior notice and has not
objected to the transaction. Under FRB regulations, the acquisition of 10% or more of a class of voting stock of a
corporation would, under the circumstances set forth in the regulations, create a rebuttable presumption of
acquisition of control of the corporation.

Transactions between FNBPA and its Affiliates and Subsidiaries

Certain transactions (including loans and credit extensions from FNBPA) between FNBPA and the
Corporation and/or its affiliates and subsidiaries are subject to quantitative and qualitative limitations, collateral
requirements, and other restrictions imposed by statute and FRB regulation. Transactions subject to these
restrictions are generally required to be made on an arms-length basis. These restrictions generally do not apply
to transactions between FNBPA and its direct wholly-owned subsidiaries.

Securities and Exchange Commission

The Corporation is also subject to regulation by the SEC by virtue of the Corporation’s status as a public
company and due to the nature of the business activities of certain subsidiaries. The Dodd-Frank Act significantly
expanded the SEC’s jurisdiction over hedge funds, credit ratings agencies and governance of public companies,
among other areas. To help implement this authority, the Dodd-Frank Act added several new weapons to the SEC’s
already substantial enforcement arsenal. Some of the provisions are clarifications (such as provisions assuring that
certain anti-manipulation provisions extend to all non-government securities) or simplify the enforcement process
(such as providing for nationwide service of process in civil actions). Several of the provisions could lead to
significant changes in SEC enforcement practice and may have long-term implications for public companies, their
officers and employees, accountants, brokerage firms, investment advisers and persons associated with them. These
provisions (1) authorize new rewards to and provide expanded protections of whistleblowers; (2) provide the SEC
authority to impose substantial administrative fines on all persons, not merely securities brokers, investment
advisers and their associated persons; (3) broaden standards for the imposition of secondary liability; (4) confer on
the SEC extraterritorial jurisdiction over alleged violations involving conduct abroad and enhancing the ability of
the SEC and the Public Company Accounting Oversight Board to regulate foreign private accounting firms and
(5) increase collateral consequences of securities law violations. The Dodd-Frank Act also contains a provision
which should help expedite the resolution of pending SEC enforcement investigations.

SOX contains important requirements for public companies in the area of financial disclosure and
corporate governance. In accordance with section 302(a) of SOX, written certifications by the Corporation’s Chief
Executive Officer (CEO) and Chief Financial Officer (CFO) are required with respect to each of the Corporation’s
quarterly and annual reports filed with the SEC. These certifications attest that the applicable report does not
contain any untrue statement of a material fact. The Corporation also maintains a program designed to comply with
Section 404 of SOX, which includes the identification of significant processes and accounts, documentation of the
design of process and entity level controls and testing of the operating effectiveness of key controls. See Item 9A,
Controls and Procedures, of this Report for the Corporation’s evaluation of its disclosure controls and procedures.

Investment Advisors is registered with the SEC as an investment advisor and, therefore, is subject to the
requirements of the Investment Advisers Act of 1940 and the SEC’s regulations thereunder. The principal purpose
of the regulations applicable to investment advisors is the protection of investment advisory clients and the
securities markets, rather than the protection of creditors and stockholders of investment advisors. The regulations

applicable to investment advisors cover all aspects of the investment advisory business, including limitations on the
ability of investment advisors to charge performance-based or non-refundable fees to clients, record-keeping,
operating, marketing and reporting requirements, disclosure requirements, limitations on principal transactions
between an advisor or its affiliates and advisory clients, as well as other anti-fraud prohibitions. The Corporation’s
investment advisory subsidiary also may be subject to certain state securities laws and regulations.

Additional legislation, changes in or new rules promulgated by the SEC and other federal and state
regulatory authorities and self-regulatory organizations or changes in the interpretation or enforcement of existing
laws and rules, may directly affect the method of operation and profitability of Investment Advisors. The
profitability of Investment Advisors could also be affected by rules and regulations that impact the business
and financial communities in general, including changes to the laws governing taxation, antitrust regulation,
homeland security and electronic commerce.

Under various provisions of the federal and state securities laws, including in particular those applicable to
broker-dealers, investment advisors and registered investment companies and their service providers, a determi-
nation by a court or regulatory agency that certain violations have occurred at a company or its affiliates can result in
a limitation of permitted activities and disqualification to continue to conduct certain activities.

Investment Advisors is also subject to rules and regulations promulgated by the Financial Industry
Regulatory Authority (FINRA) and the U.S. Department of Labor under the Employee Retirement Income Security
Act (ERISA), among others. The principal purpose of these regulations is the protection of clients and the securities
markets, rather than the protection of stockholders and creditors.

Consumer Finance Subsidiary

Regency is subject to regulation under Pennsylvania, Tennessee, Ohio and Kentucky state laws that
require, among other things, that it maintain licenses in effect for consumer finance operations for each of its offices.
Representatives of the Pennsylvania Department of Banking, the Tennessee Department of Financial Institutions,
the Ohio Division of Consumer Finance and the Kentucky Department of Financial Institutions periodically visit
Regency’s offices and conduct extensive examinations in order to determine compliance with such laws and
regulations. Additionally, the FRB, as “umbrella” regulator of the Corporation pursuant to the GLB Act, may
conduct an examination of Regency’s offices or operations. Such examinations include a review of loans and the
collateral therefor, as well as a check of the procedures employed for making and collecting loans. Additionally,
Regency is subject to certain federal laws that require that certain information relating to credit terms be disclosed to
customers and, in certain instances, afford customers the right to rescind transactions.

Insurance Agencies

FNIA is subject to licensing requirements and extensive regulation under the laws of the Commonwealth
of Pennsylvania and the various states in which FNIA conducts business. These laws and regulations are primarily
for the benefit of policyholders. In all jurisdictions, the applicable laws and regulations are subject to amendment or
interpretation by regulatory authorities. Generally, such authorities are vested with relatively broad discretion to
grant, renew and revoke licenses and approvals and to implement regulations. Licenses may be denied or revoked
for various reasons, including the violation of such regulations or the conviction of certain crimes. Possible
sanctions that may be imposed for violation of regulations include the suspension of individual employees,
limitations on engaging in a particular business for a specified period of time, revocation of licenses, censures and
fines.

Penn-Ohio is subject to examination on a triennial basis by the Arizona Department of Insurance.
Representatives of the Arizona Department of Insurance periodically determine whether Penn-Ohio has maintained
required reserves, established adequate deposits under a reinsurance agreement and complied with reporting
requirements under the applicable Arizona statutes.

Merchant Banking

FNBCC is subject to regulation and examination by the FRB as the “umbrella” regulator and is subject to

rules and regulations issued by FINRA and the SEC.

Governmental Policies

The operations of the Corporation and its subsidiaries are affected not only by general economic
conditions, but also by the policies of various regulatory authorities. In particular, the FRB regulates monetary
policy and interest rates in order to influence general economic conditions. These policies have a significant
influence on overall growth and distribution of loans, investments and deposits and affect interest rates charged on
loans or paid for time and savings deposits. FRB monetary policies have had a significant effect on the operating
results of all financial institutions in the past and may continue to do so in the future.

Available Information

The Corporation makes available on its website at www.fnbcorporation.com, free of charge, its
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K (and
amendments to any of the foregoing) as soon as practicable after such reports are filed with or furnished to
the SEC. These reports are also available to stockholders, free of charge, upon written request to F.N.B.
Corporation, Attn: David B. Mogle, Corporate Secretary, One F.N.B. Boulevard, Hermitage, PA 16148. A fee
to cover the Corporation’s reproduction costs will be charged for any requested exhibits to these documents.
The public may read and copy the materials the Corporation files with the SEC at the SEC’s Public Reference
Room, located at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information regarding the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The public may also read and copy
the materials the Corporation files with the SEC by visiting the SEC’s website at www.sec.gov. The Corporation’s
common stock is traded on the NYSE under the symbol “FNB”.

ITEM 1A.

RISK FACTORS

As a financial services organization, the Corporation takes on a certain amount of risk in every business
decision and activity. For example, every time FNBPA opens an account or approves a loan for a customer,
processes a payment, hires a new employee, or implements a new computer system, FNBPA and the Corporation
incur a certain amount of risk. As an organization, the Corporation must balance revenue generation and
profitability with the risks associated with its business activities. The objective of risk management is not to
eliminate risk, but to identify and accept risk and then manage risk effectively so as to optimize total shareholder
value.

The Corporation has identified five major categories of risk: credit risk, market risk, liquidity risk,
operational risk and compliance risk. The Corporation more fully describes credit risk, market risk and liquidity
risk, and the programs the Corporation’s management has implemented to address these risks, in the Market Risk
section of Management’s Discussion and Analysis of Financial Condition and Results of Operations, which is
included in Item 7 of this Report. Operational risk arises from inadequate information systems and technology,
weak internal control systems or other failed internal processes or systems, human error, fraud or external events.
Compliance risk relates to each of the other four major categories of risk listed above, but specifically addresses
internal control failures that result in non-compliance with laws, rules, regulations or ethical standards.

The following discussion highlights specific risks that could affect the Corporation and its businesses. You
should carefully consider each of the following risks and all of the other information set forth in this Report. Based
on the information currently known, the Corporation believes that the following information identifies the most
significant risk factors affecting the Corporation. However, the risks and uncertainties the Corporation faces are not
limited to those described below. Additional risks and uncertainties not presently known or that the Corporation
currently believes to be immaterial may also adversely affect its business.

If any of the following risks and uncertainties develop into actual events or if the circumstances described
in the risks and uncertainties occur or continue to occur, these events or circumstances could have a material adverse
affect on the Corporation’s business, financial condition or results of operations. These events could also have a
negative affect on the trading price of the Corporation’s securities.

The Corporation’s results of operations are significantly affected by the ability of its borrowers to repay their
loans.

Lending money is an essential part of the banking business. However, borrowers do not always repay their

loans. The risk of non-payment is affected by:

(cid:129)
(cid:129)
(cid:129)
(cid:129)

credit risks of a particular borrower;
changes in economic and industry conditions;
the duration of the loan; and
in the case of a collateralized loan, uncertainties as to the future value of the collateral.

Generally, commercial/industrial, construction and commercial real estate loans present a greater risk of
non-payment by a borrower than other types of loans. For additional information, see the Lending Activity section
of Management’s Discussion and Analysis of Financial Condition and Results of Operations, which is included in
Item 7 of this Report. In addition, consumer loans typically have shorter terms and lower balances with higher yields
compared to real estate mortgage loans, but generally carry higher risks of default. Consumer loan collections are
dependent on the borrower’s continuing financial stability, and thus are more likely to be affected by adverse
personal circumstances. Furthermore, the application of various federal and state laws, including bankruptcy and
insolvency laws, may limit the amount that can be recovered on these loans.

The Corporation’s financial condition and results of operations would be adversely affected if its allowance
for loan losses is not sufficient to absorb actual losses.

There is no precise method of predicting loan losses. The Corporation can give no assurance that its
allowance for loan losses will be sufficient to absorb actual loan losses. Excess loan losses could have a material
adverse effect on the Corporation’s financial condition and results of operations. The Corporation attempts to
maintain an appropriate allowance for loan losses to provide for estimated losses inherent in its loan portfolio as of
the reporting date. The Corporation periodically determines the amount of its allowance for loan losses based upon
consideration of several quantitative and qualitative factors including, but not limited to, the following:

(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)

a regular review of the quality, mix and size of the overall loan portfolio;
historical loan loss experience;
evaluation of non-performing loans;
geographic concentration;
assessment of economic conditions and their effects on the Corporation’s existing portfolio; and
the amount and quality of collateral, including guarantees, securing loans.

For additional discussion relating to this matter, refer to the Allowance and Provision for Loan Losses
section of Management’s Discussion and Analysis of Financial Condition and Results of Operations, which is
included in Item 7 of this Report.

Changes in economic conditions and the composition of the Corporation’s loan portfolio could lead to higher
loan charge-offs or an increase in the Corporation’s provision for loan losses and may reduce the Corporation’s
net income.

Changes in national and regional economic conditions continue to impact the loan portfolios of the
Corporation. For example, an increase in unemployment, a decrease in real estate values or changes in interest rates,
as well as other factors, have weakened the economies of the communities the Corporation serves. Weakness in the
market areas served by the Corporation could depress its earnings and consequently its financial condition because

customers may not want or need the Corporation’s products or services; borrowers may not be able to repay their
loans; the value of the collateral securing the Corporation’s loans to borrowers may decline; and the quality of the
Corporation’s loan portfolio may decline. Any of the latter three scenarios could require the Corporation to charge-
off a higher percentage of its loans and/or increase its provision for loan losses, which would reduce its net income.

The Corporation may continue to be adversely affected by the downturn in Florida real estate markets.

Many Florida real estate markets, including the markets in Orlando, Sarasota and Tampa, where the
Corporation had operated loan production offices, continued to decline in value throughout 2009 and 2010 and may
continue to undergo further declines. During a period of prolonged general economic downturn in the Florida
market and even though FNBPA’s Florida loan portfolio comprises 3.2% of the Corporation’s total loan portfolio,
the Corporation may experience further increases in non-performing assets, net charge-offs and provisions for loan
losses.

The Corporation’s continued pace of growth may require it to raise additional capital in the future, but that
capital may not be available when it is needed.

The Corporation is required by federal and state regulatory authorities to maintain adequate levels of
capital to support its operations (see the Government Supervision and Regulation section included in Item 1 of this
Report). As a financial holding company, the Corporation seeks to maintain capital sufficient to meet the
“well-capitalized” standard set by regulators. The Corporation anticipates that its current capital resources will
satisfy its capital requirements for the foreseeable future. The Corporation may at some point, however, need to
raise additional capital to support continued growth, whether such growth occurs internally or through acquisitions.

The Corporation’s ability to raise additional capital, if needed, will depend on conditions in the capital
markets at that time, which are outside of the Corporation’s control, and on the Corporation’s financial perfor-
mance. Accordingly, there can be no assurance of the Corporation’s ability to expand its operations through internal
growth and acquisitions could be materially impaired. As such, the Corporation may be forced to delay raising
capital, issue shorter term securities than desired or bear an unattractive cost of capital, which could decrease
profitability and significantly reduce financial flexibility.

In the event current sources of liquidity, including internal sources, do not satisfy the Corporation’s needs,
the Corporation would be required to seek additional financing. The availability of additional financing will depend
on a variety of factors such as market conditions, the general availability of credit, the overall availability of credit to
the financial services industry, the Corporation’s credit ratings and credit capacity, as well as the possibility that
lenders could develop a negative perception of the Corporation’s long- or short-term financial prospects if the
Corporation incurs large credit losses or if the level of business activity decreases due to economic conditions.

The Corporation’s status as a holding company makes it dependent on dividends from its subsidiaries to meet
its financial obligations and pay dividends to stockholders.

The Corporation is a holding company and conducts almost all of its operations through its subsidiaries.
The Corporation does not have any significant assets other than cash and the stock of its subsidiaries. Accordingly,
the Corporation depends on dividends from its subsidiaries to meet its financial obligations and to pay dividends to
stockholders. The Corporation’s right to participate in any distribution of earnings or assets of its subsidiaries is
subject to the prior claims of creditors of such subsidiaries. Under federal law, FNBPA is limited in the amount of
dividends it may pay to the Corporation without prior regulatory approval. Also, bank regulators have the authority
to prohibit FNBPA from paying dividends if the bank regulators determine FNBPA is in an unsound or unsafe
condition or that the payment would be an unsafe and unsound banking practice.

The Corporation’s results of operations may be adversely affected if asset valuations cause other-than-tempo-
rary impairment or goodwill impairment charges.

The Corporation may be required to record future impairment charges on its investment securities if they
suffer declines in value that are considered other-than-temporary. Numerous factors, including lack of liquidity for
re-sales of certain investment securities, absence of reliable pricing information for investment securities, adverse
changes in business climate, adverse actions by regulators, or unanticipated changes in the competitive environment
could have a negative effect on the Corporation’s investment portfolio in future periods. Goodwill is assessed
annually for impairment and declines in value could result in a future non-cash charge to earnings. If an impairment
charge is significant enough it could affect the ability of FNBPA to pay dividends to the Corporation, which could
have a material adverse effect on the Corporation’s liquidity and its ability to pay dividends to stockholders and
could also negatively impact
in FNBPA not being classified as
“well-capitalized” for regulatory purposes.

its regulatory capital ratios and result

The Corporation could be adversely affected by changes in the law, especially changes in the regulation of the
banking industry.

The Corporation and its subsidiaries operate in a highly regulated environment and are subject to
supervision and regulation by several governmental agencies, including the FRB, OCC and FDIC. Regulations
are generally intended to provide protection for depositors, borrowers and other customers rather than for investors.
The Corporation is subject to changes in federal and state law, regulations, governmental policies, tax laws and
accounting principles. Changes in regulations or the regulatory environment could adversely affect the banking and
financial services industry as a whole and could limit the Corporation’s growth and the return to investors by
restricting such activities as:

the payment of dividends;

(cid:129)
(cid:129) mergers with or acquisitions of other institutions;
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)

investments;
loans and interest rates;
fees assessed for consumer deposit accounts and electronic financial transactions;
the provision of securities, insurance or trust services;
the types of non-deposit activities in which the Corporation’s financial institution subsidiaries may
engage; and
limit the type and scope of financial activities.

(cid:129)

Adverse economic conditions in the Corporation’s market area may adversely impact its results of operations
and financial condition.

The substantial portion of the Corporation’s business is concentrated in Pennsylvania and eastern Ohio,
which over recent years has had slower growth than other areas of the United States. As a result, FNBPA’s loan
portfolio and results of operations may be adversely affected by factors that have a significant impact on the
economic conditions in this market area. The local economies of this market area have historically been less robust
than the economy of the nation as a whole and may not be subject to the same fluctuations as the national economy.
Adverse economic conditions in this market area, including the loss of certain significant employers, could reduce
its growth rate, affect its borrowers’ ability to repay their loans and generally affect the Corporation’s financial
condition and results of operations. Furthermore, a downturn in real estate values in FNBPA’s market area could
cause many of its loans to become inadequately collateralized.

The Corporation’s deposit insurance premiums could be substantially higher in the future which would have
an adverse effect on the Corporation’s future earnings.

The Dodd-Frank Act changed the assessment base for FDIC deposit insurance. The new assessment base
will be tied to total assets less tangible equity instead of deposit liabilities. The likely effect of this will be to increase

assessment fees for institutions that rely more heavily on nondeposit funding sources. Many in the banking industry
believe that this change will increase assessment rates for large banks and lower assessment costs for smaller
community banks. In general, community banks usually derive the majority of their funding from deposits, so the
assessment rates for such institutions should not increase and could decrease. However, the higher assessments for
institutions that have relied on nondeposit sources of funding in the past could force these institutions to change
their funding models and more actively search for deposits. If this happens, it could drive up the costs to attain
deposits across the market, a situation that would negatively impact community banks like FNBPA.

The Dodd-Frank Act also changes the minimum reserve ratio for the FDIC DIF. The Dodd-Frank Act
increases the minimum reserve ratio to 1.35 percent of estimated insured deposits or the assessment base. On
December 15, 2010, the Board of Directors of the FDIC voted on a final rule to set the DIF’s designated reserve ratio
(DRR) at 2% of estimated insured deposits. The FDIC is required to offset the effect of the increased minimum
reserve ratio for banks with assets of less than $10 billion, so smaller community banks will be spared the cost of
funding the increase in the minimum reserve ratio. It is not clear how the FDIC will offset the effect of the increased
minimum reserve ratio for banks with assets of less than $10 billion. The FDIC could charge the same assessment
rates to both large and small banks until the DIF reaches the previous minimum reserve ratio of 1.15 percent and
then charge higher rates to larger banks to bring the ratio up to the new 1.35 percent threshold. It is likely that once
the DIF reaches the new minimum reserve ratio, banks of all sizes will be required to maintain the DIF above that
ratio. This could further increase the assessment rates of community banks like FNBPA in the future.

Due to the recent increases in the assessment rates, and the potential for additional increases, the
Corporation may be required to pay additional amounts to the DIF, which could have an adverse effect on the
Corporation’s earnings. If the deposit insurance premium assessment rate applicable to the Corporation increases
again, either because of its risk classification, because of emergency assessments, or because of another uniform
increase, the Corporation’s earnings could be further adversely impacted.

The Corporation’s information systems may experience an interruption or breach in security.

The Corporation relies heavily on communications and information systems to conduct its business. Any
failure, interruption or breach in security of these systems could result in failures or disruptions in the Corporation’s
customer relationship management, general ledger, deposit, loan and other systems. Although the Corporation has
policies and procedures designed to prevent or limit the effect of the failure, interruption or security breach of these
information systems, there can be no assurance that any such failures, interruptions or security breaches will not
occur or, if they do occur, that they will be adequately addressed. The occurrence of any failures, interruptions or
security breaches of the Corporation’s information systems could damage its reputation, result in a loss of customer
business, subject it to additional regulatory scrutiny, or expose it to civil litigation and possible financial liability,
any of which could have a material adverse effect on the Corporation’s financial condition and results of operations.

Certain provisions of the Corporation’s Articles of Incorporation and By-laws and Florida law may discourage
takeovers.

The Corporation’s Articles of Incorporation and By-laws contain certain anti-takeover provisions that may
discourage or may make more difficult or expensive a tender offer, change in control or takeover attempt that is
opposed by the Corporation’s Board of Directors. In particular, the Corporation’s Articles of Incorporation and By-
laws:

(cid:129)

(cid:129)
(cid:129)
(cid:129)

previously classified its Board of Directors into three classes, so that stockholders elected only one-
third of its Board of Directors each year. However, this classified structure will be phased out in May
2011;
permit stockholders to remove directors only for cause;
do not permit stockholders to take action except at an annual or special meeting of stockholders;
require stockholders to give the Corporation advance notice to nominate candidates for election to its
Board of Directors or to make stockholder proposals at a stockholders’ meeting;

(cid:129)

permit the Corporation’s Board of Directors to issue, without stockholder approval unless otherwise
required by law, preferred stock with such terms as its Board of Directors may determine;
require the vote of the holders of at least 75% of the Corporation’s voting shares for stockholder
amendments to its By-laws;

Under Florida law, the approval of a business combination with a stockholder owning 10% or more of the
voting shares of a corporation requires the vote of holders of at least two-thirds of the voting shares not owned by
such stockholder, unless the transaction is approved by a majority of the corporation’s disinterested directors. In
addition, Florida law generally provides that shares of a corporation that are acquired in excess of certain specified
thresholds will not possess any voting rights unless the voting rights are approved by a majority of the corporation’s
disinterested stockholders.

These provisions of the Corporation’s Articles of Incorporation and By-laws and of Florida law could
discourage potential acquisition proposals and could delay or prevent a change in control, even though a majority of
the Corporation’s stockholders may consider such proposals desirable. Such provisions could also make it more
difficult for third parties to remove and replace members of the Corporation’s Board of Directors. Moreover, these
provisions could diminish the opportunities for stockholders to participate in certain tender offers, including tender
offers at prices above the then-current market price of the Corporation’s common stock, and may also inhibit
increases in the trading price of the Corporation’s common stock that could result from takeover attempts.

The Corporation is exposed to risk of environmental liabilities with respect to properties to which it takes title.

Portions of the Corporation’s loan portfolio are secured by real property. In the ordinary course of its
business, the Corporation may own or foreclose and take title to real estate, and could be subject to environmental
liabilities with respect to these properties. The Corporation may be held liable to a governmental entity or to third
parties for property damage, personal injury, investigation and clean-up costs incurred by these parties in
connection with environmental contamination, or may be required to investigate or clean up hazardous or toxic
substances, or chemical releases at a property. The costs associated with investigation or remediation activities
could be substantial. In addition, as the owner or former owner of a contaminated site, the Corporation may be
subject to common law claims by third parties based on damages and costs resulting from environmental
contamination emanating from the property. If the Corporation ever becomes subject to significant environmental
liabilities, the Corporation’s business, financial condition, liquidity and results of operations could be materially
adversely affected.

The Corporation’s key assets include its brand and reputation and the Corporation’s business may be affected
by how it is perceived in the market place.

The Corporation’s brand and its attributes are key assets of the Corporation. The Corporation’s ability to
attract and retain banking, insurance, consumer finance, wealth management, merchant banking and corporate
clients is highly dependent upon the external perceptions of its level of service, trustworthiness, business practices
and financial condition. Negative perceptions or publicity regarding these matters could damage the Corporation’s
reputation among existing customers and corporate clients, which could make it difficult for the Corporation to
attract new clients and maintain existing ones. Adverse developments with respect to the financial services industry
may also, by association, negatively impact the Corporation’s reputation, or result in greater regulatory or
legislative scrutiny or litigation against the Corporation. Although the Corporation monitors developments for
areas of potential risk to its reputation and brand, negative perceptions or publicity could materially and adversely
affect the Corporation’s revenues and profitability.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

NONE.

ITEM 2.

PROPERTIES

The Corporation owns a six-story building in Hermitage, Pennsylvania that serves as its headquarters,
executive and administrative offices. It shares this facility with Community Banking and Wealth Management.
Additionally, the Corporation owns a two-story building in Hermitage, Pennsylvania that serves as its data
processing and technology center.

The Community Banking segment has 223 offices, located in 32 counties in Pennsylvania and four
counties in Ohio, of which 159 are owned and 64 are leased. Community Banking also leases its two commercial
loan offices. The Consumer Finance segment has 62 offices, located in 17 counties in Pennsylvania, 16 counties in
Tennessee, 14 counties in Ohio and 5 counties in Kentucky, of which one is owned and 61 are leased. The operating
leases for the Community Banking and Consumer Finance segments expire at various dates through the year 2030
and generally include options to renew. For additional information regarding the lease commitments, see the
Premises and Equipment footnote in the Notes to Consolidated Financial Statements, which is included in Item 8 of
this Report.

ITEM 3.

LEGAL PROCEEDINGS

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 or a subsidiary 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.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

NONE.

EXECUTIVE OFFICERS OF THE REGISTRANT

The name, age and principal occupation for each of the executive officers of the Corporation as of

February 16, 2011 is set forth below:

Name

Stephen J. Gurgovits

Age

Vincent J. Calabrese

Vincent J. Delie, Jr.

Gary L. Guerrieri

Brian F. Lilly

Timothy G. Rubritz

John C. Williams, Jr.

Principal Occupation

Chief Executive Officer of the Corporation;
Chairman of FNBPA

Chief Financial Officer of the Corporation;
Senior Vice President of FNBPA

President of the Corporation;
Chief Executive Officer of FNBPA

Executive Vice President of FNBPA

Vice Chairman and Chief Operating Officer of the Corporation;
Chief Administrative Officer of FNBPA

Corporate Controller and Senior Vice President of the Corporation

President of FNBPA

There are no family relationships among any of the above executive officers, and there is no arrangement
or understanding between any of the above executive officers and any other person pursuant to which he was
selected as an officer. The executive officers are elected by and serve at the pleasure of the Corporation’s Board of
Directors, subject in certain cases to the terms of an employment agreement between the officer and the
Corporation.

PART II.

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The Corporation’s common stock is listed on the NYSE under the symbol “FNB.” The accompanying table
shows the range of high and low sales prices per share of the common stock as reported by the NYSE for 2010 and
2009. The table also shows dividends per share paid on the outstanding common stock during those periods. As of
January 31, 2011, there were 12,348 holders of record of the Corporation’s common stock.

Quarter Ended 2010
March 31
June 30
September 30
December 31
Quarter Ended 2009
March 31
June 30
September 30
December 31

Low

$6.65
7.84
7.53
8.10

$5.14
5.74
5.86
6.32

High

$ 8.66
9.75
8.90
10.28

$13.71
9.31
8.07
7.45

Dividends

$0.12
0.12
0.12
0.12

The information required by this Item 5 with respect to securities authorized for issuance under equity

compensation plans is set forth in Part III, Item 12 of this Report.

The Corporation did not purchase any of its own equity securities during the fourth quarter of 2010.

STOCK PERFORMANCE GRAPH

Comparison of Total Return on F.N.B. Corporation’s Common Stock with Certain Averages

The following five-year performance graph compares the cumulative total shareholder return (assuming
reinvestment of dividends) on the Corporation’s common stock (s) to the NASDAQ Bank Index (m) and the Russell
2000 Index ((cid:2)). This stock performance graph assumes $100 was invested on December 31, 2005, and the
cumulative return is measured as of each subsequent fiscal year end.

F.N.B. Corporation Five-Year Stock Performance
Total Return, Including Stock and Cash Dividends

150

125

100

e
u
a
V
x
e
d
n

12/31/2005

12/31/2006

12/31/2007

12/31/2008

12/31/2009

12/31/2010

FNB Corp

NASDAQ Bank Index

Russell 2000

ITEM 6.
Dollars in thousands, except per share data

SELECTED FINANCIAL DATA

Year Ended December 31
Total interest income
Total interest expense
Net interest income
Provision for loan losses
Total non-interest income
Total non-interest expense
Net income
Net income available to common

stockholders

2010

2009

2008 (1)

2007

2006

$ 373,721
88,731
284,990
47,323
115,972
251,103
74,652

$ 388,218
121,179
267,039
66,802
105,482
255,339
41,111

$ 409,781
157,989
251,792
72,371
86,115
222,704
35,595

$ 368,890
174,053
194,837
12,693
81,609
165,614
69,678

$ 342,422
153,585
188,837
10,412
79,275
160,514
67,649

74,652

32,803

35,595

69,678

67,649

At Year-End
Total assets
Net loans
Deposits
Short-term borrowings
Long-term debt
Junior subordinated debt
Total stockholders’ equity

Per Common Share
Basic earnings per share
Diluted earnings per share
Cash dividends declared
Book value

$8,959,915
5,982,035
6,646,143
753,603
192,058
204,036
1,066,124

$8,709,077
5,744,706
6,380,223
669,167
324,877
204,711
1,043,302

$8,364,811
5,715,650
6,054,623
596,263
490,250
205,386
925,984

$6,088,021
4,291,429
4,397,684
449,823
481,366
151,031
544,357

$6,007,592
4,200,569
4,372,842
363,910
519,890
151,031
537,372

0.66
0.65
0.48
9.29

0.32
0.32
0.48
9.14

0.44
0.44
0.96
10.32

1.16
1.15
0.95
8.99

1.15
1.14
0.94
8.90

Ratios
Return on average assets
Return on average tangible assets
Return on average equity
Return on average tangible common

equity

Dividend payout ratio
Average equity to average assets

0.84%
0.95
7.06

16.02
74.02
11.88

0.48%
0.57
3.87

8.74
149.50
12.35

0.46%
0.55
4.20

10.63
219.91
11.01

1.15%
1.25
12.89

26.23
82.45
8.93

1.15%
1.25
13.15

26.30
81.84
8.73

(1)

During 2008, the Corporation completed acquisitions of Omega Financial Corporation and Iron and Glass Bancorp, Inc.

QUARTERLY EARNINGS SUMMARY (Unaudited)
Dollars in thousands, except per share data

Quarter Ended 2010
Total interest income
Total interest expense
Net interest income
Provision for loan losses
Gain on sale of securities
Impairment loss on securities
Other non-interest income
Total non-interest expense
Net income

Per Common Share
Basic earnings per share
Diluted earnings per share
Cash dividends declared

Quarter Ended 2009
Total interest income
Total interest expense
Net interest income
Provision for loan losses
Gain on sale of securities
Impairment loss on securities
Other non-interest income
Total non-interest expense
Net income
Net income available to common stockholders

Per Common Share
Basic earnings per share
Diluted earnings per share
Cash dividends declared

Dec. 31 (1)

Sept. 30

June 30

Mar. 31

$92,867
20,022
72,845
10,807
443
(51)
29,108
58,329
23,533

$0.21
0.21
0.12

Dec. 31

$96,160
26,468
69,585
25,924
30
(3,659)
28,909
65,781
4,556
4,556

$0.04
0.04
0.12

$93,947
21,688
72,259
12,313
80
—
27,674
64,247
17,217

$0.15
0.15
0.12

$94,361
22,880
71,481
12,239
47
(602)
28,998
63,084
17,922

$0.16
0.16
0.12

$92,546
24,141
68,405
11,964
2,390
(1,686)
29,571
65,443
15,980

$0.14
0.14
0.12

Sept. 30

June 30

Mar. 31

$96,750
28,989
67,544
16,455
154
(3,291)
26,882
62,321
10,306
4,810

$0.04
0.04
0.12

$97,153
31,702
65,332
13,909
66
(740)
29,005
66,265
10,598
9,129

$0.10
0.10
0.12

$98,155
34,020
64,082
10,514
278
(203)
28,051
60,972
15,651
14,308

$0.16
0.16
0.12

(1)

The results for the quarter ended December 31, 2010 were significantly affected by a one-time prior service credit to pension expense of
$10,543 (or $6,853 after tax) due to the freezing of the Retirement Income Plan.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Management’s discussion and analysis represents an overview of the consolidated results of operations
and financial condition of the Corporation. This discussion and analysis should be read in conjunction with the
consolidated financial statements and notes presented in Item 8 of this Report. Results of operations for the periods
included in this review are not necessarily indicative of results to be obtained during any future period.

Important Cautionary Statement Regarding Forward-Looking Information

Certain statements in this Report are “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 the 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 the
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 the Corporation is engaged; (6) technological issues which may adversely affect the
Corporation’s financial operations or customers; (7) changes in the securities markets; (8) risk factors mentioned
in the reports and registration statements the Corporation files with the SEC which are on file with the SEC, and are
available on the Corporation’s 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 the Corporation’s assets and liabilities. All information provided in this Report is based on information
presently available and the Corporation undertakes no obligation to revise these forward-looking statements or to
reflect events or circumstances after the date this Report is filed with the SEC.

Application of Critical Accounting Policies

The Corporation’s consolidated financial statements are prepared in accordance with U.S. generally
accepted accounting principles (GAAP). Application of these principles requires management to make estimates,
assumptions and judgments that affect the amounts reported in the consolidated financial statements and accom-
panying notes. These estimates, assumptions and judgments are based on information available as of the date of the
consolidated financial statements; accordingly, as this information changes, the consolidated financial statements
could reflect different estimates, assumptions and judgments. Certain policies inherently are based to a greater
extent on estimates, assumptions and judgments of management and, as such, have a greater possibility of
producing results that could be materially different than originally reported.

The most significant accounting policies followed by the Corporation are presented in the Summary of
Significant Accounting Policies footnote in the Notes to Consolidated Financial Statements, which is included in
Item 8 of this Report. These policies, along with the disclosures presented in the Notes to Consolidated Financial
Statements, provide information on how the Corporation values significant assets and liabilities in the consolidated
financial statements, how the Corporation determines those values and how the Corporation records transactions in
the consolidated financial statements.

Management views critical accounting policies to be those which are highly dependent on subjective or
complex judgments, estimates and assumptions, and where changes in those estimates and assumptions could have
a significant impact on the consolidated financial statements. Management currently views the determination of the
allowance for loan losses, securities valuation, goodwill and other intangible assets and income taxes to be critical
accounting policies.

Allowance for Loan Losses

The allowance for loan losses addresses credit losses inherent in the existing loan portfolio and is presented
as a reserve against loans on the consolidated balance sheet. Loan losses are charged off against the allowance for
loan losses, with recoveries of amounts previously charged off credited to the allowance for loan losses. Provisions
for loan losses are charged to operations based on management’s periodic evaluation of the adequacy of the
allowance.

Estimating the amount of the allowance for loan losses is based to a significant extent on the judgment and
estimates of management regarding the amount and timing of expected future cash flows on impaired loans,
estimated losses on pools of homogeneous loans based on historical loss experience and consideration of current
economic trends and conditions, all of which may be susceptible to significant change.

Management’s assessment of the adequacy of the allowance for loan losses considers individual impaired
loans, pools of homogeneous loans with similar risk characteristics and other risk factors concerning the economic
environment. The specific credit allocations for individual impaired loans are based on ongoing analyses of all loans
over a fixed dollar amount where the internal credit rating is at or below a predetermined classification. These
analyses involve a high degree of judgment in estimating the amount of loss associated with specific impaired loans,
including estimating the amount and timing of future cash flows, current fair value of the underlying collateral and
other qualitative risk factors that may affect the loan. The evaluation of this component of the allowance requires
considerable judgment in order to estimate inherent loss exposures.

Pools of homogeneous loans with similar risk characteristics are also assessed for probable losses. A loss
migration and historical charge-off analysis is performed quarterly and loss factors are updated regularly based on
actual experience. This analysis examines historical loss experience, the related internal ratings of loans charged off
and considers inherent but undetected losses within the portfolio. Inherent but undetected losses may arise due to
uncertainties in economic conditions, delays in obtaining information, including unfavorable information about a
borrower’s financial condition, the difficulty in identifying triggering events that correlate to subsequent loss rates
and risk factors that have not yet manifested themselves in loss allocation factors. The Corporation has grown
through acquisitions and expanding the geographic footprint in which it operates. As a result, historical loss
experience data used to establish loss estimates may not precisely correspond to the current portfolio. Also, loss data
representing a complete economic cycle is not available for all sectors. Uncertainty surrounding the strength and
timing of economic cycles also affects estimates of loss. The historical loss experience used in the migration and
historical charge-off analysis may not be representative of actual unrealized losses inherent in the portfolio.

Management also evaluates the impact of various qualitative factors which pose additional risks that may
not adequately be addressed in the analyses described above. Such factors could include: levels of, and trends in,
consumer bankruptcies, delinquencies, impaired loans, charge-offs and recoveries; trends in volume and terms of
loans; effects of any changes in lending policies and procedures, including those for underwriting, collection,
charge-off and recovery; experience, ability and depth of lending management and staff; national and local
economic trends and conditions; industry and geographic conditions; concentrations of credit such as, but not
limited to, local industries, their employees or suppliers; market uncertainty and illiquidity; or any other common
risk factor that might affect loss experience across one or more components of the portfolio. The determination of
this component of the allowance is particularly dependent on the judgment of management.

There are many factors affecting the allowance for loan losses; some are quantitative, while others require
qualitative judgment. Although management believes its process for determining the allowance adequately
considers all of the factors currently inherent in the portfolio that could potentially result in credit losses, the
process includes subjective elements and may be susceptible to significant change. To the extent actual outcomes
differ from management estimates, additional provisions for loan losses could be required that may adversely affect
the Corporation’s earnings or financial position in future periods.

The Allowance and Provision for Loan Losses section of this financial review includes a discussion of the

factors affecting changes in the allowance for loan losses during the current period.

Securities Valuation and Impairment

The Corporation evaluates its investment securities portfolio for other-than-temporary impairment (OTTI)
on a quarterly basis. Impairment is assessed at the individual security level. An investment security is considered
impaired if the fair value of the security is less than its cost or amortized cost basis.

The Corporation’s OTTI evaluation process is performed in a consistent and systematic manner and
includes an evaluation of all available evidence. Documentation of the process is extensive as necessary to support a
conclusion as to whether a decline in fair value below cost or amortized cost is other-than-temporary and includes
documentation supporting both observable and unobservable inputs and a rationale for conclusions reached.

This process considers factors such as the severity, length of time and anticipated recovery period of the
impairment, recent events specific to the issuer, including investment downgrades by rating agencies and economic
conditions of its industry, and the issuer’s financial condition, capital strength and near-term prospects. The
Corporation also considers its intent to sell the security and whether it is more likely than not that the Corporation
would be required to sell the security prior to the recovery of its amortized cost basis. Among the factors that are
considered in determining the Corporation’s intent to sell the security or whether it is more likely than not that the
Corporation would be required to sell the security is a review of its capital adequacy, interest rate risk position and
liquidity.

The assessment of a security’s ability to recover any decline in fair value, the ability of the issuer to meet
contractual obligations, and the Corporation’s intent and ability to retain the security require considerable
judgment. The unrealized losses of $13.3 million on pooled TPS have been recognized on the balance sheet as
a component of accumulated other comprehensive income, net of tax, however future charges to earnings could
result if expected cash flows deteriorate.

Debt securities with credit ratings below AA at the time of purchase that are repayment-sensitive securities
are evaluated using the guidance of ASC (Accounting Standards Codification) Topic 320, Investments - Debt
Securities.

Goodwill and Other Intangible Assets

As a result of acquisitions, the Corporation has acquired goodwill and identifiable intangible assets on its
balance sheet. Goodwill represents the cost of acquired companies in excess of the fair value of net assets, including
identifiable intangible assets, at the acquisition date. The Corporation’s recorded goodwill relates to value inherent
in its Community Banking, Wealth Management and Insurance segments.

The value of goodwill and other identifiable intangibles is dependent upon the Corporation’s ability to
provide quality, cost-effective services in the face of competition. As such, these values are supported ultimately by
revenue that is driven by the volume of business transacted. A decline in earnings as a result of a lack of growth or
the Corporation’s inability to deliver cost effective services over sustained periods can lead to impairment in value
which could result in additional expense and adversely impact earnings in future periods.

Other identifiable intangible assets such as core deposit intangibles and customer and renewal lists are

amortized over their estimated useful lives.

The two-step impairment test is used to identify potential goodwill impairment and measure the amount of
impairment loss to be recognized, if any. The first step compares the fair value of a reporting unit with its carrying
amount. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered
not impaired and the second step of the test is not necessary. If the carrying amount of a reporting unit exceeds its

fair value, the second step is performed to measure impairment loss, if any. Under the second step, the fair value is
allocated to all of the assets and liabilities of the reporting unit to determine an implied fair value of goodwill. This
allocation is similar to a purchase price allocation performed in purchase accounting. If the implied goodwill value
of a reporting unit is less than the carrying amount of that goodwill, an impairment loss is recognized in an amount
equal to that difference.

Determining fair values of a reporting unit, of its individual assets and liabilities, and also of other
identifiable intangible assets requires considering market information that is publicly available as well as the use of
significant estimates and assumptions. These estimates and assumptions could have a significant impact on whether
or not an impairment charge is recognized and also the magnitude of any such charge. Inputs used in determining
fair values where significant estimates and assumptions are necessary include discounted cash flow calculations,
market comparisons and recent transactions, projected future cash flows, discount rates reflecting the risk inherent
in future cash flows, long-term growth rates and determination and evaluation of appropriate market comparables.

The Corporation performed an annual test of goodwill and other intangibles as of October 1, 2010, and

concluded that the recorded value of goodwill was not impaired.

Income Taxes

The Corporation is subject to the income tax laws of the U.S., its states and other jurisdictions where it
conducts business. The laws are complex and subject to different interpretations by the taxpayer and various taxing
authorities. In determining the provision for income taxes, management must make judgments and estimates about
the application of these inherently complex tax statutes, related regulations and case law. In the process of preparing
the Corporation’s tax returns, management attempts to make reasonable interpretations of the tax laws. These
interpretations are subject to challenge by the taxing authorities based on audit results or to change based on
management’s ongoing assessment of the facts and evolving case law.

The Corporation establishes a valuation allowance when it is “more likely than not” that the Corporation
will not be able to realize a benefit from its deferred tax assets, or when future deductibility is uncertain.
Periodically, the valuation allowance is reviewed and adjusted based on management’s assessments of realizable
deferred tax assets.

On a quarterly basis, management assesses the reasonableness of the Corporation’s effective tax rate based
on management’s current best estimate of net income and the applicable taxes for the full year. Deferred tax assets
and liabilities are assessed on an annual basis, or sooner, if business events or circumstances warrant.

Recent Accounting Pronouncements and Developments

The New Accounting Standards footnote in the Notes to Consolidated Financial Statements, which is
included in Item 8 of this Report, discusses new accounting pronouncements adopted by the Corporation in 2010
and the expected impact of accounting pronouncements recently issued or proposed but not yet required to be
adopted.

Overview

The Corporation is a diversified financial services company headquartered in Hermitage, Pennsylvania. Its
primary businesses include community banking, consumer finance, wealth management and insurance. The
Corporation also conducts leasing and merchant banking activities. The Corporation operates its community
banking business through a full service branch network with offices in Pennsylvania and Ohio. The Corporation
operates its wealth management and insurance businesses within the community banking branch network. It also
conducts selected consumer finance business in Pennsylvania, Ohio, Tennessee and Kentucky.

Results of Operations

Year Ended December 31, 2010 Compared to Year Ended December 31, 2009

Net income for 2010 was $74.7 million or $0.65 per diluted share compared to net income available to
common shareholders of $32.8 million or $0.32 per diluted common share for 2009. Net income available to
common stockholders for 2009 was derived by reducing net income by $8.3 million related to preferred stock
dividends and discount amortization associated with the Corporation’s participation in the CPP. The increase in net
income is a result of an increase of $18.0 million in net interest income, combined with an increase of $10.5 million
in non-interest income and decreases of $19.5 million in the provision for loan losses and $4.2 million in non-
interest expenses. These items are more fully discussed later in this section.

The Corporation’s return on average equity was 7.06% and its return on average assets was 0.84% for

2010, compared to 3.87% and 0.48%, respectively, for 2009.

In addition to evaluating its results of operations in accordance with GAAP, the Corporation routinely
supplements its evaluation with an analysis of certain non-GAAP financial measures, such as return on average
tangible common equity and return on average tangible assets. The Corporation believes these non-GAAP financial
measures provide information useful to investors in understanding the Corporation’s operating performance and
trends, and facilitates comparisons with the performance of the Corporation’s peers. The non-GAAP financial
measures the Corporation uses may differ from the non-GAAP financial measures other financial institutions use to
measure their results of operations.

The following tables summarize the Corporation’s non-GAAP financial measures for 2010 and 2009

derived from amounts reported in the Corporation’s financial statements (dollars in thousands):

Return on average tangible common equity:
Net income available to common stockholders
Amortization of intangibles, net of tax

Average total stockholders’ equity
Less: Average preferred stockholders’ equity
Less: Average intangibles

Return on average tangible common equity

Return on average tangible assets:
Net income
Amortization of intangibles, net of tax

Average total assets
Less: Average intangibles

Return on average tangible assets

Year Ended
December 31,

2010

2009

74,652
4,364

79,016

32,803
4,607

37,410

$1,057,732
—
(564,448)

$1,063,104
(63,602)
(571,492)

$ 493,284

$ 428,010

16.02%

8.74%

74,652
4,364

79,016

41,111
4,607

45,718

$8,906,734
(564,448)

$8,606,188
(571,492)

$8,342,286

$8,034,696

0.95%

0.57%

The following table provides information regarding the average balances and yields earned on interest

earning assets and the average balances and rates paid on interest bearing liabilities (dollars in thousands):

Liabilities
Interest bearing liabilities:
Deposits:

Interest bearing demand
Savings
Certificates and other time

$2,443,381
857,582
2,199,667

Year Ended December 31

2010
Interest
Income/
Expense

Average
Balance

Yield/
Rate

Average
Balance

2009
Interest
Income/
Expense

Yield/
Rate

Average
Balance

2008
Interest
Income/
Expense

Yield/
Rate

$ 171,740
—

428
—

0.25% $ 202,288
14,110

—

504
69

0.24% $
0.48

4,344
14,596

89
304

2.04%
2.05

1,394,778

43,150

3.04

1,210,817

50,551

4.13

1,038,815

49,775

4.77

11,126
325,669
380,373

5.86
5.45
4.92

189,834
5,968,567
7,724,919
141,880
(114,526)
115,983
1,033,478
$8,906,734

10,129
1,659
52,736

4,449
3,694
8,080
7,984

0.41
0.19
2.40

0.69
2.78
3.60
3.91

88,731

1.32

640,248
130,981
224,610
204,370

6,700,839
1,045,837
102,326
7,849,002
1,057,732
$8,906,734

10,857
332,587
394,568

5.76
5.69
5.29

14,229
2,875
68,595

4,596
3,924
17,202
9,758

0.65
0.34
3.04

0.96
3.38
4.10
4.76

121,179

1.86

188,627
5,831,176
7,447,018
142,838
(107,015)
120,747
1,002,600
$8,606,188

$2,192,844
841,999
2,258,551

472,628
114,341
419,570
205,045

6,504,978
940,808
97,298
7,543,084
1,063,104
$8,606,188

10,225
355,426
415,819

5.62
6.57
6.25

26,307
6,610
78,651

7,771
5,259
21,044
12,347

1.42
0.89
3.68

2.05
3.61
4.22
6.43

157,989

2.66

181,957
5,410,022
6,649,734
146,615
(67,962)
108,768
859,739
$7,696,894

$1,849,808
746,570
2,137,555

373,200
143,154
498,262
192,060

5,940,609
825,083
83,785
6,849,477
847,417
$7,696,894

$1,024,080

$ 942,040

$ 709,125

291,642
6,552
$285,090

272,389
6,350
$267,039

257,830
6,038
$251,792

3.60%

3.77%

3.43%

3.67%

3.60%

3.88%

Assets
Interest earning assets:
Interest bearing deposits with

banks

Federal funds sold
Taxable investment
securities (1)

Non-taxable investment

securities (1)(2)

Loans (2)(3)

Total interest earning assets

Cash and due from banks
Allowance for loan losses
Premises and equipment
Other assets

Treasury management

accounts

Other short-term borrowings
Long-term debt
Junior subordinated debt
Total interest bearing

liabilities

Non-interest bearing demand
Other liabilities

Stockholders’ equity

Excess of interest earning

assets over interest bearing
liabilities

Net interest income (FTE)
Tax-equivalent adjustment
Net interest income

Net interest spread

Net interest margin (2)

(1)

(2)

(3)

The average balances and yields earned on securities are based on historical cost.

The interest income amounts are reflected on a fully taxable equivalent (FTE) basis which adjusts for the tax benefit of income on certain
tax-exempt loans and investments using the federal statutory tax rate of 35.0% for each period presented. The yield on earning assets and
the net interest margin are presented on an FTE basis. The Corporation believes this measure to be the preferred industry measurement of
net interest income and provides relevant comparison between taxable and non-taxable amounts.

Average balances include non-accrual loans. Loans consist of average total loans less average unearned income. The amount of loan fees
included in interest income on loans is immaterial.

Net Interest Income

Net interest income, which is the Corporation’s major source of revenue, is the difference between interest
income from earning assets (loans, securities and federal funds sold) and interest expense paid on liabilities
(deposits, treasury management accounts and short- and long-term borrowings). In 2010, net interest income, which
comprised 71.1% of net revenue (net interest income plus non-interest income) compared to 71.7% in 2009, was
affected by the general level of interest rates, changes in interest rates, the shape of the yield curve, the level of non-
accrual loans and changes in the amount and mix of interest earning assets and interest bearing liabilities.

Net interest income, on an FTE basis, increased $19.3 million or 7.1% from $272.4 million for 2009 to
$291.6 million for 2010. Average interest earning assets increased $277.9 million or 3.7% and average interest
bearing liabilities increased $195.9 million or 3.0% from 2009 due to investment, loan, deposit and treasury
management account growth. The Corporation’s net interest margin increased 10 basis points from 2009 to 3.77%
for 2010 as deposit rates declined faster than loan yields along with an improved funding mix with higher
transaction account balances and lower long-term debt. Details on changes in tax equivalent net interest income
attributed to changes in interest earning assets, interest bearing liabilities, yields and cost of funds are set forth in the
preceding table.

The following table provides certain information regarding changes in net interest income attributable to
changes in the average volumes and yields earned on interest earning assets and the average volume and rates paid
for interest bearing liabilities for the periods indicated (in thousands):

Interest Income
Interest bearing deposits with banks
Federal funds sold
Securities
Loans

Interest Expense
Deposits:

Interest bearing demand
Savings
Certificates and other time
Treasury management accounts
Other short-term borrowings
Long-term debt
Junior subordinated debt

2010 vs 2009
Rate

Net

Volume

2009 vs 2008
Rate

Net

18
(34)
(12,456)
(10,867)

(76)
(69)
(7,132)
(6,918)

470
(10)
7,452
23,502

(55)
(225)
(6,044)
(46,341)

415
(235)
1,408
(22,839)

(23,339)

(14,195)

31,414

(52,665)

(21,251)

(4,799)
(1,137)
(14,135)
(1,519)
(766)
(1,904)
(1,742)

(4,100)
(1,216)
(15,859)
(147)
(230)
(9,122)
(1,774)

(26,002)

(32,448)

4,426
720
4,547
1,693
(404)
(3,241)
790

8,531

(16,504)
(4,455)
(14,603)
(4,868)
(931)
(601)
(3,379)

(12,078)
(3,735)
(10,056)
(3,175)
(1,335)
(3,842)
(2,589)

(45,341)

(36,810)

Volume

(94)
(35)
5,324
3,949

9,144

699
(79)
(1,724)
1,372
536
(7,218)
(32)

(6,446)

Net Change

$15,590

$ 2,663

$ 18,253

$22,883

$ (7,324)

$ 15,559

(1)

(2)

The amount of change not solely due to rate or volume was allocated between the change due to rate and the change due to volume based
on the net size of the rate and volume changes.

Interest income amounts are reflected on an FTE basis which adjusts for the tax benefit of income on certain tax-exempt loans and
investments using the federal statutory tax rate of 35.0% for each period presented. The Corporation believes this measure to be the
preferred industry measurement of net interest income and provides relevant comparison between taxable and non-taxable amounts.

Interest income, on an FTE basis, of $380.4 million in 2010 decreased by $14.2 million or 3.6% from 2009.
Average interest earning assets of $7.7 billion for 2010 grew $277.9 million or 3.7% from the same period of 2009
primarily driven by increases in average investments and average loans. The yield on interest earning assets
decreased 37 basis points to 4.92% for 2010 reflecting the decreases in market interest rates.

Interest expense of $88.7 million for 2010 decreased by $32.4 million or 26.8% from 2009. The rate paid
on interest bearing liabilities decreased 54 basis points to 1.32% during 2010 reflecting changes in interest rates and
a favorable shift in mix. Average interest bearing liabilities increased $195.9 million or 3.0% to average $6.7 billion
for 2010. This growth was primarily attributable to average deposit and treasury management account growth of
$479.9 million or 7.2% for 2010, driven by the success of marketing campaigns designed to attract new customers to
the Corporation’s local approach to banking combined with customer preferences to keep funds in banks due to
uncertainties in the market. This growth was partially offset by a $195.0 million or 46.5% reduction in long-term
debt associated with the prepayment and maturities of certain higher cost borrowings in 2010.

Provision for Loan Losses

The provision for loan losses is determined based on management’s estimates of the appropriate level of
allowance for loan losses needed to absorb probable losses inherent in the existing loan portfolio, after giving
consideration to charge-offs and recoveries for the period.

The provision for loan losses of $47.3 million during 2010 decreased $19.5 million from 2009. During
2010, net charge-offs decreased $21.0 million from 2009 as the Corporation recognized lower net charge-offs for its
Florida portfolio, which decreased $24.4 million compared to 2009. The allowance for loan losses increased
$1.5 million from December 31, 2009 to $106.1 million at December 31, 2010 reflecting an increase in lending
activity, particularly in commercial loans and consumer lines of credit. While the economy is recovering from the
recession, the duration of the slow economic environment remains a challenge for borrowers, particularly in the
Corporation’s Florida portfolio. The $47.3 million provision for loan losses for 2010 was comprised of $17.1 million
relating to FNBPA’s Florida region, $6.1 million relating to Regency and $24.1 million relating to the remainder of
the Corporation’s portfolio, which is predominantly in Pennsylvania. During 2010, net charge-offs were $45.9 mil-
lion or 0.77% of average loans compared to $66.9 million or 1.15% of average loans for 2009. The net charge-offs
for 2010 were comprised of $19.5 million or 8.83% of average loans relating to FNBPA’s Florida region,
$6.1 million or 3.82% of average loans relating to Regency and $20.3 million or 0.36% of average loans relating
to the remainder of the Corporation’s portfolio. For additional information, refer to the Allowance and Provision for
Loan Losses section of this Management’s Discussion and Analysis.

Non-Interest Income

Total non-interest income of $116.0 million in 2010 increased $10.5 million or 9.9% from 2009. This
increase resulted primarily from higher gains on sales of securities, an increase in trust fees and higher gains on sales
of residential mortgage loans, combined with increased other income and lower OTTI charges. These items were
partially offset by decreases in service charges, insurance commissions and fees, securities commissions and fees
and income from bank owned life insurance (BOLI). These items are further explained in the following paragraphs.

Net impairment losses on securities of $2.3 million improved by $5.6 million from 2009 due to fewer

impairment losses during 2010 relating to investments in pooled TPS.

Service charges on loans and deposits of $56.8 million for 2010 decreased $1.0 million or 1.7% from 2009,
reflecting lower overdraft fees resulting from changing patterns of consumer behavior and the implementation of
Regulation E, which was effective for new accounts on July 1, 2010 and existing accounts on August 15, 2010. The
impact of Regulation E on 2010 was a reduction to service charges on deposits of $1.7 million. The lower overdraft
fees were partially offset by higher debit card fees.

Insurance commissions and fees of $15.8 million for 2010 decreased $0.9 million or 5.4% from 2009

primarily as a result of lower contingent and commission revenues.

Securities commissions and fees of $6.8 million for 2010 decreased by $0.6 million or 8.3% from 2009

primarily due to lower revenue generated from financial consultant activity during 2010.

Trust fees of $12.7 million in 2010 increased by $0.9 million or 7.7% from 2009 due to the effect of
improved market conditions on assets under management compared to 2009. Assets under management increased
by $61.4 million or 2.7% to $2.3 billion at December 31, 2010.

Income from BOLI of $4.9 million for 2010 decreased by $0.7 million or 13.0% from 2009. This decrease
was primarily attributable to lower yields and a $13.7 million withdrawal from the policy which was redeployed
into higher yielding investments during 2009.

Gain on sale of residential mortgage loans of $3.8 million for 2010 increased by $0.7 million or 22.9%
from 2009. The Corporation sold $191.9 million of residential mortgage loans during 2010 compared to
$196.2 million during 2009 as part of its ongoing strategy of generally selling 30-year fixed rate residential
mortgage loans.

Gains on sales of securities of $3.0 million increased $2.4 million from 2009 primarily as a result of the
Corporation selling a $6.0 million U.S. government agency security and $53.8 million of mortgage-backed
securities during 2010 to better position the balance sheet.

Other income of $14.5 million for 2010 increased $4.1 million or 39.4% from 2009. The primary items
contributing to this increase were $2.9 million more in recoveries on impaired loans acquired in previous
acquisitions, $2.0 million more in gains relating to activity at the Corporation’s merchant banking subsidiary
and $0.2 million more in gains relating to the sale of repossessed assets. These items were partially offset by a gain
of $0.8 million recognized during 2009 on the sale of a building acquired in a previous acquisition and a decrease of
$0.5 million in fees earned through an interest rate swap program for larger commercial customers who desire fixed
rate loans while the Corporation benefits from a variable rate asset, thereby helping to reduce volatility in net
interest income.

Non-Interest Expense

Total non-interest expense of $251.1 million in 2010 decreased $4.2 million or 1.7% from 2009. This
decrease was primarily attributable to decreases in salaries and employee benefits, outside services, other real estate
owned (OREO), FDIC insurance, telephone and advertising, partially offset by increases in merger-related and
other expenses. These items are further explained in the following paragraphs.

Salaries and employee benefits of $126.3 million in 2010 decreased $0.6 million or 0.5% from 2009. This
decrease was primarily driven by a one-time $10.5 million reduction to pension expense in 2010 related to the
amendment of the existing plan to be more in line with current industry practices. This amendment is intended to
reduce the volatility and uncertainty of future pension costs and provide employees greater flexibility through
participation in the Corporation’s 401(k) plan which is expected to increase the Corporation’s contributions by
approximately $1.0 million per annum. Partially offsetting the one-time pension adjustment was an increase of
$3.8 million relating to salaries associated with various revenue-generating initiatives such as the addition of an
asset-based lending group and an expanded private banking group combined with normal annual merit increases.
Additionally, incentive compensation, increased $3.8 million resulting from business performance, discretionary
employer 401(k) contributions increased $1.1 million as a result of the Corporation exceeding its annual
profitability thresholds and restricted stock expense increased $1.0 million primarily due to the effect of prior
year executive bonuses being awarded in stock instead of cash.

Amortization of intangibles expense of $6.7 million in 2010 decreased $0.4 million or 5.3% from 2009 due
to a combination of certain intangible assets being completely amortized during 2009 and lower amortization
expense on some intangible assets due to accelerated amortization methods.

Outside services expense of $22.6 million in 2010 decreased $1.0 million or 4.1% from 2009 primarily due
to lower legal and consulting fees during 2010 resulting from the completion of projects and loan workout efforts in
2009.

FDIC insurance of $10.5 million for 2010 decreased $3.4 million from 2009 due to a one-time special
assessment of $4.0 million paid during 2009, partially offset by the full year effect of an increase in FDIC insurance
premium rates during the second half of 2009 and higher deposits.

State tax expense of $7.3 million in 2010 increased $0.5 million or 6.8% from 2009 primarily due to higher

net worth based taxes related to the June 2009 capital raise.

OREO expense of $4.9 million in 2010 decreased $1.3 million or 21.0% from 2009, due to lower

foreclosure activity and write-downs of OREO property in the Florida market compared to 2009.

Telephone expense of $4.5 million in 2010 decreased $0.7 million or 13.6% from 2009 reflecting

continued effective expense control through the use of technology.

Advertising and promotional expense of $5.2 million in 2010 decreased slightly from 2009.

The Corporation recorded merger-related expenses of $0.6 million in 2010 relating to the acquisition of
CBI, which closed on January 1, 2011. No merger-related expenses were recorded during 2009. Information
relating to the Corporation’s acquisitions is discussed in the Mergers and Acquisitions footnote in the Notes to
Consolidated Financial Statements, which is included in Item 8 of this Report.

Other non-interest expenses of $24.2 million in 2010 increased $2.1 million or 9.7% from 2009. During
2010, the Corporation recognized charges of $2.3 million associated with the prepayment of certain higher cost
borrowings to better position the balance sheet.

Income Taxes

The Corporation’s income tax expense of $27.9 million for 2010 increased by $18.6 million from 2009.
The effective tax rate of 27.19% for 2010 increased from 18.40% for 2009, primarily due to higher pre-tax income
for 2010. The income tax expense for 2010 and 2009 were favorably impacted by $0.3 million and $0.4 million,
respectively, due to the resolution of previously uncertain tax positions. The lower effective tax rate also reflects
benefits resulting from tax-exempt income on investments, loans and BOLI. Both periods’ tax rates are lower than
the 35.0% federal statutory tax rate due to the tax benefits primarily resulting from tax-exempt instruments and
excludable dividend income.

Year Ended December 31, 2009 Compared to Year Ended December 31, 2008

Net income for 2009 was $41.1 million compared to net income of $35.6 million for 2008. Net income
available to common stockholders for 2009 was $32.8 million or $0.32 per diluted share, compared to net income
available to common stockholders for 2008 of $35.6 million or $0.44 per diluted share. Net income available to
common stockholders for 2009 included $8.3 million related to preferred stock dividends and discount amortization
associated with the Corporation’s participation in the CPP. The increase in net income is a result of an increase of
$15.2 million in net interest income, combined with an increase of $19.4 million in non-interest income and a
decrease of $5.6 million in the provision for loan losses, partially offset by an increase of $32.6 million in non-
interest expenses. These items are more fully discussed later in this section.

The Corporation’s return on average equity was 3.87% and its return on average assets was 0.48% for

2009, compared to 4.20% and 0.46%, respectively, for 2008.

Net Interest Income

Net interest income, which is the Corporation’s major source of revenue, is the difference between interest
income from earning assets and interest expense paid on liabilities. In 2009, net interest income, which comprised
71.7% of net revenue compared to 74.5% in 2008, was affected by the general level of interest rates, changes in
interest rates, the shape of the yield curve, the level of non-accrual loans and changes in the amount and mix of
interest earning assets and interest bearing liabilities.

Net interest income, on an FTE basis, increased $14.6 million or 5.6% from $257.8 million for 2008 to
$272.4 million for 2009. Average interest earning assets increased $797.3 million or 12.0% and average interest
bearing liabilities increased $564.4 million or 9.5% from 2008 due to organic loan and deposit growth and the
Omega and IRGB acquisitions. The Corporation’s net interest margin decreased by 21 basis points from 2008 to
3.67% for 2009 as loan yields declined faster than deposit rates, reflecting the actions taken by the FRB to lower
interest rates during the fourth quarter of 2008 combined with competitive pressures on deposit rates.

Interest income, on an FTE basis, of $394.6 million in 2009 decreased by $21.3 million or 5.1% from 2008.
Average interest earning assets of $7.4 billion for 2009 grew $797.3 million or 12.0% from the same period of 2008
primarily driven by the Omega and IRGB acquisitions, which increased loans by $1.1 billion and $160.2 million,
respectively, at the time of each acquisition. The yield on interest earning assets decreased 96 basis points to 5.29%
for 2009 reflecting changes in interest rates as the FRB has lowered its federal funds target rate from 4.25% at the
beginning of 2008 to 0.25% by the end of 2009.

Interest expense of $121.2 million for 2009 decreased by $36.8 million or 23.3% from 2008. The rate paid
on interest bearing liabilities decreased 80 basis points to 1.86% during 2009 reflecting changes in interest rates and
a favorable shift in mix. Average interest bearing liabilities increased $564.4 million or 9.5% to average $6.5 billion
for 2009. This growth was primarily attributable to the Omega and IRGB acquisitions combined with organic
growth. The Omega and IRGB acquisitions increased deposits by $1.3 billion and $256.8 million, respectively, at
the time of each acquisition. The Corporation also recognized organic average deposit and treasury management
account growth of $279.7 million or 4.7% for 2009, compared to 2008, driven by success with ongoing marketing
campaigns designed to attract new customers to the Corporation’s local approach to banking combined with
customer preferences to keep funds in banks due to uncertainties in the market.

Provision for Loan Losses

The provision for loan losses of $66.8 million in 2009 decreased $5.6 million from 2008. In 2009, net
charge-offs increased $34.3 million as allowances provided in 2008 were charged off in 2009, while the allowance
for loan losses ended 2009 at $104.7 million, flat with December 31, 2008. The $66.8 million provision for loan
losses for 2009 was comprised of $35.1 million relating to FNBPA’s Florida region, $6.7 million relating to Regency
and $25.0 million relating to the remainder of the Corporation’s portfolio. The increase in net charge-offs reflects
continued weakness in the Corporation’s Florida portfolio, and, to a much lesser extent, the slowing economy in
Pennsylvania. During 2009, net charge-offs were $66.9 million or 1.15% of average loans compared to $32.6 million
or 0.60% of average loans for 2008. The net charge-offs for 2009 were comprised of $43.8 million or 15.80% of
average loans relating to FNBPA’s Florida region, $6.3 million or 4.04% of average loans relating to Regency and
$16.7 million or 0.30% of average loans relating to the remainder of the Corporation’s portfolio. For additional
information, refer to the Allowance and Provision for Loan Losses section of this Management’s Discussion and
Analysis.

Non-Interest Income

Total non-interest income of $105.5 million in 2009 increased $19.4 million or 22.5% from 2008. This
increase resulted primarily from increases in both service charges and insurance commissions and fees reflecting
organic growth and the impact of acquisitions combined with lower OTTI charges, a gain recognized on the sale of a
building acquired in a previous acquisition and higher gains on sales of residential mortgage loans. These items
were partially offset by decreases in securities commissions and fees, trust fees, income from bank owned life
insurance and gains on sales of securities.

Service charges on loans and deposits of $57.7 million for 2009 increased $3.0 million or 5.6% from 2008,
reflecting organic growth as the Corporation took advantage of competitor disruption in the marketplace, with
ongoing marketing campaigns designed to attract new customers to the Corporation’s local approach to banking.
Additionally, the Corporation’s customer base expanded as a result of the Omega and IRGB acquisitions during
2008. Insurance commissions and fees of $16.7 million for 2009 increased $1.1 million or 7.1% from 2008
primarily as a result of the acquisition of Omega during 2008. Securities commissions of $7.5 million for 2009
decreased by $0.7 million or 8.2% from 2008 primarily due to lower activity due to market conditions, partially
offset by the impact of the acquisition of Omega during 2008. Trust fees of $11.8 million in 2009 decreased by
$0.3 million or 2.3% from 2008 due to the negative effect of market conditions on assets under management,
partially offset by growth in assets under management resulting from the Omega acquisition during 2008. Income
from BOLI of $5.7 million for 2009 decreased by $0.7 million or 11.4% from 2008. This decrease was primarily
attributable to death claims, lower yields and a $13.7 million withdrawal from the policy due to the unfavorable
market conditions during 2009. Gain on sale of residential mortgage loans of $3.1 million for 2009 increased by
$1.2 million or 67.8% from 2008 due to a higher volume of loan sales resulting from increased loan refinancing in a
lower rate environment. The Corporation sold $196.2 million of residential mortgage loans during 2009 compared
to $117.8 million during 2008. Gains on sales of securities of $0.5 million decreased $0.3 million or 36.7% from
2008. During 2009, the Corporation recognized a gain of $0.2 million relating to the acquisition of a company in
which the Corporation owned stock. Additionally, the Corporation recognized a gain of $0.2 million relating to
called securities during 2009. During 2008, most of the gain related to the Visa, Inc. initial public offering. The
Corporation is a member of Visa USA since it issues Visa debit cards. As such, a portion of the Corporation’s
ownership interest in Visa was redeemed in exchange for $0.7 million. This entire amount was recorded as gain on
sale of securities in 2008 since the Corporation’s cost basis in Visa is zero. Net impairment losses on securities of
$7.9 million decreased by $9.3 million from 2008. Impairment losses on securities during 2009 consisted of
$7.1 million related to investments in pooled TPS and $0.7 million related to investments in bank stocks, while
impairment losses on securities during 2008 consisted of $16.0 million related to investments in pooled TPS and
$1.2 million related to investments in bank stocks. Other income of $10.4 million for 2009 increased $6.7 million or
178.0% from 2008. The primary items contributing to this increase were $1.0 million more in gains relating to
payments received on impaired loans acquired in previous acquisitions, a gain of $0.8 million on the sale of a
building acquired in a previous acquisition and an increase of $0.3 million in fees earned through an interest rate
swap program for larger commercial customers who desire fixed rate loans while the Corporation benefits from a
variable rate asset, thereby helping to reduce volatility in its net interest income. Additionally, impairment losses
associated with the Corporation’s merchant banking subsidiary decreased by $2.9 million.

Non-Interest Expense

Total non-interest expense of $255.3 million in 2009 increased $32.6 million or 14.7% from 2008. This
increase was primarily attributable to operating expenses resulting from the Omega and IRGB acquisitions in 2008
combined with increases in salaries and employee benefits, OREO and FDIC insurance.

Salaries and employee benefits of $126.9 million in 2009 increased $10.0 million or 8.6% from 2008. This
increase was primarily attributable to the acquisitions of Omega and IRGB during 2008 combined with $1.1 million
in additional pension expense during 2009 resulting from an increase in the actuarial valuation amount. Combined
net occupancy and equipment expense of $38.2 million in 2009 increased $4.0 million or 11.7% from the combined
2008 level, primarily due to the Omega and IRGB acquisitions during 2008. Amortization of intangibles expense of

$7.1 million in 2009 increased $0.6 million or 10.0% from 2008 primarily due to higher intangible balances
resulting from the Omega and IRGB acquisitions during 2008. Outside services expense of $23.6 million in 2009
increased $2.7 million or 12.8% from 2008 primarily due to the Omega and IRGB acquisitions during 2008,
combined with higher fees for professional services, including legal fees incurred for loan workout efforts. FDIC
insurance of $13.9 million for 2009 increased $13.0 million from 2008 due to a one-time special assessment of
$4.0 million paid during 2009, combined with an increase in FDIC insurance premium rates for 2009 and FNBPA
having utilized its FDIC insurance premium credits in prior periods. State tax expense of $6.8 million in 2009
increased $0.3 million or 4.0% from 2008 primarily due to higher net worth based taxes resulting from the
Corporation’s acquisitions of Omega and IRGB in 2008. OREO expense of $6.2 million in 2009 increased
$4.0 million from 2008, due to increased foreclosure activity and write-downs of OREO property, particularly in the
Florida market, during 2009. Advertising and promotional expense of $5.3 million in 2009 increased $0.7 million or
16.0% from 2008 due to increased advertising in connection with the Corporation’s efforts to attract new customers
to the Corporation’s local approach to banking during a time of competitor disruption in the marketplace, combined
with the Corporation’s acquisitions of Omega and IRGB in 2008. The Corporation recorded merger-related
expenses of $4.7 million in 2008 relating to the acquisitions of Omega and IRGB. No merger-related expenses were
recorded during 2009. Information relating to the Corporation’s acquisitions is discussed in the Mergers and
Acquisitions footnote in the Notes to Consolidated Financial Statements, which is included in Item 8 of this Report.
Other non-interest expenses of $22.1 million in 2009 increased $2.1 million or 10.2% from 2008. This increase
reflects additional operating costs associated with the Corporation’s acquisitions of Omega and IRGB in 2008.
Additionally, loan-related expense of $3.8 million in 2009 increased $0.8 million from 2008 primarily due to costs
associated with the Florida commercial loan portfolio in 2009. Also, the Corporation recorded net expense of
$1.0 million during 2009 associated with a litigation settlement.

Income Taxes

The Corporation’s income tax expense of $9.3 million for 2009 increased by $2.0 million or 28.1% from
2008. The effective tax rate of 18.4% for 2009 increased from 16.9% for the prior year, primarily due to higher pre-
tax income for 2009. The income tax expense for 2009 and 2008 were favorably impacted by $0.4 million and
$0.3 million, respectively, due to the resolution of previously uncertain tax positions. The lower effective tax rate
also reflects benefits resulting from tax-exempt income on investments, loans and BOLI. Both periods’ tax rates are
lower than the 35.0% federal statutory tax rate due to the tax benefits primarily resulting from tax-exempt
instruments and excludable dividend income.

Liquidity

The Corporation’s goal in liquidity management is to satisfy the cash flow requirements of customers and
the operating cash needs of the Corporation with cost-effective funding. The Board of Directors of the Corporation
has established an Asset/Liability Management Policy in order to achieve and maintain earnings performance
consistent with long-term goals while maintaining acceptable levels of interest rate risk, a “well-capitalized”
balance sheet and adequate levels of liquidity. The Board of Directors of the Corporation has also established a
Contingency Funding Policy to address liquidity crisis conditions. These policies designate the Corporate
Asset/Liability Committee (ALCO) as the body responsible for meeting these objectives. The ALCO, which
includes members of executive management, reviews liquidity on a periodic basis and approves significant changes
in strategies that affect balance sheet or cash flow positions. Liquidity is centrally managed on a daily basis by the
Corporation’s Treasury Department.

FNBPA generates liquidity from its normal business operations. Liquidity sources from assets include
payments from loans and investments as well as the ability to securitize, pledge or sell loans, investment securities
and other assets. Liquidity sources from liabilities are generated primarily through the 223 banking offices of
FNBPA in the form of deposits and treasury management accounts. The Corporation also has access to reliable and
cost-effective wholesale sources of liquidity. Short-term and long-term funds can be acquired to help fund normal
business operations as well as serve as contingency funding in the event that the Corporation would be faced with a
liquidity crisis.

The principal sources of the parent company’s liquidity are its strong existing cash resources plus
dividends it receives from its subsidiaries. These dividends may be impacted by the parent’s or its subsidiaries’
capital needs, statutory laws and regulations, corporate policies, contractual restrictions, profitability and other
factors. Cash on hand at the parent at December 31, 2010 was $91.6 million, up from $74.9 million at December 31,
2009. Management believes these are appropriate levels of cash for the Corporation given the current environment.
Two metrics that are used to gauge the adequacy of the parent company’s cash position are the Liquidity Coverage
Ratio (LCR) and Months of Cash on Hand (MCH). The LCR is defined as the sum of cash on hand plus cash inflows
over the next 12 months divided by cash outflows over the next 12 months. The LCR was 2.0x on December 31,
2010 and 2.1x on December 31, 2009 versus a policy guideline of H = 1x. The MCH is defined as the number of
months of corporate expenses that can be covered by the cash on hand. The MCH was 12 months on both
December 31, 2010 and 2009 versus a policy guideline of H = 3 months. During 2009, the Parent took a number of
actions to bolster its cash position. On January 9, 2009, the Corporation completed the sale of 100,000 shares of
newly issued Series C Preferred Stock valued at $100.0 million as part of the UST’s CPP. The Corporation redeemed
the Series C Preferred Stock on September 9, 2009. Additionally, on January 21, 2009, the Corporation’s Board of
Directors elected to reduce the common stock cash dividend rate from $0.24 to $0.12 per quarter, thus reducing
annual liquidity needs by approximately $55.0 million. Finally, on June 16, 2009, the Corporation completed a
common stock offering that raised $125.8 million in total capital, $98.0 million of which was invested in FNBPA.
The parent also may draw on an approved line of credit with a major domestic bank. This unused line was
$15.0 million as of December 31, 2010 and 2009. During 2009, a $25.0 million committed line of credit was
negotiated with a major domestic bank on behalf of Regency. As of December 31, 2010 and 2009, $10.0 million was
outstanding. In addition, the Corporation also issues subordinated notes through Regency on a regular basis.
Subordinated notes increased $14.9 million or 7.9% during 2010 to $204.2 million at December 31, 2010. This
increase is net of a $5.6 million decrease in the balance of a single customer’s account.

The liquidity position of the Corporation continues to be strong as evidenced by its ability to generate
strong growth in deposits and treasury management accounts. As a result, the Corporation is less reliant on capital
markets funding as witnessed by its ratio of total deposits and treasury management accounts to total assets of
81.0% and 79.4% as of December 31, 2010 and 2009, respectively. Over this time period, growth in deposits and
treasury management accounts was $341.0 million or 4.9% which funded loan growth of $238.8 million. FNBPA
had unused wholesale credit availability of $3.1 billion or 35.3% of bank assets at December 31, 2010 and
$3.1 billion or 36.9% of bank assets at December 31, 2009. These sources include the availability to borrow from the
FHLB, the FRB, correspondent bank lines and access to certificates of deposit issued through brokers. FNBPA has
identified certain liquid assets, including overnight cash, unpledged securities and loans, which could be sold to
meet funding needs. Included in these liquid assets are overnight balances and unpledged government and agency
securities which totaled 4.6% and 4.9% of bank assets as of December 31, 2010 and 2009, respectively. FNBPA
recently received approval to offer an offshore, non-collateralized, interest-bearing checking account. This account
is expected to reduce the security pledging requirements of FNBPA as customers move from repurchase agreements
to this account. Consequently, the lower pledging requirements will result in a higher level of unpledged
government and agency securities available for contingency funding needs.

Another metric for measuring liquidity risk is the liquidity gap analysis. The following liquidity gap
analysis (in thousands) for the Corporation as of December 31, 2010 compares the difference between cash flows
from existing assets and liabilities over future time intervals. Management seeks to limit the size of the liquidity
gaps so that sources and uses of funds are reasonably matched in the normal course of business. A matched position
lays a better foundation for dealing with the additional funding needs during a potential liquidity crisis. The twelve-

month cumulative gap to total assets of (1.1)% as of December 31, 2010 compares to an internal guideline of
between (5.0)% and 5.0%. This metric was not calculated as of December 31, 2009.

Assets
Loans
Investments

Liabilities
Non-maturity deposits
Time deposits
Borrowings

Period Gap (Assets - Liabilities)

Cumulative Gap

Cumulative Gap to Total Assets

Within
1 Month

$142,034
96,275
238,309

57,391
147,313
27,353
232,057

6,252

0.1%

2-3
Months

4-6
Months

7-12
Months

Total
1 Year

$269,510
74,259
343,769

114,783
249,105
34,291
398,179

$ (54,410)

$ (48,158)

$408,924
133,078
542,002

172,174
363,374
47,683
583,231

$ (41,229)

$ (89,387)

$ 703,691
232,613
936,304

344,349
512,573
90,105
947,027

(10,723)

(100,110)

(0.5)%

(1.0)%

(1.1)%

$1,524,159
536,225
2,060,384

688,697
1,272,365
199,432
2,160,494

(100,110)

In addition, the ALCO regularly monitors various liquidity ratios and stress scenarios of the Corporation’s
liquidity position. Management believes the Corporation has sufficient liquidity available to meet its normal
operating and contingency funding cash needs.

Market Risk

Market risk refers to potential losses arising from changes in interest rates, foreign exchange rates, equity
prices and commodity prices. The Securities footnote in the Notes to Consolidated Financial Statements, which is
included in Item 8 of this Report, discusses impairment charges the Corporation has taken on its investment
portfolio during 2010 and 2009 relating to the pooled TPS and bank stock portfolios. The Securities footnote also
discusses the ongoing process management utilizes to determine whether impairment exists.

The Corporation is primarily exposed to interest rate risk inherent in its lending and deposit-taking
activities as a financial intermediary. To succeed in this capacity, the Corporation offers an extensive variety of
financial products to meet the diverse needs of its customers. These products sometimes contribute to interest rate
risk for the Corporation when product groups do not complement one another. For example, depositors may want
short-term deposits while borrowers desire long-term loans.

Changes in market interest rates may result in changes in the fair value of the Corporation’s financial
instruments, cash flows and net interest income. The ALCO is responsible for market risk management which
involves devising policy guidelines, risk measures and limits, and managing the amount of interest rate risk and its
effect on net interest income and capital. The Corporation uses derivative financial instruments for interest rate risk
management purposes and not for trading or speculative purposes.

Interest rate risk is comprised of repricing risk, basis risk, yield curve risk and options risk. Repricing risk
arises from differences in the cash flow or repricing between asset and liability portfolios. Basis risk arises when
asset and liability portfolios are related to different market rate indexes, which do not always change by the same
amount. Yield curve risk arises when asset and liability portfolios are related to different maturities on a given yield
curve; when the yield curve changes shape, the risk position is altered. Options risk arises from “embedded options”
within asset and liability products as certain borrowers have the option to prepay their loans when rates fall while
certain depositors can redeem their certificates of deposit early when rates rise.

The Corporation uses a sophisticated asset/liability model to measure its interest rate risk. Interest rate risk
measures utilized by the Corporation include earnings simulation, economic value of equity (EVE) and gap
analysis.

Gap analysis and EVE are static measures that do not incorporate assumptions regarding future business.
Gap analysis, while a helpful diagnostic tool, displays cash flows for only a single rate environment. EVE’s long-
term horizon helps identify changes in optionality and longer-term positions. However, EVE’s liquidation
perspective does not translate into the earnings-based measures that are the focus of managing and valuing a
going concern. Net interest income simulations explicitly measure the exposure to earnings from changes in market
rates of interest. In these simulations, the Corporation’s current financial position is combined with assumptions
regarding future business to calculate net interest income under various hypothetical rate scenarios. The ALCO
reviews earnings simulations over multiple years under various interest rate scenarios on a periodic basis.
Reviewing these various measures provides the Corporation with a comprehensive view of its interest rate profile.

The following repricing gap analysis (in thousands) as of December 31, 2010 compares the difference
between the amount of interest earning assets (IEA) and interest bearing liabilities (IBL) subject to repricing over a
period of time. A ratio of more than one indicates a higher level of repricing assets over repricing liabilities for the
time period. Conversely, a ratio of less than one indicates a higher level of repricing liabilities over repricing assets
for the time period.

Interest Earning Assets (IEA)
Loans
Investments

Interest Bearing Liabilities (IBL)
Non-maturity deposits
Time deposits
Borrowings

Period Gap

Cumulative Gap

IEA/IBL (Cumulative)

Cumulative Gap to IEA

Within
1 Month

2-3
Months

$1,442,933
96,278
1,539,211

$ 988,467
96,481
1,084,948

1,643,445
156,648
668,869
2,468,962

—
244,919
10,030
254,949

$ (929,751)

$ 829,999

$ (929,751)

$ (99,752)

4-6
Months

$391,226
194,576
585,802

—
354,042
32,791
386,833

$198,969

$ 99,217

7-12
Months

$570,865
309,233
880,098

—
493,806
17,321
511,127

$368,971

$468,188

0.62

(11.9)%

0.96

(1.3)%

1.03

1.3%

1.13

6.0%

Total
1 Year

$3,393,491
696,568
4,090,059

1,643,445
1,249,415
729,011
3,621,871

$ 468,188

The cumulative twelve-month IEA to IBL ratio changed to 1.13 for December 31, 2010 from 1.04 for

December 31, 2009.

The allocation of non-maturity deposits to the one-month maturity category is based on the estimated
sensitivity of each product to changes in market rates. For example, if a product’s rate is estimated to increase by
50% as much as the market rates, then 50% of the account balance was placed in this category.

The following net interest income metrics were calculated using rate ramps which move market rates in a
parallel fashion gradually over 12 months. Whereas the EVE metrics utilized rate shocks which represent
immediate rate changes that move all market rates by the same amount. The variance percentages represent
the change between the net interest income or EVE calculated under the particular rate scenario versus the net
interest income or EVE that was calculated assuming market rates as of December 31, 2010.

The following table presents an analysis of the potential sensitivity of the Corporation’s net interest income

and EVE to changes in interest rates:

Net interest income change (12 months):
+ 300 basis points
+ 200 basis points
+ 100 basis points
- 100 basis points

Economic value of equity:
+ 300 basis points
+ 200 basis points
+ 100 basis points
(cid:2) 100 basis points

December 31,
2010

December 31,
2009

ALCO
Guidelines

0.1 %
0.0 %
(0.1)%
0.2 %

(8.5)%
(5.2)%
(2.2)%
1.4 %

(0.8)%
(0.5)%
(0.2)%
(0.7)%

(9.7)%
(5.9)%
(2.3)%
(0.9)%

+/-5.0%
+/-5.0%
+/-5.0%
+/-5.0%

—
—
—
—

The Corporation’s strategy is to manage to a neutral interest rate risk position. In the short term, rising rates
have a modest positive effect on net interest income. The Corporation has maintained a relatively stable net interest
margin over the last five years despite market rate volatility.

During 2010, the ALCO utilized several strategies to maintain the Corporation’s interest rate risk position
at a relatively neutral level. For example, the Corporation successfully achieved growth in longer-term certificates
of deposit. On the lending side, the Corporation regularly sells long-term fixed-rate residential mortgages to the
secondary market and has been successful in the origination of consumer and commercial loans with short-term
repricing characteristics. Total variable and adjustable-rate loans increased from 57.4% of total loans as of
December 31, 2009 to 58.4% of total loans as of December 31, 2010. The investment portfolio is used, in part, to
manage the Corporation’s interest rate risk position. The duration of the investment portfolio is relatively low at
2.5 years and 2.3 years at December 31, 2010 and 2009, respectively. The investment portfolio is expected to
generate approximately $460.0 million in cash flow during 2011. Finally, the Corporation has made use of interest
rate swaps to lessen its interest rate risk position. The $138.9 million in notional swap principal originated in 2010
contributed to the increase in adjustable loans and has brought the total to $480.7 million under this program. For
additional information regarding interest rate swaps, see the Derivative Instruments footnote in the Notes to
Consolidated Financial Statements, which is included in Item 8 of this Report.

OCC Bulletin 2000-16 mandates that banks have their asset/liability models independently validated on a
periodic basis. The Corporation’s Asset/Liability Management Policy states that the model will be validated at least
every three years. A leading asset/liability consulting firm issued a report as of December 31, 2009 after conducting
a validation of the model for FNBPA. The model was given an “Excellent” rating, which according to the
consultant, indicates that the overall model implementation meets FNBPA’s earnings performance assessment and
interest rate risk analysis needs.

The Corporation recognizes that all asset/liability models have some inherent shortcomings. Asset/
liability models require certain assumptions to be made, such as prepayment rates on interest earning assets and
pricing impact on non-maturity deposits, which may differ from actual experience. These business assumptions are
based upon the Corporation’s experience, business plans and available industry data. While management believes
such assumptions to be reasonable, there can be no assurance that modeled results will be achieved. Furthermore,
the metrics are based upon the balance sheet structure as of the valuation data and do not reflect the planned growth
or management actions which could be taken.

Risk Management

The key to effective risk management is to be proactive in identifying, measuring, evaluating and
monitoring risk on an ongoing basis. Risk management practices support decision-making, improve the success rate
for new initiatives, and strengthen the market’s confidence in the Corporation and its affiliates.

The Corporation supports its risk management process through a governance structure involving its Board
of Directors and senior management. The Corporation’s Risk Committee, which is comprised of various members
of the Board of Directors, helps insure that management executes business decisions within the Corporation’s
desired risk profile. The Risk Committee has the following key roles:

(cid:129)
(cid:129)
(cid:129)

facilitate the identification, assessment and monitoring of risk across the Corporation;
provide support and oversight to the Corporation’s businesses; and
identify and implement risk management best practices, as appropriate.

FNBPA has a Risk Management Committee comprised of senior management to provide day-to-day
oversight to specific areas of risk with respect to the level of risk and risk management structure. FNBPA’s Risk
Management Committee reports on a regular basis to the Corporation’s Risk Committee regarding the enterprise
risk profile of the Corporation and other relevant risk management issues.

The Corporation’s audit function performs an independent assessment of the internal control environment.
Moreover, the Corporation’s audit function plays a critical role in risk management, testing the operation of internal
control systems and reporting findings to management and to the Corporation’s Audit Committee. Both the
Corporation’s Risk Committee and FNBPA’s Risk Management Committee regularly assess the Corporation’s
enterprise-wide risk profile and provide guidance on actions needed to address key risk issues.

Contractual Obligations, Commitments and Off-Balance Sheet Arrangements

The following table sets forth contractual obligations of principal that represent required and potential cash

outflows as of December 31, 2010 (in thousands):

Deposits without a stated maturity
Certificates and other time deposits
Operating leases
Long-term debt

Within
1 Year

$4,517,074
1,242,049
5,651
26,098

$5,790,872

1-3 Years

3-5 Years

—
664,798
9,354
112,923

$787,075

—
218,662
4,604
51,949

$275,215

After
5 Years

$ —
3,560
12,614
1,088

$17,262

Total

$4,517,074
2,129,069
32,223
192,058

$6,870,424

The following table sets forth the amounts and expected maturities of commitments to extend credit and

standby letters of credit as of December 31, 2010 (in thousands):

Commitments to extend credit
Standby letters of credit

Within
1 Year

$1,380,266
67,298

$1,447,564

1-3 Years

3-5 Years

$34,730
32,548

$67,278

$23,869
1,340

$25,209

After
5 Years

$111,391
—

$111,391

Total

$1,550,256
101,186

$1,651,442

Commitments to extend credit and standby letters of credit do not necessarily represent future cash
requirements because while the borrower has the ability to draw upon these commitments at any time, these
commitments often expire without being drawn upon. For additional information relating to commitments to extend
credit and standby letters of credit, see the Commitments, Credit Risk and Contingencies footnote in the Notes to
Consolidated Financial Statements, which is included in Item 8 of this Report.

Lending Activity

commercial loans in Florida, which totaled $195.3 million or 3.2% of total loans as of December 31, 2010 compared
to $243.9 million or 4.2% of total loans as of December 31, 2009. In addition, the portfolio contains consumer
finance loans to individuals in Pennsylvania, Ohio, Tennessee and Kentucky, which totaled $162.8 million or 2.7%
of total loans as of December 31, 2010.

Following is a summary of loans (in thousands):

December 31
Commercial
Direct installment
Residential mortgages
Indirect installment
Consumer lines of credit
Other

2010

2009

2008

2007

2006

$3,337,992
1,002,725
622,242
514,369
493,881
116,946

$3,234,738
985,746
605,219
527,818
408,469
87,371

$3,173,941
1,070,791
638,356
531,430
340,750
65,112

$2,232,860
941,249
465,881
427,663
251,100
25,482

$2,111,752
926,766
490,215
461,214
254,054
9,143

$6,088,155

$5,849,361

$5,820,380

$4,344,235

$4,253,144

Commercial is comprised of both commercial real estate loans and commercial and industrial loans. Direct
installment is comprised of fixed-rate, closed-end consumer loans for personal, family or household use, such as
home equity loans and automobile loans. Residential mortgages consist of conventional and jumbo mortgage loans
for non-commercial properties. Indirect installment is comprised of loans written by third parties, primarily
automobile loans. Consumer lines of credit includes home equity lines of credit (HELOC) and consumer lines of
credit that are either unsecured or secured by collateral other than home equity. Other is comprised primarily of
commercial leases, mezzanine loans and student loans.

Total loans increased $238.8 million or 4.1% to $6.1 billion at December 31, 2010 compared to $5.8 billion
at December 31, 2009. The majority of the increase was due to solid growth in commercial loans and consumer lines
of credit.

Total loans were essentially unchanged at $5.8 billion for both the periods ended December 31, 2009 and
2008. However, the Corporation saw a favorable shift in the loan mix as commercial and consumer lines of credit
increased by 1.9% and 19.9%, respectively, while direct installment, residential mortgages and indirect installment
declined 7.9%, 5.2% and 0.7%, respectively. Additionally, other increased by 34.2%, primarily due to an increase of
$20.6 in commercial leases.

The composition of the Florida loan portfolio consisted of the following as of December 31, 2010:
unimproved residential land (11.7%), unimproved commercial land (17.4%), improved land (3.0%), income
producing commercial real estate (48.1%), residential construction (5.8%), commercial construction (11.3%),
commercial and industrial (1.1%) and owner-occupied (1.6%). The percentage of loans in the Florida portfolio
comprising income producing commercial real estate increased from December 31, 2009 after an $8.1 million
residential construction loan and an $8.5 million commercial construction loan were both reclassified to the income
producing segment after the construction phases were completed and the properties began to lease. The weighted
average loan-to-value ratio for the Florida portfolio was 82.0% and 76.8% as of December 31, 2010 and 2009,
respectively.

The majority of the Corporation’s loan portfolio consists of commercial loans. As of December 31, 2010
and 2009, commercial real estate loans were $2.1 billion for both periods, or 34.7% and 35.4% of total loans,
respectively. As of December 31, 2010, approximately 47.0% of the commercial real estate loans are owner-
occupied, while the remaining 53.0% are non-owner-occupied. As of December 31, 2010 and 2009, the Corporation
had construction loans of $202.0 million and $184.1 million, respectively, representing 3.3% and 3.1% of total
loans, respectively. As of December 31, 2010 and 2009, there were no concentrations of loans relating to any
industry in excess of 10% of total loans.

Following is a summary of the maturity distribution of certain loan categories based on remaining

scheduled repayments of principal as of December 31, 2010 (in thousands):

Commercial
Residential mortgages

Within
1 Year

$237,063
803

$237,866

1-5
Years

$904,087
25,336

$929,423

Over
5 Years

$2,196,842
596,103

Total

$3,337,992
622,242

$2,792,945

$3,960,234

The total amount of loans due after one year includes $2.9 billion with floating or adjustable rates of

interest and $855.2 million with fixed rates of interest.

For additional information relating to lending activity, see the Loans footnote in the Notes to Consolidated

Financial Statements, which is included in Item 8 of this Report.

Non-Performing Assets

Non-performing loans include non-accrual loans and restructured loans. Non-accrual loans represent loans
for which interest accruals have been discontinued. Restructured loans are loans in which the borrower has been
granted a concession on the interest rate or the original repayment terms due to financial distress. Non-performing
assets also include debt securities on which OTTI has been taken in the current or prior periods.

The Corporation discontinues interest accruals when principal or interest is due and has remained unpaid
for 90 to 180 days depending on the loan type. When a loan is placed on non-accrual status, all unpaid interest is
reversed. Non-accrual loans may not be restored to accrual status until all delinquent principal and interest has been
paid and the ultimate collectibility of the remaining principal and interest is reasonably assured.

Non-performing loans are closely monitored on an ongoing basis as part of the Corporation’s loan review
and work-out process. The potential risk of loss on these loans is evaluated by comparing the loan balance to the fair
value of any underlying collateral or the present value of projected future cash flows. Losses on non-accrual and
restructured loans are recognized when appropriate.

Non-performing investments consist of pooled TPS with OTTI charges recognized that are currently in a

non-accrual status.

Following is a summary of non-performing assets (dollars in thousands):

December 31
Non-accrual loans
Restructured loans

Total non-performing loans
Other real estate owned (OREO)

Total non-performing loans and OREO

Non-performing investments

2010

$115,589
19,705

135,294
32,702

167,996
5,974

2009

$133,891
11,624

145,515
21,367

166,882
4,825

2008

$139,607
3,872

143,479
9,177

152,656
10,456

2007

$29,211
3,288

32,499
8,052

40,551
—

2006

$24,636
3,314

27,950
5,948

33,898
—

Total non-performing assets

$173,970

$171,707

$163,112

$40,551

$33,898

Non-performing loans/total loans
Non-performing loans + OREO/ total loans

+ OREO

Non-performing assets/total assets

2.22%

2.74%
1.94%

2.49%

2.84%
1.97%

2.47%

2.62%
1.95%

0.75%

0.93%
0.67%

0.66%

0.80%
0.56%

During 2010, non-performing loans and OREO increased $1.1 million from $166.9 million at
December 31, 2009 to $168.0 million at December 31, 2010. This increase in non-performing loans and OREO
reflects an $8.1 million increase in restructured loans primarily relating to the Corporation’s Pennsylvania portfolio,
and an $11.3 million increase in OREO, primarily relating to the Corporation’s Florida portfolio. The restructured
loans have increased primarily due to modifying residential loans to help homeowners retain their residences.
Additionally, total non-accrual loans decreased $18.3 million during 2010 as non-accrual loans relating to the
Corporation’s Florida loan portfolio decreased $16.5 million and non-accrual loans for Corporation’s Pennsylvania
loan portfolio decreased $1.6 million. During 2010, two non-accrual loans in the Florida portfolio totaling
$17.6 million were partially charged down and transferred to OREO. The level of Florida non-accruals was then
further reduced during the fourth quarter after $12.9 million in write-downs were taken as a result of the reappraisals
that occurred on a majority of the land-related loans in that portfolio. These reductions to the level of non-accrual
loans were somewhat offset by the migration to non-accrual of a $20.0 million relationship during 2010. This
relationship had a specific reserve of $3.4 million at December 31, 2010, with the net balance adequately secured
based on an updated appraisal received in the fourth quarter of 2010.

The increase in non-performing loans from 2007 to 2008 is primarily a result of the significant

deterioration in Florida, and to a much lesser extent, the slowing economy in Pennsylvania.

Following is a summary of loans 90 days or more past due on which interest accruals continue (dollars in

thousands):

December 31
Loans 90 days or more past due
As a percentage of total loans

2010

2009

2008

2007

2006

$8,634

0.14%

$12,471

$13,677

0.21%

0.23%

$7,173

0.17%

$5,171

0.12%

The following tables provide additional information relating to non-performing loans for the Corporation’s

core portfolios (dollars in thousands):

December 31, 2010
Non-performing loans
Other real estate owned (OREO)
Total past due loans
Non-performing loans/total loans
Non-performing loans + OREO/ total loans +

OREO

December 31, 2009
Non-performing loans
Other real estate owned (OREO)
Total past due loans
Non-performing loans/total loans
Non-performing loans + OREO/ total loans +

OREO

FNBPA (PA)

FNBPA (FL)

Regency

Total

$ 71,961
10,520
103,255

1.26%

1.44%

$ 66,160
9,836
112,659

1.22%

1.39%

$55,222
20,860
57,721
28.28%

$8,111
1,322
6,869
4.98%

35.20%

5.75%

$71,737
10,341
71,737
29.41%

$7,618
1,190
7,404
4.70%

32.28%

5.40%

$135,294
32,702
167,845

2.22%

2.74%

$145,515
21,367
191,800

2.49%

2.84%

FNBPA (PA) reflects FNBPA’s total portfolio excluding the Florida portfolio which is presented

separately.

Following is a table showing the amounts of contractual interest income and actual interest income related

to non-accrual and restructured loans (in thousands):

December 31
Gross interest income:
Per contractual terms
Recorded during the year

2010

2009

2008

2007

2006

$7,827
965

$8,788
698

$6,408
347

$2,378
362

$2,046
458

Allowance and Provision for Loan Losses

The allowance for loan losses represents management’s estimate of probable loan losses inherent in the
loan portfolio at a specific point in time. This estimate includes losses associated with specifically identified loans,
as well as estimated probable credit losses inherent in the remainder of the loan portfolio. Additions are made to the
allowance through both periodic provisions charged to income and recoveries of losses previously incurred.
Reductions to the allowance occur as loans are charged off. Management evaluates the adequacy of the allowance at
least quarterly, and in doing so relies on various factors including, but not limited to, assessment of historical loss
experience, delinquency and non-accrual trends, portfolio growth, underlying collateral coverage and current
economic conditions. This evaluation is subjective and requires material estimates that may change over time.

The components of the allowance for loan losses represent estimates based upon ASC Topic 450,
Contingencies, and ASC Topic 310, Receivables. ASC Topic 450 applies to homogeneous loan pools such as
consumer installment, residential mortgages and consumer lines of credit, as well as commercial loans that are not
individually evaluated for impairment under ASC Topic 310. ASC Topic 310 is applied to commercial loans that are
individually evaluated for impairment.

Under ASC Topic 310, a loan is impaired when, based upon current information and events, it is probable
that the loan will not be repaid according to its original contractual terms, including both principal and interest.
Management performs individual assessments of impaired loans to determine the existence of loss exposure and,
where applicable, the extent of loss exposure based upon the present value of expected future cash flows available to
pay the loan, or based upon the fair value of the collateral less estimated selling costs where a loan is collateral
dependent.

In estimating loan loss contingencies, management considers numerous factors, including historical
charge-off rates and subsequent recoveries. Management also considers, but is not limited to, qualitative factors that
influence the Corporation’s credit quality, such as delinquency and non-performing loan trends, changes in loan
underwriting guidelines and credit policies, as well as the results of internal loan reviews. Finally, management
considers the impact of changes in current local and regional economic conditions in the markets that the
Corporation serves. Assessment of relevant economic factors indicates that the Corporation’s primary markets
historically tend to lag the national economy, with local economies in the Corporation’s primary market areas also
improving or weakening, as the case may be, but at a more measured rate than the national trends. Regional
economic factors influencing management’s estimate of reserves include uncertainty of the labor markets in the
regions the Corporation serves and a contracting labor force due, in part, to productivity growth and industry
consolidations. Homogeneous loan pools are evaluated using a combination of historical loss experience and an
analysis of the rate at which delinquent loans ultimately result in charge-offs to estimate credit quality migration and
expected losses within the homogeneous loan pools. Historical loss rates are adjusted to incorporate changes in
existing conditions that may impact, both positively or negatively, the degree to which these loss histories may vary.
This determination inherently involves a high degree of uncertainty and considers current risk factors that may not
have occurred in the Corporation’s historical loan loss experience.

During the fourth quarter of 2009, the Corporation updated the allowance methodology to place a greater
emphasis on losses realized within the past two years. The previous methodology relied on a rolling 15 quarter
experience method. This change did not have a material impact on the 2009 provision and allowance, but could

indicate higher provisions in future periods if higher losses are experienced. The Corporation continued to utilize
this updated methodology in 2010.

During the fourth quarter of 2008, the Corporation began applying its methodology for establishing the
allowance for loan losses to the Pennsylvania and Florida loan portfolios separately instead of continuing to
evaluate the portfolios on a combined basis. This decision was based on the fact that the two loan portfolios have
significantly different risk characteristics and that the Florida economic environment was deteriorating at an
accelerated rate in the fourth quarter of 2008.

In evaluating its Florida loan portfolio in 2008, the Corporation increased the allowance to address the
heightened level of inherent risk in that portfolio given the significant deterioration in that market. In applying the
methodology to this portfolio, the Corporation utilized quantitative loss factors provided by the OCC based on a
prior recession. The OCC-supplied rates were more appropriate than historical loss history due to the limited age
and relatively small size of the portfolio; furthermore, all non-performing loans within this pool have been evaluated
for impairment under ASC Topic 310. The combined impact of the significant deterioration in the Florida market
and separately evaluating the Florida loan portfolio utilizing these quantitative factors was a $12.3 million increase
in the Corporation’s allowance for loan losses for the Florida loan portfolio at December 31, 2008, with the
predominant factor being the impact of the significant deterioration in the Florida market.

The Corporation also increased qualitative allocations to address increased inherent risk associated with its
Florida loans including, but not limited to, current levels and trends of the Florida portfolio, collateral valuations,
charge-offs, non-performing assets, delinquency, risk rating migration, competition, legal and regulatory issues and
local economic trends. The combined impact of the significant deterioration in the Florida market and separately
evaluating the Florida loan portfolio utilizing these qualitative factors was a $2.3 million increase in the
Corporation’s allowance for loan losses for the Florida loan portfolio at December 31, 2008.

Following is a summary of changes in the allowance for loan losses (dollars in thousands):

Year Ended December 31
Balance at beginning of period
Additions due to acquisitions
Charge-offs:

Commercial
Direct installment
Residential mortgages
Indirect installment
Consumer lines of credit
Other

Total charge-offs

Recoveries:

Commercial
Direct installment
Residential mortgages
Indirect installment
Consumer lines of credit
Other

Total recoveries

Net charge-offs
Provision for loan losses

Balance at end of period

Net loan charge-offs/average loans
Allowance for loan losses/total loans
Allowance for loan losses/ non-performing

loans

2010

$104,655
—

2009

$104,730
16

2008

$ 52,806
12,150

2007

$ 52,575
21

2006

$ 50,707
3,035

(30,315)
(10,431)
(1,387)
(3,345)
(1,841)
(1,270)

(48,589)

808
1,015
99
640
160
9

2,731
(45,858)
47,323

(52,850)
(8,907)
(1,288)
(3,881)
(1,444)
(1,297)

(69,667)

912
1,024
69
625
122
22

2,774
(66,893)
66,802

(21,578)
(8,382)
(573)
(2,833)
(1,240)
(1,308)

(35,914)

1,326
1,030
181
638
121
21

3,317
(32,597)
72,371

(3,327)
(7,351)
(297)
(2,181)
(1,373)
(684)

(2,813)
(6,502)
(902)
(2,778)
(1,026)
(659)

(15,213)

(14,680)

481
1,241
158
683
117
50

2,730
(12,483)
12,693

821
1,523
187
345
126
99

3,101
(11,579)
10,412

$106,120

$104,655

$104,730

$ 52,806

$ 52,575

0.77%
1.74%

1.15%
1.79%

0.60%
1.80%

0.29%
1.22%

0.29%
1.24%

78.44%

71.92%

72.99%

162.48%

188.10%

The national trends in the economy and real estate market deteriorated during 2008, and the deterioration
accelerated significantly in the fourth quarter of 2008. These trends were particularly evident in the Florida market
where excess inventory built up, new construction slowed dramatically and credit markets stopped functioning
normally. With economic activity turning negative across all sectors of the economy, sales activity in the Florida
real estate market virtually ceased during the fourth quarter of 2008. The significant deterioration in the Florida
market during the fourth quarter of 2008 also reflected increased stress on borrowers’ cash flow streams and
increased stress on guarantors characterized by significant reductions in their liquidity positions.

During 2009, activity throughout the Florida marketplace increased across various asset classes as price
points had been reduced to levels that generated interest from buyers. The Corporation experienced increased
activity and levels of interest in condominiums and developed residential lots. In addition, the Corporation also
experienced increased interest in land as a number of clients pursued sales opportunities for further development.

During 2010, the level of investor interest and activity in the Florida market continued to improve. This
was evident in the number of investors seeking opportunities to purchase properties at current market price points,
as well as an increase in lending activity. The Corporation completed the sale of various condo units and developed
land parcels during the year which had previously been in OREO. The Corporation also successfully sold four
performing loan relationships to a Florida-based community bank at par value, a sign the secondary markets are
beginning to open up and that lending activity is resuming in the Florida market.

The following tables provide additional information relating to the provision and allowance for loan losses

for the Corporation’s core portfolios (dollars in thousands):

FNBPA (PA)

FNBPA (FL)

Regency

Total

At or for the Year Ended December 31, 2010
Provision for loan losses
Allowance for loan losses
Net charge-offs
Net charge-offs/average loans
Allowance for loan losses/total loans
Allowance for loan losses/ non-performing loans
At or for the Year Ended December 31, 2009
Provision for loan losses
Allowance for loan losses
Net charge-offs
Net charge-offs/average loans
Allowance for loan losses/total loans
Allowance for loan losses/ non-performing loans

$24,053
81,797
20,315

0.36%
1.43%
113.67%

$25,045
78,061
16,744

0.30%
1.43%
117.99%

$17,126
17,485
19,433

8.83%
8.95%
31.66%

$35,090
19,789
43,807
15.80%
8.11%
27.59%

$6,144
6,838
6,111
3.82%
4.20%
84.30%

$6,667
6,805
6,342
4.04%
4.20%
89.33%

$ 47,323
106,120
45,859

0.77%
1.74%
78.44%

$ 66,802
104,655
66,893

1.15%
1.79%
71.92%

FNBPA (PA) reflects FNBPA’s total portfolio excluding the Florida portfolio which is presented

separately.

During 2010, the Corporation reduced its Florida land-related portfolio including OREO by $25.1 million
or 24.3%, reducing total land-related exposure including OREO to $78.1 million. In addition, the condominium
portfolio exposure including OREO, is down $1.6 million since December 31, 2009 to $2.8 million at December 31,
2010. These reductions are consistent with the Corporation’s objective to reduce higher risk exposures in the Florida
portfolio.

The allowance for loan losses at December 31, 2010 increased $1.5 million or 1.4% from December 31,
2009 as the provision for loan losses for 2010 of $47.3 million exceeded net charge-offs of $45.9 million. While
there is an increase in lending activity in the Corporation’s Pennsylvania portfolio, the duration of the slow
economic environment in the Corporation’s Florida portfolio continues to be a challenge. The allowance for loan
losses for the Florida portfolio was $17.5 million or 8.95% of total loans in that portfolio at December 31, 2010
compared to $19.8 million or 8.11% of that portfolio at December 31, 2009. Based on data collected from
reappraisals during 2010 on certain properties in the Florida portfolio, along with Florida market data, the
information suggests that Florida land valuations have not yet fully stabilized. As a result, the Corporation provided
additional reserves to the Florida land portfolio allowance during the first three quarters of 2010 in anticipation of
the reappraisal process that occurred during the fourth quarter of 2010 on a majority of the properties in the land
portfolio. The collective impact of loan migrations, write-downs and transfers to OREO during the year resulted in a
$0.4 million reduction in the Florida land-related allowance. The allowance for the Florida land-related portfolio at
December 31, 2010 was $7.6 million or 12.12% of the land-related portfolio.

The allowance for loan losses as a percentage of non-performing loans increased from 71.92% as of
December 31, 2009 to 78.44% as of December 31, 2010. While the allowance for loan losses increased $1.5 million
or 1.4% since December 31, 2009, non-performing loans decreased $10.2 million or 7.0% over the same period
primarily due to loans migrating to OREO.

During 2009, the Corporation was able to reduce its Florida land-related portfolio including OREO by
$46.9 million or 31.2%, reducing total land-related exposure including OREO to $103.2 million at December 31,
2009. Including OREO, the condominium portfolio was reduced by $12.8 million during 2009, representing a
74.3% decline since December 31, 2008 to stand at $4.4 million at December 31, 2009.

The allowance for loan losses was $104.7 million at both December 31, 2009 and 2008. For 2009, net
charge-offs totaled $66.9 million compared to $32.6 million during 2008, an increase of $34.3 million due to
continued economic deterioration in Florida, and to some extent, the slowing economy in Pennsylvania. The total
net charge-offs for 2009 include $43.8 million related to the Florida loan portfolio. Additionally, during 2009, the
Corporation provided $35.1 million to the reserve related to Florida, bringing the total allowance for loan losses for
the Florida portfolio to $19.8 million or 8.11% of total loans in that portfolio.

The allowance for loan losses as a percentage of non-performing loans decreased slightly from 72.99% as
of December 31, 2008 to 71.92% as of December 31, 2009. While the allowance for loan losses remained constant
at $104.7 million, non-performing loans increased $2.0 million or 1.4% over the same period. The reduction in the
allowance coverage of non-performing loans relates to the nature of the loans that were added to non-performing
status which were supported to a large extent by real estate collateral at current valuations and therefore did not
require a 100% reserve allocation given the estimated loss exposure on the loans.

The allowance for loan losses ended 2009 flat with 2008 as specific reserves established in 2008 on several
sizable Florida credits were released when the credits were charged down during 2009. The allowance for loan losses
at December 31, 2009 included $19.8 million or 18.9% of the total related to the Corporation’s Florida loan portfolio.
Net charge-offs increased $34.3 million or 105.2%, with the Florida loan portfolio comprising $28.8 million of that
total increase.

The allowance for loan losses increased $51.9 million during 2008 representing a 98.3% increase in
reserves for loan losses between December 31, 2007 and December 31, 2008, due to higher net charge-offs,
additional specific reserves and increased allocations for a weaker environment. The significant increase primarily
reflects continued deterioration in Florida, and to a much lesser extent, the slowing economy in Pennsylvania. The
allowance for loan losses at December 31, 2008 included $28.5 million or 27.2% of the total relating to the
Corporation’s Florida loan portfolio. Net charge-offs increased $20.1 million or 161.1% reflecting higher loan
charge-offs, including $15.0 million in charge-offs in the Florida market during 2008.

At December 31, 2010 and 2009, there were $3.6 million and $8.0 million of loans, respectively, that were
impaired loans acquired with no associated allowance for loan losses as they were accounted for in accordance with
ASC Topic 310-30, Receivables - Loans and Debt Securities Acquired with Deteriorated Credit Quality.

Following is a summary of the allocation of the allowance for loan losses (dollars in thousands):

Dec 31,
2010

$ 74,606
14,940
4,577
6,045

Commercial
Direct installment
Residential mortgages
Indirect installment
Consumer lines of

credit

Other

% of Loans
in each
Category to
Total
Loans

Dec 31,
2008

% of Loans
in each
Category to
Total
Loans

Dec. 31,
2006

Dec. 31,
2007

Dec 31,
2009

55% $ 73,789
14,707
17
4,204
10
6,204
8

55% $ 76,071
14,022
17
3,659
10
5,012
9

55% $32,607
11,387
18
2,621
11
3,766
9

51% $30,813
11,445
21
3,068
11
4,649
10

50%
22
11
11

6
—

4,639
1,313

8
2

4,176
1,575

7
2

4,851
1,115

6
1

2,310
115

6
1

2,343
257

$106,120

100% $104,655

100% $104,730

100% $52,806

100% $52,575

100%

The amount of the allowance allocated to consumer lines of credit increased in 2010 due to loan growth in
the Corporation’s HELOC portfolio, while the amount of allowance allocated to the commercial portfolio increased
during the year due to loan growth in the Pennsylvania’s commercial and industrial portfolio, which was somewhat
offset by the utilization of reserves held against the Corporation’s Florida portfolio in conjunction with the
$19.4 million in charge-offs that occurred within that portfolio during 2010.

The amount of the allowance allocated to commercial loans decreased in 2009 due to the utilization of
specific reserves on certain Florida loans in conjunction with the $43.8 million in charge-offs within that portfolio
that occurred during 2009.

The amount of the allowance allocated to commercial loans increased in 2008 primarily due to increased
asset quality deterioration and allocations for a weaker environment, primarily a result of the continued deteri-
oration in the Florida market with $28.5 million of the commercial allowance for the Florida portfolio.

The amount of the allowance allocated to commercial loans increased in 2007 due to a combination of the
increased loan balance and the additional $2.0 million in specific reserves recorded in relation to a developer
relationship in the Florida market.

Investment Activity

Investment activities serve to enhance net interest income while supporting interest rate sensitivity and
liquidity positions. Securities purchased with the intent and ability to hold until maturity are categorized as
securities held to maturity and carried at amortized cost. All other securities are categorized as securities available
for sale and are recorded at fair value. Securities, like loans, are subject to similar interest rate and credit risk. In
addition, by their nature, securities classified as available for sale are also subject to fair value risks that could
negatively affect the level of liquidity available to the Corporation, as well as stockholders’ equity. A change in the
value of securities held to maturity could also negatively affect the level of stockholders’ equity if there was a
decline in the underlying creditworthiness of the issuers and an OTTI is deemed to have occurred or a change in the
Corporation’s intent and ability to hold the securities to maturity.

As of December 31, 2010, securities totaling $738.1 million and $940.5 million were classified as
available for sale and held to maturity, respectively. During 2010, securities available for sale increased by
$22.8 million while securities held to maturity increased by $165.2 million from December 31, 2009.

The following table indicates the respective maturities and weighted-average yields of securities as of

December 31, 2010 (dollars in thousands):

Obligations of U.S. Treasury and other U.S. Government agencies:

Maturing within one year
Maturing after one year but within five years
Maturing after ten years

States of the U.S. and political subdivisions:

Maturing within one year
Maturing after one year but within five years
Maturing after five years but within ten years
Maturing after ten years
Collateralized debt obligations:
Maturing after ten years

Other debt securities:

Maturing after ten years

Residential mortgage-backed securities:
Agency mortgage-backed securities
Agency collateralized mortgage obligations
Non-agency collateralized mortgage obligations

Equity securities

Total

Amount

25,576
270,580
9,337

6,572
24,251
35,961
129,164

9,106

12,832

900,082
218,968
33,988
2,189

$1,678,606

Weighted
Average
Yield

0.67%
1.29
2.30

5.47
5.33
6.10
5.97

3.00

5.13

3.69
2.10
5.05
4.93

3.33

The weighted average yields for tax-exempt securities are computed on a tax equivalent basis using the
federal statutory tax rate of 35.0%. The weighted average yields for securities available for sale are based on
amortized cost.

For additional information relating to investment activity, see the Securities footnote in the Notes to

Consolidated Financial Statements, which is included in Item 8 of this Report.

Deposits and Short-Term Borrowings

As a bank holding company, the Corporation’s primary source of funds is deposits. These deposits are
provided by businesses, municipalities and individuals located within the markets served by the Corporation’s
Community Banking subsidiary.

Total deposits increased $265.9 million to $6.6 billion at December 31, 2010 compared to December 31,
2009, primarily as a result of an increase in transaction accounts, which is comprised of non-interest bearing,
savings and NOW accounts (which includes money market deposit accounts), which was partially offset by a
decline in certificates of deposit. The increase in transaction accounts is a result of the Corporation’s ability to
capitalize on competitor disruption in the marketplace, with ongoing marketing campaigns designed to attract new
customers to the Corporation’s local approach to banking. Certificates of deposit are down by design reflecting the
Corporation’s continuing strategy to focus on growing transaction accounts.

Short-term borrowings, made up of treasury management accounts (also referred to as securities sold
under repurchase agreements), federal funds purchased, subordinated notes and other short-term borrowings,
increased by $84.4 million to $753.6 million at December 31, 2010 compared to $669.2 million at December 31,

2009. This increase is primarily the result of increases of $75.1 million and $9.5 million in treasury management
accounts and subordinated notes, respectively. The increase in treasury management accounts is the result of the
Corporation’s strong growth in new commercial client relationships.

Treasury management accounts are the largest component of short-term borrowings. The treasury
management accounts, which have next day maturities, are sweep accounts utilized by larger commercial customers
to earn interest on their funds. At December 31, 2010 and 2009, treasury management accounts represented 81.2%
and 80.2%, respectively, of total short-term borrowings.

Following is a summary of selected information relating to treasury management accounts (dollars in

thousands):

Balance at year-end
Maximum month-end balance
Average balance during year
Weighted average interest rates:

At end of year
During the year

2010

$611,902
714,498
640,248

2009

$536,784
551,779
472,628

2008

$414,705
433,411
373,200

0.58%
0.69

0.84%
0.97

1.20%
2.08

For additional information relating to deposits and short-term borrowings, see the Deposits and Short-
Term Borrowings footnotes in the Notes to Consolidated Financial Statements, which is included in Item 8 of this
Report.

Capital Resources

The access to, and cost of, funding for new business initiatives, including acquisitions, the ability to engage
in expanded business activities, the ability to pay dividends, the level of deposit insurance costs and the level and
nature of regulatory oversight depend, in part, on the Corporation’s capital position.

The assessment of capital adequacy depends on a number of factors such as asset quality, liquidity,
earnings performance, changing competitive conditions and economic forces. The Corporation seeks to maintain a
strong capital base to support its growth and expansion activities, to provide stability to current operations and to
promote public confidence.

The Corporation has an effective shelf registration statement filed with the SEC. Pursuant to this
registration statement, the Corporation may, from time to time, issue and sell in one or more offerings any
combination of common stock, preferred stock, debt securities or TPS. As of December 31, 2010, the Corporation
has issued 24,150,000 common shares in a public equity offering.

Capital management is a continuous process with capital plans for the Corporation and FNBPA updated
annually. Both the Corporation and FNBPA are subject to various regulatory capital requirements administered by
federal banking agencies. For additional information, see the Regulatory Matters footnote in the Notes to the
Consolidated Financial Statements, which is included in Item 8 of this Report. From time to time, the Corporation
issues shares initially acquired by the Corporation as treasury stock under its various benefit plans. The Corporation
may continue to grow through acquisitions, which can potentially impact its capital position. The Corporation may
issue additional common stock in order maintain its well-capitalized status.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information called for by this item is provided in the Market Risk section of Management’s Discussion

and Analysis of Financial Condition and Results of Operations, which is included in Item 7 of this Report.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Management on F.N.B. Corporation’s Internal Control Over Financial Reporting

February 25, 2011

F.N.B. Corporation’s (the Company) internal control over financial reporting is a process effected by the
board of directors, management, and other personnel, designed to provide reasonable assurance regarding the
preparation of reliable financial statements in accordance with U.S. generally accepted accounting principles. An
entity’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of
the assets of the entity; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts
and expenditures of the entity are being made only in accordance with authorizations of management and the board
of directors; and (3) provide reasonable assurance regarding prevention, or timely detection and correction of
unauthorized acquisition, use, or disposition of the entity’s assets that could have a material effect on the financial
statements.

Management is responsible for establishing and maintaining effective internal control over financial
reporting. Management assessed the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2010 based on the framework set forth by the Committee of Sponsoring Organizations of the
Treadway Commission in Internal Control — Integrated Framework. Based on that assessment, management
concluded that, as of December 31, 2010 the Company’s internal control over financial reporting is effective based
on the criteria established in Internal Control - Integrated Framework. Ernst & Young LLP, independent registered
public accounting firm, has issued an audit report on the Corporation’s internal control over financial reporting.

F.N.B. Corporation

/s/Stephen J. Gurgovits
By: Stephen J. Gurgovits
Chief Executive Officer

/s/Vincent J. Calabrese
By: Vincent J. Calabrese
Chief Financial Officer

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
F.N.B. Corporation

We have audited the accompanying consolidated balance sheets of F.N.B. Corporation and subsidiaries as of
December 31, 2010 and 2009, and the related consolidated statements of income, stockholders’ equity, and cash
flows for each of the three years in the period ended December 31, 2010. These financial statements are the
responsibility of the Company’s management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated
financial position of F.N.B. Corporation and subsidiaries at December 31, 2010 and 2009, and the consolidated
results of their operations and their cash flows for each of the three years in the period ended December 31, 2010, in
conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), F.N.B. Corporation and subsidiaries internal controls over financial reporting as of December 31,
2010, based on criteria established in Internal Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2011 expressed an
unqualified opinion thereon.

/s/Ernst & Young LLP

Pittsburgh, Pennsylvania
February 25, 2011

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
F.N.B. Corporation

We have audited F.N.B. Corporation and subsidiaries’ internal control over financial reporting as of December 31,
2010, based on criteria established in Internal Control - Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (the COSO criteria). F.N.B. Corporation and subsidiaries’
management is responsible for maintaining effective internal control over financial reporting and for its assessment
of the effectiveness of internal control over financial reporting, included in the accompanying Report of Man-
agement on F.N.B. Corporation’s Internal Control over Financial Reporting. Our responsibility is to express an
opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk and performing such other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstate-
ments. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

In our opinion, F.N.B. Corporation and subsidiaries maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2010, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the consolidated balance sheets of F.N.B. Corporation and subsidiaries as of December 31, 2010 and 2009, and
the related statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended
December 31, 2010 of F.N.B. Corporation and subsidiaries and our report dated February 25, 2011 expressed an
unqualified opinion thereon.

/s/Ernst & Young LLP

Pittsburgh, Pennsylvania
February 25, 2011

F.N.B. Corporation and Subsidiaries
Consolidated Balance Sheets
Dollars in thousands, except par values

Assets
Cash and due from banks
Interest bearing deposits with banks
Cash and Cash Equivalents

Securities available for sale
Securities held to maturity (fair value of $959,414 and $796,537)
Residential mortgage loans held for sale
Loans, net of unearned income of $42,183 and $38,173
Allowance for loan losses

Net Loans

Premises and equipment, net
Goodwill
Core deposit and other intangible assets, net
Bank owned life insurance
Other assets

Total Assets

Liabilities
Deposits:

Non-interest bearing demand
Savings and NOW
Certificates and other time deposits

Total Deposits

Other liabilities
Short-term borrowings
Long-term debt
Junior subordinated debt
Total Liabilities
Stockholders’ Equity
Common stock - $0.01 par value

Authorized - 500,000,000 shares
Issued - 114,902,454 and 114,214,951 shares

Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Treasury stock - 155,369 and 103,256 shares at cost

Total Stockholders’ Equity

December 31

2010

2009

$ 115,556
16,015
131,571
738,125
940,481
12,700
6,088,155
(106,120)
5,982,035
115,956
528,720
32,428
208,051
269,848
$8,959,915

$1,093,230
3,423,844
2,129,069

6,646,143
97,951
753,603
192,058
204,036

7,893,791

1,143
1,094,713
6,564
(33,732)
(2,564)
1,066,124

$ 160,845
149,705
310,550
715,349
775,281
12,754
5,849,361
(104,655)
5,744,706
117,921
528,710
39,141
205,447
259,218
$8,709,077

$ 992,298
3,182,909
2,205,016

6,380,223
86,797
669,167
324,877
204,711

7,665,775

1,138
1,087,369
(12,833)
(30,633)
(1,739)
1,043,302

Total Liabilities and Stockholders’ Equity

$8,959,915

$8,709,077

See accompanying Notes to Consolidated Financial Statements

F.N.B. Corporation and Subsidiaries
Consolidated Statements of Income
Dollars in thousands, except per share data

Interest Income
Loans, including fees
Securities:
Taxable
Nontaxable
Dividends

Other

Total Interest Income

Interest Expense
Deposits
Short-term borrowings
Long-term debt
Junior subordinated debt

Total Interest Expense

Net Interest Income

Provision for loan losses

Net Interest Income After Provision for Loan Losses

Non-Interest Income
Impairment losses on securities
Non-credit related losses on securities not expected to be sold (recognized in other

comprehensive income)

Net impairment losses on securities
Service charges
Insurance commissions and fees
Securities commissions and fees
Trust
Bank owned life insurance
Gain on sale of mortgage loans
Gain on sale of securities
Other

Total Non-Interest Income

Non-Interest Expense
Salaries and employee benefits
Net occupancy
Equipment
Amortization of intangibles
Outside services
FDIC insurance
State taxes
Other real estate owned
Telephone
Advertising and promotional
Merger related
Other

Total Non-Interest Expense

Income Before Income Taxes

Income taxes

Net Income
Preferred stock dividends and discount amortization
Net Income Available to Common Stockholders

Net Income per Common Share

Basic

Diluted

Cash Dividends Paid per Common Share

See accompanying Notes to Consolidated Financial Statements

Year Ended December 31
2009

2008

2010

$322,773

$329,841

$352,687

43,150
7,299
71
428

373,721

64,524
8,143
8,080
7,984

88,731

284,990
47,323
237,667

(9,590)

7,251

(2,339)
56,780
15,772
6,839
12,719
4,941
3,762
2,960
14,538

115,972

126,259
20,049
18,212
6,714
22,628
10,526
7,278
4,886
4,538
5,161
620
24,232
251,103

102,536
27,884

74,652
—

50,527
7,131
146
573

388,218

85,699
8,520
17,202
9,758

121,179

267,039
66,802
200,237

49,742
6,686
274
392

409,781

111,568
13,030
21,044
12,347

157,989

251,792
72,371
179,421

(25,232)

(17,189)

17,339

(7,893)
57,736
16,672
7,460
11,811
5,677
3,061
528
10,430

105,482

126,865
20,258
17,991
7,088
23,587
13,881
6,813
6,183
5,255
5,321
—
22,097
255,339

50,380
9,269

41,111
8,308

—

(17,189)
54,691
15,572
8,128
12,095
6,408
1,824
834
3,752

86,115

116,819
17,888
16,357
6,442
20,918
898
6,550
2,138
5,336
4,589
4,724
20,045
222,704

42,832
7,237

35,595
—

$ 74,652

$ 32,803

$ 35,595

0.66

0.65

0.48

0.32

0.48

0.44

0.96

F.N.B. Corporation and Subsidiaries
Consolidated Statements of Stockholders’ Equity
Dollars in thousands

Compre-
hensive
Income

$ 35,595
(19,767)

$ 15,828

$ 41,111
(4,128)

$ 36,983

$ 74,652
(3,099)

$ 71,553

Balance at January 1, 2008
Net income
Change in other comprehensive income (loss)

Comprehensive income

Common dividends declared: $0.96/share
Issuance of common stock
Restricted stock compensation
Tax benefit of stock-based compensation
Adjustment to initially apply Revised ASC Topic 715
Balance at December 31, 2008
Net income
Change in other comprehensive income (loss)

Comprehensive income

Cash dividends declared:

Preferred stock
Common stock: $0.48/share
Issuance of preferred stock (CPP)
Repurchase of preferred stock (CPP)
Issuance of warrant/discount (CPP)
Adjust warrant/discount valuation (CPP)
Capitalize issuance costs (CPP)
Amortization of CPP discount
Issuance of common stock
Restricted stock compensation
Tax expense of stock-based compensation
Adoption of Revised ASC Topic 320
Balance at December 31, 2009
Net income
Change in other comprehensive income (loss)

Comprehensive income

Common dividends declared: $0.48/share
Issuance of common stock
Restricted stock compensation
Tax expense of stock-based compensation
Balance at December 31, 2010

Preferred
Stock

Common
Stock

— $ 602

Accumu-
lated
Other
Compre-
hensive
Income
(Loss)

Additional
Paid-In
Capital

Retained
Earnings

Treasury
Stock

Total

$ 508,891 $ 42,426 $ (6,738) $ (824) $ 544,357
35,595
(19,767)

(19,767)

35,595

292

441,403
2,049
857

—

894

953,200

100,000
(100,000)
(4,441)
(282)
(252)
4,975

4,441
282

244

127,829
1,775
(158)

— 1,138

1,087,369

4,804
2,739
(199)

(78,283)
(275)

(606)

(1,143)
41,111

(3,333)
(49,042)

1
(4,975)
(15)

4,563

(12,833)
74,652

(55,255)

362

(26,505)

(462)

(4,128)

(1,277)

(30,633)

(1,739)

(3,099)

(825)

(78,283)
441,782
2,049
857
(606)

925,984
41,111
(4,128)

(3,333)
(49,042)
100,000
(100,000)
—
—
(251)
—
126,781
1,775
(158)
4,563

1,043,302
74,652
(3,099)

(55,255)
3,984
2,739
(199)

— $1,143

$1,094,713 $ 6,564 $(33,732) $(2,564) $1,066,124

See accompanying Notes to Consolidated Financial Statements

F.N.B. Corporation and Subsidiaries
Consolidated Statements of Cash Flows
Dollars in thousands

Operating Activities
Net income
Adjustments to reconcile net income to net cash flows provided

by operating activities:

Depreciation, amortization and accretion
Provision for loan losses
Deferred income taxes
Gain on sale of securities
Other-than-temporary impairment losses on securities
Tax expense (benefit) of stock-based compensation
Net change in:

Interest receivable
Interest payable
Residential mortgage loans held for sale
Trading securities
Bank owned life insurance

Other, net

Net cash flows provided by operating activities

Investing Activities
Net change in:

Securities available for sale:

Securities held to maturity:

Loans

Purchases
Sales
Maturities

Purchase of bank owned life insurance
Withdrawal/surrender of bank owned life insurance
Increase in premises and equipment
Acquisitions, net of cash acquired

Net cash flows used in investing activities

Financing Activities
Net change in:

Non-interest bearing deposits, savings, and NOW accounts
Time deposits
Short-term borrowings
Increase in long-term debt
Decrease in long-term debt
Decrease in junior subordinated debt
Issuance of preferred stock and common stock warrant
Redemption of preferred stock
Net proceeds from issuance of common stock
Tax (expense) benefit of stock-based compensation
Cash dividends paid

Net cash flows provided by financing activities
Net (Decrease) Increase in Cash and Due from Banks
Cash and due from banks at beginning of year
Cash and Due from Banks at End of Year

See accompanying Notes to Consolidated Financial Statements

Year Ended December 31
2009

2008

2010

$ 74,652

$ 41,111

$ 35,595

27,934
47,323
(50)
(2,960)
2,339
199

1,874
(2,085)
54
—
(2,929)
17,147
163,498

25,858
66,802
(9,463)
(528)
7,893
158

2,619
(3,782)
(2,046)
—
(1,395)
(11,421)
115,806

20,970
72,371
(10,998)
(834)
17,189
(857)

4,171
(320)
(5,071)
264,416
(4,648)
(15,047)
376,937

(312,564)

(119,902)

(271,604)

(433,809)
60,165
353,115

(434,393)
7,644
258,718
(35)
360
(9,810)
—
(510,609)

341,867
(75,946)
84,436
125,884
(258,703)
(675)
—
—
6,723
(199)
(55,255)
168,132
(178,979)
310,550
$ 131,571

(529,780)
812
289,996

(179,898)
—
247,352
(16)
13,700
(7,997)
48
(285,685)

439,040
(113,441)
72,905
39,328
(204,701)
(675)
99,749
(100,000)
128,554
(158)
(52,375)
308,226
138,347
172,203
$ 310,550

(345,885)
2,521
221,255

(302,794)
—
149,762
—
—
(14,194)
64,035
(496,904)

162,097
(50,299)
118,658
121,630
(120,746)
(506)
—
—
8,045
857
(78,283)
161,453
41,486
130,717
$ 172,203

F.N.B. Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Dollars in thousands, except per share data

Nature of Operations

The Corporation is a diversified financial services company headquartered in Hermitage, Pennsylvania. Its
primary businesses include community banking, consumer finance, wealth management and insurance. The
Corporation also conducts leasing and merchant banking activities. The Corporation operates its community
banking business through a full service branch network in Pennsylvania and Ohio. The Corporation operates its
wealth management and insurance businesses within the existing branch network. It also conducts selected
consumer finance business in Pennsylvania, Ohio, Tennessee and Kentucky.

1. Summary of Significant Accounting Policies

Basis of Presentation

The Corporation’s accompanying consolidated financial statements and these notes to the financial
statements include subsidiaries in which the Corporation has a controlling financial interest. 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), F.N.B. Capital Corporation, LLC and Bank Capital Services, LLC, and
includes results for each of these entities in the accompanying consolidated financial statements.

The accompanying consolidated financial statements include all adjustments that are necessary, in the
opinion of management, to fairly reflect the Corporation’s financial position and results of operations in accordance
with GAAP. All significant intercompany balances and transactions have been eliminated. Certain prior period
amounts have been reclassified to conform to the current period presentation. Events occurring subsequent to the
date of the balance sheet have been evaluated for potential recognition or disclosure in the consolidated financial
statements through the date of the filing of the consolidated financial statements with the SEC.

Use of Estimates

The accounting and reporting policies of the Corporation conform with 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, securities valuation, goodwill and other intangible assets and income taxes.

Business Combinations

Business combinations are accounted for by applying the acquisition method in accordance with ASC
Topic 805, Business Combinations. Under the acquisition method, identifiable assets acquired and liabilities
assumed, and any non-controlling interest in the acquiree at the acquisition date are measured at their fair values as
of that date, and are recognized separately from goodwill. Results of operations of the acquired entities are included
in the consolidated statement of income from the date of acquisition.

Cash Equivalents

The Corporation considers cash and demand balances due from banks as cash and cash equivalents.

Securities

Investment securities, which consist of debt securities and certain equity securities, comprise a significant
portion of the Corporation’s consolidated balance sheet. Such securities can be classified as “trading,” “securities
held to maturity” or “securities available for sale.”

Securities are classified as trading securities when management intends to sell such securities in the near
term and are carried at fair value, with unrealized gains (losses) reflected through the consolidated statement of
income. The Corporation acquired securities in conjunction with the Omega and IRGB acquisitions that the
Corporation classified as trading securities. The Corporation both acquired and sold these trading securities during
the quarters of 2008 in which the acquisitions occurred. As of December 31, 2010 and 2009, the Corporation did not
hold any trading securities.

Securities held to maturity are comprised of debt securities, for which management has the positive intent
and ability to hold such securities until their maturity. Such securities are carried at cost, adjusted for related
amortization of premiums and accretion of discounts through interest income from securities, and OTTI, if any.

Securities that are not classified as trading or held to maturity are classified as available for sale. The
Corporation’s available for sale securities portfolio is comprised of debt securities and marketable equity securities.
Such securities are carried at fair value with net unrealized gains and losses deemed to be temporary and unrealized
losses deemed to be other-than-temporary and attributable to non-credit factors reported separately as a component
of other comprehensive income, net of tax. Realized gains and losses on the sale of available for sale securities and
credit-related OTTI charges are recorded within non-interest income in the consolidated statement of income.
Realized gains and losses on the sale of securities are determined using the specific-identification method.

The Corporation evaluates its investment securities portfolio for OTTI on a quarterly basis. Impairment is
assessed at the individual security level. The Corporation considers an investment security impaired if the fair value
of the security is less than its cost or amortized cost basis.

When impairment of an equity security is considered to be other-than-temporary, the security is written
down to its fair value and an impairment loss is recorded as a loss within non-interest income in the consolidated
statement of income. When impairment of a debt security is considered to be other-than-temporary, the amount of
the OTTI recorded as a loss within non-interest income and thereby recognized in earnings depends on whether the
Corporation intends to sell the security or whether it is more likely than not that the Corporation will be required to
sell the security before recovery of its amortized cost basis.

If the Corporation intends to sell the debt security or more likely than not will be required to sell the
security before recovery of its amortized cost basis, OTTI shall be recognized in earnings equal to the entire
difference between the investment’s amortized cost basis and its fair value.

If the Corporation does not intend to sell the debt security and it is not more likely than not the Corporation
will be required to sell the security before recovery of its amortized cost basis, OTTI shall be separated into the
amount representing credit loss and the amount related to all other market factors. The amount related to credit loss
shall be recognized in earnings. The amount related to other market factors shall be recognized in other
comprehensive income, net of applicable taxes.

The Corporation performs its OTTI evaluation process in a consistent and systematic manner and includes
an evaluation of all available evidence. Documentation of the process is as extensive as necessary to support a
conclusion as to whether a decline in fair value below cost or amortized cost is other-than-temporary and includes
documentation supporting both observable and unobservable inputs and a rationale for conclusions reached. In
making these determinations for pooled TPS, the Corporation consults with third-party advisory firms to provide
additional valuation assistance.

This process considers factors such as the severity, length of time and anticipated recovery period of the
impairment, recoveries or additional declines in fair value subsequent to the balance sheet date, recent events
specific to the issuer, including investment downgrades by rating agencies and economic conditions in its industry,
and the issuer’s financial condition, repayment capacity, capital strength and near-term prospects.

For debt securities, the Corporation also considers the payment structure of the debt security, the likelihood
of the issuer being able to make future payments, failure of the issuer of the security to make scheduled interest and
principal payments, whether the Corporation has made a decision to sell the security and whether the Corporation’s
cash or working capital requirements or contractual or regulatory obligations indicate that the debt security will be
required to be sold before a forecasted recovery occurs. For equity securities, the Corporation also considers its
intent and ability to retain the security for a period of time sufficient to allow for a recovery in fair value. Among the
factors that the Corporation considers in determining its intent and ability to retain the security is a review of its
capital adequacy, interest rate risk position and liquidity. The assessment of a security’s ability to recover any
decline in fair value, the ability of the issuer to meet contractual obligations, the Corporation’s intent and ability to
retain the security, and whether it is more likely than not the Corporation will be required to sell the security before
recovery of its amortized cost basis require considerable judgment.

Securities Sold Under Agreements to Repurchase

Securities sold under agreements to repurchase are accounted for as collateralized financing transactions
and are recorded at the amounts at which the securities were sold plus accrued interest. Securities, generally
U.S. government and federal agency securities, pledged as collateral under these financing arrangements cannot be
sold or repledged by the secured party. The fair value of collateral either received from or provided to a third party is
continually monitored and additional collateral is obtained or is requested to be returned to the Corporation as
deemed appropriate.

Derivative Instruments and Hedging Activities

From time to time, the Corporation may enter into derivative transactions principally to protect against the
risk of adverse price or interest rate movements on the value of certain assets and liabilities and on future cash flows.
The Corporation formally documents all relationships between hedging instruments and hedged items, as well as its
risk management objective and strategy for undertaking each hedge transaction. All derivative instruments are
carried at fair value on the balance sheet in accordance with the requirements of ASC Topic 815, Derivatives and
Hedging.

Cash flow hedges are accounted for by recording the fair value of the derivative instrument on the balance
sheet as either a freestanding asset or liability, with a corresponding offset recorded in accumulated other
comprehensive income within stockholders’ equity, net of tax. Amounts are reclassified from accumulated other
comprehensive income to the consolidated statement of income in the period or periods in which the hedged
transaction affects earnings.

Derivative gains and losses under cash flow hedges not effective in hedging the change in fair value or
expected cash flows of the hedged item are recognized immediately in the consolidated statement of income. At the
hedge’s inception and at least quarterly thereafter, a formal assessment is performed to determine whether changes
in the fair values or cash flows of the derivative instruments have been highly effective in offsetting changes in fair
values or cash flows of the hedged items and whether they are expected to be highly effective in the future. If it is
determined a derivative instrument has not been or will not continue to be highly effective as a hedge, hedge
accounting is discontinued. The Corporation did not enter into any transactions qualifying as hedging instruments
during 2010.

The Corporation periodically enters into interest rate swap agreements to meet the financing, interest rate
and equity risk management needs of its commercial loan customers. These agreements provide the customer the
ability to convert from variable to fixed interest rates. The Corporation then enters into positions with a derivative

counterparty in order to offset its exposure on the variable and fixed components of the customer agreements. These
agreements meet the definition of derivatives, but are not designated in formal hedging relationships. These
instruments and their offsetting positions are reported gross at fair value in other assets and other liabilities on the
consolidated balance sheet with any resulting gain or loss recorded in current period earnings as other income. The
Corporation does not net cash collateral with the fair value of derivative instruments.

Mortgage Loans Held for Sale and Loan Commitments

Certain residential mortgage loans are originated for sale in the secondary mortgage loan market and
typically sold with servicing rights released. These loans are classified as loans held for sale and are carried at the
lower of cost or estimated market value on an aggregate basis. Market value is determined on the basis of rates
obtained in the respective secondary market for the type of loan held for sale. Loans are generally sold at a premium
or discount from the carrying amount of the loan. Such premium or discount is recognized at the date of sale. Gain or
loss on the sale of loans is recorded in non-interest income at the time consideration is received and all other criteria
for sales treatment have been met.

The Corporation routinely issues commitments to make loans as a part of its residential lending operations.
These commitments are considered derivatives. The Corporation also enters into commitments to sell loans to
mitigate the risk that the market value of residential loans may decline between the time the rate commitment is
issued to the customer and the time the Corporation contracts to sell the loan. These commitments and sales
contracts are also derivatives. Both types of derivatives are recorded at fair value. Sales contracts and commitments
to sell loans are not designated as hedges of the fair value of loans held for sale. Fair value adjustments related to
derivatives are recorded in current period earnings as an adjustment to net gains on sale of loans.

Loans and the Allowance for Loan Losses

Loans are reported at their principal amount outstanding net of unearned income, unamortized premiums

or discounts, acquisition fair value adjustments and any deferred origination fees or costs.

Interest income on loans is accrued on the principal outstanding. It is the Corporation’s policy to
discontinue interest accruals generally when principal or interest is due and has remained unpaid for 90 days
or more unless the loan is both well secured and in the process of collection. When a loan is placed on non-accrual
status, all unpaid interest is reversed. Payments on non-accrual loans are generally applied to either principal or
interest or both, depending on management’s evaluation of collectibility. Consumer installment loans are generally
charged off against the allowance for loan losses upon reaching 120 to 180 days past due, depending on the loan
type. Commercial loan charges-offs, either in whole or in part, are generally made as soon as facts and
circumstances raise a serious doubt as to the collectibility of all or a portion of the principal. Loan origination
fees and related costs are deferred and recognized over the life of the loans as an adjustment of yield in interest
income.

The allowance for loan losses is maintained at a level that, in management’s judgment, is believed
adequate to absorb probable losses associated with specifically identified loans, as well as estimated probable credit
losses inherent in the remainder of the loan portfolio at the balance sheet date. The allowance for loan losses is based
on management’s evaluation of potential loan losses in the loan portfolio, which includes an assessment of past
experience, current economic conditions in specific industries and geographic areas, general economic conditions,
known and inherent risks in the loan portfolio, the estimated value of underlying collateral and residuals and
changes in the composition of the loan portfolio. Determination of the allowance is inherently subjective as it
requires significant estimates, including the amounts and timing of expected future cash flows on impaired loans,
estimated losses on pools of homogeneous loans based on historical loss experience and consideration of current
environmental factors and economic trends, all of which are susceptible to significant change. Loan losses are
charged off against the allowance when the loss actually occurs or when a determination is made that a loss is
probable while recoveries of amounts previously charged off are credited to the allowance. A provision for credit

losses is recorded based on management’s periodic evaluation of the factors previously mentioned as well as other
pertinent factors. Evaluations are conducted at least quarterly and more often as deemed necessary.

Management estimates the allowance for loan losses pursuant to ASC Topic 310 and ASC Topic 450.
Larger balance commercial and commercial real estate loans that are considered impaired as defined in ASC Topic
310 are reviewed individually to assess the likelihood and severity of loss exposure. Loans subject to individual
review are, where appropriate, reserved for according to the present value of expected future cash flows available to
repay the loan, or the estimated fair value less estimated selling costs of the collateral. Commercial loans excluded
from individual assessment, as well as smaller balance homogeneous loans, such as consumer, residential real estate
and home equity loans, are evaluated for loss exposure under ASC Topic 450 based upon historical loss rates for
each of these categories of loans. Historical loss rates for each of these loan categories may be adjusted to reflect
management’s estimates of the impacts of current economic conditions, trends in delinquencies and non-perform-
ing loans, volume, concentrations and mergers and acquisitions, as well as changes in credit underwriting and
approval requirements. The accrual of interest on impaired loans is discontinued when the loan is 90 to 180 days
past due or in management’s opinion the account should be placed on non-accrual status (loans partially charged off
are immediately placed on non-accrual status). When interest accrual is discontinued, all unpaid accrued interest is
reversed against interest income. Interest income is subsequently recognized only to the extent that cash payments
are received.

Acquired Loans

Any loans acquired through the completion of a transfer, including loans acquired in a business com-
bination, that have evidence of deterioration of credit quality since origination and for which it is probable at
acquisition, that the Corporation will be unable to collect all contractually required payments receivable, are
initially recorded at fair value (as determined by the present value of expected future cash flows) with no valuation
allowance. The difference between the undiscounted cash flows expected at acquisition and the investment in the
loan, or the “accretable yield,” is recognized as interest income on a level-yield method over the life of the loan.
Increases in expected cash flows subsequent to the initial investment are recognized prospectively through
adjustment of the yield on the loan over its remaining life. Decreases in expected cash flows are recognized as
impairment. Valuation allowances on these impaired loans reflect only losses incurred after the acquisition.

Premises and Equipment

Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed using
the straight-line method over the asset’s estimated useful life. Leasehold improvements are expensed over the lesser
of the asset’s estimated useful life or the term of the lease including renewal periods when reasonably assured.
Useful lives are dependent upon the nature and condition of the asset and range from 3 to 40 years. Maintenance and
repairs are charged to expense as incurred, while major improvements are capitalized and amortized to operating
expense over the identified useful life.

Other Real Estate Owned

OREO is comprised principally of commercial and residential real estate properties obtained in partial or
total satisfaction of loan obligations. OREO acquired in settlement of indebtedness is included in other assets
initially at the lower of estimated fair value of the asset less estimated selling costs or the carrying amount of the
loan. Changes to the value subsequent to transfer are recorded in non-interest expense along with direct operating
expenses. Gains or losses not previously recognized resulting from sales of OREO are recognized in non-interest
expense on the date of sale.

Goodwill and Other Intangible Assets

Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired.
Other intangible assets represent purchased assets that lack physical substance but can be distinguished from

goodwill because of contractual or other legal rights. Intangible assets that have finite lives, such as core deposit
intangibles, customer relationship intangibles and renewal lists, are amortized over their estimated useful lives and
subject to periodic impairment testing. Core deposit intangibles are primarily amortized over ten years using
straight line and accelerated methods. Customer and renewal lists and other intangible assets are amortized over
their estimated useful lives which range from ten to twelve years.

Goodwill and other intangibles are subject to impairment testing at the reporting unit level, which must be
conducted at least annually. The Corporation performs impairment testing during the fourth quarter of each year.
Due to ongoing uncertainty regarding market conditions surrounding the banking industry, the Corporation
continues to monitor goodwill and other intangibles for impairment and to evaluate carrying amounts, as necessary.
Based on the results of testing performed, the Corporation concluded that no impairment existed at December 31,
2010. However, future events could cause the Corporation to conclude that goodwill or other intangibles have
become impaired, which would result in recording an impairment loss. Any resulting impairment loss could have a
material adverse impact on the Corporation’s financial condition and result of operations.

Determining the fair value of a reporting unit under the first step of the goodwill impairment test and
determining the fair value of individual assets and liabilities of a reporting unit under the second step of the goodwill
impairment test are judgmental and often involve the use of significant estimates and assumptions. Similarly,
estimates and assumptions are used in determining the fair value of other intangible assets. Estimates of fair value
are primarily determined using discounted cash flows, market comparisons and recent transactions. These
approaches use significant estimates and assumptions including projected future cash flows, discount rates
reflecting the market rate of return, growth rates and determination and evaluation of appropriate market
comparables.

Income Taxes

The Corporation and a majority of its subsidiaries file a consolidated federal income tax return. The
provision for federal and state income taxes is based on income reported on the consolidated financial statements,
rather than the amounts reported on the respective income tax returns. Deferred tax assets and liabilities are
computed using tax rates expected to apply to taxable income in the years in which those assets and liabilities are
expected to be realized. The effect on deferred tax assets and liabilities resulting from a change in tax rates is
recognized as income or expense in the period that the change in tax rates is enacted.

The Corporation makes certain estimates and judgments in determining income tax expense for financial
statement purposes. These estimates and judgments are applied in the calculation of certain tax credits and in the
calculation of the deferred income tax expense or benefit associated with certain deferred tax assets and liabilities.
Significant changes to these estimates may result in an increase or decrease to the Corporation’s tax provision in a
subsequent period. The Corporation recognizes interest and/or penalties related to income tax matters in income tax
expense.

The Corporation assesses the likelihood that it will be able to recover its deferred tax assets. If recovery is
not likely, the Corporation will increase its provision for income taxes by recording a valuation allowance against
the deferred tax assets that are unlikely to be recovered. The Corporation believes that it will ultimately recover a
substantial majority of the deferred tax assets recorded on the balance sheet. However, should there be a change in
the Corporation’s ability to recover its deferred tax assets, the effect of this change would be recorded through the
provision for income taxes in the period during which such change occurs.

The Corporation periodically reviews the tax positions it takes on its tax return and applies a “more likely
than not” recognition threshold for all tax positions that are uncertain. The amount recognized in the financial
statements is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For
tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

Advertising and Promotional Costs

Advertising and promotional costs are generally expensed as incurred.

Per Share Amounts

Earnings per common share is computed using net income available to common stockholders, which is net

income adjusted for the preferred stock dividend and discount amortization.

Basic earnings per common share is calculated by dividing net income available to common stockholders
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 available to common stock-
holders 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, as calculated using the treasury stock method. Adjustments to the weighted
average number of shares of common stock outstanding are made only when such adjustments dilute earnings per
common share.

Pension and Postretirement Benefit Plans

The Corporation sponsors pension and other postretirement benefit plans for its employees. The expense
associated with the plans is calculated in accordance with ASC Topic 715, Compensation - Retirement Benefits. The
plans utilize assumptions and methods determined in accordance with ASC Topic 715, including reflecting trust
assets at their fair market value for the qualified pension plans and recognizing the overfunded and underfunded
status of the plans on its consolidated balance sheet. Gains and losses, prior service costs and credits are recognized
in accumulated other comprehensive income, net of tax, until they are amortized, or immediately upon curtailment.

Stock Based Compensation

The Corporation accounts for its stock based compensation awards in accordance with ASC Topic 718,
Compensation - Stock Compensation, which requires the measurement and recognition of compensation expense,
based on estimated fair values, for all share-based awards, including stock options and restricted stock, made to
employees and directors.

ASC Topic 718 requires companies to estimate the fair value of share-based awards on the date of grant.
The value of the portion of the award that is ultimately expected to vest is recognized as expense in the
Corporation’s consolidated statement of income over the shorter of requisite service periods or the period through
the date that the employee first becomes eligible to retire. Because share-based compensation expense is based on
awards that are ultimately expected to vest, share-based compensation expense has been reduced to account for
estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if
actual forfeitures differ from those estimates.

Capital

On January 9, 2009, the Corporation received from the UST under the CPP proceeds of $100,000 in
exchange for 100,000 shares of Series C Preferred Stock and a warrant to purchase up to 1,302,083 shares of the
Corporation’s common stock.

On September 9, 2009, the Corporation utilized a portion of the proceeds of its public offering to redeem
all of the Series C Preferred Stock issued to the UST and to pay the related final accrued dividend. Since receiving
the CPP funds, the Corporation paid the UST $3,333 in cash dividends. Upon redemption, the remaining difference
of $4,319 between the Series C Preferred Stock redemption amount and the recorded amount was charged to
retained earnings as non-cash deemed preferred stock dividends. The non-cash deemed preferred stock dividends
had no impact on total equity, but reduced 2009 earnings per diluted common share by $0.04.

The number of shares of common stock issuable upon exercise of the warrant that was issued to the UST in
association with the CPP was reduced by one-half to 651,042 shares as a result of the capital raised in the June 2009
offering. The warrant has a ten-year term and an exercise price of $11.52 per share.

2. New Accounting Standards

Disclosure of Supplementary Pro Forma Information for Business Combinations

In December 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards
Update (ASU) No. 2010-29, Disclosure of Supplementary Pro Forma Information for Business Combinations, to
address diversity in practice concerning pro forma revenue and earnings disclosure requirements for business
combinations. This update specifies that if a public entity presents comparative financial statements, the entity
should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred
during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The
update also expands the supplemental pro forma disclosures to include a description of the nature and amount of
material, nonrecurring pro forma adjustments directly attributable to the business combination(s) included in the
reported pro forma revenue and earnings. These requirements are effective prospectively for business combinations
for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after
December 15, 2010. Adoption of this standard is not anticipated to have a material effect on the financial statements,
results of operations or liquidity of the Corporation.

Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses

In July 2010, the FASB issued ASU No. 2010-20, Disclosures about the Credit Quality of Financing
Receivables and the Allowance for Credit Losses, to provide financial statement users with greater transparency
about credit quality of financing receivables and allowance for credit losses. This update requires additional
disclosures as of the end of a reporting period and additional disclosures about activity that occurs during a reporting
period that will assist financial statement users in assessing credit risk exposures and evaluating the adequacy of the
allowance for credit losses.

The additional disclosures are required to be provided on a disaggregated basis. ASU No. 2010-20 defines
two levels of disaggregation and provides additional implementation guidance to determine the appropriate level of
disaggregation of information. The disclosures should facilitate evaluation of the nature of the credit risk inherent in
a portfolio of financing receivables, how that risk is analyzed and assessed in arriving at the allowance for credit
losses, and the changes and reasons for those changes in the allowance for credit losses.

The disclosures as of the end of a reporting period are effective for interim and annual reporting periods
ending on or after December 15, 2010. The disclosures about activity that occurs during a reporting period are
effective for interim and annual reporting periods beginning on or after December 15, 2010. Disclosures required by
this standard did not have a material effect on the financial statements, results of operations or liquidity of the
Corporation.

Modification of a Loan That is Part of a Pool That is Accounted for as a Single Asset

In April 2010, the FASB issued ASU No. 2010-18, Effect of a Loan Modification When the Loan is Part of
a Pool That is Accounted for as a Single Asset. ASU No. 2010-18 provides that modifications of acquired loans with

deteriorated credit quality that are accounted for within a pool do not result in removal of those loans from the pool
even if the modification of those loans would otherwise be considered a troubled asset restructuring.
ASU No. 2010-18 is effective for modifications occurring in the first interim or annual reporting period ending
on or after July 15, 2010. Adoption of this standard did not have a material effect on the financial statements, results
of operations or liquidity of the Corporation.

Fair Value Disclosures

In January 2010, the FASB issued ASU No. 2010-06, Improving Disclosures about Fair Value Measure-
ments. The ASU clarifies existing disclosure requirements and requires additional disclosures regarding fair value
measurements. This standard clarifies that an entity should provide fair value disclosures by class rather than major
category of assets and liabilities, resulting in a greater level of disaggregated information presented in all fair value
disclosures. ASU 2010-06 also clarifies that, for fair value measurements using significant other observable inputs
(Level 2) and significant unobservable inputs (Level 3), an entity is required to describe valuation techniques and
the inputs used in determining the fair values of each class of assets and liabilities and to disclose a change in
valuation technique and the reason for making that change. Additionally, the ASU requires an entity to discuss the
reasons for transfers in or out of Level 3 and, if significant, to disclose these transfers on a gross basis, to disclose on
a gross basis the amounts and reasons for significant transfers between Level 2 and Level 3 of the fair value
hierarchy, and to disclose its policy for determining when transfers between Levels are recognized. This standard
was effective for interim and annual reporting periods that began after December 15, 2009. Adoption of this
standard did not have a material effect on the financial statements, results of operations or liquidity of the
Corporation.

3. Mergers and Acquisitions

On January 1, 2011, the Corporation completed its acquisition of Comm Bancorp, Inc. (CBI), a bank
holding company based in Clarks Summit, Pennsylvania. On the acquisition date, CBI had $625,570 in assets,
which included $445,271 in loans, and $561,775 in deposits. The transaction, valued at $75,547, resulted in the
Corporation paying $17,203 in cash and issuing 5,941,287 shares of its common stock in exchange for
1,719,978 shares of CBI common stock. CBI’s banking affiliate, Community Bank and Trust Company, was
merged into FNBPA on January 1, 2011. The Corporation has not yet finalized its determination of the fair values of
acquired assets and liabilities relating to the CBI acquisition.

On August 16, 2008, the Corporation completed its acquisition of IRGB, a bank holding company based in
Pittsburgh, Pennsylvania. On the acquisition date, IRGB had $301,727 in assets, which included $168,638 in loans,
and $252,584 in deposits. The transaction, valued at $83,725, resulted in the Corporation paying $36,722 in cash
and issuing 3,176,990 shares of its common stock in exchange for 1,125,026 shares of IRGB common stock. The
assets and liabilities of IRGB were recorded on the Corporation’s balance sheet at their fair values as of August 16,
2008, the acquisition date, and IRGB’s results of operations have been included in the Corporation’s consolidated
statement of income since that date. IRGB’s banking subsidiary, Iron and Glass Bank, was merged into FNBPA on
August 16, 2008. Based on the purchase price allocation, the Corporation recorded $47,645 in goodwill and $3,551
in core deposit intangible as a result of the acquisition. None of the goodwill is deductible for income tax purposes.

On April 1, 2008, the Corporation completed its acquisition of Omega, a diversified financial services
company based in State College, Pennsylvania. On the acquisition date, Omega had $1,851,501 in assets, which
included $1,074,856 in loans, and $1,291,483 in deposits. The all-stock transaction, valued at approximately
$388,176, resulted in the Corporation issuing 25,362,525 shares of its common stock in exchange for
12,544,150 shares of Omega common stock. The assets and liabilities of Omega were recorded on the Corporation’s
balance sheet at their fair values as of April 1, 2008, the acquisition date, and Omega’s results of operations have
been included in the Corporation’s consolidated statement of income since that date. Omega’s banking subsidiary,
Omega Bank, was merged into FNBPA on April 1, 2008. Based on the purchase price allocation, the Corporation
recorded $237,657 in goodwill and $31,191 in core deposit and other intangibles as a result of the acquisition. None
of the goodwill is deductible for income tax purposes.

The assets and liabilities of these acquired entities were recorded on the balance sheet at their estimated
fair values as of their respective acquisition dates. The consolidated financial statements include the results of
operations of these entities from their respective dates of acquisition.

The Corporation recorded merger charges of $620 in 2010 associated with the acquisition of CBI.
Additionally, the Corporation recorded merger and integration charges of $4,724 in 2008 associated with the
acquisitions of Omega and IRGB.

The following table shows the calculation of the purchase price and the resulting goodwill relating to the

Omega acquisition:

Fair value of stock issued and stock options assumed
Fair value of:

Tangible assets acquired
Core deposit and other intangible assets acquired
Liabilities assumed
Net cash received in the acquisition

Fair value of net assets acquired

Goodwill recognized

$ 1,532,217
31,191
(1,463,325)
50,436

$388,176

150,519

$237,657

The following table summarizes the estimated fair value of the net assets that the Corporation acquired

from Omega:

Assets

Cash and due from banks
Federal funds sold
Securities
Loans
Goodwill and other intangible assets
Accrued income and other assets

Total assets
Liabilities
Deposits
Borrowings
Accrued expenses and other liabilities

Total liabilities

Purchase price

57,039
52,400
256,837
1,074,856
268,848
141,521

1,851,501

1,291,483
157,241
14,601

1,463,325

$ 388,176

The following unaudited summary financial information presents the consolidated results of operations of
the Corporation for the year ended December 31, 2008 on a pro forma basis, as if the Omega acquisition had
occurred at the beginning of 2008:

Net interest income
Provision for loan losses

Net interest income after provision for loan losses
Non-interest income
Non-interest expense

Income before taxes
Income taxes

Net income

Net income per common share

Basic

Diluted

$267,934
75,806

192,128
92,986
239,953

45,161
7,518

$ 37,643

0.47

0.46

The pro forma results include the amortization of the fair value adjustments on loans, deposits and debt and
the amortization of the newly created intangible assets and post-merger acquisition related expenses. The pro forma
results for 2008 also include $3,900 pre-tax for certain non-recurring items, including personnel expense for
retention bonuses and severance payments. The pro forma results do not reflect cost savings or revenue
enhancements that were anticipated from the acquisition, and are not necessarily indicative of what actually
would have occurred if the acquisition had been completed as of the beginning of 2008, nor are they necessarily
indicative of future consolidated results. Actual results of operations of the Corporation for the periods after the
acquisition are included in the Corporation’s consolidated statement of income provided elsewhere in this Report.

Due to the immateriality of the IRGB acquisition, it has not been included in the pro forma financial

information presented above.

4. Securities

The amortized cost and fair value of securities are as follows:

Securities Available For Sale:

December 31, 2010
U.S. Treasury and other U.S. government

agencies and corporations

Residential mortgage-backed securities:
Agency mortgage-backed securities
Agency collateralized mortgage obligations
Non-agency collateralized mortgage

obligations

States of the U.S. and political subdivisions
Collateralized debt obligations
Other debt securities

Total debt securities

Equity securities

December 31, 2009
U.S. Treasury and other U.S. government

agencies and corporations

Residential mortgage-backed securities:
Agency mortgage-backed securities
Agency collateralized mortgage obligations
Non-agency collateralized mortgage

obligations

States of the U.S. and political subdivisions
Collateralized debt obligations
Other debt securities

Total debt securities

Equity securities

December 31, 2008
U.S. Treasury and other U.S. government

agencies and corporations

Residential mortgage-backed securities:
Agency mortgage-backed securities
Non-agency collateralized mortgage

obligations

States of the U.S. and political subdivisions
Collateralized debt obligations
Other debt securities

Total debt securities

Equity securities

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair Value

$299,861

$1,395

(688)

$300,568

205,443
146,977

37
57,830
19,288
12,989
742,425
1,867
$744,292

6,064
1,081

1
934
—
—
9,475
381
$9,856

—
(192)

—
(26)
(13,314)
(1,744)
(15,964)
(59)
$(16,023)

211,507
147,866

38
58,738
5,974
11,245
735,936
2,189
$738,125

$251,192

$1,563

(299)

$252,456

319,902
43,985

47
74,177
21,590
12,999
723,892
2,656
$726,548

6,035
54

—
1,495
—
—
9,147
224
$9,371

(166)
(531)

(2)
(89)
(16,766)
(2,569)
(20,422)
(148)
$(20,570)

325,771
43,508

45
75,583
4,824
10,430
712,617
2,732
$715,349

$249,370

$3,925

—

$253,295

1,969

3
254
—
—
6,151
157
$6,308

(306)

133,000

—
(2,138)
(6,242)
(4,737)
(13,423)
(268)
$(13,691)

56
69,181
14,627
8,613
478,772
3,498
$482,270

131,337

53
71,065
20,869
13,350
486,044
3,609
$489,653

Securities Held To Maturity:

December 31, 2010
U.S. Treasury and other U.S. government

agencies and corporations

Residential mortgage-backed securities:
Agency mortgage-backed securities
Agency collateralized mortgage obligations
Non-agency collateralized mortgage

obligations

States of the U.S. and political subdivisions
Collateralized debt obligations
Other debt securities

December 31, 2009
U.S. Treasury and other U.S. government

agencies and corporations

Residential mortgage-backed securities:
Agency mortgage-backed securities
Agency collateralized mortgage obligations
Non-agency collateralized mortgage

obligations

States of the U.S. and political subdivisions
Collateralized debt obligations
Other debt securities

December 31, 2008
U.S. Treasury and other U.S. government

agencies and corporations

Residential mortgage-backed securities:
Agency mortgage-backed securities
Non-agency collateralized mortgage

obligations

States of the U.S. and political subdivisions
Collateralized debt obligations
Other debt securities

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair Value

4,925

212

$ —

5,137

688,575
71,102

33,950
137,210
3,132
1,587
$940,481

23,878
511

328
1,735
—
18
$26,682

(3,079)
(889)

(1,331)
(1,630)
(778)
(42)
$(7,749)

709,374
70,724

32,947
137,315
2,354
1,563
$959,414

5,386

$ —

5,467

566,876
27,263

49,000
121,548
3,590
1,618
$775,281

23,141
406

—
2,477
—
11
$26,116

(261)
—

(3,245)
(399)
(812)
(143)
$(4,860)

589,756
27,669

45,755
123,626
2,778
1,486
$796,537

506

154

$ —

660

658,260

15,915

(694)

673,481

63,422
115,766
3,785
2,124
$843,863

—
376
—
—
$16,445

(6,748)
(928)
(572)
(115)
$(9,057)

56,674
115,214
3,213
2,009
$851,251

The Corporation classifies securities as trading securities when management intends to sell such securities
in the near term and are carried at fair value, with unrealized gains (losses) reflected through the consolidated
statement of income. The Corporation acquired securities in conjunction with the Omega and IRGB acquisitions
that the Corporation classified as trading securities. The Corporation both acquired and sold these trading securities
during the quarters of 2008 in which the acquisitions occurred. As of December 31, 2010, 2009 and 2008, the
Corporation did not hold any trading securities.

The Corporation recognized a gain of $2,291 during 2010 relating to the sale of a $6,016 U.S. government
agency security and $52,625 of mortgage backed securities. These securities were sold to better position the balance
sheet for the future. Additionally, the Corporation recognized gains of $669 and $322 during 2010 and 2009,
respectively, relating to other securities that were sold or called during that period. The Corporation also recognized
a gain of $206 during 2009 relating to the acquisition of a company in which the Corporation owned stock. No
securities were sold at a loss during 2010.

Gross gains and gross losses were realized on sales of securities as follows:

Year Ended December 31
Gross gains
Gross losses

2010

$2,960
—
$2,960

2009

$546
(18)
$528

2008

$839
(5)
$834

As of December 31, 2010, the amortized cost and fair value of securities, by contractual maturities, were as

follows:

Due in one year or less
Due from one to five years
Due from five to ten years
Due after ten years

Residential mortgage-backed securities:
Agency mortgage-backed securities
Agency collateralized mortgage obligations
Non-agency collateralized mortgage

obligations
Equity securities

Available for Sale
Fair
Value

Amortized
Cost

Held to Maturity
Fair
Value

Amortized
Cost

$ 25,676
272,771
17,087
74,434
389,968

205,443
146,977

37
1,867
$744,292

$ 25,733
273,486
17,449
59,857
376,525

211,507
147,866

38
2,189
$738,125

$ 6,415
21,345
18,512
100,582
146,854

688,575
71,102

33,950
—
$940,481

6,463
22,177
18,757
98,972
146,369

709,374
70,724

32,947
—
$959,414

Maturities may differ from contractual terms because borrowers may have the right to call or prepay
obligations with or without penalties. Periodic payments are received on residential mortgage-backed securities
based on the payment patterns of the underlying collateral.

At December 31, 2010, 2009 and 2008, securities with a carrying value of $651,299, $598,078 and
$670,234, respectively, were pledged to secure public deposits, trust deposits and for other purposes as required by
law. Securities with a carrying value of $676,083, $616,000 and $584,995 at December 31, 2010, 2009 and 2008,
respectively, were pledged as collateral for short-term borrowings.

Following are summaries of the fair values and unrealized losses of securities, segregated by length of

impairment:

Securities Available For Sale:

December 31, 2010
U.S. Treasury and other U.S.
government agencies and
corporations

Residential mortgage-backed

securities:
Agency collateralized mortgage

obligations

States of the U.S. and political

subdivisions

Collateralized debt obligations
Other debt securities
Equity securities

December 31, 2009
U.S. Treasury and other U.S.
government agencies and
corporations

Residential mortgage-backed

securities:
Agency mortgage-backed

securities

Agency collateralized mortgage

obligations

Non-agency collateralized
mortgage obligations
States of the U.S. and political

subdivisions

Collateralized debt obligations
Other debt securities
Equity securities

Less than 12 Months
Fair
Value

Unrealized
Losses

Greater than 12 Months

Total

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

$117,140

(688)

$ —

—

$117,140

(688)

22,616

(192)

3,322
—
4,024
—

(26)
—
(62)
—

—

—
5,974
7,221
648

—

22,616

(192)

—
(13,314)
(1,682)
(59)

3,322
5,974
11,245
648

(26)
(13,314)
(1,744)
(59)

$147,102

(968)

$13,843

$(15,055)

$160,945

$(16,023)

$ 46,501

(299)

$ —

—

$ 46,501

(299)

68,313

29,516

12,357
3,755
—
789

(166)

(531)

(2)

(89)
(12,023)
—
(99)

—

—
1,069
10,430
721

—

—
(4,743)
(2,569)
(49)

68,313

29,516

12,357
4,824
10,430
1,510

(166)

(531)

(2)

(89)
(16,766)
(2,569)
(148)

$161,276

$(13,209)

$12,220

$ (7,361)

$173,496

$(20,570)

Securities Held To Maturity:

December 31, 2010
Residential mortgage-backed

securities:
Agency mortgage-backed

securities

Agency collateralized mortgage

obligations

Non-agency collateralized
mortgage obligations
States of the U.S. and political

subdivisions

Collateralized debt obligations
Other debt securities

December 31, 2009
Residential mortgage-backed

securities:
Agency mortgage-backed

securities

Non-agency collateralized
mortgage obligations
States of the U.S. and political

subdivisions

Collateralized debt obligations
Other debt securities

Less than 12 Months
Fair
Value

Unrealized
Losses

Greater than 12 Months

Total

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

$156,544

$(3,079)

$ —

$156,544

$(3,079)

39,074

(889)

—

39,074

(889)

2,551

(12)

10,739

(1,319)

13,290

(1,331)

47,125
—
—

(1,415)
—
—

2,319
2,354
1,288

(215)
(778)
(42)

49,444
2,354
1,288

(1,630)
(778)
(42)

$245,294

$(5,395)

$16,700

$(2,354)

$261,994

$(7,749)

$ 20,650

$ (261)

$ —

$ 20,650

$ (261)

15,534

13,055
—
—

(80)

30,221

(3,165)

45,755

(3,245)

(362)
—
—

1,968
2,778
1,192

(37)
(812)
(143)

15,023
2,778
1,192

(399)
(812)
(143)

$ 49,239

$ (703)

$36,159

$(4,157)

$ 85,398

$(4,860)

As of December 31, 2010, securities with unrealized losses for less than 12 months include 9 investments in
U.S. Treasury and other U.S. government agencies and corporations, 20 investments in residential mortgage-backed
securities (14 investments in agency mortgage-backed securities, 5 investments in agency collateralized mortgage
obligations (CMOs) and 1 investment in non-agency CMOs), 41 investments in states of the U.S. and political subdivision
securities and 1 investment in other debt securities. Securities with unrealized losses of greater than 12 months include 2
investments in residential mortgage-backed securities (non-agency CMOs), 1 investment in states of the U.S. and political
subdivision securities, 13 investments in collateralized debt obligations (CDOs), 6 investments in other debt securities and
3 investments in equity securities. The Corporation does not intend to sell the debt securities and it is not more likely than
not the Corporation will be required to sell the securities before recovery of their amortized cost basis.

The Corporation’s unrealized losses on CDOs primarily relate to investments in TPS. The Corporation’s
portfolio of TPS consists of single-issuer and pooled securities. The single-issuer securities are primarily from
money-center and large regional banks. The pooled securities consist of securities issued primarily by banks, with
some of the pools including a limited number of insurance companies. Investments in pooled securities are all in
mezzanine tranches except for one investment in a senior tranche, and are secured by over-collateralization or
default protection provided by subordinated tranches. The non-credit portion of unrealized losses on investments in
TPS are attributable to temporary illiquidity and the uncertainty affecting these markets, as well as changes in
interest rates.

Other-Than-Temporary Impairment

Debt securities with credit ratings below AA at the time of purchase that are repayment-sensitive securities
are evaluated using the guidance of ASC Topic 325, Investments - Other. All other securities are required to be
evaluated under ASC Topic 320, Investments - Debt Securities.

The Corporation invested in TPS issued by special purpose vehicles (SPVs) which hold pools of collateral
consisting of trust preferred and subordinated debt securities issued by banks, bank holding companies and
insurance companies. The securities issued by the SPVs are generally segregated into several classes known as
tranches. Typically, the structure includes senior, mezzanine and equity tranches. The equity tranche represents the
first loss position. The Corporation generally holds interests in mezzanine tranches. Interest and principal collected
from the collateral held by the SPVs are distributed with a priority that provides the highest level of protection to the
senior-most tranches. In order to provide a high level of protection to the senior tranches, cash flows are diverted to
higher-level tranches if certain tests are not met.

The Corporation prices its holdings of TPS using Level 3 inputs in accordance with ASC Topic 820, Fair
Value Measurements and Disclosures, and guidance issued by the SEC. In this regard, the Corporation evaluates
current available information in estimating the future cash flows of these securities and determines whether there have
been favorable or adverse changes in estimated cash flows from the cash flows previously projected. The Corporation
considers the structure and term of the pool and the financial condition of the underlying issuers. Specifically, the
evaluation incorporates factors such as over-collateralization and interest coverage tests, interest rates and appropriate
risk premiums, the timing and amount of interest and principal payments and the allocation of payments to the various
tranches. Current estimates of cash flows are based on the most recent trustee reports, announcements of deferrals or
defaults, and assumptions regarding expected future default rates, prepayment and recovery rates and other relevant
information. In constructing these assumptions, the Corporation considers the following:

(cid:129)
(cid:129)
(cid:129)

(cid:129)

that current defaults would have no recovery;
whether the security is currently deferring interest;
that some individually analyzed deferrals will cure at rates varying from 10% to 90% after the
deferral period ends;
recent historical performance metrics, including profitability, capital ratios, loan charge-offs and
loan reserve ratios, for the underlying institutions that would indicate a higher probability of default
by the institution;
that institutions identified as possessing a higher probability of default would recover at a rate of 10%
for banks and 15% for insurance companies;
that financial performance of the financial sector continues to be affected by the economic
environment resulting in an expectation of additional deferrals and defaults in the future; and
the external rating of the security and recent changes to its external rating.

The primary evidence utilized by the Corporation is the level of current deferrals and defaults, the level of
excess subordination that allows for receipt of full principal and interest, the credit rating for each security and the
likelihood that future deferrals and defaults will occur at a level that will fully erode the excess subordination based
on an assessment of the underlying collateral. The Corporation combines the results of these factors considered in
estimating the future cash flows of these securities to determine whether there has been an adverse change in
estimated cash flows from the cash flows previously projected.

The Corporation’s portfolio of trust preferred CDOs consists of 13 pooled issues and seven single issue
securities consisting of only four issuers. One of the pooled issues is a senior tranche; the remaining 12 are
mezzanine tranches. At December 31, 2010, the 13 pooled TPS had an estimated fair value of $8,328 while single-

issuer TPS had an estimated fair value of $12,533. The Corporation has concluded from the analysis performed at
December 31, 2010 that it is probable that the Corporation will collect all contractual principal and interest
payments on all of its single-issuer and pooled TPS, except for those on which OTTI was recognized.

Upon adoption of ASC Topic 320, the Corporation determined that $7,021 of previously recorded OTTI
charges were non-credit related. As such, a $4,563 (net of $2,458 of taxes) increase to retained earnings and a
corresponding decrease to accumulated other comprehensive income were recorded as the cumulative effect of
adopting ASC Topic 320 as of April 1, 2009.

The Corporation recognized impairment losses on securities of $2,339, $7,893 and $17,189 for the years
ended December 31, 2010, 2009 and 2008, respectively, due to the write-down to fair value of securities that the
Corporation deemed to be other-than-temporarily impaired. Impairment losses related to bank stocks for the years
ended December 31, 2010, 2009 and 2008 amounted to $58, $735 and $1,152, respectively. For the year ended
December 31, 2010, impairment losses on pooled TPS amounted to $9,532, which includes $7,251 ($4,713, net of tax)
for non-credit related impairment losses recognized directly in other comprehensive income and $2,281 of credit-
related impairment losses recognized in earnings. For the year ended December 31, 2009, impairment losses on pooled
TPS amounted to $24,497, which includes $17,339 ($11,270, net of tax) for non-credit related impairment losses
recognized directly in other comprehensive income and $7,158 of credit-related impairment losses recognized in
earnings. For the year ended December 31, 2008, impairment losses on pooled TPS amounted to $16,037.

The $58 in impairment losses on bank stocks during 2010 relate to securities that have been in an unrealized
loss position for an extended period of time or the percentage of unrealized loss is such that management believes it will
be unlikely to recover in the near term. In accordance with GAAP, management has deemed these impairments to be
other-than-temporary given the low likelihood that they will recover in value in the foreseeable future. At December 31,
2010, the Corporation held 14 bank stocks with an adjusted cost basis of $1,841 and fair value of $2,158.

At December 31, 2010, all 12 of the pooled TPS on which OTTI has been recognized are classified as non-

performing investments.

The following table presents a summary of the cumulative credit-related OTTI charges recognized as
components of earnings for securities for which a portion of an OTTI is recognized in other comprehensive income:

December 31
Beginning balance of the amount related to credit loss for which a portion of

OTTI was recognized in other comprehensive income
Amount of OTTI related to credit loss on April 1, 2009(1)
Additions related to credit loss for securities with previously recognized OTTI
Additions related to credit loss for securities with initial OTTI
Ending balance of the amount related to credit loss for which a portion of OTTI

2010

2009

$(16,051)
—
(2,235)
(46)

—
(8,953)
(2,315)
(4,783)

was recognized in other comprehensive income

$(18,332)

$(16,051)

(1) Amount represents the OTTI charges recorded for pooled TPS, net of the Corporation’s cumulative effect

adjustment upon adoption of ASC Topic 320, effective April 1, 2009.

TPS continue to experience price volatility as the secondary market for such securities remains limited.
Write-downs were based on the individual securities’ credit performance and its ability to make its contractual
principal and interest payments. Should credit quality deteriorate to a greater extent than projected, it is possible that
additional write-downs may be required. The Corporation monitors actual deferrals and defaults as well as expected
future deferrals and defaults to determine if there is a high probability for expected losses and contractual shortfalls
of interest or principal, which could warrant further impairment. The Corporation evaluates its entire portfolio each
quarter to determine if additional write-downs are warranted.

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States of the U.S. and Political Subdivisions

The Corporation’s municipal bond portfolio of $195,948 is highly rated with an average rating of AA.
Ninety-seven percent of the portfolio is rated A or better. General obligation bonds comprise 97% of the portfolio.
Geographically, these holdings support the Corporation’s footprint as 71% of the securities are from municipalities
located throughout Pennsylvania. The average holding size of the securities in the municipal bond portfolio is $850.
Finally, this portfolio is supported by underlying insurance as 84% of the securities have credit support.

Non-Agency CMOs

The Corporation purchased $161,151 of non-agency CMOs from 2003 through 2005. These securities,
which are classified as held to maturity, have a current book value of $33,950. Paydowns in 2010 amounted to
$13,700, an annualized paydown rate of 30.0%, which includes one AAA-rated holding that was performing well
and was redeemed by the issuer at par during the third quarter. In addition, one AAA-rated holding with a book
value of $1,339 was sold during the fourth quarter of 2010. The sale was permitted under ASC Topic 320 since less
than 15.0% of the purchase amount remained. At the time of purchase, these securities were all rated AAA, with an
original average loan-to-value (LTV) ratio of 66.1% and original credit score of 724. At origination, the credit
support, or the amount of loss the collateral pool could absorb before the AAA securities would incur a credit loss
ranged from 1.3% to 7.0%. This credit support has grown to a range of 4.3% to 19.7%, due to paydowns and good
credit performance through the first half of 2008. Beginning in the second half of 2008, national delinquencies, an
early warning sign of potential default, began to accelerate on the collateral pools. The rate of delinquencies in 2010
continued to show a slight upward trend throughout the year. All CMO holdings are current with regards to principal
and interest.

The rating agencies monitor these non-agency CMOs and the underlying collateral performance for
delinquencies, foreclosures and defaults. They also factor in trends in bankruptcies and housing values to ultimately
arrive at an expected loss for a given piece of defaulted collateral. Based on deteriorating performance of the
collateral, many of these types of securities have been downgraded by the rating agencies. For the Corporation’s
portfolio, four of the ten non-agency CMOs have been downgraded from AAA.

The Corporation determines its credit related losses by running scenario analysis on the underlying
collateral. This analysis applies default assumptions to delinquencies already in the pipeline, projects future
defaults based in part on the historical trends for the collateral, applies a rate of severity and estimates prepayment
rates. Because of the limited historical trends for the collateral, multiple default scenarios were analyzed including
scenarios that significantly elevate defaults over the next 12 - 18 months. Based on the results of the analysis, the
Corporation’s management has concluded that there are currently no credit-related losses in its non-agency CMO
portfolio.

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5. Federal Home Loan Bank Stock

The Corporation is a member of the Federal Home Loan Bank (FHLB) of Pittsburgh. The FHLB requires
members to purchase and hold a specified minimum level of FHLB stock based upon their level of borrowings,
collateral balances and participation in other programs offered by the FHLB. Stock in the FHLB is non-marketable
and is redeemable at the discretion of the FHLB. Both cash and stock dividends on FHLB stock are reported as
income.

Members do not purchase stock in the FHLB for the same reasons that traditional equity investors acquire
stock in an investor-owned enterprise. Rather, members purchase stock to obtain access to the low-cost products
and services offered by the FHLB. Unlike equity securities of traditional for-profit enterprises, the stock of FHLB
does not provide its holders with an opportunity for capital appreciation because, by regulation, FHLB stock can
only be purchased, redeemed and transferred at par value.

At December 31, 2010 and 2009, the Corporation’s FHLB stock totaled $26,564 and $27,962, respec-
tively, and is included in other assets on the balance sheet. The Corporation accounts for the stock in accordance
with ASC Topic 325, which requires the investment to be carried at cost and evaluated for impairment based on the
ultimate recoverability of the par value.

The Corporation periodically evaluates its FHLB investment for possible impairment based on, among
other things, the capital adequacy of the FHLB and its overall financial condition. The Federal Housing Finance
Agency, the regulator of the FHLB, requires it to maintain a total capital-to-assets ratio of at least 4.0%. At
September 30, 2010, the FHLB’s capital ratio of 8.3% exceeded the regulatory requirement. Failure by the FHLB to
meet this regulatory capital requirement would require an in-depth analysis of other factors including:

(cid:129)
(cid:129)
(cid:129)

(cid:129)

the member’s ability to access liquidity from the FHLB;
the member’s funding cost advantage with the FHLB compared to alternative sources of funds;
a decline in the market value of FHLB’s net assets relative to book value which may or may not affect
future financial performance or cash flow;
the FHLB’s ability to obtain credit and source liquidity, for which one indicator is the credit rating of
the FHLB;
the FHLB’s commitment to make payments taking into account its ability to meet statutory and
regulatory payment obligations and the level of such payments in relation to the FHLB’s operating
performance; and
the prospects of amendments to laws that affect the rights and obligations of the FHLB.

At December 31, 2010, the Corporation believes its holdings in the stock are ultimately recoverable at par
value and, therefore, determined that FHLB stock was not other-than-temporarily impaired. In addition, the
Corporation has ample liquidity and does not require redemption of its FHLB stock in the foreseeable future.

6. Loans

Following is a summary of loans, net of unearned income:

December 31
Commercial
Direct installment
Residential mortgages
Indirect installment
Consumer lines of credit
Other

2010

2009

$3,337,992
1,002,725
622,242
514,369
493,881
116,946

$3,234,738
985,746
605,219
527,818
408,469
87,371

$6,088,155

$5,849,361

Commercial is comprised of both commercial real estate loans and commercial and industrial loans.
Direct installment is comprised of fixed-rate, closed-end consumer loans for personal, family or household use,
such as home equity loans and automobile loans. Residential mortgages consist of conventional and jumbo
mortgage loans for non-commercial properties. Indirect installment is comprised of loans written by third parties,
primarily automobile loans. Consumer lines of credit includes home equity lines of credit (HELOC) and consumer
lines of credit that are either unsecured or secured by collateral other than home equity. Other is comprised
primarily of commercial leases, mezzanine loans and student loans.

Unearned income on loans was $42,183 and $38,173 at December 31, 2010 and 2009, respectively.

The loan portfolio consists principally of loans to individuals and small- and medium-sized businesses
within the Corporation’s primary market area of Pennsylvania and northeastern Ohio. The portfolio also includes
commercial loans in Florida, which totaled $195,281 or 3.2% of total loans as of December 31, 2010 compared to
$243,912 or 4.2% of total loans as of December 31, 2009. In addition, the portfolio contains consumer finance loans
to individuals in Pennsylvania, Ohio, Tennessee and Kentucky, which totaled $162,805 or 2.7% of total loans as of
December 31, 2010.

The composition of the Florida loan portfolio consisted of the following as of December 31, 2010:
unimproved residential land (11.7%), unimproved commercial land (17.4%), improved land (3.0%), income
producing commercial real estate (48.1%), residential construction (5.8%), commercial construction (11.3%),
commercial and industrial (1.1%) and owner-occupied (1.6%). The percentage of loans in the Florida portfolio
comprising income producing commercial real estate increased from December 31, 2009 after an $8.1 million
residential construction loan and an $8.5 million commercial construction loan were both reclassified to the income
producing segment after the construction phases were completed and the properties began to lease. The weighted
average loan-to-value ratio for this portfolio was 82.0% and 76.8% as of December 31, 2010 and 2009, respectively.

The majority of the Corporation’s loan portfolio consists of commercial loans. As of December 31, 2010
and 2009, commercial real estate loans were $2,115,492 and $2,072,126, or 34.7% and 35.4% of total loans,
respectively. As of December 31, 2010, approximately 47.0% of the commercial real estate loans are owner-
occupied, while the remaining 53.0% are non-owner-occupied. As of December 31, 2010 and 2009, the
Corporation had construction loans of $202,018 and $184,092, respectively, representing 3.3% and 3.1% of total
loans, respectively. As of December 31, 2010 and 2009, there were no concentrations of loans relating to any
industry in excess of 10% of total loans.

At December 31, 2010 and 2009, there were $3,626 and $8,011 of loans, respectively, that were impaired
loans acquired with no associated allowance for loan losses as they were accounted for in accordance with
ASC Topic 310-30.

Certain directors and executive officers of the Corporation and its significant subsidiaries, as well as
associates of such persons, are loan customers. Loans to such persons were made in the ordinary course of business
under normal credit terms and do not have more than a normal risk of collection. Following is a summary of the
aggregate amount of loans to any such persons who had loans in excess of $60 during 2010:

Total loans at December 31, 2009
New loans
Repayments
Other
Total loans at December 31, 2010

$ 74,255
45,869
(69,008)
(1,280)
$ 49,836

Other represents the net change in loan balances resulting from changes in related parties during 2010.

7. Credit Quality

Management monitors the credit quality of its loan portfolio on an ongoing basis. Measurement of

delinquency and past due status are based on the contractual terms of each loan.

Past due loans are reviewed on a monthly basis to identify loans for non-accrual status. The Corporation
places a loan on non-accrual status and discontinues interest accruals when principal or interest is due and has
remained unpaid for 90 to 180 days depending on the loan type. When a loan is placed on non-accrual status, all
unpaid interest recognized in the current year is reversed and interest accrued in prior years is charged to the
allowance for loan losses. Non-accrual loans may not be restored to accrual status until all delinquent principal and
interest have been paid and the ultimate collectibility of the remaining principal and interest is reasonably assured.

Following is an age analysis of the Corporation’s past due loans, by class:

December 31, 2010

Commercial
Direct installment
Residential

mortgages

Indirect installment
Consumer lines of

credit

Other

30-89 Days
Past Due

$17,101
8,603

9,127
5,659

1,581
1,551

H90 Days Past
Due and
Still Accruing

$3,020
2,496

2,144
394

571
9

Non-Accrual

$106,724
3,285

3,272
750

589
970

Total
Past Due

$126,845
14,384

14,543
6,803

2,740
2,530

Current

$3,211,147
988,341

607,699
507,566

491,141
114,416

Total
Loans

$3,337,992
1,002,725

622,242
514,369

493,881
116,946

$43,622

$8,634

$115,589

$167,845

$5,920,310

$6,088,155

Following is a summary of the Corporation’s non-accrual loans, by class:

December 31
Commercial
Direct installment
Residential mortgages
Indirect installment
Consumer lines of credit
Other

2010

2009

$106,724
3,285
3,272
750
589
970
$115,589

$122,643
5,169
4,239
741
580
519
$133,891

The use of internally assigned risk rating grades within the following commercial loan credit categories
permits management’s use of migration and roll rate analysis to estimate a quantitative portion of credit risk. The
Corporation’s internal credit risk grading system is based on past experiences with similarly graded loans and
conforms with regulatory categories. In general, loan risk ratings within each category are reviewed on an ongoing
basis according to the Corporation’s policy for each class of loans. Each quarter, management analyzes the resulting
ratings, as well as other external statistics and factors such as delinquency, to track the migration performance of the
commercial loan portfolio. Loans that migrate toward the Pass credit category or within the Pass credit category
generally have a lower risk of loss and therefore a lower risk factor compared to loans that migrate toward the
Substandard or Doubtful credit categories which generally have a higher risk of loss and therefore a higher risk
factor applied to those related loan balances.

The Corporation’s commercial loan credit quality categories are as follows:

Pass

Special Mention

Substandard

Doubtful

in general, the condition of the borrower and the performance of the loan is
satisfactory or better
in general, the condition of the borrower has deteriorated although the loan
performs as agreed
in general, the condition of the borrower has significantly deteriorated and
the performance of the loan could further deteriorate if deficiencies are not
corrected
in general, the condition of the borrower has significantly deteriorated and
the collection in full of both principal and interest is highly questionable or
improbable

Following is a table showing commercial loans by credit quality category (in thousands):

December 31, 2010
Commercial – PA
Commercial – FL

December 31, 2009
Commercial – PA
Commercial – FL

Commercial Loan Credit Quality Categories

Pass

$2,887,682
83,444

$2,971,126

$2,684,586
96,979

$2,781,565

Special
Mention

$ 80,409
38,664

$119,073

$112,796
36,629

$149,425

Substandard

Doubtful

Total

$170,714
73,173

$243,887

$187,067
110,304

$297,371

$3,906
—

$3,906

$6,377
—

$6,377

$3,142,711
195,281

$3,337,992

$2,990,826
243,912

$3,234,738

The use of payment status and delinquency migration analysis within the following consumer and other
loan categories enables management to estimate a quantitative portion of credit risk. Each month, management
analyzes payment activity, as well as other external statistics and factors such as volume, to determine how
consumer loans are performing.

Following is a table showing consumer and other loans by payment activity (in thousands):

December 31, 2010
Direct installment
Residential mortgages
Indirect installment
Consumer lines of credit
Other

December 31, 2009
Direct installment
Residential mortgages
Indirect installment
Consumer lines of credit
Other

Consumer Loan Credit Quality by
Payment Status

Performing

Non-
Performing

$991,921
608,642
513,619
493,075
115,976

976,318
593,849
526,902
407,831
86,852

$10,804
13,600
750
806
970

9,428
11,370
916
638
519

Total

$1,002,725
622,242
514,369
493,881
116,946

985,746
605,219
527,818
408,469
87,371

Loans are designated as impaired when, in the opinion of management, based on current information and
events, the collection of principal and interest in accordance with the loan contract is doubtful. Typically, the
Corporation does not consider loans for impairment unless a sustained period of delinquency (i.e. 90-plus days) is
noted or there are subsequent events that impact repayment probability (i.e. negative financial trends, bankruptcy
filings, eminent foreclosure proceedings, etc.). Impairment is evaluated in total for smaller-balance loans of a
similar nature and on an individual loan basis for other loans. If a loan is impaired, a specific valuation allowance is
allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the
loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Consistent
with the Corporation’s existing method of income recognition for loans, interest on impaired loans, except those
classified as non-accrual, is recognized as income using the accrual method. Impaired loans, or portions thereof, are
charged off when deemed uncollectible.

Following is a summary of information pertaining to loans considered to be impaired or restructured, by

class of loans:

At or for the Year Ended
December 31, 2010
With no specific allowance recorded:
Commercial
Direct installment
Residential mortgages
Indirect installment
Consumer lines of credit
Other
With a specific allowance recorded:
Commercial
Direct installment
Residential mortgages
Indirect installment
Consumer lines of credit
Other
Total:
Commercial
Direct installment
Residential mortgages
Indirect installment
Consumer lines of credit
Other

Recorded
Investment

Unpaid
Principal
Balance

Related
Allowance

Average
Recorded
Investment

Interest
Income
Recognized

$ 70,832
4,542
8,032
750
589
970

37,532
6,262
5,568
—
217
—

108,364
10,804
13,600
750
806
970

$ 95,725
4,669
8,055
1,930
604
—

39,250
6,340
5,568
—
217
—

134,975
11,009
13,623
1,930
821
—

$ —
—
—
—
—
—

10,313
626
557
—
22
—

$ 81,394
5,613
8,233
833
584
745

38,070
4,503
4,252
—
138
—

119,464
10,116
12,485
833
722
745

$ 98
77
260
—
—
—

—
275
246
—
9
—

98
352
506
—
9
—

8. Allowance for Loan Losses

Following is an analysis of changes in the allowance for loan losses:

Year Ended December 31
Balance at beginning of year
Additions from acquisitions
Charge-offs
Recoveries

Net charge-offs

Provision for loan losses
Balance at end of year

9. Premises and Equipment

2010

2009

2008

$104,655
—
(48,589)
2,731
(45,858)
47,323
$106,120

$104,730
16
(69,667)
2,774
(66,893)
66,802
$104,655

$ 52,806
12,150
(35,914)
3,317
(32,597)
72,371
$104,730

Following is a summary of premises and equipment:

December 31
Land
Premises
Equipment

Accumulated depreciation

2010

2009

$ 26,721
118,115
82,913

227,749
(111,793)

$ 26,740
117,565
77,256

221,561
(103,640)

$ 115,956

$ 117,921

Depreciation and amortization expense of premises and equipment was $11,775 for 2010, $11,865 for

2009 and $10,705 for 2008.

The Corporation has operating leases extending to 2046 for certain land, office locations and equipment,
many of which have renewal options. Leases that expire are generally expected to be replaced by other leases. Lease
costs are expensed in accordance with ASC Topic 840, Leases, taking into account escalation clauses. Rental
expense was $6,235 for 2010, $5,985 for 2009 and $5,674 for 2008.

Total minimum rental commitments under such leases were $32,223 at December 31, 2010. Following is a

summary of future minimum lease payments for years following December 31, 2010:

2011
2012
2013
2014
2015
Later years

$ 5,651
4,989
4,365
2,993
1,611
12,614

10. Goodwill and Other Intangible Assets

The following table shows a rollforward of goodwill by line of business:

Community
Banking

Wealth
Management

Insurance

Consumer
Finance

Balance at January 1, 2009
Goodwill additions

Balance at December 31, 2009
Goodwill additions

$509,153
788

509,941
—

Balance at December 31, 2010

$509,941

$8,070
(50)

8,020
—

$8,020

$9,246
(306)

8,940
10

$1,809
—

1,809
—

Total

$528,278
432

528,710
10

$8,950

$1,809

$528,720

The Corporation recorded goodwill during 2010 as a result of a previous Insurance Company acquisition.
The Corporation recorded goodwill during 2009 as a result of the final purchase accounting adjustments relating to
the acquisitions of Omega and IRGB.

The following table shows a summary of core deposit intangibles, customer and renewal lists and other

intangible assets:

December 31, 2010
Gross carrying amount
Accumulated amortization

December 31, 2009
Gross carrying amount
Accumulated amortization

Core Deposit
Intangibles

Customer
and Renewal
Lists

Other
Intangible
Assets

$ 66,239
(40,632)
$ 25,607

$ 66,239
(34,753)
$ 31,486

$10,970
(4,196)
$ 6,774

$10,970
(3,419)
$ 7,551

$ 890
(843)
$ 47

$ 890
(786)
$ 104

Total
Finite-
lived
Intangibles

$ 78,099
(45,671)
$ 32,428

$ 78,099
(38,958)
$ 39,141

Core deposit intangibles are being amortized primarily over 10 years using straight-line and accelerated
methods. Customer and renewal lists and other intangible assets are being amortized over their estimated useful
lives which range from ten to twelve years.

Amortization expense on finite-lived intangible assets totaled $6,714, $7,088 and $6,442 for 2010, 2009
and 2008, respectively. Following is a summary of the expected amortization expense on finite-lived intangible
assets, assuming no new additions, for each of the five years following December 31, 2010:

2011
2012
2013
2014
2015

$6,276
5,694
5,142
4,684
3,242

Goodwill and other intangible assets are reviewed annually for impairment, and more frequently if
impairment indicators exist. The Corporation completed this review in 2010 and 2009 and determined that its
intangible assets are not impaired.

11. Deposits

Following is a summary of deposits:

December 31
Non-interest bearing demand
Savings and NOW
Certificates and other time deposits

2010

2009

$1,093,230
3,423,844
2,129,069
$6,646,143

$ 992,298
3,182,909
2,205,016
$6,380,223

Time deposits of $100,000 or more were $610,183 and $573,684 at December 31, 2010 and 2009,

respectively. Following is a summary of these time deposits by remaining maturity at December 31, 2010:

Three months or less
Three to six months
Six to twelve months
Over twelve months

Certificates of
Deposit

Other Time
Deposits

$ 81,298
86,470
112,502
187,981
$468,251

$ 7,930
11,343
36,905
85,754
$141,932

Total

$ 89,228
97,813
149,407
273,735
$610,183

Following is a summary of the scheduled maturities of certificates and other time deposits for the years

following December 31, 2010:

2011
2012
2013
2014
2015
Later years

$1,242,049
406,530
258,268
136,415
82,247
3,560

12. Short-Term Borrowings

Following is a summary of short-term borrowings:

December 31
Securities sold under repurchase agreements
Subordinated notes
Other short-term borrowings

2010

2009

$611,902
131,458
10,243
$753,603

$536,784
121,938
10,445
$669,167

The Corporation also has available an approved line of credit with a major domestic bank. This unused line
was $15,000 as of both December 31, 2010 and 2009. This line of credit is periodically reviewed by the issuing bank
and is generally subject to withdrawal at their discretion. During 2009, a $25,000 committed line of credit was
negotiated with a major domestic bank on behalf of Regency, of which $10,000 was outstanding at both
December 31, 2010 and 2009. The weighted average interest rates on short-term borrowings during 2010,
2009 and 2008 were 1.04%, 1.43% and 2.49%, respectively. The weighted average interest rates on short-term
borrowings at December 31, 2010, 2009 and 2008 were 1.00%, 1.27% and 1.59%, respectively.

13. Long-Term Debt

Following is a summary of long-term debt:

December 31
Federal Home Loan Bank advances
Subordinated notes
Convertible subordinated notes

2010

2009

$118,700
72,745
613
$192,058

$256,921
67,343
613
$324,877

The Corporation’s banking affiliate has available credit with the FHLB of $1,831,371, of which $118,700
was used as of December 31, 2010. These advances are secured by loans collateralized by 1-4 family mortgages and
FHLB stock and are scheduled to mature in various amounts periodically through the year 2019. Interest rates paid
on these advances ranged from 0.99% to 4.79% in 2010, 2.28% to 5.54% in 2009 and 2.12% to 5.54% in 2008.
During 2010, the Corporation prepaid $59,000 of FHLB advances yielding 3.93% to better position the balance
sheet and incurred a prepayment penalty of $2,269 that was recorded in other non-interest expense.

Subordinated notes are unsecured and subordinated to other indebtedness of the Corporation. The long-
term subordinated notes mature in various amounts periodically through the year 2020. At December 31, 2010, all
of the long-term subordinated debt is redeemable by the holders prior to maturity at a discount equal to three to
twelve months of interest, depending on the term of the note. The Corporation may require the holder to give
30 days prior written notice. No sinking fund is required and none has been established to retire the debt. The
weighted average interest rate on long-term subordinated debt was 4.15% at December 31, 2010, 4.91% at
December 31, 2009 and 4.08% at December 31, 2008.

The Corporation assumed 5% convertible subordinated notes in conjunction with an acquisition. These
subordinated notes mature in 2018 and are convertible into shares of the Corporation’s common stock at any time
prior to maturity at $12.50 per share. As of December 31, 2010, the Corporation has reserved 49,000 shares of
common stock for issuance in the event the convertible subordinated notes are converted.

Scheduled annual maturities for all of the long-term debt for the years following December 31, 2010 are as

follows:

2011
2012
2013
2014
2015
Later years

$26,098
59,725
53,198
25,509
26,440
1,088

14.

Junior Subordinated Debt

The Corporation has four unconsolidated subsidiary trusts (collectively, the Trusts): F.N.B. Statutory
Trust I, F.N.B. Statutory Trust II, Omega Financial Capital Trust I and Sun Bancorp Statutory Trust I. One hundred
percent of the common equity of each Trust is owned by the Corporation. The Trusts were formed for the purpose of
issuing Corporation-obligated mandatorily redeemable capital securities (TPS) to third-party investors. The
proceeds from the sale of TPS 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. Since the third-party investors are the primary beneficiaries, the Trusts qualify as VIEs and are not
consolidated in the Corporation’s financial statements. The Trusts pay dividends on the TPS at the same rate as the
distributions paid by the Corporation on the junior subordinated debt held by the Trusts. Omega Financial Capital
Trust I and Sun Bancorp Statutory Trust I were acquired as a result of the Omega acquisition.

Distributions on the subordinated debt issued to the Trusts are recorded as interest expense by the
Corporation. The TPS 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 FRB guidelines subject to certain limitations beginning March 31, 2011. The Corporation has
entered into agreements which, when taken collectively, fully and unconditionally guarantee the obligations under
the TPS subject to the terms of each of the guarantees.

The following table provides information relating to the Trusts as of December 31, 2010:

F.N.B.
Statutory
Trust I

F.N.B.
Statutory
Trust II

Omega
Financial
Capital Trust I

Sun Bancorp
Statutory
Trust I

Trust preferred securities
Common securities
Junior subordinated debt
Stated maturity date
Optional redemption date
Interest rate

125,000
3,866
128,866
3/31/33
3/31/08

3.54%

21,500
665
22,165
6/15/36
6/15/11

36,000
1,114
35,873
10/18/34
10/18/09

$ 16,500
511
17,132
2/22/31
2/22/11

7.17%

2.48%

10.20%

variable;
LIBOR plus
325 basis points

fixed until 6/15/11;
then LIBOR plus
165 basis points

variable;
LIBOR plus 219
basis points

15. Derivative Instruments

The Corporation is exposed to certain risks arising from both its business operations and economic
conditions. The Corporation principally manages its exposures to a wide variety of business and operational risks
through management of its core business activities. The Corporation manages economic risks, including interest
rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities.
The Corporation’s existing interest rate derivatives result from a service provided to certain qualifying customers.
The Corporation manages its derivative instruments in order to minimize its net risk exposure resulting from such
transactions.

At December 31, 2010, the Corporation was party to 138 swaps with notional amounts totaling approx-
imately $480,668 with customers, and 138 swaps with notional amounts totaling approximately $480,668 with
derivative counterparties. The following table presents the fair value of the Corporation’s derivative financial
instruments as well as their classification on the balance sheet:

Interest Rate Products:
Asset derivatives
Liability derivatives

Balance
Sheet
Location

December 31

2010

2009

Other assets
Other liabilities

$25,631
25,043

$13,305
12,497

The following table presents the effect of the Corporation’s derivative financial instruments on the income

statement:

Interest rate products

Income
Statement
Location

Other income

Year Ended December 31

2010

$(220)

2009

$196

2008

$612

The Corporation has agreements with each of its derivative counterparties that contain a provision where if
the Corporation defaults on any of its indebtedness, including default where repayment of the indebtedness has not

been accelerated by the lender, then the Corporation could also be declared in default on its derivative obligations.
The Corporation also has agreements with certain of its derivative counterparties that contain a provision if the
Corporation fails to maintain its status as a well capitalized institution, then the counterparty could terminate the
derivative positions and the Corporation would be required to settle its obligations under the agreements. Certain of
the Corporation’s agreements with its derivative counterparties contain provisions where if a material or adverse
change occurs that materially changes the Corporation’s creditworthiness in an adverse manner the Corporation
may be required to fully collateralize its obligations under the derivative instrument.

Interest rate swap agreements generally require posting of collateral by either party under certain
conditions. As of December 31, 2010, the fair value of counterparty derivatives in a net liability position, which
includes accrued interest but excludes any adjustment for non-performance risk related to these agreements, was
$25,024. At December 31, 2010, the Corporation has posted collateral with derivative counterparties with a fair
value of $14,383, of which none is cash collateral. Additionally, if the Corporation had breached its agreements
with its derivative counterparties it would be required to settle its obligations under the agreements at the
termination value and would be required to pay an additional $10,642 in excess of amounts previously posted as
collateral with the respective counterparty.

The Corporation has entered into interest rate lock commitments to originate residential mortgage loans
held for sale and forward commitments to sell residential mortgage loans to secondary market investors. These
arrangements are considered derivative instruments. The fair values of the Corporation’s rate lock commitments to
customers and commitments with investors at December 31, 2010 are not material.

16. 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 loan commitments 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:

December 31
Commitments to extend credit
Standby letters of credit

2010

2009

$1,550,256
101,185

$1,411,865
87,917

At December 31, 2010, funding of approximately 81.0% of the commitments to extend credit was
dependent on the financial condition of the customer. The Corporation has the ability to withdraw such commit-
ments 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 quantified on a quarterly basis, through the
review of historical performance of the Corporation’s portfolios and allocated as a liability on the Corporation’s
balance sheet.

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.

17. Stock Incentive Plans

Restricted Stock

The Corporation issues restricted stock awards, consisting of both restricted stock and restricted stock
units, to key employees under its Incentive Compensation Plans (Plans). The grant date fair value of the restricted
stock awards is equal to the price of the Corporation’s common stock on the grant date. During 2010, 2009 and
2008, the Corporation issued 515,857, 469,346 and 245,255 restricted stock awards, respectively, with weighted
average grant date fair values of $4,029, $2,811 and $3,313, respectively, under these Plans. The Corporation has
available up to 2,531,576 shares of common stock to issue under these Plans.

Under the Plans, more than half of the restricted stock awards granted to management are earned if the
Corporation meets or exceeds certain financial performance results when compared to its peers. These perfor-
mance-related awards 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 awards 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 restricted stock awards are eligible to receive cash dividends or dividend equivalents which
are ultimately used to purchase additional shares of stock. Any additional shares of stock received as a result of cash
dividends 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 award agreements.

Share-based compensation expense related to restricted stock awards was $2,739, $1,775 and $2,119 for
the years ended December 31, 2010, 2009 and 2008, the tax benefit of which was $959, $621 and $742,
respectively.

The following table summarizes certain information concerning restricted stock awards:

Weighted
Average
Grant
Price per
Share

2009

Weighted
Average
Grant
Price per
Share

2008

$10.57
7.81
10.11
15.05
9.45
8.72

527,101
469,346
—
(99,369)
(90,926)
48,288

$15.34
5.99
—
17.59
13.04
6.69

387,064
245,255
—
(114,675)
(27,991)
37,448

$17.59
13.51
—
18.58
14.69
13.48

2010

854,440
515,857
9,824
(95,281)
(41,306)
65,955

Unvested shares outstanding at beginning

of year

Granted
Net adjustment due to performance
Vested
Forfeited
Dividend reinvestment
Unvested shares outstanding at end of

year

1,309,489

8.52

854,440

10.57

527,101

15.34

The total fair value of shares vested was $698, $1,046 and $1,527 for the years ended December 31, 2010,

2009 and 2008, respectively.

As of December 31, 2010, there was $4,955 of unrecognized compensation cost related to unvested
restricted stock awards granted, none of which is subject to accelerated vesting under the plan’s immediate vesting
upon retirement provision for awards granted prior to the adoption of ASC Topic 718 on January 1, 2006. The
components of the restricted stock awards as of December 31, 2010 are as follows:

Unvested shares
Unrecognized compensation expense
Intrinsic value
Weighted average remaining life (in years)

Stock Options

Service-
Based
Awards

495,271
1,680
$
4,864
$
2.03

Performance-
Based
Awards

814,218
$ 3,275
$ 7,996
2.49

Total

1,309,489
4,955
$
12,860
$
2.31

The Corporation did not grant stock options during 2010, 2009 or 2008. All outstanding stock options were
granted at prices equal to the fair market value at the date of the grant, are primarily exercisable within ten years
from the date of the grant and were fully vested as of January 1, 2006. The Corporation issues shares of treasury
stock or authorized but unissued shares to satisfy stock options exercised. Shares issued upon the exercise of stock
options were 24,063, 1,979 and 543,591 for 2010, 2009 and 2008, respectively.

The following table summarizes certain information concerning stock option awards:

Weighted
Average
Price per
Share

2010

2009

Weighted
Average
Price per
Share

2008

968,090
—
(24,063)
(173,417)

$13.67
—
9.05
11.60

1,299,317
—
(1,979)
(329,248)

$14.00
—
15.53
14.96

1,139,844
845,969
(543,591)
(142,905)

$11.75
16.00
11.41
17.77

Options outstanding at beginning of

year

Assumed in acquisitions
Exercised
Forfeited
Options outstanding and exercisable

at end of year

770,610

14.28

968,090

13.67

1,299,317

14.00

100

Upon consummation of the Corporation’s acquisitions, all outstanding options issued by the acquired

companies were converted into equivalent Corporation options.

The following table summarizes information about stock options outstanding at December 31, 2010:

Options Outstanding and Exercisable

Range of Exercise
Prices

Options
Outstanding

Weighted Average
Remaining
Contractual Years

Weighted
Average
Exercise Price

$ 2.68 - $ 4.02
6.06 -
9.09
9.10 - 13.65
13.66 - 19.65

16,778
653
279,400
473,779
770,610

2.20
0.81
0.73
1.80

$ 2.68
8.31
12.17
15.95

The intrinsic value of outstanding and exercisable stock options at December 31, 2010 was $(3,421), since

the fair value of the stock was less than the exercise price.

The following table summarizes certain information relating to stock options exercised:

Year Ended December 31
Proceeds from stock options exercised
Tax benefit recognized from stock options exercised
Intrinsic value of stock options exercised

2010

$218
6
18

2009

$13
—
—

2008

$6,192
988
2,823

Warrants

In conjunction with its participation in the CPP, the Corporation issued to the UST a warrant to purchase up
to 1,302,083 shares of the Corporation’s common stock. Pursuant to Section 13(H) of the Warrant to Purchase
Common Stock, the number of shares of common stock issuable upon exercise of the warrant has been reduced in
half to 651,042 shares as of June 16, 2009, the date the Corporation completed a public offering. The warrant has an
exercise price of $11.52 per share.

18. Retirement Plans

The Corporation sponsors the Retirement Income Plan (RIP), a qualified noncontributory defined benefit
pension plan covering substantially all salaried employees hired prior to January 1, 2008. The RIP covers
employees who satisfy minimum age and length of service requirements. During 2006, the Corporation amended
the RIP such 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 $14,079,
which had been amortized over the average period of future service of active employees of 13.5 years. The
Corporation’s funding guideline 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, the Corporation did not
make a contribution to the RIP in 2010. The Corporation amended the RIP on October 20, 2010 to be frozen
effective December 31, 2010, at which time the Corporation recognized the remaining previously unrecognized
prior service credit of $10,543 as a reduction to expense.

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 whom the Board of Directors designates.
Officers participating in the BRP receive a benefit based on a target benefit percentage based on years of service at
retirement and a designated tier as determined by the Board of Directors. When a participant retires, the basic

101

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 was reduced by the monthly benefit the participant receives from Social
Security, the RIP, the ERISA Excess Retirement Plan and the annuity equivalent of the two percent automatic
contributions to the qualified 401(k) defined contribution plan and the ERISA Excess Lost Match Plan. The BRP
was frozen as of December 31, 2008, at which time the Corporation recognized a one-time charge of $762. The
ERISA Excess Retirement Plan was frozen as of December 31, 2010.

The following tables provide information relating to the accumulated benefit obligation, change in benefit
obligation, change in plan assets, the plans’ funded status and the amount included in the consolidated balance sheet
for the qualified and non-qualified plans described above (collectively, the Plans):

December 31
Accumulated benefit obligation

December 31
Projected benefit obligation at beginning of year
Service cost
Interest cost
IRGB-related
Curtailment gain
Actuarial loss
Benefits paid
Projected benefit obligation at end of year

December 31
Fair value of plan assets at beginning of year
Actual return on plan assets
Corporation contribution
IRGB-related
Benefits paid
Fair value of plan assets at end of year

December 31
Funded status of plan

2010

2009

$131,356

$119,080

2010

2009

$121,270
3,606
6,982
—
(2,205)
7,023
(5,225)
$131,451

2010

$ 95,609
11,225
1,289
—
(5,225)
$102,898

$113,226
3,352
7,014
(2,988)
—
5,867
(5,201)
$121,270

2009

$92,677
8,412
2,709
(2,988)
(5,201)
$95,609

2010

2009

$(28,553)

$(25,661)

The unrecognized actuarial loss, prior service cost and net transition obligation are required to be
recognized into earnings over the average remaining participant life due to the freezing of the RIP, which may, on a
net basis reduce future earnings.

Actuarial assumptions used in the determination of the projected benefit obligation in the Plans are as

follows:

Assumptions at December 31
Weighted average discount rate
Rates of average increase in compensation levels

2010

5.28%
4.00%

2009

5.79%
4.00%

The discount rate assumption at December 31, 2010 and 2009 was determined using a yield-curve based
approach. A yield curve was produced for a universe containing the majority of U.S.-issued Aa-graded corporate
bonds, all of which were non-callable (or callable with make-whole provisions), and after excluding the 10% of the
bonds with the highest yields and the 10% of the bonds with the lowest yields. The discount rate was developed as

102

the level equivalent rate that would produce the same present value as that using spot rates aligned with the
projected benefit payments.

The net periodic pension cost and other comprehensive income for the Plans included the following

components:

Year Ended December 31
Service cost
Interest cost
Expected return on plan assets
Settlement charge
Special termination charge
Curtailment credit
Transition amount amortization
Prior service credit amortization
Actuarial loss amortization
Net periodic pension cost
Other changes in plan assets and benefit obligations

recognized in other comprehensive income:

Current year actuarial loss (gain)
Curtailment effects
Amortization of actuarial loss
Amortization of prior service credit
Amortization of transition asset

Total recognized in other comprehensive income
Total recognized in net periodic pension cost and other

comprehensive income

2010

$ 3,606
6,982
(7,553)
—
—
(10,543)
(93)
(971)
3,166
(5,406)

1,146
10,543
(3,166)
971
93
9,587

2009

$ 3,352
7,014
(7,186)
526
—
—
(93)
(1,195)
3,063
5,481

4,640
—
(3,589)
1,195
93
2,339

2008

$ 3,292
6,648
(8,789)
762
358
—
(93)
(1,091)
1,083
2,170

26,771
(2,403)
(1,083)
1,091
93
24,469

$ 4,181

$ 7,820

$26,639

The plans have an actuarial measurement date of December 31. Actuarial assumptions used in the

determination of the net periodic pension cost in the Plans are as follows:

Assumptions For The Year Ended December 31
Weighted average discount rate
Rates of increase in compensation levels
Expected long-term rate of return on assets

2010

5.79%
4.00%
8.00%

2009

6.09%
4.00%
8.00%

2008

6.21%
4.00%
8.00%

The expected long-term rate of return on plan assets has been established by considering historical and
anticipated expected returns on the asset classes invested in by the pension trust and the allocation strategy currently
in place among those classes.

The change in plan assets reflects benefits paid from the qualified pension plans of $3,935 and $4,052 for
2010 and 2009, respectively, and employer contributions to the qualified pension plans of $0 and $1,560 for 2010
and 2009, respectively. For the non-qualified pension plans, the change in plan assets reflects benefits paid and
contributions to the plans in the same amount. This amount represents the actual benefit payments paid from
general plan assets of $1,289 for 2010 and $1,149 for 2009.

103

As of December 31, 2010 and 2009, the projected benefit obligation, accumulated benefit obligation and

fair value of plan assets for the qualified and non-qualified pension plans were as follows:

December 31
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets

Qualified Pension Plans

2010

2009

$112,613
112,613
102,898

$102,635
100,539
95,609

Non-Qualified
Pension Plans

2010

$18,838
18,743
—

2009

$18,635
18,541
—

The impact of changes in the discount rate, expected long-term rate of return on plan assets and

compensation levels would have had the following effects on 2010 pension expense:

0.5% decrease in the discount rate
0.5% decrease in the expected long-term rate of return on plan assets

Estimated
Increase in
Pension
Expense

$827
469

The following table provides information regarding estimated future cash flows relating to the Plans at

December 31, 2010:

Expected employer contributions:
Expected benefit payments:

2011
2011
2012
2013
2014
2015
2016 - 2020

$ 1,331
5,514
5,905
6,236
6,630
7,091
45,176

The qualified pension plan contributions are deposited into a trust and the qualified benefit payments are
made from trust assets. For the non-qualified plans, the contributions and the benefit payments are the same and
reflect expected benefit amounts, which are paid from general assets.

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 matched 50 percent of an eligible
employee’s contribution on the first 6 percent that the employee deferred through December 31, 2010. Beginning in
2011, the Corporation will match 100% of the first 4 percent that the employee defers. Employees are eligible to
participate upon their first day of employment or having attained age 21, whichever is later. Beginning with 2007, in
light of the change to the RIP benefit, 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. Effective January 1, 2008, in lieu of the RIP benefit, the automatic contribution for
substantially all new full-time employees was increased from two percent to four percent. Beginning in 2011,
substantially all employees will receive an automatic contribution of three percent of compensation at the end of the
year. The Corporation’s contribution expense was $5,770 for 2010, $4,577 for 2009 and $4,323 for 2008.

The Corporation also sponsors an ERISA Excess Lost Match Plan for certain officers. This 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 have been provided under the qualified 401(k) defined contribution plan,
if no limits were applied.

104

Pension Plan Investment Policy and Strategy

The Corporation’s investment strategy is to diversify plan assets between a wide mix of securities within
the equity and debt markets in an effort to allow the plan the opportunity to meet the plan’s expected long-term rate
of return requirements while minimizing short-term volatility. In this regard, the plan has targeted allocations
within the equity securities category for domestic large cap, domestic mid cap, domestic small cap, real estate
investment trusts, emerging market and international securities. Within the debt securities category, the plan has
targeted allocation levels for U.S. Treasury, U.S. agency, domestic investment grade bonds, high yield bonds,
inflation protected securities and international bonds.

Following are asset allocations for the Corporation’s pension plans as of December 31, 2010 and 2009, and

the target allocation for 2011, by asset category:

December 31
Asset Category
Equity securities
Debt securities
Cash equivalents

Target
Allocation
2011

45 - 65%
30 - 50
0 - 10

Percentage of Plan Assets

2010

2009

59%
34
7

50%
42
8

At December 31, 2010 and 2009, equity securities included 550,128 and 420,128 shares of the
Corporation’s common stock, respectively, totaling $5,402 (5.3% of total plan assets) at December 31, 2010
and $2,853 (3.0% of total plan assets) at December 31, 2009. The plan acquired 130,000 shares during 2010.
Dividends received on the Corporation’s common stock held by the Plan were $250 for 2010 and $163 for 2009.

The fair values of the Corporation’s pension plan assets by asset category are as follows:

December 31, 2010
Asset Class
Cash
Equity securities:

F.N.B. Corporation
Other large-cap U.S. financial services

companies

Other large-cap U.S. companies
International companies

Mutual fund equity investments:

U.S. equity index funds:

U.S. large-cap equity index funds
U.S. small-cap equity index funds
U.S. mid-cap equity index funds

Non-U.S. equities growth fund
U.S. equity funds:
U.S. mid-cap
U.S. small-cap

Other

Fixed income securities:

U.S. government agencies
Fixed income mutual funds:

U.S. investment-grade fixed income

securities

Non-U.S. fixed income securities

Level 1

Level 2

Level 3

Total

$ 7,827

5,402

1,775
24,137
753

4,357
2,042
2,542
8,157

5,220
2,833
3,114

—

—
—
—

—
—
—
—

—
—
—

—

$31,515

2,738
486
$71,383

—
—
$31,515

105

—

—
—
—

—
—
—
—

—
—
—

—

—
—
—

7,827

5,402

1,775
24,137
753

4,357
2,042
2,542
8,157

5,220
2,833
3,114

31,515

2,728
486
$102,898

December 31, 2009
Asset Class
Cash
Equity securities:

F.N.B. Corporation
Other large-cap U.S. financial services

companies

Other large-cap U.S. companies
International companies

Mutual fund equity investments:

U.S. equity index funds:

U.S. large-cap equity index funds
U.S. small-cap equity index funds
U.S. mid-cap equity index funds

Non-U.S. equities growth fund
U.S. equity funds:
U.S. mid-cap
U.S. small-cap

Other
Fixed income securities:

U.S. government agencies
Corporate bonds

Fixed income mutual funds:

U.S. investment-grade fixed income

securities

Non-U.S. fixed income securities

Level 1

Level 2

Level 3

Total

$ 8,073

2,853

1,437
22,329
588

4,762
1,908
1,945
6,074

2,318
2,522
972

—
—

2,510
373
$58,664

—

—
—
—

—
—
—
—

—
—
—

$35,556
1,389

—
—
$36,945

—

—
—
—

—
—
—
—

—
—
—

—
—

—
—
—

$ 8,073

2,853

1,437
22,329
588

4,762
1,908
1,945
6,074

2,318
2,522
972

35,556
1,389

2,510
373
$95,609

The classifications for Level 1, Level 2 and Level 3 are discussed in the Fair Value Measurements footnote.

19. Other Postretirement Benefit Plans

The Corporation sponsors a pre-Medicare eligible postretirement medical insurance plan for retirees of
certain affiliates between the ages of 62 and 65. During 2006, the Corporation amended the plan such that only
employees who were age 60 or older as of January 1, 2007 are eligible for employer paid coverage. 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 service for such benefits. The Corporation reserves the right
to terminate the plan or make plan changes at any time.

The following tables provide information relating to the change in benefit obligation, change in plan

assets, the Plan’s funded status and the liability reflected in the consolidated balance sheet:

December 31
Benefit obligation at beginning of year
Interest cost
Plan participants’ contributions
Actuarial (gain) loss
Benefits paid
Benefit obligation at end of year

2010

$1,594
67
42
14
(333)
$1,384

2009

$1,997
90
47
(127)
(413)
$1,594

106

December 31
Fair value of plan assets at beginning of year
Corporation contribution
Plan participants’ contributions
Benefits paid
Fair value of plan assets at end of year

December 31
Funded status of plan

2010

$ —
291
42
(333)
$ —

2009

$ —
366
47
(413)
$ —

2010

2009

$(1,384)

$(1,594)

Actuarial assumptions used in the determination of the benefit obligation in the Plan are as follows:

Assumptions at December 31
Discount rate
Assumed healthcare cost trend:

Initial trend
Ultimate trend
Year ultimate trend reached

2010

4.35%

8.00%
5.00%
2018

2009

4.65%

8.00%
5.00%
2018

The discount rate assumption at December 31, 2010 was determined using the same yield-curve based

approach as previously described in the Retirement Plans footnote.

Net periodic postretirement benefit (income) cost and other comprehensive income included the following

components:

Year Ended December 31
Service cost
Interest cost
Actuarial loss amortization
Net periodic postretirement benefit (income) cost
Other changes in plan assets and benefit obligations

recognized in other comprehensive income:

Current year actuarial (gain) loss
Amortization of actuarial loss

Total recognized in other comprehensive income

Total recognized in net periodic postretirement income and

other comprehensive income

2010

$—
67
—
67

14
—
14

$81

2009

$ —
90
—
90

(127)
—
(127)

2008

$ 24
115
2
141

23
(2)
21

$ (37)

$162

Actuarial assumptions used in the determination of the net periodic postretirement cost in the Plan are as

follows:

Assumptions for the Year Ended December 31
Weighted average discount rate
Assumed healthcare cost trend:

Initial trend
Ultimate trend
Year ultimate cost trend reached

2010

4.65%

8.50%
5.00%
2018

2009

5.70%

8.00%
5.00%
2017

2008

5.50%

8.00%
5.00%
2016

107

A one percentage point change in the assumed health care cost trend rate would have had the following
effects on 2010 service and interest cost and the accumulated postretirement benefit obligation at December 31,
2010:

1% Increase

1% Decrease

Effect on service and interest components of net periodic cost
Effect on accumulated postretirement benefit obligation

$ 3
54

$ (3)
(50)

The following table provides information regarding estimated future cash flows relating to the postre-

tirement benefit plan at December 31, 2010:

Expected employer contributions:
Expected benefit payments:

2011
2011
2012
2013
2014
2015
2016 - 2020

$212
253
194
185
174
160
625

The contributions and the benefit payments for the postretirement benefit plan are the same and represent

expected benefit amounts, net of participant contributions, which are paid from general plan assets.

20.

Income Taxes

Income tax expense, allocated based on a separate tax return basis, consists of the following:

Year Ended December 31
Current income taxes:

Federal taxes
State taxes

Deferred income taxes:

Federal taxes
State taxes

2010

2009

2008

$23,767
97
23,864

3,943
77
4,020
$27,884

$11,460
115
11,575

(2,283)
(23)
(2,306)
$ 9,269

$ 21,186
117
21,303

(14,017)
(49)
(14,066)
$ 7,237

Income tax expense related to gains on the sale of securities was $1,036, $185 and $292 for 2010, 2009 and

2008, respectively.

Income tax expense and the effective tax rate for 2010 were favorably impacted by $265 due to the
expiration of an uncertain tax position in the current period. The effective tax rates for 2010, 2009 and 2008 were all
lower than the 35.0% federal statutory tax rate due to tax benefits resulting from tax-exempt income on investments,
loans, tax credits and income from BOLI.

108

The following table provides a reconciliation between the federal statutory tax rate and the actual effective

tax rate:

Year Ended December 31
Federal statutory tax rate
Effect of tax-free interest and dividend income
Tax credits and settlements
Other items
Actual effective tax rate

2010

35.0%
(6.0)
(1.6)
(0.2)
27.2%

2009

35.0%
(12.2)
(3.7)
(0.7)
18.4%

2008

35.0%
(14.4)
(3.8)
0.1
16.9%

The following table presents the tax effects of temporary differences that give rise to deferred tax assets

and liabilities:

December 31
Deferred tax assets:

Allowance for loan losses
State net operating loss carryforwards
Deferred compensation
Intangibles
Securities impairments
Pension and other defined benefit plans
Net unrealized securities losses
Other

Total

Valuation allowance

Total deferred tax assets

Deferred tax liabilities:

Loan fees
Depreciation
Purchase accounting adjustments
Prepaid expenses
Intangibles
Other

Total deferred tax liabilities
Net deferred tax assets

2010

2009

$ 46,365
12,159
4,037
—
6,764
11,935
2,072
3,357
86,689
(14,176)
72,513

(1,303)
(7,118)
(8,780)
(552)
(539)
(2,015)
(20,307)
$ 52,206

$ 46,007
11,142
4,081
78
6,223
10,939
3,775
3,899
86,144
(13,232)
72,912

(1,391)
(6,612)
(9,915)
(406)
—
(41)
(18,365)
$ 54,547

The Corporation establishes a valuation allowance when it is more likely than not that the Corporation will
not be able to realize the benefit of the deferred tax assets or when future deductibility is uncertain. Periodically, the
valuation allowance is reviewed and adjusted based on management’s assessment of realizable deferred tax assets.
At December 31, 2010, the Corporation had unused state net operating loss carryforwards expiring from 2018 to
2030. The Corporation anticipates that neither the state net operating loss carryforwards nor the other net deferred
tax assets at certain of its subsidiaries will be utilized and, as such, has recorded a valuation allowance against the
deferred tax assets related to these carryforwards.

As of December 31, 2010 and 2009, the Corporation has approximately $2,481 and $3,042, respectively,
of unrecognized tax benefits, excluding interest and the federal tax benefit of unrecognized state tax benefits. Also,
as of December 31, 2010 and 2009, additional unrecognized tax benefits relating to accrued interest, net of the
related federal tax benefit, amounted to $182 and $197, respectively. As of December 31, 2010, $2,190 of these tax
benefits would affect the effective tax rate if recognized. 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.

109

The Corporation files numerous consolidated and separate income tax returns in the U.S. federal
jurisdiction and in several state jurisdictions. The Corporation is no longer subject to U.S. federal income tax
examinations for years prior to 2008. The Corporation’s 2006 and 2007 federal examinations have closed with no
material impact to the Corporation’s financial position. The Corporation’s tax years 2009 and 2008 remained open
to federal examination. With limited exception, the Corporation is no longer subject to state income tax
examinations for years prior to 2007 and state income tax returns for 2007 through 2009 are currently subject
to examination. The Corporation anticipates that a reduction in the unrecognized tax benefit of up to $168 may
occur in the next twelve months from the expiration of statutes of limitations which would result in a reduction in
income taxes.

Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding interest and

the federal income tax benefit of unrecognized state tax benefits) is as follows:

Year Ended December 31
Balance at beginning of year
Additions based on tax positions related to current year
Additions based on tax positions of prior year
Reductions for tax positions of prior years
Reductions due to statute of limitations
Balance at end of year

21. Comprehensive Income

2010

$3,042
77
4
(1)
(641)
$2,481

2009

$3,210
359
40
(8)
(559)
$3,042

The components of comprehensive income, net of related tax, are as follows:

Year Ended December 31
Net income
Other comprehensive loss:

Unrealized gains (losses) on securities:

Arising during the period, net of tax expense
(benefit) of $1,904, $(4,022) and $(7,713)

Less: reclassification adjustment for (gains) losses

included in net income, net of tax expense
(benefit) of $217, $(2,578) and $(5,724)
Unrealized losses on swap, net of tax benefit of $69
Pension and postretirement amortization, net of tax

benefit of $3,356, $779 and $8,573

Other comprehensive loss
Comprehensive income

2010

2009

2008

$74,652

$41,111

$ 35,595

3,537

(7,469)

(14,324)

(403)
—

(6,233)
(3,099)
$71,553

4,787
—

(1,446)
(4,128)
$36,983

10,606
(128)

(15,921)
(19,767)
$ 15,828

For 2008, the amount of the reclassification adjustment for losses included in net income differs from the
amount shown in the consolidated statement of income because it does not include gains or losses realized on
securities that were both purchased and then sold during that year.

110

The accumulated balances related to each component of other comprehensive income, net of tax, are as

follows:

December 31
Non-credit related loss on debt securities not expected to be

sold

Unrealized net gain (loss) on other available for sale

securities

Unrecognized pension and postretirement obligations
Accumulated other comprehensive income

2010

2009

2008

$ (8,654)

$(10,644)

—

4,767
(29,845)
$(33,732)

3,624
(23,613)
$(30,633)

(4,338)
(22,167)
$(26,505)

22. Earnings per Share

The following tables set forth the computation of basic and diluted earnings per share:

Year Ended December 31
Net income available to common stockholders - basic

earnings per share

Interest expense on convertible debt
Net income available to common stockholders after
assumed conversion - diluted earnings per share

2010

2009

2008

74,652
20

74,672

32,803
20

32,823

35,595
20

35,615

Basic weighted average common shares outstanding
Net effect of dilutive stock options, warrants, restricted

stock and convertible debt

Diluted weighted average common shares outstanding

113,923,612

102,580,415

80,654,153

358,121
114,281,733

268,919
102,849,334

343,834
80,997,987

Basic earnings per share

Diluted earnings per share

0.66

0.65

0.32

0.44

For the years ended December 31, 2010, 2009 and 2008, 797,983, 1,549,205 and 118,619 shares of
common stock, respectively, related to stock options and warrants were excluded from the computation of diluted
earnings per share because the exercise price of the shares was greater than the average market price of the common
shares and therefore, the effect would be antidilutive.

23. Stockholders’ Equity

On January 9, 2009, in conjunction with the UST’s CPP, the Corporation issued to the UST 100,000 shares
of Series C Preferred Stock and a warrant to purchase up to 1,302,083 shares of the Corporation’s common stock for
an aggregate purchase price of $100,000. The warrant has a ten-year term and an exercise price of $11.52 per share.

On June 16, 2009, the Corporation completed a public offering of 24,150,000 shares of common stock at a
price of $5.50 per share, including 3,150,000 shares of common stock purchased by the underwriters pursuant to an
over-allotment option, which the underwriters exercised in full. The net proceeds of the offering after deducting
underwriting discounts and commissions and offering expenses were $125,784. As a result of the completion of the
public stock offering, the number of shares of the Corporation’s common stock purchasable upon exercise of the
warrant issued to the UST was reduced in half to 651,042 shares and the exercise price was unchanged.

On September 9, 2009, the Corporation utilized a portion of the proceeds of its public offering to redeem
all of the Series C Preferred Stock issued to the UST under the CPP and to pay the related final accrued dividend.
Since receiving the CPP funds on January 9, 2009, the Corporation paid the UST $3,333 in cash dividends. Upon
redemption, the remaining difference of $4,319 between the Series C Preferred Stock redemption amount and the

111

recorded amount was charged to retained earnings as non-cash deemed preferred stock dividends. The non-cash
deemed preferred stock dividends had no impact on total equity, but reduced 2009 earnings per diluted common
share by $0.04. The remaining offering proceeds were used for general corporate purposes and to enhance capital
levels.

24. Regulatory Matters

The Corporation and FNBPA are subject to various regulatory capital requirements administered by the
federal banking agencies. Quantitative measures established by regulators to ensure capital adequacy require the
Corporation and FNBPA to maintain minimum amounts and ratios of total and Tier 1 capital (as defined in the
regulations) to risk-weighted assets (as defined) and of leverage ratio (as defined). Failure to meet minimum capital
requirements can initiate certain mandatory, and possibly additional discretionary actions, by regulators that, if
undertaken, could have a direct material effect on the Corporation’s consolidated financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation and
FNBPA must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-
balance sheet items as calculated under regulatory accounting practices. The Corporation’s and FNBPA’s capital
amounts and classifications are also subject to qualitative judgments by the regulators about components, risk
weightings and other factors.

The Corporation’s management believes that, as of December 31, 2010 and 2009, the Corporation and

FNBPA met all capital adequacy requirements to which either of them was subject.

As of December 31, 2010, the most recent notification from the federal banking agencies categorized the
Corporation and FNBPA as well-capitalized under the regulatory framework for prompt corrective action. There
are no conditions or events since the notification which management believes have changed this categorization.

Following are the capital ratios as of December 31, 2010 and 2009 for the Corporation and FNBPA:

December 31, 2010

Total Capital (to risk-weighted assets):

Actual

Well-Capitalized
Requirements

Minimum Capital
Requirements

Amount

Ratio

Amount

Ratio

Amount

Ratio

F.N.B. Corporation
FNBPA

$836,228
768,040

12.9% $648,244
626,183
12.3

10.0% $518,595
500,946
10.0

8.0%
8.0

Tier 1 Capital (to risk-weighted assets):

F.N.B. Corporation
FNBPA

Leverage Ratio:

F.N.B. Corporation
FNBPA

737,755
689,495

11.4
11.0

8.7
8.3

388,946
375,710

424,362
414,734

6.0
6.0

5.0
5.0

259,297
250,473

339,490
331,787

4.0
4.0

December 31, 2009
Total Capital (to risk-weighted assets):

F.N.B. Corporation
FNBPA

$795,372
745,183

12.9% $617,447
602,810
12.4

10.0% $493,958
482,248
10.0

8.0%
8.0

Tier 1 Capital (to risk-weighted assets):

F.N.B. Corporation
FNBPA

Leverage Ratio:

F.N.B. Corporation
FNBPA

705,188
669,543

11.4
11.1

8.7
8.5

370,468
361,686

406,314
395,647

6.0
6.0

5.0
5.0

246,979
241,124

325,052
316,517

4.0
4.0

112

FNBPA was required to maintain aggregate cash reserves with the FRB amounting to $17,078 at

December 31, 2010. The Corporation also maintains deposits for various services such as check clearing.

Certain limitations exist under applicable law and regulations by regulatory agencies regarding dividend
distributions to a parent by its subsidiaries. As of December 31, 2010, the Corporation’s subsidiaries had $9,883 of
retained earnings available for distribution to the Corporation without prior regulatory approval.

Under current FRB regulations, FNBPA is limited in the amount it may lend to non-bank affiliates,
including the Corporation. Such loans must be secured by specified collateral. In addition, any such loans to a non-
bank affiliate may not exceed 10% of FNBPA’s capital and surplus and the aggregate of loans to all such affiliates
may not exceed 20% of FNBPA’s capital and surplus. The maximum amount that may be borrowed by the
Corporation under these provisions was $131,449 at December 31, 2010.

25. Business Segments

The Corporation operates in four reportable segments: Community Banking, Wealth Management,

Insurance and Consumer Finance.

(cid:129)

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 all lines 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.

113

The following tables provide financial information for these segments of the Corporation. 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 subsid-
iaries and eliminations and adjustments which are necessary for purposes of reconciling to the consolidated
amounts.

Community
Banking

Wealth
Manage-
ment

Insurance

Consumer
Finance

Parent

and Other Consolidated

At or for the Year Ended
December 31, 2010

Interest income
Interest expense
Net interest income
Provision for loan losses
Non-interest income
Non-interest expense
Intangible amortization
Income tax expense (benefit)
Net income (loss)
Total assets
Total intangibles

At or for the Year Ended
December 31, 2009

At or for the Year Ended
December 31, 2008

198
—
198
—
12,898
11,795
427
319
555
19,097
11,778

$ 33,386
4,842
28,544
6,144
2,194
15,208
—
3,389
5,997
171,649
1,809

$ 4,149
9,964
(5,815)
779
(3,763)
141
—
(4,119)
(6,379)
(3,204)
—

$ 373,721
88,731
284,990
47,323
115,972
244,389
6,714
27,884
74,652
8,959,915
561,148

Insurance

Consumer
Finance

Parent

and Other Consolidated

280
—
280
—
13,804
12,135
427
545
977
20,625
12,195

$ 32,511
5,561
26,950
6,667
2,157
15,429
—
2,449
4,562
168,345
1,809

$ 2,654
11,337
(8,683)
673
(5,862)
1,418
—
(6,059)
(10,577)
(9,191)
—

$ 388,218
121,179
267,039
66,802
105,482
248,251
7,088
9,269
41,111
8,709,077
567,851

Insurance

Consumer
Finance

Parent

and Other Consolidated

408
—
408
—
13,127
11,585
493
552
905
23,623
12,928

$ 32,287
5,837
26,450
5,642
2,193
14,965
—
2,852
5,184
164,835
1,809

$ 1,160
11,672
(10,512)
619
(9,550)
78
—
(7,634)
(13,125)
(27,855)
—

$ 409,781
157,989
251,792
72,371
86,115
216,262
6,442
7,237
35,595
8,364,811
574,507

$ 335,975
73,925
262,050
40,400
83,977
201,450
5,937
26,663
71,577
8,753,276
535,594

Community
Banking

$ 352,760
104,281
248,479
59,462
74,982
203,411
6,295
10,829
43,464
8,509,072
541,530

Community
Banking

$ 375,876
140,473
235,403
66,110
59,025
174,681
5,675
9,280
38,682
8,184,555
547,036

13
—
13
—
20,666
15,795
350
1,632
2,902
19,097
11,967

Wealth
Manage-
ment

13
—
13
—
20,401
15,858
366
1,505
2,685
20,226
12,317

Wealth
Manage-
ment

50
7
43
—
21,320
14,953
274
2,187
3,949
19,653
12,734

114

26. Cash Flow Information

Following is a summary of cash flow information:

Year Ended December 31
Interest paid on deposits and other borrowings
Income taxes paid
Transfers of loans to other real estate owned
Transfers of other real estate owned to loans

2010

$90,816
31,611
25,584
1,115

2009

2008

$124,960
6,287
22,023
580

$153,125
26,300
11,973
985

Supplemental non-cash information relating to the Corporation’s acquisitions is included in the Mergers

and Acquisitions footnote included in this Item of the Report.

27. Parent Company Financial Statements

The following is condensed financial information of F.N.B. Corporation (parent company only). In this
information, the parent company’s investments in subsidiaries are stated at cost plus equity in undistributed
earnings of subsidiaries since acquisition. This information should be read in conjunction with the consolidated
financial statements.

Balance Sheets
December 31
Assets
Cash and cash equivalents
Securities available for sale
Premises and equipment
Other assets
Investment in and advance to bank subsidiary
Investments in and advances to non-bank subsidiaries

Total Assets

Liabilities
Other liabilities
Advances from affiliates
Junior subordinated debt
Subordinated notes:

Short-term
Long-term

Total Liabilities
Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

2010

2009

91,560
2,158
4,256
25,431
1,206,016
248,776

74,922
3,025
4,374
15,977
1,194,814
235,570

$1,578,197

$1,528,682

30,214
265,256
205,156

29,442
238,458
205,156

8,672
2,775
512,073
1,066,124

8,922
3,402
485,380
1,043,302

$1,578,197

$1,528,682

115

Statements of Income
Year Ended December 31

Income
Dividend income from subsidiaries:

Bank
Non-bank

Interest income
Other income

Total Income

Expenses
Interest expense
Other expenses

Total Expenses

Income Before Taxes and Equity in Undistributed Income of

Subsidiaries
Income tax benefit

Equity in undistributed income (loss) of subsidiaries:

Bank
Non-bank
Net Income

2010

2009

2008

$61,700
10,800
72,500
6,381
119
79,000

17,745
6,584

24,329

54,671
6,608

61,279

13,770
(397)

$45,650
7,800
53,450
6,797
(312)
59,935

20,109
7,227

27,336

32,599
7,579

40,178

1,050
(117)

$123,700
10,075
133,775
11,682
(1,124)
144,333

23,271
5,218

28,489

115,844
6,655

122,499

(80,889)
(6,015)

$74,652

$41,111

$ 35,595

116

Statements of Cash Flows
Year Ended December 31

Operating Activities
Net income
Adjustments to reconcile net income to net cash flows from

operating activities:

Undistributed earnings from subsidiaries
Other, net

Net cash flows provided by operating activities

Investing Activities
Purchase of securities available for sale
Proceeds from sale of securities available for sale
Net (increase) decrease in advances to subsidiaries
Investment in subsidiaries
Net cash paid for mergers and acquisitions

Net cash flows used in investing activities

Financing Activities
Net increase (decrease) in advance from affiliate
Net decrease in short-term borrowings
Decrease in long-term debt
Increase in long-term debt
Issuance of preferred stock and common stock warrant
Redemption of preferred stock
Net proceeds from issuance of common stock
Tax (expense) benefit of stock-based compensation
Cash dividends paid

Net cash flows (used in) provided by financing activities

Net Increase in Cash and Cash Equivalents
Cash and cash equivalents at beginning of year

2010

2009

2008

$ 74,652

$ 41,111

$ 35,595

(13,373)
(8,918)

52,361

—
1,133
(12,671)
(1,375)
—

(12,913)

26,798
(249)
(1,418)
790
—
—
6,723
(199)
(55,255)

(22,810)

16,638
74,922

(933)
8,219

86,904
7,901

48,397

130,400

—
475
(40,584)
(112,138)
—

(3,035)
6,045
54,035
(540,454)
(23,869)

(152,247)

(507,278)

37,655
(811)
(1,658)
1,037
99,749
(100,000)
128,554
(158)
(52,375)

111,993

8,143
66,779

(9,738)
(2,110)
(2,746)
1,471
—
—
512,508
857
(78,283)

421,959

45,081
21,698

Cash and Cash Equivalents at End of Year

$ 91,560

$ 74,922

$ 66,779

Cash paid during the year for:

Interest

28. Fair Value Measurements

$ 17,781

$ 20,102

$ 23,281

The Corporation uses fair value measurements to record fair value adjustments to certain financial assets
and liabilities and to determine fair value disclosures. Securities available for sale and derivatives are recorded at
fair value on a recurring basis. Additionally, from time to time, the Corporation may be required to record at fair
value other assets on a nonrecurring basis, such as mortgage loans held for sale, certain impaired loans, OREO and
certain other assets.

Fair value is defined as an exit price, representing the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date. Fair value

117

measurements are not adjusted for transaction costs. Fair value is a market-based measure considered from the
perspective of a market participant who holds the asset or owes the liability rather than an entity-specific measure.

In determining fair value, the Corporation uses various valuation approaches, including market, income
and cost approaches. ASC Topic 820 establishes a hierarchy for inputs used in measuring fair value that maximizes
the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be
used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability,
which are developed based on market data obtained from sources independent of the Corporation. Unobservable
inputs reflect the Corporation’s assumptions about the assumptions that market participants would use in pricing an
asset or liability, which are developed based on the best information available in the circumstances.

The fair value hierarchy gives the highest priority to unadjusted quoted market prices in active markets for
identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3
measurement). The fair value hierarchy is broken down into three levels based on the reliability of inputs as follows:

Level 1

Level 2

Level 3

valuation is based upon unadjusted quoted market prices for identical instruments traded in
active markets.
valuation is based upon quoted market prices for similar instruments traded in active markets,
quoted market prices for identical or similar instruments traded in markets that are not active
and model-based valuation techniques for which all significant assumptions are observable in
the market or can be corroborated by market data.
valuation is derived from other valuation methodologies including discounted cash flow models
and similar techniques that use significant assumptions not observable in the market. These
unobservable assumptions reflect estimates of assumptions that market participants would use
in determining fair value.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is

significant to the fair value measurement.

Following is a description of the valuation methodologies the Corporation uses for financial instruments

recorded at fair value on either a recurring or nonrecurring basis:

Securities Available For Sale

Securities available for sale consists of both debt and equity securities. These securities are recorded at fair
value on a recurring basis. At December 31, 2010, approximately 97.6% of these securities used valuation
methodologies involving market-based or market-derived information, collectively Level 1 and Level 2 measure-
ments, to measure fair value. The remaining 2.4% of these securities were measured using model-based techniques,
with primarily unobservable (Level 3) inputs.

The Corporation closely monitors market conditions involving assets that have become less actively
traded. If the fair value measurement is based upon recent observable market activity of such assets or comparable
assets (other than forced or distressed transactions) that occur in sufficient volume, and do not require significant
adjustment using unobservable inputs, those assets are classified as Level 1 or Level 2; if not, they are classified as
Level 3. Making this assessment requires significant judgment.

The Corporation uses prices from independent pricing services and, to a lesser extent, indicative (non-
binding) quotes from independent brokers, to measure the fair value of investment securities. The Corporation
validates prices received from pricing services or brokers using a variety of methods, including, but not limited to,
comparison to secondary pricing services, corroboration of pricing by reference to other independent market data
such as secondary broker quotes and relevant benchmark indices, and review of pricing by Corporate personnel
familiar with market liquidity and other market-related conditions.

118

The Corporation determines the valuation of its investments in trust preferred debt securities with the
assistance of a third-party independent financial consulting firm that specializes in advisory services related to
illiquid financial investments. The consulting firm provides the Corporation appropriate valuation methodology,
performance assumptions, modeling techniques, discounted cash flows, discount rates and sensitivity analyses with
respect to levels of defaults and deferrals necessary to produce losses. Additionally, the Corporation utilizes the
firm’s expertise to reassess assumptions to reflect actual conditions. See the Securities footnote for information on
how the Corporation reassesses assumptions to determine the valuation of its trust preferred debt securities.
Accessing the services of a financial consulting firm with a focus on financial instruments assists the Corporation in
accurately valuing these complex financial instruments and facilitates informed decision-making with respect to
such instruments.

Derivative Financial Instruments

The Corporation determines its fair value for derivatives using widely accepted valuation techniques
including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects
contractual terms of the derivative, including the period to maturity and uses observable market based inputs,
including interest rate curves and implied volatilities.

The Corporation incorporates credit valuation adjustments to appropriately reflect both its own non-
performance risk and the respective counterparty’s non-performance risk in the fair value measurements. In
adjusting the fair value of its derivative contracts for the effect of non-performance risk, the Corporation considers
the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts
and guarantees.

Although the Corporation has determined that the majority of the inputs used to value its derivatives fall
within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize
Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its
counterparties. However, as of December 31, 2010, the Corporation has assessed the significance of the impact of
the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit
valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Corporation has
determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

Residential Mortgage Loans Held For Sale

These loans are carried at the lower of cost or fair value. Under lower of cost or fair value accounting,
periodically, it may be necessary to record nonrecurring fair value adjustments. Fair value, when recorded, is based
on independent quoted market prices and is classified as Level 2.

Impaired Loans

The Corporation reserves for commercial and commercial real estate loans that the Corporation considers
impaired as defined in ASC Topic 310 at the time the Corporation identifies the loan as impaired based upon the
present value of expected future cash flows available to pay the loan, or based upon the fair value of the collateral
less estimated selling costs where a loan is collateral dependent. Collateral may be real estate and/or business assets
including equipment, inventory and accounts receivable.

The Corporation determines the value of real estate based on appraisals by licensed or certified appraisers.
The value of business assets is generally based on amounts reported on the business’s financial statements.
Management must rely on the financial statements prepared and certified by the borrower or its accountants in
determining the value of these business assets on an ongoing basis which may be subject to significant change over
time. Based on the quality of information or statements provided, management may require the use of business asset
appraisals and site-inspections to better value these assets. The Corporation may discount appraised and reported
values based on management’s historical knowledge, changes in market conditions from the time of valuation or

119

management’s knowledge of the borrower and the borrower’s business. Since not all valuation inputs are
observable, the Corporation classifies these nonrecurring fair value determinations as Level 2 or Level 3 based
on the lowest level of input that is significant to the fair value measurement.

The Corporation reviews and evaluates impaired loans no less frequently than quarterly for additional

impairment based on the same factors identified above.

Other Real Estate Owned

OREO is comprised of commercial and residential real estate properties obtained in partial or total
satisfaction of loan obligations plus some bank owned real estate. OREO acquired in settlement of indebtedness is
recorded at the lower of carrying amount of the loan or fair value less costs to sell. Subsequently, these assets are
carried at the lower of carrying value or fair value less costs to sell. Accordingly, it may be necessary to record
nonrecurring fair value adjustments. Fair value is generally based upon appraisals by licensed or certified appraisers
and other market information and is classified as Level 2 or Level 3.

The following table presents the balances of assets and liabilities measured at fair value on a recurring

basis:

Level 1

Level 2

Level 3

Total

December 31, 2010
Assets measured at fair value:

Available for sale debt securities:
U.S. Treasury and other U.S.

government agencies and corporations
Residential mortgage-backed securities:
Agency mortgage-backed securities
Agency collateralized mortgage

obligations

Non-agency collateralized mortgage

obligations

States of the U.S. and political

subdivisions

Collateralized debt obligations
Other debt securities

Available for sale equity securities:

Financial services industry
Insurance services industry

Derivative financial instruments

Liabilities measured at fair value:
Derivative financial instruments

$ —

$300,568

$ —

$300,568

211,507

147,866

58,738
—
—
718,717

1,313
—
1,313
720,030
25,631
$745,661

$ 25,043
$ 25,043

—

—
5,974
11,245
17,219

375
—
375
17,594
—
$17,594

—
—

211,507

147,866

58,738
5,974
11,245
735,936

2,158
31
2,189
738,125
25,631
$763,756

$ 25,043
$ 25,043

—

—
—
—
—

470
31
501
501
—
$501

—
—

120

December 31, 2009
Assets measured at fair value:

Available for sale debt securities:
U.S. Treasury and other U.S.

government agencies and corporations
Residential mortgage-backed securities:
Agency mortgage-backed securities
Agency collateralized mortgage

obligations

Non-agency collateralized mortgage

obligations

States of the U.S. and political

subdivisions

Collateralized debt obligations
Other debt securities

Available for sale equity securities:

Financial services industry
Insurance services industry

Derivative financial instruments

Liabilities measured at fair value:
Derivative financial instruments

Level 1

Level 2

Level 3

Total

$ —

$252,456

$ —

$252,456

—

—
—
—
—

992
22
1,014
1,014
—
$1,014

—
—

325,771

43,508

75,583
—
—
697,363

1,385
—
1,385
698,748
13,305
$712,053

$ 12,497
$ 12,497

—

—
4,824
10,430
15,254

333
—
333
15,587
—
$15,587

—
—

325,771

43,508

75,583
4,824
10,430
712,617

2,710
22
2,732
715,349
13,305
$728,654

$ 12,497
$ 12,497

The following table presents additional information about assets measured at fair value on a recurring

basis and for which the Corporation has utilized Level 3 inputs to determine fair value:

Year Ended December 31, 2010
Balance at beginning of period
Total gains (losses) - realized/unrealized:

Included in earnings
Included in other comprehensive income

Purchases, issuances, and settlements
Transfers in and/or (out) of Level 3
Balance at end of period

Year Ended December 31, 2009
Balance at beginning of period
Total gains (losses) - realized/unrealized:

Included in earnings
Included in other comprehensive income

Purchases, issuances, and settlements
Transfers in and/or (out) of Level 3
Balance at end of period

Collateralized
Debt
Obligations

Other
Debt
Securities

Equity
Securities

$ 10,430

—
815
—
—
$ 11,245

$ 8,475

—
2,236
14,465
(14,746)
$ 10,430

$333

—
42
—
—
$375

$293

—
40
—
—
$333

$ 4,824

(2,281)
3,431
—
—
$ 5,974

$14,626

(7,098)
(2,704)
—
—
$ 4,824

121

Total

$ 15,587

(2,281)
4,288
—
—
$ 17,594

$ 23,394

(7,098)
(428)
14,465
(14,746)
$ 15,587

The Corporation reviews fair value hierarchy classifications on a quarterly basis. Changes in the
observability of the valuation attributes may result in reclassification of certain financial assets or liabilities.
Such reclassifications are reported as transfers in/out of Level 3 at fair value at the beginning of the period in which
the changes occur.

The amount of total losses included in earnings for the years ended 2010 and 2009 attributable to the
change in unrealized gains or losses relating to assets still held as of those dates was $2,281 and $7,098,
respectively. These losses are included in net impairment losses on securities reported as a component of non-
interest income.

TPS were transferred between Level 2 and Level 3 during 2009. These transfers were primarily due to
observability of inputs used to establish a benchmark for valuation. Fair values for these securities were determined
using discounted cash flow models, which incorporate certain assumptions and projections in determining fair
values assigned.

In accordance with GAAP, from time to time, the Corporation measures certain assets at fair value on a
nonrecurring basis. These adjustments to fair value usually result from the application of lower of cost or fair value
accounting or write-downs of individual assets. Valuation methodologies used to measure these fair value
adjustments were previously described. For assets measured at fair value on a nonrecurring basis still held in
the balance sheet, the following table provides the hierarchy level and the fair value of the related assets or
portfolios:

December 31, 2010
Impaired loans
Other real estate owned

December 31, 2009
Impaired loans
Other real estate owned

Level 1

Level 2

Level 3

Total

—
—

$ 1,157
16,195

$26,082
10,804

$27,239
26,999

2,794
6,929

21,981
7,687

24,775
14,616

Impaired loans measured or re-measured at fair value on a nonrecurring basis during 2010 had a carrying
amount of $31,582 and an allocated allowance for loan losses of $7,641 at December 31, 2010. The allocated
allowance is based on fair value of $27,239 less estimated costs to sell of $3,298. The allowance for loan losses
includes a provision applicable to the current period fair value measurements of $6,959 which was included in the
provision for loan losses for 2010.

OREO with a carrying amount of $36,913 was written down to $26,999 (fair value of $30,766 less

estimated costs to sell of $3,767), resulting in a loss of $9,914, which was included in earnings for 2010.

122

Fair Value of Financial Instruments

The estimated fair values of the Corporation’s financial instruments are as follows:

December 31
Financial Assets
Cash and short-term investments
Securities available for sale
Securities held to maturity
Net loans, including loans held for sale
Bank owned life insurance
Accrued interest receivable

Financial Liabilities
Deposits
Short-term borrowings
Long-term debt
Junior subordinated debt
Accrued interest payable

2010

2009

Carrying
Amount

Fair Value

Carrying
Amount

Fair Value

$ 131,571
738,125
940,481
5,994,735
208,051
25,345

$ 131,571
738,125
959,414
6,035,129
208,051
25,345

$ 310,550
715,349
775,281
5,757,460
205,447
27,219

$ 310,550
715,349
796,537
5,770,824
205,447
27,219

6,646,143
753,603
192,058
204,036
6,866

6,677,301
754,211
197,397
141,061
6,866

6,380,223
669,167
324,877
204,711
8,951

6,420,971
669,712
333,494
90,721
8,951

The following methods and assumptions were used to estimate the fair value of each financial instrument:

Cash and Due from Banks, Short-Term Investments, Accrued Interest Receivable and Accrued Interest

Payable. For these short-term instruments, the carrying amount is a reasonable estimate of fair value.

Securities. For both securities available for sale and securities held to maturity, fair value equals the
quoted market price from an active market, if available, and is classified within Level 1. If a quoted market price is
not available, fair value is estimated using quoted market prices for similar securities or pricing models, and is
classified as Level 2. Where there is limited market activity or significant valuation inputs are unobservable,
securities are classified within Level 3. Under current market conditions, assumptions used to determine the fair
value of Level 3 securities have greater subjectivity due to the lack of observable market transactions.

Loans. The fair value of fixed rate loans is estimated by discounting the future cash flows using the
current rates at which similar loans would be made to borrowers with similar credit ratings and for the same
remaining maturities. The fair value of variable and adjustable rate loans approximates the carrying amount.

Bank Owned Life Insurance. The Corporation owns both general account and separate account BOLI.
The fair value of general account BOLI is based on the insurance contract cash surrender value. The fair value of
separate account BOLI equals the quoted market price of the underlying securities, if available. If a quoted market
price is not available, fair value is estimated using quoted market prices for similar securities. In connection with the
separate account BOLI, the Corporation has purchased a stable value protection product that mitigates the impact of
market value fluctuations of the underlying separate account assets.

Deposits. The fair value of demand deposits, savings accounts and certain money market deposits is the
amount payable on demand at the reporting date. The fair value of fixed-maturity deposits is estimated by
discounting future cash flows using rates currently offered for deposits of similar remaining maturities.

Short-Term Borrowings. The carrying amounts for short-term borrowings approximate fair value for
amounts that mature in 90 days or less. The fair value of subordinated notes is estimated by discounting future cash
flows using rates currently offered.

123

Long-Term and Junior Subordinated Debt. The fair value of long-term and junior subordinated debt is
estimated by discounting future cash flows based on the market prices for the same or similar issues or on the
current rates offered to the Corporation for debt of the same remaining maturities.

Loan Commitments and Standby Letters of Credit. Estimates of the fair value of these off-balance sheet
items were not made because of the short-term nature of these arrangements and the credit standing of the
counterparties. Also, unfunded loan commitments relate principally to variable rate commercial loans, typically
non-binding, and fees are not normally assessed on these balances.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

NONE.

ITEM 9A.

CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES. The Corporation maintains disclosure controls and
procedures designed to ensure that the information required to be disclosed in the reports that it files or submits
under the Securities Exchange Act of 1934, as amended, are recorded, processed, summarized and reported within
the time periods specified in the SEC’s files and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the
reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the
issuer’s management, including its principal executive and principal financial officers, or persons performing
similar functions, as appropriate to allow timely decisions regarding required disclosure. The Corporation’s
management, with the participation of its CEO and CFO, evaluated the effectiveness of the Corporation’s disclosure
controls and procedures (as defined in Rules 13(a)-15(e) and 15d-15(e) under the Securities Exchange Act of
1934) as of the end of the period covered by this Report. Based upon such evaluation, the Corporation’s CEO and
CFO have concluded that, as of the end of such period, the Corporation’s disclosure controls and procedures were
effective.

There have not been any significant changes in the Corporation’s internal control over financial reporting
(as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the
fiscal quarter to which the report relates that have materially affected, or are reasonably likely to materially affect,
the Corporation’s internal control over financial reporting.

INTERNAL CONTROL OVER FINANCIAL REPORTING. Information required by this item is set forth
in “Management’s Report on F.N.B. Corporation’s Internal Control Over Financial Reporting - Reporting at a Bank
Holding Company Level” and “Report of Independent Registered Public Accounting Firm.”

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING. There have not been any
changes in the Corporation’s internal control over financial reporting (as such term is defined in Rules 13a - 15(f)
and 15d - 15(f) under the Securities Exchange Act of 1934) during the quarter ended December 31, 2010 to which
this report relates that have materially affected, or are reasonably likely to materially affect, internal control over
financial reporting.

ITEM 9B.

OTHER INFORMATION

NONE.

124

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information relating to this item is provided in the Corporation’s definitive proxy statement filed with the
SEC in connection with its annual meeting of stockholders to be held May 18, 2011. Such information is
incorporated herein by reference. Certain information regarding executive officers is included under the caption
“Executive Officers of the Registrant” after Part I, Item 4, of this Report.

ITEM 11.

EXECUTIVE COMPENSATION

Information relating to this item is provided in the Corporation’s definitive proxy statement filed with the
SEC in connection with its annual meeting of stockholders to be held May 18, 2011. Such information is
incorporated herein by reference. Neither the Report of the Compensation Committee nor the Report of the Audit
Committee shall be deemed filed with the SEC, but shall be deemed furnished to the SEC in this Report, and will
not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act
of 1934, except to the extent that the Corporation specifically incorporates it by reference.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGE-
MENT AND RELATED STOCKHOLDER MATTERS

With the exception of the equity compensation plan information provided below, the information relating
to this item is provided in the Corporation’s definitive proxy statement filed with the SEC in connection with its
annual meeting of stockholders to be held May 18, 2011. Such information is incorporated herein by reference.

The following table provides information related to equity compensation plans as of December 31, 2010:

Plan Category

Equity compensation plans approved by security

holders

Equity compensation plans not approved by

security holders

Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Stock Options

Weighted
Average Exercise
Price of Outstanding
Stock Options

Number of
Securities
Remaining for
Future Issuance
Under Equity
Compensation Plans

770,610(1)

N/A

$14.28

N/A

2,531,576(2)

N/A

(1)

(2)

Excludes 1,309,489 shares of restricted common stock awards subject to forfeiture. The shares of restricted
stock vest over periods ranging from three to five years from the award date.

Represents shares of common stock registered with the SEC which are eligible for issuance pursuant to
stock option or restricted stock awards granted under various plans.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE

125

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

PART IV

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)

FINANCIAL STATEMENTS

The consolidated financial statements of F.N.B. Corporation and subsidiaries required in response to
this item are incorporated by reference to Item 8 of this Report.

(b)

EXHIBITS

The exhibits filed or incorporated by reference as a part of this report are listed in the Index to
Exhibits which appears at page 129 and is incorporated by reference.

(c)

SCHEDULES

No financial statement schedules are being filed because of the absence of conditions under which
they are required or because the required information is included in the Consolidated Financial
Statements and related notes thereto.

126

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant

has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

F.N.B. CORPORATION

By /s/Stephen J. Gurgovits
Stephen J. Gurgovits
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by

the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/Stephen J. Gurgovits
Stephen J. Gurgovits

/s/Vincent J. Calabrese
Vincent J. Calabrese

/s/Timothy G. Rubritz
Timothy G. Rubritz

/s/William B. Campbell
William B. Campbell

/s/Henry M. Ekker
Henry M. Ekker

/s/Philip E. Gingerich
Philip E. Gingerich

/s/Robert B. Goldstein
Robert B. Goldstein

/s/Dawne S. Hickton
Dawne S. Hickton

/s/David J. Malone
David J. Malone

/s/D. Stephen Martz
D. Stephen Martz

/s/Peter Mortensen
Peter Mortensen

Chief Executive Officer and Director
(Principal Executive Officer)

February 16, 2011

Chief Financial Officer
(Principal Financial Officer)

February 16, 2011

Corporate Controller and Senior Vice
President (Principal Accounting Officer)

February 16, 2011

Chairman and Director

February 16, 2011

Director

127

February 16, 2011

/s/Harry F. Radcliffe
Harry F. Radcliffe

/s/Arthur J. Rooney II
Arthur J. Rooney II

/s/John W. Rose
John W. Rose

/s/Stanton R. Sheetz
Stanton R. Sheetz

/s/William J. Strimbu
William J. Strimbu

/s/Earl K. Wahl, Jr.
Earl K. Wahl, Jr.

Director

128

INDEX TO EXHIBITS

The following exhibits are filed or incorporated by reference as part of this report:

3.1.

3.2.

4.1.

4.2.

4.3.

10.1.

10.2.

10.3.

10.4.

10.5.

10.6.

10.7.

10.8.

10.9.

10.10.

10.11.

10.12.

long-term debt of

filed herewith defining the rights of holders of

Articles of Incorporation of the Corporation as currently in effect. (Incorporated by reference to
Exhibit 3.1. of the Corporation’s Annual Report on Form 10-K for the year ended December 31,
2006).
Amended by-laws of the Corporation as currently in effect. (Incorporated by reference to
Exhibit 3.1. of the Corporation’s Current Report on Form 8-K filed on October 22, 2009).
The rights of holders of equity securities are defined in portions of the Articles of Incorporation and
By-laws. The Corporation agrees to furnish to the Commission upon request copies of all
instruments not
the
Corporation and its subsidiaries.
Form of Certificate for the Series C Preferred Stock. (Incorporated by reference to Exhibit 4.1. of the
Corporation’s Current Report on Form 8-K filed on January 14, 2009).
Warrant to purchase up to 1,302,083 shares of Common Stock, issued to the United States
Department of the Treasury. (Incorporated by reference to Exhibit 4.2. of the Corporation’s
Current Report on Form 8-K filed on January 14, 2009).
Form of Deferred Compensation Agreement by and between First National Bank of Pennsylvania
and four of its executive officers. (Incorporated by reference to Exhibit 10.3. of the Corporation’s
Annual Report on Form 10-K for the fiscal year ended December 31, 1993).*
Amended and Restated Employment Agreement between F.N.B. Corporation, First National Bank
of Pennsylvania and Stephen J. Gurgovits. (Incorporated by reference to Exhibit 10.1. of the
Corporation’s Current Report on Form 8-K filed on June 24, 2008).*
Amended and Restated Consulting Agreement between F.N.B. Corporation, First National Bank of
Pennsylvania and Stephen J. Gurgovits. (Incorporated by reference to Exhibit 10.2. of the
Corporation’s Current Report on Form 8-K filed on June 24, 2008).*
Form of Restricted Stock Units Agreement for Stephen J. Gurgovits pursuant to the F.N.B.
Corporation 2007 Incentive Compensation Plan. (Incorporated by reference to Exhibit 10.2. of
the Corporation’s Current Report on Form 8-K filed on January 23, 2008).*
Amended 2007 Performance-Based Restricted Stock Award for Stephen J. Gurgovits pursuant to the
F.N.B. Corporation 2007 Incentive Compensation Plan. (Incorporated by reference to Exhibit 10.3.
of the Corporation’s Current Report on Form 8-K filed on January 23, 2008).*
Amended 2007 Service-Based Restricted Stock Award for Stephen J. Gurgovits pursuant to the
F.N.B. Corporation 2007 Incentive Compensation Plan. (Incorporated by reference to Exhibit 10.3.
of the Corporation’s Current Report on Form 8-K filed on January 23, 2008).*
Amendment to Deferred Compensation Agreement of Stephen J. Gurgovits. (Incorporated by
reference to Exhibit 10.2. of the Corporation’s Current Report on Form 8-K filed on December 22,
2008).*
Basic Retirement Plan (formerly the Supplemental Executive Retirement Plan) of F.N.B.
Corporation effective January 1, 1992. (Incorporated by reference to Exhibit 10.9. of the
Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 1993).*
F.N.B. Corporation 1996 Stock Option Plan. (Incorporated by reference to Exhibit 10.15. of the
Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 1995).*
F.N.B. Corporation 1998 Director’s Stock Option Plan. (Incorporated by reference to Exhibit 10.14.
of the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998).*
F.N.B. Corporation 2001 Incentive Plan. (Incorporated by reference to Exhibit 10.1. of the
Corporation’s Form S-8 filed on June 14, 2001).*
Termination of Continuation of Employment Agreement between F.N.B. Corporation and Peter
Mortensen. (Incorporated by reference to Exhibit 10.17. of the Corporation’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2001).*

129

10.13.

10.14.

10.15.

10.16.

10.17.

10.18.

10.19.

10.20.

10.21.

10.22.

10.23.

10.24.

10.25.

10.26.

10.27.

11
12
14

21
23
31.1.
31.2.

Employment Agreement between First National Bank of Pennsylvania and David B. Mogle.
(Incorporated by reference to Exhibit 10.1. of the Corporation’s Quarterly Report on Form 10-Q
for the quarter ended September 30, 2005).*
Employment Agreement between First National Bank of Pennsylvania and James G. Orie.
(Incorporated by reference to Exhibit 10.2. of the Corporation’s Quarterly Report on Form 10-Q
for the quarter ended September 30, 2005).*
Employment Agreement between F.N.B. Corporation and Brian F. Lilly. (Incorporated by reference
to Exhibit 10.1. of the Corporation’s Current Report on Form 8-K filed on October 23, 2007).*
Form of Amendment to Employment Agreements of Vincent Calabrese, Scott Free, David Mogle,
James Orie, Gary Guerrieri and Louise Lowrey. (Incorporated by reference to Exhibit 10.1. of the
Corporation’s Current Report on Form 8-K filed on December 22, 2008).*
F.N.B. Corporation 2007 Incentive Compensation Plan. (Incorporated by reference to Exhibit A of
the Corporation’s 2007 Proxy Statement filed on March 22, 2007).*
Employment Agreement between First National Bank of Pennsylvania and Vincent J. Calabrese.
(Incorporated by reference to Exhibit 10.1. of the Corporation’s Current Report on Form 8-K filed
on March 23, 2007).*
Restricted Stock Agreement. (Incorporated by reference to Exhibit 10.1. of the Corporation’s
Current Report on Form 8-K filed on July 19, 2007).*
Performance Restricted Stock Award Agreement. (Incorporated by reference to Exhibit 10.2. of the
Corporation’s Current Report on Form 8-K filed on July 19, 2007).*
Form of Indemnification Agreement for directors. (Incorporated by reference to Exhibit 10.1. of the
Corporation’s Current Report on Form 8-K filed on September 23, 2008).*
Form of Indemnification Agreement for officers. (Incorporated by reference to Exhibit 10.1. of the
Corporation’s Current Report on Form 8-K filed on September 23, 2008).*
Letter Agreement between the Corporation and the United States Department of Treasury relating to
the TARP Capital Purchase Program, including Securities Purchase Agreement - Standard Terms,
incorporated by reference therein. (Incorporated by reference to Exhibit 10.1. of the Corporation’s
Current Report on Form 8-K filed on January 14, 2009).*
Form of Waiver executed by Robert V. New, Brian F. Lilly, Stephen J. Gurgovits, Vincent J. Delie
and Gary J. Guerrieri in connection with TARP Capital Purchase Program. (Incorporated by
reference to Exhibit 10.2. of the Corporation’s Current Report on Form 8-K filed on January 14,
2009).*
Form of Executive Compensation Agreement by and between F.N.B. Corporation and each of
Robert V. New, Brian F. Lilly, Stephen J. Gurgovits, Vincent J. Delie and Gary J. Guerrieri in
connection with TARP Capital Purchase Program. (Incorporated by reference to Exhibit 10.3. of the
Corporation’s Current Report on Form 8-K filed on January 14, 2009).*
Employment Agreement between First National Bank of Pennsylvania and Timothy G. Rubritz.
(Incorporated by reference to Exhibit 10.1. of the Corporation’s Current Report on Form 8-K filed
on December 22, 2009).*
Employment Agreement between F.N.B. Corporation, First National Bank of Pennsylvania and
Vincent J. Delie, Jr. (Incorporated by reference to Exhibit 10.1. of the Corporation’s Current Report
on Form 8-K filed on December 21, 2010).*
Computation of Per Share Earnings**
Ratio of Earnings to Fixed Charges. (filed herewith).
Code of Ethics. (Incorporated by reference to Exhibit 99.3. of the Corporation’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2009).*
Subsidiaries of the Registrant. (filed herewith).
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm. (filed herewith).
Certification of Chief Executive Officer Sarbanes-Oxley Act Section 302. (filed herewith).
Certification of Chief Financial Officer Sarbanes-Oxley Act Section 302. (filed herewith).

130

32.1.
32.2.
101.

Certification of Chief Executive Officer Sarbanes-Oxley Act Section 906. (filed herewith).
Certification of Chief Financial Officer Sarbanes-Oxley Act Section 906. (filed herewith).
The following materials from F.N.B. Corporation’s Annual Report on Form 10-K for the period
ended December 31, 2010, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the
Consolidated Statements of Income, (iii) the Consolidated Statements of Stockholders’ Equity,
(iv) the Consolidated Statements of Cash Flows and (v) the Notes to Consolidated Financial
Statements tagged as blocks of text.***

Management contracts and compensatory plans or arrangements required to be filed as exhibits pursuant
to Item 15(a)(3) of this Report.
This information is provided in the Earnings Per Share footnote in the Notes to Consolidated Financial
Statements, which is included in Item 8 in this Report.

***

This information is deemed furnished, not filed.

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L E T T E R T O S H A R E H O L D E R S

Dear Shareholder,

I am pleased to report that F.N.B. Corporation produced

certainly affect the cost of compliance as well as the ability

solid results in 2010. For the year ended December 31,

to garner fee income. We are monitoring developments and

2010, net income was $74.7 million or $0.65 per diluted

are confident that our team will develop effective solutions

share. This more than doubled our 2009 performance

for each challenge presented.

of net income available to common shareholders of $32.8

million or $0.32 per diluted share.

One of the first regulatory challenges encountered in

2010 was the amendment of Regulation E. This

In 2010, F.N.B. Corporation, like all financial services

amendment eliminated the charging of overdraft fees for

companies, faced a difficult operating environment. A

ATM and debit card overdrafts unless the customer opted

soft economy coupled with high

to continue overdraft coverage. We discovered that once

unemployment was one
contributing factor. In addition,
the financial reform legislation

passed by Congress introduced

the most sweeping regulatory

changes in banking since the

1930s. This legislation and its

resulting regulations will

customers understood the benefits of convenient overdraft

options, the great majority opted to maintain this

service. Our success in educating customers substantially

mitigated the loss of fee income.

Despite this challenging environment, overall, 2010 was

a year of growth for F.N.B. Corporation. We achieved

significant organic growth which we supplemented with the

January 1, 2011 acquisition of Comm Bancorp, Inc., parent

company of Community Bank & Trust Company, which

is based in the Scranton area. This acquisition creates a

natural extension of our footprint into eastern Pennsylvania,

and our business potential is enhanced because of significant

opportunities related to the Marcellus Shale gas repository.

In fact, we have been identified as the financial institution

having the second greatest potential to benefit from

Marcellus Shale opportunities.

First National Bank of Pennsylvania, our largest affiliate,

had an outstanding year. The bank showed positive

trends in key business drivers including solid loan and

deposit growth, stable fee income, controlled expenses and

Stephen J. Gurgovits

Corporate Officers

Stephen J. Gurgovits
Chief Executive Officer

Vincent J. Delie, Jr.
President

Brian F. Lilly
Vice Chairman
Chief Operating Officer

Vincent J. Calabrese
Chief Financial Officer

Timothy G. Rubritz
Senior Vice President
Corporate Controller

Scott D. Free
Vice President
Treasurer

David B. Mogle
Vice President
Corporate Secretary

James G. Orie
Vice President
Chief Legal Officer

F.N.B. Corporation
Board of Directors

William B. Campbell
Chairman
F. N. B. Corporation

Henry M. Ekker
Attorney-at-Law
Ekker, Kuster, McConnell & Epstein, LLP

Philip E. Gingerich
Retired Real Estate Appraiser and Consultant

Robert B. Goldstein
Principal
CapGen Financial Advisors, LLC

Stephen J. Gurgovits
CEO
F.N.B. Corporation

Dawne S. Hickton
Vice Chairman, President and CEO
RTI International Metals, Inc.

David J. Malone
President and CEO
Gateway Financial Group, Inc.

D. Stephen Martz
Retired Banker

Peter Mortensen
Retired Chairman
F.N.B. Corporation

Harry F. Radcliffe
Investment Manager

Arthur J. Rooney II
President
Pittsburgh Steelers Sports, Inc.

John W. Rose
Principal
CapGen Financial Advisors, LLC

Stanton R. Sheetz
CEO
Sheetz, Inc.

William J. Strimbu
President
Nick Strimbu, Inc.

Earl K. Wahl, Jr.
Retired Businessman

Corporate Headquarters
F.N.B. Corporation
One F.N.B. Boulevard
Hermitage, Pennsylvania 16148
Telephone: (888) 981-6000
Website: www.fnbcorporation.com

Transfer Agent
and Registrar
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016
Telephone: (800) 368-5948

Stock Listing
The Corporation’s common
stock is traded on the
New York Stock Exchange under
the ticker symbol “FNB.”

F . N . B . C O R P O R A T I O N ❙ 2 0 1 0 A N N U A L R E P O R T

Annual Report